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HomeMy WebLinkAboutSDP 04-13; CIC La Costa LP; |2011-0570022|2011-0570024|2008-0445222|2008-0445217|2008-0445218|; Affordable Housing-Regulatory Agreement & Dec. of Restrictive CovenantsRECORDED AT THE REQUEST OF CHICAGO TITLE COMPANY SUBDIVISION DEPT. c RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk's Office City of Carlsbad Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, CA 92008 No fee for recording pursuant to Government Code Section 27383 Fn9944 DOC# 2008-0445218 AUG19, 2008 4:13 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE GREGORY J. SMITH, COUNTY RECORDER FEES: 0.00 WAYS: 3 DA: 1 PAGES: 20 DEED OF TRUST WITH ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (Hunters Pointe) THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS AND SECURITY AGREEMENT ("Deed of Trust") is made as of/WS> i*\ . 200?_, by and among CIC La Costa, L.P., a California limited partnership ("Trustor"),chicago Title Company, a California corporation ("Trustee"), and the City of Carlsbad, a municipal corporation ("Beneficiary"). FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's fee interest in the property located in the City of Carlsbad, County of San Diego, State of California, that is described in the attached Exhibit A. incorporated herein by this reference (the "Property"). TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property; TOGETHER WITH all building materials and equipment now or hereafter delivered to said property and intended to be installed therein; TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property; 1010\01\235386.4 1 " 9945 TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and 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; and TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing. All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever. FOR THE PURPOSE OF SECURING: (a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note (defined in Article 1 below) until paid or cancelled. Said principal and other payments shall be due and payable as provided in the Note. Said Note and all its terms are incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced; and (b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to 1010\01\235386.4 • • c 9946 advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein; and (c) Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents (defined in Section 1.2 below). AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES: ARTICLE 1 DEFINITIONS In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall have the following meanings in this Deed of Trust: Section 1.1 The term "Loan Agreement" means that certain Loan Agreement between Trustor and Beneficiary, dated of even date herewith providing for the Beneficiary to loan to the Trustor an amount not to exceed One Million Nine Hundred Thirty Two Thousand Dollars ($1,932,000) for the development of the Property. Section 1.2 The term "Loan Documents" means this Deed of Trust, the Note, the Loan Agreement, the Regulatory Agreement, and any other debt, loan or security instruments between Trustor and the Beneficiary relating to the Property. Section 1.3 The term "Note" means the promissory note in the principal amount of One Million Nine Hundred Thirty Two Thousand Dollars ($1,932,000) dated of even date herewith executed by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are incorporated herein by reference.). Section 1.4 The term "Principal" means the amount required to be paid under the Note. Section 1.5 The term "Regulatory Agreement" means the regulatory agreement by and between the Beneficiary and the Trustor, dated and recorded in the official Records of San Diego County concurrently herewith. ARTICLE 2 MAINTENANCE AND MODIFICATION OF THE PROPERTY AND SECURITY Section 2.1 Maintenance and Modification of the Property by Trustor. The Trustor agrees that at all times prior to full payment of the sum owed under the Note, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition. The Trustor will from time to 31010\01\235386.4 9947 time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security. Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those actions as hereinbefore provided. Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor, upon written request of the Beneficiary, shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of San Diego County, a surety bond in an amount 1 and 1/2 times the amount of such claim item to protect against a claim of lien. Section 2.2 Granting of Easements. Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law and as approved, in writing, by Beneficiary. Section 2.3 Assignment of Rents. As part of the consideration for the indebtedness evidenced by the Note, Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the rents and revenues of the Property including those now due, past due, or to become due by virtue of any lease or other agreement for the occupancy or use of all or any part of the Property, regardless of to whom the rents and revenues of the Property are payable. Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the aforesaid rents and revenues and hereby directs each tenant of the Property to pay such rents to Beneficiary or Beneficiary's agents; provided, however, that prior to written notice given by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents, Trustor shall collect and receive all rents and revenues of the Property as trustee for the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to the sums secured by this Deed of Trust with the balance, so long as no such breach has occurred, to the account of Trustor, it being intended by Trustor and 1010\01\235386.4 9948 Beneficiary that this assignment of rents constitutes an absolute assignment and not an assignment for additional security only. Upon delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents, and without the necessity of Beneficiary entering upon and taking and maintaining full control of the Property in person, by agent or by a court-appointed receiver, Beneficiary shall immediately be entitled to possession of all rents and revenues of the Property as specified in this Section 2.3 as the same becomes due and payable, including but not limited to rents then due and unpaid, and all such rents shall immediately upon delivery of such notice be held by Trustor as trustee for the benefit of Beneficiary only; provided, however, that the written notice by Beneficiary to Trustor of the breach by Trustor shall contain a statement that Beneficiary exercises its rights to such rents. Trustor agrees that commencing upon delivery of such written notice of Trustor's breach by Beneficiary to Trustor, each tenant of the Property shall make such rents payable to and pay such rents to Beneficiary or Beneficiary's agents on Beneficiary's written demand to each tenant therefor, delivered to each tenant personally, by mail or by delivering such demand to each rental unit, without any liability on the part of said tenant to inquire further as to the existence of a default by Trustor. Except as previously approved by the Beneficiary as set forth in the Loan Agreement, Trustor hereby covenants that Trustor has not executed any prior assignment of said rents, that Trustor has not performed, and will not perform, any acts or has not executed and will not execute, any instrument which would prevent Beneficiary from exercising its rights under this Section 2.3, and that at the time of execution of this Deed of Trust, there has been no anticipation or prepayment of any of the rents of the Property for more than two (2) months prior to the due dates of such rents. Trustor covenants that Trustor will not hereafter collect or accept payment of any rents of the Property more than two (2) months prior to the due dates of such rents. Trustor further covenant that Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of the Property as Beneficiary may from time to time request. Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents, Beneficiary may in person, by agent or by a court-appointed receiver, regardless of the adequacy of Beneficiary's security, enter upon and take and maintain full control of the Property in order to perform all acts necessary and appropriate for the operation and maintenance thereof including, but not limited to, the execution, cancellation or modification of leases, the collection of all rents and revenues of the Property, the making of repairs to the Property and the execution or termination of contracts providing for the management or maintenance of the Property, all on such terms as are deemed best to protect the security of this Deed of Trust. In the event Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to the appointment of such receiver. Beneficiary or the receiver shall be entitled to receive a reasonable fee for so managing the Property. All rents and revenues collected subsequent to delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents shall be applied first to the costs, if any, of taking control of and managing the Property and collecting the rents, including, but not limited to, attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies, taxes, assessments and other charges on the Property, and the costs of discharging any obligation or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this 1010\01\235386.4 9949 Deed of Trust. Beneficiary or the receiver shall have access to the books and records used in the operation and maintenance of the Property and shall be liable to account only for those rents actually received. Beneficiary shall not be liable to Trustor, anyone claiming under or through Trustor or anyone having an interest in the Property by reason of anything done or left undone by Beneficiary under this Section 2.3. If the rents of the Property are not sufficient to meet the costs, if any, of taking control of and managing the Property and collecting the rents, any funds expended by Beneficiary for such purposes shall become indebtedness of Trustor to Beneficiary secured by this Deed of Trust pursuant to Section 3.3 hereof. Unless Beneficiary and Trustor agree in writing to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof and shall bear interest from the date of disbursement at the rate stated in Section 3.3. Any entering upon and taking and maintaining of control of the Property by Beneficiary or the receiver and any application of rents as provided herein shall not cure or waive any default hereunder or invalidate any other right or remedy of Beneficiary under applicable law or provided herein. This assignment of rents of the Property shall terminate at such time as this Deed of Trust ceases to secure indebtedness held by Beneficiary. The rights of the Beneficiary under this Section 2.3 are subject to the rights of any senior mortgage lender. ARTICLE 3 TAXES AND INSURANCE; ADVANCES Section 3.1 Taxes, Other Governmental Charges and Utility Charges. Trustor shall pay, or cause to be paid, at least fifteen (15) days prior to the date of delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security or any part thereof; provided, however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of the Security; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments. Except as provided in clause (b) of the first sentence of this paragraph, the provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies. In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within seven (7) business days after receipt of such notice. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become an additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts. 1010\01\235386.4 9950 Section 3.2 Provisions Respecting Insurance. Trustor agrees to provide insurance conforming in all respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured by this Deed of Trust have been paid and all other obligations secured hereunder fulfilled, and this Deed of Trust reconveyed. All such insurance policies and coverages shall be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of Trust. Trustee is aware that California Civil Code Section 2955.5(a) provides as follows: No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property. Section 3.3 Advances. In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become an additional obligation of the Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the lesser of eight percent (8%) per annum or the maximum rate permitted by law. ARTICLE 4 DAMAGE, DESTRUCTION OR CONDEMNATION Section 4.1 Awards and Damages. All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property ("Funds") are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any funds and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its sole option. The Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for 1010\01\235386.4 9951 its disposition, and Beneficiary agrees to release Funds to Trustor to rebuild the Project on the Property provided Trustor demonstrates to Beneficiary that such rebuilding is economically feasible. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior mortgage lender. ARTICLE 5 AGREEMENTS AFFECTING THE PROPERTY; FURTHER ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST Section 5.1 Other Agreements Affecting Property. The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof. Section 5.2 Agreement to Pay Attorneys' Fees and Expenses. In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such expenses are incurred at the lesser often percent (10%) per annum or the maximum rate permitted by law. Section 5.3 Payment of the Principal. The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein. Section 5.4 Personal Property. To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code. Section 5.5 Financing Statement. The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of 1010\01\235386.4 9952 the Note in accordance with their terms. The Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument. Section 5.6 Operation of the Security. The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Loan Documents. Section 5.7 Inspection of the Security. At any and all reasonable times upon seventy-two (72) hours' notice, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect the Security. Section 5.8 Nondiscrimination. The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall run with the land. ARTICLE 6 HAZARDOUS WASTE Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept and used in and about multifamily residential property. Trustor shall immediately advise Beneficiary in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous 1010\01\235386.4 c 9953 Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above hereinafter referred to a "Hazardous Materials Claims"); and (iii) Trustor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border-zone property" under the provision of California Health and Safety Code, Sections 25220 et seq., or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. Beneficiary shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall indemnify and hold harmless Beneficiary and its boardmembers, supervisors, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. Without Beneficiary's prior written consent, which shall not be unreasonably withheld, Trustor shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement, impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary. The Trustor hereby acknowledges and agrees that (i) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the 1010\01\235386.4 9954 Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(l)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(l), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed of Trust and shall be due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action. ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES Section 7.1 Events of Default. The following shall constitute Events of Default following the expiration of any applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Loan Documents, including, without limitation, the provisions concerning discrimination; or (3) failure to make any payment or perform any of Trustor's other covenants, agreements, or obligations under any other debt instruments or regulatory agreement secured by the Property, which default shall not be cured within the times and in the manner provided therein. Section 7.2 Acceleration of Maturity. If an Event of Default shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default and the unpaid Principal of the Note shall immediately become due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan Documents), and no omission on the 1010\01\235386.4 w 9955 part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right. Section 7.3 The Beneficiary's Right to Enter and Take Possession. If an Event of Default shall have occurred and be continuing, the Beneficiary may: (a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or invalidate any act done in response to such Default or pursuant to such Notice of Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale; (b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of Default and Election to Sell"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of San Diego County; or (d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. Section 7.4 Foreclosure By Power of Sale. Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of the Note is immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. (a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Default and Election to Sell and after Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate 1010\01\235386.4 9956 lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such purchaser or purchasers. (b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor. (c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale. Section 7.5 Receiver. If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated. Section 7.6 Remedies Cumulative. No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity. Section 7.7 No Waiver. (a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary. Beneficiary's expressed or implied consent to a breach by Trustor, or a waiver of any obligation 1010\01\235386.4 9957 of Trustor hereunder shall not be deemed or construed to be a consent to any subsequent breach, or further waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor. (b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of any sums secured hereby, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easement or other right affecting the Security, or (iv) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co- signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby. Section 7.8 Suits to Protect the Security. The Beneficiary shall have power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary. Section 7.9 Trustee May File Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Trustee, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date. Section 7.10 Waiver. The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any sums owing under the Note or in proceedings against the 1010\01\235386.4 9958 Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust. ARTICLE 8 MISCELLANEOUS Section 8.1 Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor. Section 8.2 Reconveyance by Trustee. Upon written request of Beneficiary stating that all sums secured hereby have been paid or forgiven, that all obligations to be performed by the Trustee under the Loan Documents (including, but not limited to, the operation of the Property in accordance with, and for the entire term of, the Regulatory Agreement), and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto. Section 8.3 Notices. If at any time after the execution of this Deed of Trust it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication shall be in writing and shall be served personally, by reputable overnight delivery service, or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to: City of Carlsbad 2965 Roosevelt St., Suite B Carlsbad, CA 92008 Attn: City Manager and (2) if intended for Trustor shall be addressed to: Chelsea Investment Corporation 725 South Coast Highway 101 Encinitas, CA 92024 Attn: James J. Schmid Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective. 1010\01\235386.4 9959 Section 8.4 Successors and Joint Trustors. Where an obligation is created herein binding upon Trustor, the obligation shall also apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all obligations of Trustor shall be deemed to be a joint and several obligation of each and every entity and person comprising Trustor. Section 8.5 Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust. Section 8.6 Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust. Section 8.7 Governing Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. Section 8.8 Gender and Number. In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires. Section 8.9 Deed of Trust, Mortgage. Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage. Section 8.10 Actions. Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security. 1010\01\235386.4 9960 Section 8.11 Substitution of Trustee. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee. Section 8.12 Statute of Limitations. 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. Section 8.13 Subordination. The rights and remedies of the Beneficiary under this Deed of Trust shall be subject in all respects to the terms and conditions of that certain subordination agreement by and among the Beneficiary, the Trustor and The Bank of New York, as trustee, recorded concurrently herewith. Section 8.14 Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 1010\01\235386.4 9961 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written. TRUSTOR: CIC LA COSTA, L.P., a California limited partnership By: DDC La Costa, LLC, a California limited liability company, its Co-General Partner By: Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner L**By: Name: TA^JC K JVwiVg.5 Its: ?tt£i\ 181010\01\235386.4 9962 STATE OF CALIFORNIA COUNTY OF 23 20$ before me,On Notary Public, personally appeared >J .' who proved to me on the basis of satisfactory evidence to be the personfs) whose name(s) (Ts^afe subscribed to the within instrument and acknowledged to me thau^sho/thcy - executed the same in^jJsfacr/thoiF authorized capacity(ies), and that bX^s?her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. t* Signature STATE OF CALIFORNIA COUNTY OF 3% . 20 ^before me,On Notary Public, personally appeared (Seal) • ^ I tf^J MICHELLE CASSEL Commission #1488413 Notary Public - California Orange County who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) ^arc subscribed to the within instrument and acknowledged to me executed the same in(^ig?tier/theiF authorized capacity(ies), and that by i signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA ) ) COUNTY OF ) (Seal) MICHELLE CASSEL Commission # 1488413 Notary Public - California Orange County I010\I8\538638.1 EXHIBIT A DESCRIPTION OF PROPERTY 9963 Lots 207, 208 and 209 of City of Carlsbad Tract99-04-03 Villages at La Costa, La Costa Oaks North, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 15318, filed in the Office of the County Recorder of San Diego County, April 18, 2006. APN: 223-810-14; 223-810-15 and 223-810-16 1010\18\538810.2 RECQRDED AT THE REQUEST OF CHICAGO TITLE COMPANY SUBDIVISION DEPT. RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk's Office City of Carlsbad Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, CA 92008 No fee for recording pursuant to Government Code Section 27383 9915 2-°! P DOC# 2008-0445217 AUG19, 2008 4:13 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE GREGORY,!. SMITH. COUNTY RECORDER FEES: 000 PAGES:29 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (Hunters Pointe) This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is made and entered into as of JOYXO- \O 200^(the "Agreement Date"), by and among the Carlsbad Redevelopment Agency, a public body, corporate and politic (the "Agency"), the City of Carlsbad, a municipal corporation (the "City"), and CIC La Costa, L.P., a California limited partnership (the "Developer"). RECITALS 1. The City and the Developer have entered into a Loan Agreement (the "Loan Agreement") under which the City agreed to loan up to One Million Nine Hundred Thirty-Two Thousand Dollars ($1,932,000) (the "City Loan") to the Developer to finance the development of a one hundred sixty eight (168)-unit affordable apartment complex (the "Development") on certain real property in the City of Carlsbad owned by the Developer and more particularly described in Exhibit A attached to and incorporated herein (the "Property"). Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Loan Agreement. 2. The City Loan consists of Housing Trust Fund monies. 3. Through this Agreement the Agency is imposing occupancy and affordability restrictions on the Development in order to meet replacement housing requirements applicable to the Redevelopment Area pursuant to Health and Safety Code Section 33413(a). 4. The Agency also intends to utilize the Development to obtain affordable housing production credits for the Agency pursuant to Health and Safety Code Section 33413(b)(2)(A) as newly constructed units located outside of the Redevelopment Area and available at affordable housing cost to very low income households, lower-income households, and moderate income 1010\18\235364.5 9916 households. Such units are required to remain affordable to such households for fifty-five (55) years. This Agreement is also intended to implement this requirement. 5. The City has agreed to provide the City Loan to the Developer on the condition that the Development be maintained and operated in accordance with Health and Safety Sections 33334.2 et seq.. 33413(a) and 33413(b)(2)(A), and in accordance with additional restrictions concerning affordability, operation, and maintenance of the Development, as specified in this Agreement and the Loan Agreement. 6. In consideration of receipt of the City Loan, the Developer has further agreed to observe all the terms and conditions set forth below. 7. In order to ensure that the entire Development will be used and operated in accordance with these conditions and restrictions, the Agency, the City, and the Developer wish to enter into this Agreement. THEREFORE, the Agency, the City, and the Developer hereby agree as follows: ARTICLE 1. DEFINITIONS Section 1.1 Definitions. When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1. (a) "Actual Household Size" shall mean the actual number of persons in the applicable household. (b) "Adjusted Income" shall mean the total anticipated annual income of all persons in a household, as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar method of calculation of adjusted income. In the event that no such program exists, the Agency shall provide the Owner with a reasonably similar method of calculation of adjusted income as provided in said Section 6914. (c) "Agency" shall mean the Carlsbad Redevelopment Agency, a public body, corporate and politic. (d) "Agreement" shall mean this Regulatory Agreement and Declaration of Restrictive Covenants. (e) "Agreement Date" shall mean the date of this Agreement as set forth above. 1010\18\235364.5 9917 (f) "Assumed Household Size" shall have the meaning set forth in Section 2.2(d). The definition is utilized to calculate affordable rent and is not intended to be a limit on the number of persons occupying a unit. (g) "City" shall mean the City of Carlsbad, a municipal corporation. (h) "City Loan" shall mean the funds loaned to the Developer by the City pursuant to the Loan Agreement. (i) "Deed of Trust" shall mean the deed of trust of even date herewith in favor of the City on the Developer's fee interest in the Property which secures repayment of the City Loan and the performance of the Loan Agreement. (j) "Developer" shall mean CIC La Costa, L.P., a California limited partnership, and its permitted successors and assigns. (k) "Development" shall mean the Property and the one hundred sixty-eight (168) residential units to be constructed on the Property, as well as any additional improvements, and all landscaping, roads and parking spaces existing thereon, as the same may from time to time exist. (1) "Housing Trust Fund" shall mean the City's Housing Trust Fund. (m) "Loan Agreement" shall mean that certain Loan Agreement dated concurrently herewith by and between the City and the Developer. (n) "Lower Income Household" shall mean a household with an Adjusted Income that does not exceed the qualifying limits for lower income households, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development. (o) "Lower Income Units" shall mean any of the Units which, pursuant to Section 2.1 below, are required to be occupied by Lower Income Households. (p) "Median Income" shall mean the median gross yearly income, adjusted for Actual Household Size or Assumed Household Size as specified herein, in the County of San Diego, California, as published from time to time by the United States Department of Housing and Urban Development ("HUD") and the State of California. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the Agency or the City shall provide the Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD and the State. 1010\18\235364.5 c 9918 (q) "Other Income Household" shall mean a household with an Adjusted Income which does not exceed ninety percent (90%) of Median Income, adjusted for Actual Household Size. (r) "Other Income Units" shall mean the Units which, pursuant to Section 2.1 below, are required to be occupied by Other Households. (s) "Property" shall mean the real property described in Exhibit A attached hereto and incorporated herein. (t) "Redevelopment Area" shall mean, collectively, the Carlsbad Village Redevelopment Project Area and the South Carlsbad Coastal Redevelopment Area, as may be amended from time to time. (u) "Rent" shall mean the total of monthly payments by the Tenant of a Unit for the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by the Developer which are required of all Tenants, other than security deposits; an allowance for the cost of an adequate level of service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service or cable TV; and any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than the Developer, and paid by the Tenant. (v) "Tenant" shall mean a household legally occupying a Unit pursuant to a valid lease with the Developer. (w) "Term" shall mean the term of this Agreement, which shall commence on the Agreement Date and shall continue for fifty-five (55) years. (x) "Unit(s)" shall mean one (1) or all of the one hundred sixty-eight (168) rental units to be constructed on the Property. (y) "Very Low Income Household" shall mean a household with an Adjusted Income that does not exceed the qualifying limits for very low income households, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development. (z) "Very Low Income Rent" shall mean the maximum allowable rent for a Very Low Income Unit pursuant to Section 2.2(a) below. (aa) "Very Low Income Units" shall mean any of the Units which, pursuant to Section 2.1 below, are required to be occupied by Very Low Income Households. 1010\18\235364.5 9919 ARTICLE 2. AFFORD ABILITY AND OCCUPANCY COVENANTS Section 2.1 Occupancy Requirements. The Developer shall regulate the use and occupancy of the Units in the following manner: One Bedroom Two Bedroom Three Bedroom Total Very Low 16 16 19 51 Lower 10 11 10 31 Other Income 10 33 43 86 Total 36 60 72 168 Section 2.2 Allowable Rent. (a) Very Low Income Rent. Subject to the provisions of Section 2.3 below, the Rent charged to Tenants of the Very Low Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of Median Income, adjusted for Assumed Household Size. (b) Lower Income Rent. Subject to the provisions of Section 2.3 below, the Rent charged to Tenants of the Lower Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Median Income, adjusted for Assumed Household Size. (c) Other Income Rent. Subject to the provisions of Section 2.3 below, the Rent charged to Tenants of the Other Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of ninety percent (90%) of Median Income, adjusted for Assumed Household Size. (d) Assumed Household Size. In calculating the allowable Rent for the Units, the following Assumed Household Sizes shall be utilized (except that if any federal statutes or regulations require use of alternate household size assumptions in calculating rents, such federally-mandated household size assumptions shall be used instead of the assumptions provided below): Number of Bedrooms One Two Three Assumed Household Size 2 3 4 (e) Approval of Rents for Units. Initial rents for all Units shall be approved by the Agency and the City prior to occupancy. All rent increases for all Units shall also be submitted to the Agency and the City for approval not less than thirty (30) days before notice is 1010\18\235364.5 c o 9920 given to the affected Tenant and shall be imposed only if in compliance with this Agreement. The Agency and the City shall provide the Developer with a schedule of maximum permissible rents for the Units annually. Section 2.3 Increased Income of Tenants. (a) Increased Income Over Very Low Income. In the event, upon recertification of a Tenant's household's income, the Developer determines that a former Very Low Income Household has an Adjusted Income that exceeds the qualifying income for a Very Low Income Household, but has an Adjusted Income not exceeding the qualifying limit for a Lower Income Household, upon expiration of the Tenant's lease, and sixty (60) days' written notice to the Tenant, the Rent may be increased to one-twelfth (1712th) of thirty percent (30%) of sixty percent (60%) of Median Income, and the Owner shall rent the next available Unit to Very Low Income Household to comply with the requirements of Section 2.1 above. (b) Increased Income Over Lower Income. In the event that, following recertification of a Tenant's income, the Developer determines that a former Very Low Income Household, or Lower Income Household has an Adjusted Income that exceeds the qualifying limit for a Lower Income Household but does not exceed ninety percent (90%) of Median Income, adjusted for Actual Household Size, then, upon expiration of the Tenant's lease and sixty (60) days' written notice to the Tenant, such household's Unit shall be considered an Other Unit, and the Rent may be increased to one-twelfth (1712th) of thirty percent (30%) of ninety percent (90%) of Median Income, and the Developer shall rent the next available Unit to or Very Low Income Household or Lower Income Household to comply with the requirements of Section 2.1 above. (c) Increased Income Over 90% of Median Income. If, upon recertification of a Tenant's income, the Developer determines that a Tenant has an Adjusted Income exceeding ninety percent (90%) of Median Income, adjusted for Actual Household Size, such Tenant shall be permitted to continue to occupy the Unit, and, upon expiration of the Tenant's lease, and sixty (60) days' written notice to the Tenant, the Rent may be increased to one-twelfth (1712th) of thirty percent (30%) of actual Adjusted Income, and the Unit shall continue to be classified as an Other Unit until the Tenant vacates the Unit at which time the Unit shall be re-rented to an income- eligible household to meet the requirements of Section 2.1. (d) Termination of Occupancy. Upon termination of occupancy of a Unit by a Tenant, such Unit shall be deemed to be continuously occupied by a household of the same income level (e.g., Very Low Income Household, Lower Income Household, or Other Income Household) as the income level of the vacating Tenant, until such Unit is reoccupied, at which time the income character of the Unit (e.g., Very Low Income Household, Lower Income Household, or Other Income Household) shall be redetermined. Section 2.4 Tax Credit Rules. To the extent the pro visions of this Agreement, regarding Adjusted Income, assumed household size or increased income of Tenants, conflicts with requirements applicable to any Units regulated by a low income housing tax credit regulatory agreement, such that the Developer cannot comply with both the tax credit 1010\18\235364.5 "**! 9921 requirements and the requirements of this Agreement, the Developer shall so notify the Agency and may comply with the tax credit requirements regarding Adjusted Income, assumed household size or increased income in lieu of the requirements of this Agreement provided that the Developer shall, at all times during the Term, comply with the requirements of Section 2.1 and Section 2.2. ARTICLES. INCOME CERTIFICATION AND REPORTING Section 3.1 Income Certification. The Developer shall obtain, complete and maintain on file, immediately prior to initial occupancy and annually thereafter, income certifications from each Tenant renting any of the Units (excluding the manager's Unit). The Developer shall make a good faith effort to verify that the income provided by an applicant or occupying household in an income certification is accurate by taking one or more of the following steps as a part of the verification process: (1) obtain a pay stub for the most recent pay period; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency or similar search; (4) obtain an income verification form from the applicant's current employer; (5) 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 (6) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. Copies of tenant income certifications shall be available to the Agency and the City upon request. Section 3.2 Annual Report to the Agency and City. The Developer shall submit to the Agency and the City (a) not later than the ninetieth (90th) day after the close of each calendar year, or such other date as may reasonably be requested by the Agency and City, a statistical report, including income and rent data for all Units covered by this Agreement, setting forth the information called for therein, and (b) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the Agency or the City in order to comply with reporting requirements of the State of California, the City, and/or the Agency. Section 3.3 Additional Information. The Developer shall provide any additional information reasonably requested by the Agency or the City. The Agency and the City shall have the right to examine and make copies of all books, records or other documents of the Developer which pertain to the Development. Section 3.4 Records. The Developer shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the Agency and the City to inspect records, including records pertaining to income and household size of Tenants. All 1010\18\235364.5 9922 Tenant lists, applications and waiting lists relating to the Development shall at all times be kept separate and identifiable from any other business of the Developer and shall be maintained as required by the Agency, in a reasonable condition for proper audit and subject to examination during business hours by representatives of the Agency and the City. The Developer shall retain copies of all materials obtained or produced with respect to occupancy of the Units for a period of at least five (5) years. Section 3.5 On-site Inspection. The Agency and the City shall have the right to perform an on-site inspection of the Development at least one (1) time per year. The Developer agrees to cooperate in such inspection. If the Agency or the City desires to inspect the interior of the Units, the Agency or the City shall give Developer sufficient notice to allow the Developer to give seventy-two (72) hours notice to residents. Such right to annually inspect the Development shall be addition to the City's right to inspect the Development in accordance with the City's municipal code as may be amended from time to time. ARTICLE 4. OPERATION OF THE DEVELOPMENT Section 4.1 Residential Use. The Development shall be operated only for residential use. No part of the Development shall be operated as transient housing. Section 4.2 Compliance with Loan Agreement. The Developer shall comply with all the terms and provisions of the Loan Agreement. Section 4.3 Taxes and Assessments. The Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it, Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. The Developer shall not apply for a property tax exemption for the Property under any provision of law, except pursuant to Revenue and Taxation Section 214(g), without the Agency's and the City's prior written consent. 1010\18\235364.5 /**» . 9923 Section 4.4 Preference to Displacees. The Developer shall give a preference in the rental of any Units to eligible households displaced by activity of the Agency or the City upon receiving a written request of the Agency or the City regarding such displacement. ARTICLE 5. PROPERTY MANAGEMENT AND MAINTENANCE Section 5.1 Management Responsibilities. The Developer is responsible for all management functions with respect to the Development, including without limitation the selection of Tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. Neither the City nor the Agency shall have responsibility over management of the Development. The Developer shall retain a professional property management company approved by the Agency and the City in their reasonable discretion to perform its management duties hereunder as set forth below. A resident manager shall also be required. Section 5.2 Management Agent. The Development shall at all times be managed by an experienced management agent reasonably acceptable to the Agency and the City, with demonstrated ability to operate residential facilities like the Development in a manner that will provide decent, safe, and sanitary housing (as approved, the "Management Agent"). The City and the Agency hereby approve CIC Management, Inc., as the initial Management Agent. The Developer shall submit for the Agency's (and the City's) approval the identity of any other proposed Management Agent. The Developer shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the Agency and the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the Agency and the City shall approve the proposed Management Agent by notifying the Developer in writing. If the proposed Management Agent is disapproved by the Agency and the City, the disapproval shall state with reasonable specificity the basis for disapproval. Thereafter, the Developer shall submit a different proposed Management Agent, and submit such additional information about the background, experience and financial condition of the proposed Management Agent as is reasonably necessary for the Agency and the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. Only upon the written approval of the Agency and the City of the Developer's proposed Management Agent shall constitute the Developer's compliance with this Section. 1010\18\235364.5 9924 Section 5.3 Periodic Performance Review. The Agency and the City reserve the right to conduct an annual (or more frequently, if deemed necessary by the Agency and the City) review of the management practices and financial status of the Development, including the performance of the Management Agent. The purpose of each periodic review will be to enable the Agency and the City to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. The Developer shall cooperate with the Agency and the City in such reviews. Section 5.4 Replacement of Management Agent. If, as a result of a periodic review, the Agency and the City determine in their reasonable judgment that the Development is not being operated and managed in accordance with any of the material requirements and standards of this Agreement, the Agency and the City shall deliver notice to Developer of their intention to cause replacement of the Management Agent, including the reasons therefor. Within fifteen (15) days after receipt by Developer of such written notice, Agency and City staff and the Developer shall meet in good faith to consider methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent. If, after such meeting, Agency and City staff recommend in writing the replacement of the Management Agent, Developer shall promptly dismiss the then Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a Management Agent set forth in Section 5.2 above and approved by the Agency and the City pursuant to Section 5.2 above. Any contract for the operation or management of the Development entered into by Developer shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute default under this Agreement, and the Agency and the City may enforce this provision through legal proceedings as specified in Section 6.8. Section 5.5 Approval of Management Policies. The Developer shall submit its written management policies with respect to the Development to the Agency and the City for their review, and shall amend such policies in any way necessary to ensure that such policies comply with the provisions of this Agreement. Section 5.6 Property Maintenance. The Developer agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, on the Property in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials. 101010\18\235364.5 c o 9925 The City and the Agency place prime importance on quality maintenance to protect their investment and to ensure that all Agency and City-assisted affordable housing projects within the City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to the City and the Agency assuming the Developer agrees to provide all necessary improvements to assure the Development is maintained in good condition. The Developer shall make all repairs and replacements necessary to keep the improvements in good condition and repair. In the event that the Developer breaches any of the covenants contained in this section and such default continues for a period often (10) days after written notice from the City or the Agency with respect to graffiti, debris, and waste material, or thirty (30) days after written notice with respect to general maintenance, landscaping and building improvements, (and subject to any stricter requirements included in any applicable City ordinance) then the City or the Agency, in addition to whatever other remedy each may have at law or in equity, shall have the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City and the Agency shall be permitted (but are not required) to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the reasonable expenditures arising from such acts and work of protection, maintenance, and preservation by the City and the Agency and/or costs of such cure, including an administrative charge equal to fifteen percent (15%) of such expenditures, which amount shall be promptly paid by the Developer to the City and the Agency upon demand. ARTICLE 6. MISCELLANEOUS Section 6.1 Lease Provisions. The Developer shall use a form of Tenant lease approved by the Agency and the City. The form of Tenant lease shall also comply with all requirements of this Agreement, and the Loan Agreement, and shall, among other matters: (a) provide for termination of the lease and consent by the Tenant to immediate eviction for failure: (1) to provide any information required under this Agreement or reasonably requested by the Developer to establish or recertify the Tenant's qualification, or the qualification of the Tenant's household, for occupancy in the Development in accordance with the standards set forth in this Agreement, or (2) to qualify as a Very Low Income Household or Lower Income Household as a result of any material misrepresentation made by such Tenant with respect to the income computation or certification; and (b) be for an initial term of not less than one (1) year, and provide for no Rent increase during such year. After the initial year of tenancy, the lease may be month to month by mutual agreement of the Developer and the Tenant, however the Rent may not be raised more often than once every twelve (12) months. The Developer will provide each Tenant with at least 1010\18\235364.5 o 9926 sixty (60) days' written notice of any increase in Rent applicable to such Tenant, and with such further notice as may be required by Section 2.3 above. Section 6.2 Nondiscrimination. All of the Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. The Developer shall not give preference to any particular class or group of persons in renting the Units, except to the extent that the Units are required to be leased to Very Low Income Households and Lower Income Households. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, source of income (e.g., SSI), age, ancestry, or disability, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall the Developer or any person claiming under or through the Developer, 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 of any Unit or in connection with the employment of persons for the construction, operation and management of any Unit. All deeds, leases or contracts made or entered into by Developer as to the Units or the Development or portion thereof, shall contain covenants concerning discrimination as prescribed by the Loan Agreement. Section 6.3 Section 8 Certificate Holders. The Developer will accept as Tenants, on the same basis as all other prospective Tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act of 1937, as amended, or its successor. The Developer shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective Tenants, nor shall the Developer apply or permit the application of management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Tenants. Section 6.4 Term. The provisions of this Agreement shall apply to the Property for the entire Term. This Agreement shall bind any successor, heir or assign of the Developer, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by the Agency and the City. The City makes the City Loan on the condition, and in consideration of, this provision, and would not do so otherwise. Section 6.5 Compliance with Loan Agreement and Program Requirements. The Developer's actions with respect to the Property shall at all times be in full conformity with: (i) all requirements of the Loan Agreement; (ii) all requirements imposed on projects assisted with the Agency monies under California Health and Safety Code Section 1010\18\235364.5 9927 33334.2 et seq., as may be amended from time to time; and (iii) all requirements of the Housing Trust Fund as may be amended from time to time. Section 6.6 Notice of Expiration of Term. At least six (6) months prior to the expiration of the Term the Developer shall provide by first-class mail, postage prepaid, a notice to all Tenants in the Units containing (a) the anticipated date of the expiration of the Term, (b) any anticipated Rent increase upon the expiration of the Term, (c) a statement that a copy of such notice will be sent to the Agency and the City, and (d) a statement that a public hearing may be held by the Agency and the City on the issue and that the Tenant will receive notice of the hearing at least fifteen (15) days in advance of any such hearing. The Developer shall also file a copy of the above-described notice with the Agency and the City. Section 6.7 Covenants to Run With the Land. The City, the Agency, and the Developer hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Property, provided, however, that on the expiration of the Term of this Agreement said covenants and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof, shall be held conclusively to have been executed, delivered and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless the Agency expressly releases such conveyed portion of the Property from the requirements of this Agreement. Section 6.8 Default by the Developer; Enforcement by the Agency or City. If the Developer fails to perform any obligation under this Agreement (including but not limited to the failure to rent the Units as set forth in Article 2), and fails to cure the default within thirty (30) days after the Agency or the City have notified the Developer, and the Developer's investor limited partner, in writing of the default or, if the default cannot be cured within thirty (30) days, fails to commence to cure within thirty (30) days and thereafter diligently pursue such cure and complete such cure within ninety (90) days, or such longer period as approved by the Agency or the City in writing, the Agency or the City shall have the right to enforce this Agreement by any or all of the following actions, or any other remedy provided by law: (a) Calling the City Loan. The City may declare a default under the Loan Agreement, and declare the City Loan due and payable and proceed with foreclosure under the Deed of Trust. (b) Action to Compel Performance or for Damages. The City may bring an action at law or in equity to compel the Developer's performance of its obligations under this Agreement, and/or for damages. 1010\18\235364.5 9928 (c) Remedies Provided Under Loan Agreement. The City may exercise any other remedy provided under the Loan Agreement. (d) Agency or City Sublease of Units. If and to the extent necessary to correct any Developer default, the Developer hereby grants to the Agency and the City the option to lease, from time to time, Units in the Development for a rental of One Dollar ($1.00) per Unit per year for the purpose of subleasing such units to comply with Article 2 of this Agreement. Upon the request of the City or the Agency following such default by the Developer, the Developer hereby agrees to execute such documents as reasonably requested by the City or the Agency, as applicable, including but not limited to, rental agreement(s) in a form prepared by the City, to implement the sublease of the Unit(s). Any rents received by the Agency or the City, as applicable, under any such sublease shall be paid to the Developer after the Agency, or the City, as applicable, has been reimbursed for any expenses incurred in connection with such sublease. Section 6.9 Recording and Filing. The Agency, the City, and the Developer shall cause this Agreement, and all amendments and supplements to it, to be recorded in the Official Records of the County of San Diego. Section 6.10 Governing Law. This Agreement shall be governed by the laws of the State of California. Section 6.11 Waiver of Requirements. Any of the requirements of this Agreement may be expressly waived by the Agency or the City in writing, but no waiver by the Agency or the City of any requirement of this Agreement shall, or shall be deemed to, extend to or affect any other provision of this Agreement. Section 6.12 Amendments. This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title, and duly recorded in the real property records of the County of San Diego. Section 6.13 Notices. Any notice requirement set forth herein shall be deemed to be satisfied one (1) day after mailing of the notice by reputable overnight delivery service or three (3) days after mailing of the notice by first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows: 1010\18\235364.5 Developer: and a copy to: and a copy to: Agency: City: c CIC La Costa, L.P. 725 South Coast Hwy 101 Encinitas, CA 92024 Attn: James J. Schmid MMA La Costa, LLC c/o MMA Financial TC Corporation 101 Arch Street Boston, MA 02110 Attn: Asset Management and Legal Department David E. Raderman, Esq. Gallagher, Evelius & Jones LLP 218 N. Charles Street, Suite 400 Baltimore, MD 21201 Carlsbad Redevelopment Agency 2965 Roosevelt St., Suite B Carlsbad, CA 92008 Attn: Executive Director City of Carlsbad 2965 Roosevelt St., Suite B Carlsbad, CA 92008 Attn: City Manager 9929 Such addresses may be changed by notice to the other party given in the same manner as provided above. Section 6.14 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby. Section 6.15 Subordination. The rights and remedies of the City and the Agency under this Agreement shall be subject in all respects to the terms and conditions of that certain subordination agreement by and among the City, the Developer and The Bank of New York, as trustee, recorded concurrently herewith. 1010\18\235364.5 15 9930 Section 6.16 Multiple Originals: Counterparts. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 1010\18\235364.5 9931 IN WITNESS WHEREOF, the Agency, the City and the Developer have executed this Agreement by duly authorized representatives, as of the last date written below. Developer: CIC LA COSTA, L.P., a California limited partnership By: DDC La Costa, LLC, a California limited liability company, its Co-General Partner By: Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner By: Name: Its: Signatures Continue on Following Page 1010\18\235364.5 17 c 9932 Agency: CARLSBAD RED, body corporate AGENCY, a public IOTT. DEPUTY flTTY MANAHF.R CITY OF C By: Its: APPROVED AS TO FORM: . ELLIOTT DEPTTTY CITY MANAHF.1? By R^nal^Ball, City Attorney By: 1010\18\235364.5 18 STATE OF CALIFORNIA COUNTY OF b On Notary Public, personally appeared , 20 Jbefore me, M (titlk 9933 who proved to me on the basis of satisfactory evidence to be the person(s)w^hose name(s) (s^tre-subscribed to the_within instrument and acknowledged to me that^g^hc/they executed the same in^ij^/hcf/theirauthorized capacity(ies), and that bXmsphef/tkeif- signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. XSeal) STATE OF CALIFORNIA COUNTY On J S range o ^tjy rvyanmB(pte5Mc MICHELLE CASSEL L Commission #1488413 I Notary Public - California f Orange County f .B0esMcy8.2008CVUlE) . 2obefore me, Notary Public, personally appeared • ->f who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) ii^be subscribed to the, within instrument and acknowledged to me t executed the same in(hi£)'hef!/theif authorized capacity(ies), and that by signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA ) ) COUNTY OF ) MICHELLE CASSEL L Commission #1488413 I Notary Public - California \ Orange County f I010\18\538638.1 9934 STATE OF CALIFORNIA COUNTY OF Son! On iTonP. |0 Public, personally appeared ) ) . ) [before me,_, Notary PU.rrH- , who proved to me on the basis of satisfactory evidence to be the person($[ whose name($| i subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacityftps£ and that by his/her/their signature(jSf on the instrument the person^, or the entity upon behalf of which the person(^acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WiTNESSjnyhand and official seal. Signature "f^XT ^-<ri (Seal)L CRESCENTI Commmion # 1661400 Notary PuWte - Cdittxrto Son Otogo County MyCorrm&E*a«Mav24.2010 1010\18\538120.1 9935 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of Sqn Dat before me, Here Insert Name anp Title of the Officer personally appeared ricuT|PS \-. f"lliCn-r Name(s) of Signer(s) L CRESCCNTI Commtakxi # 1661400 Notary Pubic - CoKOmta Son Otago County who proved to me on the basis of satisfactory evidence to be the person^, whose name^) is/afe subscribed to the within instrument and acknowledged to me that he/sho/thoy executed the same in his/hefcfthetr authorized capacity(j^s), and that by his/he&ftheif- signature^ on the instrument the person^, or the entity upon behalf of which the person^ acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Place Notary Seal Above Signature OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. DescriptiorTetAttached Document Title or Type of Docum Document Date: Signer(s) Other Than Named Above: ^^^ Number of Pages:. SigrjerSvjName: Individua D Corporate Officer.— Title(s): D Partner — D Limite D Attorney in Fact D Trustee D Guardian or Conservator D Other: Tap of thumb here Top of thumb here Signer Is Representing:Signer Is Representing: Capacity(ies) Claimed by Signer(s) Signer's Name: D Individual D Corporate Officer — Title(s): D Partner — D Limited D General Attorney in Fact Trustee Guardian or Conservator Other: ©2007 National Notary Association• 9350 De Soto Ave., P.O. Box 2402 • Chatsworth, CA 91313-2402• www.NationalNotary.org Item #5907 Reorder:Call Toll-Free 1 -800-876-6827 9936EXHIBIT A DESCRIPTION OF PROPERTY Lots 207, 208 and 209 of City of Carlsbad Tract99-04-03 Villages at La Costa, La Costa Oaks North, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 15318, filed in the Office of the County Recorder of San Diego County, April 18, 2006. APN: 223-810-14; 223-810-15 and 223-810-16 1010\18\538810.2 9937 EXHIBIT "B" Form of Promissory Note (Hunters Pointe) 3303143MJH 006252-0250 version 2 PROMISSORY Null (Hunters'Poimc) 9938 Carlsbad, California 00 V FOR VAI.H-: KI.CI.IVJ-IX C1C La Costa. L.P.. a California limited partnership • "Bummer"), promises to pay to the Cits of Carlsbad, a municipal corporation (the "Cit\"j. or order, the principal sum of up to One Million Nine Hundred Thirty |'\vo Thousand Dollars -;S1 .l).?2.000), or M> much as is disbursed to Borrower, plus interest thereon pursuant to Section 2 be km. !. IBorrow..c.r'.s ()hljgation. This promissory note (the "Note"} evidences the Borrower's obHt'ation to pay the City the principal amount of up to One Million Nine Hundred Thiru T\\o Thousand Dollars ($1,932,000). or so much a* is disbursed, lor the funds loaned to ihc Borrow-er b\ City so finance the development of the Proper!) pursuant to the Loan \-jreenieni between the Bummer and the City, dated ___JPlV__ , 200 S" (the "Agreement"). Ail cnpiiuli/ed terms not otherwise defined in this Note shall hase the meanings scl knlli in the Aurecmcnt. -- Lobyv^i- The oulstandiny principal balance of this' Note shall bear .simple interest at ihe rule of three percent (>%) per annum from the dale of disbursement until paid; provided, hmsever. if a Default occurs, interest on ;he principal balance .shall begin to accrue, as of the date of Default < following expiration of applicable notice and cure periods}, and continuing until such time as the Loan funds arc repaid in full or the Default is cured, at the default Kite of the lesser often percent (10%). compounded annually, or the highest rate pennhlcJ b\ km. 3. Termlandj^cjpj^^ 'I he term of this Note shall Ci':r.:iu-nce \siih the date of tin's Note and shall expire fifty-five (55) years thereafter. This Noic shall be due and jxnahle as sef forth in Section 2.6 of the Agreement. Repayment of this Note shall be nonrecourse to the Borrower pursuant to Section 2,8 of the Agreement and subject lo the execplions set forth therein. 4. No A<sumpUon. This; Note shall not be assumable by the successors and assigns of Borrower \\ithout the prior written consent of the City, or as set forth in Article 4 of the Agreement, ?- Security. This Note is secured by a Deed ofTrust uith Assignment of Rv-tb ar.t! Seeurii\ Aureetr.cnl (the "Deed ofTrust") ofcvendatc herewith, wherein the Borro'.scr is Trustor aisd ihe Citv is the Beneficiary, covering the Borrower's fee interest in the Properly. 9939 6. Terms of Payment, (a) All payments due under this Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. (b) All payments on this Note shall be paid to the City at City of Carlsbad, 2%5 Roosevelt Street, Suite B, Carlsbad, CA 92008 or to such other place as the City may from time to (imc designate in writing. (c) AM payments on this Note shall be without expense to the City, and the Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of the City, incurred in connection with the payment of this Note and the release of any security hereof, (d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of the Borrower under this Note, if, for any reason whatsoever, the payment of any sums by the Borrower pursuant to the terms of this Note would result in ihc payment of interest which would exceed the amount that the City may legally charge under the laws of the State of California, then the amount by which payments exceeds the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no evens shall the Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate. 7, Default- (a) Any of the following shall constitute an Event of Default under this Note: (i) Any failure to pay, in ftill, any payment required under this Note when due following written notice by City of such failure and thirty (30) days opportunity to cure; (ii) Any failure in the performance by the Borrower of any term, condition, provision or covenant set forth in this Note subject to the notice and cure period set forth in Section 8.4 of the Agreement; and (in) The occurrence of any Default under the Agreement, the Deed of Trust or the Regulatory Agreement (the "Loan Documents"), or other instrument securing the obligations of the Borrower under this Note or under any other promissory notes hereafter issued by the Borrower to the City pursuant to the Agreement or the Deed of Trust, subject to notice and cure periods, if any, set forth therein. (b) Upon the occurrence of such an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note and the Deed of Trust shall at the option of the City become 9940 immediately due and payable upon written notice by the City to the Borrower without further demand. (c) The failure to exercise the remedy sei forth in Subsection ?(b) above or an> other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by City hereof of any payment v\hich is less than the total of all amounts due and payable at the lime of .such payment j,hall nut constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of the City, except as and to the extent otherwise provided by law, (d) lite rights and remedies of the City under this Note shall be subject in all respects to the terras and conditions of that certain subordination agreement by and among the City, the Borrower and The Bank of New York, as trustee, executed concurrently herewith, 8. Waivers. (a) The Borrower hereby waives diligence, presentment, protest and demand, and no? ice of protest, notice of demand, and notice of dishonor of this Note, The Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that the City may accept further security or release any security for this Note, all without in any way affecting the liability of the Borrower, (b) No extension of time for payment of this Note or any installment hereof made by agreement by the Cily with any person now or hereafter liable for payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note, either in whole or in part. (c) The obligations of the Borrower under this Note shall be absolute and the Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever, 9. Miscellaneous Provisions. (a) All notices to the City or the Borrower shall be given in the manner and at the addresses set forth in the Agreement, or to such addresses as the City and the Borrower may hereinafter designate, (b) The Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by the City in the enforcement of the provision of this Note, regardless of whether suit is filed to seek enforcement, HHO'>,01'%23S379,4 9941 (c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought, (d) This Note shall be governed by and construed in accordance with the laws ol'ihe State of California. (e) The times for the performance of any obi igations hereunder shall be strictly construed, time being of the essence, (f) This document, together with the Loan Documents, contains the entire agreement between the parties as to the Loan. It may not be modified except upon written consent of the parties. CIC LA COSTA,. L.P., a California Kmi partnership By: DDC 1 a Costa. LLC, a California limited ilability company, its Co-General Partner Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner By: Its: 9942 STATE OF CALIFORNIA (-01. N'l V OF ' (-->1{ ,,/J.iiU.- ....-J'i. ... • ?•*''& before me, /'/•'{ /__ N'oiurv Public, personally appeared •-^{'!•'}'• f^\ ...-;, who proved to me on the basis of satisfactory evidence In he the per»>n(s) whose name(s) f'is/are-subjicribed to the within instrument and acknowledged to me ihatfji^sft executed the *atne in^fis*rl«stUteH>-auihori/cd capacities), and that bv lU^lwF hitir.aiurels) on the instrument the person(s), or the entity upon behalf of which the persnn{s} acted, executed the instrument. i certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. \\ I'l \hSS inv hand and otSleial scttL (Seal) STATE OF CALIFORNIA i Ot'M'Y OF 4i// '' -)^t t1 UJ.;/ /- .204 before me. \olai> I'-jblic, per.sunally appeared ^J/i^A.' MSCHEJ.il CASSCt mff Notaiy CsHHwma f Couftty %V]K> proveii to me on the basis of satisfactory evidence to be the persons) whose name(s) iv'are stiHsenbed to the H uhin instrument and acknowledged to me that^iC/s exeeuietl the same in |HS/hertheir authorixed capacity(ies), and that by |5l?w1 sa',i'iaiure(si on the mstrwment the pcrson(s>). or the entity upon behalf of which the perM>n(s) ack'd. executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California thai the foregoing paragraph is true and correct. \\ H NliSS inv hand and official seal. STATE OF CALIFORNIA COUNTY OF MfCHItlE CASSgl # 1795) 14 f^ufeHc - CoHtornio I ton Ot*« Counly EXHIBIT A ^' DESCRIPTION OF PROPERTY Lois 207, 208 and 209 of City of Carlsbad Traet99~04-03 Villages at La Costa. La Costa Oaks North, in the City of Carlsbad, Couniy of San Diego, Stale of California, according to Map thereof No, 15318, filed in the Office of the County Recorder of San Diego County. April 18. APN: 225-8HM4; 223-810-15 a«d 223-810-16 F '".'CORDED AT :;^-; R^Gi/C^s W CHICAGO TiTLE COMRWY SUBDIVISION DEFT. RECORDING REQUESTED BY, AND WHEN RECORDED MAIL TO', City of Carlsbad City Clerk's Office 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attn: City Clerk No fee for recording pursuant to Government Code Section 27383 10009 Fll 3P Nll- DGC# 2008-0445222 AUG19,2008 4:13 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE GREGORY J. SMITH, COUNTY RECORDER FEES: 0.00 DA: 1 PAGES: REQUEST FOR NOTICE UNDER SECTION 2924b OF CALIFORNIA CIVIL CODE IN ACCORDANCE with Section 2924b of the California Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under that certain Deed of Trust recorded as Instrument No. 2006-0414840 on June 12, 2006, in the Official Records of San Diego County California encumbering the fee interest in the real property described in Exhibit A attached hereto, executed by CIC La Costa, L.P., as trustor, in which The Bank of New York, is named as beneficiary, and Chicago Title Company is named as trustee, be mailed to the City Clerk's Office, City of Carlsbad, 1200 Carlsbad Village Drive, Carlsbad, CA 92008, Attn: City Clerk. NOTICE: A copy of any notice of default and of any notice of sale will be sent only to the address contained in this recorded request. If your address changes, a new request must be recorded. Dated:\0 ,2008 City of Garish 1010\18\538I20.1 10010 STATE OF CALIFORNIA COUNTY OF *3ml On Zjorxo. \O Public, personally appeared _T , 20^before me,_, Notary , who proved to me on the basis of satisfactory evidence to be the person(X) whose name^f is/are subscribed to the within instrument and acknowledged to me that he/she/they-executed the same in his/hef/their authorized capacity(J»s£ and that by his/heF/theH^signature^fon the instrument the person^ or the entity upon behalf of which the person(^acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) RMRtCIA L CRESCENH CommUHon # 1661400 Notoy PuMc - Coltttnla San Dtogo County MyConrn ExplmMay 24,2010 1010\18\538120.1 10011 EXHIBIT A DESCRIPTION OF PROPERTY Lots 207, 208 and 209 of City of Carlsbad Tract99-04-03 Villages at La Costa, La Costa Oaks North, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 15318, filed in the Office of the County Recorder of San Diego County, April 18, 2006. APN: 223-810-14; 223-810-15 and 223-810-16 1010\18\538810.2 LOAN AGREEMENT by and between THE CITY OF CARLSBAD and CIC LA COSTA, L.P. (Hunters Pointe Housing Development) ORIGINAL 1010\01\235233.7 TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS AND EXHIBITS 2 Section 1.1 Definitions 2 Section 1.2 Exhibits 5 ARTICLE 2 LOAN PROVISIONS 5 Section 2.1 Loan; Excess Proceeds of Permanent Financing 5 Section 2.2 Interest 6 Section 2.3 Use of Funds 6 Section 2.4 Security 6 Section 2.5 Loan Disbursement 6 Section 2.6 Repayment of the Loan 7 Section 2,7 Reports and Accounting of Residual Receipts 9 Section 2.8 Non-Recourse 10 Section 2.9 Subordination 11 ARTICLE 3 CONSTRUCTION AND OPERATION OF THE DEVELOPMENT 12 Section 3.1 Permits and Approvals , 12 Section 3.2 Plans and Specifications 12 Section 3.3 Commencement of Construction 12 Section 3.4 Completion of Construction 13 Section 3.5 Construction Pursuant to Plans and Laws; Prevailing Wages 13 Section 3.6 Marketing Plan 14 Section 3.7 Relocation 14 Section 3.8 Equal Opportunity 15 Section 3.9 Progress Reports. 15 Section 3.10 Construction Responsibilities 15 Section 3.11 Inspections 15 Section 3.12 Approved Development Budget; Revisions to Budget 15 Section 3.13 Information 16 Section 3.14 Records 16 Section 3.15 Audits 16 Section 3.16 Hazardous Materials 16 Section 3.17 Fees and Taxes 18 Section 3.18 Notice of Litigation 19 Section 3.19 Operation of Development as Affordable Housing 19 Section 3.20 Non-Discrimination 19 Section 3.21 Mandatory Language in All Subsequent Deeds, Leases and Contracts 19 Section 3.22 Insurance Requirements 20 Section 3.23 Developer Fee 22 ARTICLE 4 ASSIGNMENT AND TRANSFERS 22 1010\01\235233.7 TABLE OF CONTENTS (continued) Section 4.1 Definitions. 22 Section 4.2 Purpose of Restrictions on Transfer 22 Section 4.3 Prohibited Transfers 23 Section 4.4 Permitted Transfers Without Prior City Approval 23 Section 4.5 Permitted Transfers With Prior Approval; City Pre-Approved Transfers 23 Section 4.6 Release of the Borrower 24 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BORROWER 24 Section 5.1 Representations and Warranties 24 ARTICLE 6 DEFAULT AND REMEDIES 26 Section 6.1 Events of Default 26 Section 6.2 Remedies 28 Section 6.3 Assignment of Plans, Data and Approvals 28 Section 6.4 Remedies Cumulative 29 ARTICLE 7 GENERAL PROVISIONS 29 Section 7.1 Relationship of Parties 29 Section 7.2 No Claims 29 Section 7.3 Amendments 29 Section 7.4 Entire Understanding of the Parties 30 Section 7.5 Indemnification 30 Section 7.6 Non-Liability of Agency and City Officials, Employees and Agents... 30 Section 7.7 No Third Party Beneficiaries 30 Section 7.8 Action by the City 30 Section 7.9 Waivers 30 Section 7.10 Notices, Demands and Communications 31 Section 7.11 Applicable Law and Venue 32 Section 7.12 Parties Bound 32 Section 7.13 Severability 32 Section 7.14 Force Majeure 32 Section 7.15 Title of Parts and Sections 32 Section 7.16 Subordination 33 Section 7.17 Multiple Originals; Counterpart 33 Exhibit A Legal Description Exhibit B Development Budget 10I0.01V235233.7 LOAN AGREEMENT (Hunters Pointe Housing Development) This Loan Agreement (the "Agreement") is entered into as of June 1, 2006, by and between the City of Carlsbad, a municipal corporation (the "City") and CIC La Costa, L.P., a California limited partnership (the "Borrower"): with reference to the following facts, purposes and intentions. RECITALS A. These Recitals refer to and utilize certain capitalized terms which are defined in Article 1 of this Agreement. The Parties intend to refer to those definitions in connection with the use of capitalized terms in these Recitals. B. The City has established a Housing Trust Fund administered by the City and used for the purpose of providing funding assistance for the development of affordable housing consistent with the policies and programs contained in the Housing Element of the City's General Plan. C. Pursuant to Resolution Number 2005-264, adopted by the City on August 16, 2005, the City committed to make the Loan to the Borrower in an amount not to exceed One Million Nine Hundred Thirty-Two Thousand Dollars ($1,932,000) for the permanent financing of the Development. The Loan funds are Housing Trust Fund monies and are not federal funds or the proceeds of a tax-exempt bond issue. D. As a condition to providing the Loan the City is imposing occupancy and affordability restrictions on the Development, pursuant to the Regulatory Agreement, ensuring that certain units remain affordable to specified income categories of occupants for a specified period. E. The City intends to utilize the Development to obtain affordable housing production credits for the Agency pursuant to Health and Safety Code Section 33413(b)(2)(A) as newly constructed located outside of the Project Area and available at affordable housing cost to very low income, low-income, and moderate income households. Such units are required to remain affordable to such households for not less than the period of the land use controls established in the Redevelopment Plan for the Project Area. This Agreement and the accompanying Regulatory Agreement are also intended to implement this requirement. F. Pursuant to Section 21157.1 of the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) the City has determined that the Final Program Environmental Impact Report for the Villages of La Costa Master Plan (EIF 98-07) dated October 23,2001, and certified by the City on October 23,2001 serves as the environmental documentation for this Agreement. 1010\01\235233.7 NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the Parties agree as follows: ARTICLE 1 DEFINITIONS AND EXHIBITS Section t.l Definitions. The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided: i (a) "Agency" means the Carlsbad Redevelopment Agency, a public body, corporate and politic. (b) "Agreement" means this Loan Agreement. (c) "Approved Development Budget" means the proforma development budget, including sources and uses'of funds, as approved by the City, and attached hereto and incorporated herein as Exhibit B. but which may be amended with the approval of the City as set forth in this Agreement. (d) "Approved Financing" means all of the following funds acquired by the Borrower, or intended to be acquired by the Borrower, and approved by the City for the purpose of financing the Development, in addition to the Loan: (1) Tax credit equity contribution from the Tax Credit Investor in the approximate amount of Nineteen Million Six Hundred Thirty-Seven Thousand Dollars ($19,637,000) (the 'Tax Credit Equity Funds"); (2) State of California Multifamily Housing Program ("MHP") loan funds in an approximate amount of Ten Million Dollars ($10,000,000) (the "MHP Loan") from HCD; (3) Multifamily housing revenue bonds issued by the California Municipal Finance Authority in the approximate amount of Twenty Five Million Dollars ($25,000,000) for the purpose of providing financing for the acquisition and construction of the Development (the "Bond Financing11); and (4) Deferred payment of developer fee to Borrower or its affiliates in the approximate amount of Five Hundred Ninety-Seven Thousand Dollars ($597,000) (the "Deferred Developer Fee Funds"); and (5) A loan from Pacific Southwest Community Development Corporation, in the amount of Five Hundred Thousand Dollars ($500,000). (e) "Borrower" means CIC La Costa, L.P., a California limited partnership. I010\01\235233.7 (f) "Certificate of Occupancy" means the final certificate of occupancy for the Improvements issued by the City. (g) "Chelsea" means Chelsea Investment Corporation, a California corporation. (h) "City" means the City of Carlsbad, a municipal corporation, (i) "City Council" means the City Council of the City. (j) "Control" means (i) direct or indirect management or control of the managing member or members in the case of a limited liability company; (ii) direct or indirect management or control of the managing general partner or general partners in the case of a partnership and (iii) (a) boards of directors that overlap by fifty percent (50%) or more of their directors, or (b) direct or indirect control of a majority of the directors in the case of a corporation. (k) "Deed of Trust" means the deed of trust that will encumber the Development to secure repayment of the Loan. The form of the Deed of Trust shall be provided by the City. (I) "Default" has the meaning set forth in Section 6.1 below, (m) "Development" means the Property and the Improvements. (n) "Excess Proceeds of Permanent Financing" shall mean the portion of the Approved Financing funds that are not required to pay the costs of acquisition and development of the Development (including but not limited to the funding of reserves). Excess Proceeds of Permanent Financing, if any, shall be determined pursuant to the procedure set forth in Section (o) "Hazardous Materials" has the meaning set forth in Section 3.20 below, (p) "Hazardous Materials Claim" has the meaning set forth in Section 3.20 below. (q) "Hazardous Materials Law" has the meaning set forth in Section 3.20 below. (r) "Housing Trust Fund" means the City's Housing Trust Fund as set forth in Title 21, Chapter 21.85 of the Carlsbad Municipal Code, as amended from time to time. (s) "HCD" means the State of California Department of Housing and Community Development. (t) "HUD" means the U.S. Department of Housing and Urban Development. 1010\OI\235233.7 (u) "Improvements11 means the approximately one hundred sixty-eight (168)- unit residential rental facility, to be constructed on the Property, plus appurtenant landscaping and improvements. (v) "Loan" means the amount not to exceed One Million Nine Hundred Thirty-Two Thdusand Dollars ($1,932,000) to be provided by the City to the Borrower pursuant to the Loan Documents. The Loan is more particularly described in Section 2.1. (w) "Loan Documents" means this Agreement, the Note, the Regulatory Agreement, aiid the Deed of Trust. (x) "Note" means the promissory note that will evidence the Borrower's obligation to repay the Loan. The form of the Note shall be provided by the City. (y) "Parties" means the City and the Borrower. (z) "Project Area" means, collectively, the Carlsbad Village Redevelopment Area, as amended from time to time, and the South Carlsbad Coastal Redevelopment Area, as amended from time to time. (aa) "Property" means the real property located in the City of Carlsbad, County of San Diego, State of California, more particularly described in the attached Exhibit A. (bb) "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants between the City and the Borrower associated with the Loan and recorded against the Property. (cc) "Regulatory Term" means the term of the Regulatory Agreement. (dd) "Tax Credits" means the low income housing tax credits established pursuant to Section 42 of the Internal Revenue Code of 1986, as amended, and allocated by TCAC to be obtained by the Borrower to finance the development of the Development. (ee) "Tax Credit Investor" means MMA La Costa, LLC, or an entity under the Control of MMA Financial, LLC, to be admitted to the Borrower as a limited partner, and which shall provide the Tax Credit Equity Funds. (fi) "TCAC" means the California Tax Credit Allocation Committee. (gg) "Term" means the term of the Loan which is fifty-five (55) years from the date of this Agreement. (hh) "Transfer" has the meaning set forth in Section 4.1 below. 10!0\01\235233.7 (ii) "Unit" means one of the approximately one hundred sixty-eight (168) apartment units to be constructed on the Property. Section 1.2 Exhibits. The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference: EXHIBIT A: Legal Description of the Property EXHIBIT B: Approved Development Budget ARTICLE 2 LOAN PROVISIONS Section 2.1 Loan: Excess Proceeds of Permanent Financing. (a) Subject to satisfaction of the conditions set forth in Section 2.5, the City shall lend to the Borrower the Loan in the principal sum not to exceed One Million Nine Hundred Thirty-Two Thousand Dollars ($1,932,000); provided, however in the event the City reasonably determines that the funding of the full amount of One Million Nine Hundred Thirty- Two Thousand Dollars ($1,932,000) will result in Excess Proceeds of Permanent Financing the City shall reduce the amount of the Loan to the extent necessary to eliminate any Excess Proceeds of Permanent Financing. The Borrower's obligation to pay the Loan shall be evidenced by the Note. (b) Excess Proceeds of Permanent Financing. The amount of the Excess Proceeds of Permanent Financing, if any, shall be determined by the Borrower and submitted to the City for approval on the date the Borrower submits the final cost audit for the Development to TCAC. The amount of the Excess Proceeds of Permanent Financing shall be calculated assuming the full funding of all of the Approved Financing set forth in Section 1.1 (d). In the event that any Approved Financing lender (including but not limited to HCD) reduces the amount of the Approved Financing to eliminate Excess Proceeds of Permanent Financing men the City shall cooperate, in good faith, with the Borrower and such Approved Financing lender(s) to determine the amount of the Loan and the Approved Financing to eliminate any Excess Proceeds of Permanent Financing. The Borrower shall also submit to the City any additional documentation sufficient to verify the amount of the Excess Proceeds of Permanent Financing. The City shall approve or disapprove Borrower's determination of the amount of the Excess Proceeds of Permanent Financing in writing within thirty (30) days of the receipt of Borrower's cost audit and supplemental documentation. If Borrower's determination is disapproved by the City, Borrower shall re-submit documentation to the City until the City approval is obtained. 1010\01\235233.7 Section 2.2 Interest. (a) Subject to the provisions of Section 2.2(b) below, the outstanding principal balance of the Loan shall accrue simple interest at the rate of three percent (3%). (b) In the event of a Default, interest on the Loan shall begin to accrue, as of the date of Default and continue until such time as the Loan funds are repaid in full or the Default is cured, at the default rate of the lesser often percent (10%), compounded annually, or the highest rate permitted by law. Section 2.3 Use of Funds. (a) The Loan shall be used for permanent financing for the development of the Property. (b) The Borrower shall not use the Loan for any other purpose without the prior written consent of the City. Section 2.4 Security. The Borrower shall secure its obligation to repay the Loan, as evidenced by the Note, by executing the Deed of Trust, and recording it as a lien against the Borrower's fee interest in the Property in a lien position reasonably acceptable to the City. Section 2.5 Loan Disbursement. The City shall not be obligated to fund any portion of the Loan or take any other action under the Loan Documents unless all of the following conditions precedent are satisfied: (a) There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under the Loan Documents; (b) The Borrower has delivered to the City a copy of a corporate authorizing resolution authorizing the Borrower's execution of the Loan Documents and the transactions contemplated by the Loan Documents; (c) The Borrower has furnished the City with evidence of the insurance coverage meeting the requirements of Section 3.22 below; (d) The Borrower holds fee interest to the Property; (e) The Borrower has executed and delivered to the City this Agreement, the Note, the Deed of Trust and the Regulatory Agreement, and the Deed of Trust and the Regulatory Agreement have been recorded against the Property in the Office of the Recorder of the County of San Diego in a lien position acceptable to the City; I010\OI\235233.7 (f) The Borrower has executed and delivered to the City all documents, instruments, and policies required under the Loan Documents; (g) A title insurer reasonably acceptable to the City is unconditionally and irrevocably committed to issuing an ALTA Lender's Policy of insurance insuring the priority of the Deed of Trust in the amount of the Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the City, and containing such endorsements as the City may reasonably require; (h) The City has received and approved the final plans and specifications for construction of the Development pursuant to Section 3.2, below; (i) The Borrower has obtained the Certificate of Occupancy for the Improvements; (j) The Borrower has obtained lien releases and/or mechanics' lien title insurance endorsements, reasonably acceptable to the City, insuring the City that there are no liens against the Property (other than the liens for the Approved Financing and other easements and encumbrances necessary for the development and operation of the Development as reasonably acceptable to the City); (k) The process to determine if the City funding the amount of One Million Nine Hundred Thirty-Two Thousand Dollars ($1,932,000) will result in Excess Proceeds of Permanent Financing (as more particularly described in Section 2.1(b), above) has been completed, and the City has determined the exact amount of the City Loan to be disbursed to the Borrower; and (1) The Borrower has closed all Approved Financing described in Section 1.1 (d) above for permanent financing. Section 2.6 Repayment of the Loan. The Loan shall be repaid as follows: (a) Term. The Term of the Loan shall commence as of the date of this Agreement and shall expire on the date that is fifty-five (55) years after the date of this Agreement. (b) Annual Repayments. Commencing on May 1 st first occurring after the fiscal year in which the Improvements are completed pursuant to this Agreement, and on each May 1st thereafter throughout the Term of the Loan, the Borrower shall make repayments of the Loan equal to the City Prorata Percentage of the Lender's Share of Residual Receipts calculated for the previous year. The Borrower shall provide the City, by each May 1st following each fiscal year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding fiscal year, the calculation of Annual Operating Expenses, Gross Revenue, and Residual Receipts (including, the Borrower's Share of Residual Receipts, the total 1010\01\23S233.7 Lenders' Share of Residual Receipts, the City Prorata Percentage, and the MHP Prorata Percentage), the status of all reserve funds, including without limitation, an annual audited financial statement for the Development prepared by a certified public accountant approved by the City. Payments made shall be credited first against accrued interest and then against outstanding principal. (c) Payment in Full. All principal and interest, if any, on the Loan shall, at the option of the City, be due and payable upon the earliest of: (i) a Transfer other than a Transfer permitted or approved by the City as provided in Article 4 below; (ii) the occurrence of a Default for which the City exercises its right to cause the Loan indebtedness to become immediately due and payable; or (tii) the expiration of the Term specified in (a) above. (d) Prepayment. The Borrower shall have the right to prepay the Loan at any time without premium or penalty. However, this Agreement, the Deed of Trust, and the Regulatory Agreement shall remain in effect for the entire Term, regardless of any prepayment. (e) Special Definitions. The following definitions shall apply for purposes of this Section 2.6: (1) "Annual Operating Expenses" with respect to a particular fiscal year shall mean the following costs reasonably and actually incurred for operation and maintenance of the Development to the extent that they are consistent with the annual budget for the Development, approved by the City pursuant to the Regulatory Agreement and with an annual independent audit performed by a certified public accountant, reasonably acceptable to the City, using generally accepted accounting principles: property taxes and assessments imposed on the Development; debt service (including required escrow and reserve deposits and trustee and servicing fees) currently due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Development) on loans associated with development of the Development and approved by the City in the Financing Plan pursuant to Section 2.5; an annual asset management fee in the amount of Five Thousand Dollars ($5,000) paid to the Tax Credit Investor which amount shall be adjusted for inflation as provided in the Borrower's partnership agreement, and as reasonably acceptable to the City; property management fees and reimbursements, not to exceed fees and reimbursements which are standard in the industry and pursuant to a management contract approved by the City as set forth in the Regulatory Agreement; premiums for property damage and liability insurance; utility services not paid for directly by tenants, including water, sewer, and trash collection; maintenance and repair; any annual license or certificate of occupancy fees required for operation of the Development; security services; advertising and marketing; cash deposited into reserves for capital replacements of the Development in an amount not to exceed the amount required in connection with the permanent financing approved by the City pursuant to Section 2.5, or by the City if no other lender or investor requires approvals of such amount; payment of any previously unpaid portion of the Developer Fee due (with interest) not exceeding a cumulative amount of the Developer Fee as set forth in Section 3.23; extraordinary operating costs specifically approved in writing by the City as part of the annual budget approval process pursuant to the Regulatory Agreement; payments of deductibles in connection with casualty insurance claims not normally paid from reserves; the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves; and other ordinary and reasonable operating expenses approved IOIO\01\235233.7 in writing by the City and not listed above. Annual Operating Expenses shall not include the following: depreciation, amortization, depletion or other non-cash expenses; any amount expended from a reserve account; and any capital cost with respect to the Development, as determined by the accountant for the Development. (f) "Borrower's Share of Residual Receipts" shall mean twenty eight percent (28%) of Residual Receipts. (g) "Gross Revenue" with respect to a particular fiscal year shall mean all revenue, income, receipts, and other consideration actually received from operation and leasing of the Development Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; net proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance and not paid to senior lenders; the proceeds of casualty insurance not used to rebuild the Development and not paid to senior lenders; and condemnation awards for a taking of part or all of the Development for a temporary period not paid to senior lenders. Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or similar advances. (h) "Lenders' Share of Residual Receipts" shall mean seventy-two percent (72%) of Residual Receipts which shall be shared among HCD and the City to repay the MHP Loan and the Loan, respectively. (i) "Prorata Percentage" shall mean, for die City, the proportion of Loan funds disbursed to the Borrower in accordance with this Agreement over the sum of the Loan funds and the MHP Loan funds disbursed to the Borrower. The term "Prorata Percentage" shall mean, for the MHP Loan, the proportion of the MHP Loan funds disbursed to the Borrower over the sum of the Loan funds and the MHP Loan funds disbursed to the Borrower. In calculating the Prorata Percentages, the Loan funds and the MHP Loan funds that have been repaid shall be deemed to not to have ever been disbursed. If all anticipated Loan and MHP Loan funds are disbursed the Prorata Percentages will be thirty percent (30%) to the City (the "City Prorata Percentage") and forty-two percent (42%) to HCD (the "MHP Prorata Percentage"). (j) "Residual Receipts" in a particular calendar year shall mean the amount by which Gross Revenue (as defined above) exceeds Annual Operating Expenses (as defined above). Section 2.7 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual payments set forth in Section 2.6(b), within sixty (60) days of the end of the Borrower's fiscal year, the Borrower shall furnish to the City an audited statement duly certified by an independent firm of certified public accountants approved by the City, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year. 1010\01\235233.7 (b) Books and Records. The Borrower shall keep and maintain on the Property, or at its principal place of business, or elsewhere with the City's written consent, full, complete and appropriate books, records and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail the Borrower's calculation of Residual Receipts. Books, records and accounts relating to the Borrower's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the City, its auditors or other City authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that the Borrower may be required to furnish any governmental agency shall at all reasonable times be open for inspection by the City at the place that the books, records and accounts of the Borrower are kept. The Borrower shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending. (c) , Audits. The receipt by the City of any statement pursuant to subsection (a) above or any payment by the Borrower or acceptance by the City of any Loan repayment shall not bind the City as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the City or any designated agent or employee of the City at anytime shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of the Borrower and other places where records are kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of such audit to the Borrower and the Tax Credit Investor. If it shall be determined as a result of such audit that there has been a deficiency in a Loan repayment to the City, then such deficiency shall become immediately due and payable with interest at the default rate set forth in this Agreement, determined as of and accruing from the date that said payment should have been made. In addition, if the Borrower's auditor's statement for any Development fiscal year shall be found to have understated Residual Receipts by more than five percent (5%) and at least Five Thousand Dollars ($5,000), and the City is entitled to any additional Loan repayment as a result of said understatement, then the Borrower shall pay, in addition to the interest charges referenced hereinabove, all of the City's reasonable costs and expenses connected with any audit or review of the Borrower's accounts and records. (d) Maximization of Residual Receipts: Compliance with MHP. The Borrower agrees at all times during the Term to continue its operations of the Development and to use its skills and diligence to produce the maximum Residual Receipts, subject to the rent and occupancy requirements of the Regulatory Agreement and the MHP regulations. Section 2.8 Non-Recourse. Except as provided below, the Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Loan or the performance of the 1010\01\235233.7 10 covenants of the Borrower under the Deed of Trust. The sole recourse of the City with respect to the principal of, or interest on, the Note and defaults by the Borrower in the performance of its covenants under the Deed of Trust shall be to the Property described in the Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall (a) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder, or (b) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note and the performance of the Borrower's obligations under the Deed of Trust, except as hereafter set forth; nothing contained herein is intended to relieve the Borrower of its obligation to indemnify the City under Sections 3.5,3.7, 3.16, and 7.5 of this Agreement; or liability for (i) fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by the Borrower other than in accordance with the Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Property. Section 2.9 Subordination. (a) Deed of Trust. The City agrees to subordinate the Deed of Trust to the lien of the deeds of trust securing the Bond Financing and the MHP Loan provided the subordination documents provide the City with reasonably adequate notice and cure rights to enable the City to avoid foreclosure of the deeds of trust securing the Bond Financing and the MHP Loan. (b) Regulatory Agreement. The City agrees that the City's Housing and Redevelopment Director shall subordinate the City Regulatory Agreement to the lien or encumbrance of Bond Financing upon the rinding of the City's Housing and Redevelopment Director that (i) an economically feasible loan is not reasonably available on comparable terms and conditions without subordination, and (ii) the mortgage to which the City Regulatory Agreement is being subordinated contains provisions meeting the requirements of Health and Safety Code Section 33334.14(a) reasonably designed to protect the City's interests in the event of default under such mortgage. The City agrees that the City Regulatory Agreement shall be subordinated to any federal or state governmental agency regulating the Development which requires that the City Regulatory Agreement be subordinate to such government agency's documents and liens. The City will execute subordination agreements in a form reasonably acceptable to the City and the lending entity or government agency requesting subordination of the City Regulatory Agreement as provided in this Section. 1010\01\235233.7 1J ARTICLE 3 CONSTRUCTION AND OPERATION OF THE DEVELOPMENT Section 3.1 Permits and Approvals. (a) As of the date of this Agreement, the Borrower has obtained all permits and approvals necessary for the development of the Development on the Property, other than the building permit for the construction of the Improvements. (b) No later than July 31,2006, the Borrower shall obtain the building permit for the constniction of the Improvements on the Property, or the City, at its option, and with thirty (30) days' prior written notice to the Borrower and opportunity to cure, may declare the Borrower in default hereunder. Section 3.2 Plans and Specifications. (a) Simultaneously with submission to the City building department, the Borrower shall submit to the City a copy of the Construction Plans for the Development. As used in this Agreement, "Construction Plans" shall mean all construction documentation upon which the Borrower and the Borrower's contractor shall rely in constructing all the improvements on the Property (including the Units, landscaping, parking, and common areas) and shall include, but not necessarily be limited to, final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings"). (b) The City shall, if the Construction Plans submitted conform to the provisions of this Agreement, approve in writing such Constniction Plans. Unless rejected by the City for their failure to comply with the foregoing requirements within fifteen (15) days following submission by the Borrower, said Construction Plans shall be deemed accepted. Such approval of the City shall not relieve Borrower's obligation to obtain any and all approvals required by the City building department. (c) If rejected by the City in whole or in part, the Borrower shall submit new or corrected Construction Plans within thirty (30) days after notification of the City's rejection and the reasons therefor. The City shall then have fifteen (15) days to review and approve the Borrower's new or corrected Construction Plans. The provisions of this Section relating to time periods for approval, rejection, or resubmission of new or corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the City. Section 3.3 Commencement of Construction. The Borrower shall cause the commencement of construction of the Development no later than July 1,2006. For the purposes of this Agreement, the term "commencement of construction" shall mean the date the Borrower commences, or causes the commencement of, physical work on the Property pursuant to a building permit. 1010\Q1 V235233.7 12 Section 3.4 Completion of Construction. The Borrower shall diligently prosecute construction of the Development to completion, and shall cause the completion of the construction of the Development no later than October 1, 2007. For the purposes of this Agreement, the term "completion of construction" shall mean the date the City issues the Certificate of Occupancy for the Improvements. Section 3.5 Construction Pursuant to Plans and Laws: Prevailing Wages. (a) The Borrower shall construct the Development in conformance with the plans and specifications approved by the City. The Borrower shall notify the City in a timely manner of any changes in the work required to be performed under this Agreement, including any additions, changes, or deletions to the plans and specifications approved by the City. A written change order authorized by the City must be obtained before any of the following changes, additions, or deletions in work for the Development may be performed: (1) any change in the work the cost of which exceeds Ten Thousand Dollars ($10,000); or (2) any set of changes in the work the cost of which cumulatively exceeds Twenty-Five Thousand Dollars ($25,000); or (3) any material change in building materials or equipment, specifications, or the structural or architectural design or appearance of the Development as provided for in the plans and specifications approved by the City. Consent to any additions, changes, or deletions to the work shall not relieve or release the Borrower from any other obligations under this Agreement, or relieve or release the Borrower or its surety from any surety bond. The City shall utilize best efforts to approve or disapprove change orders within five (5) working days of receipt of a request for approval. (b) The Borrower shall cause all work performed in connection with the Development to be performed in compliance with (i) all applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter, and (ii) all directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and the Borrower shall be responsible to the City for the procurement and maintenance thereof, as may be required of the Borrower and all entities engaged in work on the Development. (c) This Agreement has been prepared with the intention that the assistance provided by the City under this Agreement meets the exception set forth in Labor Code Section 1720(c)(6)(E) to the general requirement that state prevailing wages be paid in connection with construction work that is paid for in whole or in part with public funds; provided, however, that nothing in this Agreement constitutes a representation or warranty by the City regarding the applicability of Labor Code Section 1720 et seg to the Approved Financing. To the extent required by any Approved Financing lender (including but not limited to HCD) the Borrower shall and shall cause the contractor and subcontractors to pay prevailing wages in the construction of the Improvements as those wages are determined pursuant to Labor Code Sections 1720 et seq., and the implementing regulations of the Department of Industrial 10IO'-.OI\235233.7 ]3 Relations (the "DIR") and comply with the other applicable provisions of Labor Code Sections 1720 sJ seq.? including but not limited to the hiring of apprentices as required by Labor Code Sections 1775 ei seq.. and the implementing regulations of the DIR. The Borrower shall and shall cause the contractor and subcontractors to keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to Labor Code Sections 1720 ei seq. The Borrower shall indemnify, hold harmless and defend (with counsel reasonably selected by the City) the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Borrower, its contractor and subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 ei seq.. to hire apprentices in accordance with Labor Code Sections 1777.5 ej seq.. and the implementing regulations of the DIR or comply with the other applicable provisions of Labor Code Sections 1720 et seq.. and the implementing regulations of the DIR in connection with construction of the Improvements or any other work undertaken or in connection with the Property. Section 3.6 Marketing Plan. (a) No later than six (6) months prior to the projected date of the completion of the construction of the Development, the Borrower shall submit to the City for approval its plan for marketing the Development to income-eligible households as required pursuant to the Regulatory Agreement, including information on affirmative marketing efforts and compliance with fair housing laws (the "Marketing Plan"). (b) Upon receipt of the Marketing Plan, the City shall promptly review the Marketing Plan and shall approve or disapprove it within thirty (30) days after submission. If the Marketing Plan is not approved, the Borrower shall submit a revised Marketing Plan within thirty (30) days following the Borrower's receipt of the City's written disapproval. If the City does not approve the revised Marketing Plan because the Borrower fails to make specific revisions requested by the City, the Borrower shall be in default hereunder. Section 3.7 Relocation. If and to the extent that acquisition of the Property or construction of the Development results in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then the Borrower shall comply with ail applicable local, state, and federal statutes and regulations, (including without limitation the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, California Government Code Section 7260 et seq.. and accompanying regulations, as amended) with respect to relocation planning, advisory assistance, and payment of monetary benefits. The Borrower shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. The Borrower shall defend (with counsel reasonably acceptable to the City), the City against any claim for damages, compensation, fines, penalties, relocation payments or other amounts arising out of the failure or alleged failure of any person or entity (including the Borrower or the City) to satisfy relocation obligations related to the development of the Development. This obligation to indemnify shall survive termination of this Agreement. 1010\01\235233.7 14 Section 3.8 Equal Opportunity. During the construction of the Development there shall be no discrimination on the basis of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin, ancestry, or disability in the hiring, firing, promoting, or demoting of any person engaged in the construction work. Section 3.9 Progress Reports. Until such time as the Borrower has completed construction of the Property, as evidenced by a certificate of occupancy issued by the City, the Borrower shall provide the City with quarterly progress reports regarding the status of the construction of the Development, including a certification that the actual construction costs to date conform to the Approved Development Budget, as it may be amended from time to time pursuant to Section 3.15 below. Section 3.10 Construction Responsibilities. (a) It shall be the responsibility of the Borrower to coordinate and schedule the work to be performed so that commencement and completion of construction will take place in accordance with this Agreement. (b) The Borrower shall be solely responsible for all aspects of the Borrower's conduct in connection with the Development, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Development is solely for the purpose of determining whether the Borrower is properly discharging its obligations to the City, and should not be relied upon by the Borrower or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Development. Section 3.11 Inspections. The Borrower shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the City and by public authorities during reasonable business hours for the purposes of determining compliance with this Agreement. Section 3.12 Approved Development Budget: Revisions to Budget. As of the date of this Agreement, the City has approved the Approved Development Budget set forth in Exhibits. The Borrower shall submit any required amendments to the Approved Development Budget to the City for approval within fifteen (15) days of the date the Borrower receives information indicating that actual costs of the Development vary or will vary from the costs shown on the Approved Development Budget. Written consent of the City shall 1010\01\235233.7 be required to amend the Approved Development Budget. The City shall utilize best efforts to approve or disapprove requested amendments to the Development Budget within five (5) working days of receipt of a request for approval. Section 3.13 Information. The Borrower shall provide any information reasonably requested by the City in connection with the Development. Section 3.14 Records. (a) The Borrower shall maintain complete, accurate, and current records pertaining to the Development for a period of five (5) years after the creation of such records, and shall permit any duly authorized representative of the City to inspect and copy records. Such records shall include all invoices, receipts, and other documents related to expenditures from the Loan funds. Records must be kept accurate and current. (b) The City shall notify the Borrower of any records it deems insufficient. The Borrower shall have twenty-one (21) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than twenty-one (21) days is reasonably necessary to correct the deficiency, then the Borrower shall begin to correct the deficiency within twenty-one (21) days and correct the deficiency as soon as reasonably possible. Section 3.15 Audits. The Borrower shall make available for examination at reasonable intervals and during normal business hours to City all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit City to audit, examine, and make excerpts or transcripts from such records. City may make audits of any conditions relating to this Agreement. Section 3.16 Hazardous Materials. (a) The Borrower shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. The Borrower shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as may be used in construction of the Development or customarily kept and used in and about residential property of this type. I010\OI\235233.7 16 (b) The Borrower shall immediately advise the City in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Borrower or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); 00 all claims made or threatened by any third party against the Borrower or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) the Borrower's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border-zone property" under the provision of California Health and Safety Code, Sections 25220 e,t seq.. or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. (c) The City shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by the Borrower. The Borrower shall indemnify and hold harmless the City and its councilmembers, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (a) all foreseeable consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by the City in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees. This obligation to indemnify shall survive termination of this Agreement, but shall not apply to the extent of the City's gross negligence or willful misconduct. (d) Without the City's prior written consent, which shall not be unreasonably withheld, the Borrower shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in the City's reasonable judgment, impair the value of the City's security hereunder; provided, however, mat the City's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the City's consent before taking such action, provided that in such event the Borrower shall notify the City as soon as practicable of any action so taken. The City agrees not to withhold its consent, where such consent is required hereunder, if either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) the Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) the Borrower establishes to the reasonable satisfaction of the City that there is no reasonable !010\01\235233.7 17 alternative to such remedial action which would result in less impairment of the City's security hereunder; or (iv) the action has been agreed to by the City. (e) The Borrower hereby acknowledges and agrees that (i) this Section is intended as the City's written request for information (and the Borrower's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by the Parties to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. i (f) In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(l)), then, without otherwise limiting or in any way affecting the City's or the trustee's rights and remedies under the Deed of Trust, the City may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Borrower to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the City's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Borrower shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(l), if the release or threatened release of Hazardous Materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Borrower knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the City in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be due and payable to the City upon its demand made at any time following the conclusion of such action. Section 3.17 Fees and Taxes. The Borrower shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Property or the Development to the extent owned by the Borrower, and shall pay such charges prior to delinquency. However, the Borrower shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by the City, the Borrower deposits with the City any funds or other forms of assurance mat the City in good faith from time to time determines appropriate to protect the City from the consequences of the contest being unsuccessful. 1CUO\OI\235233.7 Section 3.18 Notice of Litigation. The Borrower shall promptly notify the City in writing of any litigation affecting the Borrower or the Property and of any claims or disputes that involve a material risk of litigation. Section 3.19 Operation of Development as Affordable Housing. (a) Promptly following the completion of construction of the Improvements, the Borrower shall continuously operate and maintain the Development as multifamily housing rented to eligible occupants at rent levels in conformity with the Regulatory Agreement and this Agreement. (b) Before leasing any Unit in the Development, the Borrower shall submit its proposed form of lease agreement for the City's review and approval. (c) Before leasing any Unit in the Development, the Borrower must provide the City, for its review and approval, with the Borrower's written tenant selection plan. (d) The Borrower must determine the income eligibility of each tenant household occupying an Unit pursuant to the City's approved tenant certification procedures no later than sixty (60) days before the household's expected occupancy of one of the Units. The Borrower shall certify each tenant household's income on an annual basis. (e) The maximum household income of a household occupying a Unit, and the total charges for rent, utilities, and related services to each household occupying a Unit, shall be maintained as provided in the Regulatory Agreement. Section 3.20 Non-Discrimination. The Borrower covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, sex, sexual orientation, marital status, familial status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Development, nor shall the Borrower or any person claiming under or through the Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Development. Section 3.21 Mandatory Language in All Subsequent Deeds. Leases and Contracts. All deeds, leases or contracts made or entered into by the Borrower, its successors or assigns, as to any portion of the Development shall contain therein the following language: (a) In Deeds: "Grantee herein covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person or of a 10IO\01\235233.7 ]9 group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, familial status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed nor shall the grantee or any person claiming under or through the grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land." 1 (b) In Leases: The lessee herein covenants by and for the lessee and lessee's heirs, personal representatives and assigns and all persons claiming under the lessee or through die lessee that this lease is made subject to the condition that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, familial status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased nor shall the lessee or any person claiming under or through the lessee 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 land herein leased." (c) In Contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, familial status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee 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." Section 3.22 Insurance Requirements. The Borrower shall maintain the following insurance coverage throughout the Loan Term: (a) Workers' Compensation insurance to the extent required by law, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident. 1010\01\235233.7 20 (b) Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverage for Contractual Liability, Personal Injury, Broadform Property Damage, and Products and Completed Operations. (c) Comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverage for owned, non-owned and hired vehicles, as applicable; provided, however, that if the Borrower does not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required. (d) Property insurance, including during the course of construction builder's risk insurance, covering the Development, in form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable federal regulations. (e) The Borrower shall cause any general contractor or agent working on the Development under direct contract with the Borrower to maintain insurance of the types and in at least the minimum amounts described in subsections (a), (b), and (c) above, except that the limit of liability for commercial general liability insurance for subcontractors shall be One Million Dollars ($1,000,000), and shall require that such insurance shall meet all of the general requirements of subsections (e), (f), and (g) below, including, without limitation, the requirement of subsection (f). Subcontractors working on the Development under indirect contract with the Borrower shall be required to maintain the insurance described in subsections (a), (b), and (c) above. Liability and Comprehensive Automobile Liability insurance to be maintained by such contractors and agents pursuant to this subsection shall name as additional insureds the City, their officers, agents, employees and members of the City Council. (f) The required insurance shall be provided under an occurrence form, and the Borrower shall maintain such coverage continuously so long as the Note is outstanding. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence limits specified above. (g) Commercial General Liability and Property insurance policies shall be endorsed to name as an additional insured the City, the Agency, and their officers, agents, employees and members of the City Council and Agency Board. (h) All policies and bonds shall contain (a) the agreement of the insurer to give the City at least thirty (30) days' notice prior to cancellation (including, without limitation, for non payment of premium) or any material change in said policies; (b) an agreement that such policies are primary and non contributing with any insurance that may be carried by the City; (c) a provision that no act or omission of the Borrower shall affect or limit the obligation of the 1010\0!\235233.7 21 insurance carrier to pay the amount of any loss sustained; and (d) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against. Section 3.23 Developer Fee. The maximum cumulative developer fee that may be paid to any entity or entities providing development services to the Development, whether paid up-front or on a deferred basis, shall not exceed Two Million Five Hundred Thousand Dollars ($2,500,000). ARTICLE 4 ASSIGNMENT AND TRANSFERS Section 4.1 Definitions. As used in this Article Four, the term "Transfer" means: (a) Any total or partial sale, lease, assignment, or other conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to this Agreement or of any part of or interest in the Development, or any agreement to do any of the foregoing; or (b) Any total or partial sale, assignment, or other conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to any ownership interest in the Borrower or any agreement to do any of the foregoing. Section 4.2 Purpose of Restrictions on Transfer. This Agreement is entered into solely for the purpose of the Borrower's construction and operation of the Development in accordance with the terms of this Agreement and the Regulatory Agreement. The qualifications and identity of the Borrower are of particular concern to me City, in view of: (a) The importance of the development of the Property to the general welfare of the community; (b) The public aids that have been made available by law and by the government for the purpose of making such development possible; (c) The reliance by the City upon the unique qualifications and ability of the Borrower to serve as the catalyst for development of the Property and upon the continuing interest which the Borrower will have in the Property to assure the quality of the use, operation, and maintenance deemed critical by the City in the development of the Property; (d) The fact that a change in ownership or control of the owner of the Property, or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the 1010\0]\235233.7 22 Borrower or the degree thereof, is for practical purposes a transfer or disposition of the Property; and (e) The importance to the City of the standards of use, operation, and maintenance of the Property. It is because of the qualifications and identity of the Borrower that the City is entering into this Agreement and that Transfers are permitted only as provided in this Agreement. Section 4.3 Prohibited Transfers. The limitations on Transfers set forth in this Article Four shall apply throughout the Term. Except as expressly permitted in this Agreement, the Borrower represents that it has not made or created, and agrees that it will not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law, without the prior written approval of the City. Any Transfer made in contravention of this Section 4.3 shall at the City's discretion be void and shall be deemed to be a default under this Agreement, whether or not the Borrower knew of or participated in such Transfer. Section 4.4 Permitted Transfers Without Prior Citv Approval. The only Transfer permitted at any time without the prior approval of the City is the rental of a Unit by the Borrower in the ordinary course of business and in compliance with the Regulatory Agreement. Section 4.5 Permitted Transfers With Prior Approval: Citv Pre-Approved Transfers. (a) Except as permitted under Section 4.4, any Transfer shall be permitted only after (a) the City, in its sole discretion, has delivered to the Borrower its prior written approval of such Transfer, and (b) the transferee has assumed the Borrower's obligations under this Agreement by signing an assignment and assumption agreement, in a form prepared by the City, and such other reasonable documentation as the City may reasonably require to evidence such transferee's assumption of the Borrower's duties and obligations under the Loan Documents. (b) The Borrower anticipates syndicating the Tax Credits that will be generated by the Development, which syndication will require the admission of the Tax Credit Investor as a limited partner in the Borrower. The City hereby approves the admission of the Tax Credit Investor to the Borrower, provided that: (i) the partnership agreement of the Borrower provides for capital contributions of the general and limited partners of the Borrower consistent with Section 1.1 (d) above and is first approved by the City in its reasonable discretion; and (ii) all documents associated with the Tax Credit syndication of the Development are submitted to the City for approval prior to execution, which approval shall not be unreasonably withheld; (c) The City hereby approves Transfer of the limited partner interest in the Borrower by the Tax Credit Investor provided that: (i) such transfers do not affect the timing 1010\0l\235233.7 23 and amount of the remaining limited partner capital contributions provided for in and subject to the terms of the partnership agreement agreed to by the City; (ii) in subsequent transfers, an entity under the Control of MMA Financial, LLC retains a membership interest and serves as a managing member or general partner of the successor limited partner; and (iii) in subsequent transfers the Tax Credit Investor remains liable for all unpaid capital contributions payable in accordance with the terms of the Borrower's partnership agreement. (d) In the event the general partner of the Borrower is removed by the limited partner of the Borrower following default under the Borrower's partnership agreement, the City hereby approves the transfer of the general partner interest to an entity under the control of MMA Financial, LLC. Section 4.6 Release of the Borrower. Upon all of the terms of this Article Four being satisfied for a permitted Transfer to be effective, the Borrower or the successor transferor party, as applicable, shall be released from all liability under this Agreement so transferred arising subsequent to the effectiveness of such Transfer. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BORROWER Section 5.1 Representations and Warranties. (a) The Borrower hereby represents to the City as follows: (1) Organization. The Borrower is a duly organized, validly existing California limited partnership and is in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (2) Authority of the Borrower. The Borrower has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (3) Authority of Persons Executing Documents. This Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of the Borrower, and all actions required under the Borrower's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. 1010\OI\235233.7 24 (4) Valid Binding Agreements. This Agreement and the Loan Documents and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of the Borrower enforceable against it in accordance with their respective terms. (5) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or City whatsoever binding on the Borrower, or any provision of the organizational documents of the Borrower, or will conflict with or constitute a breach of or a default under any agreement to which the Borrower is a party, or will result in the creation or imposition of any lien upon any assets or property of the Borrower, other than liens established pursuant hereto. (6) Pending Proceedings. The Borrower is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or the Property, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Borrower, materially affect the Borrower's ability to repay the Loan or impair the security to be given to the City pursuant hereto. (b) The Borrower hereby warrants to the City as follows: (1) Compliance With Laws: Consents and Approvals. The construction of the Development will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency. The Development shall be constructed substantially in accordance with die Construction Plans approved by the City pursuant to Section 3.2. (2) Title to Land. AtthetimeofrecordationoftheDeedofTrustand the Regulatory Agreement, the Borrower will have good and marketable fee title to the Property and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, and liens in favor of the City or approved in writing by the City. (3) Financial Statements. The financial statements of the Borrower and other financial data and information furnished by the Borrower to the City fairly present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of the Borrower from that shown by such financial statements and other data and information. I0!0\0l\235233.7 25 (4) Sufficient Funds. The Borrower holds sufficient funds and or binding commitments for sufficient funds to complete the acquisition of the Property and the construction of die Development in accordance with the plans and specifications approved by the City. ARTICLE 6 DEFAULT AND REMEDIES Section 6.1 Events of Default. Each of the following shall constitute a "Default" by the Borrower under this Agreement: (a) Failure to Obtain Approvals. Failure of the Borrower to obtain all planning approvals and building permits necessary to construct the Development within the time set forth in Article 3. (b) Failure to Make Payment Failure to repay the principal and any interest on the Loan that is due and payable to the City pursuant to the Loan Documents following written notice by the City to the Borrower and the Tax Credit Investor of such failure and ten (10) days opportunity to cure. (c) Failure to Construct. Failure of the Borrower to commence and complete construction of the Development within the time frames set forth in Article 3 above. (d) Breach of Covenants. Failure by the Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof by the Borrower and the Tax Credit Investor from City or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be in breach so long as the Borrower is diligently undertaking to cure such breach and such breach is cured within ninety (90) days from the date of the City's written notice to the Borrower and the Tax Credit Investor; provided, however, that if a different period or notice requirement is specified under any other section of this Article 6, the specific provisions shall control. (e) Default Under Other Loans. A default is declared under the Approved Financing by the lender of such Approved Financing following the expiration of any applicable grace or cure period. (f) Insolvency. A court having jurisdiction shall have made or entered any decree or order (i) adjudging the Borrower to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of the Borrower or seeking any arrangement for the Borrower under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of the Borrower in bankruptcy or insolvency or for any of their properties, (iv) directing 1010\01\235233.7 26 the winding up or liquidation of the Borrower, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or (v) the Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note. (g) Assignment: Attachment. The Borrower shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note. (h) Suspension: Dissolution. The Borrower shall have voluntarily suspended its business or the dissolution of the Borrower. (i) Liens on Property and the Development. There shall be filed any claim of lien (other than liens approved in writing by the City) against the Development, the Property, or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Loan and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days without discharge or satisfaction thereof or provision therefore (including, without limitation, the posting of bonds) satisfactory to the City. (j) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Property and the Development, except that condemnation by the City shall cause the Loan to accelerate but shall not be a Default. (k) Unauthorized Transfer. Any Transfer other than as permitted by Article 4 or approved by the City in writing. (I) Representation or Warranty Incorrect. Any representation or warranty of the Borrower contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the City in connection with any of the Loan Documents, proves to have been incorrect in any material and adverse respect when made. (m) Insufficient Funds. The Borrower fails to obtain funds, or commitment of funds, sufficient to acquire the Property and develop the Development, as determined by the City in the City's reasonable discretion. (n) Applicability to General Partner. In the event the Borrower is a partnership, the occurrence of any of the events set forth in subsection (f), subsection (g), or subsection (h) in relation to the general partner of Borrower. 10tO\01\235233.7 27 Section 6.2 Remedies. \ The City agrees that any cure of a Default by the Tax Credit Investor, or other limited partners of the Borrower shall be deemed to be a cure by the Borrower, and shall be accepted or rejected on the same basis as if made or tendered by the Borrower. The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the Loan and shall give the City the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents, including but not limited to the following: 1 (a) Acceleration of Note. Subject to the provisions of Section 2.8, the City shall have the right to cause all indebtedness of the Borrower to the City under this Agreement and the Note, together with any accrued interest thereon, to become immediately due and payable. The Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or ail rights afforded to the City as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Deed of Trust. The Borrower shall be liable to pay the City on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the City in connection with the collection of the Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan. (b) Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Loan Documents. (c) Right to Cure at the Borrower's Expense. The City shall have the right (but not the obligation) to cure any monetary default by the Borrower under a loan other than the Loan. The Borrower agrees to reimburse the City for any funds advanced by the City to cure a monetary default by the Borrower upon demand therefore, together with interest thereon at the lesser of the maximum rate permitted by law or ten percent (10%) per annum from the date of expenditure until the date of reimbursement. Section 6.3 Assignment of Plans, Data and Approvals. If this Agreement is terminated pursuant to Section 6.2, then the Borrower shall promptly assign and deliver to the City, copies of all plans, studies, reports, data and specifications for the Development, all permits and approvals obtained in connection with the Development, and all applications for permits and approvals not yet obtained but needed in connection with the Improvements (collectively, the "Planning Documents"). The Planning Documents shall be delivered by the Borrower without any warranties or representations of any type or kind, express or implied, including whether the Planning Documents have been completed in final form. The City agrees and acknowledges that all such Planning Documents will be delivered subject to the rights of any copyright holders. 1010\OI\235233.7 28 Section 6.4 Remedies Cumulative. Subject to the non-recourse provisions contained in the Note, no right, power, or remedy given to the City by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against the Borrower and any other person. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy. ARTICLE 7 GENERAL PROVISIONS Section 7.1 Relationship of Parties. Nothing contained in this Agreement shall be interpreted or understood by any of the parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the City and the Borrower or the Borrower's agents, employees or contractors, and the Borrower shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement for the development of the Development. In regards to the development of the Development, the Borrower shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. The Borrower agrees to be solely responsible for its own acts and those of its agents and employees. Section 7.2 No Claims. Nothing contained in this Agreement shall create or justify any claim against the City, by any person the Borrower may have employed or with whom the Borrower may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the development of the Development, and the Borrower shall include similar requirements in any contracts entered into for the development of the Development. Section 7.3 Amendments. No alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties. !010\01\235233.7 29 Section 7.4 Entire Understanding of the Parties. \ This Agreement constitutes the entire understanding and agreement of the Parties with respect to the Loan. Section 7.5 Indemnification. ! Except as directly caused by the City's gross negligence or willful misconduct, the Borrower agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City), the City and its council members, officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of: (i) the Borrower's performance or non-performance of its obligations under this Agreement; (ii) the Borrower's ownership of the Property, (iii) the development, marketing, rental and operation of the Development, or (iv), or any documents executed by the Borrower in connection with the Development The provisions of this Section 7.5 shall survive termination of this Agreement. Section 7.6 Non-Liabilitv of Agency and City Officials. Employees and Agents. No member, official, employee or agent of the Agency or the City shall be personally liable to the Borrower, or any successor in interest, in the event of any Default or breach by the City, or for any amount which may become due to the Borrower or its successor or on any obligation under the terms of this Agreement. Section 7.7 No Third Party Beneficiaries. Except for the Agency there shall be no third party beneficiaries to this Agreement. Section 7.8 Action bv the Cirv. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, extension of time, waiver of condition, termination, or other action by the City is required or permitted under this Agreement, such action may be given, made, or taken by the City Manager without further approval by the City Council, and any such action shall be in writing. The amount of the Loan may not be increased without approval of the City Council. Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies. The City Manager is also hereby authorized to approve, on behalf of the City* requests by the Borrower for reasonable extensions of time deadlines set forth in this Agreement. The City shall not unreasonably delay in reviewing and approving or disapproving any proposal by the Borrower made in connection with mis Agreement. Section 7.9 Waivers. Any waiver by the City of any obligation or condition in this Agreement must be in writing. No waiyer will be implied from any delay or failure by the City to take action on any 1010\01\235233.7 30 breach or default of the Borrower or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to the Borrower to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the City to any act or omission by the Borrower shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers. Section 7.10 Notices. Demands and Communications. Formal notices, demands, and communications between the City and the Borrower shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by reputable overnight delivery service, return receipt requested, or delivered personally, to the principal office of the City and the Borrower as follows: City: City of Carlsbad 2965 Roosevelt Street, Suite B Carlsbad, CA 92008 Attn: City Manager Borrower: CIC La Costa, L.P. 725 South Cost Highway 101 Encinitas, CA 92024 Attn: James J. Schmid Tax Credit Investor: MMA La Costa, LLC c/o MMA Financial TC Corporation 101 Arch Street Boston, MA 02110 Attn: Asset Management and Legal Department with a copy to: David E. Raderman, Esq. Gallagher, Evelius & Jones LLP 218 N. Charles Street, Suite 400 Baltimore, MD 21201 1010\0!\235233.7 31 Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt for delivery or refusal of delivery. Section 7.11 Applicable Law and Venue.i ^ " ' ~ ^-^— This Agreement will be governed by California law. Any action brought claiming a breach of this Agreement or interpreting this Agreement shall be brought and venued in San Diego County, California. Section 7.12 Parties Bound. Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, legal representatives, successors and assigns. This Agreement is intended to run with the land and shall bind the Borrower and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and assigns. Section 7.13 Severabilit}'. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability. Section 7.14 Force Majeure. In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock- outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of transportation; or court order; or any other similar causes (other than lack of funds of the Borrower or the Borrower's inability to finance the construction of the Development) beyond the control or without the fault of the Party claiming an extension of time to perform. An extension of time for any cause will be deemed granted if notice by the Party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and the Party granting the extension agrees to the extension in writing. In no event shall the City be required to agree to cumulative delays in excess of one hundred eighty (180) days. Section 7.15 Title of Parts and Sections. Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions. 1010\01\235233.7 32 Section 7.16 Subordination. Following the execution of that certain subordination agreement by and among the City, the Developer, and The Bank of New York, as trustee for the Bond Financing (the "Subordination Agreement"), to be executed in connection with the recordation of the Deed of Trust, the rights and remedies of the City under this Agreement shall be subject in all respects to the terms and conditions of the Subordination Agreement Section 7.17 Multiple Originals: Counterpart. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts. Remainder of Page Left Intentionally Blank 1010\OI\235233.7 33 WHEREFORE, this Agreement has been entered into by the undersigned as of the date first above written. BORROWER: i CIC La Costa, L.P., a California limited partnership By: DDC La Costa, LLC, a California limited , liability company, its Co-General Partner By: Name: Its: By: Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner By: Name: Its: ED AS TO FORM: Ronald Ball City Attorney CITY: CITY OF CARLSBAD^amunicipal corporation ByT l^ City Manager 10!0\01\235233.7 34 WHEREFORE, this Agreement has been entered into by the undersigned as of the date first above written. BORROWER: CIC La Costa, L.P., a California limited partnership By: DDC La Costa, LLC, a California limited liability company, its Co-General Partner APPROVED AS TO FORM: Ronald Ball City Attorney By:Pacific Southwest Community Development Corporation, a California nonprofit public benefit corporation, its Managing General Partner By: Name: Its:/ 6.f*a . CITY: CITY OF CARLSBAD, a municipal corporation By: . Its: 1010\01\235233.7 34 EXHIBIT A ^ LEGAL DESCRIPTION OF THE PROPERTY 1010\01\235233.7 EXHIBIT B APPROVED DEVELOPMENT BUDGET B-lI010'.01\235233.7 6/7/2006 CHELSEA INVESTMENT CORPORATION TAX CREDIT FINANCIAL ANALYSIS Hunters Pointe Family Apartments, Carlsbad, CA TABLE OF CONTENTS EXHIBIT A EXHIBIT B EXHIBIT C EXHIBIT D EXHIBIT E EXHIBIT F PROJECT SUMMARY PROJECTED SOURCES & USES OF FUNDS OPERATING BUDGET OPERATING BUDGET DETAIL TAX CREDIT BASIS & EQUITY CALCULATION WATERFALL CASH FLOW - 45 YR © 2005 Chelsea Investment Corporation EXHIBIT A: PROJECT SUMMARY: HUNTERS POINTE - 168 UNITS 6/7/2006 PROJECT DEAL STRUCTURE FINANCING ASSUMPTIONS PROJECT UNIT & INCOME MIX Development Costs: Eligible Costs Ineligible Costs Total Development Costs Tax Credit Equity MHP Permanent Loan City of Carlsbad Master Dev. Contrlbution/GAP Land Donation GAP (Excess) Total Sources: Developer Fee Deferred Fee 40.591,248 11.321,470 51.91 2.7J? 19,594.000 10,000.000 9.772,000 1,932,000 500,000 9,576,000 495,718 5J.869.718 100% 2,500,000 20% 495,718 TCRate Annual Tax Credit TC Price OCR Amort Interest - Permanent Loan Interest - Construction Loan Opr. Exp./unit/year Replacement Reserves/unit/year A Bond BBond Total Bonds 50% Test 3.52% 1.857,455 1.06 1.10 40 5.60% 5.50% 3.398 600 9.772.000 15,228,000 25,000,000 61.59% AMI Sttidjg jBB 2Jgg §5% 0 10 28 50% 0 13 10 35% 0 13 21 Mgr. 0 0 1 Totate p, 35 £9 MHP Targeted Arfordablllty Scoring MHP Leveraging Scoring MHP Set-A-Slde Scoring Housina Set-A-Slde 3BR 38 8 25 1 72 max max Totals IS 21 59 2 IB 35 20 max 35 "Multi-Family" Draw Down of Bonds \ Close of financing Month 1 6,280,000 25.1% Months 6,410,000 12,690,000 25.6% Month 6 6,390,000 19,080,000 25.6% Month 9 2,450,000 21,530,000 9.8% i Month 12 3,470,000 25.000.000 13.9% 100% Hunters Point* M¥A-Con«1rucilon & NMA-Perm, UHP 1 MM* -1% TC Carlsbad, CA EXHIBrr B: PROJECTED SOURCES AND USES OF FUNDS 6/7/2006 16:43 SOURCES OF FUNDS 1 Master Developer Cwilribjtior. ;GAP;- 2 Delflrrod Developer Fa* 4 MUA / Construction Loan 5 UHTC 6 Value ol Land Donation (less bargain Ourchase: 7 City olCantbM 8 MMA-PermLoan 9 Total Source* of Funds 10 USES OF FUNDS 11 Site Acquisition 12 T«l«ff«icortlfttj f, Escrow 13 Subtotal SM* AcquWOon 14 15 Ora<*ng / On-sh« Infrastructure - included below 16 Structures ft On SIM Construction Cosl 17 Subtotal Herd Co«s 16 Contactor Overhead, Profit A General Requirements 19 Tola) Construction Contract -$ gross/at 20 Contingency % of Hard Costs 21 Contingency % of Soft Costs 22 Davaiopw OH, pfo«1» Oen. Raqls 23 Reknburseable Improv«men1 Bond- Water Dtelncl 24 Building Permit/Plan Check Fa« 25 Ortdlnoxlrnp«ov»rfMirn Plan ChecWtn sped ion S Landscape 26 Public Facmuss i. TratSc imoact 27 MedoRoos 26 CFD *1 tacllKlel Imprownenll 29 School Fee 30 WairjrAuftorityYM«er& Connection Fee 5500* 50.09* 35.00S mgr 181 unlit 76 31 59 2 10* 28R 3BR ISHM i«on4! i A Bond uau 9,772,0»0 lTa* Paid " (Mwwl 2,004,212 i «»Tasl **S>71«] »asa Z,500,00«t (Acluai) 11.15% I 61.89% IM 32 ArdiKacts' EnglneeAig Fees 33 Pr»-corrstruc»on - rvtorket Study 34 Pre-conitructlon-Appraisals 35 Pre<onj1rucUo« - Envtroiwn*mal Study 36 Prevailing Wa^e Comofiancf 37 Title ft Recording 38 Real Eitata Tax« 39 legal (PD S MS) 40 osier • Accoummg/Finance 41 UibWIyfCOC Insurance 42 SubtoUl Iraprowmants 43 Olher Loan/TCAC Costs u Bank ConMiucUon Loan Origination Fee 42 Bank Legal Counsel FM & Documentation «3 Bunk Lock Fe« 45 Construction inspection Fee S«50 o«r mornh » wnsultanl 43 Mel Conslrucllon lm»n«1 44 SuMotaHntantt/Faei 45 Marketing & SeMces Fees (S50K PSCDC) $0 Pumbnlngt 51 Replacernert Raierve (.6* s«ruirtU'«J only) 52 Operating OeSdt Reseive (3 mot op exo. reserve « debl svc) 53 Cosl Review, ApprahalS Em*onmental 54 Bond Counsel 55 Bank Perm Loan Fee 56 Ta* Service UCC Flood Cert. 57 CIXAC/CDIAC 5S issuer Fee59 Mlsc Bond Closing Costs 60 Notl Perfflanen! Loan Oprx Imeresl 16 months 61 MMA Syndication Legal62 MMA Due Diligence 63 Borrowed! Coonset (Gary Downs) 64 GP Legal (PSCOC) • Mile 65 ToUl Utei Dt Funtfs «6 Mel SoureeS Use 67 Dtelribuaore. 6A Balance of Funds SI7.0COA*4 Ill.tOUMI V KL«K,« lujo^ii IMKaStoqft wv.siruekqk f* • X S4HtanK MM*** SlJMMt tUKMI MWIMt OX7MK iiji^uijt tao% um 5JW tarn «»* c e a Clou 500.000 3.053.780 3,700.000 9.576.000 1«,«29,7«0 9,578.<X>3 . ,io.ooo_ 9.5M.OOO 285,000 2*5,000 215,060 14.230 50,000 476,000 769,098 SB 125 172.670 352.182 138.824 1,033.200 886.263 863.163 615.9M 700.000 10,300 10,000 20.000 35.000 25.000 100.000 50.000 «,574,427 69.454 250,000 40.000 3.600 3U.OM 50.000 4.050 45.000 750 4.000 62.500 5.000 45.000 25.000 25.000 20.0001SJH.7BO Quarttr 1 Quarter 2 Quarter 3 4.837.281 7,194.251 5965773 5 588 OX 4.J37.2J1 7,194,281 11,673,773 ... 3.596,579 5,692,982 9.315.769 3.SM.STS 0,652,912 9,315,719 543.421 797,018 1304,211 4,140,000 6,490,090 10,120.000 179.829 294,849 465.789 50.000 50,000 SO.OOfl 95.200 95,200 95.200 275.166 100,10"' 7500* 20.000 20.000 20.000 10.900 10.000 10,000 4,770,195 7,949,149 11,335,9(9 2926 2.926 2,926 84,160 141,476 234.858 67,086 144,482 237,764 — 4M3TJH — 7,1»4,m — M, 573,77 J~ Fund Completion Quartef4 • 455.397 5.412.000 5.1 87 J97 4 399.123 4.39»,123 815.977 5.015.000 219.956 50.000 95,200 75.000 20.000 25.000 10.000 5,510,1 S« 2,926291.816 294,741 62.500 S,887,J9T Quarter 5 2,249.117 2J4»,I17 - 1 .293 860 1,293,660 161,140 1.475,000 64.693 50.000 95,200 75.000 20,000 10.000 1,719,691 2.926 306,298 309,224 100.000 50.000 — Z449.H7 • 0 vwiivHufwM &.vu«<M«mx» wHvevwen *wi9 low Subtotal Qtnr*7 M00« 500.000 - • 23774JW9 14700.000 9,576.000 4I.S51,5n 9*76 090 10.0 X ' fi 24J83.333 i 24,5«3,3JJ , 3,441.867 , 21,025,000 1.229,167 300.000 152,000 769.098 88.126 172.670 3S2.I82 136.624 1.033.2 rri 8M.263 663.163 815J52 1,300.166 10.300 10,000 20.000 100,000 35.000 50.000 100.000 100.000 300,900 37,03o,S10 69.454 250.000 40.000 18.230 1. 038.606 1,436,290 150,000 50.000 4,050 45.000 750 4.000 125.000 5.000 45.000 25.000 26.00020.000 4*,551,*t9 • 495,711 10.000.000 1,224.401 (25.000,000) 802.000 3.370.000 785,000 <. 932.000 9.772.000 2.0*6,401 74,000 1.2*0.711 • * Retention 1.293,660 i 1.29M60 161.140 1.47S.OOO 720,000 67,242 1, 260,71 1 (769.098) 10.000 925,90? 77,2«2 1,260.718 - 331.638 97.720 867.659 -1391,761 (U.G40 I^MJTI 432.840 (432.640) 432.«40 0 500.000 495,711 10400,000 19.637,0009.576.000 1.932.000 9.772.000 51.912,711 9.576.000 9.M*^XX) 25,677.193 25,877.193 3.6JJ.807 24,500.000 1.229.167 300.000 2,500,000. 66 125 172.670 352182 138.824 1.033,200 686.263 663,183 615,552 1,300,166 10.300 10.000 20.000 100,000 45.000 50,000 100.000 100.0OO 300,000 39,294,41! 89.454 250.000 40,000 18,230 1,038.606 1,436,290 150.000 50.000 331.639 4.050 45,000 B7.720 750 4.000 125,000 5.000 687.659 45.000 25.000 25,000 20,000 .hSl'i^^i^ Hunters Pointe Carlsbad, CA 2005 TCAC/MHP Rents EXHIBIT B: OPERATING BUDGET & INCOME ANALYSIS 07-Jun-QB Rent: 1BR/1BA 1BR/1BA 1BR/1BA 2BR/2BA 2BR/2BA 2BR/2BA 2BR/2BA 3BR/2BA 3BR/2BA 3BR/2BA 3BR/2BA %AMI 55% 50% 35% 55% 50% 35% MGR MGR 55% 50% 35% Clubhouse & Other Total Rants MHP B B B ; Construction Square Feet Laundry Units 10 13 13 28 10 21 1 1 38 8 25 168 Square Feet/Unit 701 701 701 893 893 893 893 1,134 1,134 1,134 1,134 2,744 Total Sq. Ft 7,010 9,113 9.113 25,004 8,930 18.753 893 1,134 43,092 9,072 28,350 160,464 Gross Rents 711 646 452 853 776 543 853 986 986 896 627 * * * Utility Allowance 29 29 29 36 36 36 36 45 45 45 45 -• - •- - Monthly Net Rant 682 617 423 817 740 507 817 941 941 851 582 0 Annual Rant 81,840 96,252 65,988 274.512 88,800 127,764 9,804 11,292 429,096 81.696 174,600 I 0 1,441,644 173,268 163,208 ( 12.00 Per unW Per month 24.192 Other Income (App. Fees, Late, etc.) $ 4.50 Per unK/ Per month 9,072 Sub-Total 1,474.908 Less: Vacancies @ 5% 73,745 Total Income $1,401,163 Total Expenses $ 3,398 Per Unit 570.940 CFD Special Tax 0 Per Unit Net Operating Income $830,223 Reserves $600.00/unlt (MHP requires $600 unless supported by Rerserve Study) MHP mandatory payment 0.42% Net Income Available for Debt Service Perm Loan: Debt Service Coverage 1.10 Interest 5.60% Amortization 40 100.800 42,000 687,423 includes Issuer Fee paid by Trustee As underwritten at dose 9,772,000 Per Bond Sizing 9,850,000 Monthly Payment 51,068 Annual Payment 612,812 Cash After Debt {74,611) Hunters Polnte EXHIBIT D: OPERATING EXPENSE DETAIL 168 OPERATING EXPENSES (Annual) Per Unit Tn^i Advertising (Legal (Accounting/Audit RSecurity Bother ' Subtotal General Administrative Phone & Cable Gas & Electric Water/Sewer Subtotal UtilitiesNie Managers anance Personnel -ubtotal Payroll/Payroll Taxes Total Insurance Painting Repairs & Maintenance Trash Removal Exterminating Grounds Elevator Supplies Other Subtotal Maintenance Blssuer's Fee flother 1 Subtotal Other ITOTAL OPERATING EXPENSES [(Management Fee - 5% above, 1% below the line [Replacement Reserve - Reserve Study Supports $375/unit Service Amenities Real Estate Taxes & Assessments TOTAL EXPENSES Total Expenses w/o RR 15 33 63 0 56 166 29 350 476 855 333 290 125 749 268 71 179 157 40 243 0 129 54 872 0 0 0 2,910 480 600 0 9 3,998 3,398 2,500 5,500 10,500 0 9,420 27,920 4,800 58,800 80,000 143,600 56,000 48,800 20,960 125,760 45,000 12.000 30,000 26,400 6,720 40.800 0 21,600 9,000 146,520 0 0 0 488,800 80.640 100,800 0 1,500 671,740 570,940 flpntar* Ppint* EXHIBIT E: TC BASIS & EQUITY CALCULATION 07-Jun-06 04:43 PM DESCRIPTION OF COSTS LAND COSTS: LAND COSTS i LEGAL\ BROKERS FEESVJTTLE OFF-SITE IMPROVEMENTS DEMOLITION EXPENSE TOTAL LAND COSTS l TOTAL ACQUISITION COST NEW CON3TKUC TION SITE WORK STRUCTURES GENERAL REQUIREMENTS CONTRACTOR OVERHEAD CONTRACTOR PROFIT TOTAL CONSTRUCTION i ARCHITECTURAL FEES DESIGN SUPERVISION TOTAL ARCHITECTURAL COSTS TOTAL SURVEY * ENGINEERING CONSTRUCTION INTEREST/FEES CONSTRUCTION LOAN INTEREST LEGAL COUNSEL FEE ORIGINATION FEE CONSTRUCTION INSPECTION FEE BOND PREMIUM FORWARD RATE LOCK INSURANCE TITLE & RECORDING TOTAL CONST. INTERESTffEES TOTAL CONSTRUCTION CONTINGENCY PERMANENT FINANCING PERM LOAN FEES S^COSTS APPLICATION FEE TITLE & RECORDING ISSUER FEES OTHER: LEGAL, MISC. TOTAL PERM FINANCING COSTS ACTUAL OR EST. OF COSTS $9,576,000 $10,000 $0 $0 $9,586,000 $0 $0 $25,877,193 $1,509.503 $603.601 $1,508.503 $29,500,000 $780,100 $260,033 $1,040,133 $260,033 $1,706,465 $40.000 $250,000 $18,230 $0 $0 $300,000 $45,000 $2,359,695 $1,229,167 $146,720 $750 $0 $125,000 $124,050 $396,520 70% ELIGIBLE BASIS XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX 30% ELIGIBLE BASIS XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX $0 $0 $25,877,193 $1,509.503 $603,801 $1,509,503 $29,500,000 $780,100 $260,033 $1.040,133 $260,033 $1.038.606 $40.000 $250,000 $18.230 $0 $0 $300,000 £45,000 $1,691,836 $1,229,167 XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX Hunters Pointe EXHIBIT E: TC BASIS & EQUITY CALCULATION Page 2 DESCRIPTION OF COSTS LEGAL FEES LENDER LEGAL OTHER (Including CPA Opinions & Acctg.) TOTAL LEGAL (NOT INC. SYNDICATION) MARKET/APPRAISAL MARKET STUDY APPRAISAL TOTAL MARKET/APPRAISAL RESERVES OPERATING & REPLACEMENT RESERVES OTHER - LOC FEES FOR CALHFA RESERVES TOTAL RESERVE COSTS OTHER EXPENSES TCAC APP/ALLOCATION FEE ENVIRONMENTAL (Incl. Asbts. & Ld. Bsd Pnt) PHYSICAL NEEDS SURVEY PREVAILING WAGE COMPLIANCE SEISMIC STUDY CFD for Facilities Improvements LOCAL PERMIT FEES MARKETING FURNISHINGS REAL ESTATE TAXES SCHOOL FEES CONTINGENCY {SOFT COSTS) OTHER: SYNDICATION COSTS TOTAL OTHER COSTS SUBTOTAL RESIDENTIAL COSTS DEVELOPER COSTS DEVELOPER OVERHEAD/PROFIT - Limit DEVELOPER OVERHEAD/PROFIT CONSULTANTS PROJECT ADMINISTRATION OTHER TOTAL DEVELOPER FEE TOTAL RESIDENTIAL COSTS ACTUAL OR EST. OF COSTS $100,000 $100,000 $200,000 $10,300 $10,000 $20,300 $331,638 $0 $331,638 $89,454 $20,000 $0 $100.000 $0 $ 1,033,200 $2,010,316 $150,000 $50.000 $50.000 $686.263 $300.000 $0 $4,489,232 $49,412,718 $2,500.000 $6,713,687 $0 $0 $2,500.000 $51,912,718 70% ELIGIBLE BASIS XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX 30% ELIGIBLE BASIS XXXXXXXXXXXXX $100.000 $100,000 $10.300 $10,000 $20,300 XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX XXXXXXXXXXXXX $20.000 $0 $100.000 $0 $ 1.033.200 $2.010.316 XXXXXXXXXXXXX $50.000 $50.000 $686.263 $300.000 XXXXXXXXXXXXX $4,249,779 $38,091,248 $2.500,000 $5,713.687 $0 $0 $0 $2,500,000 $40,591,248 i TOTAL PROJECT AND BASIS COSTS | $51,912,718 | $346,084.79/unit ||130% DIFFICULT DEVELOPMENT FACTOR? |iTX CREDITS @ Tx Credit Rt @ % U Eligible Tract*Not Avail. TCAC Reservation Amw 3.52% June 06 rate $337.73/sq ft y $1,584.898 100.00% BTX CREDITS OVER TEN YEARS $40,591,248 | $52.766.622 I $1,857,455 | $1,861,296 $18,574,554.96 I ' JTX CREDIT EQ>Y@$/Credit@% Investment $1.055 99.99% Rounded $19,594,196 I 19.594 .000 Hunters Polnte EXHIBIT F: WATERFALL CF 45 YR Total Income, nel vacancies InflaUw £{ 2.90% Operating Expenses Inflation® J.50% Nel Operating Income Principal And interest MHP 042% Replacement Re»rves»»»0 infection 0.00% LPFee Net Project Cash Flow 1 1 1.401,163 570.940 430J23 612,812 42.000 100.800 7,500 2 1,436.192 590.923 846.2 19 612.812 42.000 100.600 7.688 81,«69 3l 1.472.096 611.60! 860X91 612.812 42.000 100,800 7,880 4 I 1.504,899 633.011 175,8*7 612.812 42,000 100.800 8.077 112,199 Si 1,546.621 655.167 8*1 ,488 612.812 42.000 100,800 6.279 127.564 •I 678.098 907,1*9 612.812 42.000 100.800 8.486 1434*2 rl 1.624.919 701.831 923.088 612.812 42,000 100.800 8.698 8 I 1. 665.542 726,395 939,147 612.812 42.000 100.600 8.916 174,62* 9 I 1.707.181 751,819 9 65 ,362 612312 42.000 100.800 9.138 1M412 10 I 1.749,860 776.133 971.TJ7 612,812 42,000 100,800 9,366 206.749 111* 1,793,607 SOS ,367 W»- 612.812 42.000 100,800 9.601 223,027 12 1.838.447 833.555 1*M« 612.812 42.000 100.800 9841 239X3* 13 I 1. 884.40*. 862.730 1*21,678 612,812 42 ,000 100.800 10,087 2SS.S80 14 I 1.S31.518 892,925 1.038,593 612.812 42,000 100.800 10.339 272442 IS 1, 979.806 924.177 IJMffl 612.812 42.000 100.800 10.597 2(9X1» 18 2.029 .301 966.524 1,072.778 612312 42,000 100,800 10,662 306,303 ADJUSTMENTS: Deferred DevJContractor Ft*: Payments F loewc* *** Beginning Principal Balance 6.00% 495.716 (87,111) (81.969) (97.000) (112,199) (127.564) (1J3.078) dHaMe Alter Oabl Svc. Oevelopaf Pee & Reserves 158.778 174.620 190.S12 206.749 223.027 239.439 2S5.9BO 272.642 289,419 MHP loan Repayment 42% (Clly rei^ijti ytfn of ton n 81% at c«tfi rtm Ml fl Cash flow before City Loan City or Hher Public Loan Interest si*rf»»Mic««jiti<w )% Pt»vapal & Accrued Unpaid Interest 1,932.006 Nel Cash Flow Sponsor Distribution • 28% of total Other Dutrlbuaons Cash Available for Distribution Incentive Mgml Fee (% of gross revenues) 80% of Cash Flow not lo exceed 6% doss Income 80% Flow nol to eiceed 6% Gross Income 6% Qross Income Incentive Managemem Fea Payable C»h Available for final distribution Tax Credit investor 99.9% Partners 0.10% PARTNERSHIP CASH FLOW __ 0 0 c 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 ; ", 0 0 0 0 0 0 0 0 0 p ( 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.206 5.808 (3.004; 0 2404 2.804 2.243 95,117 2,243 561 '560) (1) iSL. 66,687 92.092 (47,630. 0 44,4«2 44.462 35,589 97,495 35,569 8.892 (8883) (9) EL 73,340 101,280 (52.382) 0 48M* 48.898 39.118 99.933 39,118 »,780 (9770) (10) 0 W.057 110.555 (57.179) 0 83^7$ 53,376 42.701 102.431 42,701 10.67* (10,664) (11) 0 86,835 119915 (57,960) (4,060) S7 *»5 57.89S 46.316 104.992 46.316 11.579 (11,567) (12) 0 93,«71 129.35$ (57,980) (8943) 82X53 62,453 49,962 107,616 49962 12,4*1 (12,478) (12) (01 100,864 138.875 (57.960) (15.8*6) 67,049 67.049 53,639 110.307 53,639 13X10 (13,396) (13) (0) 107.512 148,468 (67,960) lta.826! 71,6*1 71.681 S7.344 113.064 57.344 14.336 (14.322) (14) (0) 114.S10 158.133 (57.960: <23.*26| 76.346 76,346 61.077 115,89161.077 15.269 (15,254) OS) (0) 121,556 167863 (57.960;, (28.859; 81,044 61.044 64836 118,788 64.836 18,209 (16.193) (16) 0 128.G47 177.656 ;57 960) ,;33«24i 85.77Z 85.772 68.618 121.758 68.618 17.1S4 (17.137) (17) («) Hunters Point* EXHIBIT F: WATERFALL CF 4S YR | Total Income, nel vacancies Matton © 2.60% Operating Expenses W»bon @ 3.60% Net Operating liwome Principal And Inlennl MHP fl.42% Replacement Re«eives»»»0 inllaction 0.00% LPFee Nei Project Cwh Flow ADJUSTMENTS: Deferred DevfContrector Fee: Payments F imw Avill CuMrn BMfik Beginning Principal Batonce 496,71 8 Cash Available After Debl Svc, Developer Fee & Reserves MHP Loan Repayment 42% (CHf raMVM W» or UW • 5» of C«* star MM>> Cash flow before City Lout City or other Pubic Loan Merest >Me<:Av<lfOMMi«w 3%. Principal & Accrued Unpaid Merest 1,932.000 Net C»h flow Sponsor Dtohfcullon » 21% ol total Ca* Available for Distribution tnceneve Mgml Fee <% ol gross revenues) 80% of Cash Flow rm to exceed 6% Gross Income 80S Flow not to exceed 6% Gross Income 6% Gross Income Incentive Management Fee Payable Ca»h Available for find tlitribullonV Tex Cred* Investor M.t% Partners 0.10% PARTNERSHIP CASH FLOW 1T I 2,080,034 990.002 1.090,032 612,812 42.000 100.800 11.134 0 323286 13S.7W 187.506 {57:960: 139.1181 90,526 92520 72.422 124.802 72.422 18,106 (18.067) (181 181 2,132.035 1,024.652 t.107,383 612,812 42.000 100,800 11,412 340J59 0 340.359 142,»5t 197,408 (57.960) (44.1 39) 9S.J09 95.305 76.247 127.922 76,247 19,082 (19,043) _. (19) 111 2,185,335 1.060,515 1,124421 612412 42/XX) 100400 11.697 357,511 0 357,511 150,155 207.35T (57.960) (49.285) 100.112 1M.112 60X1*9 131,120 80,089 20J22 (20,002) (20) 20 i 2.239,969 1.097,633 1.142,336 612.812 42,000 100.800 11.990 374,734 0 374,734 1ST 488 217.346 (57.960) (54.451) 104435 104 .»« 83.948 134.398 83,948 20417 (20.966) (2D 0 111 2,295.963 1,136,050 1.199.911 612.812 42.000 100.800 12.290 392417 0 392.017 1<4447 227.370 (57,960) (59.636) 101,774 1 39.774 87419 137,758 87.819 214S6 (21.933) (22) a 22| 2.353.367 1.175.M3 1.177,865 812,812 42,000 100,800 12,597 409.347 ; 409. W T71,«26 237,421 (57.960) (64.834) 114.82? 114.627 91,702 141.202 91,702 22425 (22402) (23) a 23 2412.201 V 16.965 1.1IU3. 612.812 42.000 100.800 12.912 42«.713 3 4«.T« 179,219 Z47.49J 24 2.472.50* 1.259459 141*447 612.812 42.000 100400 13,235 444.101 •j 444.101 116422 267,579 Wl 2,534 319 1.303,644 1430476 612.812 42.000 100.800 13,565 461 491 0 4(1.498 193,129 267.669 (57.960) (57,960) (57460) (70,044) (75.260) (80.478) 11I.49C 119,491) 95,592 144,732 95.592 23498 124459 124,359 99.4S7 148,350 99.487 24472 129431 129.231 103.384 1S2.059 103.384 2M4* (23,874) (24.847) (25420) (24) (25) (26) 0 0 10) 2.1 2.597.677 1. 34*271 1441X0* *12.*'2 42.000 100.800 13,905 0 471,890 201,134 277,756 (57,960) (8S.695) 134,101 134101 107,280 155,861 107.260 2*420 (26.793) (27) 27 2,662*19 1.396.49* 1466.123 612,812 42.000 100400 14.252 498 JSS 0 496456 20M29 287430 21 2,729,185 1.445373 1^83412 612412 42.000 100.800 14,609 513491 0 513.591 215,708 297.133 29 1 2 797.414 1 495.961 1,*«,4S3 «'2.812 42.000 100,600 14.974 U04M ; 530468 222464 307,903 (46.149) (43.068) (39,738) (102.717) (110.998) (119510) 131.96* 138965 111.172 159757 111,172 27,793 1434*1 143,818 115.054 163,751 115.054 21,7*4 148.656 148.656 118425 167,845 118,925 2»,731 Ml 2.867.350 1 548.320 1.319430 612.812 42.000 100,800 15.348 14*1,070 I) 548,070 230,189 317481 (36.152) (128.256) 16M73 153.473 122,778 172.041 122.778 >0,«9S (27.765) (28735) (29.701) (30464) (28) (29) (30) K» 0 (0) (0) (311 0 31 1 2.939,033 1 £02511 t,««22 612.812 42.000 100,800 15.732 5*5.176 0 S6S.179 237475 327804 (32405) (137.235) 1513*4 158,264 126,611 176.342 126,611 31,653 (31.621) (32) 0 32i 3.012.509 1 .65859* 1,353410 42.000 100,800 16,125 512.174 •3 582,174 244413 337.661 (28.188) (146.451) 183423 163023 130,418 180.751 130,418 32405 (32,572) (33) n HurKert Polnfq EXHIBIT F: WATERFALL CF 45 YR »l Ml -*35l »T 371 391 40T 41 43l ISC TOtata Total kicome, net vacancies tnflapon Q Ooerating Expenses Inflation Q Net OpemUng Income 2:50% .3.58* 3,087.822 3.165,017 3.244.143 3.325.246 3.408.378 3,493,587 3.580,927 3,670.450 3,762.211 3458.266 1.716450 1.776.732 1438,916 1.903.280 1.969495 2.038341 2.110201 2,184,058 2,2*0.500 2439.617 3.952,673 4.051,490 2.421,504 4,152.777 114.217,354 2493.975 60494,988 1,371.172 14U48S 1405425 1421.986 143*48) 1,454.746 M70.7M 148C492 1416,84* •* 1431,1(9 612.812 42.000 100.800 1S528 5*9.1 JZ Principal And Interest MHP Replacement R*terv«»»»>0 Wbcoon «WX LPFee Net Prefect Cult Plow ADJUSTMENTS: Deferred DevKontraclor Fee: Payment* F lo»<t*rAv*n exHiow Beginning Prindpal Balance 4*8,718 Cash Avalabk) After Oebl Svc, Developer Fee & Reserve! 599.032 812412 612412 42.000 42400 100400 17,365 632448 16,941 612,812 612312 42.000 42000 100400 100400 100800 17.79* 18.244 64*455 6*4427 612412 812412 612.812 42004 42 000 42.000 103800 100800 100,800 18.7CO 19.188 680/434 695441 42400 100400 19,647 20.138 711,133 1438,773 42.000 100400 20441 1453408 42.000 42400 100300 100.800 21.157 21486 1467412 14**,747 1,558,801 42.000 100300 22^29 1.393,773 24412.474 1390,000 4438400 611471 2&272421 °OOOOOOOQO"0 ,(618.921J 61S732 632.248 648.555 664.627 680.434 695,946 711.133 1,338,773 1J53.208 1.3*7,212 1,380,747 1.393.773 21,653,600 MHP Loan Replymx* C»h Dow baton CNy Loan C ity wottiw Public Loan interest it** Ann OMOIIOW Piindpilt Accrued Unpaid Intatett Nd Caih Flow Spontor Dlstitbutlon = 28% oftoUl Olh.rCH«tri button* Clsi\ Avalabla lor Ditblbubon Incentive Uotrrt Fee {% ol gro» cevenuM) 80% ol Cash Flow not to exceed 6% Grose Income 80% Ftow not to exceed 6* Gross Income 6S Gross Income Incentive Management Fee Payable Cash AwrlJM* (or Anal distribution V Tax Credit Investor 42% 3% i,«3i.oao of tout iome (Income 251 ,5M 347.439 (23.794! (155.901) 167743 167,743 134.195 185,269 134,195 2S8407 357.124 (19.117) nesses; 172420 172,420 137,936 189.901 137.936 265,544 368704 (14.149) 1175,510; 177445 177,045 141,636 1*4,649 141,636 272J93 376182 (6884) (1I54S7) 111411 181411 145,289 19941S 14W89 279,143 385.483 (3.314) (110,46*) 271,701 271.701 217,361 204,503 204403 285,782 394452 0 0 3944S2 394,652 315,721 209,615 209415 292.298 403.649 0 0 403449 403449 322.919 214.858 214,856 2*8*76 412,457 0 0 412,457 412.457 329,966 220,227 220.227 M2.285 776,489 0 0 776,489 776,489 621,191 225,733 225,733 568,347 784,860 0 0 76446P 784,860 627.888 231.376 231.376 574,229 792.983 0 0 792483 792,983 634,386 237,160 237,160 579,114 800,833 0 0 800433 . 800,833 640,667 243,089 243.089 S*S,3B3 808,388 0 0 88848* 808.388 646.711 249.167 249,167 t.094412 12,559.088 (1/440.371) (2.293.446) 842S.271 8.825,271 0 7,060,217 6.411.143 4,739.132 34/84 35,40*38.322 87,198 185436 188,7*3 1*2.130 55P.7S6 563/«84 S55422 557,744 889422 4486,138 (33415) (34.449) (35.374) (36.286) (67,131) (184451) (188.605) (192,038) (550,205) (552.931) (555,267) (557.186) (558,663) (4.082.052) 0.10%(34)_I§ZL C89)(8S81 1559) PARTNERSHIP CASH TLOW (0)(0) HUNTERS POINTE CONSTRUCTION LOAN INTEREST CALCULATION Close! -onsf/t/ctfon Loan •raws ntenst ialance interest In eligible basis "(instruction Period Interact iBond it»r«t on Outsl»ndlng Bond •itensttn ttlglbte tusk: 'onthry Draw Quarter 1 QuarMr2 4 j". Quarters Quarter 4 10 11 530% 3.053.780 1612.427 1«t2.427 1,6*2,427 2398,084 2,398,084 2.398.084 1,995,258 1.995,258 1,995,258 151,799 151799 151.798 13.996 21.387 28,777 36167 47,159 58,150 09,141 78,286 87,43t 96,576 97^272 97.967 3,053,780 4688,208 6.278.635 7,691062 10,289.145 12,687,229 15,085,313 17,080.570 19.075.828 21.071.086 21.22&885 21,374$84 21,526,483 iirmileflivs Draw ileresl on Cumubtive Draw Beginning Bat, 0.00*4 otal Interest In eSglble bail* Construction Period 'merest lontttryDraw Merest on Beg ntnng Balance 0 CO V. 'otal Interest interest in Elegble Basis onstruction Period Interest oan Balance Current Draw ess Payments ' oan Ending Balance X INTEREST IN ELIGIBLE BASIS TOTAL INTEREST a o D D 0 D 0 0 13.996 13,996 5 0 C c 21.387 21.387 0 0 0 0 28.777 28,777 64,160 0 0 c - 36.167 36.167 0 0 a 0 47,159 47,159 0 0 0 0 58,150 58,150 141,476 0 o 0 0 69.141 69,141 a 0 0 0 78486 78486 0 D 0 0 87^31 87.431 234,858 0 0 0 0 M£76 0 0 0 0 97472 97472 C 0 0 0 6 97.967 97,987 291,815 vraoo*«« PM HUNTERS PdNTE CONSTRUCTION LOAN INTEREST CALCULATION Quarters 13 14 CortJfructfon Loan Draws 5.50% 749,706 749,706 Interest 98,663 102,099 Balance 22276,188 23.025,894 Interest In eligible basis Construction Period Interest A Bond Interest on Outstanding Bond 0 0 Intenst In •llylblt tattt: Monthly Draw 0 0 Cumulative Draw 0 c Interest on Cumulative Draw Beginning Bak 0 00% C C Total Interesl In eligible basis C 0 Construction Period Interest 3 Bond Monthly Draw 0 D interest on Beginning Balance 0.00% C C Total Interest c 0 Interest n ElegUe Basis G o Construction Period Interest Loan Balance: Current Draw - 0 0 Less Payments ° 3 Loan Ending Balance 0 n V INTEREST IN ELIGIBLE BASIS 98,663 102,099 TOTAL INTEREST 98.663 102,099 | Quarter 6 I Quarter 7 13 16 i 17 18 19 17 749.706 204.067 204.067 204.067 204,067 204.067 10S.535 108.971 109.907 110.842 111.777 112.713 23,775599 23.979.666 24.183,733 24387,800 24591.866 24.795,933 0100 00 C 0 0 C' DO 0 0 0 C 00 0000 00 0 C 00 € 0 0 0 0 0 0 0 I) . 0 C 0 0 0 5 0 C 0 0 0 00 C 0 0 C 00 0 0 0 C 50 105.535 105,535 108,971 109,907 110,842 111,777 112,713 308,296 329,720 Construction Period Interest Construction Period Inters*! Basis Eigfcte Interest Basis Eligible Interest Poet Construction Interest Post Construction Interest J 18 204.067 24^87,800 113.648 1,708,465 25.000,000 0 6 0 0 0 0 C 0 0 C 0 0 0 0 0 ' 0 0 c 0 0 0 1.038,606 113,648 1.708,465 338,138 1,706,465 1,038,606 1,038.606 867359 W7/2WI l.*S PM Underwriting NOI 687,423 Assumed Bond Rate 5.600% Total Rate 5.600% 40 yr Amortization 6.271% Services Fee 0.029% Trustee Fee 0.044% 6.344% Debt Service Coverage Ratio 1.10 Max Debt 9,850,000