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R32-Economic Development Agency
CITY OF SAN BERNARDINO ORIGINAL ECONOMIC DEVELOPMENT AGENCY FROM: Emil A.Marzullo SUBJECT: Joint Public Hearing - Meta Housing, Inc., Interim Executive Director Magnolia Highland, L.P., Disposition and Development Residual Receipts Loan Agreement (The Magnolia at Highland Project DATE: July 23,2009 —Northwest Redevelopment Project Area) Synopsis of Previous Commission/Council/Committee Action(s): On June 18, 2009, Redevelopment Committee Members Johnson, Baxter and Brinker unanimously voted to recommend that the Mayor and Common Council and/or the Community Development Commission consider this action for approval. Recommended Motion(s): Open/Close Joint Public Hearing (Mayor and Common Council) Resolution of the Mayor and Common Council of the City of San Bernardino consenting to the disposition of the Redevelopment Agency of the City of San Bernardino's properties located on the southwest corner of Highland Avenue and Medical Center Drive (APN's: 0143-191-38, 46 and 63) to Meta Housing, Inc. — Magnolia Highland, L.P., for the development of 79 units of affordable senior citizen rental housing (Northwest Redevelopment Project Area) (Community Development Commission) Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to execute the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement("DDA")by and between the Agency and Meta Housing, Inc.—Magnolia Highland, L.P. (Northwest Redevelopment Project Area) Contact Person(s): Carey K.Jenkins Phone: (909)663-1044 Project Area(s): Northwest Redevelopment Project Area Ward(s): 6 Supporting Data Attached: 0 Staff Report Il Resolution(s) 0 Agreement(s)/Contract(s) ❑Map(s) ❑ Letter(s) Funding Requirements: Amount: $ 4 Million Source: Tax Increment 20%Housing Set-Aside Budget Authority: FY 2009-2010 ............ . Signature: Fiscal Review. Emil A.Marzullo, xecutive Director s DeJesus nterim Administrative Services Director Commission/Council Notes: *SO ' o7 0 - dea/Cr2l-SLzi Z 7/c-2(-)/0- P:\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Con't).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009/0 Agenda Item Number: •`32- ECONOMIC DEVELOPMENT AGENCY STAFF REPORT META HOUSING,INC.,MAGNOLIA HIGHLAND,L.P.,DISPOSITION AND DEVELOPMENT RESIDUAL RECEIPTS LOAN AGREEMENT (THE MAGNOLIA AT HIGHLAND PROJECT— NORTHWEST REDEVELOPMENT PROJECT AREA) BACKGROUND: In an attempt to address a number of affordable housing objectives, the Redevelopment Agency of the City of San Bernardino ("Agency") initiated the launch of an annual notice of funding availability ("NOFA"). The reasons for issuing such a procurement document included, among other things, the ability to provide a systematic allocation of funds on a regular basis; foster an environment where similar projects can be reviewed on the same merits at the same time; allow the City to address its overall housing production goals as stated in its Housing Element and the Agency's Housing Implementation Plan; provide a means for the City to implement specific housing policy goals and objectives (for example, higher quality affordable housing stock and better on-site management); and finally, create development opportunities within the City and generate interest from a greater number of development professionals. FY 2008-2009 marked the Agency's first opportunity to provide a regular allocation of funds to address the general affordable housing goals previously stated above. With this in mind, the Agency allocated a combination of approximately $6 million in tax increment housing set-aside funds and HOME funds toward two specific project types: 1. New construction of senior housing between 80 and 120 units; and 2. Acquisition and rehabilitation of existing and blighted multi-family rental housing in excess of 40 units. The Agency sought to emphasize these two types of projects in the NOFA as they represented the most pressing affordable housing needs within the City. In the case of new construction of senior housing, it would add to the City's list of successful senior projects in order to meet the housing demands of this growing community. In the case of the acquisition and rehabilitation of existing multi-family housing, especially those with a history of public service calls and those that are a blighting influence on the surrounding community, the investment would help to immediately stabilize certain areas of the City adversely affected by poorly maintained and operated residential housing complexes. On October 10, 2008, the NOFA was distributed to a wide variety of for-profit and non-profit developers, legal counsels that represent developers, financial consultants that specialize in redevelopment transactions and other redevelopment agencies in an attempt to garner support for the program and to create interest in the City's development opportunities. This was followed by a non-mandatory bidder's conference on November 5, 2008, held at the Agency's office. Finally, the Agency received 11 responses to the NOFA on December 19, 2008. From this total,there were 6 responses for new construction projects and 5 responses for acquisition and rehabilitation projects. P:\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Con't).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009 Agenda Item Number: 1251---" Economic Development Agency Staff Report Meta Housing, Inc. —D&DRR Loan Agreement Page 2 Upon receipt, the responses were submitted to a review panel that consisted of the Agency Director of Housing and Community Development and Senior Planner, as well as the City Planner and an Agency Consultant. Based on a review of the written responses, oral interviews with the finalists and site visits to each of the proposed development sites, the final rankings were as follows: Developer Location Type Score 1. Meta Housing, Inc. SW corner Highland& Medical Center Dr. New Construction 94 2. KDF Communities Foothill Villas—2nd&Meridian Rehabilitation 91 3. National CORE SE corner Highland& Medical Center Dr. New Construction 84 4. Chelsea Development Waterman & Weir New Construction 77 4. Chelsea Development Commercial & Steele New Construction 77 4. Chelsea Development 16th&Medical Center Dr. New Construction 77 7. TELACU IV Highland& Central New Construction 76 (additional funding for approved Project) Meta Housing, Inc. ("Developer"), proposal was awarded a number one ranking based on the quality of their proposed site, the opportunity to mitigate existing blighting conditions, and the ability to provide a high quality senior housing development to an underserved community that is a part of the Agency's Northwest Redevelopment Project Area. Specific details on the proposal are identified in the "Current Issue" section of this Staff Report. The KDF Communities project, the only responsive rehabilitation proposal, was very viable, however, the requested subsidy of the Agency was cost prohibitive and would not have created the immediate positive impact of the Developer's deal. The third ranked proposal from National CORE was also viable, however, it was located immediately across the street from that of the Developer's proposed Project and did not provide additional blight mitigation opportunities. In addition, the review committee felt the overall design and project layout did not match that of the Developer's deal. The other four proposals were responsive, however, in the collective opinion of the review committee, did not meet the quality threshold established by the top three NOFA responses. CURRENT ISSUE: The project site consists of three parcels that total approximately 3.4 acres that will be combined and subdivided into two parcels. The smaller parcel will be approximately 1 acre with frontage on Medical Center Drive and will remain vacant and owned by the Agency in anticipation of future development opportunities. The second larger parcel will be approximately 2.4 acres at the southwest corner of Highland Avenue and Medical Center Drive, and will accommodate the construction of a 3-story senior housing complex with approximately 87,000 square feet of floor area (the "Project"). Please see Attachment "A" that shows the Project site location. The Project includes enhanced landscaping treatments and significant tenant amenities throughout the development. P:\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Con't).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009 Agenda Item Number: 42 Economic Development Agency Staff Report Meta Housing, Inc. —D&DRR Loan Agreement Page 3 There will be 3 separate plans offered for the units of the Project. The first is a one-bedroom unit of approximately 589 square feet with a patio or balcony and the two other plans consist of 2-bedroom units of approximately 828 square feet and 971 square feet, also with patios or balconies. Please refer to Attachment "B" which shows the floor plan for each of these units. A lobby area, community room with a kitchen, fitness room, business center/computer room and management offices are planned on the first floor. Laundry rooms and auxiliary storage areas are planned on each floor. The exterior of the facility will be enhanced by an outdoor patio area with shade trees, a fountain, barbeque grills, a swimming pool and adequate areas for relaxed seating. A walking path around the perimeter of the building will allow residents the opportunity for exercise while at the same time providing them with a sense of security as the path will be within a decorative fencing of a 6-foot wrought iron fence that surrounds the Project. Adequate parking will also be provided with 97 standard parking spaces and four handicapped parking spaces. This exceeds the development code for the number of parking spaces for developments of this size. All resident parking will be secured to address safety concerns. Additional on-site security measures will include exterior and interior lighting, security cameras and a 24-hour monitoring service. Overall, the proposed building design features prominent contemporary architecture with varied roof lines, window treatments and awnings, a patio trellis, and complementary finish materials in varied earth tones. Please refer to Attachment "C" which shows various building elevations for the Project. The floor plan is open and convenient, with two elevators, laundry facilities on each floor, as well as easily accessible trash shoots on each floor. The Developer Meta Housing, Inc., is a Los Angeles, California based company that specializes in the development of affordable and market-rate apartment communities for families and seniors. Since 1969, the organization has been responsible for successfully developing more than 10,000 single-family and multi-family residential units throughout Southern California. As it relates to their portfolio of senior projects, the Developer believes senior housing should provide aging residents with more than just a comfortable place to live. Instead, their principle is to create an environment of "active aging in place." The Developer does this from the earliest design stages, by planning amenities and programs that attempt to engage residents and keep them inspired by their daily activities. The ultimate goal of this strategy is to encourage seniors to seek out participation in their immediate community and the surrounding neighborhood. Their portfolio includes both new construction and rehabilitation projects and has been recognized throughout the industry with awards, including the National Association of Home Builder's Platinum Medal, National Senior Housing Council's Gold Award, Gold Nugget Awards and numerous other honors. As evidenced by their past achievements, the quality of their NOFA response and the significant benefits the Project will bring to the Northwest Redevelopment Project Area, Agency Staff believes the Developer has a strong likelihood of success with the proposed Project. Project Deal Points The Developer is presently in escrow to acquire the three separate parcels that comprise the Project site. The Developer is presently entitling the parcels in preparation for the transition from three parcels into two parcels. At the close of escrow,the Developer would assign its position over to the Agency who would, in turn, acquire P:\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Cont).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009 Agenda Item Number: (2-32' Economic Development Agency Staff Report Meta Housing, Inc. —D&DRR Loan Agreement Page 4 the land at the specified value with Agency funds. This value is presently the stated appraised value plus accumulated escrow,title and legal processing fees and is estimated to be approximately$2,500,000. During this transitional period the Developer would complete its application process with the California Tax Credit Allocation Committee ("TCAC") for an anticipated award of 9% tax credits to complete the Project financing. The Developer would also be working with the City to complete the parcel map process. In addition, the Developer would be maintaining the Project site during this interim phase and would have assigned all of its drawings,plans, specifications and other predevelopment work over to the Agency. Once the financing for the Project is in place, all entitlement issues have been addressed, building permits approved and any other ancillary items completed per the DDA, the Agency would then transfer the 2.4 acre parcel at the corner of Highland Avenue and Medical Center Drive to the Developer("Parcel 1"). The Agency would then retain the one-acre parcel to the south that fronts Medical Center Drive in anticipation of future development("Parcel 2"). The Developer would then draw down the remaining funds from the Agency's $4 million original allocation as needed to pay for pre-development costs and City impact fees. Funds required to complete the Project would be in the form of a private bank construction loan and a portion of the tax credits. Upon completion of construction, permanent financing would occur through the replacement of the construction loan with a smaller permanent loan, additional tax credits injected into the deal and a small deferred developer's fee that would be paid back over time based only on available net operating income. The funds originally provided by the Agency for site acquisition in the amount of$2,477,605 would remain in the transaction and would be coupled with $1,522,395 allocated to pre-development costs prior to the start of construction. These two funding components would be rolled into permanent financing. The transfer for these funds to the Developer would be structured as a residual receipts loan and would be repaid to the Agency from 50% of the net operating income after the deferred developer's fee had been repaid. Project Financing The Agency's agreed upon subsidy for the Project is $4,000,000. This would be used for site acquisition in the amount of$2,400,000, plus $77,605 in accumulated escrow extension, title and legal transaction fees. The remaining balance of $1,522,395 would be used to pay for reimbursable pre-development costs and City impact fees. As a result of this development,the Agency would retain the one-acre Parcel 2 and would receive a deferred payment residual receipts loan secured by a second trust deed against the Project. The total development cost for the Project is $17,549,251. The permanent sources used to complete the Project would be derived from the following: $10,621,198 in tax credit equity; $2,916,778 in permanent 1'trust deed financing; $4,000,000 from the Agency in the form of a deferred payment 2nd trust deed residual receipts loan; and $11,275 in deferred developer's fee. Please refer to Attachment "D" which details the permanent sources and uses of Project funds. From a redevelopment perspective,the return to the Agency is significant. With its investment of$4,000,000, the Agency would transform an existing blighted automotive repair site into 79 units of high quality affordable housing for seniors plus one on-site manager's unit, obtain a one-acre parcel of land directly to the south of the proposed Project for future development opportunities, and create a future stream of income through the residual receipts loan that could be used for future housing development activities. P:\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Con't).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009 Agenda Item Number: 3/3/i' Economic Development Agency Staff Report Meta Housing, Inc. —D&DRR Loan Agreement Page 5 Existing Approvals On April 24, 2009, the Project was presented to a Committee of the Northwest Project Area Committee ("Northwest PAC"). The Developer presented the Project plans and answered questions of the Northwest PAC members present at the Redevelopment Committee meeting. Based on all accounts, the Project was enthusiastically received. On April 30, 3009, the Development/Environmental Review Committee (D/ERC) reviewed the Project plans and moved the item to the Planning Commission for consideration. It was noted by various members of the D/ERC that the initial plan submittal was complete and the Developer had verified all required documents and technical reports in advance to make the review process much easier. On May 19, 2009, the City's Planning Commission unanimously approved the Developer's request for a Tentative Parcel Map to combine three parcels to create two parcels of approximately one acre and 2.4 acres in area and a Conditional Use Permit to construct a 3-story, 80-unit senior housing project on 2.4 acres located at the southwest corner of Highland Avenue and Medical Center Drive in the CO, Commercial Office land use district. ENVIRONMENTAL IMPACT: This request is exempt under the California Environmental Quality Act ("CEQA"), pursuant to Section 15332, Class 32,which consists of projects characterized as in-fill development meeting the following conditions: (a) the Project is consistent with the applicable general plan, applicable zoning designation and regulations; (b) the proposed Project is located within city limits and is not more than 5 acres; (c)the Project site has no value as habitat for endangered, rare or threatened species; (d) the Project would not result in any significant effects relating to traffic, noise, air quality or water quality; and (e) the Project is adequately served by all required utilities and public services. FISCAL IMPACT: There is no City General Fund impact as a result of the Project. The Agency anticipates subsidizing the Project in the amount of$4,000,000, in the form of a deferred payment residual receipts loan secured by a 2nd trust deed. The source of these funds is derived from tax increment 20% housing set-aside and has been identified in the FY 2009-2010 Agency Budget. RECOMMENDATION: That the Mayor and Common Council and the Community Development Commission adopt the attached Resolutions. Emil A. Marzullo,Interim Executive Director P.\Agendas\Comm Dev Commission\CDC 2009\08-03-09 Meta Housing,Inc.-D&DRR Loan Agreement SR(Cont).doc COMMISSION MEETING AGENDA Meeting Date: 08/03/2009 Agenda Item Number: V-3 C PY 1 RESOLUTION NO. 2 3 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF 4 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN 5 BERNARDINO'S PROPERTIES LOCATED ON THE SOUTHWEST CORNER OF HIGHLAND AVENUE AND MEDICAL CENTER DRIVE 6 (APNS: 0143-191-38, 46 AND 63) TO META HOUSING, INC. — MAGNOLIA HIGHLAND,L.P., FOR THE DEVELOPMENT OF 79 UNITS 7 OF AFFORDABLE SENIOR CITIZEN RENTAL HOUSING (NORTHWEST REDEVELOPMENT PROJECT AREA) 8 9 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 10 public body, corporate and politic; and 11 WHEREAS, the Agency will own properties located on the southwest corner of Highland 12 Avenue and Medical Center Drive (APN's: 0143-191-38, 46, and 63 collectively, the "Property"); .13 and 14 WHEREAS,the Agency will acquire the Property using low- and moderate-income housing 15 tax increment set-aside funds; and 16 WHEREAS, the Agency proposes to transfer the Property to Meta Housing, Inc. —Magnolia 17 Highland, L.P., a California limited partnership (the "Developer"), in accordance with the terms and 18 conditions of the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and - 19 Development Agreement (the "DDA"); and 20 WHEREAS, the Developer shall develop and improve the Property as may hereafter be 21 transferred by the Agency to the Developer pursuant to the DDA with 79 units of affordable senior 22 citizen rental housing and one on-site manager's unit ("Project"), using the design and - 23 improvement standards which are consistent with City Tentative Parcel Map No. 19200 24 (Subdivision No. 09-02) and City Conditional Use Permit No. 09-05, as previously approved by the 25 Planning Commission on May 19, 2009; and 26 WHEREAS, the Developer has the background, experience and financial capability to 27 develop the Project and is seeking a deferred payment second trust deed residual receipts loan from 28 the Agency in an amount up to $4,000,000; and R 3P P:\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc.MCC Resolution(Coot).don 1 WHEREAS, the Agency loan will be combined with other funds the Developer is seeking 2 including an allocation of low-income housing tax credits from the California Tax Credit Allocation 3 Committee ("TCAC") to provide funds in the amount of$10,621,198, and a permanent first trust 4 deed loan in an amount up to $2,928,053 to complete the financing of the Project with an estimated 5 total development cost of$17,549,251; and 6 WHEREAS, it had been found and determined that the environmental review of the disposition of Agency Property mis a "categorically exempt ro j ect" for the reasons indicated in the 8 Agency Staff Report, and no potentially adverse environmental effects are anticipated to be 9 associated with the redevelopment of the Project; and 10 WHEREAS, the Agency has prepared and published a notice of joint public hearing in The 11 San Bernardino County Sun Newspaper on July 4, 2009, and again on July 10, 2009, regarding the 12 consideration and consenting to the disposition of the Property to the Developer. 13 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY 14 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 15 FOLLOWS: 16 Section 1. The Recitals of this Resolution are true and correct. 17 Section 2. On August 3, 2009, the Mayor and Common Council of the City of San 18 Bernardino ("Council") conducted a full and fair joint public hearing with the Community 19 Development Commission of the City of San Bernardino ("Commission"), and considered the 20 written Agency Staff Report and consented to the disposition of the Agency Property to the 21 Developer pursuant to this Resolution. The Council hereby consents to the disposition of the 22 Agency Property to the Developer. The minutes of the City Clerk for the August 3, 2009, joint - 23 public hearing of the Council and the Commission shall include a record of all communication and 24 testimony submitted to the City Council and the Commission at the joint public hearing by 25 interested persons relating to the disposition of the Property. As required by Health and Safety 26 Code Section 33433(b)(2), the Council hereby finds and determines that the disposition and redevelopment of the Property by the Developer in accordance with the DDA is no less than the fair 28 reuse value at the use and with the covenants and conditions and development costs as affordable 2 P:\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc MCC Resolution(Can't).doe 1 senior housing and with the covenants and conditions and development cost authorized by said 2 DDA. 3 Section 3. The Council hereby finds and determines that the environmental review of the 4 approval of the DDA and the redevelopment activities contemplated thereunder is a "categorically 5 exempt project" for the reasons indicated in the Agency Staff Report, and no potentially adverse 6 environmental effects are anticipated to be associated with the redevelopment of the Project. 7 Section 4. The City is not a party to the DDA, and nothing in this Resolution shall be 8 deemed to constitute an approval by the City of any application for a development project permit or 9 approval which the Developer may hereafter be required to obtain from the City as a condition 10 precedent to the performance of the Developer's obligation under the DDA with respect to the 11 redevelopment of the Project. The City hereby reserves its discretion under all applicable law to 12 approve or reject, and to impose any appropriate condition of its approval on the project 13 development permit application as the Developer may hereafter submit to the City in connection 14 with the Project. 15 Section 5. This Resolution shall take effect upon its adoption and execution in the 16 manner as required by the City Charter. 17 /// 18 /// 19 /// 20 //I 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 3 P:\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc MCC Resolution(Coot).doc 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF 2 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN 3 BERNARDINO'S PROPERTIES LOCATED ON THE SOUTHWEST CORNER OF HIGHLAND AVENUE AND MEDICAL CENTER DRIVE 4 (APNS: 0143-191-38, 46 AND 63) TO META HOUSING, INC. — MAGNOLIA HIGHLAND, L.P., FOR THE DEVELOPMENT OF 79 UNITS 5 OF AFFORDABLE SENIOR CITIZEN RENTAL HOUSING (NORTHWEST REDEVELOPMENT PROJECT AREA) 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 8 Common Council of the City of San Bernardino at a meeting 9 thereof, held on the day of , 2009, by the following vote to wit: 10 Council Members: Ayes Nays Abstain Absent 11 ESTRADA 12 BAXTER BRINKER 13 SHORETT 14 KELLEY 15 JOHNSON 16 MC CAMMACK 17 18 19 Rachel G. Clark, City Clerk 20 The foregoing Resolution is hereby approved this day of , 2009. 21 22 23 Patrick J. Morris, Mayor 24 City of San Bernardino 25 Approved as to Form: 26 1_, �r�27 By: 9. ames F. Penman, City Attorney 28 4 P:\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc.MCC Resolution(Cant).doc C l'Ep.) y 1 RESOLUTION NO. 2 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION 3 OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE 4 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE 2009 AFFORDABLE SENIOR CITIZEN 5 RENTAL HOUSING ACQUISITION, DISPOSITION AND 6 DEVELOPMENT AGREEMENT ("DDA") BY AND BETWEEN THE AGENCY AND META HOUSING,.INC. — MAGNOLIA HIGHLAND, L.P. 7 (NORTHWEST REDEVELOPMENT PROJECT AREA) 8 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 9 public body, corporate and politic; and 10 WHEREAS, the Agency will own properties located on the southwest corner of Highland 11 Avenue and Medical Center Drive (APN's: 0143-191-38, 46, and 63 collectively, the "Property"); 12 and 13 WHEREAS, the Agency will acquire the Property through an assignment of interest under a 14 purchase contract between Meta Housing, Inc. — Magnolia Highland, L.P. (the "Developer"), and 15 the respective property owners for purchase of the Property pending final disposition; and 16 WHEREAS, the Agency proposes to transfer the Property to the Developer in accordance 17 with the terms and conditions of the "2009 Affordable Senior Citizen Rental Housing Acquisition, 18 Disposition and Development Agreement (the "DDA"); and 19 WHEREAS, the Developer shall develop and improve the Property as may hereafter be 20 transferred by the Agency to the Developer pursuant to the DDA with 79 units of affordable senior 21 citizen rental housing and one on-site manager's unit ("Project"), using the design and 22 improvement standards which are consistent with City Tentative Parcel Map No. 19200 23 (Subdivision No. 09-02) and City Conditional Use Permit No. 09-05, as previously approved by the 24 Planning Commission on May 19, 2009; and 25 WHEREAS, the Developer has the background, experience and financial capability to 26 develop the Project and is seeking a deferred payment second trust deed residual receipts loan from 27 the Agency in an amount up to $4,000,000; and 28 1 P:\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc.CDC Resolution(Con4).doc 1 WHEREAS, the Agency loan will be combined with other funds the Developer is seeking 2 including an allocation of low-income housing tax credits from the California Tax Credit Allocation 3 Committee ("TCAC") to provide funds in the amount of $10,621,198, and a permanent first trust 4 deed loan in an amount up to $2,928,053 to complete the financing of the Project with an estimated 5 total development cost of$17,549,251; and 6 WHEREAS, it had been determined that the environmental review of the Agreement with 7 regards to the disposition and development of Agency Property is a "categorically exempt project" 8 for the reasons indicated in the Agency Staff Report, and no potentially adverse environmental 9 effects are anticipated to be associated with the redevelopment of the Project; and 10 WHEREAS, the Agency has prepared and published a notice of joint public hearing in The 11 San Bernardino County Sun Newspaper on July 4, 2009, and again on July 10, 2009, regarding the 12 consideration and disposition of the Property to the Developer; and 13 WHEREAS, pursuant to Health and Safety Code Section 33433(b), the Agency may transfer 14 the Property to the Developer subject to the Mayor and Common Council of the City of San 15 Bernardino ("Council") and the Community Development Commission of the City of San 16 Bernardino ("Commission") adopting a Resolution by the Council authorizing the Agency to 17 transfer the Property in light of the findings set forth in such Resolution, pursuant to Health and 18 Safety Code Section 33433; and 19 WHEREAS, the Agency has prepared a Summary Report that describes the salient points of 20 the DDA and identifies the cost to the Agency of the disposition and development of the Property. 21 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 22 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 23 FOLLOWS: 24 Section 1. The Recitals of this Resolution are true and correct. 25 Section 2. On August 3, 2009, the Commission conducted a full and fair joint public 26 hearing with the Council, and considered the written Agency Staff Report relating to the DDA, the 27 Summary Report and the testimony submitted relating to the disposition and development of the 28 Property by the Developer pursuant to the terms and conditions of the DDA. The minutes of the 2 P.\Agendas\Resolutions\Resolutions\2009\08-03-09 Meta Housing,Inc.CDC Resolution(Con't).doc 1 City Clerk for the August 3, 2009, joint public hearing of the Commission and the Council shall 2 include a record of all communication and testimony submitted to the Commission and the Council 3 at the joint public hearing by interested persons relating to the Summary Report, the Project and the 4 approval of the DDA. 5 Section 3. This Resolution is adopted in order to satisfy the provisions of Health and 6 Safety Code Section 33433 as those provisions relate to the disposition of the Property by the 7 Agency to the Developer on the terms and conditions set forth in the DDA. The Commission 8 hereby finds and determines as follows: 9 (i) The Summary Report contains the information described in Health and Safety Code 10 Section 33433(a)(2)(B); 11 (ii) The disposition and redevelopment of the Property by the Developer in accordance 12 with the DDA is consistent with the affordable housing supply preservation and 13 expansion programs of the Agency Housing Implementation Plan; 14 (iii) The terms and conditions of the DDA contain assurances that the Developer will 15 redevelop the Property; 16 (iv) As required by Health and Safety Code Section 33433(b)(2), the disposition and 17 redevelopment of the Property by the Developer in accordance with the DDA is not 18 less than the fair reuse value at the use and with the covenants and conditions and 19 development costs as affordable senior housing and with the covenants and 20 conditions and development costs authorized by said DDA; and 21 (v) The disposition of the Property to the Developer on the terms set forth in the DDA 22 shall assist in the elimination of conditions of blight on the Property and in the 23 Northwest Redevelopment Project Area. 24 Section 4. The Commission hereby finds and determines that the environmental review 25 of the DDA and the redevelopment activities contemplated thereunder is a "categorically exempt 26 project" for the reasons indicated in the Agency Staff Report. No potentially adverse environmental 27 effects are anticipated to be associated with the redevelopment of the Property, and accordingly 28 based upon its own independent review of the information provided to the Commission regarding 3 P:Agendas`Resolutions`Resolutions`2009`:08-03-09 Meta Housing,Inc.CDC Resolution(Con't).doc 1 the Property; the Commission hereby authorizes the filing of a Notice of Exemption under CEQA 2 relating to the Project. 3 Section 5. The Commission hereby receives and approves the Summary Report and the 4 DDA in the form as submitted at this joint public hearing. 5 Section 6. The Commission hereby approves the disposition of the Property by the 6 Agency to the Developer on the terms set forth in the Agreement and hereby authorizes the Interim 7 Executive Director of the Agency to execute the DDA on behalf of the Agency and the Interim 8 Executive Director of the Agency is hereby authorized to make minor corrections, additions, 9 clarifications, interpretations to the DDA, provided said changes are not substantive in nature, do 10 not increase the monetary impact to the Agency and are consented to by the Agency Counsel. 11 Section 7. This Resolution shall take effect upon its adoption and execution. 12 /// 13 /// 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 4 P:1Agendas`Resolutions\Resolutions`2 00910 8-03-09 Meta Housing,Inc.CDC Resolution(Con's).doc 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND 2 AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE 3 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE THE 2009 AFFORDABLE SENIOR CITIZEN 4 RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT ("DDA") BY AND BETWEEN THE 5 AGENCY AND META HOUSING, INC. — MAGNOLIA HIGHLAND, L.P. (NORTHWEST REDEVELOPMENT PROJECT AREA) 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 8 Development Commission of the City of San Bernardino at a meeting 9 thereof, held on the day of , 2009, by the following vote to wit: 10 Commission Members: Ayes Nays Abstain Absent 11 ESTRADA 12 BAXTER 13 BRINKER 14 SHORETT 15 KELLEY 16 JOHNSON 17 MC CAMMACK 18 19 Secretary 20 21 The foregoing Resolution is hereby approved this day of , 2009. 22 - 23 Patrick J. Morris, Chairperson 24 Community Development Commission of the City of San Bernardino 25 26 Approved as to Form: 27 By: / 28 Agency o 1el 5 P.Wgendas\AesolutionsItesolutions\2009\08-03-09 Meta Housing,Inc.CDC Resolution(Coat).doc 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.) THIS 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT(this"Agreement")is dated as of August 3,2009, by and between Magnolia Highland, L.P., a California limited partnership (the "Developer"), and the Redevelopment Agency of the City of San Bernardino,a public body corporate and politic(the"Agency"). This Agreement is entered into with respect to the facts presented in the following Recitals: FOR GOOD AND VALUABLE CONSIDERATION, THE DEVELOPER AND THE AGENCY HEREON PROMISE,COVENANT AND AGREE FOR THEMSELVES AND THE SUCCESSORS AND ASSIGNS OF EACH OF THEM AS FOLLOWS: SECTION 1.1. Integration of Understanding; Identification of Parties. (a) The Agency has previously accepted the proposal of the Developer's predecessor in interest,Meta Housing Corporation, under certain correspondence of the Agency,dated March 20, 2009 (the"NOFA Ranking Letter")to undertake the"Project"as this term is described in this Agreement. The Developer and the Agency hereby acknowledge and agree that on the "Effective Date," as this term is defined below in this Agreement, this Agreement shall supercede the NOFA Ranking Letter, and , no provision of the NOFA Ranking Letter shall have any further force or effect after the Effective Date. (b) This Agreement constitutes the entire agreement of the Developer and the Agency with respect to the subject matter covered herein. The Developer and the Agency agree that there are no other agreements or understandings between the Agency and the Developer except as set forth in this Agreement. The Developer and the Agency further agree that no representation has been made by either party to the other as an inducement to enter into this Agreement. The Developer and the Agency agree that all prior representations and negotiations between the parties under the NOFA Ranking Letter or subsequent to the date of the NOFA Ranking Letter, are superceded by this Agreement. (c) The text of the Agency resolution approving this Agreement, is incorporated by this reference into this Agreement and is made a part hereof. (d) Prior to the execution of this Agreement,Meta Housing Development Corporation,Inc.,a California corporation("Meta"), entered into the various agreements for the acquisition and purchase of the Property as defined herein and has formed the Developer prior to the date of this Agreement. Meta has extensive experience through the individuals acting as the principals of Meta to undertake all obligations required by Meta and the Developer pursuant to this Agreement and to enter into the Meta Housing Corporation Guaranty for the repayment of the Initial Agency Loan Advance,the Agency Loan Note,the Agency Loan Deed of Trust, the Developer Assignment of Licenses, Permits and Contracts as further provided in the definition of Agency Loan Documents. Rep/ace/776,d- 1 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08 3 a 3-09 Meta Housing-Final DDA.doc SECTION 1.2. Environmental Impact Evaluation of the Project Under the California Environmental Quality Act. (a) As part of the consideration of the City of San Bernardino Planning Commission of the development project application for approval of tentative Parcel Map No. 19200 and City Conditional Use Permit No.09-05,the City of San Bernardino has previously certified under the California Environmental Quality Act ("CEQA"), that the Project is a "Class 32 Categorically Exempt Project", as this term is defined under the applicable regulations of CEQA. The Community Development Commission of the City of San Bernardino acting by and for the Agency,as a"responsible agency"to the City of San Bernardino, finds and determines that the Project is a categorically exempt Class 32 project under CEQA. (b) In the event that the implementation by the Developer of one or more particular elements of the Project may require additional review under CEQA, the parties shall consult with each other with respect to such additional CEQA study,as may then be indicated. Nothing in the preceding sentence shall be deemed to be a commitment or an obligation of the Agency to pay for any such additional cost of CEQA study,and the Agency reserves its discretion to approve or disapprove any such additional CEQA study cost or expense which would be payable by the Agency. SECTION 1.3. Purpose of Agreement. The purpose of this Agreement is to effectuate the Redevelopment Plan for the Northwest Redevelopment Project by providing affordable rental housing loan assistance to the Developer to: (i) acquire the Site from the Agency for redevelopment as affordable senior citizen rental housing and; (ii) design, construct, install, finance and place the Project in use and occupancy by Senior Citizens Households and Lower-Income Senior Citizen Households. The redevelopment of the Project on the Site and the fulfillment generally of this Agreement are in the best interests of the City and the welfare of its residents and are in accordance with the public purposes and provisions of applicable federal, state, and local laws and regulations under which the Project has been undertaken and is being assisted. SECTION 1.4. Definitions. In addition to the meaning ascribed to certain words and phrases as set forth in the Recitals of this Agreement or in other sections of this Agreement including any of the Attachments to this Agreement, other words and phrases shall have the meaning described below: • Affordable Rental Units. The words"Affordable Rental Units"mean and refer to the senior citizen multi-family rental housing dwelling units to be constructed by the Developer as part of the Project. Each of the Affordable Rental Units shall be reserved for occupancy by Senior Citizen Households at an"affordable rent"in compliance with the lower rent level for each Affordable Rental Unit set forth in either the State TCAC Regulatory Agreement or the Agency Regulatory Agreement. • Agency Acquisition Escrow. The words"Agency Acquisition Escrow"mean and refer to the land transfer transaction account by and among the Escrow Agent, each of the owners of the parcels of land which comprise the Property and the Agency. The Agency shall acquire the Property upon the close of the Agency Acquisition Escrow. • Agency Grant Deed. The words "Agency Grant Deed" mean and refer to the instrument of conveyance for the transfer by the Agency of the Site to the Developer. The general form of the Agency Grant Deed is Attachment No. 6 of this Agreement. 2 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Anachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA-doe • Agency Loan. The words"Agency Loan"mean and refer to the loan to be originated by the Agency in favor of the Developer in a principal amount not to exceed Four Million Dollars ($4,000,000). The provisions of the Agency Loan are set forth in Section 2.8. The Agency Loan shall be evidenced by the Agency Loan Note (Attachment No. 10) and shall be secured by the Agency Loan Deed of Trust(Attachment No. 11) and the other Agency Loan Documents. • Agency Loan Deed of Trust. The words"Agency Loan Deed of Trust"mean and refer to the deed of trust which encumbers the Site and the Project as security for the repayment of the Agency Loan. The general form of the Agency Loan Deed of Trust is Attachment No. 11 of this Agreement. • Agency Loan Documents. The words"Agency Loan Documents"means and refers to collectively, all of the documents executed by the Developer in favor of the Agency which either evidence the Agency Loan or provide the Agency with security for the repayment of the Agency Loan. The Agency Loan Documents include without limitation the Meta Housing Corporation Guaranty for the repayment of the Initial Agency Loan Advance, the Agency Loan Note, the Agency Loan Deed of Trust, the Developer Assignment of Licenses, Permits and Contracts. • Agency Loan Note. The words"Agency Loan Note"mean and refer to the promissory Note of the Developer payable to the Agency which evidences the Agency Loan. The form of the Agency Loan Note is Attachment No. 10 of this Agreement. • Agency Regulatory Agreement. The term "Agency Regulatory Agreement" means and refers to that certain Lower-Income Senior Citizen Household rental housing regulatory agreement and declaration of covenants and restrictions by and between the Developer and the Agency affecting the Site and the Project subject to subordination by the Agency to the Construction Loan and the Permanent Loan. The form of the Agency Regulatory Agreement is Attachment No. 9 of this Agreement. • Agency Subordination Agreement for Project Financing. The words "Agency Subordination . Agreement for Project Financing" mean and refer to the form of one or more loan subordination agreements by and between the Developer and the Agency in favor of a lender who provides permitted development financing for the Project as set forth in this Agreement. The first such Agency Subordination Agreement for Project Financing shall be in favor of the Construction Lender in support of the Construction Loan, and the second shall be in favor of the Permanent Lender in support of the Permanent Loan. The Agency Subordination Agreement for Project Financing with respect to the Construction Loan and/or Permanent Loan may be in the form of an intercreditor agreement among the Agency and other holders of security interests in the Project in the event that the Developer may obtain a Construction Loan or a Permanent Loan, as applicable, from multiple lending sources, such as a portion of such construction financing from a conventional lender and a portion from an instrumentality of the State of California,including without limitation the California Housing Finance Agency. Each such Agency Subordination Agreement for Project Financing shall be for a permitted Security Financing Interest and shall be subject to the terms and conditions of this Agreement;provided,however,that the Senior Citizens Rental Housing Use Covenant as set forth in Attachment No.7 to this Agreement shall never be subject to such subordination. The Agency shall not be obligated nor required to execute and deliver any subsequent Agency Subordination Agreement for Project Financing except at its sole discretion. 3 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments Agrmts-Amend 2009\0g-03-09 Meta Housing-Final DDA.doc • Certificate of Completion. The term"Certificate of Completion"means and refers to that certain Certificate of Completion which is Attachment No. 12 of this Agreement. • City. The term "City" means and refers to the City of San Bernardino. • Closing/Closing Date/Close of Site Transfer Escrow. The terms "Closing","Closing Date" and "Close of Site Transfer Escrow"shall mean the date on which the conditions for the transfer of the Site to the Developer(Parcel No. 1 of tentative Parcel Map No. 19200)have been satisfied and the Agency Deed of Trust and the Agency Grant Deed, the Agency Regulatory Agreement and the related Agency instruments are filed for record in the Office of the County Recorder of San Bernardino County, California. The Closing shall occur on or before the date provided in the Schedule of Performance. • Construction Lender. The words"Construction Lender"means and refers to the entity or entities which provides the Construction Loan to the Developer. • Construction Loan. The words "Construction Loan" mean and refer to the loan (or collectively loans from multiple sources, including instrumentalities of the State of California) which the Developer shall hereafter obtain in an approximate principal amount presently estimated to be that amount as set forth on the Developer Project Pro Forma submitted by the Developer to the Agency, subject to modifications as may be approved by the Agency Executive Director, in order to provide for the construction and improvement of the Project. The Construction Loan may be derived from one or more sources of financing obtained by the Developer, including without limitation from an instrumentality of the State of California, from the proceeds of a construction loan provided by a state or federally regulated third-party lending institution, or from a combination of these. • Construction Loan Documents. The words"Construction Loan Documents"mean and refer to the various documents and instruments by and between the Developer and the Construction Lender which evidence the Construction Loan for the improvement of the Project. • Construction Loan Escrow. The words "Construction Loan Escrow" mean and refer to the loan financing transaction account by and between the Developer, Construction Lender and the Escrow Agent through which the initial disbursement of the Construction Loan shall be paid to the Developer. The Construction Loan Escrow shall close concurrently with the Close of the Site Transfer Escrow. The Agency shall not be party to the Construction Loan Escrow. • Days.The word day or days shall mean calendar days in all instances unless modified specifically to mean business days to thus exclude weekends and holidays from the calculation of the number of days. • Developer. The words Developer means Magnolia Highland, L.P.,a California limited partnership, duly formed by Meta Housing Corporation ("Meta"), as an affiliate of Meta. unless otherwise specifically set forth to the contrary in this Agreement. • Developer Acquisition Escrow Assignment Agreement. The words "Developer Acquisition Escrow Assignment Agreement"means and refers to the agreement by and between the Developer and the Agency,whereby the Developer assigns to the Agency the real property purchase agreements by and between the Developer and each of the following owners of property which comprise the Property and as set forth on Attachment No. 5 to this Agreement: 4 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03.09 Meta Housing-Final DDA.doc (i) Elias C. Antonovich, et al; (ii) 11026 Long Beach, LLC, et al; and (iii) Harold Mirsh Survivors, et al. • Developer Assignment of Licenses,Permits and Contracts. The words"Developer Assignment of Licenses, Permits and Contracts" means that certain assignment document to be executed and delivered by the Developer pursuant to this Agreement as further required by Section 2.8(f)(iii)(C). • Developer Equity. The words "Developer Equity"mean and refer to: (i) amounts of Developer Equity as shall be contributed to the Project by the Developer including such Developer Equity as may be provided by the Investor Limited Partners,as necessary in order to provide for the improvement of the Project,including such amounts as may be required by the Construction Lender under its construction loan underwriting standards; and (ii) other equity as the Investor Limited Partners may provide or require the Developer to contribute as set forth under the Tax Credit Limited Partnership Agreement; and (iii) if requested and approved by the Developer, other equity as the Agency may in its sole and absolute discretion elect to contribute to the Developer following the commencement of construction of the Project. • Developer Investigations. The words "Developer Investigations" means and refers to the Developer's due diligence investigations of the Property and the Site to determine the suitability of the Site for the Project. The scope of the Developer Investigation shall include all matters relevant to the Project as determined at the discretion of the Developer. • Developer Project Pro Forma. The words"Developer Project Pro Forma"mean and refer to the document dated June 3,2009,prepared by the Developer and approved by the Agency on the date • of approval of this Agreement,in support of the Developer's request for the Agency to consider the approval of this Agreement. The Developer Project Pro Forma,includes the Project Construction Budget. The Developer Project Pro Forma is included as part of Attachment No. 4 of this Agreement. • Development Project Application. The words "Development Project Application" mean and refer to collectively the completed development project application materials as prepared by the Developer and submitted to the City for approval of each of the following Development Project Permits: (i) City tentative Parcel Map No. 19200; and (ii) City Conditional Use Permit No. 09-05. • Development Project Permit. The words"Development Project Permit(s)"means and refers to all of the regulatory and building permits which the Developer shall hereafter apply for and obtain from the City(and each of the other agencies with regulatory jurisdictions over the improvement of each element of the Project) following the approval by the City of the Project Development Application for the Project. 5 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc • Due Diligence Period. The words "Due Diligence Period"mean and refer to the period of time following the Effective Date and prior to the Close of the Site Transfer Escrow, when the Developer shall conduct and complete all of its Developer Investigations. • Effective Date. The words"Effective Date" mean and refer to the date after the conclusion of a public hearing by the governing board of the Agency for the approval of this Agreement when each of the following events shall have occurred: (i) the governing board of the Agency has adopted its approving resolution containing the findings required by Health and Safety Code Section 33433; (ii) this Agreement has been fully executed by the Developer and the Agency; and (iii) the Developer Acquisition Escrow Acquisition Assignment Agreement has been fully executed by the Developer and the Agency. • Escrow Agent. The words "Escrow Agent" mean and refer to First American Title Insurance Company or such other escrow agent as mutually acceptable to the Developer and the Agency. The Escrow Agent shall administer each of the escrow accounts as identified in this Agreement, including the Agency Acquisition Escrow,the Site Transfer Escrow,the Construction Loan Escrow and the Permanent Loan Escrow, unless the parties to each such escrow may otherwise appoint another agent to serve as escrow agent for a particular transfer or transaction. • Hazardous Substances. The term"Hazardous Substances"means and refers to(i)any hazardous or toxic substance or material including petroleum, petroleum-based products, asbestos and asbestos containing materials ("ACM") and lead-based paint ("LBP"), or waste which is or becomes regulated by any local governmental authority,the State of California or the United States Government and/or(ii)any substance or material identified by the United States Government,the State of California or any local governmental authority as hazardous or toxic and which is included • on any list of such substances published by any such governmental entity,provided,however that any such substance or material which is authorized by the United States Government or the State of California for use as a consumer product or in connection with the development, operation or maintenance of the Project when used in accordance with applicable law,shall not be deemed to be a Hazardous Substance for the purpose of subphase (ii)of this definition of Hazardous Substance. • Investor Limited Partner. The words"Investor Limited Partner"mean and refer to the tax credit equity investor who is a party to the Tax Credit Limited Partnership Agreement with the Developer. • Lower-Income Senior Citizen Household. The term"Lower-Income Senior Citizen Household" shall refer to a Senior Citizen Household which has the household income characteristics of a lower income household as defined in Health and Safety Code Section 50079.5. • Notice of Acceptance of the Site. The words"Notice of Acceptance of the Site"means and refers to the acknowledgment of acceptance of the condition of the Site as executed and delivered by the Developer to the Agency in the form reasonably acceptable to the Interim Executive Director of the Agency. The Developer shall execute such Notice of Acceptance of the Site based solely upon the Developer's Investigations of the Property and the Site as set forth in Section 2.13. 6 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc • "Operating Expenses" shall mean actual, approved reasonable and customary costs, fees and expenses directly attributable to the operation,recordkeeping,maintenance,taxes and management of the Project,including but not limited to, a commercially reasonable property management fee; taxes and assessments; payroll and payroll taxes for property employees; insurance; security, painting,cleaning,repairs,and alterations;landscaping;sewer charges;utility charges;advertising, promotion and publicity; cable television, satellite and other similar services; office,janitorial, cleaning and building supplies; approved recreational amenities and supplies; purchase, repair, servicing and installation of appliances,equipment,fixtures and furnishing;fire alarm monitoring; fees and expenses of accountants,attorneys,consultants and other professionals. Expenses for the purpose of calculating residual receipts are subject to Agency's reasonable approval and shall be calculated on a cash basis. Depreciation and debt service payments are not eligible operating expenses for calculating residual receipts. • Permanent Lender. The words"Permanent Lender"mean and refer to the mortgage lender who shall provide a permanent mortgage loan to the Project following the completion of improvement of the Project. The Permanent Lender shall provide a loan to the Developer and the Project which shall be used and applied to repay the Construction Loan in full. • Permanent Loan. The words"Permanent Loan"mean and refer to the permanent mortgage loan which the Developer shall hereafter obtain in an approximate principal amount presently estimated to be that amount as set forth on the Developer Project Pro Forma as submitted by the Developer to the Agency, subject to modifications as may be approved by the Agency Executive Director, in order to provide for the release and reconveyance of the Construction Loan and the long term financing for the capital costs associated with the development and financing of the Project. The Permanent Loan may be provided by the Construction Lender and shall be subordinate to the Senior Citizens Rental Housing Use Covenant. Any refinancing of the initial Permanent Loan may be undertaken by the Developer provided that any such refinancing does not increase the then outstanding principal balance of the initial Permanent Loan or extend the repayment thereof unless approved by the Agency at its sole discretion. Any other refinancing of the initial Permanent Loan - that is not in compliance with the preceding sentence shall not be subordinate to the Agency Loan Deed of Trust and the Agency Regulatory Agreement. • Permanent Loan Documents. The words"Permanent Loan Documents"mean and refer to the various documents and instruments by and between the Developer and the Permanent Lender which evidence the Permanent Loan for the development and financing of the Project. • Permanent Loan Escrow. The words "Permanent Loan Escrow" mean and refer to the loan financing transaction account by and between the Developer, the Permanent Lender and the Escrow Agent through which the Construction Loan shall be repaid in full to the Construction Lender and the proceeds of the Permanent Loan are disbursed to the Developer. • Project. The term "Project" shall mean all of the work of investigation, design, construction, improvement,modification,and financing necessary in order for the Developer to acquire the Site and construct and place in service thereon the affordable senior citizen rental housing project consisting of not more than seventy nine(79)rental units reserved for occupancy by Senior Citizen Households and one (1) unit for occupancy by on-site management personnel. The Project also includes all related landscaping,driveways,utilities,and any improvements which may be required by the City on the Site or within the public rights-of-way adjacent to the Site. The functional 7 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agnms-Amend 2009\08-03-09 Meta Housing-Final DDA.doc elements of the Project are more particularly described in the Scope of Development and Site Improvement Plan at Attachment No. 2 of this Agreement (the"Scope of Development"). • Project Accounting Year. The term"Project Accounting Year"means and refers to the tax year accounting period designated by the Developer in its Tax Credit Limited Partnership Agreement. • Project Construction Budget. The words"Project Construction Budget"means and refers to the budget of construction costs for the Project as prepared by the Developer. The Project Construction Budget includes a reasonable course of construction contingency reserve and reserves for marketing and leasing the completed rental units in the Project for initial occupancy by Senior Citizen Households. The Project Construction Budget is included in the Developer Project Pro Forma. • Property. The word"Property"means and refers to the lands as depicted in the land subdivision document approved by the City as tentative Parcel Map No. 19200 upon approval of the Development Project Application. The Property is located in the redevelopment project area of the Northwest Redevelopment Project. A composite legal description of the three(3)separate parcels of land which comprise the Property which is Attachment No. 1A of this Agreement. The Site comprises only a portion of the Property,which is generally depicted as Parcel 1 of tentative Parcel Map No. 19200 which is Attachment No. 1B of this Agreement. • Purchase Price. The term"Purchase Price"shall mean that amount payable by the Developer to the Agency for the purchase of the Site from the Agency, which Purchase Price is Two Million Four Hundred Seventy Seven Thousand Six Hundred and Five Dollars($2,477,605),exclusive of any Site Transfer Escrow Closing costs. • Redevelopment Plan. The term"Redevelopment Plan" shall mean the Redevelopment Plan for the Northwest Redevelopment Project. A copy of the Redevelopment Plan is on file in the Office of the City Clerk of the City. The Redevelopment Plan is incorporated herein by this reference as . though fully set forth herein. • Residual Rental Receipts of the Project. The term"Residual Rental Receipts of the Project"and "Residual Rental Receipts" and "Residual Receipts" mean and refer to fifty percent (50%) of "Revenues"of the Developer remaining on any scheduled debt service date or other payment date under the Agency Loan Note, reduced in the following order: (1) Operating Expenses calculated on a cash basis; (2) debt services on senior debt secured by the senior position deeds of trust; (3) cash payments to any reserves required by the Tax Credit Limited Partnership Agreement or the documents evidencing the Construction Loan and/or the Permanent Loan; (4) repayment of general partner loans; (5) cash payments of deferred Developer fees; and 8 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doe (6) partnership management fees and asset management fee each Project operating year up to Fifteen Thousand Dollars ($15,000) in the aggregate, increasing by three percent(3%)annually following the completion date of the Project as provided in Section 3.11 of this Agreement. • "Revenue" with respect to a particular fiscal year shall mean all revenue, income, receipts, and other consideration actually received from the operations of the Project. 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; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance;the proceeds of casualty insurance(if not used to replace or repair the Project or repay any permitted financing); and condemnation awards for a taking of part of all of the Project for a temporary period. Revenue shall also include the fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Project. Revenue shall not include tenants' security deposits, interest on security deposits, loan proceeds, capital contributions or similar advances,amounts released from reserves or interest on reserves provided taht such reservees and interest are used for the purpsoes for which the reserves were established. • Schedule of Performance. The term"Schedule of Performance"shall mean that certain schedule of Project development performance milestones set forth in Attachment No. 3 of this Agreement, and as the same may hereafter be amended by the mutual written agreement of the parties. • Security Financing Interest. The words"Security Financing Interest"means and refers toziany permitted third-party financing security interest which may encumber the Site as set forth in Section 3.9 Security Financing Interest include the Construction Loan Documents and the Permanent Loan Documents, as applicable. • Senior Citizen Household. The term"Senior Citizen Household"shall mean and refer to a person or family eligible to occupy a rental dwelling unit at the Project under the Agency Regulatory Agreement, who is/are at the time of initial occupancy of the rental dwelling unit by such person(s): (i) 62 years of age or older; and, if applicable (ii) provided at least one (1) member of the family is 62 years of age or older, a "qualified permanent resident", as this term is defined in Civil Code Section 51.3(c(2) and (3). • Senior Citizen Rental Housing Use Covenant. The words"Senior Citizen Rental Housing Use Covenant"mean and refer to the land use covenant by and between,the City and the Agency which shall be recorded concurrently with Parcel Map No. 19200. The form of the Senior Citizen Rental Housing Use Covenant is set forth in Attachment No. 7 of this Agreement and at all times shall be in a first recorded priority position superior to that of the Construction Loan and the Permanent Loan for the period of time as set forth in said Covenant provided that the Project remains in existence. 9 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc • Site. The term"Site"means and refers to that portion of the Property,consisting of approximately 2.5 acres of land(more or less)and more particularly illustrated or depicted as Parcel 1 of tentative Parcel Map No. 19200. A copy of tentative Parcel Map No. 19200,in the form as approved by the City as part of the Development Project Application, is set forth in Attachment No. 1B of this Agreement. • Site Transfer Escrow. The words "Site Transfer Escrow" means and refers to land transfer transaction account by and among the Developer,the Escrow Agent and the Agency. The parties shall cause the Site (e.g., Parcel 1 of Parcel Map No. 19200) to be conveyed from the Agency to the Developer upon the Close of the Site Transfer Escrow. • State TCAC. The words "State TCAC" mean and refer to the State of California Tax Credit Allocation Committee. • State TCAC Regulatory Agreement. The words"State TCAC Regulatory Agreement"mean and refer to the affordable rental housing regulatory agreement by and between the Developer and the California Tax Credit Allocation Committee(as established under Health and Safety Code Section 50199.8)which shall affect the Site and the Project, whereby the Project shall be made subject to compliance with the conditions of affordable rental dwelling unit tax credit eligibility under Section 42 of the Internal Revenue Code, and all applicable Revenue Rulings of the Internal Revenue Service. • Tax Credit Limited Partnership Agreement. The words "Tax Credit Limited Partnership Agreement" mean and refer to the federal affordable rental housing tax credit limited partner investor agreement by and between the Developer and one or more of its Investor Limited Partners. A draft of which document is on file with the Agency as of the date of execution of this Agreement. The final form of such Tax Credit Limited Partnership Agreement shall be subject to the written approval of the Agency prior to the Close of the Construction Loan Escrow and such approval shall not be unreasonably withheld, conditioned or delayed. • Title Company. The term"Title Company"shall mean First American Title Insurance Company or such other title company mutually agreeable to the Agency and the Developer. SECTION 1.5. Parties to this Agreement. (a) The parties to this Agreement are the Developer and the Agency. The City is not a party to this Agreement nor is the City responsible in any manner for the representations of the Agency contained herein,for any financial obligation of the Agency set forth in this Agreement or for any other covenant or undertaking of the Agency in favor of the Developer as arise,under this Agreement. In furtherance of this provision,the Developer and the City have executed and delivered a separate indemnification agreement wherein the Developer has agreed to defend, indemnify and hold harmless the City and all City officials, employees and other indemnified parties from all claims and actions that may be filed against the City with respect to this Agreement and the financing, development, construction and use of the Project by any person. (b) The Developer is as identified above. The principal office of the Developer for purposes of this Agreement is currently located at 1640 South Sepulveda Boulevard, Suite 425, Los Angeles, California 90025. 10 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc (c) Prior to the Effective Date, the Developer has provided the Agency with satisfactory evidence of the legal formation and existence of the Developer and the good standing of the Developer to transact business within the State, and to accept transfer of the Site from the Agency by the Developer. SECTION 1.6. Change in Developer Ownership Management and Control of the Developer--Assignment and Transfer. (a) The word"Transfer"as used in this Section 1.6, and elsewhere in this Agreement means: (1) Any total or partial sale,assignment or conveyance,or any trust or power,or any transfer in any other mode or form or series of such sales, assignments or contracts or agreements to do any of the foregoing or the like which results in a change in: (i)more than twenty-five percent (25%) of the shareholders of the Developer; (ii) if all of the interest of the Developer in this Agreement has been transferred to a partnership in which the Developer is the sole general partner and thereafter,there is a change of more than twenty-five percent(25%)of the interests of the shareholder in Meta Housing Corporation, or in the sole general partner of the Developer such that Meta Housing Corporation, is not the sole general partner or managing general partner of the Developer; or (iii) if none of the foregoing subphrases applies to a particular Transfer, more than fifty percent (50%) of the ownership or equity interest of the Developer's interest in this Agreement is sold assigned, conveyed or the like, (each of the events described in subphrases(i),(ii)and (iii),above being referred as"Change of Control"); or (2) Any total or partial sale, assignment, conveyance, or transfer by the Developer of the Project and/or this Agreement in any other mode or form, of or with respect to any ownership interest in Developer which results in a Change of Control; or (3) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer in this Agreement, any Developer Land,the Site or any part thereof or any interest therein or the improvements construction thereon(or series of such sales,assignments and the like) which results in Change in Control; or (4) Any total or partial sale,assignment or conveyance or any trust or power,or any transfer in any other mode or form(or series of such sales,assignments or other transfers)which results in the reduction of the ownership interest of Meta Housing Corporation,having less than a fifty percent (50%) ownership interest in the Developer; or (5) Any sale, assignment or conveyance or any trust or power, or any transfer in any mode or form which results in a disposition or transfer by the Developer of any interest in the Site, except that Changes in Control of the Developer shall not be deemed a disposition or transfer of the Site for these purposes; or (6) The leasing, licensing or grant of any concession of or relating to part or all of the Project or any part thereof or any interest therein, except for Project purposes of this Agreement. (b) For the purposes of this Section 1.6,the following Transfers shall not be deemed to result in a Change of Control: 11 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009108-03.09 Meta Housing-Final DDA.doc • (1)Any Transfer of any interest in the Developer resulting from the execution of the Tax Credit Limited Partnership Agreement in the form as approved by the Agency prior to the Close of the Site Transfer Escrow,provided,however that such transfer is not a default under any permitted Security Financing Interest or other covenant of the Developer in favor of State TCAC; (2) Any Transfer of any interest in the Developer, voluntarily or involuntarily or otherwise provided such a Transfer is not a default under any permitted Security Financing Interest or other covenant of the Developer in favor of State TCAC; (3) An amendment to the Tax Credit Limited Partnership Agreement:(i)which does not result in a reduction of the installments of the Investor Limited Partner's capital contributions to be made during and at the time of completion of the Project on the date and subject to the existing terms and conditions set forth in the Tax Credit Limited Partnership Agreement (including without limitation credit adjustments as provided therein)or(ii)which does not materially and adversely affect the ability of the Developer to perform its obligations under this Agreement,or (iii)which does not result in a default under the permitted Security Financing Interest or State TCAC covenant; (4) Notwithstanding anything to the contrary contained herein, the respective interests of the Developer's Investor Limited Partner may be transferable in accordance with the terms of the Tax Credit Limited Partnership Agreement without the consent of the Agency, so long as the Developer is not then in default under the permitted Security Interest or the Agency Loan Documents and upon the expiration of the tax credit compliance period, the interests of the Investor Limited Partner in the Developer may be transferred to the Developer,or its affiliate, without the consent of the Agency; (5) Notwithstanding anything to the contrary contained herein, the Developer's Investor Limited Partner shall be permitted to remove either Magnolia Highland, LLC, a California limited liability company, or any other general partner for cause in accordance with the Tax Credit Limited Partnership Agreement without the consent of the Agency;provided,however, • that Investor Limited Partner shall not elect and appoint a successor general partner therefore without the consent of the Agency, which consent shall not be unreasonably withheld. Notwithstanding the foregoing,the substitute general partner shall assume all of the rights and obligations of the removed general partner hereunder; (6) Agency transfer of the interests of the Developer in this Agreement, and the Site, if then applicable,by the Agency at the request of the Developer to a limited partnership in which the Developer acts as a general partner. (c) This Agreement is entered into solely for the purpose of the redevelopment of the Project. The Developer recognizes that the qualifications and identity of Developer are of particular concern to the Agency, in view of: (1) The importance of the redevelopment of the Site to the general welfare of the community; and (2) The fact that a Transfer by the Developer of this Agreement or the Site is for all practical purposes a transfer or disposition of the responsibilities of the Developer, with respect to the Project. 12 P:\Agendas\Agenda Attachmentz\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc The Developer further recognizes and acknowledges that it is because of the qualifications and identity of the Developer, and in particular, the qualifications of John M. Huskey, President, of Meta Housing Corporation, that the Agency is entering into this Agreement with the Developer, and, as a consequence, Transfers are permitted only as provided in this Agreement. (d) The limitations on a Transfer as set forth in this Section 1.6 by the Developer shall apply until the first anniversary following the end of the tax credit regulatory compliance period for the Project. Except as expressly permitted in this Agreement in the case of permitted Transfers, the Developer represents and agrees that it has not made nor will it create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the Agency until such time as a Certificate of Completion has been approved for the Project by the Agency. Any Transfer made in contravention of this Section 1.6 shall be deemed to be a default under this Agreement whether or not the Developer knew of or participated in such Transfer, and shall be voidable at the election of the Agency. (e) The following types of a Transfer shall be permitted and approved by the Agency and are referred to herein as a"Permitted Transfer": (1) Any Transfer by the Developer following a Site Transfer Escrow Closing creating a permitted"Security Financing Interest"which conforms to the provisions of Section 3.8 and Section 3.9; (2) Any Transfer directly resulting from the foreclosure of a Security Financing Interest created by the Developer in the Project; or the granting of a deed in lieu of foreclosure of a Security Financing Interest in the Project; (3) A Transfer under(1)or(2)above,which includes a collateral assignment to the beneficiary of the Security Financing of the Developer's beneficial interest in the Project; (4) Any Transfer of any interest in Developer to any affiliate of or other entity related to the Developer which does not result in a Change of Control under Section 1.6(a); (5) Any Transfer of any interest the Developer which does not result in a change of Control in the Developer under Section 1.6(a); (6) Any Transfer which is a lease of either an Affordable Rental Unit (dwelling) which is consistent with the applicable Affordable Rental Housing Regulatory Agreement; (7) Any Transfer which is a sale, lease, exchange, or other conveyance of the Site, or any portion thereof,by the Developer to the City or the Agency or to an entity which is controlled by the City and/or the Agency,including a joint powers authority or a non-profit corporation in which a majority of the directors are appointed by the City and/or the Agency; (8) Any Transfer which grants a construction-related or public utility easement on the Site or which establishes a reciprocal easement for ingress, egress and maintenance affecting lands adjacent to the Site. 13 P:\Agendas\Agenda Attachments\Agenda AttachmentAAgenda Attachments\Agrmts-Amend 2009108-03-09 Meta Housing-Final DDA.doc (f) No Permitted Transfer of this Agreement, the Project or the Site by the Developer(other than a Permitted Transfer created pursuant to a Security Financing Interest under Section 3.9 and Section 1.6(e)(6) and (8)) shall be effective unless, at the time of the Permitted Transfer, the person or entity to which such Transfer is made, shall expressly assume the obligations of Developer under this Agreement (or to the extent that the Permitted Transfer arises under Section 1.6(e)(4)or(5),such person shall assume the obligations of the Developer with respect to the Project) and such person or entity also agrees to be subject to the conditions and restrictions to which Developer is subject under this Agreement. Such an assumption of obligation shall be evidenced by a written instrument delivered to the Agency in a recordable form which is reasonably satisfactory to the Agency not less than sixty(60) days prior to the date on which such Permitted Transfer is proposed to occur. (g) Provided the particular transaction is a Permitted Transfer,the Developer is not required to give the Agency more than sixty(60)days advance notice of such a Permitted Transfer. Concurrently with the delivery of notice of the Permitted Transfer, the Developer shall also provide the Agency with a suitably detailed written description of the proposed Permitted Transfer. If the Developer desires to effect a Transfer for which Agency prior approval is required,the Developer shall submit to the Agency as part of its request for consent from the Agency, the form of an assignment and assumption agreement which shall set forth the terms and conditions of the proposed Transfer and the transferee's assumption of the Developer's obligations under this Agreement which are assigned to such transferee. The Agency's approval of any Transfer requiring Agency approval shall be evidenced in writing and the Agency agrees not to unreasonably withhold delay or condition its approval of any such Transfer,provided such proposed transferee can demonstrate successful and satisfactory experience in the development ownership, operation,and management of a facility comparable in size and quality to the Project,or portion thereof,as proposed for Transfer. Any such transferee for itself and its successors and assigns,and for the benefit of the Agency shall expressly assume all of the obligations of the Developer to the Agency under this Agreement with respect to the interest to be transferred. The Agency agrees that it shall be unreasonable for the Agency to: (i) require the Developer or the proposed transferee to pay any fee or charge to the Agency in consideration for the Agency's approval of such a Transfer, except for reimbursement of reasonable Agency overhead costs, allocated on an hourly basis for Agency employees and consultants who are engaged in the documentation of such a Transfer; or(ii)require the Developer or the proposed transferee to consent to the approval of any material change requested by the Agency in any prior condition of approval affecting the Project; except as may be reasonably required in connection with the Agency's approval of such a transfer to offset a specific cost or expense of the Agency or to compensate the Agency for a material adverse financial impact upon the Agency in connection with such a Transfer. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such Transfer; and the approval or disapproval of the Agency shall be provided to the Developer in writing setting forth the grounds for the Agency's disapproval of a transfer,if applicable,within thirty(30)days of receipt by the Agency of Developer's request and the form of assignment and assumption agreement proposed to be used in the transaction. SECTION 1.7. Recordation of Notice of Agreement at Time of Close of the Site Transfer Escrow. Upon the Close of the Site Transfer Escrow,the parties shall jointly cause to be completed,execute and cause to be recorded the form of the Notice of Agreement (Attachment No. 8) in the Office of the Recorder of San Bernardino County. The Notice of Agreement shall include a legal description of the Site. 14 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc SECTION 1.8. List of Attachments to Agreement. Each of the following items or documents are hereby deemed to be approved by the parties as of the date of approval of this Agreement by the governing board of the Agency and each such item or document is incorporated into the text of this Agreement by this reference: Attachment No. 1 A Legal Description of the Property (From Developer Acquisition Escrow Assignment Agreement) Attachment No. 1B Copy of Tentative Parcel Map No. 19200 Attachment No. 2 Scope of Development Attachment No. 3 Schedule of Performance Attachment No. 4 Developer Project Pro Forma Attachment No. 5 Developer Acquisition Escrow Assignment Agreement Attachment No. 6 Agency Grant Deed Attachment No. 7 Senior Citizen Rental Housing Use Covenant Attachment No. 8 Notice of Agreement Attachment No. 9 Agency Regulatory Agreement Attachment No. 10 Agency Loan Note Attachment No. 11 Agency Loan Deed of Trust Attachment No. 12 Certificate of Completion ARTICLE II SECTION 2.1 Agency Purchase of the Property. (a) Subject to the terms and conditions of this Agreement,the Agency hereby agrees to accept an assignment from the Developer of all of the equitable right-title and interest of the Developer in the Property as arises under each of the following real estate purchase agreements : (i) Property located 2120 Medical Center Drive: Seller - First American Trust, John and Rodney Edmunds, The Edmunds Family Trust(Escrow number 232682-PD and Title number 6022385- 62) ; and (ii) Property located at Highland Avenue and Medical Center Drive: Seller - 11026 Long Beach, LLC, et al. (Escrow/Title number 8378221); and 15 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\A rents-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (iii) Property located at 2196 Medical Center Drive: Seller - Elias Chehade Antoun (Escrow/Title number 835425). (b) As of the Effective Date, the Developer covenants and warrants to the Agency that: (i) each of the real estate purchase agreements referenced in Section 2.1(a)is in full force and effect and that no default by either the buyer or the seller exists thereunder; (ii) the Developer has the right and authority under each of the real estate purchase agreements referenced in Section 2.1(a) to assign the rights of the buyer thereunder to the Agency; (iii) as of the Effective Date,the Developer has accepted the condition of each of the parcels of land as more particularly described in each of the real estate purchase agreements referenced in Section 2.1(a) as evidenced by the Developer's executed Notice of Acceptance of the Property; and (iv) no real estate broker commission or property finder's fee is or shall be payable by the Agency to any person upon the close of the Agency Acquisition Escrow. (c) Prior to the close of the Agency Acquisition Escrow, the Developer shall execute and deliver to the Agency the Notice of Acceptance of the Condition of the Property in a form reasonably acceptable to the Interim Executive Director of the Agency. (d) The Agency shall acquire the Property as set forth in the Developer Acquisition Assignment Agreement upon the close of the Agency Acquisition Escrow. The Agency shall cause its conditions to close the Agency Acquisition Escrow to be satisfied or waived as provided in the Developer Acquisition Assignment Agreement. (e) In the event that any condition of close of the Agency Acquisition Escrow is not satisfied or waived by the Agency within the time period set forth in the Developer Acquisition Assignment Agreement through no fault of the Agency, then upon ten (10) days written notice by the Agency to the Developer which references this Section 2.1(d), the Agency may terminate the Developer Acquisition Assignment Agreement and this Agreement, and thereafter, the Developer and the Agency shall be mutually released from any further liability except as arises under Section 5.9,and as may be specifically provided in the Developer Acquisition Assignment Agreement. SECTION 2.2 [Reserved—No Text] SECTION 2.3. Project Implementation Consultations. (a) Commencing upon the Effective Date,and thereafter through the completion of the Project or earlier termination of this Agreement,the Developer and Agency staff shall conduct regular meetings at the Agency offices,to review the status of each of the following matters of mutual interest as applicable: (i) the Developer Investigations; (ii) the administration of the Developer Acquisition Escrow Assignment Agreement and the Agency Acquisition Escrow; 16 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc (iii) the administration of the Site Transfer Escrow; (iv) review of the preparation by the Developer of applications for each of the Development Project Permits based upon the Development Project Application as previously approved by the City, including the preparation of the form of tentative Parcel Map No. 19200 for recordation by the City at the Close of the Site Transfer Escrow; (v) review of the Developer Project Pro Forma and the sources of funds available to the Developer and the Agency to pay for Project costs which are the responsibility of the applicable party to pay for; (vi) finalization of the text of the Agency Loan Documents in preparation for the Close of the Site Transfer Escrow; (vii) review of the State TCAC submissions of the Developer and the Tax Credit Limited Partnership Agreement; (viii) review of the status of Developer financing for the development of the Project including the Developer Construction Loan commitment as provided under Section 2.22 and the Construction Loan financing under Section 3.8 and Section 3.9 and the Permanent Loan financing; (ix) review of the Project Construction Budget and the Developer's preparation of construction project documentation for the Project under Section 2.19; (x) review of the implementation of the Project Job Employment Outreach Program under Section 3.3; (xi) review the Developer marketing plans for the rental housing dwelling units, and the preparation of one or more community outreach plans for the preparation of a tenant eligibility list for senior citizen households who may qualify, to initially occupy the Affordable Rental Units; (xii) review of the progress of specific items of construction and improvement by the Developer of each element of the Project; (xiii) review of applications of the Developer for disbursements of the principal balance of the Agency Loan as part of the Site Transfer Escrow Closing and thereafter until the full amount of the Agency Loan has been disbursed to the Developer; (xiv) review the status of audit and accounting of various costs incurred by the parties under this Agreement, including without limitation the audit of amounts disbursed by the Agency to the Developer under the Agency Loan; (xv) review of the CEQA documents for the Project and the Mitigation Monitoring and Reporting Plan, as appropriate, during the implementation of the Project; 17 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts•Amend 2009\08-03-09 Meta Housing-Final DDA.doc (xvi) review and confirmation of the dates set forth in the Schedule of Performance for the performance of the obligations of the parties and the satisfaction of various conditions precedent with respect to the redevelopment of the Project; and (xvii) review of other matters as requested in writing by either party. (b) In the event that either party delivers a notice in writing to the other party within ninety (90) days following the Effective Date that the dates of one or more milestones set forth either in this Agreement or in the Schedule of Performance cannot be feasibly accomplished within the time frame set forth in the Schedule of Performance,as such date or milestone appeared in the Schedule of Performance or this Agreement on the Effective Date,the parties shall consider under the provisions of Section 2.3(c) one or more specific extensions of the applicable date to a new time of not more than one hundred eighty (180) days later than as originally set forth in the Schedule of Performance. (c) This Agreement and the Schedule of Performance set forth various dates and times relating to the implementation of the Project, and the accomplishment of the various tasks assigned to the responsible party including without limitation,the satisfaction of the conditions precedent for Site Transfer Escrow Closings. The parties agree and declare that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent for the Site Parcel Escrow Closing in view of the large investment of resources which both parties recognize will be required for the redevelopment of the Project. In the event that the date for the completion of a task or the satisfaction of a condition relating to the implementation of the Project and/or the Site Transfer Escrow Closing may not be achieved by the particular date ascribed to the task or condition as set forth either in the text of this Agreement or in the Schedule of Performance, including any extensions for delays due to force majeure if applicable,then at least thirty(30)days prior to such date the parties shall,as part of their consultations under Section 2.3(a), consider whether a modification to the Schedule of Performance may be indicated. Any decision to approve a modification or a series of such modifications to the time for performance of a task which in the aggregate does not exceed one hundred and eighty (180)days for a particular time or date as provided in either this Agreement or the Schedule of Performance, shall be subject to the mutual reasonable discretion of the Interim Executive Director of the Agency and the Developer and shall not be unreasonably withheld, conditioned or delayed by either party. Each such modification of a date in the Schedule of Performance shall be evidenced by a written modification of the Schedule of Performance, signed by the Interim Executive Director of the Agency and the Developer which references this Section 2.3(c). Notwithstanding the foregoing, any modification or series of modifications of a time or date for performance of a particular matter set forth in this Agreement or in the Schedule of Performance which results in a delay or extension of more than one hundred and eighty (180) days later than the time as originally provided in the Schedule of Performance on the Effective Date,shall be subject to the approval of the Developer and the governing board of the Agency in the reasonable discretion of each of them. (d) Notwithstanding any provision of Section 2.3(c) to the contrary, the date assigned in the schedule of Performance for the Agency Acquisition Escrow closing shall not be subject to modification or adjustment by the Interim Executive Director of the Agency of more than ninety(90)days after October 1, 2009 under the provisions of Section 2.3(c). Any change to the date set for the Site Transfer Escrow Closing of more than ninety(90)days shall be subject to the prior written approval of the Developer and the governing board of the Agency in the sole and absolute discretion of each of them. (e) During the course of consultations between the Developer and the Agency as provided in this Section 2.3, the Developer shall provide the Agency with detailed evidence as the Agency may 18 P:'Agendas'Agenda Attachments\Agenda Attachments\Agenda Attachments'Agrmts-Amend 2009'08-03-09 Meta Housing-Final DDA.doc reasonably request that the Developer is making diligent and reasonable progress in securing all necessary Developer Equity in an amount sufficient to undertake the acquisition, completion and operation of this Project. The Site Transfer Escrow pursuant to Sections 2.15 and 2.16 hereof shall not close until the conditions set forth in this Section 2.3(e) have been met to the reasonable satisfaction of the Agency. Failure of the Developer to comply with the conditions of this Section 2.3 shall not cause the final date for the close of escrow to be extended nor shall such failure be deemed to be an enforced delay as provided in Section 6.6 hereof. SECTION 2.4 [Reserved—No Text] SECTION 2.5. Agreement of the Agency to Sell the Site to the Developer for the Improvement of the Project. Subject to the Close of the Agency Acquisition Escrow. (a) Subject to the Agency's acquisition of the Property upon the satisfaction of the conditions in favor of the Agency and the close of the Agency Acquisition Escrow as set forth in the Developer Acquisition Assignment Agreement and further subject to the terms and conditions of this Agreement,the Agency hereby agrees to sell the Site to the Developer and the Developer agrees to purchase the Site from the Agency. The Developer shall pay the Agency the Purchase Price for the Site. The Purchase Price for the Site payable by the Developer to the Agency shall be in an amount as provided in Section 2.6. (b) The applicable amount of the Purchase Price for the Site, shall be paid to the Agency in cash at the time of the Site Transfer Escrow Closing. (c) In the event that the Agency may not acquire the Property under the Developer Acquisition Escrow Assignment Agreement,through no fault of the Agency,the obligation of the Agency to sell the Site to the Developer and to provide the Developer with the proceeds of the Agency Loan shall terminate and be of no further force or effect and the parties shall thereupon be mutually released from any further liability under this Agreement. SECTION 2.6. Purchase Price for the Site. (a) As of the Effective Date, the Purchase Price for the Site is Two Million Four Hundred Seventy-Seven Thousand Six Hundred and Five Dollars ($2,477,605) in United States currency. (b) The Purchase Price for the Site has been established by the parties based upon the configuration of the Site as Parcel 1 of tentative Parcel Map No. 19200 as a legal parcel of land upon the recordation of the final form of Parcel Map No. 19200. In the event that the final configuration of Parcel 1 of Parcel Map No. 19200 may be materially different than as shown on tentative Parcel Map No. 19200 as of the Effective Date,each of the parties reserves the discretion to adjust the Purchase Price on a per square foot basis utilizing the dollar amount of$2,400,000 as the intended Purchase Price for the Site to be calculated on a square foot basis pursuant to that land area shown on tentative Parcel Map No. 19200 for the change in square footage whether a lesser or greater amount than shown on tentative parcel Map No. 19200 for any such material difference in land area,upon giving ten(10) days prior written notice to the other party. SECTION 2.7. [Reserved—No Text] 19 P:\Agendas\Agenda Attachments Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doe SECTION 2.8. Agency Loan. (a) Subject to the terms and conditions of this Agreement, the Agency shall make a special affordable housing development loan (the "Agency Loan") to the Developer in the principal amount of Four Million Dollars ($4,000,000) . The outstanding principal balance of the Agency Loan shall bear a rate of interest of three percent (3%) per annum calculated on a simple interest basis on the outstanding principal balance until all principal and accrued and unpaid interest is paid in full subject to such interest rate being adjusted to a higher or lower rate of interest per annum at the time of the closing on the Construction Loan upon the request of the Developer if required by the terms of the Tax Credit Limited Partnership Agreement subject to the written approval of the Agency Executive Director: (b) The Agency Loan shall be for a term of the longer period of: (i) five(5)years from the date on which the Initial Advance of the Agency Loan has occurred under Section 2.8(f); or (ii) fifty five(55)years from the date when the Site Transfer Escrow is closed and the Escrow Agent disburses the proceeds of the Construction Loan to the Developer and the Construction Loan Escrow is closed provided,however that the Site Transfer Escrow shall have occurred by a date not later than December 31, 2011. (c) The Agency Loan shall be evidenced by a promissory note substantially in the form as set forth in Attachment No. 10 (the "Agency Loan Note") to be executed by the Developer in favor of the Agency at the time of the close of the Agency Acquisition Escrow and shall be secured initially by Meta Housing Corporation and upon the Close of the Site Transfer Escrow,the Agency Loan shall be secured by a subordinate deed of trust on the Site substantially in the form as set forth in Attachment No. 11 (the "Agency Loan Deed of Trust") and this Agency Loan Documents. Both the Agency Loan Note and the Agency Deed of Trust shall contain the provisions relating to permitted subordinate debt in compliance with the applicable provisions of this Agreement. The Agency Loan Note and the Meta Housing Corporation Guaranty shall be fully executed and delivered to the Agency at the time of the close of the escrow for the Agency's acquisition of the Property as provided in the Developer Escrow Assignment Agreement. The Agency Deed of Trust and the other Agency Loan Documents shall be executed by the Developer prior to the Close of the Site Transfer Escrow. (d) The Developer shall,prior to the maturity date of the Agency Note,repay the Agency Loan plus interest in installments as set forth in the Agency Note. The installments of principal and interest are due under the Agency Note shall be payable by the Developer prior to its maturity solely from the special source of funds defined in the Note as "Residual Rental Receipts of the Project". (e) The Agency Loan Note shall be initially secured by the Meta Housing Corporation Guaranty as provided in Section 2.8(f)and upon the Close of the Site Transfer Escrow,the Agency Loan shall be secured by the Agency Loan Deed of Trust,pursuant to which the Developer grants to the Agency a lien on the Site and the Project, subordinate to the lien created in favor of the Construction Lender(and later,the Permanent Lender)and its assigns,for the purpose of providing financing for the acquisition and rehabilitation of the Project. 20 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts•Amend 2009\08-03-09 Meta Housing-Final DDAdoc (f) The principal amount of the Agency Loan shall be disbursed to the Developer as set forth in this Section 2.8(f). (i) The term "Meta Housing Corporation Guaranty" means and refers to the payment guarantee of Meta Housing Corporation in favor of the Agency in which Meta Housing Corporation unconditionally guarantees to repay the Agency the full principal amount of the Initial Advance of the Agency Loan,plus interest thereon, in the event that the Developer may suffer an Event of Default to occur under this Agreement prior to the close of the Site Transfer Escrow or in the event that the Site Transfer Escrow may fail to close for any reason not attributable to the fault of the Agency on or before December 31,2011,and the Agency elects to cause an acceleration of the Agency Loan Note. Upon the close of the Site Transfer Escrow, the Meta Housing Corporation Guaranty shall be released and discharged by the Agency, and thereafter,the Agency Loan shall not be further secured by the Meta Housing Corporation Guaranty. The final form of the Meta Housing Corporation Guaranty shall be subject to the approval of the Interim Executive Director of the Agency in his reasonable discretion. (ii) The term "Initial Advance of the Agency Loan" means and refers to a sum not to exceed One Hundred Thousand Dollars ($100,000), which may be disbursed to the Developer to pay for pre development expenses of the Developer which have been approved by the Interim Executive Director of the Agency. (iii) The Initial Advance of the Agency Loan shall be disbursed to the Developer following the close of the Agency Acquisition Escrow and the satisfaction of the following conditions by the Developer: (A) the Developer has submitted a suitably detailed written listing of necessary and reasonable third party predevelopment costs for the Project as incurred by the Developer. Such a written listing of predevelopment costs shall be subject to the reasonable review and approval by the Interim Executive Director of the Agency; (B) the Developer has caused to be executed and delivered to the Agency the Meta Housing Corporation Guaranty; (C) the Developer has executed and delivered to the Agency the Agency Loan Note and the Developer Assignment of Licenses,Permits and Contracts,in final form as approved by the Interim Executive Director of the Agency; (D) Developer has delivered a legal opinion of its counsel in a form reasonably acceptable to the Interim Executive Director of the Agency that the Agency Loan Note and related documents executed by the Developer, has been duly executed by the Developer and is a valid, lawful and binding obligation of the Developer. (iv) the remaining balance of the Agency Loan shall be disbursed to the Developer following the Initial Advance of the Agency Loan at the time of the Site Transfer Escrow Closing as follows: (A) the Interim Executive Director of the Agency has confirmed that the conditions in favor of the Agency under Section 2.15 have been satisfied and that the Site Transfer Escrow is in a condition to close. 21 P:\Agendas Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc (B) the Developer has delivered its written Notice of Acceptance of the Site to the Agency in a form reasonably acceptable to the Interim Executive Director of the Agency and the Developer has executed its acceptance of the Agency Grant Deed for the Site and the Agency Loan Deed of Trust, the Agency Regulatory Agreement and the other Agency Loan Documents and the Developer has delivered these documents to the Escrow Agent; (C) the Escrow Agent shall use and apply a portion of the Agency Loan as disbursed to the order and account of the Developer upon the close of the Site Transfer Escrow to pay the Purchase Price for the Site to the Agency; and (D) the Escrow Agent shall use and apply the remaining balance of the Agency Loan,after the Initial Advance of the Agency Loan under Section 2.8(f)(iii) and the payment of the Purchase Price, to pay for development costs of the Project as charged by the City, including without limitation,the costs of City building permits,City development permits, City sewer and water capacity and capital charges, City development impact fees and such other necessary and reasonably development costs of the Project as approved by the Interim Executive Director of the Agency. Any amount of the Agency Loan which is disbursed for the order and account of the Developer to pay for Project development costs other than Project development costs payable to the City, shall be delivered by the Agency to the Construction Lender for final disbursement to the Developer under the Construction Loan, subject to the building construction loan disbursement controls of the Construction Lender as set forth in Section 3.8. (E) The Interim Executive Director of the Agency shall approve the disbursement of the amount of the Agency Loan as provided in Section 2.8(f)(iv)(D) upon the submission by the Developer of a written Agency Loan draw request delivered to the Interim Executive Director of the Agency not less than fifteen(15)days prior to the scheduled date of close of the Site Transfer Escrow which sets forth the following information: (1) is signed by the Developer and is certified to the Agency to be true and correct; (2) contains a detailed written description of the Project development costs to be paid for using such proceeds of such advance of the Agency Loan. The Interim Executive Director of the Agency shall not unreasonably withhold, condition or delay approval of the written Agency Loan disbursement request submitted by the • Developer under this Section 2.8(f)(iv)(E). (g) The Developer shall not be in default under this Agreement at the time of the close of the Site Transfer Escrow or at this time of the close of the Construction Loan Escrow. (h) The Developer shall instruct the Escrow Agent for the Construction Loan Escrow to comply with the written instructions of the Agency addressed to the Escrow Agent for the Construction Loan Escrow as relate to the disbursement by such escrow agent of the proceeds of the Agency Loan for the order and account of the Developer under Section 2.8(f)(iv)(E). (i) Notwithstanding any other provision of the Agency Loan Note to the contrary, on the "maturity date" of the Agency Loan Note the outstanding principal balance and all accrued and unpaid interest thereunder shall be due and payable. 22 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc (j) The Agency hereby acknowledges that following the close of the Site Transfer Escrow,the Agency Loan Note is non-recourse obligation of the Developer and shall contain substantially the following text: "Except as set forth in the next sentence of this paragraph, following the date on which the Site Transfer Escrow is closed, upon the failure to pay any sum provided for in this Promissory Note when due, or a material breach of this Agreement or the Agency Loan Deed of Trust by the Borrower,no partner of the Borrower(or in the case of an assignee of the Borrower—no affiliate, member, partner, shareholder or subsidiary of such assignee) shall have personal liability for payment of the principal or interest then due under this Promissory Note. The sole recourse of the Holder to recover any sum under this Promissory Note following the date on which the Site Transfer Escrow is closed, shall be to the Property subject to the Agency Deed of Trust,except in the event of: (A)fraud by the Borrower(or its assignee),(B)any material misrepresentation made by the Borrower to the Agency under this Agreement,(C)misappropriation by the Borrower(or its assignee)of any rents,security deposits,tax collection amounts, security deposits,or insurance or condemnation awards of the Project, (D) commission of bad faith waste by the Borrower (or its assignee)or(E)the presence of"Hazardous Substances"on the Site, as this term is defined in the Agency Deed of Trust." (k) Upon the close of the Site Transfer Escrow,the Agency shall release and cancel the Meta Housing Corporation Guaranty. SECTION 2.9. Evidence of Developer Equity Funds Sufficient to Initiate the Project and to Provide Certain Developer Costs in Support of the Project. As of the Effective Date,the Developer has provided the Agency with a full and complete copy of the State TCAC tax credit reservation application for the Project,and the Agency has made a preliminary determination that the Project, as proposed by the Developer, is commercially and economically feasible and that the Developer is reasonably likely to obtain all of the funds necessary for the Project, including amounts of Developer Equity which,when added to the Agency Loan and the Construction Loan,will be in an amount sufficient to pay for all of the costs of acquisition, construction,and initial operation of the Project. SECTION 2.10. Site Transfer Escrow. (a) Following the Effective Date and concurrently with the opening of the Agency Acquisition Escrow under the Developer Acquisition Escrow Assignment Agreement,the Agency and the Developer shall jointly establish the Site Transfer Escrow for the transfer of the Site to the Developer. The Developer and the Agency shall exchange the appropriate documents as relate to the transfer from the Agency to the Developer of the Site for redevelopment by the Developer through the Site Transfer Escrow. The Developer and the Agency shall execute such additional escrow instructions as consistent with the assembly,transfer and conveyance of the Site to the Developer. Upon indicating its acceptance in writing of its duties under this Section 2.10, the Escrow Agent is hereby empowered to carry out its function as Escrow Agent for the Site Transfer Escrow. The Agency and Developer each agree to deliver to the Escrow Agent all documents necessary for the transfer of the Site Parcels to the Developer, in conformity and, within the times, as provided in this Agreement and Schedule of Performance. 23 P:\Agendas\Agenda AttachmentslAgenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc • The Developer also pay the Escrow Agent: (i) all of the applicable Site Transfer Escrow fees charged by the Escrow Agent to the parties, including the fees, costs and expenses of the Escrow Agent, recording fees,messenger fees and the like,promptly after the Escrow Agent has notified the Developer of the amount of such fees,charges and costs;and(ii)the Developer shall also pay the documentary transfer taxes due upon the recordation of the Agency upon the Site Transfer Escrow Closing. (b) The Escrow Agent is authorized to: (1) serve concurrently as the Escrow Agent under the Agency Acquisition Escrow, and later under the Construction Loan Escrow; (2) pay and charge the Developer for the applicable Site Transfer Escrow fees, charges and costs; (3) record the applicable instruments delivered through the Site Transfer Escrow at the instruction of the parties; and (4) otherwise comply with the supplemental written escrow instructions of the parties as addressed to the Escrow Agent. (c) The Site Transfer Escrow Closing shall occur when all of the conditions have been satisfied or waived by the applicable party; provided, however, that the Site Transfer Escrow Closing shall have occurred by a date not later than December 31,2011, unless at least sixty(60)days before such date,the parties have agreed to an extension of the date for such Site Transfer Escrow Closing as provided in Section 2.3(c),provided,however that if the Site Transfer Escrow Closing should fail to close by such date and neither party is in default, then either party may terminate this Agreement and the Developer shall cause the Initial Advance of the Agency Loan to be repaid in full to the Agency, whereupon, the parties shall each be released from further liability under this Agreement except as arises under Section 5.9. (d) Promptly following the opening of the Site Transfer Escrow, the Agency shall cause the Title Company to deliver to the Developer a preliminary title report and title insurance pro-forma policy for the Site for the Developer's review and approval as provided in Section 2.11. (e) The Site Transfer Escrow Closing shall be subject to the satisfaction of the conditions of the parties under Section 2.15, in the case of the Agency, and Section 2.16, in the case of the Developer. (f) Notwithstanding any other provision of this Agreement to the contrary,the Agency shall have no duty or obligation to cause the Site Transfer Escrow Closing to occur until such time as the Agency has confirmed that the Agency Acquisition Escrow is in a condition to close concurrently with the Site Transfer Escrow and the City has either (i) caused the final form of Parcel Map No. 19200 to be recorded or(ii)the City has authorized the Escrow Agent to record the final form of such parcel map as part of the Site Transfer Escrow Closing. (g) The Escrow Agent shall comply with the written escrow closing instructions of the Agency which references this Section 2.10(g) at the time when the Site Transfer Escrow Closing occurs. The Escrow Agent shall record the following instruments in the recording order indicated below, with the office of the Recorder of San Bernardino County upon the Close of the Site Transfer Escrow: 24 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (i) the Senior Citizen Rental Housing Use Covenant by and among the City, the Developer and the Agency; (ii) the Agency Grant Deed; (iii) Agency Affordable Senior Citizen Rental Housing Regulatory Agreement; (iv) the Agency Loan Deed of Trust; (v) other Agency Loan Documents as instructed by the Agency; (vi) the Notice of Agreement; and (vii) other instruments as directed by the mutual written instructions of the Developer and the Agency. (h) Promptly upon the Close of the Site Transfer Escrow the Escrow Agent shall deliver to the parties the final form of the Escrow Agreements escrow closing statement of costs and fund balances and the Escrow Agent shall deliver to the Agency the executed original copy of the Agency Loan Notice and such other fully executed original copies of Agency Loan Documents and other documents deposited into escrow the parties as may be described in the Agency's final written escrow closing instructions addressed to the Escrow Agent. SECTION 2.11. Obligation of the Agency to Provide Title Insurance at Time of the Site Transfer Escrow Closing. (a) Subject to the completion of the recordation of the final form of Parcel Map No. 19200 as approved by the City as part of the Development Project Application, the Agency shall exercise its best effort to cause the condition of title to the Site, to be transferred to the Developer upon the Site Transfer Escrow Closing which shall be in a marketable condition for the purposes of the redevelopment of the Project, subject to the terms and conditions of this Agreement. (b) Within thirty(30)days following the date when the Escrow Agent has accepted its duties under the Site Transfer Escrow,the Agency shall cause the Title Company to deliver to the Developer a preliminary title report for all of the lands included in the Site subject to the cooperation of the Developer in verifying the field results of any survey as may then be required for the recordation of the Parcel Map,in a form tentatively acceptable to the Title Company for purposes of this Section 2.11 and thereafter, the Agency shall cause also to be delivered to the Developer legible copies of all instruments referred to in the preliminary title report as a title exception. Within thirty(30)days following its receipt of the preliminary title report for an Extended Coverage ALTA Developer's Policy as referenced in this Section 2.11, the Developer shall specifically identify and give notice in writing to the Agency as part of its Developer Investigations of each exception or disapproval of any matter relating to title in the Site, which the Developer may in its reasonable discretion indicate(each referred to as a"Title Exception"). Each Title Exception shall reference the particular land parcel,to which it corresponds,and describe in suitable detail the action which the Developer believes is indicated to cure or correct such Title Exception. If the Developer fails to disapprove a title matter in writing delivered to the Agency as a Title Exception within thirty(30)days following receipt,then each Title Exception shall remain and be deemed a Title Exception. The Agency shall have no obligation to cure any Title Exception, other than obtaining the release of any 25 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda AttachmentsUgmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc monetary liens upon the Site subject to the close of the Agency Acquisition Escrow,nor shall the Agency be considered in default for failure to cure any title defect or Title Exception for any portion of the Site. The sole remedy of the Developer with respect to a Title Exception shall be to either accept such defect, cure such defect or to cancel the Site Transfer Escrow and terminate this Agreement as provided in this Section 2.11. (c) Within thirty (30) days following its receipt of notice of a Title Exception from the Developer under this Section 2.11,the Agency may,but is under no obligation to do so,confirm in writing to the Developer whether each such Title Exception shall be cured,at the time of the Site Transfer Escrow Closing. If the event the Agency fails to confirm within such thirty(30)day period whether one or more of such Title Exceptions shall be cured by the Agency at or prior to the Site transfer Escrow Closing,then the Title Exception shall remain,and the Agency shall have no further duty to cure such Title Exception,and the Developer may, within five (5) days thereafter in writing addressed to the Agency and the Escrow Agent, elect to waive its objection to such Title Exception. (d) If by the date set forth in the Schedule of Performance, any Title Exception remains that was caused by the actions or inactions of the Agency during the period of time that the Site was owned in fee by the Agency which has not been cured by the Agency under this Section 2.11,or which has not been expressly waived in writing by the Developer, or otherwise not resolved to the mutual satisfaction of the parties,then the Developer may upon thirty(30)days' written notice to the Agency which references this Section 2.11(d), cancel the Site Transfer Escrow and terminate this Agreement. In the event of a termination of this Agreement on the grounds set forth in this Section 2.11(c)above,and the Agency is not then in default as provided in Article V hereof,the Developer shall be responsible for paying for all of the reasonable and customary escrow cancellation and preliminary title report costs of the Title Company, if any, and the parties shall each be released from any further responsibility or liability hereunder,except as may arise under Section 5.9. (e) As part of its Developer Investigations of the Site the Developer shall prepare and complete a survey of the lands included in the Site by a civil engineer selected by the Developer to enable the Title Company to issue at the time of the Site Transfer Escrow Closing, such additional items of survey title insurance coverage or title insurance survey endorsements as the Developer may require; provided, however that no exception to title as may be indicated by such survey shall be deemed to be a Title Exception for the purposes of Section 2.11 unless the Developer delivers written notice of such title survey exception to the Agency by no later than ninety(90)days following the date on which the preliminary title report is delivered to the Developer under Section 2.11. (f) , For the purpose of this Section 2.11,matters affecting the condition of title of the Site which may be imposed by the City prior to the recordation of the final Parcel Map No. 19200 creating the legal parcel of land which comprises the Site, shall not be deemed to "Title Exceptions". The effect of a Development Project Permit, or other title matter imposed by the City on the Site as part of the City's review and approval of a Development Project Application or a Default Project Permit,shall be subject to the provisions of Section 4.5(b). (g) The Developer shall pay the cost of the premium of title insurance in favor of the Developer for the Site upon Site Transfer Escrow Closing. 26 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc SECTION 2.12. Due Diligence Period and Developer Investigations of the Site. (a) The Due Diligence Period is the time when the Developer shall undertake certain investigations of the Site, in order to ensure that the acquisition and redevelopment of the Site and the Project by the Developer is feasible, and may be undertaken by the Developer subject to the terms and conditions of this Agreement. (b) The Developer is solely responsible for undertaking all Developer Investigations of the Site and for each Phase of the Project as the Developer may believe to be indicated. The Agency shall reasonably cooperate with the Developer in the Developer's performance of any such Developer Investigations,including the performance of conduct of such Developer Investigations as relate to potential Title Exceptions and subsurface soil investigations relating to geotechnical and soil engineering study and the potential presence of Hazardous Substances,provided,however,such cooperation by the Agency with the Developer for the conduct of the Developer Investigations during the Due Diligence Period shall not require the Agency to incur any cost or expense payable by the Agency to a third party,except as may be expressly provided in this Agreement. (c) The Agency makes no representation or warranty to the Developer relating to the suitability of the Site, for use by the Developer. The Developer shall rely solely and exclusively upon the results of its Developer Investigations of the Site,for the purpose of the Developer's: (i)acceptance of the condition of the Site as may hereafter be transferred by the Agency to the Developer, and (ii) the Developer's approval or confirmation of the feasibility of the redevelopment of the Project as set forth in this Agreement. In addition to the consideration of the potential effect on the Project of one or more Title Exceptions and the economic feasibility of redevelopment of the Project, the scope of the Developer Investigations shall also include without limitation the Developer's consideration of the results of the geotechnical soil investigations and conditions and compliance of the design and improvement of the Project and each element thereof with applicable laws pertaining to the remediation of any Hazardous Substances which may be present on any portion of the Site, and any other matters relevant to or arising from the suitability of the Site and each portion thereof for the Project as the Developer may deem necessary and proper. (d) The Developer shall give the Agency and the Escrow Agent written notice of its completion of its Developer Investigations and the Developer's satisfaction with the condition of each Site Parcel which references this Section 2.12,(each a"Notice of Acceptance")not later than thirty(30)days prior to the Site Transfer Escrow Closing. In the event that the Developer,in its sole and absolute discretion,is not satisfied with any aspect of the condition of the Site, then the Developer shall deliver to the Agency and the Escrow Agent a written rejection statement for the Site Parcel which references this Section 2.12(d). The Developer's rejection statement shall include a description of the particular matter which the Developer rejects. If such a statement of rejection is delivered, then the parties shall confer about the means by which such rejection may be withdrawn by the Developer. Until such time as the rejection may be withdrawn by the Developer at its option,or if this Agreement is terminated by the parties as set forth in the next sentence, the Agency shall have no further obligation to proceed in preparation for the Site Transfer Escrow Closing. If the Developer does not accept the condition of the Site as evidenced by the timely submittal by the Developer of the appropriate Notice of Acceptance,the Developer shall be deemed to have rejected the condition of the Site and neither party shall be deemed to be in default,and thereafter, this Agreement may be terminated by either party upon thirty(30)days written notice and the parties shall each be released from any further responsibility or liability except, as provided in Section 5.9. 27 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments'Agrmts-Amend 2009108-03-09 Meta Housing-Final DDA-doc (e) The Developer acknowledges that there is a significant probability that there exists many unknown physical conditions, including, but not limited to, below ground structures, debris, non-native soils, unconsolidated or non-compatible soils within the Site that will an adverse impact upon the feasibility and the costs of the Project. The Developer acknowledges and agrees that the location of these physical conditions cannot be determined or inferred by review of any drawing,record or study as of the Effective Date for which the Agency has notice of such physical conditions. The location of physical conditions cannot be determined or inferred by review of any drawing,record or study as of the Effective Date for which the Agency has notice of such physical conditions. There is a probability that unknown physical conditions will be discovered as of and during the time of the preparation,demolition,grading and improvement by the Developer of the Project for which the Developer undertakes the covenants and agreements as set forth in subsection(f), (g) and(h)below. (f) At its option and in the exercise of its sole discretion, the Developer shall accept the transfer from the Agency of the Site at the time of the Site Transfer Escrow Closing, in its "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS"condition. (g) THE DEVELOPER HEREBY SPECIFICALLY ACKNOWLEDGES AND AGREES THAT THE AGENCY SHALL TRANSFER AND THE DEVELOPER SHALL ACQUIRE THE SITE FROM THE AGENCY IN ITS "AS IS", "WHERE IS" AND "SUBJECT TO ALL FAULTS" CONDITION AND THAT THE DEVELOPER IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,EXPRESS OR IMPLIED,MADE BY THE AGENCY OR THE AGENTS OF THE AGENCY AS TO ANY MATTER CONCERNING THE SITE OR OF THE PROPERTY OR OF ANY OF THE DEVELOPER INVESTIGATIONS OR OTHER DEVELOPER DUE DILIGENCE OR INFORMATION OR MATERIALS INCLUDING, WITHOUT LIMITATION: (i) THE QUALITY, NATURE AND ADEQUACY OF THE PHYSICAL CONDITION OF THE SITE, (ii)THE QUALITY, NATURE,ADEQUACY,AND PHYSICAL CONDITION OF THE SOILS,GEOLOGY AND/OR ANY GROUNDWATER UNDER OR IN THE VICINITY OF THE SITE,(iii)THE EXISTENCE,QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE SITE, (iv) THE DEVELOPMENT POTENTIAL OF THE SITE, AND THE USE, HABITABILITY, MERCHANTABILITY,OR THE FITNESS, SUITABILITY,VALUE OR ADEQUACY OF THE SITE FOR ANY PARTICULAR PURPOSE,(\)THE ZONING OR OTHER LEGAL STATUS OF THE SITE, OR ANY OTHER PUBLIC USE DEDICATION OR PRIVATE RESTRICTION AFFECTING THE SITE, (vi) COMPLIANCE OF THE SITE, EITHER BEFORE OR AFTER A SITE TRANSFER ESCROW CLOSING,REGARDING ANY USE OR OCCUPANCY WITH ANY APPLICABLE CODE, LAW, INCLUDING ENVIRONMENTAL LAWS, REGULATION, STATUTE, ORDINANCE, COVENANT, CONDITION AND/OR RESTRICTION OF ANY GOVERNMENTAL OR QUASI- GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR ENTITY,(vii)THE PRESENCE OF HAZARDOUS SUBSTANCES IN, ON, UNDER OR ABOUT THE SITE, EITHER BEFORE OR AFTER THE SITE TRANSFER ESCROW CLOSING, OR IN OR UPON ANY OTHER PARCEL OR LAND ADJOINING OR NEIGHBORING OR OTHERWISE AFFECTING SUCH SITE PARCEL(viii) THE QUALITY OF ANY LABOR AND MATERIALS USED TO CONSTRUCT ANY IMPROVEMENT ON THE SITE,(ix)THE CONDITION OF TITLE TO THE SITE,EITHER BEFORE OR AFTER THE SITE TRANSFER ESCROW CLOSING,AND(x)THE PROBABILITY OF SUCCESS EITHER FINANCIAL OR OTHERWISE OF THE ACQUISITION,IMPROVEMENT OR OPERATION OF THE SITE FOR THE PROJECT. 28 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda AttachmentslAgrmts-Amend 2009\08-03-09 Meta Housing-Finai DDA.doc BY ITS ACCEPTANCE OF THE DELIVERY OF THE AGENCY GRANT DEED,THE DEVELOPER AGREES THAT IT IS ASSUMING FOR THE BENEFIT OF THE AGENCY ALL OF THE OBLIGATIONS OF THE AGENCY WITH RESPECT TO THE MANAGEMENT OR ABATEMENT OF ANY HAZARDOUS SUBSTANCE INCLUDING WITHOUT LIMITATION, ASBESTOS CONTAINING MATERIALS AND LEAD-BASED PAINT, AND COMPLIANCE WITH ENVIRONMENTAL LAWS AND THE TITLE MATTERS FROM AND AFTER THE RECORDATION OF SUCH AGENCY GRANT DEED. Developer's Initials (h) Without limiting the provisions of this Section 2.12,the Developer,on behalf of itself and its successors and assigns,waives its right to recover from,and forever releases and discharges the Agency and the officers,employees,attorneys,agents of the Agency, from any and all demands,claims,legal or administrative proceedings,losses,liabilities,damages,penalties,fines,liens,judgments,costs or expenses whatsoever, including,without limitation,attorneys' fees and costs,whether direct or indirect,known or unknown,foreseen or unforeseen,that may arise on account of or in any way be connected with(i)the Site including, without limitation, declarations, restrictions, grants of easements, parking agreements and/or maintenance agreements, (ii)the physical condition of the Site including,without limitation,all structural and seismic elements,the environmental condition of the Site,any Hazardous Substances in,on,under or about each and every Site Parcel, or (iii) any law or regulation applicable to the Site including, without limitation,any Environmental Law and/or any other federal,state or local law(collectively,the"Released Claims"). The Developer represents, warrants and agrees that: (i) it understands that it is releasing potentially unknown claims; (ii) such releases are fairly and knowingly made; (iii) it is aware that it has limited knowledge with respect to certain of the Released Claims,and(iv)it specifically allocates the risk of any mistake by any party in entering into this Agreement to the party or parties who later claims it was mistaken. The Developer hereby waives any and all rights which it may have under or pursuant to the provisions of Section 1542 of the Civil Code of the State of California, and any rights it may have under any other similar statute,regulation or common law of any state or of the United States. Section 1542 of the Civil Code of the State of California provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASES,WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." The Developer understands fully the statutory language of Section 1542 of the Civil Code of the - State of California and,having been so apprised,by placing initials of officers in the space provided below, the Developer nevertheless releases Agency from all known or unknown Released Claims, as provided above. Developer's Initials (i) In addition to the matters relating to potential Title Exceptions with respect to the Site, promptly following the Effective Date,the Agency shall make available for inspection and copying by the Developer all of the public record documents requested by the Developer pertaining to the redevelopment of the Site then in possession of the Agency. 29 P:Agendas'Agenda AttachmenuUgenda Attachments\Agenda Attachments'Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (j) Prior to the Effective Date, the Developer initiated certain subsurface soil environmental investigations of the Site and the Property in order to conduct a more focused inquiry of certain environmental matters relating to the potential presence of Hazardous Substances within the soils of a portion of the Property which includes the Site. The Developer acknowledges and agrees that it shall proceed with the purchase of the Property and the Close of Site Transfer Escrow solely upon information obtained by Developer at its sole discretion without reliance upon any information or other facts or documents obtained from the Agency. SECTION 2.13. Access to the Site for Developer Investigation. During the Due Diligence Period,the Developer and the Developer's agents shall have access to the Site and the Property as set forth in the Developer Acquisition Escrow Assignment Agreement,during normal business hours in order for the Developer to conduct its Developer Investigations thereon as may be requested by the Developer. The performance of any work of the Developer Investigations on the Site shall not unreasonably disrupt the use or occupancy of the Site by the occupant thereof. The Developer shall be liable for any damage to property or injury to any person occasioned by the acts of the Developer, its employees,agents or representatives during the course of performance of any Developer Investigation on the Site and the Property and the Developer shall indemnify,defend and hold harmless Agency,and the officers, attorneys and agents of the Agency from any and all liens, claims, demands or liability resulting from such access by the Developer to the Property and any portion thereof. SECTION 2.14 [Reserved—No Text] SECTION 2.15. Agency Conditions for Site Transfer Escrow Closings. (a) The Agency shall not be required to transfer the Site to the Developer or to cause the Site Transfer Escrow Closings to occur until the following conditions have been satisfied: (i) the Developer is not in default under this Agreement; (ii) the Escrow Agent has confirmed its acceptance to the Agency of its duties under the Site Transfer Escrow and has issued its preliminary escrow closing statement to the Developer and the Agency; (iii) the Title Company has confirmed to the Agency that it is prepared to issue its ALTA — lender's policy of title insurance in favor of the Agency in form and substance reasonably acceptable to the Agency,upon the close of the Site Transfer Escrow; (iv) the Agency has approve the update of the Project Construction Budget as provided in Section 2.19 and the update of the Developer Project Pro Forma as provided in Section 2.24 and the Developer has demonstrated to the reasonable satisfaction of the Agency that the Developer has the equity funds necessary to support the Project as provided in Section 2.9; (v) State TCAC has issued its reservation of affordable rental housing tax credits to the Developer and the Project in an amount sufficient,when added to other Developer Equity and financing for the Project, is deemed by the Agency to be sufficient for 30 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc the Developer to undertake the Project,and such reservation of tax credits has been accepted in writing by the Developer and is in full force and effect at the time of the Site Transfer Escrow Closing; (vi) the City has authorized the recordation of the final form of Parcel Map No. 19200 and such parcel map is in a condition to be recorded concurrently with the Close of the Site Transfer Escrow and the Developer has made arrangements acceptable to the Agency to pay for all of the costs and expenses of the Agency associated with the preparation and recordation of Parcel Map No. 19200 ; (vii) the Developer has accepted the condition of the Site as set forth under Section 2.12; (viii) the Agency has approved the final text of the definitions of such words and phrases as "Operating Expenses", "Operating Reserve Fund", "Replacement Reserve Fund", "cash payments of deferred Borrower fees" and the like, as used in the definition of the term "Residual Rental Receipts of the Project", as set forth in Section 1.4; (ix) the Agency has approved the final form of the Tax Credit Limited Partnership Agreement and such agreement has been fully executed by the Developer and its limited partner(s); and (x) the Developer has complied with the conditions set forth in Section 2.3(e)all to the reasonable satisfaction of the Agency. (b) In the event that the foregoing conditions may have failed to occur for the Site Transfer Escrow Closing by December 31, 2011, without the fault of the Agency,the Agency may terminate this Agreement accelerate the repayment of the outstanding principal balance of the Agency Note plus interest thereon, (e.g., the Initial Advance of the Agency Loan) to the date of such termination and upon the - collection of such payment by the Agency the parties shall each be released from any further responsibility or liability except as provided in Section 5.9. SECTION 2.16. Developer Conditions for Site Transfer Escrow Closing. (a) The Developer shall not be required to accept the transfer of the Site Parcel or to cause the Site Transfer Escrow Closing to occur until all of the following conditions precedent have been satisfied: (i) the Agency is not in default under this Agreement; (ii) the Escrow Agent has confirmed its acceptance to the Developer of its duties under the Site Transfer Escrow and has issued its preliminary escrow closing statement to the Agency and the Developer; (iii) the Title Company has confirmed to the.Developer that it is prepared to issue its ALTA—Owner's policy of title insurance in favor of the Developer in a form and substance reasonably acceptable to the Developer upon the close of the Site Transfer Escrow; • 31 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc (iv) State TCAC has issued its reservation of affordable rental housing tax credit to the Developer and the Project in an amount when added to other Developer Equity and financing for the Project is deemed by the Developer to be sufficient to undertake the Project; and such reservation of tax credits is in full force and effect at the time of the Close of the Site Transfer Escrow; (v) the final form of the Tax Credit Limited Partnership Agreement has been fully executed by the limited partners of the Developer; (vi) the Developer has accepted the terms and conditions of the Construction Loan and Construction Loan Escrow is in a condition to close concurrently with the Site Transfer Escrow; (vii) the Agency has executed all of the documents required by the Agency for the close of the Site Transfer Escrow and that all such documents are in the possession of the Escrow Agreement; (viii) the Agency has confirmed to the Developer that its conditions for the close of the Site Transfer Escrow have been satisfied. (b) In the event that the foregoing conditions may have failed to occur for the Site Transfer Escrow Closing by December 31,2011,without the fault of the Developer,the Developer shall repay the outstanding principal balance of the Agency Note,plus interest,then due and payable to and including the date of such termination and terminate this Agreement and thereupon, the parties shall each be released from any further responsibility or liability except as provided in Section 5.9. SECTION 2.17. Construction Loan Escrow. (a) The final delivery and exchange of the documentation and instruments evidencing the Construction Loan and the initial disbursement of funds by the Construction Lender to the Developer for the construction and development of the Project shall be accomplished upon the close of the Construction Loan Escrow. The Agency shall not be a party to the Construction Loan Escrow;provided,however,that the inclusion in the Construction Loan Escrow as set forth in this Section 2.17 are part of the consideration for the Agency entering into this Agreement. (b) The Developer and the Construction Lender shall mutually establish the Construction Loan Escrow and the Developer and the Construction Lender shall each instruct the Escrow Agent, as designated by the Construction Lender and the Developer,to comply with the written Construction Loan Escrow instructions of the Agency addressed to such Escrow Agent for the Construction Loan Escrow which are consistent with the Construction Loan Documents and/or this Agreement. (c) The Developer shall cause the Escrow Agent for the Construction Loan Escrow to deliver to the Agency,the final form of all documents and instruments as delivered to the Escrow Agent by either the Construction Lender or the Developer. The Escrow Agent for the Construction Loan Escrow shall deliver to the Agency the final escrow closing statement of the Escrow Agent addressed to the Developer, as the borrower under the Construction Loan Documents. 32 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (d) The Agency may obtain an appropriate lender's title insurance endorsement of its Agency Deed of Trust from the Title Company at the time of the close of the Construction Loan Escrow at the cost and expense of the Developer, which the Developer hereby agrees to pay. (e) Provided the Developer is not then in default under this Agreement,or any of the Agency Loan Documents, the Agency shall remit the remaining principal balance of the Agency Loan in accordance with Section 2.8,to the Escrow Agent for the Construction Loan Escrow for disbursement to the Developer for the payment of Project costs as may be approved by the Agency and the Construction Lender, as set forth under Section 2.8(g) subject to the satisfaction of the following conditions: (i) the Agency has approved an update of the Project Construction Budget as provided in Section 2.19; (ii) the Agency has approved the update of the Developer Project Pro Forma as provided in Section 2.24; (iii) the State TCAC has issued its reservation of affordable rental housing tax credits to the Developer and the Project in an amount acceptable to the Agency Executive Director that will generate net funds available for the Project and such reservation of State TCAC has been accepted by the Developer and is in full force and effect at the time of the close of the Construction Loan Escrow; (iv) the Agency has approved the final form of the Tax Credit Limited Partnership Agreement and the Developer has confirmed to the Agency that upon the close of the Construction Loan Escrow, the Agency shall receive a written opinion of a nationally recognized firm of lawyers that such Tax Credit Limited Partnership Agreement is a valid lawful binding obligation of the Developer and is in full force and effect; (v) the Agency has approved the form of the Project construction documentation as set forth in Section 3.6; (vi) the Agency has approved the form of the Construction Loan Documents as set forth in Section 3.6; (vii) the Construction Lender has confirmed its approval of the Agency Subordination Agreement for Project Financing, in a form as acceptable to the Agency under Section 3.9; and (viii)the Developer has provided the Agency with written evidence reasonably acceptable to the Agency that the Developer Equity is available to fund the cost of the construction of the Project. SECTION 2.18. [Reserved—No Text] 33 P-.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc SECTION 2.19. Project Construction Budget. (a) As of the Effective Date, the Developer has included a preliminary Project Construction Budget as part of the Developer Project Pro Forma. The preliminary Project Construction Budget has been prepared by the Developer based upon the Development Project Application as approved by the City and the Developer represents and warrants to the Agency that as of the Effective Date,the preliminary Project Construction Budget contains an accurate estimate of the actual and reasonable costs necessary to design, construct, improve, furnish and finance the Project, based upon development assumptions which the Developer believes to be reasonable. (b) The State TCAC application materials for the Project as prepared and submitted by the Developer to State TCAC,includes development costs assumptions and estimates for the Project which are based upon the preliminary Project Construction Budget. (c) Upon the Effective Date,the Developer hereby agrees to diligently prepare applications for issuance of Development Project Permits to the City for improvement of the Project based upon the Development Project Application as approved by the City. The plans and specifications prepared by the Developer in connection with such applications for issuance of Development Project Permits shall provide the Developer and the agency with the basis to confirm, update and further refine the preliminary Project Construction Budget for purposes of obtaining the Construction Loan from the Construction Lender. (d) Concurrently with the Developer's submission of the Construction Loan Documents to the Agency for its review and approval under Section 3.8, the Agency shall confirm that the final form of the Project Construction Budget as accepted and approved by the Construction Lender is reasonably consistent with the preliminary Project Construction Budget and the Development Project Application for the Project as approved by the City. SECTION 2.20. State TCAC Application for Affordable Rental Tax Credit Allocation to the Project. (a) Prior to the Effective Date of this Agreement the Developer has caused to be submitted to State TCAC an application for affordable rental tax credit allocation for the Project. (b) The Developer hereby agrees to exercise its best effort to cause State TCAC to consider and approve the application for a reservation of affordable rental tax credits for the Project in accordance with the application as previously submitted by the Developer for the Project. The Developer hereby agrees to provide the Agency with copies of all correspondence and written communications by and between State TCAC staff and the Developer with respect to the processing,review and approval by State TCAC of the affordable rental tax credit reservation for the Project. SECTION 2.21. Review of Project Operating Cost Budget. (a) As part of the ongoing consultations between the Developer and the Agency as provided in Section 2.3 of this Agreement, the Developer hereby agrees to provide the Agency with all relevant information with respect to the finalization of the terms on which the Tax Credit Limited Partnership Agreement shall be executed by the Investor Limited Partners and the finalization of such terms as the following for purposes of completing the final form of the Agency Loan Note: 34 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agtmts-Amend 2009108-03-09 Meta Housing-Final DDA.doc (1) "Operating Expenses"of the Project; (2) actual debt service schedules as projected for all of the "Senior Debt" as may be secured under the "Senior Lender Documents"; (3) the starting balance of the"Operating Reserve Fund"and the estimated amounts to be deposited each year to the Operating Reserve Fund by the Project; (4) the starting balance of the"Replacement Reserve"and the estimated amounts to be deposited each year for the Replacement Reserve Fund by the Project; (5) the estimated amount of the general partner loans, if any, to the Project and the repayment schedule of such general partner loans; (6) estimated amounts of the deferred Developer fee for the Project, and the payment schedule for such deferred Developer fee; (7) other accounting items which effect the calculation of the amount of Residual Rental Receipts of the Project which may be available during the Project compliance period,each Project Accounting Year for the repayment of the Agency Loan. (b) Based upon the consultations between the Developer and the Agency under Section 2.21(a), the Parties shall finalize the text of the Agency Loan Note and the related Agency Loan Documents prior to the Close of the Site Transfer Escrow. SECTION 2.22. Construction Loan Commitment. The Developer shall have the sole obligation to obtain a construction loan commitment from a recognized commercial lender at such time as the State TCAC has issued its reservation of low income housing tax credits and prior to the Close of Site Transfer Escrow. - SECTION 2.23 [Reserved—No Text] SECTION 2.24. Developer Project Pro Forma. (a) As of the Effective Date, the Developer has prepared and presented the Agency with a Developer Project Pro Forma for the Project. The Developer Project Pro Forma for the Project is on file with the Agency. Upon the completion of the improvement of the Project,the Developer shall provide an accounting to the Agency for the actual cost incurred by the Developer in connection with the acquisition and construction of the Project as set forth in Section 2.25. (b) At all times following the Effective Date,the Developer shall keep and maintain and make available for review and inspection by the Agency and its auditors accounting books and records for Project acquisition and development costs incurred in connection with the Project in accordance with generally accepted principles of business accounting. The Agency and its accountants and auditors shall have the right upon reasonable prior notice to conduct inspections and reviews of the accounting books and records of the Developer relating to the Project, at the business offices of the Developer. The Developer shall cooperate with the Agency in the production of its accounting books and records for the Project, as reasonably required by the Agency and its auditors to conduct an audit or review of actual Project acquisition and development costs at any time during the course of improvement of the Project. 35 P:\A endas\Agenda Attachments'Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (c) [ RESERVED (d) The Parties acknowledge and agree that the Agency Loan is intended to partially finance the financing"gap"of the Project(i.e.,the amount needed to pay the dollar amouint of the total acquisition, development and construction costs incurred and paid by Developer during the course of construction of the Project (collectively, the "Total Project Costs") that is in excess of the financing and other funding sources available to the Developer for the acquisition,development and construction of the Project),but in no event to provide funding in excess of the Total Project Costs. If the Total Project Costs are less than the anticipated Project costs as set forth in the Developer Project Pro Forma as the same may be amended prior to the commencement of construction with the reasonable approval of the Agency Exectuive Direcotr (the"Estimated Project Costs")(as uised herein the dolar amount representing the difference between the Estimated Project Costs and the Total Project Costs shall be a"Cost Reduction"),then an amount equal to the Cost Reduction shall first be applied to pay any outstanding portion of the Developer fee,and thereafter remaining amounts shall be paid to Agency to reduce the principal amount of the Agency Loan. (e) In the event that following the Effective Date either the Developer or the Agency may propose a substantial modification to the Development Project Application for the Project as approved by the City, the parties acknowledge that the mutual approval of any such proposed modification of the Development Project Application insofar as the Project is concerned could also have a material effect on the Developer Project Pro Forma. SECTION 2.25. Project Audit and Accounting. (a) The Developer(including for purposes hereof any Developer affiliate that owns or has any interest in the Project) shall provide the Agency with annual financing statements of its operations with respect to its ownership and operation of the Project no later than one hundred twenty(120)days after the conclusion of each Project Accounting Year, beginning for calendar year 2010 through the end of the regulatory period under the Agency Regulatory Agreement. Such information as shall be contained in the annual financial statements of the Developer for the Project shall be utilized by the Agency in determining • the amounts payable by the Developer from the Project each year to the Agency pursuant to the repayment requirements as set forth in the Agency Loan. Upon reasonable notice from the Agency,Developer shall make available for inspection at the office of the Agency all updated financial information of the Developer for the confidential inspection by either a financial consultant to the Agency or a certified public accountant retained by the Agency to review such information. Such financial information shall be made available on a confidential basis. No financial information of the Developer shall be disclosed by the Agency or its consultants to third persons,other than such consultants of the Agency shall be permitted to comment to the Agency regarding the financial condition of the Developer as it relates to the ability of the Developer to continue with the Project consistent with this Agreement. The Agency shall use all reasonable efforts to protect the confidentially of the Developer's financial information, subject to disclosures required by applicable law. (b) The Agency shall have the right at reasonable times to conduct its independent audit of the financial statements, or any component thereof, of the Developer as to those matters set forth in Section 2.25(a) above at its sole cost and expense. Each party shall reasonably cooperate with the other party during the conduct of any such audit. Notwithstanding the foregoing,the Agency shall have any right to inspect books and/or records of the Developer as to which the Developer reasonably asserts a claim of attorney/client communications or other attorney work product under applicable law. 36 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda AttachmentsWgmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc ARTICLE III REDEVELOPMENT OF THE PROJECT,AND EACH ELEMENT THEREOF SECTION 3.0. Consequences of Exercise of Discretion'by the City. The Developer and the Agency mutually agree that one or more of the Developer's and the Agency's respective conditions precedent to the Close of the Site Transfer Escrow may fail to be met as a result of any studies,revisions or proceedings involving the exercise of discretion by the City with respect to the approval of any Development Project Application,the conditions imposed under any Development Project Permit or as a result of intervening State or federal legislation or regulation or judicial ruling. Upon the occurrence of such an event, neither party shall be in default under this Agreement, and this Agreement shall be subject to termination by either party and the parties shall be released from any further responsibility or liability except as provided in Section 5.9. SECTION 3.1. Developer Demolition Activities on the Site. (a) It shall be the sole duty and responsibility of the Developer to cause all above and below ground structures situated on the Site, to be demolished and the corresponding demolition wastes to be removed from the Site at the sole cost and expense of the Developer promptly following the demolition activities of Developer. Developer shall not store such demolition waste on the Site for a period of time equal to the lesser of(i) the time prior to any scheduled demolition waste removal or (ii) ten (10) days whichever is the first to occur. (b) Pursuant to Section 2.12,the Developer has agreed to accept the transfer from the Agency of the Site at the time of Escrow Closing in an"AS IS","WHERE IS"condition with all known faults and defects including the existence of ACMs,LBP,Hazardous Substances,and USTs and other matters,which shall be the sole obligation and responsibility,of the Developer to remove,remediate or otherwise manage in such manner as is appropriate under the applicable Development Project Permit and other applicable law. The Developer recognizes that additional costs and expenses, and time delays in the demolition of any structure on the Site or the grading of the Site may result due to the presence and abatement work associated with such ACMs, LBPs, Hazardous Substances, USTs, and the removal or correction of non- native or non-compactable soil and debris from the Site. SECTION 3.2. Development of the Project by the Developer. (a) Subject to Site Transfer Escrow Closing, the Developer hereby agrees to construct and complete the improvement of the Project in a manner which is consistent with each applicable Development Project Permit. Notwithstanding the foregoing,the Developer acknowledges and agrees that no work of improvement of the Project, or any Phase thereof, other than on-site geotechnical testing and survey work,as authorized in Section 2.12 and Section 2.13, shall occur on the Site until such time as the Developer has: (i) acquired the fee interest the Site, (ii) the City has issued the applicable Development Project Permit to the Developer for the improvement of the Site and(iii)the occupants of the Site, if any have surrendered possession of the Site to the Developer or the Agency, as applicable under a notice of displacement or otherwise. (b) The Developer shall not submit a Development Project Application for the modification of tentative Parcel Map No. 19200 or City Conditional Use Permit No.09-05 until after the Agency has first 37 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc approved the Developer Project Application for such a modification of either tentative Parcel Map No. 19200 and/or City Conditional Use Permit No.09-05. Subject to the approval and the issuance by the City of the applicable Development Project Permits for the construction of improvements on a the Site, the redevelopment of the Project by the Developer shall be accomplished in substantial accordance with the Developer Project Application as approved by the Agency,together with such changes in the Developer Improvement Plan,if any,as may be approved by the Agency either before or after the dates of submission by the Developer to the Agency or the submission by the Developer of one or more Development Project Applications to the City pursuant to this Agreement. This Agreement, including the Schedule of Performance specifies various dates for the submission by the Developer to the City and/or to the Agency, of various documents and items of information for review,including geotechnical reports,preliminary and final drawings, and structural engineering studies, building elevations, renderings, construction implementations,facility operation plan reports and Project cost audit reports and the like for the Project. (c) No action by the Agency with reference to this Agreement or any of the related documents or the Attachments hereto shall be deemed a waiver of any City development standard which is applicable to the improvement and redevelopment of the Project, the Site or any portion thereof. (d) In the case of a Development Project Application,the word"Plans"means and refers to the preliminary and final drawings, site development plans, tentative subdivision map, building elevations, design engineer reports, landscape plans and other written materials as may then be indicated by the City staff or required under the City Municipal Code in support of the submission and completion of one or more Development Project Applications. In the case of a Development Project Permit,the word"Plans"means and refers to preliminary and final drawings, final subdivision maps, demolition plans, grading plans, architectural plans, civil engineering plans and specifications for building and structural elements,building, electrical,plumbing, mechanical and all related life safety plans,material samples and the like,as may then be indicated by the City staff or required to support the issuance of one or more Development Project Permits. The Developer shall prepare at its sole cost and expense for submission to the City all Plans • necessary to accompany each Development Project Application in sufficient detail for the City to accept as complete each such Development Project Application. Following the approval or conditional approval by the City of each such Development Project Application, the Developer shall prepare at its sole cost and expense for submission to the City all Plans necessary and in sufficient detail to obtain from the City each Development Project Permit which authorizes the construction or installation of a specific item of improvement of the Project on the Site. In the event that after the Agency has approved the Developer Improvement Plan,the Developer may seek to:(i)prepare a Development Project Application or a Plan in support of a Development Project Application; or(ii)modify, revise or amend a Development Project Application or Plan, which in either such case of(i)or(ii)the Interim Executive Director of the Agency determines in a written notice issued to the Developer is a "material change" as this term is defined in this Section 3.2, from the Developer Improvement Plan,then before the Developer may request the City to further consider such a modification, revision or amendment of a Development Project Application or Plan, the Developer shall obtain the approval of the governing board of the Agency of the particular modification,revision or amendment to such Development Project Application, and/or Plan. The Developer may request by written notice to the Agency that the Interim Executive Director of the Agency determine whether a feature of one or more Development Project Applications or Plan as 38 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\05-03-09 Meta Housing-Final DDAdoc proposed for submittal to the City includes a material change from Developer Improvement Plan as previously approved by the Agency and the Interim Executive Director of the Agency shall respond to such a written request within fifteen (15) business days after receipt thereof as to whether a material change appears to exist. (e) The words "material change," as used in Section 3.2(d) means and refers to any of the following: (1) a development proposal included in either a Development Project Application or a Development Project Permit is not consistent with the previously approved Developer Improvement Plan; (2) a development proposal set forth in a Development Project Application contains more than a ten percent (10%) difference in the land area, building area, landscape area and/or common area, than as originally set forth; (3) a proposed Plan or Development Project Permit contains one or more provisions which require the modification or amendment of the Developer Improvement Plan; (4) any other physical change to the proposed scope of overall improvement for the Project occurs which the City determines is not within the scope of the completed CEQA review for the Project by the City. (f) Landscaping plans for the Project shall be prepared by a licensed landscape architect. The landscaping plans prepared by the Developer as part of the Agency concurrence of the Developer Improvement Plan includes high quality and attractive landscaping and related improvements within the proposed common areas, as applicable, as well as within the public parkways. (g) The Developer shall prepare and submit all Plans for the Project as required under the City . Municipal Code. The Agency shall cooperate with and shall assist the Developer following the Effective Date in order to obtain the approval by the City of each Development Project Application submitted by the Developer to the City which is consistent with the Scope of Development and the Developer Improvement Plan,and any other Plans which have previously been approved by the City prior to the Effective Date. In the event that the City disapproves any element of a Development Project Application or any Plan related thereto,the Developer may revise and resubmit such Development Project Application or Plan to the City in accordance with the City's requirements, or the Developer may appeal the rejection by the City of a particular Development Project Application or Plan, in the manner provided by law. The Developer and the Agency staff shall hold regular progress meetings to coordinate the preparation and submission by the Developer of each Development Project Application,and each Plan and related documents to the City and the consideration by the City of the completeness of each Development Project Application,the approval by the City of each Development Project Application and thereafter, the issuance by the City of Development Project Permits for the improvement of the Project. The Agency Staff and the Developer shall communicate and consult informally as necessary to ensure that the formal submittal of the any Plans or other documents to the City or the Agency can receive prompt and speedy approval. (h) The Developer Improvement Plan,once approved by the Agency,shall not be modified by the Agency unless such modification is mutually agreed by the parties. Nothing contained herein shall preclude the City from conducting its review,modification or rejection of any Plan which accompanies a 39 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc Development Project Application as required by all applicable laws and regulations. The Developer shall revise each such Plan, in a manner that addresses the basis of proposed modification or rejection by the City. The Developer shall promptly revise and resubmit to the City any Plan, which is conditionally approved or rejected by the City as part of the consideration and approval by the City of each Development Project Application and/or the issuance of one or more Development Project Permits. After the Site Transfer Escrow Closing has occurred,the Developer may request a reasonable extension of the period of time as set forth in the Schedule of Performance during which the preparation of revisions to Plans as required by the City in support of the issuance of one or more Development Project Permits may be necessary and such extension of time by the Agency shall not be unreasonably withheld, conditioned or delayed. (i) After the acceptance by the City of the Development Project Application,or later after the issuance of one or more Development Project Permits corresponding to the Development Project Application, if the Developer desires to make any material change in a final Plan which is not consistent with the Development Project Application as approved by the City(either before or after the time when the City has issued the Development Project Permit to the Developer),or if the Interim Executive Director of the Agency has determined that a material change has occurred as set forth in Section 3.2(e) then the Developer shall submit the proposed change to the Agency for its consideration and approval, together with a request for extension of the Schedule of Performance, if such extension is necessary. Such a proposed change shall be approved or rejected by the Agency in writing within thirty (30) days after submission to the Agency. Such a change shall, in any event,be deemed approved by the Agency unless rejected by either the governing board of the Agency or the Interim Executive Director of the Agency, in whole or in part, by written notice of the Agency to the Developer, setting forth in detail the reasons therefore. The Developer, upon receipt of a rejection by the Agency, may revise such portions as are rejected,or may appeal or dispute such rejection. Once a Development Project Permit has been issued and the work of improvement pursuant to that Development Project Permit has commenced, the Developer shall have the right during the course of construction make "minor field changes" for the work of improvement covered by such Development Project Permit without seeking the prior approval of the Agency. "Minor field changes",as this term is used in the preceding sentence,shall refer to those changes from the final construction Plans which have no material or adverse effect on the quality or appearance of the improvements and include changes made in order to expedite the work of construction in response to conditions encountered in the field during the course of construction. (j) Except as expressly provided herein, all of the costs of redeveloping the Site and the Project, including the cost of preparing and submitting each Plan to the City for its review and approval, the costs and charges of any public agency with jurisdiction associated with the issuance of any Development Project Permit,the reorganization of existing or proposed utility services and the costs and charges of the construction of all improvements on the Site, and all off-site improvements associated therewith, shall be borne solely by the Developer. (k) The Developer shall begin and complete the redevelopment of the Project within the times specified in the Schedule of Performance or within such extensions of time as may be revised by the parties from time to time as mutually agreed upon in writing,or as required under Section 2.3(c)or Section 3.2(i). (1) The Developer for itself and its successors and assigns agrees that in the design and construction of the improvements for the Project,the Developer will not discriminate against any employee or applicant for employment because of sex,marital status,race,color,religion,creed,national origin,or ancestry. 40 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (m) The Developer shall be responsible for carrying out its construction of the improvement of the Project,in conformity with all applicable laws,including all applicable federal and state labor standards and requirements. SECTION 3.3. City of San Bernardino Construction Job Employment Outreach Program of the Developer. (a) The Developer hereby agrees to use good faith efforts to recruit San Bernardino residents, for any new job or entry level employment positions,and to the extent of all other factors being equal and consistent with other applicable law, the Developer covenants on a best efforts basis to give San Bernardino residents preference for hiring for such new entry level job or employment positions and to the maximum reasonable and feasible extent, use the services of businesses which are located in the City of San Bernardino which result from the performance of this Agreement and which are performed within the City. (b) "Good faith efforts"of the Developer for the purposes of this Section 3.3 include,but are not limited to, the following factors: (1) advertisement in local media concerning employment, contracting and subcontracting opportunities; (2) providing written notice to a reasonable number of local business enterprises soliciting their interest in contracting or subcontracting in sufficient time to allow them to participate effectively; (3) establishing an applicant pool of eligible persons who have responded to such entry level employment outreach efforts of the Developer; (4) attendance at pre-solicitation or pre-bid meetings that were scheduled by the City to inform contractors or subcontractors of contracting and subcontracting opportunities for local business enterprises; (5) following up initial solicitation of interest by contacting local business enterprises by telephone to determine with certainty whether they are interested in participating; (6) selecting portions of the work to be performed by local business enterprises; (7) providing interested local business enterprises and other enterprises with adequate information about the plans, specifications and requirements of contracts and subcontracts; (8) negotiating in good faith with interested local business enterprises to perform work; and (9) making reasonable efforts to assist interested local business enterprises in obtaining necessary sources of supply, lines of credit or insurance in order to participate in such work associated with the Project. 41 P:\Agendas\Agenda Attachments\Agenda AttachmentslAgenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA:doc (c) If requested to do so by the Agency,the Developer shall provide the Agency with access to copies of all of its records pertaining or relating to its employment practices, except to the extent such records or portions of such records are confidential or privileged under state or federal law. (d) Nothing contained in this contract shall be construed in any manner so as to require or permit any act which is prohibited by law. SECTION 3.4. Developer Compliance with Prevailing Wage Requirements. (a) The sole source of funding for the Agency Loan to the Developer shall be derived from the available low and moderate income housing funds of the Agency under Health and Safety Code Sections 33334.2 and 33334.3, and no other source of Agency funds shall be used or shall be made available therefore. (b) The Developer hereby represents and warrants to the Agency that as of the date of this Agreement and separate from the Agency Loan and the funds received pursuant to the Tax Credit Limited Partnership Agreement, no other part of the Project is anticipated to be paid for in whole or in part from public funds or from a public funding program which would otherwise require that the provisions of Labor Code Section 1720 shall be applicable to the construction of the Project. In the event other public funds or any public funding program are used in whole or in part to pay for any portion of the Project, the Developer shall then comply with said provisions of Labor Code Section 1720, as applicable. (c) The Agency shall not be responsible or liable for the payment of any sums under Labor Code Section 1720, et seq., or other prevailing wage requirements as the result of the activities of the Developer, or any of its affiliates or the contractors or subcontractors of any of them, in connection with the development and improvement of the Project. The Developer shall indemnify, defend and hold harmless the Agency and all officers, officials, employees,consultants and attorneys of the Agency with respect to all such prevailing wage compliance issues arising out of the activities of the Developer associated with its acquisition of the Site from the Agency and in constructing the Project. The Developer . agrees to apprise in writing all third parties seeking to provide labor and construction work on the Project, as to the provisions of this Section 3.4. Any indemnification provided to the Developer from such third parties with respect to compliance of the Project with the public work requirements imposed upon the Developer and the Project by virtue of the provisions of Labor Code Section 1720,et seq.,shall not relieve the Developer of its indemnification obligations to the Agency arising under this Section 3.4. SECTION 3.5. Maintenance of the Site Following Close of the Site Transfer Escrow and Prior to the Recordation of the Certificate of Completion. Subject to the Close of the Site Transfer Escrow the Developer covenants and agrees for itself,its successors, and assigns to maintain the Site, in a good condition free from any accumulation of debris or waste material subject to normal construction job site conditions. In the event that at any time between the Close of the Site Transfer Escrow and the recordation of the Certificate of Completion,the Developer,or its successors or assigns, fails to perform the maintenance as required herein,the Agency shall have the right,but not the obligation,to enter the Site and undertake maintenance activities upon thirty (30) days prior written notice to the Developer. In such event, and cumulative with all of the other rights and remedies of the Agency,including the separate and cumulative remedies of the Agency as arise under the Agency Regulatory Agreement,the Developer shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities. The obligation of the Developer under this Section 3.5 with respect 42 P:\Agendas\Agenda AttachmentskAgenda Attachments\Agenda Attachments'Agrnns-Amend 2009\08-03-09 Meta Housing-Final DDA.doc to the Site shall be discharged on the date when the Agency has issued its Certificate of Completion for the redevelopment of the Project. SECTION 3.6. Agency Loan Deed of Trust Subordination to Construction Loan(s)for the Project. (a) The Agency hereby agrees to subordinate the Agency Loan Dead of Trust in the Project and the Agency Regulatory Agreement to the security interest of a Construction Lender under a Construction Loan which is secured by the Project pursuant to a subordination with such Construction Lender (each such subordinate agreement is referred to as a"Construction Lender Subordination Agreement"),subject to the satisfaction of the following conditions and provided that the Senior Citizen Rental Housing Use Covenant shall at all times remain in a first and prior recorded in a priority recorded position as to the Construction Loan and the Permanent Loan: (i) the maximum principal amount of all such Construction Loans(including funded interest reserves and customary and reasonable costs of financing of the Construction Loan) shall not exceed an approximate dollar amount presently estimated to be the amount as set forth in the Developer Project Pro Forma, subject to modifications as may be approved by the Agency Executive Director,and the Construction Loan shall not permit the disbursement of "soft costs" to the Developer in excess of percent of the principal amount of the Construction Loan as also set f orth in the Developer Project Pro Forma until the Project improvements are complete. No Construction Loan may contain a "land draw" or authorize another disbursement of the proceeds of such a Construction Loan which is not related to actual, reasonable and incurred development costs of the Project; (ii) at the time of the Agency's execution of the Construction Lender Subordination Agreement,there shall be no default of the Developer under this Agreement or the Agency Loan Documents; (iii) no provisions of the Construction Lender Subordination Agreement shall require the Agency to first obtain the consent of such Construction Lender before the Agency may assert any remedy against the Developer or realize upon the value of any security given by the Developer to the Agency under this Agreement or the Agency Loan Note or the Agency Loan Deed of Trust; and (iv) the Construction Loan documents shall contain provisions reasonably satisfactory to the Agency which assure the Agency that: (1) an independent lender's disbursement control service shall be used to perform the customary functions of a construction lender disbursement control and payment verification for the portion of the Project; (2) the Construction Loan documents shall not be materially modified or amended following the recordation of the Construction Lender Subordination Agreement without the Developer first obtaining the written approval of the Agency; (b) The Developer shall be solely responsible for obtaining each Construction Loan and nothing herein shall be deemed to be an undertaking or commitment by the Agency to arrange for, obtain, guarantee or participate in any such Construction Loan. The Developer agrees to exercise best faith efforts 43 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc to obtain the necessary Construction Loan for the improvements to be constructed as part Project. Each Construction Loan shall be obtained by the Developer from a reputable,recognized and well established financial institution or commercial lending source, including but not limited to a bank, savings and loan institution, insurance company, real estate investment trust, pension fund and the like. (c) Provided that the Agency has received and previously approved a Construction Loan commitment relating to a particular Construction Loan as set forth in Section 2.22,the Agency shall review and consider a request for subordination of the Agency Loan Deed of Trust concurrently within the Agency's consideration of the Construction Loan documentation under Section 3.8(b)(iii). The Agency shall deliver its approval or disapproval of the applicable Construction Loan Subordinate Agreement within thirty(30)days after submittal by the Developer of the notice described in the preceding sentence. If after such thirty(30)day period the Agency has not responded in writing,the Developer's submittal of the request for Agency Loan Deed of Trust subordination shall be deemed approved. In the event of disapproval of the Construction Loan Subordinate Agreement,the Agency shall concurrently within the delivery of the notice of such disapproval, inform the Developer in writing of the reason for disapproval and the required changes to the proposed Construction Lender Subordinate,if any,to make it acceptable to the Agency. SECTION 3.7. Construction of Project Improvements. (a) The Developer shall construct all of the improvements for the Project in substantial accordance with the final Plans approved by the City and the terms and provisions set forth in this Agreement. Without limitation of the foregoing,the Developer specifically acknowledges and agrees that the Developer shall be responsible for satisfying all of the conditions necessary to ensure that the Project conforms to all applicable CEQA requirements and mitigations and the conditions of approval of each Development Project Application and each Development Project Permit. (b) The Developer shall commence and complete or cause the commencement and completion of the preparation of all Plans, (whether before or after the Close of the Site Transfer Escrow) improvements for the Project in accordance with the times set forth in the Schedule of Performance and the terms of this Agreement. The Developer shall commence and complete or cause the commencement and completion of the improvements for the Project,and shall make all submissions and secure all approvals in connection therewith, prior to the deadlines set forth in the Schedule of Performance subject to force majeure events. If the Developer fails to commence or cause commencement of construction of the improvements for the Project prior to the deadline established therefore in Schedule of Performance,or if the Developer commits a material default under this Agreement,including, without limitation,the failure to proceed with and complete construction of the improvements for the Project prior to a deadline established therefore in the Schedule of Performance,the parties shall be entitled to exercise the rights and remedies and be afforded the protections as specified further in Article V hereof. SECTION 3.8. Security Financing;No Encumbrances Except for Development Purposes. (a) The Developer shall have no right or power to create or impose any Security Financing Interest on the Property except as set forth in this Agreement. The Developer shall create no security interest in Parcel 2 of Parcel Map No. 19200 following the recordation of such final parcel map. Notwithstanding any other provision of this Agreement, following the Site Transfer Escrow Closing, mortgages and deeds of trust,or any other reasonable method of security,are permitted to be placed upon the Site, but only for: (i) the purpose of securing loans of funds to be used for the payment by the 44 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc Developer of actual and reasonable costs of, design and construction of the Project and any other expenditures necessary and appropriate to redevelop the Site under this Agreement,and costs and expenses incurred or to be incurred by the Developer in furtherance of this Agreement and/or(ii)with respect any permit financing affecting the Project following the date when the Certificate of Completion has been issued to the Developer by the Agency and filed for recordation. (b) The Developer agrees to submit to Agency certain documents as set forth in this Section 3.8 as evidence that Developer has obtained the equity(including Developer Equity)and other contractual commitments to finance and develop the Project, as required by this Agreement. Such submittals to the Agency shall consist of the following: (i) By the date specified in Section 2.22,the Developer agrees to deliver to the Agency,for its written approval,which approval shall not be unreasonable withheld,a written commitment (or commitments)(each or collectively as applicable"Construction Commitment"),from an institutional lender(the"Construction Lender")by which the Construction Lender shall represent that it has agreed, subject to customary closing conditions and final loan documentation consistent with the terms of such written commitment(s), to make a • construction loan for the construction and improvement of the Project(each being referred to as a"Construction Loan") in accordance with this Agreement. A. The Developer's delivery of such Construction Commitment to the Agency shall be accompanied by a written notice addressed to the Interim Executive Director of the Agency which references this Section 3.8(b)(i). B. The Agency shall deliver its approval, or disapproval, of the Construction Commitment within thirty(30) days after submittal by the Developer of the notice described in the preceding sentence. If after such thirty(30)day period Agency has not responded in writing, the Developer's submittal of the Construction Commitment shall be deemed approved. • C. In the event of any disapproval of the Construction Commitment,the Agency shall, concurrently with delivery of the notice of such disapproval inform the Developer in writing of the reason for disapproval and the required changes to the written commitment if any,to make it acceptable to the Agency. The Developer shall have thirty (30) days from receipt of any notice from the Agency specifying required changes ("Commitment Disapproval Notice") within which to notify the Agency that the Developer agrees to make such changes or objects to any requested changes. If the Developer does not notify the Agency in writing within such thirty (30)day period of its objections to the requested changes,then the Developer shall be deemed to have approved of all such requested changes. If the Developer notifies the Agency within said thirty (30) day period of its objections to the requested changes,then the Agency and the Developer agree to meet to discuss the differences within ten (10)days after the Developer gives such notice. Following such meeting, the Developer shall, if deemed necessary by the Agency, obtain a revised Construction Commitment and resubmit it for approval to the Agency, by the later of thirty(30)days after receipt of the Commitment Disapproval Notice or ten(10)days after such meeting with the Agency,unless the nature of such changes requires a longer period of time, in which case the Developer shall resubmit said 45 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009108-03-09 Meta Housing-Final DDA.doc Construction Commitment as soon as possible,and,in any case,no later than sixty (60) days after receipt of the Commitment Disapproval Notice. Any such resubmissions shall be approved or disapproved and revised within the times set forth herein with respect to the initial submission, and the Developer shall be entitled to not more than two(2) such resubmittals pursuant to this subsection. (ii) The amount of the Construction Commitment for the improvement of the Project shall not be less than (A) the amount of the Construction Contract for the improvement of the Project,less(B)the available undisbursed balance of the Agency Loan, if any,less(C)the amount of any other Construction Loan amounts for which the Agency has previously approved a Construction Commitment,if applicable and (D)the amount of the Developer Equity including the equity to be provided by the Investor Limited Partner which shall be disbursed and available to the Developer to pay for the cost of constructing the improvement of the Project prior to the issuance by the Agency of the Certificate of Completion for the Project or the submission by the Developer of its final Project cost certifications to State TCAC. (iii) The Developer shall provide the Agency with a complete set of the documents,instruments and agreements which the Construction Lender proposes to use to evidence each Construction Loan at least thirty(30)days prior to the date when the Developer and/or such Construction Lender proposes to make an initial advance or disbursement to the Developer under such Construction Loan. A. The delivery of such documents by the Developer to the Agency shall be accompanied by a written notice addressed to the Interim Executive Director of the Agency which references this Section 3.8(b)(iii). B. The Agency shall within thirty (30) days after receipt of such Construction Loan documentation review such Construction Loan documentation and the Agency shall - confirm that such documentation is consistent with the construction commitment for the particular Site Parcel as previously approved by the Agency under Section 3.8(b)(i). The approval of the Interim Executive Director of the Agency of such Construction Loan documents shall not be unreasonably withheld, conditioned or delayed. C. The Agency approval of one or more Construction Loans shall not constitute a waiver by the Agency of any breach or violation of this Agreement by Developer that is a result of acts that are or purport to be in compliance with or in furtherance of any Construction Loan including a Construction Loan which has been previously approved by the Agency. D. Notwithstanding anything herein which is or appears to be to the contrary, recordation of a notice of default with respect to any Construction Loan shall constitute a material default under this Agreement. (iv) The Developer represents that it intends to pay off each Construction Loan for the improvement of the Project upon the completion of improvement of the Project as evidenced by a Certificate of Completion issued by the Agency and that the Developer 46 P:\Agendas\Agenda Attachments\Agenda Attachmems\Agenda Attachmems\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc proposes to retain an interest in the Project upon completion of the redevelopment and improvement of the Project. The Developer agrees to deliver to the Agency,for its written approval (which approval shall not be unreasonably withheld) prior to the final maturity date of each Construction Loan, a written commitment (or commitments) (each or collectively (as applicable)"Permanent Commitment") from an institutional lender (the "Permanent Lender")by which such Permanent Lender shall represent that it has agreed, subject to customary closing conditions and final loan documentation consistent with the terms of said written commitment, to make a permanent loan (or loans) secured by the Developer's interest in the Project(the "Permanent Loan") in an amount at least equal to the then-outstanding Construction Loan or Construction Loans. A. The Permanent Loan may either be a continuation of the Construction Loan or it may be a new loan or multiple new loans. B. Such Permanent Loan shall be secured only by the Project, or interest therein, owned by the Developer and such credit enhancement as the Permanent Commitment may require from the Developer. C. The final Permanent Loan documents shall provide for notice to the Agency of any Developer default and a reasonable opportunity to cure. D. The Developer shall draw upon and utilize the Permanent Loan first to repay the Construction Loan being replaced. E. The Agency shall deliver its approval (or disapproval) of the Permanent Commitment within thirty (30) days after submittal. If after such thirty (30) day period Agency has not responded in writing,Developer's submittal shall be deemed approved. F. In the event of any disapproval,the Agency shall,concurrently with delivery of the notice of such disapproval to the Developer,inform the Developer in writing of the reasons for disapproval and the required changes to the written commitment. The Developer shall have thirty(30) days from receipt of any notice from the Agency specifying required changes("Permanent Loan Commitment Disapproval Notice") within which to notify the Agency that the Developer agrees to make such changes or objects to any requested changes. If the Developer does not notify the Agency in writing within such thirty(30)day period of its objections to the requested changes, then the Developer shall be deemed to have approved of all such requested changes. G. If the Developer notifies the Agency within said thirty (30) days period of its objections to the requested changes, then the Agency and the Developer agree to meet to discuss the differences within ten(10)days after the Developer gives such notice. Following such meeting,the Developer shall, if deemed necessary by the Agency, revise the Permanent Commitment and resubmit it for approval to the Agency, as required by this Agreement, by the later of(i) thirty (30) days after receipt of the Permanent Loan Commitment Disapproval Notice or (ii) ten (10) days after such meeting,unless the nature of such changes requires a longer period of time,in which case the Developer shall resubmit said Permanent Commitment as 47 P'\Agendas Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc soon as possible,and, in any case,no later than sixty(60)days after receipt of the Permanent Loan Commitment Disapproval Notice. Any such resubmission shall be approved or disapproved and revised within the times set forth herein with respect to the initial submission. (v) Agency approval of any Permanent Loan shall not constitute a waiver by the Agency of any breach or violation of this Agreement that is a result of acts that are or purport to be in compliance with or in furtherance of any outstanding Construction Loan or of any other the Permanent Loan. (c) Upon the Agency's written request delivered to the Developer, the Developer agrees to demonstrate, to the Agency's reasonable satisfaction that: (i) the source of the funds providing the Developer Equity contribution on which the Developer will rely to obtain financing for all or the necessary portion of the Developer's costs of the Project,and(ii)the Developer shall demonstrate that subject only to customary Contribution Loan and/or Permit closing conditions required by such third party lenders and as reasonably acceptable to the Agency,that such funds are committed to funding development costs of the Project, and(ii)the amount of such Developer Equity funds committed,when added to the Agency Loan and the Construction Loan is sufficient to cover all costs of the completion of the improvements. (d) Not less than thirty (30) days prior to the close of the Construction Loan Escrow, the Developer agrees to deliver to the Agency,for its review and approval,the form construction contract(s) (collectively, the"Construction Contract") for the improvement of the Project. (i) The Construction Contract shall obligate one or more general contractors(collectively,the "General Contractor"), who is (a) capable of obtaining proper bonding of their performance, (b)licensed in California, and (c) has substantial experience in completing the type of improvements contemplated by this Agreement,to commence and complete the construction of the improvements for the Project in accordance with this Agreement. (ii) The word "bonded" as is used in the preceding subsection, shall mean that the General Contractor shall provide the Developer with a construction payment and completion surety or construction performance letter of credit or other security in a form and amount satisfactory to the Agency in the exercise of its sole discretion,which names the Developer and the Agency as beneficiary of such payment and completion security. (iii) The Developer shall comply with the requirements of Section 3.8(d) and Section 3.8(e) prior to the commencement of any work constituting the construction of the Project. (iv) Subject to the requirements of all applicable law, including,without limitation, California Civil Code Section 3268, the Construction Contract for any of the improvement of the Project shall provide for a retention, until the final payment is due to the General Contractor of reasonable retentions from each progress payment for construction work performed. Such retention shall be retained by the Developer until the occurrence of both of the following events: A. the expiration of thirty five(35)days from the date of recording by the Developer as owner of a notice of completion for the applicable improvements, which the Developer agrees to record promptly within the times specified by law for the recording of such Notice; and 48 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agr mts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc B. the settlement and discharge of all liens and charges claimed by persons who supplied either labor or materials for the construction of the applicable improvements. (v) Each Construction Contract shall give the Agency the right,but not the obligation,to cure defaults thereunder and provided,that such right to cure shall be subordinate to and subject to the rights, if any, of the Developer's Construction Lender with respect to such Construction Contract. (vi) The Agency shall deliver its approval(or disapproval)of the Construction Contract within thirty (30) days after submittal. If after such thirty (30) day period Agency has not responded in writing, Developer's submittal shall be deemed approved. A. In the event of any disapproval,the Agency shall,concurrently with delivery of the notice of such disapproval to the Developer,inform the Developer in writing of the reasons for disapproval and the required changes to the written commitment. The Developer shall have thirty(30)days from receipt of any notice from the Agency specifying required changes("Construction Contract Disapproval Notice")within which to notify the Agency that the Developer agrees to make such changes or objects to any requested changes. If the Developer does not notify the Agency in writing within such thirty (30) days period of its objections to the requested changes,then the Developer shall be deemed to have approved of all such requested changes. B. If the Developer notifies the Agency within said thirty (30) days period of its objections to the requested changes,then the Agency and the Developer agree to meet to discuss the differences within ten(10)days after the Developer gives such notice. Following such meeting,the Developer shall, if deemed necessary by the Agency, revise the Construction Contract and resubmit it for approval to the - Agency, as required by this Agreement, by the later of(i) thirty (30) days after receipt of the Construction Contract Disapproval Notice or(ii)ten(10)days after such meeting,unless the nature of such changes requires a longer period of time,in which case the Developer shall resubmit said Construction Contract as soon as possible, and, in any case, no later than forty five (45) days after receipt of the Construction Contract Disapproval Notice. Any such resubmissions shall be approved or disapproved and revised within the times set forth herein with respect to the initial submission, and the Developer shall be entitled to not more than two (2) such resubmissions pursuant to this subsection. (e) Prior to the commencement of construction of the Project, the Developer or its General Contractor,shall furnish the Agency with a contractor's performance bond in an amount not less than one hundred percent(100%)of the costs for the improvements and a payment bond guaranteeing contractor's completion of those improvements free from liens of materialmen,contractors,subcontractors,mechanics, laborers, and other similar liens. Such contractor's performance bonds shall be issued by a responsible surety company, licensed to do business in California, and with a financial strength and credit rating acceptable to the Agency by an insurance company or companies that have an AM Best Rating of A-V or better and shall remain in effect until the entire costs for such improvements shall have been paid in full. 49 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc Any such contractor's performance bonds shall be in a form reasonably satisfactory to the Agency and its legal counsel. Such contractor's performance bonds may be the bonds obtained by the Developer which name the Agency as a beneficiary or co-beneficiary. SECTION 3.9. Security Financing Interests. (a) The holder of any Security Financing Interest authorized by this Agreement("Holder") is not obligated to construct or complete any improvement of the Project. However, nothing in this Agreement shall be deemed to permit or authorize any such Holder to devote the Site, or any portion thereof, to any use, or to construct any improvements thereon, other than those uses of improvements provided for or authorized by this Agreement. (b) Whenever the Agency,pursuant to its rights set forth in this Agreement,delivers any notice or demand to the Developer to cure or correct a default or breach with respect to the redevelopment of the Project,the Agency shall at the same time deliver to each Holder of record any Security Financing Interest creating a lien upon the Site, a copy of such notice or demand of the Agency. Each such Holder shall (insofar as the rights of the Agency are concerned) have the right, but not the obligation, at its option, within thirty(30)days after the receipt of the notice,to cure or remedy or commence to cure or remedy any such default or breach affecting the Site which is subject to the lien of the Security Financing Interest held by such Holder and to all the costs thereof to the security interest debt and the lien on the security interest. (c) In any case where within one hundred and eighty (180) days after the occurrence of a default or breach by the Developer for which the Agency has given notice to the holder of any Security Financing Interest under Section 3.9(b), and such holder has exercised its option to construct the improvement of the Project,but such holder has not proceeded diligently with construction,the Agency shall thereupon be afforded the same rights and remedies against such holder of a Security Financing Interest for such default or breach of the Developer as the Agency would otherwise originally have had against Developer under this Agreement. (d) In the event of a default or breach by the Developer under a Security Financing Interest prior to the completion of redevelopment of the Project or portion thereof,and the holder has not exercised its option to complete the improvement of the Project(or such portion thereof encumbered by the Security Financing Interest),the Agency, at its sole option and election,but without any obligation to do so, may cure the default or breach of the Developer to such holder,prior to the completion of any foreclosure under such holder's Security Financing Interest. In such event the Agency shall be entitled to reimbursement from the Developer of the principal amount paid by the Agency to cure or satisfy the defaults plus interest, at the penalty rate set forth in the agency Loan Note,and all reasonable other costs and expenses incurred by the Agency in curing the default of the Developer. The Developer hereby agrees that the Agency shall also be entitled to a lien upon the Project,or any portion thereof to secure the repayment of such amount to the Agency. The Agency agrees that in the event that the such a lien in favor of the Agency may arise under this Section 3.9(d),that the lien of the Agency shall be subordinate to any other Security Financing Interest approved or deemed approved by the Agency prior to the date of such advance by the Agency. The Agency shall execute from time to time any and all documentation reasonably requested by Developer to effect such subordination of the lien right of the Agency as may arise under this Section 3.9(d) with respect to the Project. (e) In addition to the optional right of the Agency to cure a default or breach of the Developer under a Security Financing Interest as set forth in Section 3.9(d), the Agency, at its sole option and 50 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda AttachmentsiAgrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc election, shall have the right to satisfy any other lien or encumbrance affecting the Project after the Developer has received a thirty (30) day notice of intention of the Agency to pay such lien or encumbrance. The Agency shall not pay or satisfy such a lien or encumbrance until the Developer has been accorded a reasonable period of time to challenge, cure or satisfy such a lien or encumbrance; provided,however,that nothing in this Agreement shall require the Developer to pay or make provisions for the payment of any lien or charge(except a lien or charge for ad valorem property taxes)so long as the Developer in good faith shall contest the validity or amount therein and so long as such delay in payment by the Developer shall not subject the Project or any portion thereof to forfeiture or security lien sale. In the event that the Agency may satisfy any such lien or encumbrance the Agency shall be entitled to reimbursement from the Developer of the principal amount paid by the Agency to cure or satisfy the lien or encumbrance plus interest at the penalty rate set forth in the Agency Loan Note, and all reasonable costs and expenses incurred by the Agency in satisfying the lien or encumbrance. The Developer hereby agrees that the Agency shall also be entitled to a lien upon the Project, or any portion thereof, to secure such repayment to the Agency. Any such lien of the Agency under this Section 3.9(e) shall be subordinate to each Security Financing Interest approved or deemed approved by the Agency. (f) The Developer, for itself, its successors and assignees hereby warrants and agrees that the Developer shall give to any Holder notice of the terms and conditions contained in this Section 3.9 and shall use commercially reasonable efforts to cause each provision contained in this Section 3.9 dealing with Security Financing Interests and rights of holders of such interests, either to be inserted into the relevant deed of trust or mortgage or to be acknowledged by the Holder prior to its perfection of any such Security Financing Interest right or interest in the Site or the Project. SECTION 3.10. Estoppel Statement. Upon the request of the Developer, a proposed Permitted Transferee under Section 1.6 of the Developer,or any Holder,the Agency shall issue a signed estoppel statement stating that this Agreement is in full force and effect and that no default hereunder exists on the part of the Developer or any successor, or if such default is claimed by the Agency to then exist, such estoppel statement shall identify the nature of such default. Such estoppel statement shall be delivered by the Agency to the Developer within thirty (30) days following receipt of written request therefore. The Agency may charge the Developer for the reasonable cost of Agency incurred in consultation with its attorney in connection with such request for an estoppels statement in an amount not to exceed $1,500. SECTION 3.11. Certificate of Completion. (a) Upon substantial completion of the improvement of the Project,the Agency shall prepare a Certificate of Completion substantially in the form of Attachment No. 15 in accordance with this Section 3.11 within sixty (60) days following receipt by the Agency of a written request therefore by the Developer. The Certificate of Completion shall evidence a conclusive determination by the Agency of satisfactory completion of the improvement of the Project by the Developer. After the recordation of the Certificate of Completion by the Agency,neither the Developer, nor any party then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Project(or such portion thereof affected by the Certificate of Completion)shall(because of such ownership,purchase,lease or acquisition)have any further obligation or liability under this Agreement for matters arising prior to the date of recordation of the Certificate of Completion or thereafter;provided,however,that certain covenants contained in Article N 51 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc of this Agreement, shall bind each successor in interest of the Developer in each Site Parcel (or such portion thereof affected by the Certificate of Completion) as covenants which run with the land. (b) At least sixty (60) days prior to the submission to the Agency of its request for the issuance of a Certificate of Completion, the Developer shall deliver to the Agency the Project cost audit and accounting information for the Project, as provided under Section 2.25. (c) At least sixty (60) days prior to the submission to the Agency of its request for the issuance of a Certificate of Completion, the Developer shall deliver to the Agency a suitably detailed written confirmation that the affordable rental housing occupancy covenants of the Developer as arise under the Agency Regulatory Agreement and the State TCAC Regulatory Agreement have been satisfied. (d) If the Agency withholds the execution of a Certificate of Completion, then the Agency shall, within said thirty (30) days of the date of the written request for the issuance of a Certificate of Completion for the Project, provide to the Developer a written statement setting forth the reasons with respect to the Agency's refusal or failure to prepare and execute a Certificate of Completion. The statement shall also contain a detailed description of the action the Developer must take to obtain a Certificate of Completion. If the reason for such refusal is confined to minor building"punch list"items, the Agency shall issue its Certificate of Completion conditioned upon the delivery of cash or other reasonably acceptable surety in an amount and terms subject to the reasonable approval of the Interim Executive Director of the Agency. No such Certificate of Completion of the Agency shall be deemed to constitute a notice of completion as referred to in Section 3093 of the California Civil Code. (e) For the purpose of determining the"completion date of the Project"under the definition of the terms of"Residual Rental Receipts of the Project,"the completion date of the Project shall be the date on which the Certification of Completion is recorded against the Site by the Agency. SECTION 3.12 [Reserved—No Text] SECTION 3.13 [Reserved—No Text] SECTION 3.14. Insurance of the Developer. (a) In order to protect the Agency, its governing board, commissions, agents, officers, employees and authorized representatives against all claims and liability for death,injury,loss and damage as a result of Developer's actions in connection with the Agency Loan, the assistance provided by the Agency under this Agreement and the design, construction, operation and financing of the Project, the Developer shall secure and maintain insurance as described in this Section 3.14. Such insurance shall be in full force and effect as of the Effective Date,and thereafter the Developer shall continuously maintain such insurance for the term of the Agency Regulatory Agreement. Developer shall pay any deductibles under all required insurance policies. (b) Developer shall submit written proof to the Agency that Developer is insured against liability for workers' compensation in accordance with the provisions of section 3700 of the Labor Code. In signing this Agreement,Developer makes the following certification,required by section 1861 of the Labor Code: 52 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda AauhmentsWgmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc • "I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers' compensation or to undertake self- insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement." Developer shall require each contractor and sub-contractor engaged to perform any work on the Project to provide workers' compensation for all of such contractors' or sub-contractors'employees,unless the contractors' or sub-contractors' employees are covered by worker's compensation insurance afforded by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate insurance for the coverage of employees not otherwise covered. (c) The Developer shall maintain in full force and effect, at all times during the term of this Agreement,the following insurance: (i) Commercial General Liability Insurance coverage, including, but not limited to, premises-operations,contractual liability insurance(specifically concerning the indemnity provisions of this Agreement and the Agency Performance Deed of Trust and the Agency Regulatory Agreement),products-completed operations hazards,personal injury(including bodily injury and death), and property damage for liability arising out of the construction of the Project and/or Developer's operation of the Site pending commencement of construction of the Project. Said insurance coverage shall have minimum limits for bodily injury and property damage liability of TWO MILLION DOLLARS ($2,000,000) each occurrence and FOUR MILLION DOLLARS ($4,000,000) aggregate. (ii) Automobile liability insurance against claims of personal injury(including bodily injury and death)and property damage covering all owned, leased,hired and non-owned vehicles used by Developer with minimum limits for bodily injury and property damage of . ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. (iii) If the Developer hires one or more consultants to provide design services, such as architectural or engineering services in connection with the Project, the Developer shall require such consultant to provide professional liability(errors and omissions)insurance, for liability arising out of, or in connection with,the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000). (iv) Upon acceptance of the Project construction items by the Developer,or any portion thereof, from each contractor, the Developer shall maintain fire and extended coverage insurance on the Project on a blanket basis or with an agreed amount clause in amount not less than 100% of the Project's replacement value. (d) During the course of construction of the Project,Developer shall require that all contractors performing work on the Project to maintain the following insurance coverages at all times during the performance of said work: 53 P'\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc (i) builder's risk insurance to be written on an all risk completed value form, in an aggregate amount equal to 100%of the completed insurable value of the building(s). (ii) Commercial general liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction phase from claims involving bodily injury and/or death and damage to the property of others. Said insurance shall include an endorsement to include owners' and contractors' protective coverage. (iii) Automobile liability insurance against claims of personal injury(including bodily injury and death) and property damage covering all owned, leased,hired and non-owned vehicles used in the performance of a contractor's obligations to the Developer with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and ONE MILLION DOLLARS ($1,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy. (e) The commercial general liability insurance required in Section 3.14(c)and(d),above shall include an endorsement naming the Agency and its officials,officers,agents,and employees as additional insureds for liability arising out of this Agreement and any operation related thereto. (f) If any of the insurance coverages required under Section 3.14(d) of this Agreement is written on a claims-made basis, such insurance policy shall provide an extended reporting period continuing through the fifth (5th) anniversary following the date of acceptance of the improvements by Developer. (g) As of the Effective Date, evidence of insurance in compliance with the requirements of Section 3.14(b)shall be furnished to the Agency by the Developer,as evidenced by a endorsements to such policies or contracts of insurance issued by the insurer in favor of the Agency and/or by one or more "certificate of insurance" issued by the authorized agents or attorneys-in-fact of such insurers in a form acceptable to the Agency Counsel. Receipt of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements set forth above. (h) The insurance coverages required to be maintained and/or provided by the Developer under this Agreement shall be maintained until the completion of all of Developer's obligations under this Agreement,and shall not be reduced,modified,or canceled without thirty(30)days prior written notice to Agency. Also, phrases such as "endeavor to" and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall not be included in the cancellation wording of all certificates of insurance or any coverage for the Agency. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated,canceled,non-renewed,or whose policy limits have been exhausted or upon insolvency of the insurer that issued the policy. (i) All insurance shall be issued by an insurance company or companies that have an AM Best Rating of A-V or better and listed in the current`Best's Insurance Guide"publication and be a California admitted insurance company. (j) All insurance afforded by the Developer pursuant to this Agreement shall be primary to and not contributing to any other insurance maintained by the Agency. Insurance coverage in the minimum amounts set forth herein shall not be construed to relieve the Developer for any liability,whether within, 54 P-\Agendas\Agenda Attachments\Agenda AttachmenuUgenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc outside,or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Agency from taking such other actions as are available to it under any other provision of this Agreement or otherwise in law. Failure by the Developer to maintain all such insurance in effect at all times required by this Agreement shall be an event of default by Developer. The Agency, at its sole option, may exercise any remedy available to it in.connection with such an event of default. Alternatively,the Agency may purchase such required insurance coverage, and without further notice to Developer,the Agency shall invoice any sums due from Developer any premiums and associated costs advanced or paid by the Agency for such insurance or the Agency may demand that additional sums be paid to the Agency by the Developer. Any failure by the Agency to take this alternative action shall not relieve the Developer of its obligation to obtain and maintain the insurance coverages required by this Agreement. (k) During the term of the Agency Loan Deed of Trust any inconsistency or conflict between the insurance coverage provisions of this Section 3.14 and the Agency Loan Deed of Trust,the insurance coverage provisions of the Agency Loan Deed of Trust shall prevail and be applicable to the Developer SECTION 3.15. Taxes, Assessments, Encumbrances and Liens. (a) The Developer shall pay prior to the delinquency all real property taxes and assessments assessed and levied on or against the Site subsequent to the Close of Site Transfer Escrow. (b) The Developer shall not place and shall not allow to be placed on the Site any mortgage, trust deed,deed of trust,encumbrance or lien not otherwise authorized by this Agreement. The Developer shall remove, or shall have removed, any levy or attachment made on the Site, or shall assure the satisfaction thereof. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amounts of any tax assessment,encumbrance or lien,nor to limit the remedies available to the Developer in respect thereto. ARTICLE IV USE OF THE SITE AND THE PROJECT SECTION 4.1. Use of the Site. (a) Developer hereby covenants and agrees, for itself and its successors and assigns,that the Site and the Project shall be developed,used and maintained as multifamily rental housing for occupancy by Senior Citizen Households. (b) As of the Effective Date of this Agreement, the Developer has submitted an affordable senior citizen household rental project tax credit application to State TCAC in support of the Project and the Developer has covenanted and warranted to State TCAC,as part of such tax credit application,that the Affordable Rental Units in the Project shall be reserved for use and occupancy by Senior Citizen Households whose annual income level at the time of initial occupancy by each such Senior Citizen Household of its Affordable Rental Unit in the Project shall be generally as follows: 55 P\Agendas\Agenda Attachments\Agenda Attachments Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc Percentage No. of One- No. of Two- Total No. AMI Bedroom Units Bedroom Units of Units 1. 30% 6 2 8 2. 50% 42 6 48 3. _ 60% 20 3 23 68 11 79 SECTION 4.2. No Inconsistent Use. Developer covenants and agrees that it shall not devote the Site to uses inconsistent with either this Agreement or the Agency Regulatory Agreement. SECTION 4.3. [Reserved —No Text] SECTION 4.4. Discrimination Prohibited. Except as provided in the Senior Citizen Rental Housing Use Covenant and the Agency Regulatory Agreement with respect to the reservation of each of the rental units in the Project for occupancy by Senior Citizen Households, there shall be no discrimination against, or segregation of, any persons, or group of persons, on account of race, color, creed, religion, sex, marital status, familial status, physical or mental disability, ancestry or national origin in the rental, sale, lease, sublease, transfer, use, occupancy, or enjoyment of the Project or the Site,or any portion thereof,nor shall the Developer,or any person claiming under or through 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, subtenants,sublessees,or vendees of the Project or the Site or any portion thereof. The nondiscrimination and nonsegregation covenants contained in the Agency Regulatory Agreement shall remain in effect in perpetuity. SECTION 4.5. Effect of Covenants. The Agency is the beneficiary of the terms and provisions of this Agreement and of the restrictions and community redevelopment and affordable rental housing covenants running with the land,whether or not appearing in the Agency Regulatory Agreement for and in its own right and for the purposes of protecting the interests of the community in whose favor and for whose benefit the covenants running with the land have been provided. The community redevelopment and affordable rental housing covenants in favor of the Agency shall run without regard to whether Agency has been remains or is an owner of any interest in the Site,and shall be effective as both covenants and equitable servitudes against the Site. If any of the community redevelopment and affordable rental housing covenants set forth in this Agreement are breached,the Agency shall have the right to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it may be entitled. No other person or entity shall have any right to enforce the terms of this Agreement under a theory of third-party beneficiary or otherwise; except the City as the successor in regulatory function of the Agency and residents of the Project and applicants to become residents of the Project, as provided in Health and Safety Code Section 33334.4, or other applicable law. SECTION 4.6. Listing of Provisions of this Agreement which Shall Remain In Full Effect Following the Recordation of the Certificate of Completion. In addition to the provisions of this Article IV,Article V and Article VI of this Agreement which 56 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc shall remain in full force and effect following the recordation of the Certificate of Completion each of the following shall remain in full force and effect following the recordation of the Certificate of Completion for the Project: (i) the Agency Loan Documents; (ii) the covenants of the Developer under the Agency Grant Deed; (iii) the covenants of the Developer under the Agency Regulatory Agreement; (iv) the provisions of Section 5.9 of this Agreement; ARTICLE V DEFAULTS. SECTION 5.1. Events of Default. (a) The occurrence of any of the following is a default and shall constitute a material breach of this Agreement and,if not corrected,cured or remedied in the time period set forth in Section 5.1(b),shall constitute an "Event of Default" hereunder: (i) failure of the Developer or any person under its direction or control to comply with or perform when due any material term, obligation, covenant or condition contained in this Agreement; (ii) failure by the Agency to comply with or perform when due any material term, obligation, covenant or condition contained in this Agreement; (iii) failure by the Developer or any person under its direction or control to comply with or perform when due any material term, obligation, covenant or condition contained in the Agency Loan Deed of Trust; (iv) any warranty,representation or statement made or furnished to the Agency by the Developer under this Agreement is false or misleading in any material respect either now or at the time made or furnished; (v) the dissolution or termination of the existence of the Developer as an ongoing business, insolvency, appoint of a receiver for any part of the property of the Developer, any assignment for the benefit of creditors, any type of creditor workout or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Developer. (b) Upon the determination by the Agency that a default has occurred, the Developer shall cause such default to be cured within the following periods of time: (i) if a monetary Event of Default occurs under the terms of the Agency Loan Note, Agency Deed of Trust or other Construction Loan Documents or the Permanent Loan Documents on the State TCAC Regulatory Agreement,prior to exercising any 57 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\A.grmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc remedies under this Agreement the Agency shall give the Developer written notice of such default. The Developer shall have a period of seven (7) days after such notice is given within which to cure the default prior to exercise of remedies by the Agency, or such longer period of time as may be specified in the Agency Loan Documents. (ii) If a non-monetary event of default occurs under the terms of the Agency Loan Note,Agency Deed of Trust or the Construction Loan Documents or the Permanent Loan Documents or the State TCAC Regulatory Agreement,prior to exercising any remedies under this Agreement the Agency shall give the Developer written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, as determined by the Agency in its sole discretion, the Developer shall have such period to effect a cure prior to exercise of remedies by the Agency under this Agreement and the Agency Loan Documents,or such longer period of time as may be specified in this Agreement and the Agency Loan Documents. If the default is such that it is not reasonably capable of being cured within thirty (30) days,as determined by the Agency in its sole discretion,or such longer period if so specified,and if the Developer(a)initiates corrective action within said period,and (b) diligently, continually, and in good faith works to effect a cure as soon as possible,then the Developer shall have such additional time as is determined by the Agency,in its sole discretion,to be reasonably necessary to cure the default prior to exercise of any remedies by the Agency. If the Developer or its successor in interest is a limited partnership, if the Developer fails to take corrective action or to cure the default within such a specified time,the Agency shall give the Developer written notice thereof,whereupon the limited partner may remove and replace the general partner with a substitute general partner who shall effect a cure within a reasonable time thereafter in accordance with the foregoing provisions. In o event shall the Agency be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by a failure to cure a default or the default is not cured within ninety(90)days after the first notice of default is given. SECTION 5.2. Notice of Default. Subject to the provisions of Section 5.1 hereof,the non-defaulting party shall give written notice of default to the party in default in accordance with Section 6.5, stating that such notice is a "Notice of Default",specifying the default complained of by the injured party and requiring the default to be remedied within thirty(30) days of the date of the Notice of Default. Except as required to protect against further material damage, the injured party may not institute legal proceedings against the party in default until thirty(30) days after giving notice. Failure or delay in giving notice shall not constitute a waiver of any default, nor shall it change the time of occurrence of the default. If the default specified in the Notice of Default is such that it is not reasonably capable of being cured within thirty(30) days, and if the party to whom the notice is addressed initiates corrective action within said thirty(30)day period and diligently works to effect a cure as soon as possible,then such party may have such additional time as authorized in writing by the other party as reasonably necessary to complete the cure of the breach prior to exercise of any other remedy for the occurrence of an Event of Default. Such authorization for additional time to cure shall not be unreasonably withheld. If a party fails to take corrective action relating to a default within thirty (30) days following the date of notice (or to 58 P:\Agendas\Agenda AaachmentMgenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc complete the cure within the additional as may be authorized by the other party),an Event of Default shall be deemed to have occurred. SECTION 5.3. Inaction Not a Waiver of Default. Any failure or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. SECTION 5.4. Remedies; Enforcement of Agreement. (a) The non-defaulting party at its discretion shall have the right to terminate this Agreement upon an Event of Default. If the non-defaulting party chooses to terminate this Agreement due to the occurrence of an Event of Default,the non-defaulting party shall give the defaulting party forty-five(45) days prior written notice of the effective termination date. (b) In the event that following the occurrence of the Initial Advance of the Agency Loan,the Site Transfer Escrow may not close for any reason not attributed to the fault of the Agency by the date indicated in Section 2.10,the Agency may accelerate the payment of the outstanding principal balance of the Agency Note,plus accrued interest thereon,and demand payment under the terms of the Meta Housing Corporation Guaranty. (c) In addition to pursuing the rights and remedies available to the Agency under this Agreement,the Agency may foreclose on the Agency Deed of Trust and exercise its other remedies under any of the Agency Loan Documents and/or the Agency Regulatory Agreement. " (d) In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default,to recover damages for any default,or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted in the Superior Court of the County of San Bernardino, State of California, in any other appropriate court in that County or in the Federal District Court in the Eastern District of California. In the event that any legal action is commenced by the Developer against the Agency, service of process on the Agency shall be made by personal service upon the Interim Executive Director of the Agency or the Chair of the Agency,or in such other manner as may be provided by law. In the event that any legal action is commenced by the Agency against the Developer,service of process on the Developer shall be made by personal service on the Developer's agent for service of process,or in such other manner as may be provided by law,and shall be valid whether made within or without the State of California. SECTION 5.5. Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in this Agreement as relates to a failure of conditions precedent occurring before the Close of the Site Transfer Escrow,the rights and remedies of the parties as set forth in this Article V are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times,of any other rights or remedies for the same default or any other default by the other party. 59 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doe SECTION 5.6. No Consequential Damages. Notwithstanding any other term of this Agreement, neither the Agency or its officers, officials, employees and agents shall be liable to the Developer or to any third party for any loss of use of the Site or the Project,loss of goodwill relating to the Developer,the Site,the Project,or the Mixed Use Component of the Site, interruption of business, or for indirect, incidental or special or consequential damages (including without limitation,lost revenues or profits of the Developer)or similar damages,whether based on tort, contract or other legal or equitable grounds. SECTION 5.7. Mutual Indemnification. Each party agrees and shall indemnify and hold each other,its directors,officers,elected officials, employees,agents,authorized volunteers,or representatives,free and harmless from all claims,demands, actions, damages and liabilities of any kind and nature arising from bodily injury, including death, violations of right to privacy, or property damage, based or asserted upon any actual or alleged act or omission of their employees, agents, or subcontractors, relating to or in any way connected with the performance of the terms of this Agreement, unless the bodily injury, property damage or other claimed injury was actually caused by the willful misconduct, sole negligence,or active negligence of the party,its directors,officers,elected officials,employees,agents,authorized volunteers,or representatives. As part of the foregoing indemnity, each party agrees to protect and defend at its expense, including attorney's fees, each the other, its directors,officers, elected officials, employees,agents, authorized volunteers, or representatives, from any and all administrative or other legal actions based upon such actual or alleged acts or omissions. Each party hereby waives any and all rights it may have to any types of express or implied indemnity against the other, their directors, officers, elected officials, employees, agents, authorized volunteers, or representatives, with respect to third party claims relating to or in any way connected with the performance of the terms of this Agreement. SECTION 5.8. Attorneys' Fees. Except as otherwise required by Section 5.7 hereof, in the event of litigation between the parties arising out of this Agreement,the prevailing party shall be entitled to recover its reasonable attorneys'fees and other costs and expenses incurred, including such fees and costs incurred on appeal, in addition to whatever other relief the prevailing party may be entitled to. As used in the preceding sentence,the words "reasonable attorney's fees"in the case of the Agency, shall also include the salary and benefits payable to lawyers employed in the Office of the City Attorney of the City,who provide legal counsel to the Agency in such litigation as allocated on an hourly basis in addition to such other counsel as may be selected by the Agency under such circumstances. SECTION 5.9. Survival of Provisions. The provisions of the following sections of this Agreement shall survive the termination of this Agreement: (a) In the event that a termination of this Agreement may occur prior to the Close of the Site Transfer Escrow,the following provisions of this Agreement shall survive such termination: (1) the Agency Note if executed by the Developer; 60 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doe (2) the Meta Housing Corporation Guaranty if the Initial Advance of the Agency Loan has occurred; - (3) Section 5.5, Section 5.6, Section 5.7, Section 5.8 and Section 6.5. (b) In the event that a termination of this Agreement may occur after the Close of the Site Transfer Escrow,the following provisions of this Agreement shall serve such termination: (1) all of the Agency Loan Documents; (2) all of the instruments executed by the City and/or the Agency and the Developer as recorded upon the Close of the Site Transfer Escrow,including without limitation the Agency Regulatory Agreement; (3) all of the provisions of Article IV of this Agreement, Section 5.4, Section 5.5, Section 5.6, Section 5.7, Section 5.8, Section 6.5 and Section 6.8. ARTICLE VI MISCELLANEOUS SECTION 6.1. Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. SECTION 6.2. No Joint Venture. Nothing in this Agreement shall be construed to constitute the creation of a partnership or joint venture between the Agency and the Developer or any contractor or other person relating to the Project or the Site. The Agency is not an agent or representative of the Developer. This Agreement does not create a contractual relationship between the Agency and any such third-person and shall not be construed to benefit or bind the Agency in any way with or create any contractual duties by the Agency to any contractor, subcontractor,materialman, laborer, or any other person. SECTION 6.3. Notices. Notices,demands,and communications between Agency and Developer shall be sufficiently given if personally delivered or delivered by a nationally-recognized courier service or sent by registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to Agency: Redevelopment Agency of the City of San Bernardino Attention: Emil A. Marzullo, Interim Executive Director 201 North"E" Street, Suite 201 San Bernardino, CA 92401 If to Developer: Magnolia Highland, L.P. Attention: 61 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing•Final DDA.doc Any notice shall be deemed to have been received as of the earlier time of actual receipt by the addressee thereof or the expiration of forty-eight(48) hours after depositing of such notice in the United States Postal System in the manner described in this Section. Such written notices, demands, and communications may be sent in the same manner to such other addresses as a party may from time to time designate in a writing. SECTION 6.4. Conflicts of Interest. No member,official,or employee of Agency shall have any personal interest,direct or indirect,in this Agreement nor shall any such member,official,or employee participate in any decision relating to this Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. SECTION 6.5. Nonliability of Agency Officials and Employees. No member, official, employee, or consultant of Agency or City shall be personally liable to Developer, or any successor in interest of Developer, in the event of any default or breach by Agency or for any amount which may become due to Developer or to its successor, or on any obligations under the terms of this Agreement nor shall any such member, official, employee, or consultant of Agency or City have personal liability for payment of any amounts that may become due and payable by Agency to Developer under this Agreement. SECTION 6.6. Enforced Delay: Extension of Time of Performance. (a) In addition to specific provisions of this Agreement,performance by either party hereunder shall not be deemed to be in default,or considered to be a default,where delays or defaults are due to force majeure events beyond the control of such party, including, without limitation,war, insurrection,strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, government imposed moratorium legislation, freight embargoes, lack of transportation,weather-caused delays,inability to secure necessary labor,materials or tools,delays of any contractor,subcontractor or supplier,that are not attributable to the fault of the party claiming an extension of time, that suspends the comment of construction of the Project, or, if after such construction is commenced, suspends the prosecution of the work of improvement of the Project. An extension of time for any such force majeure cause shall be for the period of the enforced delay and shall commence to run from the date of occurrence of the delay; provided, however,that the party claiming the existence of the delay first provides the other party with written notice of the occurrence of the delay,within ten(10)days of the commencement of such occurrence of a force majeure event and, thereafter, takes prompt and reasonable action within its control to restore,reconstruct,or rebuild any damage to the Project caused by such force majeure event and resume regular business operation. (b) The inability of the Developer to obtain the Construction Loan or later the Permanent Loan, or the failure of the City to provide any necessary approval relating to the development of the Project or the inability of the Developer to satisfy any other condition of this Agreement relating to the design,fmancing or development of the Project on the Site, shall not be deemed to be a force majeure event or otherwise provide grounds for the assertion of the existence of a forced delay under this Section 6.6. The parties each expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that provided a basis for entering into this Agreement occurring at any time after the execution of this Agreement, are not force majeure events and do not provide either 62 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachmems\Agrmts-Amend 2009108-03-09 Meta Housing-Final DDA.doc party with grounds for asserting the existence of a forced delay in the performance of any covenant or undertaking arising under this Agreement. Each party expressly assumes the risk that changes in general economic conditions or changes in their economic assumptions could impose an inconvenience or hardship on the continued performance by such party under this Agreement and that such inconvenience or hardship is not a force majeure event and does not excuse the performance by such party of its obligations under this Agreement. (c) The Developer acknowledges that the Agency is a"public entity"and/or a"public agency" as defined under applicable California law. Therefore, the Agency must satisfy the requirements of certain California statutes relating to the actions of public entities, including, without limitation, the California Environmental Quality Act ("CEQA"). Also, as a public body, the Agency's action in approving this Agreement may be subject to proceedings to invalidate this Agreement. The Developer hereby assumes the risk of delays and damages that may result to the Developer from any such third-party legal actions initiated within sixty (60) days following the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement,even in the event that an error,omission or abuse of discretion by the Agency is determined to have occurred. If a third-party files a legal action regarding the Agency's approval of this Agreement or the pursuit of the activities contemplated by this Agreement, the Agency may terminate this Agreement on sixty(60)days written notice to the Developer of the Agency's intent to terminate this Agreement, referencing this Section 6.6(c), without any further obligation to perform the terms of this Agreement and without any liability to the Developer resulting from such termination,unless the Developer unconditionally agrees to indemnify and defend the Agency against such third-party legal action, as provided herein. Within thirty (30) days after receipt of the Agency's notice of intent to terminate this Agreement, as provided in the preceding sentence, the Developer may offer to defend the Agency in the third-party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions,attorney fee awards,expert witness and consulting fees,and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Developer must be in writing and in a form reasonably acceptable to the Agency and must demonstrate pursuant to acceptable evidence as shall be determined by the Agency that the Developer has the ability to perform as represented in such offer to defend. SECTION 6.7. Modifications. Any alteration,change or modification of or to this Agreement,in order to become effective,shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. SECTION 6.8. Representations and Warranties of Developer. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (1) The Developer is a duly organized and validly existing California limited partnership corporation. The Developer has the legal right,power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power,right and authority to bind the Developer. 63 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc (2) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby,and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ,injunction,order or decree of any court or governmental body applicable to the Developer or to the Site. All representations and warranties contained in this Section 6.8 are true and correct on the Effective Date and on the Closing of the Site Transfer Escrow,the closing of the Construction Loan Escrow and the closing of the Permanent Loan Escrow, and Developer's liability for misrepresentation or breach of warranty,representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the close of each such escrow as referred in the preceding sentence. SECTION 6.9. Representations and Warranties of the Agency. The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Developer has been made and the acquisition by the Developer of the Site will have been made in material reliance by the Developer on such covenants, representations and warranties: (1) Each and every undertaking and obligation of the Agency under this Agreement shall be . performed by the Agency timely when due; and that all representations and warranties of the Agency under this Agreement and its exhibits shall be true in all material respects as of the Effective Date. (2) The Agency is a community redevelopment agency, duly formed and operating under the laws of California. The Agency has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (3) The Agency has taken official action to approve this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby. (4) The persons executing any instruments for or on behalf of the Agency have been authorized to act on behalf of the Agency and that this Agreement is valid and enforceable against the Agency in accordance with its terms and each instrument to be executed by the Agency pursuant hereto or in connection therewith will, when executed, be valid and enforceable against the Agency in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person,is required in connection with the valid execution and delivery of and compliance with this Agreement by the Agency. 64 P:\Agendas\Agenda Attachments'Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDAdoc If the Agency becomes aware of any act or circumstance which would change or render incorrect, in whole or in part,any representation or warranty made by the Agency under this Agreement,whether as of the date given or any time thereafter through the Closing and whether or not such representation or warranty was based upon the Agency's knowledge and/or belief as of a certain date,the Agency will give immediate written notice of such changed fact or circumstance to the Developer,but such notice shall not release the Agency of its liabilities or obligations with respect thereto. All representations and warranties contained in this Section 6.9(a) are true and correct on the date hereof and on the Closing Date and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. SECTION 6.10. Binding Effect of Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto,their legal representatives, successors, and assigns. SECTION 6.11. Assurances to Act in Good Faith. Agency and Developer agree to execute all documents and instruments and to take all action and shall use their best efforts to accomplish the purposes of this Agreement. Agency and Developer shall each diligently and in good faith pursue the satisfaction of any conditions or contingencies subject to their approval. SECTION 6.12. Severability. Wherever possible,each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If,however, any provision of this Agreement shall be prohibited by or invalid under applicable law,such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. /// /// /// /// /// /// /// /// 65 P-\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agtmts-Amend 2009\O8-03-09 Meta Housing-Final DDAdoc J IN WITNESS WHEREOF the Agency and Developer have each executed this Agreement as of the date first written above. AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: — Agency o el DEVELOPER Executed this day of , 2009 Magnolia Highland, L.P., a California limited partnership By: Magnolia Highland, LLC, a California limited liability company Its: Administrative General Partner By: John M. Huskey, Manager By: Western Community Housing, Inc., a California non-profit public benefit Corporation Its: Managing General Partner By: Graham Espley-Jones, President By: Leanne Truofreh, Secretary Approved as to Form: By: Legal Counsel for Developer 66 P:\Agendas\A enda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc Attachment No. lA Legal Description of the Property (from Developer Acquisition Escrow Assignment Agreement) • • 67 P\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Mail Hot,sing-Final DDA doc ATTACHMENT NO. lA LEGAL DESCRIPTION Real property in the City of San Bernardino, County of San Bernardino, State of California, described as follows: PARCEL NO. 1 • THE NORTH 199.75 FEET OF THE EAST 171.25 FEET OF LOT 1 OF MOUNT VERNON ORANGE GROVE AND FRUIT COMPANY LANDS, IN THE CITY OF SAN BERNARDINO,COUNTY OF SAN • - BERNARDINO,STATE OF CALIFORNIAN AS PER PLAT RECORDED IN BOOK 12 OF MAPS, PAGE • ---- (S) 16, RECORDS OF SAID COUNTY. AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER LINES OF ALL ADJOINING STREETS AND ROADS. PARCEL NO.2 AN EASEMENT FOR INGRESS AND EGRESS APPURTENANT TO AND FOR THE BENEFIT OF • PARCEL NO.1 HEREINABOVE DESCRIBED,OVER THE SOUTH I5 FEET TO THE NORTH 214.75 FEET TO THE EAST 171.25 FEET OF LOT 1 OF MOUNT VERNON ORANGE GROVE AND FRUIT COMPANY LANDS,IN THE CITY OF SAN BERNARDINO,COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA,AS PER PLAT RECORDED IN BOOK 12 OF MAPS, PAGE(S) 16, RECORDS OF SAID COUNTY. AREAS AND DISTANCES OF THE ABOVE DESCRIBED PROPERTY ARE COMPUTED TO THE CENTER LINES OF ALL ADJOINING STREETS AND ROADS. EXCEPT MINERALS AND OIL, GAS AND OTHER HYDROCARBON SUBSTANCES UNDER SAID LAND BELOW A DEPTH OF 500 FEET WITHOUT THE RIGHT OF SURFACE ENTRY,AS RESERVED BY ATLANTIC RICHFIELD COMPANY BY DEED RECORDED OCTOBER 28, 1977,AND DEEDED TO CORNERSTONE OIL COMPANY,A CALIFORNIA CORPORATION, RECORDED DECEMBER 13, 1995, INSTRUMENT NO. 95-426808,OFFICIAL RECORDS. APN: 0143-191-38-0-000 • 1 ATTACHMENT NO. lA LEGAL DESCRIPTION 4 1 Real property in the City of San Bernardino,County of San Bernardino,State of California, described as follows: ALL THAT PORTION OF LOT 1, MT.VERNON ORANGE GROVE AND FRUIT COMPANY LANDS,IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA,AS PER.MAP RECORDED IN BOOK 12 PAGE 16 OF MAPS,IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, LYING NORTH OF THE NORTH LINE OF THE LAND DESCRIBED IN THE DEED TO THE STATE OF CALIFORNIA, RECORDED MAY 3, 1961 IN BOOK 5420 PAGE 6 OF OFFICIAL RECORDS, IN THE. OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THE WEST 320.00 FEET THEREOFF. ALSO EXCEPT THE NORTH 199.75 FEET OF THE EAST 171.25 FEET THEREOF. AREAS AND DISTANCES HEREIN DESCRIBED ARE MEASURED FROM THE CENTER LINE OF ADJOINING STREETS AS SHOWN ON SAID MAP. APN: 0143-191-46-0-000 • • • • f 2 • ATTACHMENT NO. lA f (LEGAL DESCRIPTION) THOSE PORTIONS OF LOTS 1 AND 2 OF MOUNT VERNON ORANGE GROVE FRUIT COMPANY LAND, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,AS PER PLAT RECORDED IN BOOK 12 OF MAPS, PAGE 16, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING ON THE EAST LINE OF SAID LOT 1, DISTANT ALONG SAID EAST LINE, BEING ALSO THE • WEST LINE OF MUSCOTT STREET; AS SHOWN ON SAID MAP, SOUTH 0° 22' 44" EAST 173.94 FEET FROM A ?WO-INCH IRON PIPE MARKING THE NORTHEAST CORNER OF SAID LOT 1; THENCE SOUTH 78° 26' 40" WEST 291.04 FEET TO THE EAST LINE OF THE WEST 320 F-tt I OF SAID LOTS 1 AND 2; THENCE ALONG LAST SAID EAST LINE SOUTH 0° 23' 03" EAST 438.08 FEET TO THE SOUTH LINE OF SAID LOT 2; THENCE ALONG SAID SOUTH LINE NORTH 89° 54' 05" EAST 70.48 FEET TO THE SOUTHWEST CORNER OF THE EAST 215 FEET OF SAID LOT 2; THENCE ALONG THE WEST LINE OF SAID EAST 215 FEET NORTH 0° 22' 44" WEST 190.00 FEET TO THE NORTHWEST CORNER OF THE SOUTH 190 FEET OF SAID EAST 215 FEET OF LOT 2; THENCE ALONG THE NORTH LINE OF SAID SOUTH 190 }tt , NORTH 89° 54' 05" EAST 215.00 FEET TO THE EAST LINE OF SAID LOT 2; THENCE ALONG SAID EAST LINE OF LOT 2, AND SAID EAST LINE OF LOT 1, NORTH 0° 22' 44" WEST 305.89 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THE WESTERLY 5 FEET. APN: 0143-191-63-0-000 • 3 Attachment No. 1B Copy of Tentative Parcel Map No. 19200 68 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc ATTACHMENT NO. 1B TENTATIVE PARCEL MAP No , 19200 CITY OF SAN BERNARDI NO PRO.ECT INFORMATION. I. C0NT07.m M1gYAL• F i OF AURAL 3M/D. 2. [NAM O Si U 5 3/24 ENCEPT FOR 11pRDy1ST COINER 5 AN MING CLAM ROAM/N9NES5 HIGHLAND A 2. Blur CpIAINZB CARE- 1114 RAI.IER (.M)ri5-371e ® man- Or OF SAN 9o1NANDINO ONE�-'�0 BITE C o WA=- Or OF LW R'4/AlgsI0 (t OS)]M-7222 2 IS$0Q• .9A1d 0VT. unman- SOBOPON CALIDP.NA cam (000)Ma-.123 16TH STR Er cos- 114 GAS COIMANY (.00)427-2200 TpDNONE- NORM (.110)522-0204 E. ♦. air Or NOIIT-OF-TMr A II.DMG 11E fR011TA(4 Of naaONG AVENUE NLIJIO lG a comp our-OFE AT 9ImICAL MIEN OPINE IS PROPOSE) TO SE MICA=FOR PN.LX 115E VICINTY MAP N.T.S. S PROPOSED USE IS SENOR AP0RTgP7S. IL NO 1REES OR SIRtIC1UE5 ON Silt OCT CET NORTKAST CANER /7"2////�//A/y/w/ (J1 II.1 0 I NO OVERHEAD MTV LNIS ON 97E. -7%Z% /--- '�':. MBA I .i5 •7. EWNG a PROPOIIEO ZONING:CO/CONIEROAL)FAKE. ray av NM/. ,.– a AMA 5 NOT SiI.ic=TD n000NG OR STORN wTE11 OYE16L0..Allir 4/aa, — ANNI – �.– :IL.. •6 N •I.. _ LEGAL DESCRIPTION. ��r..Sw--- 0-74.-77.K.,-' I --- '' A PORTION OF M7.VERNON ORANGE GROVE 8 FRVR CO.UN05 NIS 12 PG 16 '��� �� ,� _ ..' APN No.'.043-191-38 46 6 63 L —�6^.T S T.''[ �ii 6 � � ►� 1T •m, MAP NOTES: ASPH 0 EXISTING 15'INGRESS/EGRESS EASEMENT(BK12,PG 16 TO BE OUITCWMED) e 0 EXISTING IS SEWER EASENENT(SK 5773.PG 3330.R.)TO BE QUITCLAIMED) 1 '� ©EXISTING 2r ROAD EASEMENT(DOC.NO.153,BK 5709,PG 5N O.R.TO BE QUITCLAIMED) 1 O EXISTING 10 SEWER EASEMENT(DK 3726,PG 509 DR.TO REMNN) "I■ `1 0 CONSTRUCT 3S RAD.CURB RETURN SWADA RAMP r!!`'+1• / 0 CONSTRUCT DRIVE WAY APPROACH PER CRY STD(9h251 _ 0 PROPOSED 57SOEDIGTION FOR HIGHLAND AVENUE ALONG PROJECT FRONTAGE r .� ® ',� ' ti. I • Q CONSTRUCT CURB AND GUTTER PER CRY STD I =47 -CEL 1 ra ,!' I' 0 220 AC MET) . pad -,-;;.--i- 0 412t2 1i111 ��S�I A�I I A ( 0' _?�iP I C - r Feet, PARCEL 2 j'` �I�I I 1 s 1 13 AC 4.4......._ 11. I;$ IC t*ter: ET' ■� ' I . 2701 STREET Q .:4.2• ; , ■ ' L LEGAL OWNER:APN#0143191-38 SOILS ENGINEER: FJ.IAS C.ANTOUN GEOCON INLAND EMPIRE.INC. I • j SUIT N.SAN FERNAN00 BLVD- `• 1 I , 3463 HOLLY CIRCLE DRIVE 530E 100 I I HIGHLAND.G 92346 II I BURBANK. 304 gg R f 1 11 11101 Y1-W8 ' I 4 I) III I ! j.EGAL OWNER:APNX 0163 191.46 (616)41.1704 FAX •■ ,1 •a• ! / I "!`•- q 11026 LONG BEACH.LLC O 1 ��77 � 1� I I I �� 606 E.BM STREET q01 BERM' L00 ANGELES G 90014 SUBDIVIDER: • . m, I I�"• � L LEGAL OWNER:APNM 0143191-63 NETA HISUSNX3 LORI. 1I11 LOS A GELES CA BLVD.WS T� . RAP HAROLD HIRSHEURVNORS LOS ANGELES G Nun I �' TI I'I I iL,a• 471N NNN STREET (310)5753563 r T 1. ' I a IA• SANTA ANA,G 92701 1310)576358]FAx ik = [�1 I i 10 ' .`T O PREPARED BY JUNE 2.2009 • `. � vv 0 - �^ mo. SINCE MIL ENGINEERING• • ' 1,�I�I' 1740 E.GMRY AVE.SUITE 712 �' �♦ �� � - N'fI I SANTA NU.u 92705 G. 7 �� . I I Id' r• Wont-WM FAX Attachment No. 2 Scope of Development 69 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc Attachment No. 2 Scope of Development The Development consists of three parcels that total approximately 3.4 acres that will be combined and subdivided into two parcels. The smaller parcel will be approximately 1 acre with frontage on Medical Center Drive and will remain vacant and owned by the Agency. The second larger parcel will be approximately 2.4 acres at the southwest corner of Highland Avenue and Medical Center Drive, and will accommodate the construction of a 3-story senior housing complex with approximately 87,000 square feet of floor area including enhanced landscaping treatments and significant tenant amenities throughout the development. There will be 3 separate plans offered for the dwelling units within the Development. The first is a one-bedroom unit of approximately 589 square feet with a patio or balcony and the two other plans consist of 2-bedroom units of approximately 828 square feet and 971 square feet, also with patios or balconies. A lobby area, community room with a kitchen, fitness room, business center/computer room and management offices are planned on the first floor. Laundry rooms and auxiliary storage areas are planned on each floor. The exterior of the facility will be enhanced by an outdoor patio area with shade trees, a fountain, barbeque grills, a swimming pool and adequate areas for relaxed seating. A walking path around the perimeter of the building will allow residents the opportunity for exercise while at the same time providing them with a sense of security as the path will be within a decorative 6-foot wrought iron fence that surrounds the Development. Adequate parking will also be provided with 97 standard parking spaces and four handicapped parking spaces. All resident parking will be secured to address safety concerns. Additional on-site security measures will include exterior and interior lighting, security cameras and a 24-hour monitoring service. Overall, the proposed building design features prominent contemporary architecture with varied roof lines, window treatments and awnings, a patio trellis, and complementary finish materials in varied earth tones. The floor plan is open and convenient, with two elevators, laundry facilities on each floor,as well as easily accessible trash shoots on each floor. Attachment No. 3 Schedule of Performance • 70 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc Attachment No. 3 SCHEDULE OF PERFORMANCE Section I. Conditions Required for Execution of DDA Submission—Environmental Assessment, No later than 30 days before the effective date Confirmation of Hazardous Materials Removal of the DDA. or Mitigation, Condition of Non-Liability. (Effective date defined as the execution date of DDA Section the DDA.) Submission—Final executed copy of the No later than 14 days before the effective date TCAC application with all applicable of the DDA. attachments and exhibits. DDA Section Submission—Final escrow instructions No later than 14 days before the effective date between Developer and parcel owners. of the DDA. DDA Section Review and Approval—Environmental No later than effective date of the DDA. Assessment. DDA Section Section II. Conditions Required for Title Transfer to Agency Submission—Executed loan documents Prior to recordation of loan documents between including Note,Deed of Trust,Notice of Agency and Developer. Affordability Restrictions, Agreement Containing Covenants, Form of Grant Deed. DDA Section Submission—Corporate Authorizing Prior to recordation of loan documents between Documents, Certificate of Status, Legal Agency and Developer. Opinion. DDA Section Submission—Conditional Use Permit and all No later than fifteen(15) days prior to the other zoning approvals from Development opening of escrow. Services. DDA Section 1 Submission—Owner's Title Policy Within 15 days after the effective date of the DDA Section DDA. Submission—design drawings at 10%phase of No later than forty-five (45) days before the completion close of escrow. DDA Section Review and Approval—design drawings at No later than fifteen(15) days before the close 10%phase of completion. of escrow. DDA Section Section III. Conditions Required for Title Transfer to Developer Submission—Permits, Licenses, &Approvals. No later than fifteen(15) days before close of DDA Section escrow. Submission—Construction Schedule. DDA No later than forty-five (45) days before close Section of escrow. Review and Approval - Construction Schedule. No later than thirty(30) days before close of DDA Section escrow. Submission—Evidence of Committed Funding No later than forty-five (45) days before close Sources. DDA Section of escrow. Submission—Construction Budget. No later than sixty(60) days before close of DDA Section escrow. Review and Approval - Construction Budget. No later than thirty(30) days before close of DDA Section escrow. Submission—design drawings at 60%phase of No later than sixty(60)days before close of completion. escrow. DDA Section Review and Approval—design drawings at No later than thirty(30)days before close of 60%phase of completion. escrow. DDA Section . Submission—Final Management Plan. No later than sixty(60)days before close of DDA Section , escrow. 2 Review and Approval—Final Management No later than thirty (30) days before close of Plan. DDA escrow. Section Submission—Final Construction Budget, No later than twenty-one (21) days before close Changes in Financing or Funding. of escrow. DDA Section Review and Approval—final Construction No later than two (2) weeks before close of Budget, Changes in Financing or Funding_ escrow. DDA Section . Submission—Construction Bonds. No later than two (2) weeks prior to Agency DDA Section issuance of Notice to Proceed. Submission—Notice to Proceed by Agency. Upon close of escrow. The Agency shall issue a Notice to Proceed upon approval of all plans, specifications, budgets, and all other documents required by the DDA necessary to the commencement of construction. DDA Section Preconstruction Meeting. Developer shall meet No later than fifteen(15) days before the start with Agency contract compliance officer. of construction. DDA Section Construction Sign. The Developer shall cause No later than the start of construction. to be erected on the Site a construction sign describing the development and the participants in accordance with Agency specifications. DDA Section Commencement of Construction. Within thirty(30)days after receipt of the DDA Section Notice to Proceed. 3 Section IV. Conditions Required for the Close of the Project Completion of Construction. Developer shall Within eighteen months after the submit certificate of substantial completion commencement of construction of the from the Developer's Architect. Improvements. DDA Section Final Inspection. Agency shall conduct a final Within fifteen (15) days after request by the inspection of all improvements. Developer. DDA Section Submission- Audit of Construction Cost. Within sixty (60) days after the issuance of the Developer shall submit a certified breakdown final Certificate of Occupancy by the City of of construction costs. San Bernardino. DDA Section Audit Approval. Agency shall approve or Within sixty(60) days after receipt of the audit disapprove the certified audit of construction by Agency. costs. DDA Section Issuance of Agency Certificate(or Partial Within thirty (30) days after receipt by Agency Certificate) of Completion. Agency shall issue of the Developer's written request, provided all in recordable form the Certificate of requirements for issuance have been satisfied. Completion (or Partial Certificate of Completion, as appropriate). DDA Section . 4 Attachment No. 4 Developer Project Pro Forma 71 • P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda AttachmentsUgrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc Meta Housing-Magnolia at Highland,LP Project Budget-Sources and Uses of Project Funds June 3,2009 Use of Project Funds Source of Project Funds Tax Credit First Percentage Agency Equity Mortgage Developer Total of Total Land Cost 2,450,000 2,450,000 13.96% Title/Escrow/Legal 27,605 27,605 0.16% Demolition 225,000 225,000 1.28% Total Land Acquisition $ 2,477,605 $ 225,000 $ 2,702,605 15.40% Site Work 300,000 300,000 1.71% Structures 4,690,982 2,659,018 7,350,000 41.88% General Requirements 411,600 411,600 2.35% Contractor Overhead 308,700 308,700 1.76% Contractor Profit 308,700 308,700 1.76% General Liabiity Insurance 130,185 130,185 0.74% Total Direct Construction $ - $ 6,150,167 $ 2,659,018 $ 8,809,185 50.20% Architectural Design 275,000 275,000 550,000 3.13% Engineering 225,000 50,000 275,000 1.57% Total A&E $ 500,000 $ 325,000 $ 825,000 4.70% Construction Loan Interest 402,064 402,064 2.29% Origination Fee 97,500 97,500 0.56% Credit Enhancement App.Fee 20,000 20,000 0.11% Predevelopment Loan Origination Fee 20,000 20,000 0.11% Predevelopment Loan Interest 50,000 50,000 0.28% Insurance 110,115 110,115 0.63% Title and Recording 25,000 25,000 0.14% Total Construction Interest/Fees $ 724,679 $ 724,679 4.13% Origination Fee 29,168 29,168 0.17% Credit Enhancement App.Fee 15,000 15,000 0.09% Title and Recording 15,000 15,000 0.09% Total Permanent Financing Costs $ 59,168 $ 59,168 0.34% Lender Legal Paid by Developer 40,000 40,000 0.23% . Partnership Legal 100,000 100,000 0.57% Invsetor Due Dilligfnce Legal 40,000 40,000 0.23% Accounting and Organizational 135,000 135,000 0.77% Total Legal Fees $ 315,000 • $ 315,000 1.79% 3-month Operating Reserve - 128,592 128,592 0.73% Appraisals 10,000 10,000 0.06% Construction Contingency 440,459 440,459 2.51% Total Contingency Costs $ 10,000 $ 440,459 $ 128,592 $ 579,051 3.30% TCAC Application/Monitoring Fees 95,000 95,000 0.54% - Reproduction 15,000 10,000 25,000 0.14% Development Impact Fees 752,395 351,784 1.104,179 6.29% Permit Processing Fees 100,000 100,000 0.57% Marketing and Start-up 70,000 70,000 0.40% Furnishings 100,000 100,000 0.57% Studies/Surveys 50,000 10,000 60,000 0.34% Contingency 144,423 144,423 0.82% Total Other Costs $ 1,012,395 $ 616,207 $ 70,000 $ 1,698,602 9.68% Developer Overhead and Profit 1,824,686 11,275 1,835,961 10.46% Total Developer Overhead and Profit $ 1,824,686 $ 11,275 $ 1,835,961 10.46% Total Development Costs $ 4,000,000 $10,621,198 $ 2,916,778 $ 11,275 $ 17,549,251 100.00% ATTACHMENT NO. 4 G. Income Information (BREAK OUT UNIT SIZES BY VARYING AFFORDABILITY LEVELS) •.� �..1.. egw-,c /'nw °1T ALFVK.+x-<i/ ;.,c w ...a... , ,�,. . •"fR"�`F'}a' 4:7', ' �*TA-,-.�'i 1 �, � sy.F s.�.c,?P`ttQ +,n. 1''' ,r :3 un `-' '"'2-. 4,-‘ � �.� � .y, ,«a.`yt � w:-v� fi y - A�: � Y.�S 1. 1 0 L r,-. sox :.y ,4 r 4 ti--*: a"iE iX '. ,+,_rU' � g ss 't lt1 $ ,--Asa: , __-i. �1_,ft ii __ , �':^ti ,ti , aiZd_,71i(_ . Low-Income Units 1 6 349 2,092 25.76 374 30% 1 8 473 3,788 25.76 499 40% 1 34 598 20,340 25.76 624 50% 1 20 695 13,905 25.76 721 60% 2 2 417 834 31.93 449 30% 2 - 566 - 31.93 598 40% 2 6 716 4,296 31.93 748 50% 2 3 866 2,597 31.93 898 60% Total#Units 79 Total $ 47,851 Managers'Units 2 1 898 898 Total#Units 1 Total S 898 Market Rate Units Total#Units - Total $ - AGGREGATE MONTHLY RENTS FOR ALL UNITS $ 48,749 x 12 AGGREGATE ANNUAL RENTS FOR al UNITS(column d): $ 584,989 California Tax Credit Allocation Committee Low-Income Housing Tax Credit Application Rev. February 1, 2006 . 2 ATTACHMENT NO. 4 I. Annual Residential Operating Expenses(Reg. Section 10327(f)) General Administrative Advertising $ 6,000 Legal $ 4,000 Accounting/Audit $ 6,000 • Security $ 4,000 Other(General Admin.) $ 18,000 Total General Administrative $ 38,000 Management Fee 6% $ 33,727 Utilities Electricity $ 18,000 Gas $ 5,000 Total Utilities $ 23,000 Total Water/Sewer $ 22,000 Payroll/Payroll Taxes On-site Manager $ 27,500 Manager's Unit 10,771 Assistant Manager Maintenance Personnel $ 27,500 Payroll Taxes/Benefits $ 10,000 Total PayrollIPayroll Taxes $ 75,771 Total Insurance $ 10,000 Maintenance Painting $ 9,000 Repairs $ 9,000 Trash Removal $ 6,000 Exterminating $ 2,500 Grounds $ 4,000 Elevator $ 5,000 Other(Fire Sprinkler/Alarm Service) $ 2,500 Total Maintenance $ 38,000 Other(specify) Monitoring Fee $ 3,600 $ Total Other $ 3,600 ANNUAL RESIDENTIAL OPERATING EXPENSES $ 244,099 NUMBER OF UNITS IN PROJECT 80 ANNUAL OPERATING EXPENSES PER UNIT(divide •/**) $ 3,051 TOTAL 3-MONTH OPERATING RESERVE(Reg.Section 10327(c)(8)(C) $ 128,592 TOTAL SERVICE AMENITIES BUDGET $ 10,000 TOTAL RESERVE FOR REPLACEMENT $ 20,000 TOTAL REAL ESTATE TAXES $ 1,500 TOTAL ANNUAL OPERATING EXPENSES $ 275,599 California Tax Credit Allocation Committee 3 Low-Income Housing Tax Credit Application Rev.February I, 2006 < .1 CO,ps M '0 N �/1 N �/1 r of O - O_ O et N N 0, 00 00 N r en r M r r 0 r Os - 00 - - eri1 7 O 000 N r C r e-en VO1i N'D P of vt - - P h h t.0 a IN 0 0 CO 00 " O N 00 0' N N iy �O{� P 1D T �D N W• 1 P• 1 pR. - p�. -se-• - .• -- .--• O� K �O of 00 �l -• N O oo N Ch er• et CV.OD r o00 f'�:.N M N - 1N+ 05 'O 00 O O �O �O 0 O O r�1 O N O:ONO b�O O N �'1 N 00 0 h 0 R 0 ' 0 ,D 00 N• V• 1 ' vi. 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O � Cg Y, vr� a •a mu t Ne •�, 00 00 .= .6 'W u Tc '5 o u �"' n: 00 W (- Q ,zcta) O � a30 � <c2oJ5aaC4 F W C70w2tnCC FO E' W O S I- > I- - (•-' 0 w gs ATTACHMENT NO. 4 PART VII. PROJECT FINANCING(Sources of Funds) A. Construction Financing List Below All Projected Sources Required to Complete Construction. :.o••y._.•:::�;;{{;;.• ,; xti,•.v ,t �.� .,,•,:;.:y..,, ::•::.o:'::;;Gi.<:.:;..:.: `.•X'•�85ti:..Sr:;;,• :v�;v�'•/:c':" :;,#`:•.�.; ..w•.'-:ro :hv'�.,•��,v; Z v �o-'ii:i'ri.;t4;.};:.; ...'{{.(r. v..�"v :�Av':'•,'�.•:i;r.;.'^vi{: .;c"�:\•. y .W •+:,?,ii:iR'i:;i{.y2:{:':{):4{,,.:x.: r .(j•f,.{rti Y'•:. n4 j : 1T .. "4\ ':v'\':e,.;t.;C;Y 7.r....k4:^:::n•S. v.�i::..v.::::y�����A� r�...••.•;t>n!:•r.�rF•: vv, .. v r v w r vx v v .•:v::ee......:}.. si}:i{•?:• :•.......................Ei••w: n:::::::...... ........... {.::vvir::4nv:v•. :.... ..:+� :. .: Chase 24 4.00% $ 9,750,000 City Loan 24 3.00% $ 4,000,000 0 24 5.00% $Tax Credit Equity 24 N/A $ 2,655,300 Def. Fee and Costs N/A N/A $ 1,143,952 Total Funds for Construction $ 17,549,251 1. Name of Lender/Source Construction Lender Street Address Contact Name City State CA Phone Number Type of Financing 1st Trust Deed Construction Loan LI Committed I INot Committed Name of Lender/Source Tax Credit Equity Investor Street Address Contact Name City State Phone Number Type of Financing Bridge Loan U Committed I 'Not Committed 3. Name of Lender/Source Meta Housing Corporation Street Address 1640 Sepulveda Blvd.,Suite#425 Contact Name Kasey Burke City Los Angeles State CA Phone Number (310)575-3543 Type of Financing Deferred Developer Fee& Costs Paid at Perm Loan Conversion UCommitted I I Not Committed 4. Name of Lender/Source Economic Development Agency of the City of San Bernardino,CA/RDA Housing Fund Street Address 201 North "E" Street,Suite 301 Contact Name Carey Jenkins City San Bernardino State CA Phone Number (909)663-1044 Type of Financing Residual Receipts Loan X Committed I (Not Committed 5. Name of Lender/Source Street Address Contact Name City State Phone Number Type of Financing Committed I I Not Committed California Tax Credit Allocation Committee Low-Income Housing Tax Credit Application Rev. February 1, 2006 5 ATTACHMENT NO. 4 B. Permanent Financing ..st Below All Projected Sources Of Funds,Including Grants,Land donations, deferred fees, owner equity, etc .. .........:::•.v::::nvx:r•::v: .:v:.:.v�:3}Jt i:::: • v;vnv:;.}vr:+•rr}'•r:::^'{•}:ii:{r::r::: v.+.r:. 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Jr, f .. .r. {:n. :::.:. vvr.v:r:::•.v?•.... .r. Y3: •3'....v:tii ./r. .......iff.%i. .:{Yfy.y{}Y w:r:.••::•:: �: .JLr :. .. ;r,: r '•: �'/r:J, :.:r.n••}s::}:;:+f::%.'•:::;. .>:•>:{,,;f,.;;..,;{{.}:{;!::.;{{.;;..{..{ :..£.. .. r....... :.;.:r5:::•.'•y`.•}:.y;2;:.y}>?yyr.:{Y,.•`..f{: +>::t4.{Y!<;/.C,. .yt f.ta •{:...... ''' ................. .. ;.. ..,• 1st Mortgage 360 7.25% $ 2,916,778 238,771 N/A City Loan 660 3.00% $ 4,000,000 Residual Receipts Deferred Pymt. Deferred Developer Fee/Costs N/A 0.00% S 11,275 Deferred Pymt. Total Permanent Financing $ 6,928,053 Tax Credit Equity S 10,621,198 Total Sources of Project Funds S 17,549,251 1. Name of Lender/Source 1st Mortgage Street Address Contact Name City State CA Phone Number Type of Financing 1st Trust Deed Construction Loan I X 'Committed I 'Not Committed 2. Name of Lender/Source Meta Housing Corporation Street Address 1640 Sepulveda Blvd.,Suite#425 Contact Name Kasey Burke City Los Angeles State CA Phone Number (310)575-3543 Type of Financing Deferred Developer Fee&Costs Paid at Perm Loan Conversion X 'Committed Not Committed • 3. Name of Lender/Source Economic Development Agency of the City of San Bernardino,CA/RDA Housing Fund Street Address 201 N. "E" Street, Suite 301 Contact Name Carey Jenkins City San Bernardino State CA Phone Number (909)663-1044 Type of Financing Residual Receipts Loan I X 'Committed I Not Committed 4. Name of Lender/Source Street Address Contact Name City State Phone Number Type of Financing I 'Committed I 'Not Committed California Tax Credit Allocation Committee Low-Income Housing Tax Credit Application Rev.February 1, 2006 6 Attachment No. 5 Developer Acquisition Escrow Assignment Agreement ASSIGNMENT AND ASSUMPTION OF PURCHASE AGREEMENT THIS ASSIGNMENT AND ASSUMPTION OF REAL PROPERTY PURCHASE AGREEMENT (the "Assignment Agreement") is made as of , 2009, by and between Meta Housing Corporation (the "Assignor") and the (the "Assignee"), with reference to the following: RECITALS A. WHEREAS,on ,Assignor,as purchaser,and ,as seller (the "Seller"), entered into that certain Standard Offer, Agreement, and Escrow Instructions for Purchase of Real Estate(the"Purchase Agreement")for the purchase of certain property described therein located in the City of , County of San Bernardino, State of California more particularly described on attached Exhibit "A," incorporated in this Assignment Agreement(the "Property"); B. WHEREAS a copy of the Purchase Agreement is attached hereto as Exhibit "B;" C. WHEREAS, in order to conduct the sale of the Property pursuant to the Purchase Agreement, Assignor and Seller have opened Escrow No. (the . "Escrow") at (the "Escrow Holder"); D. WHEREAS Assignor and Seller have executed those certain Escrow Instructions attached . hereto as Exhibit "C" (the "Escrow Instructions"); E. WHEREAS, in connection with the Purchase Agreement and Escrow Instructions, Assignor has deposited the sum of$ in Escrow (the "Deposit"); F. WHEREAS Assignor desires to assign to Assignee and Assignee is willing, on certain conditions, to assume all rights and obligations of Assignee under the Purchase Agreement and Escrow Instructions. NOW,THEREFORE,for good and valuable consideration,the receipt and adequacy of which are acknowledged, the parties agree as follows: Assignment and Assumption. Assignor hereby assigns to Assignee all of Assignor's right, title and interest under the Purchase Agreement and Escrow Instructions, including, without limitation, all right, title and interest in and to the Deposit (the "Assignment"). Assignee assumes and agrees to perform and observe all of the obligations and covenants of Assignor in the Purchase Agreement and Escrow Instructions to be performed on or after the date hereof. Reimbursement of Deposit. As of the date hereof,Assignee shall reimburse to Assignor, in immediately available funds, a sum equal to the Deposit. 72 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03 439 Meta Housing-Final DDA.doc Representations and Warranties. Assignor represents and warrants to Assignee as follows: The Purchase Agreement attached hereto is a true and complete copy of the Purchase Agreement and the Purchase Agreement has not been otherwise amended, modified or supplemented in any respect except as set forth in the Escrow Instructions. The Purchase Agreement (as supplemented and amended by the Escrow Instructions) represents the entire agreement between Assignor and Seller with respect to the Property. The Escrow Instructions are a true and complete set of Escrow Instructions as of the date hereof. Assignor is the holder of the entire buyer's interest under the Purchase Agreement. Assignor has not assigned, hypothecated or otherwise transferred all or any portion of its interest in the Purchase Agreement. Successors and Assigns. This Assignment Agreement shall be binding upon and shall inure to the benefit of Assignor and Assignee and their respective successors and assigns. Governing Law. This Assignment Agreement shall be governed and construed in accordance with California Law. [Signatures on following page.] • 73 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments`Agmtts-Amend 2009\08-03-09 Meta Housing-Final DDA doc IN WITNESS WHEREOF,the parties have executed this Assignment Agreement as of the date first set forth above. "Assignor" By: Name: Title: "Assignee" By: Name: Title: 74 P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc SCHEDULE OF EXHIBITS EXHIBIT DESCRIPTION "A" Legal Description of Property "B" Purchase Agreement "C" Escrow Instructions 75 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agtmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY • EXHIBIT "A" Page 1 of 1 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\O8-03-09 Meta Housing-Final DDA.dot EXHIBIT "B" PURCHASE AGREEMENT [TO BE INSERTED] EXHIBIT "B" Page 1 of 1 P-\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc EXHIBIT "C" ESCROW INSTRUCTIONS [TO BE INSERTED] EXHIBIT "C" Page 1 of 1 P:\Agendas\Agenda Attachments\Agenda Attachments\Agenda Anachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA.doc CONSENT TO ASSIGNMENT [Escrow No. ] The undersigned,Seller under the Purchase Agreement,consents to the foregoing assignment of Assignor's interest as Purchaser under the Purchase Agreement to "Seller" By: Date: , 2009 Name: Title: P.\Agendas\Agenda Attachments\Agenda Attachments\Agenda Attachments\Agrmts-Amend 2009\08-03-09 Meta Housing-Final DDA doc ACKNOWLEDGMENT OF ASSIGNMENT [Escrow No.] The undersigned hereby acknowledges the foregoing Assignment. TITLE COMPANY By: Date: , 2009 3 07-29-09 Meta Housing-DDA Attachment No. 6 Agency Grant Deed RECORDING REQUESTED BY ) Redevelopment Agency ) of the City of San Bernardino ) ) ) AND WHEN RECORDED MAIL TO: ) ) ) CA 9 ) Attention: ) ) (Space above line reserved for use by Recorder) REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO AGENCY GRANT DEED OF A PUBLIC AGENCY AND COMMUNITY REDEVELOPMENT AFFORDABLE SENIOR CITIZEN RESIDENTIAL HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS This Agency Grant Deed of a Public Agency and Community Redevelopment Affordable Senior Citizen Residential Housing Development, Use and Occupancy Conditions, Covenants and Restrictions (the "Agency Grant Deed") hereby grants from the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), that certain real property situated at the Streets (APNs: ), San Bernardino, California (the "Property") to (the "Developer"), subject to the community redevelopment affordable senior citizen residential housing development, use and occupancy conditions, covenants and restrictions contained in PART B hereof. The Agency is the grantor in this Agency Grant Deed and the Developer is the grantee. PART A For valuable consideration,the receipt of which is hereby acknowledged,the Agency hereby grants to the Developer, subject to the community redevelopment affordable senior citizen residential housing development,use and occupancy conditions,covenants and restrictions of this Agency Grant Deed,all of the right, title and interest of the Agency in the Property, as more particularly described below: 4 07-29-09 Meta Housing-DDA (-- The Property--) See Exhibit"A" attached hereto, on file in the Official Records of the Office of the Recorder of San Bernardino County. PART B The grant of the Property by the Agency to the Developer is expressly subject to the satisfaction of the community redevelopment affordable senior citizen residential housing development,use and occupancy conditions, covenants and restrictions as arise under that certain agreement entitled "2009 Affordable Senior Citizen Rental Housing Low and Moderate Income Housing Funds Grant Disposition and Development Agreement,"dated as of _,2009(the"Agreement"),by and between the Agency and the Developer: 1. The Property shall be reserved for development, use, improvement and occupancy for senior citizen household multi-family residential purposes, as the term "Senior Citizen Household" is defined below; and 2. During the first ( ) years, commencing on the date of recordation of this Agency Grant Deed not less than ( ) of the Units(the"Restricted Units")shall be rented or occupied by, or if vacant, available for rental and occupancy by Lower Income Senior Citizen Households at"affordable rents" as defined below. Thereafter, for an additional ( )year period,the Restricted Units shall be rented and occupied by, or if vacant, available for rental and occupancy by low-income senior tenants as defined in Health and Safety Code Section 50093; and 3. For the purpose of subparagraph 1 and 2 above,the following definitions of certain terms shall apply: "affordable rents" means and refers to a sum of rent, including a reasonable utility allowance, for a particular Senior Citizen Household which occupies a rental housing unit on the Property which is computed in accordance with the provisions of Health and Safety Code Section 50053 as may be amended from time-to-time; "lower income households"means and refers to persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time-to-time pursuant to Section 8 of the United States Housing Act of 1937. Such income for lower income households shall not exceed eighty percent (80%) of the Area Median Income, adjusted for family size and revised annually; and "Senior Citizen Household" means and refers to a person or family eligible to occupy a rental dwelling unit on the Property under the"HUD Capital Advance Documents",as this term is defined in the Agreement, and after the expiration of the term of the HUD Capital Advance Documents,the words Senior Citizen Household shall mean and refer to a person or family who is/are at the time of initial occupancy of the rental dwelling unit by such person(s): (i) sixty-two (62) years of age or older; and, if applicable. 5 07-29-09 Meta Housing-DDA (ii) provided at least one (1) member of the family is sixty-two (62) years of age or older, a"qualified permanent resident", as this term is defined in California Civil Code Section 51.3(b)(2) and (3) as such section of the California Civil Code presently exists or may hereafter be amended from time-to-time. PART C Subject to the covenant of the Developer as provided in PART B, the Developer shall refrain from restricting the rental,sale,or lease of any portion of the Property on the basis of race,color,creed,religion, sex,marital status,age,physical or mental disability, ancestry,or national origin of any person. All such deeds, leases, or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) Deeds: In deeds,the following language shall appear: Except as specifically provided for in the Agency Regulatory Agreement (the "Agency Regulatory Agreement"), dated , 200_, recorded in the official records of the County of San Bernardino, State of California (the "Official Records"), as Instrument No. , with respect to renting the units within the Project to Senior Citizens, as such term is defined therein,and subject to the covenant in the Agency Grant Deed that restricts the Property for development,use,improvement and occupancy by Senior Citizen Households,as this term is defined in the Agency Regulatory Agreement. The Developer 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,sex,marital status,age,physical or mental disability, ancestry, or national origin including all other protected classes of persons and groups of persons as may be considered as such by any local, State or Federal law and as shall be required pursuant to Health& Safety Code Section 33435 and Section • 33436,in the sale,lease,rental,sublease,transfer,use,occupancy,tenure,or enjoyment of the land herein conveyed, nor shall the Developer itself,or any persons 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 land herein conveyed. The foregoing covenants shall run with the land. (b) Leases: In leases,the following language shall appear:The lessee herein covenants by and for itself, its heirs, executors, administrators, successors, and assigns, and all persons claiming under or through them and this lease is made and accepted upon and subject to the following conditions: Except as specifically provided for in the Agency Regulatory Agreement, dated , 200 , and recorded in the official records of the County of San Bernardino, State of California(the"Official Records"),as Instrument No. ,with respect to renting units within the Project to Senior Citizens,as such term is defined therein, and subject to the covenant in the Agency Grant Deed that restricts the Property for development use,improvement and occupancy by Senior Citizen Households, as this term is defined in the Agency Regulatory Agreement. There shall be no discrimination against or segregation of any person or group of persons on account of race, 6 07-29-09 Meta Housing-DDA color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin, including all other protected classes of persons and groups of persons as may be considered as such by any local, State or Federal law and as shall be required pursuant to Health & Safety Code Section 33435 and Section 33436, in the leasing, subleasing, renting, transferring, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee 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,sublessees,subtenants,or vendees in the land herein leased. (c) Contracts: In contracts, the following language shall appear: Except as specifically provided for in the Agency Regulatory Agreement, dated _, 200 , and recorded in the official records of the County of San Bernardino, State of California(the "Official Records"),as Instrument No. ,with respect to renting units within the Project to Senior Citizens, as such term is defined therein, and subject to the covenant in the Agency Grant Deed that restricts the Property for development use, improvement and occupancy by Senior Citizen Households,as this term is defined in the Agency Regulatory Agreement. There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin including all other protected classes of persons and groups of persons as may be considered as such by any local, State or Federal law and as shall be required pursuant to Health& Safety Code Section 33435 and Section 33436,in the sale,lease,rental,sublease,transfer,use,occupancy,tenure,or enjoyment of the land,nor shall the transferee itself,or any person claiming under or through it,establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land. The foregoing covenants shall remain in effect in perpetuity. PART D No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in PART B, PART C or PART E of this Agency Grant Deed shall, defeat or render invalid or in any way impair the lien or charge of any mortgage,deed of trust or other financing or security instrument permitted by and approved by the Agency pursuant to the Agreement;provided,however,that any successor of the Developer to the Property shall be bound by such remaining covenants,conditions,restrictions,limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. PART E The provisions of this Agency Grant Deed are expressly declared by the Agency to promote and increase, improvement and preservation of the community's supply of low-income housing. The transfer of the Property by the Agency to the Developer for this purpose and the recordation of this Agency Grant Deed is required by the provisions of Health and Safety Code Sections 33334.2 and 33334.3,and other applicable 7 07-29-09 Meta Housing-DDA laws and actions of the Agency. Upon the delivery of this Agency Grant Deed to the Developer, the community redevelopment affordable senior citizen residential housing development,use and occupancy conditions, covenants and restrictions as contained herein shall be conditions, covenants and restrictions which affect the Property and shall run with the land and shall be enforceable by either the Agency or by the City of San Bernardino, a municipal corporation, as community redevelopment affordable senior citizen residential housing development,use and occupancy conditions,covenants and restrictions against the Developer and each successor-in-interest or assignee of the Developer in the Property as provided in Health and Safety Code Section 33334.3(0(2). No person other than the City of San Bernardino or the Agency or HUD shall be deemed to be authorized to enforce any provision of this Agency Grant Deed as a covenant or restriction which runs with the land and affects the Property. /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// /// 8 07-29-09 Meta Housing-DDA THIS AGENCY GRANT DEED is executed as of the date indicated below next to the authorized signature of the Interim Executive Director of the Agency. AGENCY Redevelopment Agency of the City of San Bernardino, a corporate body,public and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: Agency Counsel [NOTARY JURAT ATTACHED] 9 07-29-09 Meta Housing-DDA ACCEPTANCE OF AGENCY GRANT DEED AND COMMUNITY REDEVELOPMENT AFFORDABLE SENIOR CITIZEN RESIDENTIAL HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS BY THE DEVELOPER The undersigned officers of , corporation(the"Developer"), hereby accepts the delivery of the instrument identified above as the "Agency Grant Deed of a Public Agency and Community Redevelopment Affordable Senior Citizen Residential Housing Development, Use and Occupancy Conditions,Covenants and Restrictions"(the"Agency Grant Deed"),and the transfer of the Property from the Redevelopment Agency of the City of San Bernardino, subject to the conditions, covenants and restrictions contained in the Agency Grant Deed. The Developer hereby acknowledges and agrees that it accepts the Property in an "AS- IS", "WHERE IS"and"SUBJECT TO ALL FAULTS"condition and that the Developer is solely responsible for causing the Property to be improved as set forth in the Agreement by and between the Agency and the Developer. The Developer hereby further accepts and agrees to each of the community redevelopment affordable senior citizen residential housing development use, and occupancy conditions,covenants and restrictions contained in the Agency Grant Deed that touch and concern the Property and community redevelopment affordable senior citizen residential housing development,use improvement and occupancy conditions, covenants and restrictions which run with the land. DEVELOPER a Date: By: Its: By: Its: [NOTARY JURAT ATTACHED] 10 07-29-09 Meta Housing-DDA Attachment No. 7 Senior Citizen Rental Housing Use Covenant RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino, California 92401 Attn: Executive Director (Space Above Line For Use By Recorder) REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO SENIOR CITIZEN RENTAL HOUSING USE COVENANT (2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement) THIS SENIOR CITIZEN RENTAL HOUSING USE COVENANT(the"Agreement")is entered into by and between the Redevelopment Agency of the City of San Bernardino, a body corporate and politic (the "Agency") and the City of San Bernardino (the "City') in light of the facts set forth in the following paragraphs of the Recitals: RECITALS The Agency owns the lands situated within the redevelopment project area of the Redevelopment Project which are referred to herein as the "Site". A legal description of the Site is attached hereto as Exhibit"A". The Agency and the Magnolia Highland, L.P., a California limited partnership(the"Developer") have entered into an agreement affecting the Site entitled"2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement", dated as of July 1, 2009 (the "2009 DDA"). A copy of the 2009 DDA is on file with the Agency and is available for inspection as a public record of the Agency. NOW THEREFORE THE CITY AND THE AGENCY FOR THEMSELVES AND THEIR SUCCESSORS AND ASSIGNS DO HEREBY COVENANT AND AGREE AS FOLLOWS: Section 1. (a) As used in this Agreement,the term"Senior Citizen Household"means and refers to a person or family who is eligible to occupy a dwelling unit on the Site because at the time of such person's initial occupancy of such dwelling unit, such person is: (i) 62 years of age or older; and if applicable 11 07-29-09 Meta Housing-DDA (ii) provided at least one (1) member of the family is 62 years of age or older, a "qualified permanent resident", as this term is defined in Civil Code Section 51.3(c)(2) and (3). (b) As used in this Agreement,the term"Owner"means and refers to the Agency,and to each successor or assign of the interest of the Agency in the Site,including without limitation the Developer,at such time as the Developer may acquire the Site from the Agency under the terms of the 2009 DDA. Section 2. Except during the temporary period of time of twelve (12) months following the date of recordation of this Covenant, and the construction of the "Project" as such term is defined in the 2009 DDA,the Owner hereby agrees to reserve and restrict the Site for improvement,use and residential occupancy, by persons and families who at the time of initial occupancy of a dwelling unit on the Site continuously and thereafter satisfy the requirements of a Senior Citizen Household. Subject to the Owner first obtaining the written permission of the City, and such permission shall not be unreasonably conditioned, delayed or denied by the City, nothing in the preceding sentence of this Section 2 shall be deemed to prohibit the Owner from reserving up to one(1)of the dwelling units on the Site for occupancy by on-site residential management employees of the Owner,and the household of such on-site residential management employees of the Owner need not qualify as a Senior Citizen Household. Section 3. This Agreement, including without limitations the Senior Citizen Household occupancy requirements under Section 2 of this Agreement, shall be in effect following the date of its recordation for a term of ninety-nine (99) years. Section 4. The Owner and the City hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are community redevelopment covenants and are part of a plan for the promotion and preservation of housing reserved for Senior Citizen Households within the territorial jurisdiction of the Agency and that each shall be deemed covenants running with the land and shall pass to and be binding upon the Site and each successor-in-interest of the Owner in the Site for the term set forth in Section 3. The Owner hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this Covenant. Each and every contract,deed or other instrument hereafter executed covering or conveying the Site or any interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. Section 5. The City and the Owner hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Owner's legal interest in the Site is affected by the affordable dwelling use and occupancy covenants hereunder. The City and the Owner hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Site by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the Senior Citizen Household housing goals and objectives of the Agency and in order to make the Site available for acquisition and redevelopment by the Owner. Section 6. (a) The failure of the Owner or any person under its direction or control to comply with or perform when due any material term,obligation, covenant or condition contained in this Covenant is a default and shall constitute a material breach of this Agreement and,if not corrected,cured or remedied in the time period set forth in Section 6(b), shall constitute an"Event of Default"hereunder. 12 07-29-09 Meta Housing-DDA (b) The City shall give written notice of default to the Owner stating that such notice is a "Notice of Default", specifying the default complained of by the City and requiring the default to be remedied within thirty(30)days of the date of the Notice of Default. Except as required to protect against further material damage,the Agency may not institute legal proceedings against the Owner until thirty(30) days after giving notice. Failure or delay in giving notice shall not constitute a waiver of any default,nor shall it change the time of occurrence of the default. If the default specified in the Notice of Default is such that it is not reasonably capable of being cured within thirty (30) days, and if the Owner initiates corrective action within said thirty(30)day period and diligently works to effect a cure as soon as possible, then the Owner may have such additional time as authorized in writing by the Agency as reasonably necessary to complete the cure of the breach prior to exercise of any other remedy for the occurrence of an Event of Default. Such authorization for additional time to cure shall not be unreasonably withheld. If the Owner fails to take corrective action relating to a default within thirty (30) days following the date of notice(or to complete the cure within the additional as may be authorized by the City),an Event of Default shall be deemed to have occurred. (c) Any failure or delays by the City in asserting any of its rights and remedies as to any default arising under this Agreement shall not operate as a waiver of any default or of any such rights or remedies. Delays by the City in asserting any of its rights and remedies shall not deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect,assert or enforce any such rights or remedies. (d) Upon the occurrence of an Event of Default, the City shall, be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity,to require the Owner to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the City; or (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and agreements of the Owner to the City. (e) The rights and remedies of the City as set forth in this Section 6 are cumulative and the exercise by the City of one or more of such rights or remedies shall not preclude the exercise by it,at the same or different times, of any other rights or remedies for the same default or any other default by the Owner. (f) In the event of litigation between the parties arising out of this Agreement,the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including such fees and costs incurred on appeal, in addition to whatever other relief the prevailing party may be entitled to. As used in the preceding sentence,the words"reasonable attorney's fees"in the case of the City include the salary and benefits payable to lawyers employed in the Office of the City Attorney of the City, who provide legal counsel to the City in such litigation as allocated on an hourly basis. (g) No third party shall have any right or power to enforce any provision of this Agreement on behalf of the City or to compel the City to enforce any provision of this Agreement against the Owner of the Site. 13 07-29-09 Meta Housing-DDA • Section 7. This Agreement shall be governed by the laws of the State of California. Section 8. This Agreement may be amended after its recordation only by a written instrument executed by the Owner and by the City. Section 9. Upon the transfer by the Agency of the Site to the Developer, the Developer shall execute and record concurrently with such transfer,an acknowledgment substantially in the form attached hereto as Exhibit`B"that this Agreement remains in full force and effect and that the Developer acquire its interest in the Site subject to the terms and conditions of this Agreement. 14 07-29-09 Meta Housing-DDA IN WITNESS WHEREOF, the Owner and the Agency have caused this Covenant to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. AGENCY Redevelopment Agency of the City of San Bernardino By: By: Approved As To Form: By: Agency Special Counsel [NOTARY JURAT ATTACHED] CITY City of San Bernardino By: By: Approved As To Form: By: City Attorney 15 07-29-09 Meta Housing-DDA EXHIBIT "A" Legal Description of the Site 16 07-29-09 Meta Housing-DDA EXHIBIT "B" ACKNOWLEDGEMENT OF DEVELOPER 17 07-29-09 Meta Housing-DDA Attachment No. 8 Notice of Agreement 18 07-29-09 Meta Housing-DDA RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino,California 92401 Attn: Executive Director (Space Above Line For Use By Recorder) NOTICE OF AGREEMENT REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement: Meta Housing Corporation and Magnolia Highland, L.P.) TO ALL INTERESTED PERSONS: PLEASE TAKE NOTICE: Magnolia Highland, L.P., a California limited partnership (the "Developer") and the Redevelopment Agency for the City of San Bernardino, a public body corporate and politic (the "Agency") have entered into a community redevelopment agreement entitled: "2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement: Meta Housing and Magnolia Highland, L.P.", dated as of June 1, 2009 (the "2009 DDA"). PLEASE TAKE FURTHER NOTICE that the 2009 DDA affects the real property situated in the redevelopment project area of the Northwest Redevelopment Project, as described in the 2009 DDA, as the"Site": The Site is more particularly described as: Parcel 1 of Parcel Map No. 19200, Book Page of Parcel Maps, Office of the Recorder San Bernardino, County 1 050.030.019 2-29-08 Interested persons may inspect the 2009 DDA as a public record of the Agency during the regular business hours of the Agency. The Agency may be contacted as follows: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino, California 92401 Attn: Executive Director (909) 663-1044 The 2009 DDA contains affordable senior citizen rental housing development, occupancy and affordable rental rate covenants of the Developer in favor of the Agency which touch and concern the Site and which run with the land for a term of years as provided in the 2009 DDA as affordable housing community redevelopment covenants. For additional and more specific information regarding these affordable rental rate covenants affecting the Site, interested persons are urged to contact the Agency. The recordation of this Notice of Agreement is authorized under Health and Safety Code Section 33336. This Notice of Agreement may be executed by the parties in counterparts and when each such counterpart is executed each such counterpart shall be deemed to be one original document. 2 050.030.019 2-29-08 IN WITNESS WHEREOF, the undersigned have executed this Notice of Agreement on the dates indicated next to each of their signatures as appear below. AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Chair of the Community Development Commission of the City of San Bernardino, its governing board Date: By: Executive Director Approved As To Form: Agency Counsel DEVELOPER Executed this day of , 200 Magnolia Highland, L.P., a California limited partnership By: Magnolia Highland, LLC, a California limited liability company Its: Administrative General Partner By: John M. Huskey Manager 3 050.030.019 2-29-08 By: Western Community Housing, Inc., a California non-profit public benefit Corporation Its: Managing General Partner By: Graham Espley-Jones President By: Leanne Truofreh Secretary Approved As To Form: Legal Counsel for Developer 4 050.030.019 2-29-08 Attachment No. 9 Agency Regulatory Agreement RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino, California 92401 Attn: Executive Director (Space Above Line Reserved For Use By Recorder) (Exempt from Recording Fees Per Govt. Code Sec. 6103) [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 ACQUISTION, DISPOSITION AND DEVELOPMENT AGREEMENT. THE FINAL FORM OF THIS REGULATORY AGREEMENT SHALL BE SUBJECT TO THE JOINT REVIEW AND APPROVAL BY THE PARTIES OF THE SPECIFIC TERMS ON WHICH THE AFFORDABLE RENTAL HOUSING DEVELOPMENT PROJECT RESERVED FOR OCCUPANCY BY SENIOR CITIZEN HOUSEHOLDS, MAY BE UNDERTAKEN BY (MAGNOLIA HIGHLAND, L.P.) THE DEVELOPER, AS PART OF THE PROJECT. THE FINAL TEXT OF THE REGULATORY AGREEMENT IS ALSO SUBJECT TO THE APPROVAL BY THE PARTIES OF THE CONDITIONS OF THE STATE TCAC REGULATORY AGREEMENT FOR THE PROJECT.] • REDEVELOPMENT AGENCY FOR THE CITY OF SAN BERNARDINO REGULATORY AGREEMENT AND COVENANTS (Magnolia Highland, L.P. Affordable Senior Citizen Housing Project) THIS REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REGULATORY AGREEMENT AND COVENANTS (the "Agency Regulatory Agreement") is dated as of , 2010, by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body corporate and politic (the "Agency")and Magnolia Highland, L.P., a California limited partnership (the "Developer") with reference to the facts set forth in the following Recitals. 19 07-29-09 Meta Housing-DDA -- RECITALS -- A. A legal description of the Site (as hereinafter defined) is attached hereto as Exhibit"A" and incorporated herein by this reference. B. The Agency and the Developer have entered into that certain agreement entitled "2009 Acquisition, Disposition and Development Agreement (Meta Housing Corporation and Magnolia Highland L.P.)", dated as of June 1, 2009, (the"2009 DDA") pursuant to which the Agency shall provide certain affordable rental housing development assistance in support of the affordable senior citizen rental housing development project constructed as part of the "Project", as the item is defined by the 2009 DDA, subject to certain conditions, including the terms and conditions of this Agency Regulatory Agreement. C. The terms of the 2009 DDA require that certain covenants and affordability restrictions remain in full force and effect on the Site for a term of at least sixty(60) years following the date of recordation of this Agency Regulatory Agreement (the "Term") in order to ensure that: (i) the units in the Project (as hereinafter defined) (exclusive of the on-site manager(s)' unit(s)), shall at all times be occupied or reserved for occupancy by elderly persons who have a household income which is not more than eighty percent (80%) of median income, adjusted for family size, as determined by HUD for the San Bernardino—Riverside statistical metropolitan area("Median Income"); and (ii) each elderly person, or elderly person household which qualifies for occupancy in the Project (each a"Qualifying Resident") shall pay no more as rent than an"Affordable Rent" as defined below. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREIN AND FOR SUCH OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE DEVELOPER AND THE AGENCY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AS FOLLOWS: Section 1. Definitions of Certain Terms and Phrases. As used in this Agency Regulatory Agreement, the following words and terms shall have the meaning as provided in the Recitals or in this Section 1, unless the specific context of usage of a particular word or term may otherwise require: • Affordable Rent. The term"Affordable Rent"means for the total number of units in the Project reserved for occupancy by Qualifying Residents whose annual household income may not exceed the annual income for a"lower income household" as defined in Health and Safety Code Section 50079.5, total charges for rent, utilities and related services, on an annual basis, shall not exceed eighty percent (80%) of Median Income, adjusted for family size,and in the case of the total number of units in the Project reserved for occupancy by Qualifying Residents whose annual household income may not exceed 20 07-29-09 Meta Housing-DDA • the annual income for a "very low income household" as defined in Health and Safety Code Section 50079.5,total charges for rent,utilities and related services,on annual basis, shall not exceed fifty percent (50%) of Median Income, adjusted for family size. • Agency Subordination Agreement for Project Financing. The words "Agency Subordination Agreement for Project Financing"mean and refer to the form of the separate loan subordination agreements by and between the Developer and the Agency in favor of a lender who provides development financing for the Project, as set forth in this Agency Regulatory Agreement. The first such Agency Subordination Agreement for Project Financing shall be in favor of the Construction Lender and the Construction Loan,and the second shall be in favor of the Permanent Lender and the Permanent Loan. The Agency Subordination Agreement for Project Financing with respect to the Construction Loan and/or Permanent Loan may be in the form of an intercreditor agreement among the Agency and other holders of security interests in the Project if the Developer obtains a Construction Loan or Permanent Loan, as applicable,from multiple lending sources,such as a portion of such construction financing from a conventional lender and a portion from an instrumentality of the State of California, including, without limitation,the California Housing Finance Agency. Each such Agency Subordination Agreement for Project Financing shall be subject to the terms and conditions of this Agency Regulatory Agreement • City. The term"City"means and refers to the City of San Bernardino, California. • Construction Lender. The term "Construction Lender" means and refers to the entity or entities providing the Construction Loan to the Developer. • Construction Loan. The term "Construction Loan" means and refers to the loan (or collectively loans from multiple sources, including instrumentalities of the State of California)which the Developer shall hereafter obtain in an approximate principal amount as provided in the 2009 DDA,in order to provide for the construction and improvement of the Project. The Construction Loan may be derived from one or more sources of financing obtained by the Developer,including, from the proceeds of a construction loan or grant of construction funding originated to the Developer by an instrumentality of the State of California, from the proceeds of a construction loan provided by a state or federally regulated third-party lending institution, or from a combination of these funding sources. • Construction Loan Documents. The term"Construction Loan Documents" shall have the same meaning as set forth in the 2009 DDA. • Hazardous Substances. The term"Hazardous Substances"shall have the same meaning as set forth in the 2009 DDA. • Median Income. The words"Median Income"mean median income as determined by the United States Department of Housing and Urban Development for the San Bernardino— Riverside Metropolitan Area. 21 07-29-09 Meta Housing-DDA • Permanent Loan. The words"Permanent Loan"shall have the same meaning as set forth in the 2009 DDA. • Permanent Loan Documents. The words "Permanent Loan Documents" shall have the same meaning as set forth in the 2009 DDA. • Project. The term "Project" shall mean all of the work of investigation, design, construction, improvement, modification, and financing necessary for the Developer to acquire the Site and construct and place in service thereon(or on a portion of the Site)the affordable senior citizen rental housing project consisting of seventy nine(79)rental units reserved for occupancy by Qualifying Tenants and one (1) unit for occupancy by on-site management personnel. The Project also includes all related landscaping, driveways, utilities,and any improvements which may be required by the City on the Site or within the public rights-of-way adjacent to the Site. The functional elements of the Project are more particularly described in the Scope of Development and Site Improvement Plan attached as Exhibit`B"to this Agency Regulatory Agreement. • Qualifying Resident. The words"Qualifying Resident"mean the tenant of any unit within the Project(other than the single on-site manager's unit)who shall be at least sixty two(62) years of age and who shall have an income that does not exceed the Qualifying Resident Income, as provided in this Agency Regulatory Agreement. If either the Construction Loan Documents or, later, the Permanent Loan Documents do not have a definition of Qualifying Tenant that supercedes the definition set forth in this Regulatory Agreement, then during the Term of this Regulatory Agreement,the words"Qualifying Resident"mean the senior citizen household of any unit within the Project which shall be composed of at least one(1)member who is sixty two (62)years of age and whose other members, if any, satisfy the provisions of California Civil Code Section 51.3, and whose combined household income does not exceed Qualifying Resident Income. • Qualifying Resident Income. The words"Qualifying Resident Income"mean in the case of Qualifying Residents who shall unit in the Project,a household income which is not more than eighty percent(80%) of Median Income, adjusted for family size; and • Site. The term"Site" shall have the same meaning as set forth in the 2009 DDA. • State TCAC Regulatory Agreement. The words "State TCAC Regulatory Agreement" shall have the same meaning as set forth in the 2009 DDA. • Term. The word"Term"means the period of time beginning on the date of the recordation of this Agency Regulatory Agreement and ending on the sixtieth (60th) anniversary thereafter. The titles and headings of the sections of this Agency Regulatory Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the meaning of any of the terms or provisions hereof. 22 07-29-09 Meta Housing-DDA Section 2. Acknowledgment of the Developer and Acknowledgment of Subordination of the Agency. (a) The Developer hereby acknowledges that this Agency Regulatory Agreement imposes certain restrictions on the use and occupancy of the Project and the Site during the Term of this Agency Regulatory Agreement. The Developer acknowledges and understands that the restrictions shall be applicable to the Project and the Site for the Term hereof, commencing on the date of recordation of this Agency Regulatory Agreement. Initials of Developer (b) Concurrently upon the execution and recordation of this Agency Regulatory Agreement the Developer shall obtain certain purchase money mortgage financing for the improvement of the Site from (as the Construction Lender), subject to the provisions of the 2009 DDA. The Developer has provided the Agency with a true and correct copy of the Construction Loan Documents. As a condition to providing its mortgage loan to the Developer the Construction Lender requires the Agency to agree that the provisions of this Agency Regulatory Agreement shall be junior and subordinate to the security interest of the Construction Lender in the Site securing repayment of the Construction Loan. The Agency hereby acknowledges and agrees that the provisions of this Agency Regulatory Agreement are subordinate and junior to the security interest of the Construction Lender in the Site securing repayment of the Construction Loan. Section 3. Covenant of Developer to Rent to Qualifying Tenants; Covenant of Developer to Charge Affordable Rent; Covenant of Developer Regarding Maintenance of Project Operating Business Records. (a) Except during the "Temporary Period" as described in subsection (f), below, during the Term,the Developer covenants that all of the dwelling units in the Project (exclusive of the on-site manager(s)' unit(s)) shall at all times be occupied or held vacant available for rental by Qualifying Tenants. Determination of Qualifying Tenant Income shall be made by the Developer at the time of initial occupancy of a dwelling unit and, upon each renewal of a Qualifying Tenant's lease, recertification of Qualifying Tenant Income shall be made by the Developer. The Developer shall obtain,prior to initial occupancy, and, thereafter, maintain on file, income certifications from each Qualifying Tenant renting any of the dwelling units in the Project. The Developer shall make a good faith effort to verify that the income information provided by an applicant(or occupying Qualifying Tenant 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 an income tax return for the most recent tax year; (2) conduct a credit reporting agency or similar search; (3) obtain an income verification form from the 23 07-29-09 Meta Housing-DDA applicant's current employer; (4) obtain an income verification form from the United States Social Security Administration and/or the California Department of Social Services, if the applicant receives assistance from either of such agencies; or(5) if the applicant is unemployed and has no such tax return, obtain another form of independent verification of income. All such verification information shall only be obtained by Developer after obtaining the applicants/Qualifying Tenant's written consent for the release of such information to the Developer. On the anniversary of the occupancy of each such dwelling unit the Developer shall recertify the household income of the Qualifying Tenant household occupying the dwelling unit. Copies of tenant income certifications shall be made available by the Developer to the Agency upon request. For purposes of this Section 3(a),the Developer may conclusively rely upon the evidence of the age of the occupant(s)of the unit as presented in a valid California Driver's License, other form of identification issued by the State of California or the United States government, which includes a date of birth. (b) Except during the Temporary Period, the Developer covenants that it shall not charge in excess of Affordable Rent for any dwelling unit in the Project. The Developer may increase rents based on changes in Median Income only and no more than once in any twelve-month period. (c) Except during the Temporary Period, business records for the Project shall be established and maintained by the Developer relating to the use and occupancy of the Site and the Project for affordable elderly person rental housing use purposes, as authorized herein. The Developer shall be responsible for establishing and maintaining such records during the Term of this Agency Regulatory Agreement, and the Developer shall provide the Agency with copies of such records within thirty (30) days of written request by the Agency. (d) Except during the Temporary Period, the Developer and all Qualifying Tenants shall permit the Agency to conduct inspections of the Site and the Project from time-to-time for purposes of verifying compliance with this Agency Regulatory Agreement, upon thirty (30) days prior written notice to the Developer. (e) Commencing on the June 30 following the fifth (5th) anniversary of the date of recordation of this Agency Regulatory Agreement or on the June 30 following the date on which 25% of the dwelling units in the Project are placed in service as rental housing units, whichever date may first occur, and on each June 30 thereafter during the Term, the Developer shall submit a report to the Agency, in a form approved by the Agency (the "Annual Report"). The Annual Report shall include for each dwelling unit in the Project,the rent, income and family size of the Qualifying Tenant household occupying the dwelling unit. The Annual Report shall also state the date the tenancy commenced for each dwelling unit and such other information as the Agency may be required by law to obtain; provided, however, that the Agency shall take reasonable steps to maintain the confidential nature of the information contained in any Annual Report specifically relating to any dwelling unit. The Developer shall provide any additional information reasonably requested by the Agency, including without limitation Project-related income and expense accounting information. The Agency shall have the right to examine and make copies of all books, records or other documents of Developer which pertain to any dwelling unit; provided,however,that the Agency shall take reasonable steps to maintain the confidential nature of such information. The Developer shall maintain complete, accurate and current records pertaining to the dwelling units, the Site and the Project, and shall permit any duly authorized representative of the Agency (during business hours and upon prior notice as provided 24 07-29-09 Meta Housing-DDA herein)to inspect such records, including records pertaining to income and household size of Qualifying Tenants; provided, however, that the Agency shall take reasonable steps to maintain the confidential nature of information relating to any specific household. (f) The "Temporary Period" shall commence on the date of recordation of this Regulatory Agreement and continue until the end of the twelfth (12th) calendar month following the recordation of this Agency Regulatory Agreement. Section 4. Covenant of the Developer With Respect to the Rental of Dwelling Units in the Project. The Developer for itself, its successors and assigns hereby covenants and agrees that, in connection with the rental of units in the Project to Qualifying Tenants during the Term, it shall comply with the following requirements: (1) The lease between the Developer and the Qualifying Tenant shall be for not less than • one year, unless by mutual agreement between the Developer and the Qualifying Tenant, but in such a case for not less than six (6) months, as required by applicable provisions of the Internal Revenue Code. (2) The lease shall not contain any of the following provisions: (i) an agreement by the Qualifying Tenant to be sued, to admit guilt or to entry of a judgment in favor of the Developer in a lawsuit brought in connection with the lease; (ii) an agreement by the Qualifying Tenant that the Developer may take, hold or sell personal property of household members, without notice to the Qualifying Tenant and a court decision on the rights of the parties, other than an agreement by the tenant concerning disposition of personal property remaining in the housing unit, after the Qualifying Tenant has moved out of the dwelling unit; (iii) an agreement by the Qualifying Tenant not to hold the Developer or its agents legally responsible for any action or failure to act, whether intentional or negligent; (iv) an agreement by the Qualifying Tenant that the Developer may institute a lawsuit without notice to the Qualifying Tenant; (v) an agreement by the Qualifying Tenant that the Developer may evict the Qualifying Tenant without instituting a civil court proceeding in which the Qualifying Tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; (vi) an agreement by the Qualifying Tenant to waive any right to a trial by jury; (vii) an agreement by the Qualifying Tenant to waive the Qualifying Tenant's right to appeal, or to otherwise challenge a court decision in connection with the lease; 25 07-29-09 Meta Housing-DDA (viii) an agreement by the Qualifying Tenant to pay attorney's fees or other legal costs, even if the Qualifying Tenant wins in a court proceeding by the Developer against the Qualifying Tenant; provided, however, the Qualifying Tenant may be obligated to pay costs, if the tenant loses such a legal action. (3) The Developer shall not terminate the tenancy or refuse to renew the lease of a Qualifying Tenant, except for serious or repeated violations of the terms and conditions of the lease; for violation of applicable Federal, State, or local law; or for other good cause. The Developer shall, in connection with a termination of a tenancy or a refusal to renew a lease, serve written notice upon the Qualifying Tenant specifying the grounds for the action, at least thirty (30) days before the termination of the tenancy. (4) The Developer shall adopt written tenant selection policies and criteria that: (i) are consistent with the purpose of providing housing for individuals who are at least sixty two (62) years of age and have an income that is no more than the Qualifying Tenant Income; (ii) are reasonably related to program eligibility and the applicants' ability to perform the obligations of the lease; (iii) give reasonable consideration to the housing needs of individuals who: occupy substandard housing; individuals that are paying more than fifty (50) percent of their annual income for rent; or individuals that are involuntarily displaced; (iv) provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; and (v) give prompt written notification to any rejected applicant of the grounds for rejection. - (5) All of the dwelling units in the Project shall be available for occupancy on a continuous basis to Qualifying Tenants. The Developer shall not give preference to any particular class or group of persons in renting the dwelling units. 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, age, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any dwelling unit. Neither the Developer nor any person claiming under or through the Developer, shall 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 dwelling unit or in connection with the employment of persons for the operation and management of any dwelling unit, the Project or the Site. All deeds, leases or contracts made or entered into by Developer as to the dwelling units, the Project or the Site or any portion thereof, shall contain covenants prohibiting discrimination, as prescribed by this Agency Regulatory Agreement. The Developer shall include a statement in all advertisements, notices and signs for the availability of dwelling units for rent to the effect that owner is an Equal Housing Opportunity Provider. 26 07-29-09 Meta Housing-DDA Section 5. Development and Management of the Project. (a) The Developer hereby reaffirms its covenant and agreement, as set forth in the 2009 DDA to undertake, and thereafter, diligently complete the development of the Project on the Site in accordance with the Budget Development/Scope of Work attached hereto as Exhibit`B" (the"Scope of Development"), within the period of time set forth under the Schedule of Performance attached hereto as Exhibit"C". (b) The Agency shall have no responsibility for the management or operation of the Project or the Site. The Developer shall be responsible for management of the Project, including, without limitation,the selection of Qualifying Tenants, certification and recertification of household size, and income and the age of the head of household of all units, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The Project shall at all times be managed by an experienced management agent(the "Management Agent") reasonably acceptable to the Agency, with demonstrated ability to operate senior citizen residential rental facilities similar to the Project in a manner that will provide decent, safe, and sanitary housing. For the purposes hereof, if the Developer directly performs the functions of the Management Agent by its employees or by means of a service contract with an entity which is a partner in the Developer, such a Management Agent shall be deemed approved by the Agency. If the Management Agent is an entity or person other than the Developer, its employees a partner in the Developer or an entity owned or controlled by the Developer, the Developer shall submit for the Agency's approval the identity of any proposed Management Agent,together with additional information relevant to the background, experience and financial condition of any proposed Management Agent, as reasonably requested by the Agency. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above,the Agency shall approve the proposed Management Agent by notifying the Developer in writing within thirty (30) days following the written request of the Developer for such approval. Unless the proposed Management Agent is disapproved by the Agency within thirty(30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. The Developer is hereby approved by the Agency as the Management Agent for the Project. Any Management Agent approved by the Permanent Lender during the term of the Permanent Loan Documents or by State TCAC shall be deemed approved by the Agency. (c) The Developer shall cause to be in full force and effect during the Term hereof insurance coverage, as follows: (i) If any building or improvements on the Site shall be damaged or destroyed by an insurable cause, the Developer shall, at its own cost and expense, diligently repair or restore the Project consistent with the original plans and specifications for the Project. Such work or repair shall be commenced within One Hundred Twenty (120) days after the damage or loss occurs and shall be completed within one year thereafter. All insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, the Developer shall make up the deficiency; and (ii) a policy of comprehensive general liability insurance written on a per occurrence basis in an amount not less than either(i) a combined single limit of TWO MILLION 27 07-29-09 Meta Housing-DDA DOLLARS ($2,000,000.00) or(ii) bodily injury limits of ONE MILLION DOLLARS ($1,000,000.00) per person, TWO MILLION DOLLARS ($2,000,000.00) per occurrence, ONE MILLION DOLLARS ($1,000,000.00)products and completed operations. (iii) a policy of workers' compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure and provide legal defense for the Developer against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Developer in the course of carrying out the activities in this Agency Regulatory Agreement. (iv) a policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either(i) bodily injury liability limits of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) per person and ONE MILLION DOLLARS ($1,000,000.00) per occurrence and (ii) property damage liability limits of TWO HUNDRED THOUSAND DOLLARS ($200,000.00)per occurrence and FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in the aggregate. Said policy shall include coverage for owned, non-owned, leased and hired vehicles. All of the above policies of insurance shall be primary insurance and shall name the City of San Bernardino and the Agency, and their officers, employees, and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against the City of San Bernardino and/or the Agency and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or canceled without providing thirty(30) days prior written notice by registered mail to Agency. In the event any of said policies of insurance are canceled, the Developer shall,prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director. No operation of the Project shall commence until the Developer has provided Agency with certificates of insurance or appropriate insurance binders evidencing the above insurance coverages, and said certificates of insurance or binders are approved by Agency. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated at least"A(vii)" or better in the most recent edition of Bests Insurance Rating Guide or an equivalent rating in The Key Rating Guide or in the Federal Register unless such requirements are modified or waived by the Executive Director of the Agency due to unique circumstances. Compliance by the Developer with the insurance requirements of the Construction Loan Documents, the Permanent Loan Documents and/or the State TCAC Regulatory Agreement shall be deemed to meet the foregoing requirements during the applicable periods of time when those agreements are in effect so long as the Agency, City and their officers, employees, and agents as additional insureds on all said policies as evidenced by certificates of insurance issued to the City and the Agency. The Developer agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which the Developer may be held responsible for the payment of damages to any persons or property resulting from the Developer's activities or the activities of any person or persons • for which the Developer is otherwise responsible. 28 07-29-09 Meta Housing-DDA Section 6. Maintenance of the Project. The Developer, for itself, its successors and assigns, hereby covenants and agrees that: (1) The exterior areas of the Project which are subject to public view(e.g.: all improvements,paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time during the Term,there is an occurrence of an adverse condition on any area of the Project which is subject to public view in contravention of the general maintenance standard described above, (a "Maintenance Deficiency") then the Agency shall notify the Developer in writing of the Maintenance Deficiency and give the Developer thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include without limitation the following inadequate or non-confirming property maintenance conditions and/or breaches of residential property use restrictions: failure to properly maintain the windows, structural elements, and painted exterior surface areas of the dwelling units in a clean and presentable manner; failure to keep the common areas of the Project free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the property; failure to regularly maintain, replace and renew the landscaping in a reasonable condition free of weed and debris; parking of any tentative-owned commercial motor vehicle in excess of 7,000 pounds gross weight anywhere on the Project; the use of garage areas on the Project for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of persons residing in the Project. In the event the Developer fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of written notice thereof to the Developer ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Developer has failed to comply with the provision of this Section 6(1). If, upon the conclusion of a public hearing, the Agency makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, thereafter the Agency shall have the right to enter the Project(exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a Maintenance Deficiency as authorized by this Section 6(1) shall become a lien on the Project. If the amount of the lien is not paid within thirty(30) days after written demand for payment by the Agency to the Developer,the Agency shall have the right to enforce the lien in the manner as provided in Section 6(3). 29 07-29-09 Meta Housing-DDA (2) Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the Project shall be removed by the Developer from any exterior surface of a structure or improvement on the Project by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the Project (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed within 72 hours following the time of its application; then in such event and without notice to the Developer, the Agency shall have the right to enter the Project and remove the graffiti. Notwithstanding any provision of Section 6(1) to the contrary, any sum expended by the Agency for the removal of graffiti from the Project as authorized by this Section 6(2) shall become a lien on the Project. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Developer, the Agency shall have the right to enforce its lien in the manner as provided in Section 6(3). (3) Subject to the lien of the Senior Lender, the parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section 6 expressly include the power to establish and enforce a lien or other encumbrance against the Property in the manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the Project to the maintenance standard required under Section 6(1) or Section 6(2), including attorneys fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in connection with such action. In any legal proceeding for enforcing such a lien against the Project, the prevailing path shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 6 shall be a covenant running with the land for the Term and shall be enforceable by the Agency in its discretion, cumulative with any other rights or powers granted by the Agency under applicable law. Nothing in the foregoing provisions of this Section 6 shall be deemed to preclude the Developer from making any alterations, additions, or other changes to any structure or improvement or landscaping on the Project, provided that such changes comply with the zoning and development regulations of the City and other - applicable law. Section 7. Affordable Rent Levels for Dwelling Units. (a) The Developer shall establish and maintain rental levels for the dwelling units in the Project at the following annual rental rates: (i) for at least thirty nine (39) dwelling units, the annual rental rate at the time of initial occupancy of the Qualifying Resident household shall not exceed an Affordable Rent for a very low income household adjusted for family size; and (ii) for not more than forty(40) dwelling units, the annual rental rate at the time of initial occupancy of the Qualified Resident household shall not exceed an Affordable Rent for a lower income household„ adjusted for family size. (b) During the time when the State TCAC Regulatory Agreement is in effect, the Developer shall establish and maintain rental levels for the dwelling units in the Project at annual rental rates which do not exceed an amount an annual rent for the dwelling units which exceed an Affordable 30 07-29-09 Meta Housing-DDA Rental for such dwelling units as mandated by the State TCAC Regulatory Agreement. In the event of any conflict between the Affordable Rent amount as may be charged by the Developer under the State TCAC Regulatory Agreement and the Affordable Rent amount as may be charged by the Developer under Section 7(a) of this Agency Regulatory Agreement, the provisions of the State TCAC Regulatory Agreement shall prevail. Section 8. Covenants to Run With the Land. The Developer and the Agency hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable housing for senior citizen households within the territorial jurisdiction of the Agency and that each shall be deemed covenants running with the land and shall pass to and be binding upon the Site and each successor-in-interest of the Developer in the Site for the Term. The Developer hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this Agency Regulatory Agreement. Each and every contract, deed or other instrument hereafter executed covering or conveying the Site or any interest therein shall • conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. Section 9. Burden and Benefit. The Agency and the Developer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Developer's legal interest in the Site is affected by the affordable dwelling use and occupancy covenants hereunder. The Agency and the Developer hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Site by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable housing goals and objectives of the Agency and in order to make the Site available for acquisition by the Developer. Section 10. Term. (a) The provisions of this Agency Regulatory Agreement shall apply to the Site for a term of sixty (60) years following the date of recordation of this Agency Regulatory Agreement. (b) Any provision or section of this Agency Regulatory Agreement may be terminated upon written agreement by the Agency and the Developer if the Agency in its reasonable discretion determines that such a termination will not adversely affect the affordable housing goals of the Agency. Section 11. DEFAULTS. 11.1 Events of Default. The occurrence of any of the following is a default and shall constitute a material breach of this Agency Regulatory Agreement and, if not corrected, cured or remedied in the time period set forth in Section 11.2, shall constitute an"Event of Default" hereunder: 31 07-29-09 Meta Housing-DDA (1) an uncured breach or default by the Developer under the 2009 DDA; (2) failure of the Developer or any person under its direction or control to comply with or perform when due any material term, obligation, covenant or condition contained in this Agency Regulatory Agreement; (3) any warranty, representation or statement made or furnished to the Agency by the Developer under this Agency Regulatory Agreement or the 2009 DDA is false or misleading in any material respect either now or at the time made or furnished; (4) the dissolution or termination of the existence of the Developer as an ongoing business, insolvency, appoint of a receiver for any part of the property of the Developer, any assignment for the benefit of creditors, any type of creditor workout or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Developer. 11.2 Notice of Default. The Agency shall give written notice of default to the Developer in accordance with Section 17, stating that such notice is a"Notice of Default", specifying the default complained of by the Agency and requiring the default to be remedied within thirty (30) days of the date of the Notice of Default. Except as required to protect against further material damage, the Agency may not institute legal proceedings against the Developer until thirty (30) days after giving notice. Failure or delay in giving notice shall not constitute a waiver of any default, nor shall it change the time of occurrence of the default. If the default specified in the Notice of Default is such that it is not reasonably capable of being cured within thirty (30) days, and if the Developer initiates corrective action within said thirty(30) day period and diligently works to effect a cure as soon as possible, then the Developer may have such additional time as authorized in writing by the Agency as reasonably necessary to complete the cure of the breach prior to exercise of any other remedy for the occurrence of an Event of Default. Such authorization for additional time to cure shall not be unreasonably withheld. If the Developer fails to take corrective action relating to a default within thirty(30) days following the date of notice (or to complete the cure within the additional as may be authorized by the Agency), an Event of Default shall be deemed to have occurred. 11.3 Inaction Not a Waiver of Default. Any failure or delays by the Agency in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by the Agency in asserting any of its rights and remedies shall not deprive the Agency of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 11.4 Remedies. Upon the occurrence of an Event of Default, the Agency shall, in addition to the remedial provisions of Section 6 as related to a Maintenance Deficiency at the Site, be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Developer to perform its obligations and covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Agency; or 32 07-29-09 Meta Housing-DDA (ii) by other action at law or inequity as necessary or convenient to enforce the obligations, covenants and agreements of the Developer to the Agency. 11.5 Rights and Remedies are Cumulative. The rights and remedies of the Agency as set forth in this Section 11 are cumulative and the exercise by the Agency of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the Developer. 11.6 Enforcement by Third Parties. Except for the City of San Bernardino, which shall have the power to enforce this Agency Regulatory Agreement as the successor of the Agency, and "residents" and "applicants", as each of these terms are defined in Health and Safety Code Section 33334.3(0(7), no third party shall have any right or power to enforce any provision of this Agency Regulatory Agreement on behalf of the Agency or to compel the Agency to enforce any provision of this Agency Regulatory Agreement against the Developer or the Project. Section 12. Governing Law. This Agency Regulatory Agreement shall be governed by the laws of the State of California. Section 13. Amendment. This Agency Regulatory Agreement may be amended after its recordation only by a written instrument executed by the Developer and by the Agency. Section 14. Attorney's Fees. In the event that a party brings an action to enforce any condition or covenant, representation or warranty in this Agency Regulatory Agreement or otherwise arising out of this Agency Regulatory Agreement, the prevailing party in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs of such suit. For the purposes of this Section 14,the words "reasonable attorneys' fees" in the case of the Agency, include the salaries, costs and overhead of the lawyers employed in the Office of the City Attorney of the City of San Bernardino who provide legal counsel to the Agency in such an action, as allocated on an hourly basis. Section 15. Severability. If any provision of this Agency Regulatory Agreement shall be declared invalid, inoperative or unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this Agency Regulatory Agreement which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or unenforceable. Section 16. Time is of the Essence. For each provision of this Agency Regulatory Agreement which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. 33 07-29-09 Meta Housing-DDA Section 17. Notice. Any notice required to be given under this Agency Regulatory Agreement shall be given by the Agency or by the Developer, as applicable, by personal delivery or by First Class United States mail at the addresses specified below or at such other address as may be specified in writing by the parties hereto: If to the Agency: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino, California 92401 Attn: Executive Director Phone: (909) 664-1044 If to the Developer: Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if personally delivered, when received by the Executive Director of the Agency or the Developer, as applicable. Section 18. Priority of State TCAC Regulatory Agreement and Construction Loan Documents/Permanent Loan Documents. - (a) During the period of time when the State TCAC Regulatory Agreement, and initially the Construction Loan Documents and then the State TCAC Regulatory Agreement and the Permanent Loan Documents are in effect with respect to the Project as evidenced by the recorded "Agency Subordination Agreement for Project Financing", as this term is defined in the 2009 DDA, compliance by the Developer with the requirements of the State TCAC and Construction Loan Documents and/or the State TCAC Regulatory Agreement and Permanent Loan Documents, as applicable, with respect to Affordable Rents, shall be deemed compliance by the Developer with the Affordable Rent requirements of this Agency Regulatory Agreement. (b) Compliance by the Developer with the State TCAC Regulatory Agreement by and between the Developer and State TCAC which may hereafter affect the Project shall be deemed to be in compliance by the Developer with Affordable Rent provisions of this Agency Regulatory Agreement during the time when such State TCAC Regulatory Agreement is in effect with respect to the Site and the Project. 34 07-29-09 Meta Housing-DDA (c) This Agency Regulatory Agreement may be amended as set forth in the 2009 DDA to accommodate the affordable senior citizen housing development loan and/or grant financing underwriting requirements of State TCAC and/or the Construction Lender and/or the Permanent Lender, or another instrumentality of the State of California, as applicable. Such amendment shall be initiated upon the written request of the Developer and such lender and shall be executed by the parties hereto. Any such amendment or modification shall be valid, binding and legally enforceable only if in written form and executed by the parties hereto and only after the approval thereof by official action of the Agency,the Developer and such lender. [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 ACQUISTION, DISPOSITION AND DEVELOPMENT AGREEMENT. THE FINAL FORM OF THIS REGULATORY AGREEMENT SHALL BE SUBJECT TO THE JOINT REVIEW AND APPROVAL BY THE PARTIES OF THE SPECIFIC TERMS ON WHICH THE AFFORDABLE RENTAL HOUSING DEVELOPMENT PROJECT RESERVED FOR OCCUPANCY BY SENIOR CITIZEN HOUSEHOLDS, MAY BE UNDERTAKEN BY (MAGNOLIA HIGHLAND, L.P.) THE DEVELOPER,AS PART OF THE PROJECT. THE FINAL TEXT OF THE REGULATORY AGREEMENT IS ALSO SUBJECT TO THE APPROVAL BY THE PARTIES OF THE CONDITIONS OF THE STATE TCAC REGULATORY AGREEMENT FOR THE PROJECT.] 35 07-29-09 Meta Housing-DDA IN WITNESS WHEREOF,the Developer and the Agency have caused this Agency Regulatory Agreement to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. AGENCY Redevelopment Agency of the City of San Bernardino Date: By: Chair Date: By: Executive Director Approved As To Form: Agency Counsel DEVELOPER Executed this day of , 200_ Magnolia Highland, L.P., a California limited partnership By: Magnolia Highland, LLC, a California limited liability company Its: Administrative General Partner By: John M. Huskey Manager 36 07-29-09 Meta Housing-DDA By: Western Community Housing, Inc., a California non-profit public benefit Corporation Its: Managing General Partner By: Graham Espley-Jones President By: Leanne Truofreh Secretary Approved As To Form: Legal Counsel for Developer 37 07-29-09 Meta Housing-DDA EXHIBIT "A" Legal Description of the Site 38 07-29-09 Meta Housing-DDA EXHIBIT "B" Scope of Development and Site Improvement Plan 39 07-29-09 Meta Housing-DDA EXHIBIT "C" Schedule of Performance (During Construction of the Project) 40 07-29-09 Meta Housing-DDA Attachment No. 10 AGENCY LOAN NOTE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (Magnolia Highland, L.P.) Borrower: Lender: Magnolia Highland, L.P. Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, California 92401 Principal Amount: Date of Promissory Note: $4,000,000 , 2009 (To Be Inserted By Escrow Agent) Rate of Interest Maturity Date of Promissory Note: 3% (See: Section 2.8(b) of 2009 DDA) PROMISE TO PAY. Magnolia Highland, L.P., a California limited partnership (the "Borrower") promises to pay to the Redevelopment Agency of the City of San Bernardino(the"Agency"or"Holder"), or order, in lawful money of the United States of America, the principal sum of Four Million Dollars ($4,000,000)as disbursed to the Borrower under the terms of the"Agency Loan",as this term is defined in . that certain 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Magnolia Highland, L.P.), dated as of June 1, 2009, by and between the Borrower and the Agency (the "2009 DDA"), together with interest on the unpaid outstanding principal balance of this Promissory Note. INDEBTEDNESS. This Promissory Note evidences the indebtedness of the Borrower to the Agency under the terms and conditions of the Agency Loan as provided for in the 2009 DDA. This Promissory Note is referred to in the 2009 DDA as the "Agency Loan Note". The Maturity Date of this Promissory Note is the fifty-fifth(55th)anniversary following its date,as set forth above. A copy of the 2009 DDA is on file with the Agency Secretary as a public record of the Agency. PAYMENT. Borrower will pay this Promissory Note prior to its maturity date,as provided in Section 2.8 of the 2009 DDA on or before the fifth (5th) anniversary following its date in the event that the "Site Transfer Escrow"as this term is defined in the 2009 DDA,may fail to close for any reason,and following the close of the Site Transfer Escrow,in annual installment amounts from"Residual Rental Receipts of the Project", as the term is defined below with the first such installment due on the last business day of the "Project Operating Year,"as defined in the 2009 DDA, (each such date referred to as a"scheduled debt service payment")until the Maturity Date or repayment in full of all outstanding principal and accrued and 41 07-29-09 Meta Housing-DDA unpaid interest under the Agency Loan. Each such annual installment shall be an amount of principal and interest based upon the amount of Residual Rental Receipts of the Project available to the Borrower as of each scheduled debt service payment date as set forth below and continuing through the Maturity Date. If on any scheduled debt service payment date Residual Rental Receipts of the Project in an amount sufficient to make a scheduled debt service payment in full is not available on such a date,the portion of such scheduled debt service payment not then paid(the"deficiency debt service amount")shall be carried forward to the next following scheduled debt service payment date,and then on such following scheduled debt service payment date,the balance of the deficiency debt service amount carried forward shall be paid first and the scheduled debt service payment shall be paid second. On the Maturity Date, a balloon payment of the remaining principal balance and accrued and unpaid interest shall be due and payable, if such amount has not been paid in full prior to the Maturity Date. Borrower will make all payments of interest and principal to the Agency at the address of the Agency: 201 North"E" Street, Suite 301, San Bernardino, California,or at such other place as the Agency may designate in writing. Unless otherwise agreed to by the Agency in writing or required by applicable law, payments will be applied first to any unpaid collection costs,then to any late charges,then to any unpaid interest, and any remaining amount will be applied to principal. The words"Residual Rental Receipts of the Project"mean and refer to fifty percent(50%)of"Revenues" of the Borrower remaining on any scheduled debt service date or other payment date under this Promissory Note reduced in the following order: (1) Operating Expenses calculated on a cash basis; (2) debt service on Senior Debt secured by the Senior Lender Documents; (3) cash payments to the Operating Reserve Fund; (4) cash payments to the Replacement Reserve Fund; (5) repayment of general partner loans as provided in Section 2.21 of the 2009 DDA; (6) cash payments of deferred Borrower fees, as provided in Section 2.21 of the 2009 DDA; and (7) partnership management fees and asset management fees each Project Operating Years up to Fifteen Thousand Dollars ($15,000) in the aggregate, increasing by 3% annually following the completion date of the Project as provided in Section 3.11 of the 2009 DDA [Final Text of Residual Rental Receipts Subject to the Provisions of Section 2.21 of the 2009 DDAJ INTEREST RATE. Interest shall accrue on the outstanding principal balance of this Promissory Note at a fixed rate of interest. The rate of interest which shall accrue on the unpaid principal balance of this Promissory Note from its date through the Maturity Date shall be three percent(3%)per annum until paid in full.Interest on this Promissory Note is computed on a 365/360 simple interest basis;that is,by applying the ratio of the annual interest rate over a year of 360 days,multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Interest which may accrue 42 07-29-09 Meta Housing-DDA prior to the first scheduled debt service payment under this Promissory Note shall be capitalized as of the day immediately preceding the due date of such first scheduled debt service payment. PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed under this Promissory Note earlier than it is due. LATE CHARGE. If a payment is ten(10) calendar days or more late, Borrower will also be charged (in addition to the annual installment amount past due) five percent(5%)of the annual payment amount as a late charge. DEFAULT. Borrower will be in default if any of the following happens: (a) Borrower fails to make any payment when due under this Promissory Note. (b) Borrower fails to make any other payment when due under the 2009 DDA. (c) Borrower breaks any promise Borrower made to the Agency in the 2009 DDA, or Borrower fails to comply with or to perform when due any other term, obligation, covenant,or condition contained in this Promissory Note or any agreement related to this Promissory Note. (d) Borrower defaults under any loan,extension of credit,security agreement,purchase or sales agreement,or any other agreement,in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Promissory Note or the ability of Borrower to perform its other obligations under this Promissory Note or the Agency Deed of Trust and the Collateral Assignment of Leases and Rents. (e) Any representation or statement made or furnished to the Agency by Borrower or on Borrower's behalf under the 2009 DDA is false or misleading in any material respect either now or at the time made or furnished. (f) Any creditor tries to take any of Borrower's property on or in which the Agency has a lien or security interest. (g) A material adverse change occurs in Borrower's financial condition,or the Agency believes the prospect of payment or performance of the indebtedness evidenced by this Promissory Note is materially impaired. If any default (other than a default described in (a), (b) or (e), above) is curable, such a default may be cured(and in such event no default will be deemed to have occurred) if Borrower, after receiving written notice from the Agency demanding cure of such default: (i) cures the default within ten (10) calendar days; or 43 07-29-09 Meta Housing-DDA (ii) if the cure requires more than ten (10) calendar days, immediately initiates steps which the Agency deems in its sole discretion to be sufficient to cure the default, and thereafter Borrower continues and RIGHTS OF THE HOLDER.Upon default by the Borrower, the Agency may exercise any of its rights provided under the 2009 DDA and the"Agency Loan", as this term is defined in the 2009 DDA,including, without limitation,the declaration by the Agency or the holder in due course of this Promissory Note(the "Holder")that the entire unpaid principal balance of this Promissory Note and all accrued unpaid interest is immediately due and payable, without notice. Upon the failure of the Borrower to pay all amounts declared due pursuant to this paragraph entitled"RIGHTS OF THE HOLDER,"including failure to pay at the Maturity Date, the Holder, at its option, may also, if permitted under applicable law, increase the interest rate on this Promissory Note for interest which accrues after the date such amount is declared due, to the rate of eight percent(8%)per annum. The Holder may hire or pay someone else to help collect this Promissory Note,if the Borrower does not pay. The Borrower will pay the Holder the amount of any and all such collection related expenses, including without limitation, subject to any limits under applicable law, the Holder's reasonable attorneys' fees, whether or not there is a lawsuit, including, without limitation,reasonable attorneys' fees and legal expenses for bankruptcy proceedings(including efforts to modify or vacate any automatic stay or injunction), appeals, and any post judge lent collection services. The Borrower also will pay any court costs, in addition to all other sums provided by law. This Promissory Note has been delivered to the Holder and accepted by the Holder in the State of California. If there is a lawsuit arising under this Promissory Note, the Superior Court of the State of California in San Bernardino County shall have jurisdiction of such lawsuit. This Promissory Note shall be governed by and construed in accordance with the laws of the State of California. COLLATERAL. The Borrower acknowledges that the Initial Advance this Promissory Note is secured by the Meta Housing Corporation Guaranty, as this term is defined in the 2009 DDA, and that concurrently upon the"Close of the Site Transfer Escrow",as defined in the 2009 DDA,the Meta Housing Corporation Guaranty shall be released and this Promissory Note shall be secured by the Agency Loan Deed of Trust that shall be recorded by the Agency concurrent with the Close of the Site Transfer Escrow. The Agency Loan Deed of Trust is subordinate to the security interest of the Construction Lender and the Permanent Lender. The obligation of the Borrower to timely pay the Agency the amounts due under this Promissory Note is assignable by the Borrower to its transferee in the Property upon thirty(30)days prior written notice to the Agency in which the Borrower and the assignee each certify to the Agency that as part of such sale, lease, or transfer of the Property, the assignee of the Borrower shall also assume the obligations of the Borrower under the note held by the Construction Lender or the Permanent Lender, as then applicable. The Agency Loan Deed of Trust affects certain real property described in the 2009 DDA as the "Property" and/or the "Project". The Agency Loan Deed of Trust contains the following provisions: "THE LENDER MAY, AT ITS OPTION, DECLARE IMMEDIATELY DUE AND PAYABLE ALL SUMS SECURED BY THIS DEED OF TRUST UPON THE OCCURRENCE OF A SPECIAL EVENT OF ACCELERATION, AS THIS TERM IS DEFINED BELOW: During the period of time when the security interests of the Senior Lender encumbers the Property under the Senior Lender Documents,a"special event of acceleration"shall occur when there is a conveyance of the Property without the consent in writing of the Lender,of 44 07-29-09 Meta Housing-DDA any right,title or interest in the Property to any person, whether such sale,refinancing or transfer is legal,beneficial,or equitable,whether voluntary or involuntary,whether by sale, deed or installment sale contract, land contract, lease option contract, or by sale, assignment or transfer of any beneficial interest of the Trustor in the Property to any land trust,and when as part of such conveyance,the security interest of the Senior Lender or its assignee in the Property is released and reconveyed to the Trustor by the Senior Lender,or its assignee. Any such conveyance which is permitted under the Senior Lender Documents shall not be deemed to be a special event of acceleration. Initials of Trustor" GENERAL PROVISIONS. Except as set forth in the next sentence of this paragraph,following the date on which the Site Transfer Escrow is closed under the 2009 DDA, upon the failure to pay any sum provided for in this Promissory Note when due,or a material breach of the 2009 DDA or the Agency Loan Deed of Trust by the Borrower,no partner of the Borrower(or in the case of an assignee of the Borrower— no affiliate,member,partner,shareholder or subsidiary of such assignee)shall have personal liability for payment of the principal or interest then due under this Promissory Note. The sole recourse of the Holder to recover any sum under this Promissory Note shall be to the Property subject to the Agency Loan Deed of Trust, except in the event of: (A) fraud by the Borrower (or its assignee), (B) any material misrepresentation made by the Borrower to the Agency under the 2009 DDA,(C)misappropriation by the Borrower (or its assignee) of any rents, security deposits, tax collection amounts, security deposits, or insurance or condemnation awards,(D)commission of bad faith waste by the Borrower(or its assignee)or (E)the presence of"Hazardous Substances"on the Property, as this term is defined in the Agency Loan Deed of Trust. The Holder may delay or forego enforcing any of its rights or remedies under this Promissory Note without losing them. Borrower and any other person who signs, guarantees or endorses this Promissory Note, to . the extent allowed by law, each waive any applicable statute of limitations, presentment, demand for payment, protest and notice of dishonor. Upon any change in the terms of this Promissory Note, and unless otherwise expressly stated in writing, no party who signs this Promissory Note, shall be released from liability. All such parties agree that the Holder may renew or extend(repeatedly and for any length of time)this Promissory Note,or release any party,or collateral; or impair, fail to realize upon or perfect the Holder's security interest in the collateral;and take any other action deemed necessary by the Holder in its sole discretion without the consent of or notice to anyone. All such parties also agree that the Holder may modify this Promissory Note and/or the Loan Agreement without the consent of or notice to anyone other than the party with whom the modification is made. All defined words,terms or phrases indicated by initial capital letters used in this Promissory Note and not specifically defined in this Promissory Note shall have the meanings ascribed to them in the 2009 DDA. PRIOR TO SIGNING THIS PROMISSORY NOTE,BORROWER HAS READ AND UNDERSTANDS ALL OF ITS PROVISIONS. BORROWER AGREES TO THE TERMS OF THIS PROMISSORY NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF. 45 07-29-09 Meta Housing-DDA BORROWER Magnolia Highland, L.P. a California limited partnership By: Magnolia Highland, LLC, a California limited liability company Its: Administrative General Partner By: John M. Huskey Manager By: Western Community Housing, Inc. a California non-profit public benefit Corporation Its: Managing General Partner By: Graham Espley-Jones President By: Leanne Truofreh Secretary 46 07-29-09 Meta Housing-DDA Attachment No. 11 Agency Loan Deed of Trust RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North"E" Street Suite 301 San Bernardino, California 92401 SUBORDINATE DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT (Agency Loan Deed of Trust) THIS SUBORDINATE DEED OF TRUST,ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT ("Deed of Trust") is made as of , by Magnolia Highland, L.P., a California limited partnership (hereinafter referred to as "Trustor"), whose address is , to Title Insurance Company (hereinafter referred to as "Trustee"), whose address is ,for the benefit of the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic, its successors and assigns (herein called "Beneficiary"), whose address is 201 North "E" Street, Suite 301, San Bernardino, California 92401. , is a limited partner of the Trustor(the"Investor Limited Partner") pursuant to that certain Limited Partnership Agreement dated - (the "Partnership Agreement"). WITNES SETH That Trustor, for valuable consideration, grants,bargains,sells, conveys and warrants to Trustee,in trust with power of sale,that property in the City of San Bernardino,County of San Bernardino, State of California,more particularly described in Exhibit"A"attached hereto and made a part hereof(the "Land"),together with the following described estate,property and rights of Trustor in the Land and/or in any improvements now or hereafter constructed thereon(herein severally and collectively referred to as the "Property") as security for the performance of each covenant and agreement of Trustor contained herein and in all other instruments executed in connection herewith, and for the payment of all sums of money secured hereby. A. All the fee and leasehold estates and rights of Trustor now held and hereafter acquired in and to the Property and in and to land lying in streets and roads adjoining the Property,and all access rights and easements appertaining thereto; and 47 07-29-09 Meta Housing-DDA B. All buildings, structures,improvements,furnishings,fixtures and equipment,real, personal and mixed, now or hereafter attached to, or used or adapted for use in the operation of the Property and any and all replacements and additions thereto, including without limitation, all heating apparatus and equipment whatsoever,all boilers,engines,motors,dynamos,generating equipment,pumps, piping and plumbing fixtures,cooling,ventilating,sprinkling,fire-extinguishing apparatus,gas and electric fixtures, elevators, escalators,partitions, and shrubbery and plants; and including also all interest of any • owner of the Property in any of such items hereafter at any time acquired under conditional sales contract, chattel mortgage or other title-retaining or security instrument, all of which property mentioned in this paragraph shall be deemed part of the realty and not severable wholly or in part without material injury to the freehold; and C. All and singular the lands,tenements,privileges,water, water rights,water stock, mineral,oil and gas rights,hereditaments and appurtenances thereto belonging or in anywise appertaining, and the reversion and reversions,remainder and remainders,rents,royalties,issues and profits thereof,and all the estate,rights,title,claim,interest and demand whatsoever of the Trustor either in law or equity,of, in and to the Property, whether now held or hereafter acquired; D. All of the right,title and interest of Trustor now or hereafter existing in and to the following now or hereafter located in,upon,within or about or used in connection with the construction, use,operation or occupancy of the Property and/or the improvements thereon and any business or activity conducted thereon or therein,together with all accessories,additions,accessions,renewals,replacements and substitutions thereto or therefor and the proceeds and products thereof: (i) all materials, supplies, furniture,furnishings,appliances,office supplies,equipment,construction materials,vehicles,machinery, computer hardware and software,maintenance equipment,window washing equipment,repair equipment and other equipment and tools, telephone and other communications equipment; (ii) all books, ledgers, records, accounting records, files, tax records and returns, policy manuals, papers, correspondence, and electronically recorded data; (iii) all "General Intangibles" (as such term is defined in the California Uniform Commercial Code), instruments, money, "Accounts," (as such term is defined in the California Uniform Commercial Code), accounts receivable, notes, certificates of deposit, chattel paper, letters of credit,choses in action,good will,rights to payment of money,rents,rental fees,equipment fees and other amounts payable by persons who utilize the Property or any of the improvements or paid by persons in order to obtain the right to use the Property and any of the improvements, whether or not so used; trademarks, service marks, trade dress, tradenames, licenses, sales contracts, deposits, plans and specifications,drawings,working drawings, studies,maps, surveys; soils,environmental,engineering or other reports, architectural and engineering contracts, construction contracts, construction management contracts, surety bonds, feasibility and market studies, management and operating agreements, service agreements and contracts, landscape maintenance agreements, security service and other services agreements and vendors agreements; (iv) all compensation, awards and other payments or relief(and claims therefor)made for a taking by eminent domain,or by any event in lieu thereof(including,without limitation,property and rights and interests in property received in lieu of any such taking), of all or any part of the Property(including without limitation, awards for severance damages),together with interest thereon, and any and all proceeds (or claims for proceeds) of casualty, liability or other insurance pertaining to the Property, together with interest thereon; (v) any and all claims or demands against any person with respect to damage or diminution in value to the Property or damage or diminution in value to any business or other activity conducted on the Property; (vi) any and all security deposits, deposits of security or advance payments made to others with respect to: (1) insurance policies relating to the 48 07-29-09 Meta Housing-DDA Property; (2)taxes or assessments of any kind or nature affecting the Property;(3)utility services for the Property and/or the improvements;(4)maintenance,repair or similar services for the Property or any other services or goods to be used in any business or other activity conducted on the Property; (vii)any and all authorizations,consents,licenses,permits and approvals of and from all persons required from time to time in connection with the construction,use,occupancy or operation of the Property,the improvements,or any business or activity conducted thereon or therein or in connection with the operation, occupancy or use thereof, (viii) all warranties, guaranties, utility or street improvement bonds, utility contracts, telephone exchange numbers,yellow page or other directory advertising and the like;(ix)all goods,contract rights, and inventory;(x)all leases and use agreements of machinery,equipment and other personal property;(xi) all insurance policies covering all or any portion of the Property; (xii) all reserves (including those provided for in Section 17 hereof) and funds held in escrow by Beneficiary or other person for Beneficiary's benefit and any funds deposited with Beneficiary, all accounts into which such funds are deposited and all accounts,contract rights and general intangibles or other rights relating thereto;(xiii)all names by which the Property is now or hereafter known; (xiv) all interests in the security deposits of tenants;(xv)all management agreements,blueprints,plans,maps,documents,books and records relating to the Property; (xvi)the proceeds from sale, assignment, conveyance or transfer of all or, any portion of the Property or any interest therein, or from the sale of any goods, inventory or services from, upon or within the Property and/or the improvements (but nothing contained herein shall be deemed a consent by Beneficiary to such sale,assignment,conveyance or transfer,except as expressly provided in this Deed of Trust); (xvii) any property described in paragraph B, above,which are not fixtures under California law; (xviii) all other property (other than fixtures) of any kind or character as defined in or subject to the provisions of the California Uniform Commercial Code, Secured Transactions,as amended and;(xix)all proceeds of the conversions, voluntarily or involuntarily, of any of the foregoing into cash or liquidated claims. TO HAVE AND TO HOLD the Property, together with all and singular the lands, tenements, privileges, water, water rights, water stock, mineral, oil and gas rights, hereditaments and appurtenances thereto belonging or in any wise appertaining,and the reversion and reversions,remainder and remainders, rents, royalties, issues and profits thereof, and all of the estate, right, title, claims and demands whatsoever of the Trustor,either in law or in equity,of,in and to the Property,forever as security for the faithful performance of the Note(as defined below)secured hereby and as security for the faithful performance of each and all of the covenants,agreements,terms and conditions of this Deed of Trust,and in all other instruments executed in connection herewith, SUBJECT,HOWEVER,to the right,power and authority given to and conferred upon Beneficiary to collect and apply such rents,issues and profits. This Deed of Trust also constitutes a security agreement in all of the property above described or referenced in which such interest may be created under the California Uniform Commercial Code and for such purposes Trustor hereby grants to Beneficiary a security interest therein. 1. Note Secured. This Deed of Trust is made for the purpose of securing the performance of each covenant, agreement and obligation of Trustor herein and of each covenant, agreement and obligation of Trustor described as the Agency Loan in that certain 2009 Affordable Senior Citizen Rental Housing Acquisition,Disposition and Development Grant Agreement(Magnolia Highland, L.P.), dated as of June 1, 2009, by and between the Trustor and the Beneficiary (the "2009 DDA") as evidenced by the Agency Loan Note (the "Note") and all interest thereon and other amounts evidenced thereby;all future advances made to Trustor by Beneficiary,its successors and assigns,under the Note or pursuant to the terms of this Deed of Trust or the 2009 DDA;the obligations evidenced by all renewals, 49 07-29-09 Meta Housing-DDA extensions, modifications, substitutions and conditions of the Note; and any and all other obligations of Trustor to Beneficiary,its successors and assigns,now existing and hereafter arising and which are at any time specifically declared by Beneficiary in writing to be secured by this Deed of Trust or which specifically indicate in the instruments which evidence the same that they are intended to be so secured. Unless otherwise indicated in this Deed of Trust,the meaning of defined terms and phrases as denoted by an initial capitalized letter in a word or phrase, shall be the same as set forth in the 2009 DDA. 2. Trustor's Covenant of Payment. Trustor shall perform all of its obligations under the Note, the 2009 DDA and under this Deed of Trust when due, without excuse or delay of any kind whatsoever, except as expressly provided herein or therein, and Trustor shall pay the Note, and all other debts and monies secured by this Deed of Trust when due, without set off or deduction of any kind. 3. Trustor's Warranties of Title. Trustor warrants to Beneficiary that it is the sole holder of fee simple absolute title to all of the Property and that except as set forth in this Deed of Trust, the Note and the 2009 DDA relative to the Senior Lender Documents said title is marketable and free from any lien or encumbrance, unless approved in writing by Beneficiary, and the liens imposed by law for nondelinquent real property taxes and assessments. Trustor further covenants and agrees as follows: that except as required under the 2009 DDA and/or the Senior Lender Documents, Trustor will keep the Property free from all liens of any kind,including,without limitation,statutory and governmental;that no lien superior or junior to this Deed of Trust will be created or suffered to be created by Trustor during the life of this Deed of Trust without Beneficiary's prior written consent;that Trustor has good right to make this Deed of Trust and the person or persons executing this Deed of Trust on behalf of Trustor has or have the authority to do so; and that Trustor will forever warrant and defend Beneficiary's interest in the Property against every person, whomsoever, claiming any right or interest in the Property or any part thereof. 4. Trustor's Right to Contest Statutory Liens.As used herein the words"mechanic's lien"and"materialmen's lien"means and includes a stop notice as this term is defined in California Civil . Code Section 3179,et seq. The filing of a mechanic's or materialmen's lien against the Property or a stop notice against the Trustor or the Beneficiary and/or funds held by or owed to the Trustor for the improvement of the Property shall not constitute a default hereunder,if and so long as(a)no defaults exist under the Note,the 2009 DDA or this Deed of Trust; (b)within fifteen(15)days after filing of such lien, Trustor obtains and maintains in effect a bond issued by a California admitted surety acceptable to Beneficiary in an amount not less than the entire sum alleged to be owed to the lien claimant or such other amount as is required to obtain a court order to release said lien of record; (c) Trustor provides to Beneficiary and pays for an endorsement to Beneficiary's title insurance policy, in a form satisfactory to Beneficiary, which insures the priority of this Deed of Trust over the lien being contested; (d) Trustor immediately commences its contest of such lien and continuously pursues the same in good faith and with due diligence; (e) such bond or contest stays the foreclosure of the lien; and (f) Trustor pays in full any judgment rendered for the lien claimant within ten (10) days following entry of any such judgment. 5. Maintenance and Inspection of Improvements.Trustor shall maintain the buildings and other improvements now or hereafter located on the Property in a first class condition and state of repair, reasonable wear and tear excepted. Trustor shall not commit or suffer any waste; shall promptly comply with all requirements of federal, state and municipal authorities and all other laws, ordinances, 50 07-29-09 Meta Housing-DDA regulations,covenants,conditions and restrictions respecting the Property or the use thereof,and shall pay all fees or charges of any kind in connection therewith. 6. Construction and Repairs. Trustor shall complete or restore promptly and in a good and workmanlike manner any building or improvement that may be constructed,damaged or destroyed on the Property, and pay when due all costs incurred therefor. 7. Alterations.No building or other improvement on the Property shall be structurally altered, removed or demolished without the Beneficiary's prior written consent, nor shall any fixture or chattel covered by this Deed of Trust and adapted to the proper use and enjoyment of the Property be removed at any time without Beneficiary's prior written consent,unless actually replaced by an article of equal suitability and value,owned by the Trustor,free and clear of any lien or security interest,except such as may be approved in writing by the Beneficiary. 8. Compliance With Laws.Trustor shall comply with all statutes,laws,ordinances and regulations which now or hereafter pertain to the construction,repair,condition,use and occupancy of the Property, including, without limitation, all environmental, subdivision, zoning, building code, fire, occupational, health, safety, occupancy and other similar or dissimilar statutes, and shall not permit any tenant or other occupant to violate the same. If any statute or order of any court of competent jurisdiction requires any correction,alteration or retrofitting of any improvements on or related to the Property,Trustor shall promptly undertake the required repairs and restoration and complete the same with due diligence at its sole cost and expense. 9. Environmental Covenants. Representations. Warranties and Indemnity. (a) Trustor will not use any Hazardous Materials (as defined herein below) in the construction of any improvements on or about the Property. (b) Trustor shall,at its sole expense,comply and cause each tenant leasing space within the Property to comply with all applicable laws, regulations, codes and ordinances relating to any Hazardous Materials or to any Environmental Activities (as defined herein below), including, without limitation, obtaining, filing, serving or posting all applicable notices, permits, licenses and similar authorizations.Trustor shall establish and maintain a management and operating policy for the Property to assure and monitor continued compliance by Trustor and each tenant leasing space in the Property with all such laws, regulations, codes and ordinances. (c) Trustor agrees to submit from time to time, if requested by Beneficiary, a report, satisfactory to Beneficiary,certifying that the Property is not now being used nor has it ever been used for any Environmental Activities. Beneficiary reserves the right, in its reasonable discretion, to retain, at Trustor's expense,an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Property for Hazardous Materials. Trustor hereby grants to Beneficiary, its agents, employees, consultants and contractors the right to enter upon the Property to perform such tests as are reasonably necessary to conduct such a review and/or investigation. (d) Upon the discovery by Trustor of any event or situation which would render any of the representations or warranties contained in subparagraph 9(g)hereof inaccurate in any respect,if made 51 07-29-09 Meta Housing-DDA at the time of such discovery,Trustor shall promptly notify Beneficiary of such event or situation and, within thirty(30)days after such discovery,submit to Beneficiary a preliminary written environmental plan setting forth a general description of such event or situation and the action that Trustor proposes to take with respect thereto. Within sixty (60) days after such discovery, Trustor shall submit to Beneficiary a final written environmental report, setting forth a detailed description of such event or situation and the action that Trustor proposes to take with respect thereto,including,without limitation, any proposed corrective work,the estimated cost and time of completion,the name of the contractor and a copy of the construction contract, if any, and such additional data, instruments, documents, agreements or other materials or information as Beneficiary may reasonably request.The plan shall be subject to Beneficiary's written approval,which approval may be granted or withheld in Beneficiary's sole but reasonable discretion.Beneficiary shall notify Trustor in writing of its approval or disapproval of the final plan within fifteen(15)days after receipt thereof by Beneficiary.If Beneficiary disapproves the plan, Beneficiary's notice to Trustor of such disapproval shall include a brief explanation of the reasons therefor. Trustor shall submit to Beneficiary a revised final written environmental plan that remedies the defects identified by Beneficiary as reasons for Beneficiary's disapproval of the previous plan. If Trustor fails to submit a revised plan to Beneficiary within said thirty (30) day period, or if such revised plan is submitted to Beneficiary and Beneficiary disapproves said plan, such failure or disapproval shall,at Beneficiary's option and upon notice to Trustor,constitute an"Event of Default" hereunder. If Beneficiary does not notify Trustor of its approval or disapproval of the final plan or any revisions thereof within the fifteen (15) day period described above, Trustor shall provide written notice to Beneficiary of Beneficiary's failure to respond, at which time Beneficiary shall have an additional forty-five(45)days after receipt of such notice from Trustor to notify Trustor of its approval or disapproval of the final plan within said additional forty-five(45)day period.If Beneficiary fails to notify Trustor of its disapproval or approval of said plan within said forty-five(45)day period the plan shall be deemed approved. Once any such plan is approved in writing or deemed approved by Beneficiary, Trustor shall promptly commence all action necessary to implement such plan and to comply with any requirements or conditions imposed by Beneficiary, and shall diligently and continuously pursue such action to completion in strict accordance with the terms of said plan. The rights of Beneficiary with respect to the approval or disapproval of the environmental plan set forth herein and the actions of Beneficiary pursuant to such rights are not intended to,and shall not,in and of themselves,confer on Beneficiary a right to manage,operate or control the Property on a continuing basis following the discovery of the event(s) or occurrence(s) described in this subparagraph 9(d). (e) Trustor agrees to submit from time to time, if requested by Beneficiary, a report, satisfactory to Beneficiary, specifying any activities involving,directly or indirectly,the use, generation, treatment,storage or disposal of any Hazardous Materials on the Property. Beneficiary reserves the right, in its sole and reasonable discretion,to retain,at Trustor's expense,an independent professional consultant to review any report prepared by Trustor and/or to conduct its own investigation of the Property. Trustor hereby grants to Beneficiary, its agent,employees, consultants and contractors the right to enter upon the Property and to perform such tests as Beneficiary deems are necessary to conduct such a review and/or investigation.Beneficiary shall hold in confidence any report delivered by Trustor to Beneficiary pursuant to this Section 9,except for disclosure to(a)any consultant(s)hired by Beneficiary to review said report, (b)legal counsel,accountants and other professional advisors to Beneficiary,(c)regulatory officials having jurisdiction over Beneficiary who may request said report, (d) as required by any federal, state, county, regional or local authority or law,rule,regulation or ordinance,(e)as required in connection with any legal 52 07-29-09 Meta Housing-DDA proceeding,and(f)any financial institution in connection with a disposition or proposed disposition of all or part of Beneficiary's or any participant's interests hereunder. "Hazardous Materials" as used in this Deed of Trust shall mean any hazardous or toxic materials, pollutants, effluents, contaminants, radioactive materials, flammable explosives, chemicals known to cause cancer or reproductive toxicity, emissions or wastes and any other chemical, material or substance, the handling, storage, release, transportation, or disposal of which is or becomes prohibited, limited or regulated by any federal, state, county, regional or local authority or which, even if not so regulated,is or becomes known to pose a hazard to the health and safety of the occupants of the Property including, without limitation, (i) asbestos, (ii) petroleum and petroleum by-products, (iii) urea formaldehyde foam insulation, (iv) polychlorinated biphenyls, (v) all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601 et seq.,as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),the Federal Water Pollution Control Act,33 U.S.C. Section 1251 et seq.the Clean Air Act,42 U.S.C. Section 7401 et seq.,the Hazardous Materials Transportation Act,49 U.S.C. Section 1801 et seq., or the Resource, Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; (vi)all substances now or hereafter designated as"hazardous wastes"in Section 25117 of the California Health&Safety Code or as"hazardous substances"in Section 253 16 of the California Health& Safety Code; (vii)all substances now or hereafter designated by the Governor of the State of California pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986 as being known to cause cancer or reproductive toxicity,or(viii)all substances now or hereafter designated as "hazardous substances," "hazardous materials" or "toxic substances" under any other federal, state or local laws or in any regulations adopted and publications promulgated pursuant to said laws. "Environmental Laws"as used herein shall mean all laws,rules,regulations and ordinances relating to Hazardous Materials, including, but not limited to, those relating to soil and groundwater conditions and those statutes referred to in the definition of Hazardous Materials set forth hereinabove. "Environmental Activities" as used herein shall mean the use, generation,transportation, treatment, storage or disposal of any Hazardous Materials at any time located on or present on, under or about the Property. (f) Trustor hereby agrees, at its sole cost and expense, to indemnify, protect, hold harmless and defend(with counsel of Beneficiary's choice),Beneficiary,its successors and assignees,and the officials, officers, agents, attorneys and employees of each of them (individually, each an "Indemnitee", and collectively, the "Indemnitees") from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses (including, without limitation, attorneys' and experts' reasonable fees,disbursements and costs)of any kind or of any nature whatsoever(collectively,"Claims") which may at any time be imposed upon, incurred or suffered by, or asserted or awarded against, any Indemnitee directly or indirectly relating to or arising from any of the following"Environmental Matters," but excluding any Claims arising solely from the gross negligence or willful misconduct of Beneficiary: (i) Any past, present or future presence of any Hazardous Materials on, in, under or affecting all or any portion of the Property or on,in,under or affecting all or any portion 53 07-29-09 Meta Housing-DDA of any property adjacent or proximate to the Property, if such Hazardous Materials originated or allegedly originated on or from the Property; (ii) Any past, present or future storage,holding,handling, release,threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under or from the Property or any portion thereof, (iii) The failure of Trustor to comply with any and all laws, rules, regulations, judgments,orders,permits, licenses,agreements,covenants,restrictions,requirements or the like now or hereafter relating to or governing in any way the environmental condition of the Property or the presence of Hazardous Materials on, in, under or affecting all or any portion of the Property including, without limitation, all Environmental Laws; (iv) The failure of Trustor to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants, and the like relative to any of the Environmental Matters described herein in connection with the Property or the ownership, use, operation or enjoyment thereof, (v) The extraction,removal,containment,transportation or disposal of any and all Hazardous Materials from any portion of the Property or any other property adjacent or proximate to the Property, if such Hazardous Materials originated or allegedly originated on or from the Property; (vi) Any past, present or future presence, permitting, operation, closure, abandonment or removal from the Property of any storage tank that at any time contains or contained any Hazardous Materials and is or was located on, in or under the Property or any portion thereof; (vii) The implementation and enforcement of any monitoring, notification or other precautionary measures that may at any time become necessary to protect against the release or discharge of Hazardous Materials on,in,under or affecting the Property or into the air,any body of water, any other public domain or any property adjacent or proximate to the Property; (viii) Any failure of any Hazardous Materials generated or moved from the Property to be removed, contained, transported or disposed of in compliance with all applicable Environmental Laws; or (ix) Any breach by Trustor of any of its covenants,representations or warranties regarding Environmental Matters contained in this Deed of Trust or any of the other Transaction Documents. The indemnity contained herein shall terminate and be of no further force and effect, if no Claim is pending,upon the repayment of the Long Term Project Loan in accordance with its terms. (g) Trustor hereby represents and warrants as follows: 54 07-29-09 Meta Housing-DDA (i) The Property is not and has not been a site for the use, generation, manufacture,storage,treatment,release,threatened release,discharge,disposal,or transportation of any Hazardous Materials; (ii) The Property is in compliance with all Environmental Laws; (iii) Trustor has not received any written notice of claims or actions (collectively,"Hazardous Materials Claims")pending or threatened against Trustor or any previous owner or user of the Property (and relating to Trustor's and/or such previous owner's or user's ownership of the Property),by any governmental entity or agency or any other person or entity and relating to Hazardous Materials or pursuant to Environmental Laws; and (iv) Trustor has not received any written notice (i) pursuant to which the Property has been designated as"border zone property"under the provisions of California Health and Safety Code Sections 25220 et seq.,or any regulation adopted in accordance therewith,(ii)of a hearing at which the Property will be considered for designation as"border zone property,"or(iii) of an 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 designated as "border zone property." The foregoing shall constitute environmental provisions for purposes of California Code of Civil Procedure Section 736. 10. Insurance 10.1. Casualty Insurance. Trustor shall at all times keep the Property insured for the benefit of Trustee and Beneficiary as follows: 10.1.1. Against damage or loss by fire and such other hazards (including lightning, windstorm, hail, explosion, riot, acts of striking employees, civil commotion, vandalism, malicious mischief,aircraft,vehicle,and smoke)as are covered by the broadest form of extended coverage endorsement available from time to time,in an amount not less than the full insurable value(as defined in section 10.9) of the Property, with a deductible amount not to exceed an amount satisfactory to Beneficiary; 10.1.2. Rent or business interruption or use and occupancy insurance on such basis and in such amounts and with such deductibles as are satisfactory to Beneficiary; 10.1.3. Against damage or loss by flood,if the Property is located in an area identified by the Secretary of Housing and urban Development or any successor or other appropriate authority(governmental or private)as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973,as amended, modified, supplemented, or replaced from time to time, on such basis and in such amounts as Beneficiary may require; 55 07-29-09 Meta Housing-DDA 10.1.4. Against damage or loss from (a) sprinkler system leakage and (b) boilers,boiler tanks,heating and air conditioning equipment,pressure vessels,auxiliary piping,and similar apparatus, on such basis and in such amounts as Beneficiary may require; 10.1.5. During any alteration,construction,or replacement of improvements on the Property,or any substantial portion thereof,a Builder's All Risk policy with extended coverage with course of construction and completed value endorsements,for an amount at least equal to the full insurable value of the improvements on the Property, and workers' compensation, in statutory amounts, with provision for replacement with the coverage described in this Section 10,without gaps or lapsed coverage, for any completed portion of improvements on the Property; and 10.1.6. If required by the Senior Lender, against damage or loss by earthquake,in an amount and with a deductible satisfactory to Beneficiary,if such insurance is required by Beneficiary in the exercise of its business judgment in light of the commercial real estate practices existing at the time the insurance is issued and in the County where the Property is located. 10.2. Liability Insurance. Trustor shall procure and maintain workers' compensation insurance for Trustor's employees and comprehensive general liability insurance covering Trustor,Trustee,and Beneficiary against claims for bodily injury or death or for damage occurring in,on, about,or resulting from the Property,or any street,drive, sidewalk, curb, or passageway adjacent to it,in standard form and with such insurance company or companies and in an amount of at least $3,000,000 combined single limit, or such greater amount as Beneficiary may require,which insurance shall include completed operations,product liability,and blanket contractual liability coverage that insures contractual liability under the indemnifications set forth in this Deed of Trust and the 2009 DDA(but such coverage or its amount shall in no way limit such indemnification). 10.3. Other Insurance. Trustor shall procure and maintain such other insurance or such additional amounts of insurance, covering Trustor and the Property, as (a) may be required by the . terms of any construction contract for any improvements on the Property or by any governmental authority,other than Beneficiary,(b)may be specified in the 2009 DDA,or(c)may be reasonably required by Beneficiary from time to time. 10.4. Form of Policies. All insurance required under this Section 10 shall be fully paid for and nonassessable. The policies shall contain such provisions,endorsements,and expiration dates as Beneficiary from time to time reasonably requests and shall be in such form and amounts,and be issued by such insurance companies doing business in the State of California, as Beneficiary shall approve in Beneficiary's sole and absolute discretion. Unless otherwise expressly approved in writing by Beneficiary, each insurer shall have a Best Rating of Class A, Category viii, or better. All policies shall (a) contain a waiver of subrogation endorsement;(b)provide that the policy will not lapse or be canceled,amended,or materially altered(including by reduction in the scope or limits of coverage)without at least 30 days'prior written notice to Beneficiary;(c)with the exception of the comprehensive general liability policy,contain a mortgagee's endorsement(438 BFU Endorsement or equivalent),and name Beneficiary and Trustee as insureds; and (d) include such deductibles as Beneficiary may approve. If a policy required under this paragraph contains a co-insurance or overage clause,the policy shall include a stipulated value or agreed amount endorsement acceptable to Beneficiary. 56 07-29-09 Meta Housing-DDA 10.5. Duplicate Originals or Certificates. Duplicate original policies evidencing the insurance required under this Section 10 and any additional insurance that may be purchased on the Property by or on behalf of Trustor shall be deposited with and held by Beneficiary and, in addition, Trustor shall deliver to Beneficiary(a)receipts evidencing payment of all premiums on the policies and(b) duplicate original renewal policies or a binder with evidence satisfactory to Beneficiary of payment of all premiums at least 30 days before the policy expires. In lieu of the duplicate original policies to be delivered to Beneficiary under this Section 10.5, Trustor may deliver an underlier of any blanket policy, and Trustor may also deliver original certificates from the issuing insurance company,evidencing that such policies are in full force and effect and containing information that,in Beneficiary's reasonable judgment, is sufficient to allow Beneficiary to ascertain whether such policies comply with the requirements of this Section 10. 10.6. Increased Coverage. If Beneficiary determines that the limits of any insurance carried by Trustor are inadequate or that additional coverage is required,Trustor shall,within 10 days after written notice from Beneficiary,procure such additional coverage as Beneficiary may require in Beneficiary's sole and absolute discretion. 10.7. No Separate Insurance. Trustor shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 10, unless endorsed in favor of Trustee and Beneficiary,as required by this Section 10 and otherwise approved by Beneficiary in all respects. 10.8. Transfer of Title. In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in extinguishment,in whole or in part,of the Note,all right, title,and interest of Trustor in and to all insurance policies required under this Section 10 or otherwise then in force with respect to the Property and all proceeds payable under, and unearned premiums on, such policies shall immediately vest in the purchaser or other transferee of the Property. 10.9. Replacement Cost. For purposes of this Section 10,the term"full insurable value"means the actual cost of replacing the Property in question, without allowing for depreciation,as calculated from time to time(but not more often than once every calendar year)by the insurance company or companies holding such insurance or, at Beneficiary's request, by appraisal made by an appraiser, engineer, architect, or contractor proposed by Trustor and approved by said insurance company or companies and Beneficiary. Trustor shall pay the cost of such appraisal. 10.10. Approval Not Warranty. No approval by Beneficiary of any insurer may be _ construed to be a representation,certification,or warranty of its solvency and no approval by Beneficiary as to the amount,type, or form of any insurance may be construed to be a representation,certification,or warranty of its sufficiency. 10.11. Beneficiary's Right To Obtain. Trustor shall deliver to Beneficiary original policies or certificates evidencing such insurance at least 30 days before the existing policies expire. If any such policy is not so delivered to Beneficiary or if any such policy is canceled,whether or not Beneficiary has the policy in its possession,and no reinstatement or replacement policy is received before termination of insurance,Beneficiary,without notice to or demand on Trustor,may(but is not obligated to)obtain such insurance insuring only Beneficiary and Trustee with such company as Beneficiary may deem satisfactory, 57 07-29-09 Meta Housing-DDA and pay the premium for such policies, and the amount of any premium so paid shall be charged to and promptly paid by Trustor or, at Beneficiary's option, may be added to the Note. Trustor acknowledges that,if Beneficiary obtains insurance,it is for the sole benefit of Beneficiary and Trustee,and Trustor shall not rely on any insurance obtained by Beneficiary to protect Trustor in any way. 10.12. Duty To Restore After Casualty. If any act or occurrence of any kind or nature(including any casualty for which insurance was not obtained or obtainable)results in damage to or loss or destruction of the Property, Trustor shall immediately give notice of such loss or damage to Beneficiary and,if Beneficiary so instructs,shall promptly,at Trustor's sole cost and expense,regardless of whether any insurance proceeds will be sufficient for the purpose, shall (i) commence and continue diligently to completion to restore, repair, replace, and rebuild the Property as nearly as possible to its value, condition, and character immediately before the damage, loss or destruction; or, (ii) pay all monetary obligations due under the Senior Lender Documents and pay all monetary obligations then due under the Note to Beneficiary. 11. Assignment of Insurance and Condemnation Proceeds. Subject to the rights of the Senior Lender under the Senior Lender Documents, in the event that the Property, or any part or appurtenance thereof or right or interest therein, be taken or damaged by reason of any public or private improvement,condemnation proceeding(including change of grade),fire,earthquake or other casualty,or in any other manner,Beneficiary or Trustee may,at its option, commence,appear in and prosecute,in its own name,any action or proceeding,or make any reasonable compromise or settlement in connection with such taking or damage, and obtain all compensation,awards or other relief therefor. Subject to the HUD Secondary Financing Rider, attached hereto, all compensation, awards, damages, rights of action and proceeds, including the policies and the proceeds of any policies of insurance affecting the Property,are hereby assigned to Beneficiary, but no such assignments shall be effective to invalidate or impair any insurance policy.Trustor further assigns to Beneficiary any return premiums or other repayments upon any insurance at any time provided for the benefit of the Beneficiary and all refunds or rebates made of taxes or assessments on the Property, and Beneficiary may at any time collect said return premiums,repayments, refunds and rebates in the event of any default by Trustor under the Note,the 2009 DDA or this Deed of • Trust.No insurance proceeds or condemnation awards at any time assigned to or held by Beneficiary shall be deemed to be held in trust and Beneficiary may commingle such proceeds with its general assets and shall not be liable for the payment of any interest thereon. Trustor also agrees to execute such further assignments of any such policies,compensation,award,damages,rebates,return of premiums,repayments, rights of action and proceeds as Beneficiary or Trustee may require. 12. Use of Insurance Proceeds.After any damage by casualty to the Property,whether or not required to be insured against under the policies to be provided by Trustor,Trustor shall give prompt written notice thereof to Beneficiary generally describing the nature and cause of such casualty and the extent of the damage to or destruction of the Property. Subject to the rights of the Senior Lender Documents,Trustor shall have the obligation to promptly repair the damage,regardless of whether and to the extent the casualty was covered by an insurance policy. For these purposes, Beneficiary shall make available to Trustor proceeds of any insurance policy covering the casualty and maintained by Trustor under and subject to each of the following terms and conditions: (a) Insurance proceeds which are directly attributable to the damage(herein the "Proceeds") shall be released to Trustor upon and subject to satisfaction of each of the following conditions: 58 07-29-09 Meta Housing-DDA • (i) There exists no default under the Note,the 2009 DDA or this Deed of Trust at any time prior to or during the course of reconstruction; (ii) Receipt by Beneficiary of satisfactory written evidence that any proposed restorations by Trustor will comply with all statutes, ordinances, regulations, rules, rulings, restrictive covenants, reciprocal easements, leases and contracts; that all proposed plans and specifications are approved by all required governmental agencies;and that Trustor has obtained all necessary building and other permits and approvals for such reconstruction; (iii) Receipt by Beneficiary from Trustor of sufficient cash funds to cover one hundred percent (100%) of any difference between the estimated costs of completion,as certified by an architect or engineer approved by Beneficiary in writing,and the Proceeds, the amount of such difference shall be paid in cash to Beneficiary with said amount and any interest earned thereon shall be released to Beneficiary, as necessary, following the exhaustion of available insurance proceeds, or at such earlier time deemed appropriate by Beneficiary. In the event of any default under the Note, the 2009 DDA or this Deed of Trust, or any reconstruction requirements, Beneficiary may, at its option, apply any portion or all of such amounts and interest against the accrued interest and principal sums outstanding under the Note; (iv) Receipt by Beneficiary of a certificate executed by Trustor describing the work to be performed in connection with such restoration and a certificate by an independent architect or engineer selected or approved by Beneficiary in writing stating that the work described in the Trustor's certificate is adequate to restore the Property to substantially the same size, design, quality and condition as existed prior to the damage. The architect's or engineer's certificate shall include its estimate of all costs and expenses which will be required to complete such restorations; and (v) Such additional conditions as may reasonably be imposed by Beneficiary to provide assurance that the Proceeds will be used to restore the Property to substantially the same condition,to the extent possible, as existed prior to the damage or taking, including, without limitation, Beneficiary's prior written approval of all permits, plans, specifications and construction contracts for such restoration. (b) Beneficiary shall disburse the Proceeds in increments corresponding to the percentage of completion costs then incurred for labor performed and materials furnished(which may,at Beneficiary's discretion, be subject to reasonable holdbacks required by Beneficiary, not exceeding ten percent(10%)of the total estimated cost of completion and which will be released upon lien-free completion of the restorations in accordance with the requirements of this Deed of Trust and the expiration of the periods within which any mechanic's or materialman's lien may be filed). Disbursements shall be conditioned upon Beneficiary's written confirmation that all of its requirements therefor have been satisfied, including its receipt of periodic inspection and completion percentage certificates executed by the project architect approved by Beneficiary in writing,payment acknowledgments and unconditional lien releases,and such other conditions to periodic disbursements as are customarily imposed by Beneficiary in connection with its 59 07-29-09 Meta Housing-DDA construction loans, no defaults or misrepresentations of Trustor and Trustor's obtaining all title insurance endorsements,payment and performance bonds,and builder's risk policies required by Beneficiary. Trustor shall, during the progress of the work, also submit to the Beneficiary, at periodic intervals not less frequently than monthly, a certificate satisfactory to Beneficiary furnished by an architect or engineer approved by Beneficiary in writing showing the cost of labor and materials incorporated into the work during the period specified in the certificate,which period shall not include any part of the period covered by any other such certificate; and (c) After completion of the restoration and subject to the conditions herein stated, and, if Trustor is not then in default under the Note, the 2009 DDA or this Deed of Trust, Beneficiary shall pay to Trustor(or such other persons or entities that may have an interest therein) the undisbursed Proceeds and Trustor's deposit for any estimated restoration expense held by Beneficiary upon delivery to Beneficiary of(i) a certificate executed by Trustor showing that the work has been completed and that all bills for labor performed and materials furnished in connection therewith have been paid,(ii)unconditional lien releases and other appropriate written acknowledgments of payment in full executed by all contractors and subcontractors performing labor on or furnishing materials to the Property; (iii) a certificate executed by an architect or engineer approved by Beneficiary confirming that the Property has been restored to substantially the same size, design, quality and condition as existed immediately prior to the damage and in accordance with all applicable federal, state, local and other governmental laws and regulations; and (iv) a certificate of occupancy and other permits issued by the appropriate governmental authorities authorizing the occupancy of the Property for its intended purposes and use. If(i)any of the conditions in subparagraph 12(b), above,are not fulfilled within sixty(60) days after the date of the casualty,or if the reconstruction cannot be completed within such 60 day period, within such additional time as may be reasonably necessary to complete the reconstruction,not to exceed one hundred eighty(180)days,and provided such additional time does not result in a breach by the Trustor under the Note, the 2009 DDA or this Deed of Trust; or (ii) if Trustor fails to exercise diligence in promptly commencing or continuously prosecuting the work; or (iii) if Trustor is otherwise in default under the Note,the 2009 DDA or this Deed of Trust,or any reconstruction requirements set forth therein or herein,Beneficiary may, at its option,apply the Proceeds and any deposits made by Trustor hereunder to the indebtedness secured hereby, or to complete the necessary repairs and use the Proceeds for the payment thereof. If the Proceeds are so applied to the indebtedness and,together with any other payments due to Beneficiary under the Note,and all other debts of Trustor to Beneficiary are discharged,Beneficiary shall not have the right to require the Property to be repaired under the terms of this Deed of Trust, but Beneficiary's rights under any other lien that it holds against the Property and which is not also required to be released shall not be thereby impaired or affected. Subject to the rights of the Senior Lender under the Senior Lender Documents,Trustor shall not commence any repairs or reconstruction of any casualty until Beneficiary consents in writing thereto, which consent may be withheld by Beneficiary in its sole discretion,until all of the conditions contained in this paragraph are satisfied. All work of repairing or restoring damage shall be done in a good and workmanlike manner with materials of good quality and in conformity with all applicable laws, ordinances,rules and regulations.Nothing herein contained shall be construed as authorizing the Trustor to subject the Property to any mechanic's, materialman's or other lien for the payment of bills for material furnished or labor performed in connection with any work contemplated by this paragraph. 60 07-29-09 Meta Housing-DDA In any event in which the Beneficiary is not otherwise obligated to permit the insurance proceeds to be applied to the restoration of the Property as hereinabove described and, at the option of Beneficiary,the proceeds of a loss under any policy,whether or not endorsed payable to Beneficiary,may be applied in payment of the principal,interest or any other sums secured by this Deed of Trust,whether or not then due, or to the restoration or replacement of any building on the Property, without in any way affecting the enforceability or priority of the lien of this Deed of Trust or the obligation of the Trustor or any other person for payment of the indebtedness hereby secured or the reconstruction of the damaged improvements, whether such Trustor be the then owner of said building or improvements or not. 13. Use of Condemnation Awards. Subject to the rights of the Senior Lender under the Senior Lender Documents, should the Property or any portion thereof or any improvements thereon be taken or damaged by reason of any public improvement or condemnation proceeding,or by any other form of eminent domain,Trustor agrees that Beneficiary shall be entitled to all compensation,awards and other payments or relief therefor and may, at its option, commence,appear in or prosecute in its own name any action or proceeding or make any reasonable compromise or settlement in connection with such taking or damage, and Trustor agrees to pay Beneficiary's costs and reasonable attorneys' fees incurred in connection therewith. All such compensation, awards, damages, rights of actions and proceeds may be applied by Beneficiary toward the repair of any damage to the improvements on any portion of the Property not subject to the taking as and subject to the same conditions herein provided with respect to the disposition of insurance proceeds, as set forth in Section 12 hereinabove; provided, however, that if the taking results in a loss of the Property to an extent which,in the reasonable opinion of Beneficiary,renders or will render the Property not economically viable or which substantially impairs Beneficiary's security or lessens to any extent the value,marketability or intended use of the Property, Beneficiary may apply the condemnation proceeds to reduce the unpaid indebtedness secured hereby in such order as Beneficiary may determine.Trustor agrees to execute such further assignments of condemnation proceeds as Beneficiary or Trustee may from time to time require. If so applied, any proceeds in excess of the unpaid principal and accrued interest due under the Note plus all other sums due to Beneficiary from Trustor shall be paid to Trustor or Trustor's assignee. 14. Property Taxes and Assessments.Trustor shall pay in full on or before the due date thereof all rents, taxes, assessments community redevelopment in lieu of property tax charges and encumbrances,with interest,that may now or hereafter be levied,assessed or claimed upon the Trustor's ownership or use of the Property that is the subject of this Deed of Trust or any part thereof, and upon request, provide the Beneficiary with copies of official receipts for payment therefor, and shall pay all taxes imposed upon, and reasonable costs, fees and expenses of,this Deed of Trust. 15. Assessment Districts.Trustor agrees not to consent to inclusion of the Land in any local improvement or special assessment district or to the imposition of any special or local improvement assessment against the Property, without Beneficiary's prior written consent. 16. Mortgage Taxes. In the event of the passage after the date of this Deed of Trust of any federal,state or municipal law,ordinance or regulation relating to the taxation of mortgages,deeds of trust or debts secured thereby so as to tax or assess any interest of Beneficiary or any payments secured hereby. Trustor shall bear and pay the full amount of such taxes. 61 07-29-09 Meta Housing-DDA • 17. Special Assessment and Insurance Reserves. Subject to the rights of the Senior Lender under the Senior Lender Documents, Trustor shall, at the request of the Beneficiary, pay to Beneficiary equal monthly installments of the special assessments and insurance premiums estimated by the Beneficiary next to become due, in addition to any other periodic payment or performances owed by Trustor under the Note or this Deed of Trust, so that thirty(30)days before the due date thereof,or of the first installment thereof, Beneficiary will have on hand an amount sufficient to pay the next maturing assessments and insurance premiums. The amount of the additional payment to be made on account of assessments and insurance premiums shall be adjusted annually or more frequently as Beneficiary deems necessary and any deficit shall be immediately paid by Trustor upon request and any surplus shall be credited on the mortgage account. Subsequent payments on account of assessments and insurance premiums shall be made in accordance with the next estimate by the Beneficiary of annual requirements. To the extent permitted by applicable law, all monies paid to Beneficiary on account of assessments or insurance premiums may be commingled and invested with Beneficiary's own funds and,unless and to the extent required by law,shall not bear interest for Trustor.Beneficiary shall not exercise the rights granted in this paragraph so long as the following conditions are met: (a) There is no other default under the Note, the 2009 DDA or this Deed of Trust; or (b) Trustor pays all assessments and insurance premiums prior to delinquency. Upon Trustor's failure to comply with any of the conditions (a)or(b)above, Beneficiary may,at its option,then or thereafter exercised,require Trustor to pay the additional sums described in this paragraph. Notwithstanding the foregoing, in the event that the Senior Lender releases casualty or condemnation proceeds to the Trustor for the repair or reconstruction of the Property, Beneficiary shall also consent to the release of such proceeds. 18., Trustor's Right to Contest Taxes. Trustor shall have the right to contest any real property tax or special assessment so long as (a)no defaults exist under the Note,the 2009 DDA, or this Deed of Trust; (b) Trustor makes any payment or deposit or posts any bond as and when required as a condition to pursuing such contest; (c) Trustor commences such contest prior to such tax or assessment becoming delinquent and continuously pursues the same in good faith and with due diligence; (d) such contest or any bond furnished by Trustor stays the foreclosure of any lien securing the payment of any such tax or assessment; and (e) Trustor pays any tax or assessment within ten (10) days following the date of resolution of such contest. 19. Report of Real Estate Transaction.Trustor has made or provided for making,or will make or provide for making,on a timely basis,any reports or returns required by state or local law relating to the Property, or the development of the Property, notwithstanding the fact that the primary reporting responsibility may fall on the Beneficiary,or other party.Trustor's obligations under this paragraph will be deemed to be satisfied,if proper and timely reports and returns required under this paragraph are filed by a title company involved in each real estate transaction relating to the Property,but nothing contained herein shall be construed to require such returns or reports to be filed by Beneficiary. 62 07-29-09 Meta Housing-DDA • 20. Leases. With respect to any leases currently or hereafter relating to any portion of the Property, Trustor agrees that each such lease shall comply with the applicable provisions of the 2009 DDA. 21. Assignment of Leases. Trustor hereby unconditionally and absolutely assigns, transfers and sets over unto Beneficiary, all leases, subleases, rental agreements,occupancy agreements, licenses,concessions,entry fees and other agreements that grant a possessory interest in all or any part of the Property, together with all rents, issues, deposits and profits of the Property, together with the immediate and continuing right to collect and receive the same, for the purpose and upon the terms and conditions hereinafter set forth. Trustor further unconditionally and absolutely assigns,transfers and sets over unto Beneficiary all of its right, title and interest in and to any plans, drawings, specifications, permits,engineering reports and land planning maps,which it now has or may hereafter acquire regarding any improvements now on or to be constructed upon the Property. Beneficiary confers upon Trustor a license to collect and retain the rents,issues,deposits and profits of the Property,as they become due and payable, subject, however,to the right of Beneficiary upon a default hereunder to revoke said license, at any time, in its sole discretion and without notice to Trustor. Beneficiary may revoke said license and collect and retain the rents,issues,deposits and profits of the Property assigned herein to Beneficiary upon the occurrence of an Event of Default hereunder or under any of the obligations secured hereby, and without taking possession of all or any part of the Property,and without prejudice to or limitation upon any of its additional rights and remedies granted pursuant hereto or pursuant to the Note or the 2009 DDA,and Beneficiary shall,in its sole and absolute discretion,have the right to apply such income for the payment of all expenses or credit the net amount of income that it receives from the Property,to the indebtedness in the manner,order and amounts as Beneficiary shall determine. In the event the Beneficiary exercises or is entitled to exercise any of its rights or remedies under this Deed of Trust as a result of the default of the Trustor under the Note or the 2009 DDA,and if any lessee,sublessee or assignee under any lease assigned under this paragraph files or has filed against it any petition in bankruptcy or for reorganization or undertakes or is subject to similar action,Beneficiary shall have,and is hereby assigned by Trustor,all of the rights that would otherwise inure to the benefit of Trustor in such proceedings, including, without limitation,the right to seek"adequate protection"of its interests,to compel assumption or rejection of any such lease and to seek such claims and awards as may be sought or granted in connection with the rejection of any such lease. Unless otherwise agreed to by Beneficiary in writing, Beneficiary's exercise of any of the rights provided in this paragraph shall preclude Trustor from the pursuit and benefit thereof, without any further action or proceeding of any nature. The foregoing assignment shall not impose upon Beneficiary any duty to produce rents from the Property,and such assignment shall not cause Beneficiary to be a"mortgagee in possession"for any purpose.The rights granted in this paragraph shall be in addition to and not in derogation of any similar or related rights granted to Beneficiary in any separate assignment of leases and rents. 22. Impairment of Security. Trustor shall not, without first obtaining Beneficiary's written consent,which consent shall not be unreasonably withheld,assign any of the rents or profits of the Property or change the general nature or use of the Property or initiate or acquiesce in any zoning reclassification,or do,or suffer to be done,any act or thing that would impair the security of Beneficiary's lien upon the Property or the rents thereof. Trustor shall not,without the written consent of Beneficiary, which consent shall not be unreasonably withheld,(i)initiate or support any zoning reclassification of the Property, seek any variance under existing zoning ordinances applicable to the Property or use or permit the use of the Property in a manner that would result in such use becoming a non-conforming use under 63 07-29-09 Meta Housing-DDA applicable zoning ordinances; (ii) modify, amend or supplement any easement, reservation, restriction, covenant,condition or encumbrance pertaining to the Property; (iii) impose or consent to any restrictive covenant or encumbrance upon the Property, execute or file any subdivision or parcel map affecting the Property or consent to the annexation of the Property to any municipality; or (iv) permit or suffer the Property to be used by the public or any person in such manner as might make possible a claim of any implied dedication or easement. 23. Defense of Suits. Trustor shall appear in and defend any suit,action or proceeding that might affect the value, priority or enforceability of this Deed of Trust or the Property itself or the rights or powers of Beneficiary or Trustee,including any suits relating to damage to property or death or personal injuries, whether or not Trustor is ultimately found liable for any negligence or other wrongful conduct or inaction.Trustor,following mutual negotiations with Beneficiary,has waived and does hereby waive any immunity to such liability to Beneficiary under any industrial insurance or similar statute,to the extent such immunity would impair Beneficiary's rights against Trustor. Should Beneficiary elect to appear in or defend any such action or proceeding or be made a party to any such action or proceeding by reason of this Deed of Trust, or elect to prosecute such action as appears necessary to preserve the value, priority or enforceability of this Deed of Trust or the Property itself, Trustor will at all times indemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss, damage, expense or cost, including cost of evidence of title expert witness fees and attorneys' fees, arising out of or incurred in connection with any such suit,action or proceeding,and any appeal or petition for review thereof,and the sum of such expenditures shall be secured by this Deed of Trust with interest at the rate of 10%per annum and shall be due and payable on demand. Trustor shall pay costs of suit, cost of evidence of title expert witness fees and reasonable attorneys' fees in any proceeding or suit brought by Beneficiary to foreclose this Deed of Trust and in any appeal therefrom or petition for review thereof. 24. Assignments and Transfers. Trustor acknowledges that Beneficiary relied upon Trustor's financial statements, credit history, business and real property managerial expertise and other factors personal to Trustor in making the Note,and Trustor covenants not to transfer any of the interest in . the Property or to permit the transfer of any interest in Trustor, except as provided in Section 25 hereinbelow, without first receiving Beneficiary's express written consent in each instance. A breach of this covenant shall constitute a default under the Note and this Deed of Trust. All sums then due to Beneficiary by Trustor hereunder or under the Note may,at Beneficiary's option,be declared immediately due and payable if any of Trustor's interests in the Property, or any part thereof, are sold or transferred, voluntarily or involuntarily, without Beneficiary's written consent. 25. Permitted Transfers. (a) Notwithstanding anything to the contrary contained herein,the respective interests of Trustor's special limited partner and Investor Limited Partner shall be transferable to any affiliate of Investor Limited Partner in accordance with the terms of the Partnership Agreement without the consent of the Beneficiary. So long as Trustor is not then in default under the terms Note,the 2009 DDA or this Deed of Trust and upon the expiration of the tax credit compliance period,the interests of the Investor Limited Partner in the Trustor may be transferred to the Trustor's general partner or its affiliate without the consent of the Beneficiary. 64 07-29-09 Meta Housing-DDA (b) Notwithstanding anything to the contrary contained herein,the Trustor's Investor Limited Partner shall be permitted to remove the Trustor's general partner for cause in accordance with the Partnership Agreement without the consent of the Beneficiary;provided,however,that Investor Limited Partner shall not elect and appoint a successor general partner therefore without the consent of the Beneficiary, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the substitute general partner shall assume all of the rights and obligations of the removed general partner hereunder and under the 2009 DDA. 26. Further Encumbrances. Trustor acknowledges that Beneficiary relied upon the Property not being subject to additional liens•or encumbrances except as set forth in this Deed of Trust,the Note and the 2009 DDA for reasons including,but not limited to,the possibility of competing claims or the promotion of plans disadvantageous to Beneficiary in bankruptcy; the risks to Beneficiary in a junior lienholder's bankruptcy;questions involving the priority of future advances,the priority of future leases of the Property,the marshaling of Trustor's assets,and the Beneficiary's rights to determine the application of condemnation awards and insurance proceeds;the impairment of the Beneficiary's option to accept a deed in lieu of foreclosure;the increased difficulty of reaching agreements for workouts or to the actions to be taken by trustees, receivers, liquidators and fiduciaries; and Beneficiary's requirements of Trustor's preservation of its equity in the Property and the absence of debt that could increase the likelihood of Trustor's being unable to perform its obligations when due. Therefore, as a principal inducement to Beneficiary to make the Note secured by this Deed of Trust,and with the knowledge that Beneficiary will materially rely upon this paragraph in so doing,Trustor covenants not to encumber the Property except as set forth herein without first receiving Beneficiary's express written consent in each instance, which consent may be withheld by Beneficiary in its sole discretion. A breach of this covenant shall constitute a default under the Note,the 2009 DDA and this Deed of Trust,and Beneficiary may exercise all remedies available to Beneficiary under the Note, the 2009 DDA or this Deed of Trust. Without limiting the generality of the foregoing, no mortgages, deeds of trust or other forms of security interests prior or subordinate to the security interests of Beneficiary shall encumber any real or personal property that is the subject of any lien or security interest granted to Beneficiary. 27. [RESERVED -NO TEXT1. 28. Event of Default.An"Event of Default"shall be deemed to have occurred in any of the following circumstances: (a) Failure of Trustor to satisfy any performance or payment obligation required under this Deed of Trust, the Note or the 2009 DDA when due, however Trustor shall have ten(10) days to cure any such default; (b) Failure of Trustor to properly perform its obligations under this Deed of Trust, the Note or the 2009 DDA, by a date specified herein or therein or in a written notice to Trustor, if applicable,(which date specified shall not be less than thirty(30) days nor greater than sixty (60) days from the date of such notice, and shall be determined by Beneficiary in its sole discretion);provided,however,that: (i)if such default set forth in the notice cannot be cured by the date specified, (ii)Trustor commences to cure the default prior to the date specified in the notice, and (iii) Trustor diligently proceeds to cure the default thereafter; then the date specified in the 65 07-29-09 Meta Housing-DDA notice shall be extended by any period reasonably necessary to complete the cure,but in no event for more than ninety (90) days after the date originally specified in the notice; (c) Trustor becomes insolvent or generally is not paying its debts as they become due,as defined in the United States Bankruptcy Reform Act,as amended from time to time (which Act,as amended,is herein called the"Bankruptcy Code"),or shall file a voluntary petition in bankruptcy seeking to effect a reorganization plan or other arrangement with creditors or any other relief under the Bankruptcy Code or under any other state or federal law relating to bankruptcy or other relief for debtors, whether now or hereafter in effect, or shall consent to or suffer the entry of any order for relief in any involuntary case under the Bankruptcy Code,or shall be the defendant or subject of any involuntary petition filed under the Bankruptcy Code that is not dismissed within ninety(90)days of the filing thereof,or shall make an assignment for the benefit of creditors; (d) Any court(or similar tribunal)having jurisdiction over Trustor or any of the Property or other property of Trustor shall enter a decree or order appointing a receiver, trustee, guardian,conservator, assignee in bankruptcy or insolvency of Trustor, of any of the Property,of any other real property of Trustor,of any other significant asset of Trustor, or shall enter a decree or order for relief in any involuntary case under the Bankruptcy Code; (e) The entry of any final judgment or arbitration award against Trustor that is not paid or stayed pending appeal, or the sequestration or attachment of, or any levy or execution upon(i)any of the Property,(ii)any other collateral provided by Trustor or any other person under this Deed of Trust, or (iii) any significant portion of the other assets of Trustor, which is not released, expunged or dismissed prior to the earlier of (30) days after such sequestration, attachment or execution or five (10) days before the sale of any such assets; (f) Trustor shall dissolve, liquidate or wind up its affairs or shall bring any legal action or take any other action contemplating such dissolution, liquidation or winding up; (g) The determination by Beneficiary that any representation, warranty or statement contained in this Deed of Trust or the Note or the 2009 DDA in writing delivered to Beneficiary in connection with Note or 2009 DDA was incomplete, untrue or misleading in any material respect as of the date made and Trustor has not cured such default within thirty(30)days from written notice by Beneficiary of such default; (h) The enactment of any law that deducts from the value of the Property for the purpose of taxation of any lien thereon or imposing upon Beneficiary the payment of the whole or any part of the taxes, assessments, charges or liens herein required to be paid by Trustor or changing in any way the laws relating to the taxation of deeds of trust or debts secured by deeds of trust or Beneficiary's interest in the Property or the manner of collection of taxes so as to affect this Deed of Trust or the Note or the 2009 DDA or the holder thereof or imposing a tax, other than a Federal or state income tax,on or payable by Trustee or Beneficiary by reason of their ownership of this Deed of Trust or the Note and,in such event,Trustor,after demand by Beneficiary,does not pay such taxes or assessments within thirty(30)days or reimburse Beneficiary therefor or, in the opinion of counsel for Beneficiary, it might be unlawful to require Trustor to make such payment 66 07-29-09 Meta Housing-DDA or the making of such payment might result in the imposition of interest costs beyond the maximum amount permitted by applicable law; (i) Trustor acknowledges and agrees that all material non-monetary defaults are conclusively deemed to be and are defaults impairing the security of this Deed of Trust, and that Beneficiary shall be entitled to exercise any appropriate remedy, including, without limitation, foreclosure of this Deed of Trust,upon the occurrence of any such material non-monetary default; and (j) Notwithstanding the remedies of Beneficiary set forth in Section 29,below, the parties hereto agree that the Investor Limited Partner shall be entitled to cure any default hereunder by the Trustor,and shall have fifteen(15)days after the expiration of the applicable cure period to effect such cure, and the parties hereto shall accept performance by the Investor Limited Partner of any obligation of the Trustor hereunder as though tendered by the Trustor itself, provided such performance by the Investor Limited Partner has occurred during the cure period,if any, provided to the Trustor hereunder with respect to such default. 29. Rights and Remedies on Default. Upon the occurrence of any Default or Event of Default under this Deed of Trust and at any time thereafter, and subject to the rights of the Senior Lender and the Senior Lender Documents,Trustee or Beneficiary may exercise any one or more of the following rights and remedies: (a) . Beneficiary may exercise any right or remedy provided for in the Note, the 2009 DDA or this Deed of Trust; (b) . Beneficiary may declare the Note and all other performances or sums secured by this Deed of Trust immediately due and payable; (c) .Beneficiary may declare all performances or sums secured hereby immediately due and payable either by commencing an action to foreclose this Deed of Trust as a mortgage, or by the delivery to Trustee of a written declaration of default and demand for sale and of written notice of default and of election to cause the Property to be sold, which notice Trustee shall cause to be duly filed for record in case of foreclosure by exercise of the power of sale herein. Should Beneficiary elect to foreclose by exercise of the power of sale herein, Beneficiary shall also deposit with Trustee this Deed of Trust, the documents evidencing the Agency Loan and any receipts and evidence of expenditures made and secured hereby as Trustee may require, and notice of sale having been given as then required by law and after lapse of such time as may then be required by law after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place of sale fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder upon any terms and conditions specified by Beneficiary and permitted by applicable law. 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 may postpone such sale by public announcement at the time fixed by the preceding postponement.Trustee shall deliver to any purchaser its deed or deeds conveying the Property, or any portion thereof, so sold, but without any covenant or warranty, express or implied. The recitals in such deed or deeds of any 67 07-29-09 Meta Housing-DDA • matters or facts, shall be conclusive proof of the truthfulness thereof. Any person, including Trustor,Trustee or Beneficiary,may purchase all or any portion of the Property, as applicable,at sale. (d) . Beneficiary, from time to time before Trustee's sale,may rescind any such notice of breach or default and of election to cause the Property to be sold by executing and delivering to Trustee a written notice of such rescission,which notice,when recorded, shall also constitute a cancellation of any prior declaration of default and demand for sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any breach or default then existing or subsequently occurring, or impair the right of Beneficiary to execute and deliver to Trustee, as above provided, other declarations of default and demand for sale,and notices of breach or default,and of election to cause the Property to be sold to satisfy the obligations hereof, nor otherwise affect any provision, agreement, covenant or condition of the Note,the 2009 DDA and/or of this Deed of Trust or any of the rights, obligations or remedies of the parties hereunder. (e) UCC Remedies. Beneficiary shall have all the rights and remedies of a secured party under the California Uniform Commercial Code, including, without limitation, Section 9501(4)thereof. Upon request,Trustor shall assemble and make such collateral available to Beneficiary at a place to be designated by Beneficiary that is reasonably convenient to both parties.Upon repossession,Beneficiary may propose to retain the collateral in partial satisfaction of the Note or sell the collateral at public or private sale in accordance with the Uniform Commercial Code as adopted in the state where the Property is situated or any other applicable statute. Such sale may be held as a part of, distinctive from or without a trustee's sale or foreclosure of the real property secured by this Deed of Trust. If any notification of disposition of all or any portion of the collateral is required by law,such notification shall be deemed reasonably and properly given,if mailed at least ten(10)days prior to such disposition.If Beneficiary disposes of all or any part of the collateral after default,the proceeds of disposition shall be applied in the . following order: (i) to the reasonable expenses of retaking,holding,preparing for sale, selling the collateral, and the like; (ii) to the reasonable attorneys' fees and legal expenses incurred by Beneficiary; and (iii) to the satisfaction of the indebtedness secured by this Deed of Trust. (f) Remedial Advances. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, without obligation so to do and without demand upon Trustor and without releasing Trustor from any obligation hereof,may(i)make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof,Beneficiary or Trustee being authorized to enter upon the Property for such purposes; (ii) commence,appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest or compromise any encumbrance,charge,lien,tax or assessment,or the premium for any policy of insurance required 68 07-29-09 Meta Housing-DDA herein; and in exercising any such power, incur any liability, expend whatever amounts in its absolute discretion it may deem necessary therefor, including cost of evidence of title, employ counsel and pay such counsel's fees.Beneficiary shall be subrogated to the rights and lien interests of any person who is paid by Beneficiary pursuant to the terms of this paragraph. Trustor shall repay immediately on written notice to Trustor all sums expended or advanced hereunder by or on behalf of Beneficiary,with interest from the date of such advance or expenditure at the rate of 10% per annum, and the repayment thereof shall be secured hereby. (g) Summary Possession. Beneficiary may,at its option,either in person or by agent, employee or court-appointed receiver, enter upon and take possession of the Property and continue any work of improvement,repair or renovation thereof at Trustor's expense and lease the same or any part thereof, making such alterations as it finds necessary, and may terminate in any lawful manner any lease(s) of the Property, exercising with respect thereto any right or option available to the Trustor.The entering upon and taking possession of the Property,the collection of rents, issues and profits, or the proceeds of fire and other insurance policies or compensation or awards for any taking or damage to the Property, and the application or release thereof shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (h) Collection of Rents.Beneficiary may require any tenant or other user of the Property to make payments of rent or use fees directly to Beneficiary, regardless of whether Beneficiary has taken possession of the Property. If any rents are collected by Beneficiary, then Trustor hereby irrevocably designates Beneficiary as Trustor's attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Beneficiary in response to Beneficiary's demand shall satisfy the obligation for which the payments are made, whether or not any proper grounds for the demand existed.Beneficiary may exercise its rights under this paragraph either in person, by agent or through a receiver. (i) Beneficiary's Enforcement of Leases.Beneficiary is hereby vested with full power to use all measures,legal and equitable,deemed by it necessary or proper to collect the rents assigned in this Deed of Trust, including the right, in person or by agent, employee or court- appointed receiver, to enter upon the Property, or any part thereof, and take possession thereof forthwith to the extent necessary to effect the cure of any default on the part of Trustor as lessor in any leases or upon Trustor's default under the Note or the 2009 DDA. Trustor hereby grants to Beneficiary full power and authority to exercise all rights,privileges and powers herein granted at any and all times hereafter,without notice to Trustor,including the right to operate and manage the Property,make and amend leases and perform any other acts reasonably necessary to protect the value,priority or enforceability of any security for the obligations of the Trustor under the Note or the 2009 DDA and use and apply all of the rents and other income herein assigned to the payment of the costs of exercising such remedies, of managing and operating the Property, and of any indebtedness or liability of Trustor to Beneficiary, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring any improvements on the Property or of making the same rentable,attorneys' fees incurred in connection with the enforcement of this Deed of Trust,and any principal and interest payments due from Trustor to Beneficiary under the Note and this Deed of 69 07-29-09 Meta Housing-DDA • Trust, all in such order as Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Trustor in any leases. It is further understood that this Deed of Trust shall not operate to place responsibility for the control, care,management or repair of the Property,or parts thereof,upon Beneficiary nor shall it operate to make Beneficiary liable for the carrying out of any of the terms and conditions of any leases,or for any waste of the Property by the lessee under any leases or by any other party, or for any dangerous or defective condition of the Property or for any negligence in the management,upkeep, repair or control of the Property resulting in loss or injury or death to any lessee,invitee,licensee, employee or stranger, except as may result from the gross negligence or willful misconduct of Beneficiary after taking possession of the Property hereunder. (j) Beneficiary's Enforcement of Contracts.Beneficiary shall have the right to enforce Trustor's rights under all architect,engineering, construction and related contracts and to bring an action for the breach thereof in the name of Beneficiary or,at Beneficiary's option,in the name of Trustor, in the event any architect, engineer, contractor or other party breaches their respective contract or contracts,regardless of whether Beneficiary acquires or retains any interest in the Property. Trustor hereby irrevocably appoints Beneficiary as its attorney-in-fact for the purposes of the foregoing,which power shall be durable and coupled with an interest.Beneficiary does not assume and shall not be obligated to perform any of Trustor's obligations under said contracts nor shall Beneficiary be required to enforce such contracts or bring action for the breach thereof,provided; however, any performance of the respective contracts specifically required by the Beneficiary in writing, following any default by Trustor under the Note,the 2009 DDA or the contracts, and which is properly and timely undertaken by the contractor, engineer or architect, shall be paid for by the Beneficiary in accordance with the terms and conditions of the contracts. Such payments shall be deemed additions to the amounts owed by Trustor to the Beneficiary under the Note and secured by this Deed of Trust and shall bear interest at the rate of 10% per annum from the date of advance to and including the date of full payment, and shall be secured by any deed of trust, collateral assignment of leases and rents, security agreement and other documents granted to secure the Note. (k) Appointment of Receiver. Beneficiary has the right to have a receiver appointed to take possession of any or all of the Property,with the power to protect and preserve the Property,to operate the Property preceding foreclosure or sale,to collect the income from the Property and apply the proceeds,over and above the cost of the receivership,against the Note.The receiver may serve without bond, if permitted by law. Beneficiary's right to the appointment of a receiver shall exist whether or not the apparent value of the Property exceeds the indebtedness secured hereby by a substantial amount. Employment by Beneficiary shall not disqualify a person from serving as a receiver.Upon taking possession of all or any part of the Property,the receiver or Beneficiary may:(i)use,operate,manage,control and conduct business on the Property and make expenditures for all maintenance and improvements as in its judgment are necessary and proper; (ii)collect the income from the Property and apply such sums to the expenses of use,operation and management; and (iii) at Beneficiary's option, complete any construction in progress on the Property,and in that connection pay bills,borrow funds,employ contractors and make any changes in plans or specifications as Beneficiary deems reasonably necessary or appropriate.If the revenues 70 07-29-09 Meta Housing-DDA produced by the Property are insufficient to pay expenses, the receiver may borrow, from Beneficiary or otherwise,as Beneficiary may deem reasonably necessary for the purposes stated in this paragraph. The amounts borrowed or advanced shall be payable on demand and bear interest from the date of expenditure until repaid at the rate of 10%per annum. Such sums shall become a part of the debt secured by this Deed of Trust. (1) Specific Enforcement.Beneficiary may specifically enforce any covenant in this Deed of Trust or the Trustor's compliance with its warranties herein and may restrain and enjoin the breach or prospective breach of any such covenant or the noncompliance with any condition and Trustor waives any requirement of the posting of any bond in connection therewith. (m) General Creditors' Remedies.Beneficiary shall have such other rights and remedies as are available under any statute or at law or in equity,generally,and the delineation of certain remedies in this Deed of Trust shall not be deemed in limitation thereof 30. Application of Sale Proceeds.After deducting all costs and expenses of Trustee and of this Deed of Trust and, subject to the rights of the Senior Lender under the Senior Lender Documents, including cost of evidence of title and reasonable attorneys'fees in connection with sale,as above set forth, Trustee shall apply the proceeds of sale to payment of all sums expended under the terms hereof,not then repaid, with accrued interest at the rate of 10% per annum; all other sums then secured hereby; and the remainder, if any,to the Beneficiary and any other person or persons legally entitled thereto. 31. Remedies Cumulative.No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy provided herein or under the Note, the 2009 DDA or this Deed of Trust,or otherwise by law provided or permitted,or provided in any guaranty given in connection with the Note,but each shall be cumulative and shall be in addition to every other remedy. Every power or remedy given by this instrument to Trustee or Beneficiary or to which either of them may be otherwise entitled,may be exercised concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies. 32. No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the future or a preclusion of any right or remedy with respect to the same or any other occurrence. 33. Marshaling. In case of a sale under this Deed of Trust,the Property,real,personal and mixed, may be sold in one or more parcels. Neither Trustee nor Beneficiary shall be required to marshal Trustor's assets. 34. SUBMISSION TO JURISDICTION. (A) TRUSTOR,TO THE FULLEST EXTENT PERMITTED BY LAW,HEREBY KNOWINGLY,INTENTIONALLY AND VOLUNTARILY,WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,(A)SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS DEED OF TRUST,(B)AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF 71 07-29-09 Meta Housing-DDA COMPETENT JURISDICTION SITTING IN SAN BERNARDINO COUNTY,CALIFORNIA,(C) SUBMITS TO THE JURISDICTION OF SUCH COURTS,AND,(D)TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY FORUM OTHER THAN SAN BERNARDINO COUNTY,CALIFORNIA (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). TRUSTOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE TRUSTOR AT THE ADDRESS FOR NOTICES DESCRIBED HEREIN, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW). (B) TRUSTOR,TO THE FULLEST EXTENT PERMITTED BY LAW,HEREBY KNOWINGLY,INTENTIONALLY AND VOLUNTARILY,WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,WAIVES,RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,ARISING OUT OF, OR IN ANY WAY RELATING TO THIS DEED OF TRUST OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY OR TRUSTOR,WHETHER SOUNDING IN CONTRACT,TORT OR OTHERWISE. 35. Trustor's Indemnification. Trustor agrees to indemnify and hold harmless Trustee and Beneficiary from and against any and all losses, liabilities, penalties, claims, charges, costs and expenses(including attorneys' fees and disbursements)(the"Losses")that may be imposed on,incurred or paid by or asserted against Trustee and/or Beneficiary by reason or on account of, or in connection with: (a) any default by Trustor hereunder or under the Note or the 2009 DDA; (b) Trustee's and/or Beneficiary's good faith and commercially reasonable exercise of any of their rights and remedies or the . performance of any of their duties hereunder or under any other documents to which Trustor is a party;(c) the construction, reconstruction or alteration of the Property; (d) any negligence, willful misconduct or failure to act of Trustor, or any negligence, willful misconduct or failure to act of any lessee of the Property,or any of their respective agents,contractors, subcontractors, servants,employees, licensees or invitees; or(e) any accident, injury, death or damage to any person or property occurring in, on or about • the Property or any street, drive, sidewalk, curb or passageway adjacent thereto, except for the willful misconduct or gross negligence of the indemnified person; or (f) any failure of Trustor to file any tax reports or returns referred to in this Deed of Trust. The indemnity provided under subsection (f) of this paragraph shall also extend to counsel for the Beneficiary.Any amount payable to Trustee,Beneficiary or counsel for Beneficiary under this paragraph shall be due and payable within ten(10) days after demand therefor and receipt by Trustor of a statement from Trustee, Beneficiary and/or counsel for Beneficiary setting forth in reasonable detail the amount claimed and the basis therefor, and such amounts shall bear interest at the rate of 10%per annum from and after the date such amounts are paid by Beneficiary,Trustee or counsel for Beneficiary,until paid in full by Trustor. Trustor's obligations under this paragraph shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation on its part under any such policy of insurance.If any claim, action or proceeding is made or brought against Trustor and/or Beneficiary that is subject to the indemnity set forth in this paragraph, Trustor shall resist or defend against the same, if necessary, in the name of 72 07-29-09 Meta Housing-DDA Trustee and/or Beneficiary, with attorneys for Trustor's insurance carrier (if the same is covered by insurance)or otherwise by attorneys approved by Beneficiary.Notwithstanding the foregoing,Trustee and Beneficiary, in their reasonable discretion, may engage their own attorneys to resist or defend, or assist therein,and Trustor shall pay,or,on demand,shall reimburse Trustee and Beneficiary for the payment of the reasonable fees and disbursements of said attorneys. The indemnity provided for herein shall survive Trustor's performance of the obligations secured by this Deed of Trust and foreclosure,whether by judicial foreclosure, power of sale pursuant to this Deed of Trust or by deed in lieu of foreclosure. 36. Attorneys' Fees; Costs. Trustor agrees to reimburse Beneficiary for all costs, expenses expert witness and consulting fees and reasonable attorneys' fees that Beneficiary incurs in connection with the realization or enforcement of any obligation or remedy contained in this Deed of Trust, the Note or the 2009 DDA,with or without litigation,including without limitation any costs,expenses and fees incurred: (a)on appeal;(b)in any arbitration or mediation; (c)in any action contesting or seeking to restrain, enjoin, stay, or postpone the exercise of any remedy in which Beneficiary prevails; (d) in any bankruptcy, probate, receivership or other proceeding involving Trustor; and (e) in connection with all negotiations, documentation, and other actions relating to any work-out, compromise, settlement or satisfaction of the debt secured hereby or settlement of any covenants and obligations secured by this Deed of Trust or set forth in the Note or the 2009 DDA. For the purposes hereof, the words "reasonable attorneys' fees" shall mean and include the salaries and fringe benefits of the City Attorney and lawyers employed by the City of Attorney of the City of San Bernardino, computed on a hourly basis, who may provide legal services to the Beneficiary in connection with the exercise by the Beneficiary of any of its remedies hereunder. All such costs, expenses and fees shall be due and payable upon demand, shall bear interest from the date incurred through the date of collection at the rate of 10% per annum, and shall be secured by this Deed of Trust. 37. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record, as provided by law. 38. Successor Trustee. Trustee may resign by an instrument in writing addressed to Beneficiary, or Trustee may be removed at any time with or without cause by an instrument in writing executed by Beneficiary and duly recorded.In case of the death,resignation,removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute or successor trustee to act instead of Trustee herein named or any substitute or successor trustee,then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor trustee, or a substitute trustee, without other formality than appointment and designation in writing executed and acknowledged by Beneficiary and the recordation of such writing in the office where this Deed of Trust is recorded,and the authority hereby conferred shall extend to the appointment of other successor and substitute trustees successively. Such appointment and designation by Beneficiary shall be full evidence of the right and authority to make the same and of all facts therein recited. If such appointment is executed on behalf of Beneficiary by an officer of Beneficiary,such appointments shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Trustee or any officer of Beneficiary.Upon the making of such appointment and designation,all of the estate and title of Trustee in the Property shall vest in the named successor or substitute trustee and it shall thereupon succeed to and shall hold,possess and execute all the rights,powers,privileges, immunities and duties herein conferred upon Trustee; but, nevertheless, upon the written request of Beneficiary or of the successor substitute trustee, the Trustee shall execute and deliver an instrument transferring to such successor or substitute 73 07-29-09 Meta Housing-DDA • trustee all of the estate and title in the Property of the trustee so ceasing to act,together with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and shall duly assign,transfer and deliver any of the properties and moneys held by the Trustee hereunder to said successor or substitute trustee.All references herein to Trustee shall be deemed to refer to any trustee(including any successor or substitute, appointed and designated, as herein provided) from time to time acting hereunder. Trustor hereby ratifies and confirms any and all acts that Trustee herein named or its successor or successors, substitute or substitutes, in this Deed of Trust, shall do lawfully by virtue hereof 39. Reconveyance.Upon written request of Beneficiary, stating that all performances and sums secured hereby have been satisfied and paid, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,and upon payment of its fees,Trustee shall reconvey,without warranty,the Property then held hereunder. The recitals in any reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof The grantee in such reconveyance may be described as"the person or persons legally entitled thereto." 40. No Releases.The Property shall not be released from the lien of this Deed of Trust and no person shall be released from liability under the Note or any other obligation secured hereby,except in the manner herein specified. Without affecting the liability of any other person for the payment and performance of any obligation herein mentioned (including Trustor should it convey said Property) and without affecting the lien or priority hereof upon any Property not released, Beneficiary may, without notice,release any person so liable,extend the maturity or modify the terms of any such obligation,grant other indulgences,make future or other advances to Trustor or any one or more parties comprising Trustor, assign or in any manner transfer this Deed of Trust, release or reconvey or cause to be released or reconveyed at any time all or part of the said Property described herein,take or release any other security or make compositions or other arrangements with debtors.Beneficiary may also accept additional security, either concurrently herewith or thereafter, and sell same or otherwise realize thereon, either before, concurrently with, or after sale hereunder. 41. Beneficiary's Consents. At any time, upon written request of Trustor, Trustor's payment of Beneficiary's fees and presentation of this Deed of Trust (in case of full reconveyance, for cancellation and retention), without affecting the liability of any person for the payment of the indebtedness, Beneficiary may: (a) consent to the making of any map or plat of said Property; (b)join in granting any easement or creating any restriction thereon, (c)join in any other agreement affecting this Deed of Trust or the lien or charge thereof, and (d) reconvey, without warranty, all or any part of the Property. 42. Partnership Agreement Amendments. The consent of the Beneficiary is not required to an amendment of the Partnership Agreement: (i) resulting from the transfer by the Investor Limited Partner of its interest in the Trustor in accordance with this Deed of Trust; (ii) which does not result in the reduction of the installments of the Investor Limited Partner's Capital Contributions to be made during and at the time of completion of construction of the Project (as defined in the 2009 DDA) under the Partnership Agreement to be used as Trustor's equity contributions in accordance with the 2009 DDA; or (iii) which does not materially and adversely affect the ability of the Trustor to perform its obligation under this Deed of Trust, the Note or the 2009 DDA. 74 07-29-09 Meta Housing-DDA 43. Further Assurances. Trustor, from time to time, within fifteen (15) days after request by Beneficiary, shall execute, acknowledge and deliver to Beneficiary, such chattel mortgages, security agreements or other similar security instruments,in form and substance reasonably satisfactory to Beneficiary,covering all property of any kind whatsoever owned by Trustor or in which Trustor has any interest which, in the reasonable opinion of Beneficiary, is essential to the operation of the Property covered by this Deed of Trust. Trustor shall further, from time to time, within fifteen (15) days after request by Beneficiary, execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement or other document as Beneficiary may reasonably request in order to perfect,preserve,continue,extend or maintain the security interest under,and the priority of,this Deed of Trust and the priority of each such chattel mortgage or other security instrument.Trustor further agrees to pay to Beneficiary on demand all reasonable costs and expenses incurred by Beneficiary in connection with the preparation, execution, recording, filing and refiling of any such instrument or document, including the charges for examining title and the attorneys' fees for rendering an opinion as to priority of this Deed of Trust and of such chattel mortgage or other security instrument as a valid and subsisting lien. However, neither a request so made by Beneficiary, nor the failure of Beneficiary to make such request shall be construed as a release of such Property,or any part thereof,from the conveyance of title under this Deed of Trust,it being understood and agreed that this covenant and any such chattel mortgage, security agreement or other similar security instrument delivered to Beneficiary are cumulative and given as additional security. 44. Time of Performance. Time is of the essence hereof in connection with all obligations of the Trustor herein and under the Note. 45. Notices.The undersigned Trustor requests that a copy of any Notice of Default or Notice of Sale hereunder be mailed to it at its address as hereinbefore set forth and to the Investor Limited Partner at: Attention: Any notices to be given to Trustor by Beneficiary hereunder shall be sufficient,if personally delivered or mailed, postage prepaid, to the address of the Trustor stated hereinabove, or to such other address that Trustor has requested in writing to Beneficiary. Any time period provided in the giving of any notice hereunder shall commence upon the date such notice is delivered or deposited with the United States Postal Service for delivery by regular first-class postage pre-paid mail,as officially recorded on the certified mail receipt. 46. Beneficiary's Right to Inspect.Beneficiary and its agents and representatives may enter upon the Property at all reasonable times to attend to Beneficiary's interest and to inspect the Property. 75 07-29-09 Meta Housing-DDA • 47. Reports and Statements. Trustor shall deliver to Beneficiary, within ninety (90) days after the end of each of Trustor's fiscal years,and within twenty(20)days after Beneficiary's request, following an Event of Default,reasonably detailed operating statements and occupancy reports in a form satisfactory to Beneficiary covering the Property, both certified as correct by Trustor. At Beneficiary's option,after an Event of Default,such operating statements shall be prepared by an independent certified public accountant at Trustor's expense. If Beneficiary so requests, such statements shall specify, in addition to other information requested by Beneficiary,the rents and profits received from the Property,the disbursements made for such period,the names of the tenants of the Property and a summary of the terms of the respective leases or the rental arrangements. Trustor shall permit Beneficiary or its representative to examine all books and records pertaining to the Property, and shall deliver to Beneficiary all fmancial statements, credit reports, and other documents pertaining to the financial condition and obligations of Trustor and any tenants of the Property,and rental,income,and expense statements,audits,and tax returns relating to the Property. 48. Assignment by Beneficiary; Participation. Beneficiary may assign this Deed of Trust in whole or in part to any person and may grant participations in any of its rights under this Deed of Trust,without notice and without affecting Trustor's liability under this Deed of Trust. In connection with any proposed assignment, participation or similar arrangement, Beneficiary may make available to any person all credit and financial data furnished or to be furnished to Beneficiary by Trustor.Trustor agrees to provide to the person designated by Beneficiary any information as such person may reasonably require to form a decision regarding the proposed assignment, participation or other arrangement. Trustor may not assign this Deed of Trust to any person at any time, except in connection with a transaction approved in writing by Beneficiary, under the terms of this Deed of Trust. • 49. Non-Recourse Liability. a. As set forth in the Note, the Note is a non-recourse loan and the payment of the principal,or interest or premium, if any, and/or any other charges of any nature arising out of the Note or - this Deed of Trust, or for any deficiency with respect to principal, or interest or premium owing on the Note shall be limited to the security given by the Trustor and the Trustor's general except for the "Nonrecourse Carve-Outs" as defined below. b. Notwithstanding the provisions of Section 49(a) above, Trustor and Trustor's general partner shall have full personal joint and several liability for, and shall not be exonerated or exculpated from, the payment of all losses or damages, liabilities and expenses suffered, sustained or incurred by Beneficiary as a result of or arising out of, in connection with, directly or indirectly, or resulting from any of the following matters (such liability and such matters from which such liability arises,collectively,the"Nonrecourse Carve-Outs")(i) any fraud,intentional material misrepresentation, misappropriation or insurance proceeds,condemnation awards,security deposits or trust funds in violation of applicable law or the provisions of the 2009 DDA;(ii)Trustor's attempts to interfere with Beneficiary's rights under the Note,the 2009 DDA or this Deed of Trust; (iii)the failure of Trustor to apply proceeds of rents and other income of the collateral toward,or for sums otherwise advance by Beneficiary for,the costs of maintenance and operation of the Property and to the payment of taxes,lien claims,insurance premiums and debt service and other indebtedness to the extent the 2009 DDA requires such taxes, lien claims and other items to be paid;(iv)statutory liability for waste or the wilful damage or destruction to the Property, except as a result of casualty or condemnation; (v)any claims,actions,proceedings and suits initiated by 76 07-29-09 Meta Housing-DDA Trustor(or any party empowered to act on behalf of Trustor)alleging that the relationship of Trustor and Beneficiary is that of joint venturers,partners,tenants in common or joint tenants or any relationship other that that of debtor and creditor; (vi) any claim, demand, order, consent decree, settlement,judgment or verdict arising from the manufacture, deposit, storage, disposal, burial, dumping, injecting, spilling, leaking or other placement or release,in,on or about any of the Property of a Hazardous Material;or(vii) the cost to repair the Property as a result of casualty to the extent that such cost is not reimbursed by insurance. 50. Legal Relationships.The relationship between Beneficiary and Trustor is similar to that of lender and borrower,and no partnership,joint venture,or other similar relationship shall be inferred from this Deed of Trust. Trustor shall not have the right or authority to make representations,to act,or to incur debts or liabilities on behalf of Beneficiary. Trustor is not executing this Deed of Trust as an agent or nominee for an undisclosed principal, and no third party beneficiaries are or shall be created by the execution of this Deed of Trust, other than by the assignment by Beneficiary of this Deed of Trust. 51. Trustor Certification of Approval. Trustor hereby covenants and certifies that by executing this Deed of Trust, Trustor has obtained all approvals required by its principals, members and partners to execute and deliver the Note and this Deed of Trust. 52. Modification. This Deed of Trust may be amended, modified, changed or varied only by a written agreement signed by all of the parties hereto. No requirement of this Deed of Trust may be waived, at any time, except in a writing signed by Beneficiary and any such waiver shall be effective only as to its terms and on a single occasion. Neither, Beneficiary's delay or omission in exercising any right,power or remedy under this Deed of Trust upon default of Trustor nor Beneficiary's failure to insist upon strict performance of any of the covenants or agreements contained in this Deed of Trust shall be construed as a waiver of any such right, power, remedy, covenant or agreement or as an acquiescence in Trustor's breach or default. 53. Successors. Subject to the prohibitions against Trustor's assignments herein,this Deed of Trust shall inure to the benefit of and bind all of the parties, their successors, estates, heirs, personal representatives and assigns. 54. Partial Invalidity. If a court of competent jurisdiction finally determines that any provision of this Deed of Trust is invalid or unenforceable, the court's determination shall not affect the validity or enforceability of the remaining provisions of this Deed of Trust. In such event, this Deed of Trust shall be construed as if it did not contain the particular provision that was determined to be invalid or unenforceable.No such determination shall affect any provision of this Deed of Trust to the extent that it is otherwise enforceable under the laws of any other applicable jurisdiction. 55. Mutual Negotiation. Beneficiary and Trustor confirm that they have mutually negotiated this Deed of Trust and that none of the terms or provisions of this Deed of Trust shall be construed against either party. 56. Paragraph Headings. The paragraph headings are for convenience only and in no way define, limit, extend, or describe the scope or intent of this Deed of Trust or any of its provisions. 77 07-29-09 Meta Housing-DDA 57. Applicable Law. This Deed of Trust and the rights of the parties hereunder shall be governed by, construed and enforced in accordance with the laws of the State of California. 58. Entire Agreement.This Deed of Trust,including any exhibits or addenda,contains the entire agreement of the parties with respect to the subject matter hereof 59. Counterparts. This Deed of Trust may be executed by the principals,members and partners of Trustor in two or more counterparts, all of which together shall constitute one and the same instrument and lien.The signature pages of exact copies of this Deed of Trust may be attached to one copy to form one complete document. Additional copies of this Deed of Trust may be executed in counterparts and recorded in two or more counties, all of which shall constitute one and the same instrument and lien. 60. Fixture Filing and Recording. This Deed of Trust constitutes a financing statement filed as a fixture filing under California Commercial Code Section 9502(c),as amended or recodified from time to time. This Deed of Trust is to be recorded in the real estate records of San Bernardino County, California, and covers goods that are, or are to become, fixtures. 61. Survival of Representations and Warranties. All of Trustor's representations and warranties contained in this Deed of Trust shall be true and correct at all times during the term of the Note secured hereby, until performance of all obligations set forth in the Note and in the 2009 DDA or, alternatively, full repayment of the Note and release and reconveyance of this Deed of Trust. 62. Conflicting Provisions. To the extent that the provisions of this Deed of Trust conflict with any provisions of the 2009 DDA, the provisions of this Deed of Trust shall control. 78 07-29-09 Meta Housing-DDA IN WITNESS WHEREOF,Trustor hereby duly executes this Agency Loan Deed of Trust as of the day and year first above written. ARTICLE 1TRUSTOR Magnolia Highland, L.P. a California limited partnership By: Magnolia Highland, LLC, a California limited liability company Its: Administrative General Partner By: John M. Huskey Manager By: Western Community Housing, Inc. a California non-profit public benefit Corporation Its: Managing General Partner By: Graham Espley-Jones President By: Leanne Truofreh Secretary [NOTARY JURATS ATTACHED] 79 07-29-09 Meta Housing-DDA EXHIBIT "A" LEGAL DESCRIPTION OF PROPERTY 80 07-29-09 Meta Housing-DDA Attachment No. 12 Certificate of Completion 81 07-29-09 Meta Housing-DDA Certificate of Completion When Recorded,Mail to: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, CA 92401 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO CERTIFICATE OF COMPLETION The undersigned officer of the Redevelopment Agency of the City of San Bernardino (the"Agency") hereby certifies as follows: By its Resolution No. CDC , adopted and approved _, 200_ and Resolution No. , adopted and approved , 200_, the Agency has resolved as follows: Section 1. The improvements required to be constructed in accordance with that certain Disposition and Development Agreement (the "Agreement") dated as of 2009 by and between the Agency and Magnolia Highland, L.P., a California limited partnership (the "Developer"), of which Meta Housing Corporation is the General Partner, on the site(s) (the "Property") more fully described in Exhibit "A" attached hereto and incorporated herein by this reference, have been completed in accordance with the provisions of the Agreement. Section 2. This Certificate of Completion shall constitute a conclusive determination of satisfaction of the agreements and covenants contained in the Agreement with respect to the obligations of the Developer, and its successors and assigns, to construct and develop the improvements on the Property, excluding any normal and customary tenant improvements and minor building "punch-list" items, and including any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the building and its use and occupancy on the Property, whether or not said improvements are on the Property or on other property subject to the Agreement, all as described in the Agreement, and to otherwise comply with the Developer's obligations under the Agreement with respect to the Property and the dates for the beginning and completion of construction of improvements thereon under the Agreement; provided,however, that the Agency may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Agency Grant Deed (Recorded Instrument No. ) and the Agency Regulatory Agreement (Recorded Instrument No. ) pursuant to which the Property was conveyed under the Agreement. The Agreement is an official record of the Agency and a copy of the Agreement may be inspected in the office of the Secretary of the Agency, 201 North "E" Street, Suite 301, San Bernardino, California, during regular business hours. Section 3. The Property to which this Certificate of Completion pertains is more fully described in Exhibit"A"attached hereto. DATED AND ISSUED this —day of , 200 . Emil A. Marzullo Interim Executive Director [NOTARY JURAT ATTACHED]