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HomeMy WebLinkAboutR30- Economic Development ECONOMIICYDEVELOPMENT OF SAN IOAGENCY ORIGINAL FROM: Emil A.Marzullo SUBJECT: Joint Public Hearing - Meta Housing, Inc., Interim Executive Director Magnolia Highland, L.P., Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and DATE: March 9,2010 Development Agreement (The Magnolia at Highland Project — Northwest Redevelopment Project Area) -- -- -------- ---------- — — Synopsis of Previous Commission/Council/Committee Action(s): On January 21, 2010, Redevelopment Committee Members Baxter and Brinker unanimously voted to recommend that the Mayor and Common Council and the Community Development Commission consider this action for approval. —----------M------------- -------- ---- ------- Recommended otion(s): Open/Close Joint Public Hearing (Mayor and Common Council) A: 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 comer of Highland Avenue and Medical Center Drive (APNs: 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 pursuant to Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project Area) (Community Development Commission) B: 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 Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement by and between the Agency and Meta Housing, Inc. — Magnolia Highland, L.P. (Northwest Redevelopment Project Area) C: 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 a demolition contract by and between the Agency and MGP Construction for the demolition of Agency property located at 2196 Medical Center Drive,San Bernardino,CA 92411 (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 0 Resolution(s)0 Agreement(s)/Contract(s)0 Map(s)0 Letter(s) $6.4 million Agency Low&Moderate Housing Set-Aside Fund;$600,000 in Northwest Project FUNDING REQUIREMENTS: Amount: $ 7 million Source: Area Redevelopment Fund /7 Budge[Authority: F 2009-2010 Agency Budget Signature: /./� 31 N/L.Q-..Q-/ l—Fiscal Review: Emil A.Marzullo,Interim Exe a Director Lori P#Km o- ' lery 'm tinistrative Services Director Commission/Council Notes: G SD T zva�E_ 19 1 /yo,- 26 esn P9AgeMea�mm MCOmmiatlon\ 20IM3-15-IOMda HOmin&Im,Megn is HighI WLP-Amend.No I Sadm COMMISSION MEETING AGENDA Meeting Date: 03/152010 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY STAFF REPORT META HOUSING,INC.,MAGNOLIA HIGHLAND,L.P.,AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT (THE MAGNOLIA AT HIGHLAND PROJECT—NORTHWEST REDEVELOPMENT PROJECT AREA) SUMMARY: As a part of the executed disposition and development agreement ("Agreement") entered into by the Redevelopment Agency of the City of San Bernardino ("Agency") and Magnolia Highland, L.P. ("Developer"), the Agency now owns the 3.48 acre site located at the southwest comer of Highland Avenue and Medical Center Drive ("Project Site"). Once the Developer has obtained the necessary financing, approximately 2.5 acres of the Project Site will be transferred to the Developer who will build and operate an 80-unit affordable senior housing facility("Project"). Recently,the Developer was notified by the California Tax Credit Allocation Committee("TCAC")that its request for approximately $10.044 million in tax credit equity was not approved in the most recent 2009 competitive application round. Apparently, there were three other applications that scored higher than the Agency-sponsored Project and utilized all of the $34.86 million in tax credits available to Inland Empire applications for that round of funding. Therefore, in an attempt to be more competitive in the first round of 2010 applications, the Agency is requesting several measures to enhance the Project's probability of receiving tax credit equity. These recommendations include the following: 1. Increase the Developer's pre-development loan up to $300,000 to pay for enhanced construction drawings to 40%of completion and to demolish the existing blighted structure on the Project Site. 2. Approve the selection of the demolition contractor. 3. Ratify the acceptance of $790,000 in additional funds obtained by the Developer from the Federal Home Loan Bank/Affordable Housing Program. 4. Revise the Project pro forma by increasing the Agency cash subsidy by an additional $2.4 million in housing set-aside funds to pay for direct and indirect Project costs and $600,000 in Northwest Project Area redevelopment funds to off-set the cost of off-site public improvements recently required by the City's Development Services Department. The requested actions outlined above will aide in making the Project significantly more competitive with other applications being considered by TCAC within the Inland Empire pool. FNg \Comm NvCnm ieuoo\ 20I=M5-10MMMwsinS,In.MagoolialligWeM LP-Amend.No I SR.Lx COMMISSION MEETING AGENDA Meeting Date: 03/152010 Agenda Item Number: AZO Economic Development Agency Staff Report Amendment No. 1 —ASCRH-DDA Page 2 BACKGROUND: On August 3, 2009, the Community Development Commission of the City of San Bernardino ("Commission") approved a disposition and development agreement ("Agreement") by and between the Redevelopment Agency of the City of San Bernardino ("Agency") and Magnolia Highland, L.P. ("Developer"), in support of the Magnolia at Highland Project ("Project"). The Project was selected through the Agency's launch of its annual notice of funding availability CNOFA")process in an attempt to, among other things,provide a more 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; and provide a means for the City to implement specific housing policy goals and objectives. The Developer is a limited partnership whose principal partner is an affiliate of Meta Housing, Inc., 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. It was Meta that presented the Project originally under the Agency's NOFA and whose proposal was ultimately selected for funding. 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 I acre with frontage on Medical Center Drive and will be retained by the Agency for future development opportunities. The second larger parcel will be approximately 2.4 acres at the southwest comer of Highland Avenue and Medical Center Drive, and will accommodate the Project with the construction of a 3-story senior housing complex with approximately 87,000 square feet of floor area. Please see Attachment"A"that shows the tentative parcel map and Project Site location. There will be three separate plans offered for the units within 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 6-foot decorative wrought iron fence that surrounds the Project. 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. Please refer to Attachment"C"which shows various building elevations for the Project. Leading up to the August 3, 2009 Commission approval, on April 24, 2009, the Project was presented to the planning and land use subcommittee of the Northwest Project Area Committee ("Northwest PAC") P'WgeM CommD Cmmi,von\ 2010W3-15-I0Mw sin&Iw_.M4 lia HighlmdL -AmeM.No.I Skd COMMISSION MEETING AGENDA Meeting Date: 03/15/2010 Agenda Item Number: Economic Development Agency Staff Report Amendment No. I —ASCRH-DDA Page 3 where it received its endorsement. On April 30, 2009,the DevelopmentlEnvironmental Review Committee (D/ERC) reviewed the Project plans and moved the item to the City's Planning Commission for consideration whereas on May 19, 2009, it unanimously approved the Developer's request for a Tentative Parcel Map to combine three parcels into two parcels 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 Commercial Office land use district. CURRENT ISSUE: As a result of the deal points identified in the Agreement, the Agency now owns all three parcels comprising the Project Site and will be re-applying at the end of March 2010 for an award of low-income housing tax credits from the California Tax Credit Allocation Committee ("TCAC") in order to complete Project financing. The Developer had originally submitted a request for tax credits in June 2009, but did not receive a high enough score to obtain an award. Though the Project received a perfect score, it was lost to three other projects in the Inland Empire that had additional tie-breaker points which exceeded that of the Agency's Project submittal. In order to be more competitive in the next round of tax credit application submissions,the Agency and the Developer have collaborated on a proposed strategy to address the anticipated high level of regional competition. This would include the following changes to the original August 3,2009 proposal submission approved by the Commission. 1. Increase the predevelopment loan available to the Developer by an amount up to $300,000. The initial predevelopment loan of$100,000 was used to reimburse the Developer for architectural, engineering and related planning fees incurred for the original TCAC submission. The additional funds would be used to pay for development of architectural and engineering building drawings to 40% completion which would provide contractors with an enhanced ability to bid the construction work being proposed. The cost to prepare the drawings at this point is anticipated to cost$170,000. The remaining $30,000 would be used to demolish the existing muffler shop which is currently on the Project Site. Both actions would enhance the upcoming TCAC application and would greatly accelerate the construction schedule, should an award of tax credits be obtained. 2, Approve the selection of the demolition contractor. The Developer's construction manager has issued a bid notice for demolition services utilizing the Agency's pool of qualified demolition contractors and contractors previously recommended by the Developer. The bid notice was released to this group of contractors on January 8, 2010, followed by a job-site walk through on January 13,2010. Bids were received on January 14,2010. Following are the responses received: Contractor City/Location Bid Amount a) Dakeno Demolition,Inc. Riverside, CA $13,600 b) AON,Inc. Fontana, CA $15,950 c) MGP Construction Fontana, CA $13,350 d) Total Environmental Fontana, CA $19,179 e) American Wrecking El Monte, CA $20,580 P Up sWo=DvCom i&donI 20IM3-15-IOMMHmsin&1u.,MW ie NigNmd LP-A eW,No.I SKd COMMISSION MEETING AGENDA Meeting Date: 03//15/2010 Agenda Item Number: ro 2A Economic Development Agency Staff Report Amendment No. 1 —ASCRH-DDA Page 4 Based on the relative quality of responses received, the responsiveness of the individual submittals and the bid amounts of each, MGP Construction is being recommended for the award of the demolition contract. Currently, based in Upland and moving soon to Fontana, MGP has been providing demolition and other construction related services since 1985. 3. Ratify the acceptance of $790,000 in additional funds from the Developer's successful application to the Federal Home Loan Bank/Affordable Housing Program. In response to the initial TCAC decision, the Developer sought additional funding sources in anticipation of being more competitive for the next tax credit allocation round. Based on the merits of the Project, the Federal Home Loan Bank of San Francisco awarded the Project $790,000 in a deferred payment low-interest loan. The Project not only competed with other California proposals but other proposals from throughout the western part of the United States. Proof of the award is attached for further review (Attachment "D"). It is anticipated that the additional funding will enhance the competitiveness of the application when submitted to TCAC. 4. Revise the overall Project pro forma to increase the cash assistance from the Agency to the Developer by $2.4 million in housing set-aside funds and $600,000 in Northwest Project Area redevelopment funds. Based on negotiations with the Developer, a thorough review of the responses that scored higher than the Project in the initial TCAC round and an estimate of where projects will be scoring in the next TCAC round, it has been determined that an additional $2.4 million in housing set-aside funds is warranted in an effort to assist the Project. The decision to recommend more funding is based on the following criteria: a) the Agency's additional cash assistance to the Project is consistent with other application responses received under last year's NOFA round; b)the revised Agency cash subsidy relative to the amount of low-income housing tax credits that would be obtained still represents a substantial financial incentive for the Agency; c) though somewhat more lengthy,this process lets the Agency effectively gauge the level of financial assistance needed relative to the level of competition from other jurisdictions for the same financial resources; and d)this incremental process allows the Agency to retain its final option of issuing tax- exempt bonds for the Project. This option, though more direct, would be more expensive to the Agency than what is presently being proposed and would otherwise cost an additional $4 million to $5 million in Agency funds. This final option would be recommended only after all opportunities to receive 9%tax credits from TCAC have been exhausted. The need to provide Northwest Redevelopment Project Area redevelopment funds are based on a subsequent review by the City's Development Services Department. As a result of their on-site inspection, Development Services staff has identified the following public improvement items that need to be addressed as a result of the Project: • Traffic signal upgrades; left turn lights-all four directions $200,000 • Widen the turning radius at each of the four Project Site corners $100,000 • Removal of three utility poles and undergrounding of utilities $220,000 • Bus stop improvements including cover and ADA upgrades $50,000 • Curb, gutter and street lights along Highland Avenue $30,000 Estimated Total Cost $600,000 P UgeMUlComm Oev CommiuwnlCDC 101%03-,5-lOMpp HOU,inp,Inc.,Magnolia Highland LP-Amend.No,I SR.doc COMMISSION MEETING AGENDA Meeting Date: 03//15-/2010 ° Agenda Item Number: 0 Economic Development Agency Staff Report Amendment No. I —ASCRH-DDA Page 5 The recommended changes to the Project's financing would cause an amendment to the Loan Agreement increasing the principal amount of the Loan to $7.0 million. A revised pro forma has been provided for further review(Attachment"E"). The Amendment No. 1 contains several Exhibits lettered "A" through "H" containing changes in some instances to those forms of the Exhibits that were previously approved at the time of the original DDA approval. Exhibit "A", the Note contains several changes which are included in this agenda item in blackline format to illustrate each change from the version adopted with the original DDA. Other Exhibits such as the Fund Control Agreement attached as Exhibit "E" did not exist when the DDA was approved and other previously approved Exhibits have minor changes to conform with the reference to the Amendment No. 1 to the DDA. The pro forma attached as Exhibit"D" has changed due to the additional financing amounts being provided by the Agency and a blackline version was not possible to be produced in the form of the pro forma. ENVIRONMENTAL IMPACT: This Project 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. This does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act ("CEQA"), which states that a "Project" means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. FISCAL IMPACT: There is no City General Fund impact as a result of the Project. The Agency anticipates providing an additional subsidy to the Project in the revised amount of $7.0 million. This will be in the form of a deferred payment residual receipts loan secured by a 2nd trust deed. The source of these funds is derived from: 1) $4.4 million already allocated to this Project and identified in the FY 2009-2010 Agency Budget; 2) a reallocation of$2 million from the current FY 2009-2010 NOFA funding round; and 3) a reallocation of$600,000 in Northwest Project Area redevelopment funds. Such a reallocation would have a marginal impact on the current year's NOFA round. The $600,000 in Northwest Redevelopment Project Area funds is currently available for this activity. Account Budgeted Amount: Please see Fiscal Impact explanation above. Balance as of: March 9,2010 Balance after approval of this item: $494.097 of FY 2009-2010 Northwest Redevelopment Project Area Tax Increment Fund; $4 Million of FY 2009-2010 NOFA round. P USm macnmm Wei Cn mieaionW 30IM3-15-10 M"eH uin&S ,Me fin HigWaM LP-A eM No.I SKd COMMISSION MEETING AGENDA Meeting Date: 03/15/2010 Agenda Item Number: ZO i Economic Development Agency Staff Report Amendment No. I —ASCRH-DDA Page 6 RECOMMENDATION: That the Mayor and Common Council and the Community Development Commission adopt the attached Resolutions. ig Emil A.Maraullo,Interim xecu ve Director ewgaa &Tomml CO Imm ivionTM2010b1-15-IOMda Hm it lM.,Mapolia HighiaMLP-A W,No,I W0. COMMISSION MEETING AGENDA Meeting Date: 03//15./2010 Agenda Item Number: P-3 Attachment "A" Attachment "A" TENTATIVE PARCEL MAP No . 19200 CITY OF SAN BERNARDINO PSR• l�f Wt�nT^Ty 9�.I1[KNN BW WIIR.0 BOEx[99HGWG91 OMWP Yj 1 VRM BNIVµES / � 09M[- lx[IfMMR 1461 iss-9U piE Q i -1.Y_ n W EN B[mu}w C49)dH`-4ID SP gg q 4ry glwapp ([DU M.-141 SWMM WIG RvE. 0�4!�ry dC 06 CpwtiN •CR9M (K)�-tlb Ra[RGF- KM[ON (wJ)U1-WOI ♦ B)B'V 9911-W-r.Y 4PV0 IK iBMIK[W NRVw9.NM2 .GOeusx Ws-Wr.l u[oW fDI14 PaH 5 vxggN 111 W WRCNw rM NAK uSG VICINIYIW } rrWW[B V46swox Nw\rv[xIS ms w 4wErvux uv art nmr wnu4 EO+Mn. ^°• •J, ,"•� ••• � �.m _:"" [u'It mrvw[�ways[o zaracw/<NUURU ara. /(L'lJ/L/ � . .::G _ _.-.Ty •.. �}vl�..�:mn ,y.SXOl w}[CfryR000W WSIG11 tliG OSfMO.. ------ — Wxr.9uw+awn[4maN..1w.I..m K J _ —� IsO11YN4N NaU 1 . u } T I' I :n• IMP NOWS: NRa. �� I L � u9EI�EVIIS.ISroxloaeanawvsq „n, S �,IAWwwoxlrosEamEV.saW U G Ure.w su On IO a[culOh'raq I ' VenasllMfw.roE'x O.BrosdaM - { mtlb WlIGVUIYlm5Hr4:1FW Wwoss4wn.¢ I O IEOLLtlATFA'NMa0W119.d 6Q19ENONlEFR , 9 ) OcOtalnu F-- i ` I� wlaurrn¢frOws amxiWr ww.wmWhw. s _ 9 j SL I I i � xwNn,ums o�xu a9a'W pv lE6LL O/R:ER:MO.Ola1191�6 Ow41nAUY �I =_=Nxr Blun[m 132—sEa9 \' p l,-�'/ r[.__ f 1!).Y•^� � * I�I�I P, w:uu°•'w.e°�im1u 0 #, I I wgwaNU(w� Attachment "B" r \ \ A\j! � _ - ° $ � g e � ƒ J ON ^ - > ! } � 2 Q �■ AN J .} oy • : SAN BE RNARDNO % cE § APARTMENTS wE�m Attachment "C" 1r r , C r AeL / C � I I > D h Z �r i' z m Ir � c it i i I D ; SAN BERNARDINO PROJECTUv1AGES SENIOR APARTMENTS g m_a San Be nwdino.CALIFORNIA - `i P I I V i O c 0 z A m A . � o • r . SAN BERNARDINO T � cif kad pit PROJECT IMAGES F SENIOR APARTMENTS °� (pia• 1� Son Bwnordino•CALIFORNIA - �_ Attachment " D" .;:�l FHLBank San Francisco January 4,2010 Donald Brewer }f Senior Vice President �" JAN O f Min JPMorgan Bank&Trust Company 1301 2nd.Ave,41st Boor _ Seattle,WA 98101 Dear Mr.Brewer Congratulations!The Board of Directors of the Federal Home l.mn Bank of San Francisco approved funding for the project(s)listed below in the Round B competition of the 2009 Affordable Housing Program (AHP).In this round, 179 applications were submitted.The Bank awarded $35,070,012 to 49 of those applications. JPMorgan Bank&Trust Company has been awarded AHP subsidy for the following: $790,000 for The Magnolia at Highland sponsored by Western Community Housing,Inc. We ere proud that in this round,JPMorgan Bank&Trust Company,together with the Federal Home Loan Bank of San Francisco,lenders,and community housing sponsors,is helping to create affordable housing for nearly 3,458 households.It is especially important that almost 84°l of these housing units will be available to households with incomes at or below 50°.6 of the area median income, if you have any questions about the Bank's award process,please contact Darlene Kirk,Community Investment Department,at(415)616-2993.Thank you for your participation in the Affordable Housing Program. Sincerely, Dean Schultz President and Chief E..rrve Officer Enclosure cc: Timothy K Gerstmann,JPMorgan Bank&Trust Company Graham Espley-Jones,Western Community Housing,Inc Fed<nl H.m<Loa. Bask d S.. Fusel... 600 Cahtomia Street Suite 3G0 Post Office Box 7946 415 616.1 W0 Sun Francisco<A 94108 Stn Francisco,CA 94130 xww t'o'f.m.n Z _O O Z w U3 y m Z � `o F— O O z U LL. � _� (D ? Z .9 = Q O fn a W M O O cn o Z O Y o 0 Q = Z N LL O LU K/ a O F Q 0; O 3 Y LL 0 m Y w ¢ N Z Z ¢ w _ Q ~ O U) wN O LL- cu o W 0 L w U U p oa LLJ O LL ,1 FH LBank 2009 AHP Round B San Francisco Award Recipients Member Sponsor Project Name Type Subsidy Alliance Bank of Arizona Sierra Housing Resource Crossing Point Villas II Own 1,350,000 Partners, Inc. Alliance Bank of Arizona PUL-Coral Gardens Apartments, Ghost Ranch Lodge Apartments Rent 700,000 Inc. Alta Alliance Bank Affordable Housing Associates 6th and Oak Senior Homes Rent 690,000 Alta Alliance Bank LINC Housing Corporation Red Star Apartments Rent 1,180,000 Bank of America California EAH Inc. Belovida at Newbury Park Senior Rent 735,022 Apartments Bank of America California Coachella Valley Housing Brims de Paz Apartments Rent 610,000 Coalition Bank of America Califomia A Community of Friends ND Sepulveda I Rent 720,000 Bank of America California A Community of Friends ND Sepulveda II Rent 740,000 Bank of America California Cabrillo Economic Development Valle Naranjal Rent 650,000 Corporation Bank of America California Ysleta del Sur Pueblo Ysleta del Sur Pueblo Homes I Rent 600,000 BankofArizona City Rescue Mission, Inc. City Rescue Mission Rent 1,500,000 Bank of Arizona Son Carlos Apache Housing San Carlos Homes IV Rent 640,000 Authority Bank of Merin Habitat for Humanity of Sonoma Healdsburg 2009-10 Own 30,000 County Bank of Merin Habitat for Humanity of Sonoma Sebastopol 2009-10 Own 30,000 County Bank of Nevada Foundation for Senior Living Pena Blanca Village Own 1,499,990 Bank of the West Habitat for Humanity Fresno Bank of the West-Echo&Clovis Own 195,000 County North Bank of the West Mid Peninsula Housing Coalition Cynara Court Rent 570,000 Cirde Bank Northbay Family Homes NFH RED Project-Sonoma 2009 Own 300,000 Citibank,N.A. Western Community Housing, Compton Senior Apartments Rent 740,051 Inc. Cltbank,N.A. Western Community Housing, La Coruna Senior Apartments Rent 860,000 Inc. City National Bank Los Angeles Mission 1417 N Bronson Ave Rent 1,000,000 City National Bank Los Angeles Mission 1920 W 3rd St Rent 500,000 City National Bank LTSC Community Development 36th Street Apartment and Rent 250,000 Corporation Broadway Apartments Desert Commercial Bank RANCHO Housing Alliance Cahuilla Village Rent 450,000 Desert Commercial Bank Desert Alliance for Community Los Vinedos Rent 840,000 Empowerment Desert Commercial Bank Desert Alliance for Community San Cristobal Migrant Housing Rent 1,400,000 Empowerment Project First Northern Bank of Dixon Mission Solano Rescue Mission The Bridge to Life Center Rent 1,500,000 JPMorgan Bank&Trust Western Community Housing, The Magnolia at Highland Rent 790,000 Company Inc. Mississippi Valley Life Insurance National Community Mission Village Senior Rent 500,000 Company Renaissance(National CORE) Apartments 1 of 2 .^I F H LBa n k 2009 AHP Round B San Francisco Award Recipients Member Sponsor Project Name Type Subsidy Mississippi Valley Life Insurance Burbank Housing Development Windsor Redwoods Rent 640,000 Company Corporation National Bank of Arizona Housing America Corporation Desert Valley Estates Phase 111 Own 1,000,000 National Bank of Arizona National Farm Workers Service Fillmore Haciendas Rent 480,000 Center, Inc. Nevada State Bank Advocates Against Family HOPE'S Door Transitional Rent 700,000 Violence, Inc. Housing Pacific Capital Bank South County Housing Hillview Self-Help Homes Own 150,000 Corporation Pacific Capital Bank South County Housing University Village Apartments Rent 1,080,000 Corporation Rabobank First Community Housing Bay Avenue Senior Apartments Rent 1,000,000 Corporation Security Business Bank of San Pacific Southwest Community Dinuba M Street Senior Rent 650,000 Diego Development Corporation Apartments Silicon Valley Bank Eden Housing, Inc. Arroyo Vista Family Housing Rent 1 1,290,000 Tamalpais Bank Northbay Family Homes NFH RED Project-Marin 2009 Own 300,000 Union Bank Eden Housing, Inc. Peralta Senior Housing Rent 970,000 Union Bank West Hollywood Community Stovall Villa Rent 310,000 Housing Corporation Visalia Community Bank Christian Church Homes of Sierra Meadows Senior Housing Rent 420,000 Northern California Wells Fargo Financial National San Diego Interfaith Housing Brighton Place Rent 760,000 Bank Foundation Wells Fargo Financial National Resources for Community Erna P. Harris Court Rent 350,000 Bank Development Wells Fargo Financial National Burbank Housing Development Fife Creek Commons Rent 470,000 Bank Corporation Wells Fargo Financial National BRIDGE Housing Corporation Geary Boulevard Senior Living Rent 1,480,000 Bank and Health Center Wells Fargo Financial National Western Community Housing, San Clemente Senior Rent 750,000 Bank Inc. Apartments Wells Fargo Financial National A Community of Friends Vendome Palms Apartments Rent 400,000 Bank Wells Fargo Financial National Del Norte Neighborhood Veterans Apartments Rent 300,000 Bank Development Corporation Total 35,070,012 2of2 Attachment "E" Meta Housing-Magnolia at Highland,LP Project Budget-Sources and Uses of Project Funds February 16,2010 Use of Project Funds Source of Project Funds Tax Credit First Percentage Aeencv Equity Morhas AHP Developer Total fo Total Land Cost 2,450,000 2,450,000 12.87% Title/Escrow/Legal 27,605 27,605 0.15% Demolition 30,000 30,000 0.16% Off-Site Improvements 600,000 200,000 800,000 4.20% Site Work 350,000 350,000 1.84% Structures 3,722,395 1,635,858 1,864,172 790,000 8,012,425 42.10% General Requirements 401,200 401,200 2.11% Contractor Overhead 303,400 303,400 1.59% Contractor Profit 303,400 303,400 1.59% General Liabiity Insurance 137,670 137,670 0.72% Total Direct Construction $41 $ 3,331528. $1,864,172 $ 790,Ooo $ 30,306,091 5447%. Architectural Design 100,000 430,000 530,000 2.78% Engineering 70,000 195,000 265,000 1.39% Total A&E $ 170,000 $ 62S,000 $ 795,000 4.19% Construction Loan Interest 256,454 256,454 1.35% Origination Fee 70,000 70,OOD 0.37% Credit Enhancement App.Fee 20,000 20,000 0.11% Predevelopment Loan Origination Fee 20,000 20,000 0.11% Predevelopment Loan Interest 40,000 40,000 0.21% Insurance 116,446 116,446 0.61% Title and Recording 25,000 25,000 0.13% Total Construction Interest/Fees $ 547,900 $ .547,900 2.88% Origination Fee 20,000 20,000 0.11% Credit Enhancement App.Fee 12,500 12,500 0.07% Title and Retarding 12,500 12,500 0.07% Total Permanent Financing Casts $ 45,000 $ 45AN 0.24% Lender Legal Paid by Developer 40,000 40,000 0.21% Partnership Legal 100,000 100,000 0.53% Invsetor Due Dilligence Legal - 0.00% Accounting and Organizational 135,000 135,000 OJl% Total Legal Fees $ 27S,000 $ 275,000 2AS% 3-month Operating Reserve 120,936 120,936 0.64% Appraisals 10,000 10,000 0.05% Construction Contingency 401,557 401,557 2.11% Total Contingency Costs $ 411,557 $ 120,936 $ -533A93 Lee% TCAC Application/Monitoring Fees 70,000 70,000 0.37% Reproduction 25,000 25,000 0.13% Development Impact Fees 1,530,000 1,530,000 8.04% Permit Processing Fees 70,000 70,000 0.37% Marketing and Start-up 40,000 40,000 0.21% Furnishings 90,000 90,000 0.47% Studies/Surveys 60,000 60,000 0.32% Contingency 141,322 141,322 0.74% Total Other Ousts $ 15'6,322 $ 110,000 $ 2,026,322 10.61 Developer Overhead and Prc`.t 1,' 046 11,331 1,993,377 10.47% Total Developer Overhead ark Profit $ 1,! '76 $ 11,331 $ 1,991 10.47% Total Development Costs $ 7,000,OOo $ 9, '53 $2,140,108 $ 790,000 $ 11,331 $ 19,030,792 100.00% SAN BERNARDINO COUNTY SUN ThlspaLe for file,sump rw 4030 N GEORGIA BLVD,SAN BERNARDINO,CA 92407 Telephone(909)889-9666 /Fax(909)885-1253 Carey K. Jenkins/L. Wyche ECONOMIC DEVELOPMENT AGENCY-CI SBSN:1600766 201 NORTH E ST#301 PUBLIC NOTICE SAN BERNARDINO, CA- 92401 NOTICE EING OF THE(MAYOR AND COMMON COUNCIL AND THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO TO CONSIDER THE SALE OF CERTAIN PARCELS OF PROOF OF PUBLICATION INC.LAN MAGNOLIA AHIGHULAND, L.P. PURSUANT TO HEALTH AND SAFETY CODE SECTIONS 33431 (2015.5 C.C.P.) AND 33433 (NORTHWEST REDEVELOPMENT PROJECT State of California AREA) PLEASE TAKE NOTICE that the County of SAN BERNARDINO )ss Mayor and Common Council of the City of San Bernardino(the"Council") and the Community Development Notice Type: GPNSB-GOVERNMENT PUBLIC NOTICE-SB Commission of the City of San Bernartlino(the"Commission")as the governing board of the Redevelopment Agency of the City of San Bernardino Ad Description: META Housing-Magnolia,LP Project (the "Agency"), will conduct a joint public hearing at 4:30 p.m., on Monday, March 15, 2010, in the City Council Chambers at City Hall, 300 North "D" Street, San Bernardino, or os soon as possible thereafter as the matter may be heard to consider the I am a citizen of the United States and a resident of the Stale of California;1 am terms on which the Agency may over the age of eighteen ears,and not a art to or interested in the above hereafter transfer certain a Highland,to Meta 9 9 Y D Y Housing, Inc — Magnolia to Met entitled matter.I am the principal clerk of the printer and publisher of the SAN L.P. (the "Developer"). At the joint BERNARDINO COUNTY SUN,a newspaper published in the English language public hearing, the Council and the in the city of SAN BERNARDINO,county of SAN BERNARDINO,and adjudged Commission toy regardiinglthe proposed a newspaper of general circulation as defined by the laws of the State of terms of the disposition and California by the Superior Court of the County of SAN BERNARDINO,State of development by the Developer of California,under date 06/20/1952,Case No.73084. That the notice,of which certain Agency owned properties referred to as the Property". The the annexed is a printed copy,has been published in each regular and entire Property includes parcels of land issue of said newspaper and not in any supplement thereof on the following which are owned by the Agency dales,to-wit: (APNs:0143-191-38,46 and 63).Each of the parcels of land included as the Property are situated within an area designated by the Agency as the "Northwest Redevelopment Project 0224/2010,03/0312010 Area" and more Particularly located on the southwest corner of Highland Avenue and Medical Center Drive within the Northwest Redevelopment Project Area. It is proposed that the Agency shall transfer the Property to the Developer subject to the terms and conditions of an agreement entitled 'Amendment Executed on: 03 1052010 No. 1 to the 2009 Affordable Senior At Los Angeles,California Citizen Rental Housing Acquisition, Disposition and Development Agreement By and Between the 1 minify (or declare) under penalty of perjury that the foregoing is true and Redevelopment Agency of the City of correct. San Bernardino ("Agency ) and Meta Housing, Inc. — Magnolia Highland, L.P." (the "Amended Agreement"). At the icint public hearing,the Agency will consider certain modifications to the Amended Agreement, including increasing its financial assistance inclu ing Signature III I II II II II III III III II I I I I I II * A 0 0 0 0 0 1 5 7 2 8 9 6 from 84 million to $7 million. The Developer shall undertake the development of the Parcels Pursuant to the Amended Agreement, as 79 new senior citizen rental residential dwelling units and one (1) on-site manager unit (the "Project"). The Project will be funded in part with 87 million from a combination of the Agency's Low and Moderate Income Housing Fund and the Agency's Northwest Redevelopment Project Area Tax Increment Fund. NOTICE IS FURTHER GIVEN that any and all Persons are Invited to appear before the Council and the Commission and present evidence or testimony concerning the foregoing matters relating to the Amended Agreement at the time,date and place set forth herein. A Revised Summary Report has been prepared relative to the proposed modifications to the Amended Agreement. This Revised Summary Report sets forth the details of the disposition and development of the Property to be transferred to the Developer and it has been Prepared Pursuant to the requirements of the Health and Safety Code,Section 33433. Copies of the Revised Summary Report and the Amended Agreement are on file and are available for inspection and copying by interested persons during normal business hours at the office of the Agency at 201 North "E"Street,Suite 301,San Bernardino, California 92401,(909)663-1044. The Agency has reviewed the Proposed Project under the California Environmental Quality Act("CEQA") and has determined that the approval of the Project and the Potential development of 79 new senior citizen rental residential dwelling units and one (1) on-site manager unit by the Developer Pursuant to the Amended Agreement qualifies as a Categorical Exemption, under Class 32 of the CEQA Guidelines,Section 15332. Interested persons may contact Carey K. Jenkins, Director of Housing and Community Development for the Agency at (909) 663-1044 or by email: cjenklnspsbrdo.org for additional information relating to the icint Public hearing and the Proposed disposition of the Property to the Developer under the terms of the Amended]�reement. NOTICE given this 17 day of February 2010. 2/24,3/3/10 SBS-1800766/ SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW — REGARDING THE DISPOSITION AND DEVELOPMENT OF AGENCY PROPERTY LOCATED ON THE SOUTHWEST CORNER OF MEDICAL CENTER DRIVE AND HIGHLAND AVENUE (APNs: 0143-191-38, 46 AND 63), PURSUANT TO THE TERMS OF AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") AND META HOUSING, INC. — MAGNOLIA HIGHLAND,L.P. (NORTHWEST REDEVELOPMENT PROJECT AREA) INTRODUCTION This Summary Report (this "Report') has been prepared by the Redevelopment Agency of the City of San Bernardino (the "Agency") in accordance with Health and Safety Code Section 33433. This Report sets forth certain details of Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement ("Amended Agreement') by and between the Agency and Meta Housing, Inc. — Magnolia Highland, L.P. (the "Developer"). The Amended Agreement provides for the sale of certain properties by the Agency to the Developer pursuant to the terms and conditions set forth in the Amended j Agreement. I The sale of certain Agency-owned land to the Developer will facilitate the new development of 79 affordable senior citizen rental dwelling units and one on-site manager unit located on the southwest corner of Medical Center Drive and Highland Avenue (APNs: 0143-191-38, 46 and 63) (the "Property") in the Northwest Redevelopment Project Area ("Project Area"). The new housing development, which may be undertaken by the Developer, is referred to in the Amended Agreement as the "Project'. This Report is prepared for the transfer of the Property from the Agency to the Developer. This Report is organized into the following six (6) sections: I. Salient Points of the Proposed Amended Agreement: This section includes a description of the major responsibilities to be assumed by the Agency and the Developer. II. Cost of the Proposed Amended Agreement to the Agency: This section outlines the proposed costs to the Agency. III. Estimated Value of the Interests to be Conveyed Determined at the Highland and Best Use Permitted under the Redevelopment Plan: This section summarizes the value of the Property to be conveyed by the proposed Amended Agreement to the Developer, at the highest use permitted. IV. Estimated Reuse Value of the Interests Determined at the Required Use and with the Conditions, Covenants and Restrictions Required by the Proposed Amended Agreement: This section summarizes the sales price to be paid to the Agency, if any. 1 P9Agn as1Agcn&A0acM. %Su=m Rcp &n 010%03-1510 Mma H u,mg,Mc.Summary R p n,wc, V. Blight Alleviation: This section describes the existing blighting conditions in and around the Project Area, and an explanation of how the proposed sale and development of the Property will assist in alleviating the blighting conditions. VI. Conformance with the AB 1290 Implementation Plan — Agency Five-Year Implementation Plan Housing Component (2009-2010 through 2018-2019) Adopted on December 2, 2009. This section identifies how the proposed Amended Agreement will result in a development activity that fulfills goals objectives established in the Agency's AB 1290 Five-Year Implementation Plan. I. SALIENT POINTS OF THE PROPOSED AMENDED AGREEMENT A. Descrintion of the pronosed Project • The purpose of the proposed Amended Agreement is to provide for the sale of the Property to the Developer to facilitate the development of 79 units of affordable senior citizen rental housing and 1 on-site manager unit on the Property in the Project Area. • All necessary infrastructure improvements such as electricity, sewer, gutter and landscaping will be provided by the Developer. • The Developer proposes to utilize a total of $19,030,792 to develop the Project. The sources used to complete the Project would be derived from the following: $9,089,353 in low-income housing tax credit equity provided through the California Tax Credit Allocation Committee; $2,140,108 in permanent Is' trust deed financing; $7,000,000 from the Agency in the form of a deferred payment 2"d trust deed residual receipts loan; $790,000 in permanent subordinated financing from the Affordable Housing Program of the Federal Home Loan Bank; and$11,331 in deferred developer's fees. B. Agency Responsibilities • Sell a 2.48 acres portion of the Property (the "Site") to the Developer for $2,450,000 pursuant to the terms of the Amended Agreement. Provide additional assistance of $4,550,000 to off-set development impact fees, architectural and engineering fees, off-site improvements costs, on-site construction costs, demolition,title, escrow, and legal fees. In consideration of the $7,000,000 in assistance, including the consideration for the Site, accept a residual receipts note, secured by a subordinated trust deed that will provide for repayment from the residual cash flow generated by the completed Project. C. Developer Responsibilities • Execute and implement the Amended Agreement with the Agency and agree to accept the 2.48-acre Site and develop 79 units of affordable senior citizen 2 P,Age&O A6eM Annh cWx\Summary Rep sUOIM03-15-10Mela Home B.lnc.Summary Repondocx rental housing and 1 on-site manager unit per the Amended Agreement and rent the 79 units to low-income senior households and secure the construction/permanent financing required to develop the Site. The units will be rented to individuals and households with a range of income levels of between 30% of the area median income ("AMI") and not more than 60% of AMI and will be subject to a covenant agreement in favor of the Agency assuring compliance with the affordability levels and other requirements for the use of the Agency's $6,400,000 derived from the Low- and Moderate- Income Housing Fund and $600,000 from the Northwest Project Area redevelopment funds. • Complete the construction i n per the Schedule of Performance in the Amended Agreement. II. COST OF THE PROPOSED AMENDED AGREEMENT TO THE AGENCY The Agency's agreed upon subsidy for the Project is $7,000,000 of which $6,400,000 will be from the Low- and Moderate-Income Housing Set-Aside Fund, and $600,000 from the Northwest Project Area redevelopment funds. A portion of these funds has been spent in accordance with the original Amended Agreement for site acquisition in the amount of $2,450,000, plus $27,605 in accumulated escrow extension, title and legal transaction fees. The remaining balance of$4,522,395 will be used to pay for demolition of an existing building, reimbursable pre-development costs, development impact fees and architectural and engineering costs, and off-site and on-site improvement costs. In exchange for this assistance, the Agency will receive a deferred payment residual receipts promissory note secured by a second trust deed in the principal amount of $7,000,000 from the Developer. In addition, the Agency will retain a one-acre remnant parcel directly to the south of the Project with an approximate value of$694,782 based upon the findings of the summary appraisal report commissioned by the Developer, dated April, 2, 2009 (indicated value per square foot identified in the appraisal report = $15.95 x 43,560 square feet per acre). The Developer is also seeking low-income housing tax credits from the California Tax Credit Allocation Committee and firs trust deed construction and permanent financing to complete the Project,which will cost approximately$19,030,792 to develop. III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST AND BEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN The highest and best use is defined as that reasonable and probable use that supports the highest present value, as defined, as of the effective date of the appraisal. Based on the j summary appraisal report dated April 2, 2009, the highest and best use for the Site is that which is proposed under the Project. The rationale for this is the development site is under-going zoning changes and modifications with the aid of the City, which will allow for a high-density affordable senior residential development and that this is a residential 3 PlAgcn"s Agmdn Attn hineW"um Rc Q010`03-15-10 Mwo Hoosmg,L¢.Sww Rt A docx area with some commercial development along Highland Avenue. Furthermore, the Northwest Redevelopment Plan Specifically calls for the production of affordable housing, including subsidized housing for seniors. With this as a background, the estimated value of the interests to conveyed to the Developer to determined at the highest and best use permitted for the 2.48 acres would have a stated land value of$1,723,059. This amount is approximately equal to the cost per square foot of$15.95 as identified in the summary appraisal report multiplied by the number of square feet in 2.48 acres of land. The 2.48 acres of land is what constitutes the Project Site. The one-acre remnant parcel would be retained by the Agency and would have an assigned value of $694,782. For the purposes of this Summary Report, the remnant parcel retained by the Agency is not considered a part of any defined project at this time. The Agency will retain the remnant parcel until such time as a favorable development opportunity arises that would be cause for its disposition. In this case, the remnant parcel would be the subject of its own disposition and development agreement and accompanying Summary Report. IV. ESTIMATED REUSE VALUE OF THE INTERESTS DETERMINED AT THE REQUIRED USE AND WITH THE CONDITIONS, COVENANTS AND RESTRICTIONS REQUIRED BY THE PROPOSED AMENDED AGREEMENT The Agency's economic consultant, Tierra West Advisors, Inc., has completed a Reuse Analysis, which is attached to this report as Exhibit B. According to that Reuse Analysis, the land effectively has a reuse value of $0 based upon its development in accordance with the conditions of the Amended Agreement. The Amended Agreement requires the Developer to develop the Property as an affordable housing project, and charge rental rates for the completed units, which would be below the fair market value rents for the area. This restriction on the rent that can be charged will remain in force for 55 years. This limitation reduces the value of the land from the current fair market value to zero. Cash flow projections indicating the cash flow projected to be paid to the Agency over the first 56 years of the Project are attached to this report as Exhibit C. These projections indicate that the net present value of the income the Agency will receive, discounted at 5.50%per year, is approximately$1,287,368. V. BLIGHT ALLEVIATION Presently the Property is the site of a dilapidated and non-operating gas service station that has turned into a muffler shop and miscellaneous car parts storage area. The muffler shop owner has been cited numerous times by the City's Code Enforcement personnel for various health and safety and general public nuisance issues. The remaining portion of the Property is vacant land that has a history of public dumping. The proposed disposition of the Site and the demolition and site clearance of the existing improvements will be the initial step that fostered the elimination of blight in the Northwest Redevelopment Area in the vicinity of the Property. The development of the Property will further will further eliminate existing blight, foster the reuse of under utilized 4 P.%AgeMB,Age aAryKcN S%SU=M RePM'2010',03.15-10 Mpe Ho ft.IM,Swn Rpm x property into new, high quality affordable rental housing units for the benefit of the low- income senior residents of the Project Area and the City. It is anticipated that additional rental housing in the Northwest Redevelopment Project Area with covenants imposed pursuant to the Amended Agreement will assure the continued viability of this Project and the continuing progress toward further elimination of blighting influences in the immediate area. VI. CONFORMANCE WITH THE AB 1290 IMPLEMENTATION PLAN — Agency Five-Year Implementation Plan — Housing Component (2009-2010 through 2018- 2019) Adopted on December 7,2009: The Five-Year Implementation Plan adopted by the Agency contains several broad operational goals and objectives for the Project Area. Among these are the following: • Eliminate blighting influences, including, deteriorating buildings, uneconomic land uses,obsolete structures, and other environmental, economic and social deficiencies. • Re-plan, redesign, and develop underdeveloped areas that are stagnant or improperly utilized. • Provide affordable housing opportunities. • The Amended Agreement will assist the Agency in meeting the broad based and more specific objectives and goals of its Five-Year Implementation Plan for the Project Area in the following ways: • The execution of the Amended Agreement with the Developer will continue redevelopment activities of the Agency by providing an additional 79 units of low- income housing within a designated redevelopment project area. • Reduce the low-income Regional Housing Needs Assessment (RHNA) number from 602 to 523 needs. • Allow the Agency to comply with Community Redevelopment Law (CRL) Section 33334.4(b)by providing units that addresses the housing needs of seniors. • Allow the Agency to meet the requirement that a proportional amount of Agency Low and Moderate Income Housing Funds must be expended to address senior housing needs in the Project Area and Citywide. Based upon the preceding factors, the Amended Agreement is consistent with the adopted Five-Year Implementation Plan. The interest and land conveyed to the Developer will be developed in conformance with the City's General Plan and Housing Element, Municipal Development Code, and the Agency's AB 1290 Implementation Plan. 5 P:Agrotl Age a Aftnh W%Summa Rep m,2010\03-15-10 Mna Housing.IM,Smm NWA docx EXHIBIT A AMENDED DISPOSITION AND DEVELOPMENT AGREEMENT (SEE AMENDMENT NO. 1 ATTACHED TO APPROVING RESOLUTION) 6 P.Ugen asUgen Att h=ntslSum RryoreWM3-15-10 MesaN ugm6.hr.Sunmvy Repon.MM EXHIBIT B REUSE ANALYSIS SEE FOLLOWING PAGES 7 V TIERRAWEST A D V 15 0 R S February 24,2010 Mr. Carey Jenkins Mr. Don Gee San Bernardino Redevelopment Agency 201 North E Street, Suite 301 San Bernardino, CA 92401-1507 Subject: Reuse Analysis, Magnolia at Highland Project, San Bernardino,CA Dear Mr. Jenkens and Mr.Gee: The San Bernardino Redevelopment Agency ("Agency") is considering providing financial assistance for the development of an 80 unit apartment project known as the Magnolia at Highland project ("Project'). The Project would be developed by Magnolia Highland LP ("Developer"), a limited partnership controlled by Meta Housing Corporation ("Meta"). The agreement between the Agency and the Developer has been memorialized through a 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement which is being amended through Amendment No. 1 (combined, the "Amended Agreement'). The Amended Agreement will document the terms of the financial assistance, and the conditions the Agency will impose on the Project. The State of California Health& Safety Code ("H& S Code") section 33433 requires that before any redevelopment agency sells or leases a property acquired with tax increment revenue, the agency shall make available to the public a summary of the agreement ("Summary Report"), which will include the estimated value of the interest to be conveyed or leased, determined at the use and with the conditions,covenants,and development costs required by the sale or lease. The Summary Report shall specify the purchase price of the land or present value of any lease payments which the lessee will be required to make during the tern of the lease. If the sale price or total rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use, consistent with the redevelopment plan, then the agency shall provide, as part of the summary, an explanation of the difference(the"Reuse Analysis"). A 3616 Evst 31C Street Los Angeles, CA 90033 T 3331265 4400 F 3231261 9676 W Berta westa Dv lso rs.com REAL ESTATE a REDEVELOPMENT CONSULTANTS Mr. Carey Jenkens Mr.Don Gee February 24,2010 Page 2 Insofar as the Agency acquired the Project site with Agency tax increment funds, and will then sell the site to the Developer for an effective price which would be less than fair market value, an explanation for the discount is required. This report provides this explanation. Proiect Description The Project site is located at the southwest corner of Highland Avenue and Medical Center Drive and it is approximately 2.48 acres (the "Site"). The Agency acquired a larger site of 3.48 acres, including the Site, in mid-2009 for $2,450,000 ($15.95 per square foot),utilizing its low to moderate income housing funds for the purchase. The Agency will grant the Site to the Developer for $2,450,000, and take back a promissory note for the full price on the condition that the Developer builds seventy- nine (79) affordable residential units and one (1) unrestricted manager's unit and meets the conditions outlined in the Amended Agreement. The Developer will apply for an allocation of 9% low-income housing tax credits("Tax Credits")which will be used to finance the development of the Project. The Developer has also received an award of Affordable Housing Program ("AHP") funds in the amount of$790,000, which are available through the Federal Home Loan Bank("FHLB"). The Developer will build a total of eighty (80) apartment units, consisting of sixty- eight(68)d-bedroom units and twelve(12)2-bedroom units. One(1)of the units will be a managers unit, and will not be rent restricted. The remaining seventy-nine (79) units will be limited to occupancy by very-low and lower-income senior households who will rent in accordance with a Regulatory Agreement which will be recorded against the Property in favor of the State of California Tax Credit Allocation Committee("TCAC"). Analysis All of the units will be restricted to occupancy by households at the very-low and lower-income levels for San Bernardino County. These qualified households will pay total housing costs, which includes rents and a reasonable utility allowance, in accordance with the income level for the respective targeted households and the regulations of the TCAC. This will result in income for the Project which will be A 2616 East Std Street Los Angeles. CA 90033 T 3231165 46400 F 323 2 6 1 8616 W tie r rawestadvisors eom REAL ESTATE a REDEVELOPMENT CONSULTANTS Mr.Carey Jenkens Mr.Don Gee February 24,2010 Page 3 significantly lower than income that would be received for a comparable market rate project,which necessitates the Agency assistance. For 2009, the incomes for the targeted households and family sizes would be as follows: San BemardinoCourty Household Incomes 2009 Family Size 1 2 3 4 Category Extremely Low Income $14,000 $16,000 $18,000 $20,000 Very LaN Income $23,300 $26,650 $29,950 $33,300 Lower Income $37,300 $42,650 $47,950 $53,300 Median Income $45,150 $51,600 $58,050 $64,500 Moderate Income $54,200 $61,900 $69,650 $77,400 Soma:Stet-of Callamia fbmirg& Cnnmunity Dewbpn tDepar6mnt The Agency funds and Tax Credits have different guidelines for what constitutes affordable housing costs for these households. In addition, the Tax Credit allocation process is competitive, so that the Developer must designate the affordability of the housing units in order to capture the maximum amount of points for the housing affordability part of the allocation process. The two public sector sources of capital anticipated for the Project, the Agency and Tax Credits, restrict rents for the respective income levels and unit sizes as indicated in the chart attached to this report as Exhibit A. As a result of these restrictions, the rents for the apartments will be set as follows: V TIERRAWEST A D V I S O R S Mr.Carey Jenkens Mr.Don Gee February 24,2010 Page 4 Rental Restrictions per TCAC standards Unit Size No. of units Income targeting Monthly rent 1-bedroom 6 30% $374 1-bedroom 8 35% $437 1-bedroom 8 409/6 $499 1-bedroom 0 450/6 $561 1-bedroom 14 50% $624 1-bedroom' 32 60% $624 2-bedroom 2 30'k $449 2-bedroom 0 40% $599 2-bedroom 0 45% $673 2-bedroom 6 50% $748 2-bedroom' 3 60% $748 All rents as grossrerts,before dediction for utility alowanoes Rental Rates based upon 2009 income levels Rents will be actuated n subsequent years based upon curert inonme levels and the respective tundbg program raquiranenft 'Although TCACregdab'ons would alow for rents of$749 forth*60%1bedvom wits and$a?6 j for H He 60%2bedoom urns,Dembper's maket study indicated the pmect would ody be able to achieve$624 and$746 respectively thr these units. These rental rates result in a potential annual rental income of$536,557 per year in the first stabilized year after considering the unrestricted manager's unit and allowances for utilities, increasing at an estimated 2.00% per year thereafter. hlcluding income from the laundry facilities and other miscellaneous income, and deducting vacancy and collection losses of 5.00%per year, results in a gross effective income of$516,113 per year as of the first stabilized year. Operating expenses are estimated to be $294,643 per year in the first stabilized year, which comes to $3,683 per unit per year. These operating expenses are lower than a market rate project would experience due to the plan of having a non-profit general partner, which will allow the Developer to qualify for a welfare exemption and thereby reduce the obligation to pay property taxes. Property taxes are budgeted at $1,000 per year. The budget includes $14,400 per year to provide services to the tenants,which is required by the tax credit program. The operating expenses are projected to increase at 3.50% per year in future years. The Developer will set aside $20,000 per year, which is $250 per unit per year, in a replacement reserve account to fund future capital investments. These revenue and expense projections result in a projected net operating income ("NOI") of$201,470 per year in the first stabilized year. V TIERRAWEST A D V I S O R S Mr.Carey Jenkens Mr. Don Gee February 24,2010 Page 5 Utilizing a debt service coverage of 1.15, a 7.25% fixed interest rate and a 30 year amortization for a loan due and payable in 18 years results in annual debt service of $175,192 per year. These payment terms will require a balloon payment in the 18'h year, which in turn will require either a refinancing or sale of the Project in that year. The loan amount based upon these terms is projected to he$2,140,108. The Developer is projecting total development costs of $19,030,792. A summary breakdown of the Developer's cost projections indicates the following: COW Cost COSIYEI it Land acquisition $2,450,000 $30,625 Construction/Hard Costs $9,345,670 $116,821 Financing $643,060 $8,038 Other Indirect costs $4,592,062 $57,401 Developer Fee $2,000,000 $25,000 Total $19,030,792 $237,885 Since the project will cost$19 million to develop but will only support$2.1 million in permanent financing,there needs to be financial assistance to cover the gap. The Tax Credits are a major source of this assistance. Under the Tax Credit program, once the Project is completed, it will generate approximately $1,298,479 per year in federal low-income housing tax credits that an investor will be able to use to offset its federal income tax obligations. In the current market investors will invest approximately $9,089,353 in the partnership in exchange for these tax benefits. These funds will be ! invested in the Project, with payments typically spread out during the development phase and a final payment made once the Project is completed and operating, and a form 8609 has been issued by TCAC vesting the Tax Credits. The sources of funds to finance the Project during the various phases of the development are projected to be as follows: SoLrce Construction Pemtanent Construction Loan $7,000,000 $0 Tax Credit equity $3,181,274 $9,089,353 Permanent Mortgage $0 $2,14Q108 AHP Funds $790,000 $79Q000 Developer Fee&deferred costs $1,059,518 $11,331 Agency 57000000 57.000000 Total $19,030,792 $19,03Q792 TIERRAWEST A D V I S O R S Mr. Carey Jenkens Mr. Don Gee February 24,2010 Page 6 As indicated in the chart above, the Agency will be paying all of its assistance either prior to or during the construction phase. Ordinarily, redevelopment agencies seek to hold back some of their funding to protect their investment and assure that the Developer performs under the agreement. However, financial markets have made the sale of Tax Credits more difficult than in the past, and resulted in a reduction in the price paid for Tax Credits. Investors and lenders are also requiring that redevelopment agencies fund their investment during the construction period. Many entities which may have invested in Tax Credits in the past have incurred sizable losses in their own businesses due to the recession,and now have less need for Tax Credits to offset federal income tax liabilities. Fannie Mae and Freddie Mac, who had been purchasers of approximately 50% of Tax Credits in the past, are no longer in the market, substantially reducing demand for the credits. The Developer does not yet have firm commitments from its lenders or Tax Credit investors, therefore,the price and terms may change from the terms anticipated in this report. The TCAC will record restrictive covenants against all 79 affordable units, which would be in addition to the Agency restrictions. The TCAC covenants will restrict rents to those rates that would be affordable to households at or below 60%of County of San Bernardino median income in accordance with TCAC's rent schedule. These TCAC restrictions will remain in place for a minimum of 55 years. The residual cash flow, which is the cash flow remaining after payment of operating expenses, reserves, debt service, and asset management fees, which are budgeted at $15,000 per year, would be approximately $11,279 per year. The Agency and the Developer would divide this residual cash flow 50% each, with the Agency's 50% ($5,640 per year) used to service its $7 million loan. The loan would accrue interest at 3% per year, which would be $210,000. Therefore the land essentially has no economic value under this development scenario. The residual cash flow accruing to the Agency's investment, including the portion for the land, is too low to generate any meaningful return. The Agency's residual receipts loan will accrue interest until it is paid off through a refinancing or sale in the future. Summary • Developer is proposing the development of an 80-unit affordable apartment project which will be financed by Tax Credits, contributions from the �TIERRAWEST A D V I S O R S Mr. Carey Jenkens Mr. Don Gee February 24,2010 Page 7 Agency's low to moderate income housing funds, and the Northwest Project Area redevelopment funds. • The Tax Credits and Agency financing commitments restrict the rents that can be charged to levels that are significantly below market rates. • The restricted rents will support approximately $2.1 million in conventional mortgage financing. • The Project is estimated to cost approximately$19 million to develop. • The sale of the Tax Credits is estimated to raise approximately $9.1 million once the Project is completed. • The Developer has received an award of$790,000 in ABP Funds. • The Project will generate residual cash flow of approximately $11,279 per year which will be divided between the Developer and the Agency. v TIERRAWEST A D V I S 0 R S Mr. Carey Jenkens Mr.Don Gee February 24, 2010 Page 8 Conclusion • The Agency will need to invest$7 million to cover the financing gap. o The Agency's assistance will be in the form of a residual receipts loan which will be paid back from the residual cash flow of the Project. • Considering the restrictive covenants that will be recorded against the property, the anticipated rents, development costs, and capital available from other sources, the sale of the land to the Developer for $2,450,000, with the Agency providing a residual receipts loan for the consideration, is not less than the fair reuse value of the land. If you have any questions we will make ourselves available for discussion. Thank you for the opportunity to review this Project on your behalf. Respectfully, TIERRA T ADVISORS, INC. ^V fi/`� Tim Mulrenan Principal v TIERRAWEST A D V I S O R S EXHIBIT A Rental Restrictions &Allowed Rates 2009 Income Unit tantina #of units TCAC rent RDA Rent Comments 1-bedroom 30% 6 $374 RDA 500/(very IoN)units 1-bedroom 300/. 0 $387 1-bedroom 35% 8 $437 RDA 50%(very loN)units 1-bedroom 40% 8 $499 RDA 50%(wry 1w)units 1-bedroom 45% 0 $561 1-bedroom 500/ 14 $624 RDA 50%(very lav)units 1-bedroom 500/. 0 $645 1-bedroom 601/. 32 $749 RDA 80%(lovver)units 1-bedroom 801/. 0 $774 1-bedroom 120% 0 $1,419 2-bedroom 300/6 0 $435 2-bedroom 301/6 2 $449 RDA 50%(wry ION)unit 2-bedroom 40% 0 $599 2-bedroom 450/6 0 $673 2-bedroom 500/6 0 $726 2-bedroom 500/. 6 $748 RDA 80%(lamr)units 2-bedroom 600/6 3 $898 RDA 120%(lowto moderate)units 2-bedroom 80% 0 $871 2-bedroom 120% 0 $1,596 Total 79 7CAC refers to the California Tax CreddAllccsaon Commttee. 'FDA"refers b iecewtopnent agencyrentlevels mmaht b HMM?8 Safety Code section 50053 Rentalreksam 2079reltalydes. Rents willbeaduskdtnwb lent ears in acmdanw with d7empechm rundlr sources A 2616 East 3rd $treat Los Angeles, CA 96033 1 3231165 4400 F 3231261 8646 W tkrtewestadvlm�ssom REAL ESTATE ft REDEVELOPMENT CONSULTANTS EXHIBIT C CASH FLOW PROJECTIONS SEE FOLLOWING PAGES 8 San Bernardino Redevelopment Agency Exhibit C SBRDA loans 3%simple interest Magnolia at Highlands Deferred loans 0%interest Cash Flow Projections Inflation 0.00% 0.00% gen'I partner Cash Flow before partnership Ltd Partner Period Year debt service tat priority debt mgmt fee Services Fee 1 2013 $209,121 ($175,192) ($10,000) ($5,000) 2 2014 $211,583 ($175,192) ($10,000) ($5,000) 3 2015 $213,991 ($175,192) ($10,000) ($5,000) 4 2016 $216,342 ($175,192) ($10,000) ($5,000) 5 2017 $218,628 ($175,192) ($10,000) ($5,000) 6 2018 $220,845 ($175,192) ($10,000) ($5,000) 7 2019 $222,986 ($175,192) ($10,000) ($5,000) 8 2020 $225,045 ($175,192) ($10,000) ($5,000) 9 2021 $227,015 ($175,192) ($10,000) ($5,000) 10 2022 $228,889 ($175,192) ($10,000) ($5,000) 11 2023 $230,659 ($175,192) ($10,000) ($5,000) 12 2024 $232,317 ($175,192) ($10,000) ($5,000) 13 2025 $233,856 ($175,192) ($10,000) ($5,000) 14 2026 $235,266 ($175,192) ($10,000) ($5,000) 15 2027 $236,539 ($175,192) ($10,000) ($5,000) 16 2028 $237,664 ($175,192) ($10,000) ($5,000) 17 2029 $238,633 ($175,192) ($10,000) ($5,000) 18 2030 $239,434 ($175,192) ($10,000) ($5,000) 19 2031 $240,057 ($181,600) ($10,000) ($5,000) 20 2032 $240,491 ($181,600) ($10,000) ($5,000) 21 2033 $240,723 ($181,600) ($10,000) ($5,000) 22 2034 $240,740 ($181600) ($10,000) ($5,000) 23 2035 $240,531 ($181600) ($10,000) ($5,000) 24 2036 $240,081 ($181,600) ($10,000) ($5,000) 25 2037 $239,377 ($181,600) ($10,000) ($5,000) 26 2038 $238,402 ($181,600) ($10,000) ($5,000) 27 2039 $237,142 ($181,600) ($10,000) ($5,000) 28 2040 $235,580 ($181,600) ($10,000) ($5,000) 29 2041 $233,700 ($181,600) ($10,000) ($5,000) 30 2042 $231,483 ($181,600) ($10,000) ($5,000) 31 2043 $228,911 $0 ($10,000) ($5,000) 32 2044 $225,964 $0 ($10,000) ($5,000) 33 2045 $222,623 $0 ($10,000) ($5,000) 34 2046 $218,867 $0 ($10,000) ($5,000) 35 2047 $214,672 $0 ($10,000) ($5,000) 36 2048 $210,017 $0 ($10,000) ($5,000) 37 2049 $204,878 $0 ($10,000) ($5,000) 38 2050 $199,229 $0 ($10,000) ($5,000) 39 2051 $193,044 $0 ($10,000) ($5,000) 40 2052 $186,296 $0 ($10,000) ($5,000) 41 2053 $178,957 $0 ($10,000) ($5,000) 42 2064 $170,997 $0 ($10,000) ($5,000) 43 2055 $162,385 $0 ($10,000) ($5,000) 44 2056 $153,089 $0 ($10,000) ($5,000) 45 2057 $143,076 $0 ($10,000) ($5,000) 46 2058 $132,311 $0 ($10,000) ($5,000) 47 2059 $120,758 30 ($10000) ($5,000) 48 2060 $108,377 $0 ($10,000) ($5,000) 49 2061 $95,131 $0 ($10,000) ($5,000) 50 2062 $80,978 $0 ($10,000) ($5,000) 51 2063 $65,875 $0 ($10,000) ($5,000) 52 2064 $49,777 $0 ($10,000) ($5,000) 53 2065 $32,638 $0 ($10,000) ($5,000) 54 2066 $14,410 $0 ($10,000) ($5,000) 55 2067 ($4,958) $0 ($10,000) ($5,000) 56 2068 ($25,518) $0 ($10,000) ($5,000) Mageelia4ighlands Cash Flea 55yn,(0%DDFN3%$B6 )(TW2-N-1Q,$7 million esaistenoe Tierra WestA dwsors Inc. Page 1 d2 204t2oo,,11:51 AM San Bemardino Redevelopment Agency Exhibit C SBRDA loans 3%simple interest Magnolia at Highlands Deferred Mans O%interest Cash Flow Projections SBRDA developer available for Residual Period Year deferred fee distribution Owner Receipts loan 1 2013 ($11,331) $7,599 ($3,799) ($3,799) 2 2014 $0 $21,391 ($10,696) ($10,696) 3 2015 $0 $23,799 ($11,900) ($11,900) 4 2016 $0 $26,150 ($13,075) ($13,075) 5 2017 $0 $28,436 ($14,218) ($14,218) 6 2018 $0 $30,653 ($15,327) ($15,327) 7 2019 $0 $32,795 ($16,397) ($16,397) 8 2020 $0 $34,854 ($17,427) ($17,427) 9 2021 $0 $36,824 ($18,412) ($18,412) 10 2022 $0 $38,697 ($19,349) ($19,349) 11 2023 $0 $40,467 ($20,234) ($20,234) 12 2024 $0 $42,126 ($21,063) ($21,063) 13 2025 $0 $43,664 ($21,832) ($21,832) 14 2026 $0 $45,074 ($22,537) ($22,537) 15 2027 $0 $46,347 ($23,173) ($23,173) 16 2028 $0 $47,472 ($23,736) ($23,736) 17 2029 $0 $48,441 ($24,221) ($24,221) 18 2030 $0 $49,242 ($24,621) ($24,621) 19 2031 $0 $43,457 ($21,728) ($21,728) 20 2032 $0 $43,890 ($21,945) ($21,945) 21 2033 $0 $44,122 ($22,061) ($22,061) 22 2034 $0 $44,140 ($22,070) ($22,070) 23 2035 $0 $43,931 ($21,966) ($21,966) 24 2036 $0 $43,481 ($21,741) ($21,741) 25 2037 $0 $42,776 ($21,388) ($21,388) 26 2038 $0 $41,802 ($20,901) ($20,901) 27 2039 $0 $40,542 ($20,271) ($20,271) 28 2040 $0 $38,980 (319,490) ($19,490) 29 2041 $0 $37,099 ($18,550) ($18,550) 30 2042 $0 $34,882 ($17,441) ($17,441) 31 2043 $0 $213,911 ($106,955) ($106,955) 32 2044 $0 $210,964 ($105,482) ($105,482) 33 2045 $0 $207,623 ($103,812) ($103,812) 34 2046 $0 $203,867 ($101,933) ($101,933) 35 2047 $0 $199,672 ($99,836) ($99,836) 36 2048 $0 $195,017 ($97,509) ($97,509) 37 2049 $0 $189,878 ($94,939) ($94,939) 38 2050 $0 $184,229 ($92,114) ($92,114) 39 2051 $0 $178,044 ($89,022) ($89,022) 40 2052 $0 $171,296 ($85,648) ($85,648) 41 2053 $0 $163,957 ($81,978) ($81,978) 42 2054 $0 $155,997 ($77,998) ($77,998) 43 2055 $0 $147,385 ($73,692) ($73,692) 44 2056 $0 $138,089 ($69,045) ($69,045) 45 2057 $0 $128,076 ($64,038) ($64,038) 46 2058 $0 $117,311 ($58,656) ($58,656) 47 2059 $0 $105,758 ($52,879) ($52,879) 48 2060 $0 $93,377 ($46,689) ($46,689) 49 2061 $0 $80,131 ($40,066) ($40,066) 50 2062 $0 $65,978 ($32,989) ($32,989) 51 2063 $0 $50,875 ($25,437) ($25,437) 52 2064 $0 $34,777 ($17,389) ($17,389) 53 2065 $0 $17,638 ($8,819) ($8,819) 54 2066 $0 ($590) $295 $295 55 2067 $0 ($19,958) $9,979 $9,979 56 2068 $0 ($40.518) $20,259 ($16,571,]81) Total $18,760,000 Net Present Value@ 5.50% $1,287,368 Magnolia-Rghlands Cash Flw 55ym C%OOF)(3%$61mA)(PN 2-24-101,$7 million assistance rem.West Advisor Inc. Page 2 M 2 024(2010,11,54 AM Q 1 RESOLUTION NO. COPY 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF 3 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN 4 BERNARDINO'S PROPERTIES LOCATED ON THE SOUTHWEST CORNER OF HIGHLAND AVENUE AND MEDICAL CENTER DRIVE 5 (APNS: 0143-191-38, 46 AND 63) TO META HOUSING, INC. — MAGNOLIA HIGHLAND, L.P., FOR THE DEVELOPMENT OF 79 UNITS 6 OF AFFORDABLE SENIOR CITIZEN RENTAL HOUSING PURSUANT TO AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR 7 CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND 8 DEVELOPMENT AGREEMENT (NORTHWEST REDEVELOPMENT PROJECT AREA) 9 10 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 11 public body,corporate and politic; and 12 WHEREAS, the Agency presently owns properties located on the southwest corner of 13 Highland Avenue and Medical Center Drive (APNS: 0143-191-38, 46 and 63, collectively C14 "Property"); and 15 WHEREAS, the Agency acquired the Property using low- and moderate-income housing 16 tax increment set-aside funds; and 17 WHEREAS, the Agency proposes to transfer the Property to Meta Housing, Inc. —Magnolia 18 Highland, L.P., a California limited partnership (the "Developer"), in accordance with the terms and 19 conditions of Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, 20 Disposition and Development Agreement(the "Amended Agreement"); and 21 22 WHEREAS, the Developer shall develop and improve the Property as may hereafter be 23 transferred by the Agency to the Developer pursuant to the Amended Agreement with 79 units of 24 affordable senior citizen rental housing and one on-site manager's unit, using the design and 25 improvement standards which are consistent with City Tentative Parcel Map No. 19200 26 (Subdivision No. 09-02) and City Conditional Use Permit No. 09-05, as previously approved by the © 27 City of San Bernardino Planning Commission("Planning Commission") on May 19, 2009; and 28 1 a"1�;-v P�pg sV=WtmostR Wtjms==3-15-10M H MM Lic.,Ma is HigW&W U ,No,1 MCCR A.Eaa 1 WHEREAS, the Developer has the background, experience and financial capability to 2 develop the Project and is seeking a deferred payment second trust deed residual receipts loan from 3 the Agency in an amended amount of up to $7,000,000; and 4 WHEREAS, the Agency loan will be combined with other funds the Developer is seeking 5 including an allocation of low-income housing tax credits from the California Tax Credit Allocation 6 Committee ("TCAC") in the amount of$9,089,353, a permanent first trust deed loan in an amount 7 up to $2,140,108 and a deferred payment subordinate loan from the Federal Home Loan 8 Bank/Affordable Housing Program in an amount up to $790,000 to complete the financing of the 9 Project with an estimated total development cost of approximately$19,030,792; and 10 WHEREAS, it had been found and determined that the environmental review of the 11 disposition of Agency Property is a "categorically exempt project' for the reasons indicated in the 12 Agency Staff Report and no potentially adverse environmental effects are anticipated to be 13 associated with the redevelopment of the Project; and 14 i 15 WHEREAS, the Agency has prepared and published a notice of joint public hearing in the 16 San Bernardino County Sun newspaper on February 24, 2010, and again on March 3, 2010, 17 regarding the consideration and consenting to the disposition of the Property to the Developer. 18 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY 19 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 20 FOLLOWS: 21 Section 1. The Recitals of this Resolution are true and correct. 22 Section 2. On March 15, 2010, the Mayor and Common Council of the City of San 23 Bernardino ("Council') conducted a full and fair joint public hearing with the Community 24 Development Commission of the City of San Bernardino ("Commission"), and considered the 25 written Agency Staff Report and consented to the disposition of the Agency Property to the 26 Developer Pursuant to the Amended Agreement. The minutes of the City Clerk for the March 15, 027 2010, joint public hearing of the Council and the Commission shall include a record of all 28 2 P UgttAaeVtewlutionaVtewlNiws�I�l0�D3-IS-IYMtta Hourio&]rc.,M�li.Hi,h a d U Amend.N. 1 MCC R.Adocz I communication and testimony submitted to the City Council and the Commission at the joint public 2 hearing by interested persons relating to the disposition of the Property. 3 Section 3. The Council hereby finds and determines that the environmental review of the 4 approval of the Amended Agreement and the redevelopment activities contemplated thereunder is a 5 "categorically exempt project" for the reasons indicated in the Agency Staff Report. No potentially 6 adverse environmental effects are anticipated to be associated with the redevelopment of the Project. 7 Section 4. The City is not a parry to the Amended Agreement, and nothing in this I 8 Resolution shall be deemed to constitute an approval by the City of any application for a 9 development project permit or approval which the Developer may hereafter be required to obtain 10 from the City as a condition precedent to the performance of the Developer's obligation under the 11 Amended Agreement with respect to the redevelopment of the Project. The City hereby reserves its 12 discretion under all applicable laws to approve or reject, and to impose any appropriate condition of 13 its approval on the Project development permit application as the Developer may hereafter submit to 14 the City in connection 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 21 22 23 24 25 26 © 27 28 3 P:44endasl C [ ionsLLc< lu[ion101=3-15-10 Meu Housing,lnc.,Magnolia HieWUW LP Amend.No l MCC Rew Adore © RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE 1 CITY OF SAN BERNARDINO CONSENTING TO THE DISPOSITION OF 2 THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO'S PROPERTIES LOCATED ON THE SOUTHWEST 3 CORNER OF HIGHLAND AVENUE AND MEDICAL CENTER DRIVE (APNS: 0143-191-38, 46 AND 63) TO META HOUSING, INC. – 4 MAGNOLIA HIGHLAND,L.P., FOR THE DEVELOPMENT OF 79 UNITS 5 OF AFFORDABLE SENIOR CITIZEN RENTAL HOUSING PURSUANT TO AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR 6 CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT (NORTHWEST REDEVELOPMENT 7 PROJECT AREA) 8 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 9 Common Council of the City of San Bernardino at a meeting 10 thereof, held on the day of , 2010,by the following vote to wit: 11 Council Members: Ayes Nays Abstain Absent 12 MARQUEZ 13 DESJARDINS 14 BRINKER — 15 SHORETT 16 KELLEY _ 17 JOHNSON 18 MC CAMMACK 19 20 Rachel G. Clark, City Clerk 21 22 The foregoing Resolution is hereby approved this day of 2010. 23 24 Patrick J.Moms, Mayor 25 City of San Bernardino 26 Approved to Form: © 27 By: 28 n s F. Penman, City Attorney 4 P UgmdaeVf ee olutionsVtemlutiona3010A3-IS-lo M to l3ousn&lie.Meeeo4e HigAIW LP Amend.No I MCC Rm A d= EXHIBIT A AMENDED DISPOSITION AND DEVELOPMENT AGREEMENT P'.WBendeaUgende At�achmemslSummary 0.epoN�tUIOWI-IS-10 Akm Hwuing,Gm.Summery Repon.docx I RESOLUTION NO. 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND 4 AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 5 ("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, 6 DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN 7 THE AGENCY AND META HOUSING, INC. — MAGNOLIA HIGHLAND, L.P. (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 presently owns properties located on the southwest corner of 12 Highland Avenue and Medical Center Drive (APNs: 0143-191-38, 46 and 63, collectively 13 "Property"); and 14 WHEREAS, the Agency acquired the Property through an assignment of interest under a 15 purchase contract between Meta Housing, Inc. — Magnolia Highland, L.P. (the "Developer") and 16 other private parties to the Agency for purchase on an interim basis; and 17 WHEREAS, the Agency proposes to transfer the Property to the Developer in accordance 18 with the terms and conditions of Amendment No. 1 to the 2009 Affordable Senior Citizen Rental 19 Housing Acquisition, Disposition and Development Agreement (the "Amended Agreement") in the 20 form as attached hereto as Exhibit"A"; and 21 WHEREAS, the Developer shall develop and improve the Property as may hereafter be 22 transferred by the Agency to the Developer pursuant to the Amended Agreement with 79 units of 23 affordable senior citizen rental housing and one on-site manager's unit, using the design and 24 improvement standards which are consistent with City Tentative Parcel Map No. 19200 25 (Subdivision No. 09-02) and City Conditional Use Permit No. 09-05, as previously approved by the 26 City of San Bernardino Planning Commission("Planning Commission")on May 19, 2009; and 27 28 1 PUzWasU lutloru wlulims1010501-15-10Mna Hoo+iw. .M lia Hi¢WaMLPAwe No.I CDCR<wBdon I WHEREAS, the Developer has the background, experience and financial capability to 2 develop the Project and is seeking a deferred payment second trust deed residual receipts loan from 3 the Agency in an amended amount up to $7,000,000; and 4 WHEREAS, the Agency loan will be combined with other funds the Developer is seeking 5 including an allocation of low-income housing tax credits from the California Tax Credit Allocation 6 Committee ("TCAC") in the amount of$9,089,353, a permanent fast trust deed loan in an amount 7 up to $2,140,108 and a deferred payment subordinate loan from the Federal Home Loan 8 Bank/Affordable Housing Program in an amount up to $790,000 to complete the financing of the 9 Project with an estimated total development cost of approximately$19,030,792; and 10 WHEREAS, it had been determined that the environmental review of the Amended 11 Agreement with regards to the disposition and development of Agency Property is a "categorically 12 exempt project' for the reasons indicated in the Agency Staff Report and no potentially adverse 13 14 environmental effects are anticipated to be associated with the redevelopment of the Project; and 15 WHEREAS, the Agency has prepared and published a notice of joint public hearing in the 16 San Bernardino County Sun newspaper on February 24, 2010, and again on March 3, 2010, 17 regarding the consideration and disposition of the Property to the Developer; and 18 WHEREAS, pursuant to Health and Safety Code Section 33433(6), the Agency may transfer 19 the Property to the Developer subject to the Mayor and Common Council of the City of San 20 Bernardino ("Council") and the Community Development Commission of the City of San 21 Bernardino ("Commission") adopting a Resolution authorizing the Agency to transfer the Property 22 in light of the findings set forth herein, pursuant to Health and Safety Code Section 33433; and 23 WHEREAS, the Agency has prepared a Summary Report that describes the salient points of 24 the Amended Agreement and identifies the cost to the Agency of the disposition and development of 25 the Property. 26 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 27 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 28 FOLLOWS: 2 1 Section 1. The Recitals of this Resolution are true and correct. 2 Section 2. On March 15, 2010,the Community Development Commission of the City of 3 San Bernardino ("Commission") conducted a full and fair joint public hearing with the Mayor and 4 Common Council of the City of San Bernardino ("Council's, and considered the written Agency 5 Staff Report relating to the Amended Agreement, the Summary Report and the testimony submitted 6 relating to the disposition and redevelopment of the Property by the Developer pursuant to the terms 7 and conditions of the Amended Agreement. The minutes of the City Clerk for the March 15, 2010, 8 joint public hearing of the Commission and the Council shall include a record of all communication 9 and testimony submitted to the Commission and the Council at the joint public hearing by interested 10 persons relating to the Summary Report, the Project and the approval of the Amended Agreement. 11 Section 3. This Resolution is adopted in order to satisfy the provisions of Health and 12 Safety Code Section 33433 as those provisions relate to the disposition of the Property by the C13 Agency to the Developer on the terms and conditions set forth in the Amended Agreement. The V 14 Commission hereby finds and determines as follows: 15 (i). The Summary Report contains the information described in Health and Safety Code 16 Section 33433(a)(2)(B); 17 (ii). The disposition and redevelopment of the Property by the Developer in accordance 18 with the Amended Agreement is consistent with the affordable housing supply 19 preservation and expansion programs of the Agency Housing Implementation Plan; 20 (iii). The terms and conditions of the Amended Agreement contain assurances that the 21 Developer will redevelop the Property; 22 iv . As required b Health and Safe Code Section 33433 (� ) y Safety (b)(2), the disposition and 23 redevelopment of the Property by the Developer in accordance with the Amended 24 Agreement is at a price that is not less than the fair reuse value as affordable senior 25 housing and with the covenants and conditions and development costs authorized by 26 said Amended Agreement; and 27 28 3 Q1 (v). The disposition of the Property to the Developer on the terms set forth in the Amended 2 Agreement shall assist in the elimination of conditions of blight on the Property and in 3 the Northwest Redevelopment Project Area. 4 Section 4. The Commission hereby finds and determines that the environmental review 5 of the Amended Agreement and the redevelopment activities contemplated thereunder is a 6 "categorically exempt project' for the reasons indicated in the Agency Staff Report. No potentially 7 adverse environmental effects are anticipated to be associated with the redevelopment of the 8 Property, and accordingly based upon its own independent review of the information provided to the 9 Commission regarding the Property; the Commission hereby authorizes the filing of a Notice of 10 Exemption under CEQA relating to the Project. 11 Section 5. The Commission hereby receives and approves the Summary Report and the 12 Amended Agreement in the form as submitted at this joint public hearing. 13 Section 6. The Commission hereby authorizes the Agency to allocate an additional 14 $2,400,000 in tax increment housing set aside funds and $600,000 in Northwest Project Area 15 redevelopment funds to assist the Developer in developing the project more fully described in the 16 Amended Agreement. 17 Section 7. The Commission hereby approves the disposition of the Property by the 1S Agency to the Developer on the terms set forth in the Amended Agreement and hereby authorizes 19 the Interim Executive Director of the Agency to execute the Amended Agreement on behalf of the 20 Agency and the Interim Executive Director of the Agency is hereby authorized to make minor 21 corrections, additions, clarifications, interpretations to the Amended Agreement, provided said 22 changes are not substantive in nature, do not increase the monetary impact to the Agency and are 23 consented to by the Agency Counsel. 24 Section 8. This Resolution shall take effect upon its adoption and execution. 25 26 27 28 4 6\1eeMU\R..nM1nim.VlwnM1nrm.\MIMIIIJt_1�Mm Mr.sino Iw M.mnlis NieF1.M!V 1mM FL. PM'P...Y A..... RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION 1 OF THE CITY OF SAN BERNARDINO APPROVING AND 2 AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 3 ("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, 4 DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN 5 THE 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 2010,by the following vote to wit: 10 Commission Members: Aves Nays Abstain Absent 11 MARQUEZ _ 12 DESJARDINS 13 BRINKER SHORETT 14 KELLEY 15 JOHNSON 16 MC CAMMACK 17 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 2010. 21 Patrick J. Moms,Chairperson 22 Community Development Commission of the City of San Bernardino 23 Approved as to Form: 24 By: 25 Agency o sel 26 27 28 5 AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT This Amendment No. I to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (the "Amendment") is made and entered into as of this 15a' day of March 2010, 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"), with reference to the following recitals of fact: RECITALS A. WHEREAS, the Developer and the Agency executed that certain 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009 (the"Original Agreement"); and B. WHEREAS, the Agency and Developer now desire to amend the Original Agreement in accordance with the terms, covenants and conditions set forth in this Amendment (the Original Agreement, as amended by the Amendment, shall be referred to as the © "Agreement"). NOW THEREFORE, in consideration of the above recitals, the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt, legal sufficiency and adequacy of which are hereby acknowledged,the parties hereto agree as follows: AGREEMENT 1. Definitions. All initially capitalized words not defined in the Preamble of this Amendment, in the recitals of this Amendment or in this Amendment shall have the meanings provided for in the Original Agreement. Except for the definitions provided in this Amendment for the "Fund Control Agreement", for the "Off-Site Project Improvements" and for the "Repayment Guaranty" (which terms are defined for the first time in this Amendment), the following definitions set forth in Section 1.4 of the Original Agreement are hereby deleted in their entirety and replaced with the following: Agency Loan. The words "Agency Loan" means and refers to the loan to be originated by the Agency in favor of the Developer in a principal amount not to exceed Seven Million Dollars ($7,000,000). The Developer may use the proceeds of the Agency Loan to pay for the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000), in the aggregate. The provisions of the Agency Loan are set forth in Section 2.9. The Agency Loan shall be evidenced by the Agency Loan Note attached hereto and incorporated herein by this reference as Exhibit "A" which Agency Loan Note shall cancel, ® replace and supersede the Agency Loan Note, dated November 23, 2009, by the Developer, as borrower, in favor of the Agency, as lender, the general form of which was attached as 1 P`AgmdmOAgm A1"tlmm"�Alunhm 'Ap -Amend3010'0}I5-NI Moe"mon6-Mngnolu Nigbm-Amend No I roNp4AN We Smim Cil'om RwmlHaar O"A e Attachment No. 10 to the Original Agreement) and shall be secured by the Agency Loan Deed of Trust and shall be evidenced or secured by the other Agency Loan Documents. Agency Loan Deed of Trust. The words "Agency Loan Deed of Trust' means and refers to the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement, which encumbers the Site and the Project as security for the repayment of the Agency Loan, as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. The general form of the Agency Loan Deed of Trust is attached hereto and incorporated herein by this reference as Exhibit eB" (which Agency Loan Deed of Trust shall cancel, replace and supersede the Agency Loan Deed of Trust that was attached as Attachment No. 11 to the Original Agreement). Agency Loan Documents. The words "Agency Loan Documents" means and refers to collectively, all of the instruments, documents and agreements executed by the Developer in favor of the Agency which either evidence or relate to the Agency Loan or provide the Agency with security for the repayment of the Agency Loan. The Agency Loan Documents include, without limitation, the Repayment Guaranty for the payment of the Initial Agency Loan Advance, the Agency Loan Note, the Agency Loan Deed of Trust, the Developer Assignment of Licenses, Permits and Contracts, and the Fund Control Agreement, all as may be amended from time-to-time by the Developer and by the Agency. Agency Loan Note. The words "Agency Loan Note" means and refers to the Amended and Restated Agency Loan Note, of even date herewith, by the Developer, as ... borrower, in favor of the Agency, as lender, in the principal amount not to exceed Seven Million Dollars ($7,000,000), attached hereto and incorporated herein by this reference as Exhibit "A", as amended from time-to-time by the Developer and by the Agency. This Agency Loan Note shall cancel, replace and supersede the Agency Loan Note, dated November 23, 2009, by the Developer, as borrower, in favor of the Agency, as lender, in the principal amount not to exceed Four Million Dollars ($4,000,000) (the general form of which was attached as Attachment No. 10 to the Original 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, conditions 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 to the Permanent Loan. The Agency Regulatory Agreement is attached hereto and incorporated herein by this reference as Exhibit "C" and cancels, replaces and supersedes the Agency Regulatory Agreement that was attached as Attachment No. 9 to the Original 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 the Original Agreement: 2 P UgmNPAgm&AOUhmmnUgmN AmahmmmUg rm¢AmeM 2010%03-1510 Man Homing Silwala Highwil-Amml.No,Ila 2M ARpyhle Swim Comm Rawl Hating DDA,dm (i) Elias Chehade Antoun; (ii) Long Beach, LLC, a California limited liability company; and (iii) Rodeny J. Edmunds, Frances Hirsh, John S. Edmunds, and First American Trust. Developer Project Pro Forma. The words "Developer Project Pro Forma" means and refers to the document dated , 2010, prepared by the Developer and approved by the Agency on the date of approval of the Original Agreement, as amended by this Amendment in support of the Developer's request for the Agency to consider the approval of the Original Agreement, as amended by the Amendment. The Developer Project Pro Forma, includes the Project Construction Budget. The Developer Project Pro Forma is attached hereto and incorporated herein by this reference as Exhibit"D"and cancels, replaces and supersedes the Developer Project Pro Forma attached as Attachment No. 4 to the Original Agreement. Fund Control Agreement. The words "Fund Control Agreement" means and refers to the Fund Control Agreement, by and between the Agency, the Developer and First American Fund Control, Inc., a California corporation, including the Addendum To Fund Control Agreement and Exhibit A, Exhibit B and Exhibit C to the Fund Control Agreement. The Fund Control Agreement is attached hereto and incorporated herein by this reference as Exhibit "E., Off-Site Project Improvements. The words "Off-Site Project Improvements" means and refers to the following Off-Site Project Improvements that the City, or any other Ems+ governing authority, requires the Developer to construct, to install, to complete and to pay for in connection with the completion by the Developer of the Project: (i) traffic signal upgrades, including, without limitation, left turn lights for all four directions, (ii) the widening of the turning radius at each of the four Project Site comers, (iii) the removal of three utility poles and the underground installation of utilities, (iv) bus stop improvements, including cover and American with Disabilities Act upgrades and compliance, and/or(v) construction and installation of the curb, of the gutter and of street lights along Highland Avenue located in the City of San Bernardino, State of California. The Developer may use the proceeds from the Agency Loan to construct and to install the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000),in the aggregate. R_pe avment Guaranty. The Words "Repayment Guaranty" means and refers to the Amended and Restated Repayment Guaranty, of even date herewith, by Meta Housing Corporation, a California corporation, as guarantor, in favor of the Agency, as guarantee. The Repayment Guaranty is attached hereto and incorporated herein by this reference as Exhibit "F" and cancels, replaces and supersedes the Repayment Guaranty, dated November 23, 2009, by Meta Housing Corporation, as guarantor, in favor of the Agency, as guarantee, and the "Meta Housing Corporation Guaranty" where referenced and appearing in the Original Agreement". All references to the Meta Housing Corporation Guaranty in the Original Agreement and this Amendment shall be deemed to refer to this Repayment Guaranty. Senior Citizen Rental Housine Use Covenant. The words "Senior Citizen Rental Housing Use Covenant" means and refers to the land use covenant by and between the City and the Agency which shall be recorded concurrently with Parcel Map 19200. The form of the 3 P?AFmHSftcrt M.chmwlsft 4 A ts�-Ame 2010'03-15-10 Mm H—Mh M�16 fthkW Amnd.Na 1.211101 Aff hbk S.i CN Rmd H—i1DDAEm Senior Citizen Rental Housing Use Covenant is attached hereto and incorporated herein by this reference as Exhibit "G" 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. This Senior Citizen Rental Housing Use Covenant cancels, replaces and supersedes the Senior Citizen Rental Housing Use Covenant attached as Attachment 7 to the Original Agreement. 2. APencV Loan. Section 2.8(a) through Section 2.8(h) of the Original Agreement are hereby deleted in its entirety and replaced with the following: 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 not to exceed Seven Million Dollars ($7,000,000). The Developer may use the proceeds from the Agency Loan to construct and to install the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000), in the aggregate. The outstanding principal balance of the Agency Loan shall bear a rate of interest of three percent (3%) per annum on the outstanding principal balance until all principal and accrued and unpaid interest is paid in full: (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 the Agency Loan Note to be executed by the Developer in favor of the Agency concurrently with this Amendment, and shall be secured initially by the Repayment Guaranty and upon the Close of the Site Transfer Escrow, by a subordinate deed of trust on the Site substantially in the form of the Agency Loan Deed of Trust and the other 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 Repayment Guaranty shall be fully executed and delivered no later than the date of this Amendment. 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 the Agency Loan Note,repay the Agency Loan plus interest in installments as set forth 9i the Agency Loan Note. The installments of principal and interest that are due under thc. .gency Loan Note 4 P+Agm&SAgwda Amchinnts Alien&Ana6—tsArIts-A—d N IM-1}IU AIm H—Mr.MWWb H ighbad�An dNw I W7CMA bk Smim C,, R-0H—ing04A.d- shall be payable by the Developer prior to its maturity solely from the special source of funds defined in the Agency Loan Note as "Residual Rental Receipts of the Project". (e) The Agency Loan Note shall be initially secured by the Repayment 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. (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 "Repayment 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 principal amount of the Initial Advance of the Agency Loan, not to exceed One Hundred Thousand Dollars ($100,000), plus interest thereon, together with all other amounts due thereunder, 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 Repayment Guaranty shall be released and discharged by the Agency, and thereafter, the Agency Loan shall not be further secured by the Repayment Guaranty. (ii) The term "Initial Advance of the Agency Loan" means and refers to a sum not to exceed Three Hundred Thousand Dollars ($300,000), which may be disbursed to the Developer to pay for pre development expenses of the Developer, including, without limitation, architectural, engineering, design, and demolition costs, which have been reasonably 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 Repayment Guaranty; 5 P UgeMOelAgeWaAvdmenmWgenda AWalunmaUpvm-Amend XIM3.15-10 M=HoumWMWohafthg -A .No I m30WAffordable Smior Cl RL Roo&n,Wkdoa C (C) the Developer has executed and delivered to the Agency the Agency Loan Note, the Developer Assignment of Licenses, Permits and Contracts and the Amendment in final form as approved by the Interim Executive Director of the Agency; (D) the 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, the Amendment and related documents executed by the Developer, have been duly executed by the Developer and are valid, lawful and binding obligations of the Developer. (iv) Any portion of the Initial Advance of the Agency Loan not yet disbursed by the Agency to the Developer under the Agency Loan, in an amount not to exceed Three Hundred Thousand Dollars ($300,000), in the aggregate, and the Purchase Price, shall be disbursed by the Agency from the proceeds of the Agency Loan on the Close of the Site Transfer Escrow,provided: (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; (B) the Developer has delivered its written Notice of Q 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 has executed and acknowledged 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 pay to the Developer any portion of the Initial Advance of the Agency Loan that has not been disbursed by the Agency to the Developer, and shall pay to the Agency the Purchase Price for the Site. (v) On and after the Close of the Site Transfer Escrow, pursuant to and in accordance with this Agreement and the Agency Loan Documents, including, without limitation, the Fund Control Agreement, the Agency shall make one or more disbursements of principal under the Agency Loan in a principal amount not to exceed the remaining balance of the Agency Loan (provided, without limitation, that the Developer is not in default under the Agreement and/or under the Agency Loan Agreements), to fund hard and soft costs that have been paid and/or incurred by the Developer and reasonably approved by the Interim Executive Director,provided: (A) The Interim Executive Director of the Agency shall © approve the disbursement of the amount of the Agency Loan as provided in Section 2.8(v) of this Amendment upon the submission by the Developer of a 6 p1AgeM ge AtlnWnen¢lApentle Apubm \4U -Amen!3010N315-1oMm Hwang-Alegoda HighLmd AmmE.N. l m2MAR IeS=-Ce K Hwting DDAA written Agency Loan draw request delivered to the Interim Executive Director of the Agency not less than fifteen (15) days prior to the scheduled requested draw payment date 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 Agency Loan disbursement request submitted by the Developer under this Section 2.8(v); (3) Must be in compliance with the Agency Loan Documents, including, without limitation, the Fund Control Agreement; and (4) the Developer must not be in default under this Agreement and/or under any one of the Agency Loan Documents. (g) The Developer must not be in default under this Agreement or under any of the Agency Loan Documents. "(h) Intentionally Omitted". Section 2.8 (i) of the Original Agreement through Section 2.8(k) of the Original Agreement, are not modified or revised by this Amendment and remain in full, force and effect as if this Amendment had never been executed by the Developer and by the Agency. 3. Developer Demolition Activities on the Site. The following subparagraph is hereby added to the Original Agreement as Section 3.1(c): "(c) All demolition work at the Site shall be overseen by the Developer's construction manager. Prior to commencement of any demolition work at the Site, the Developer shall solicit and receive bids for the demolition work from at least three (3) contractors on the Agency's list of pre-approved contractors (the "Approved Contractor List"). In the event a contractor not appearing on the Approved Contractor List submits the lowest bid, the Developer shall have the right to select such contractor, provided that Agency Staff approves such bid, which approval shall not be unreasonably withheld, conditioned or delayed." 1%W W 7 P UgmduUgeMa 301PA3-1510M N ng M000lmfthhnd-MM.to 1b 2M Affmda J.So—CW RmWI Iq OCA do 4. Developer Compliance with Prevailing Wage Requirements. Section 3.4 of the Original Agreement is hereby deleted in its entirety and replaced with the following: "3.4 Developer Compliance with Prevailing Wage Requirements. 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." 5. Developer's Proiect Pro Forma. Attachment No. 4 to the Original Agreement is hereby deleted in its entirety and replaced with Exhibit "D", attached hereto. All references to the Developer's Project Pro Forma in the Original Agreement and in this Amendment shall be deemed to refer to the project pro forma attached hereto as Exhibit "D," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 6. Notice of Agreement. Attachment No. 8 to the Original Agreement is hereby deleted in its entirety and is replaced with the Notice of Agreement attached hereto and incorporated herein by this reference as Exhibit "H". All references to the "Notice of Agreement" in the Original Agreement and in this Amendment shall be deemed to refer to the Notice of Agreement attached hereto as Exhibit"H". 7. Agency Loan Note. Attachment No. 10 to the Original Agreement is hereby deleted in its entirety and is replaced with the Amended and Restated Agency Loan Note attached hereto and incorporated herein by this reference as Exhibit "A". All references to the "Agency Loan Note" in the Original Agreement and in this Amendment shall be deemed to refer to the Amended and Restated Agency Loan Note attached hereto as Exhibit "A," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 8. Agency Loan Deed of Trust. Attachment No. 11 to the Original Agreement is hereby deleted in its entirety and is replaced with the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement attached hereto and incorporated herein by this reference as Exhibit "B". All references to the "Agency Loan Deed of Trust" in the Original Agreement and in this Amendment shall be deemO to refer to the Subordina.. Deed of Trust, Assignment of Leases and Rents, Fixture Filing akid Security Agreement at shed 8 RUguiEUlAgenN AmWnm¢.Ageole AmrbmeMaUgmva-Amatl 301P03-I31a MW INUnng-MSgnola HighlaW MeM.Na.Ib2MAooN Ie Smim Ci Re F iMDD, hereto as Exhibit `B," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 9. Letter Agreement. The Agency and the Developer hereby acknowledge that they are parties to that certain Letter Agreement dated as of November 20, 2009 (the "Letter Agreement'), and further acknowledge and agree that all references to the "Amended and Restated Note" in the Letter Agreement shall be deemed to refer to the Amended and Restated Agency Loan Note attached hereto as Exhibit"A". 10. Representations Warranties and Covenants of the Developer and of the Agency. 10.1 The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Amendment by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: 10.1.1 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 Amendment and the instruments, documents and agreements referenced herein and to consummate the transactions contemplated hereby. The persons executing this Amendment and the instruments, documents and agreements referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and �^ authority to bind the Developer. 10.1.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Amendment and the instruments, documents and agreements referenced herein and the consummation of the transactions contemplated hereby,and no consent of any other party is required. 10.1.3 This Amendment is, and all instruments, documents and agreements to be executed by the Developer pursuant to this Amendment 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. 10.1.4 Neither the execution of this Amendment nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other instrument, document or agreement 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. 10.1.5 The Developer shall perform and fully comply with the Original Agreement,as amended by this Amendment, and with the Agency Loan Documents. 10.1.6 To the best knowledge of the Developer, no default has occurred, or will occur with the passage of time, the giving of notice, or both, under the Original Agreement, as amended by this Amendment, or under the Agency Loan Documents. 9 p UgnidssUgwMa AmcM1mmnUgmL AtlazhmmbUpMS-Amend 20100-1510 M.2MV,W MI-1.Fligh -Amend.N. Ib 2009 ARw We g —C.RMaINw®og DDAd. f All representations and warranties contained in this Section 10.1 are true and correct on the effective date of this Amendment and the Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Amendment, shall survive the execution and delivery of this Amendment. 10.2 The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Amendment by the Developer has been made in material reliance by the Developer on such covenants,representations and warranties: 10.2.1 Each and every undertaking and obligation of the Agency under this Amendment shall be performed by the Agency timely when due; and that all representations and warranties of the Agency under this Amendment and its exhibits shall be true in all material respects as of the effective date of this Amendment. 10.2.2 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 Amendment and to execute the instruments, documents and agreements referenced herein, and to consummate the transactions contemplated hereby. 10.2.3 The Agency has taken official action to approve this Amendment and the instruments, documents and agreements referenced herein and the consummation of the transactions contemplated hereby. 10.2.4 The persons executing any instruments, documents and agreements for or on behalf of the Agency have been authorized to act on behalf of the Agency and that this Amendment 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 Amendment by the Agency. 10.2.5 The Agency shall perform and fully comply with the Original Agreement, as amended by this Amendment,and with the Agency Loan Documents. 10.2.6 To the best knowledge of the Agency, no default has occurred, or will occur with the passage of time, the giving of notice, or both, under the Original Agreement, as amended by this Amendment,or under the Agency Loan Documents. All representations and warranties contained in this Section 10.2 are true and correct on the effective date of this Amendment and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Amendment, shall survive the execution and delivery of this Amendment. 10 P:N6rntlssUeenEa AvazM1mmhUBmN AverBm>seUpem-AmtlEOIP,03-IS-10 Meld Fbueivg-MaBnolu HiBH^^tl-AmnN.N. 1wMAfi WSeem Cmem PnWl w,UOAM C11. Condition. This Amendment shall not become effective until executed and approved by the Agency and by the Developer and not until the Developer has provided the Agency with a commitment or other evidence acceptable to the Agency, in its sole discretion, that the Developer has received an award of Affordable Housing Program Funds from the Federal Home Loan Bank of San Francisco in the amount of Seven Hundred Ninety Thousand Dollars($790,000). 12. Certificate of Completion. hi Section 3.11 of the Original Agreement,the words "Attachment No. 15" shall be deleted in their entirety and replaced by the following words" "Attachment No. 12". All other provisions of Section 3.11 remain unchanged. 13. Notices. In Section 6.3 of the Original Agreement, the address for the Developer shall be as follows: Magnolia Highland, L.P., 1604 Sepulveda Boulevard, Suite 425, Los Angeles, CA 90025, Attention: John M. Huskey. All other provisions of Section 3.11 remain unchanged. 14. Section Reference Corrections. The following Section reference corrections shall be made to the Original Agreement: (i) in Section 2.1(e), the reference to Section 2.1(d) shall be deleted in its entirety and replaced by "Section 2.1(e)", (ii) in Section 2.11(d), the reference to Section 2.11(c) shall be deleted in its entirety and replaced by"Section 2.11(d)", (iii) in Section 2.11(f), the reference to Section 43(b) shall be deleted in its entirety and replaced by "Section 4.5", (iv) in Section 2.17(e)(vii), the reference to Section 3.9 shall be deleted in its ® entirety and replaced by "Section 3.6, (v) in Section 5.2, the reference to Section 6.5 shall be deleted in its entirety and replaced by "Section 6.3", and (vi) in Section 6.9, the reference to Section 6.9(a) shall be deleted in its entirety and replaced with"Section 6.9". 15. Fund Control Agreement. Within two (2) business days after the receipt by the Developer of the written request from the Agency, and prior to the transfer of the Site by the Agency to the Developer, the Developer shall execute, shall deliver and shall comply with the terms,covenants and conditions of the Fund Control Agreement. 16. Ratification. The Agency and the Developer hereby ratify, confirm, restate and agree to the terms, covenants and conditions of the Original Agreement. The terms, covenants and conditions of the Original Agreement shall remain unchanged and shall remain in full force and effect, except as modified by this Amendment. 17. Effect of Amendment. The Original Agreement, as amended by this Amendment, is referred to as "the Agreement'. All terms and conditions of the Original Agreement will remain the same to the extent they are not expressly modified by this Amendment. To the extent any provision in the Original Agreement conflicts with this Amendment, the terms and conditions of this Amendment shall prevail. Unless otherwise defined in this Amendment, all defined terms used in this Amendment have the meanings set forth in the Original Agreement(unless the context otherwise clearly requires). 18. Counteryw_-_ This Amendment may be signed in counterparts, including facsimile counterparts, eac a If which shall be deemed an original and all of which together shall constitute one and the samc greement. 11 P NgmGaMgeMa MlecM1meo4\AgmN AneohmeMN, -AnaoC 3010N1-I5-I0 M.Hwuiog-M$mlu HyFlwd-Amrnl.NO.l w 2 Affor&bleSmia Chao 0.mulHwuog DDA EOn 19. Severability. Whenever possible, each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provisions of this Amendment is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, and this Amendment shall be reformed, construed and enforced in such jurisdiction so as to best give effect to the intent of the parties under this Amendment. 20. Successors and Assigns. Except as otherwise provided in the Original Agreement, this Amendment shall bind and inure to the benefit of and be enforceable by the Developer and by the Agency and their respective successors and assigns. 21. Waiver. The failure of any party to enforce any of the provisions of this Amendment shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Amendment in accordance with its terms. 22. Governing Laws. The Original Agreement, as amended by this Amendment, shall be governed and construed in accordance with the laws of the State of California. End of Page 12 p yymyeUg®ypppechmmhlAgmtlo At4dmmu+Ngmae-Amad 3010b}ISIOMm Haunnp-Magoolu Hyhlee!-AnuvE.No l b30%MwdhlcS IChumR IH nWOOAC IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of the day and year first above written. AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency Coi s DEVELOPER Executed this day of 2010 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 13 PWgMtlss $ah AmcbmmYUgmtla Aes<bmcoLLU BA d3010M-15-10 MM .HigL -Am ,No.1.20 AR bkS—C—R.W Hoaxing DDA dace Exhibit "A" Amended and Restated Agency Loan Note 14 PUgm&sUgmY AlucM1mmu\AgenN AMCNncNeUyamnAmmtl 2610W3IF10 Mna Ilauing Magnolia HighlaM Ammd.Na.l b 2L�ARmNblc Smia Citizrn 0.mal Having UOAMCa i (WTOBER 8,2009 RRAIZF 9FCON a Farm rY d:Faa:5M,rbt Supasvlpt/ "19bsaipt I AMENDED AND RESTATED 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 1604 Sepulveda Blvd.,Suite 425 201 North"E"Street,Suite 301 Los Angeles,CA 90025 San Bernardino,California 92401 Principal Amount: Date of Agency Loan Note: $42,000,000 .200 March .2010 at) Rate of Interest Maturity Date of Agency Loan Note: 3% (See:Section 2.8(b)(i)and 2.8b(ii)of 2009 DDA) V PROMISE TO PAY.__Magnolia Highland, L.P., a California limited_partnership (tthe rarm.a.a:No vMerline 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 ef-Feaenot to exceed Seven Million Dollars (S47_000,000) as disbursed to the Borrower under the terns of the"Agency Load', as this term is defined in that certain 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009,by and between the Borrower and the Agency+ke- -DDA"` .—w amended by that certain Amendment No 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition Disposition and Development Agreement thereto dated as of March 2010(collectively.the"DDA")under and pursuant to this Amended and Restated Agency Loan Note(the "Agency Loan Note") The Borrower may use the proceeds of this Agency Loan to pay for the Off Site Project Improvement (as defined in the DDA) in an amount not to exceed Six Hundred Thousand Dollars(5600.000) AMEND AND RESTATE This Agency Loan Note amends and restates in its entirety the Original Note Upon execution of th" Agency Loan Note the Original Note shall be cancelled and of no further force and effect The Original Note shall be returned to the Borrower at the address movided in the DDA marked"Cancelled". INDEBTEDNESS.— This Agency_Loan Note evidences the indebtedness of the Borrower to formevea:ra uMad�n9 the Agency under the terns and conditions of the Agency Loan as provided for in the 22809 (�l'� 4952-107 o 5.1 1 OCTOBER 8,2009 DRAFF SECOND ForauftW:W :Mid,Not&V&wW IL! sub=" DDA. This Agency Loan Note is referred to in the 2009-DDA as the"Agency Loan Note". The Maturity Date of this Agency Loan Note is the fifty-fifth (55i6) anniversary following the date the Project is completed (the"Maturity Date"). Capitalized terms not otherwise defined herein shall have the meanings set forth in the 2909-DDA. A copy of the 2909-DDA is on file with the Agency Secretary as a public record of the Agency. PAYMENT_ _Notwithstanding the foregoing, Borrower will pay the indebtedness evidenced rormamd:ap pndm by this Agency Loan Note to the Agency in accordance with the terms,covenants and conditions of this Agency Loan Note. Commencing one (1) year after the date that the Agency has executed and recorded the Certificate of Completion, as this tern is defined in the 2009-DDA (the"Project Acceptance Date"), in the official records of the county recorder's office for the County of San Bernardino, State of California, and annually thereafter for the tern of this Agency Loan Note, the Borrower shall pay to the Agency annual installments of principal and interest fully-amortized over the remaining term of the Agency Loan. Borrower shall make such payments, in annual installment amounts, paid by the Borrower to the Agency from the "Residual Rental Receipts of the Project", as the term is defined in the 2099-DDA (each such installment payment date referred to as a"scheduled debt service payment") until the Maturity Date or repayment in fall of all outstanding principal, accrued and unpaid interest and all other fees, charges and amounts due under the Agency Loan. If on any scheduled debt service payment date, the Residual Rental Receipts of the Project are not sufficient to pay in full the interest accruing under this Agency Loan Note for the prior year,on such scheduled debt service payment date, that portion of such interest not then paid under this Agency Loan Note (the "interest deficiency debt service amount")shall be added to the outstanding principal balance of (fit/ the Agency Loan on such scheduled debt service payment date and shall accrue interest in accordance with this Agency Loan Note and be subject to and governed by the terms,covenants and conditions of this Agency Loan Note,the Agency Loan Deed of Trust,as this term is defined in the 2099-DDA,and the Agency Loan Documents,as this term is defined in the 20WDDA. If on any scheduled debt service payment date,the Residual Rental Receipts are sufficient to pay in full the annual installment of principal and interest, the Borrower shall pay to the Agency the installment of principal and interest due on such scheduled debt service payment date. If on any scheduled debt service payment date, the Residual Rental Receipts exceed the amount of the installment of principal and interest then due,such excess amount shall be paid by the Borrower to the Agency and shall be applied by the Agency to reduce the outstanding principal balance of the Agency Loan. On the Maturity Date,a balloon payment of the remaining principal balance, accrued and unpaid interest and all other fees, charges and amounts then due under the Agency Loan Documents shall be due and payable by the Borrower to the Agency, 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 92401, 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, including,without limitation, attorneys' fees and court costs, then to any late charges,then to any unpaid interest,and any remaining amount will be applied to principal. • The tern "Residual Rental Receipts of the Project"and"Residual Rental Receipts" and "Residual Receipts" mean and refer to fifty percent (50%) of the "Revenues" of the 4852-107aosm.1 2 OGTOBE 8- DP kFT Sli;CON Funoatrea:rax:Dom,not suaar Ptl saga Borrower remaining on any scheduled debt service payment date or other payment date under the Agency Loan Note or other Agency Loan Documents,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,as defined in the 2009-DDA,and/or the Permanent Loan,as defined in the 2409-DDA; (4) repayment of general partner loans; (5) cash payments of deferred developer fees;and (6) partnership management fees and asset management fee each Project operating year up to Fifteen Thousand Dollars(515,000)in the aggregate, increasing by three percent(3%)annually. • "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. "Revenue" with respect to a particular fiscal year shall mcan all revenue, income, receipts, and other consideration actually received from the operations of the Project. Revenue shall include, but not be limited to: ail 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 "52-107"805A 3 SrSCO { rgmarttl;Pmt gild,nor SupaviW "'°'t svasQrot 1 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 that such reserves and interest are used for the purposes for which the reserves were established. INTEREST RATE.—_Intemst shall accrue on the outstand_mgyrincpal balance of this Agency Parmamea:no uad�ne Loan Note at a fixed rate of interest. The rate of interest which shall accrue on the unpaid principal balance of this Agency Loan Note from the date of this Agency Loan Note through the Maturity Date shall be three percent(3%)per annum until paid in full. Interest on this Agency Loan 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. PREPAYMENT.—_Borrower may pad without l all or a rt_poon of the amount owed rorm.uetl:uo u ,e under this Agency Loan Note earlier than it is due. ,ATE CHARGE.—_If apayment is ten(19)calendar days or more late,Borrower will also be Pormeud:ao a;acnK charged(in addition to the annual installment amount past due)five pement(501)of the annual payment amount w a late charge. The Late Charge may be levied by the Lender for the purpose o_f defraying the_e eases incident to handling such delinquent Payment. The Late Ch ar e represents a reasonable sum considering all of the circumstances existing on the date of this Agency Loan Note and represents a fair and reasonable estimate of the costs that will be sustained by the Lender due to the failure of the Borrower to make timely Payments. The partic V also further agree that proof of actual damages would be costly or inconvenience. The Late Charge shall be paid without Preiudice to the right of the Lender to collect any other amounts provided to be paid pr to declare a default under this Agency Loan Note under the Agency Loan Deed of Trust or under any Agency Loan Documents or from exercising any of the other rights and remedies of the Lender. pEFAULT.—Borrower will be in default if my of the followirig happens:_ _ _ _ _ _ _ _ , (a) Borrower fails to make any payment when due under this Agency Loan Note or under the other Agency Loan Documents. (b) Borrower fails to make any other payment when due under the 20WDDA. (c) Borrower fails to comply with or to perform when due any other term, obligation, covenant, or condition contained in the 2009--DDA, this Agency Loan Note, in the other Agency Loan Documents or any agreement related to this Agency Loan 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 the Borrower's property or the Borrower's ability to repay this Agency Loan Note or the ability of the Borrower to perform its other obligations under this Agency 4852-107o-osas.1 4 {r V OCTOBER 813009 DPdkpr 89G(Al F.Anw.mot:aw,W sue—� sum Loan Note, the Agency Loan Deed of Trust or any of the other Agency Loan Documents. (e) Any representation or statement made or furnished to the Agency by the Borrower or on the Borrower's behalf under the 2404-DDA,this Agency Loan Note or any of the other Agency Loan Documents 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 the Borrower's property on or in which the Agency has a lien or security interest. (g) A material adverse change occurs in the Borrower's financial condition,or the Agency reasonably believes the prospect of payment or performance of the indebtedness evidenced by this Agency Loan Note is materially impaired. Such a default may be cured (and in such event no default will be deemed to have occurred) if the Borrower,after receiving written notice from the Agency demanding cure of such default: (i) cures any payment default within seven(7)calendar days;or (ii) cures any non-monetary default within thirty(30)calendar days;or (iii) If the cure requires more than thirty(30)calendar days, as determined by the Agency in its sole discretion,the Borrower 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 the exercise of any remedies by the Agency under this Agency Loan Note or the other Agency Loan Documents provided: (a) the Borrower initiates corrective action within said thirty (30)-calendar day period, and (b) the Borrower diligently,continuously,and in good faith works to effect a cure a soon as possible. RIGHTS OF THE HOLDER.—Upon default by the Borrower Ssubject to any applicable notice cu rorm.mea:rb u and re periods), en the Agcy may exercise any of its rights and remedies provided under the 2009-DDA and the"Agency Loan",as this term is defined in the 2449-DDA, including,without limitation,the declaration by the Agency or the holder in due course of this Agency Loan Note that the entire unpaid principal balance of this Agency Loan Note, all accrued unpaid interest is immediately due and payable, and all other fees, charges and amounts due under the Agency Loan Note and under the other Agency Loan Documents,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 Agency Loan 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 Agency Loan Note, if the Borrower does not pay. The Borrower will pay the Holder the amount of any and all such 6852-10'IO-0fi05.1 5 ccrp�{p Fa ttea;rant sold,Not SulclsoW SOsaU 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 judgment collection services. The Borrower also will pay any court costs, in addition to all other sums provided by law. This Agency Loan 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 Agency Loan Note,the Superior Court of the State of California in San Bernardino County shall have jurisdiction of such lawsuit. This Agency Loan Note shall be governed by and construed in accordance with the laws of the State of California. COLLATERAL.—_Upon closing of the Site Transfer Escrow, pursuant to the terms of the wrmateea:No aMMlne 2009 DDA,the obligations of this Agency Loan Note share secured,without limitation,by the Agency Loan Deed of Trust. The Agency Loan Deed of Trust shall be subordinate to the security interest of the Construction Lender and of the Permanent Lender. Subject to the terms, covenants and conditions of the 2009-DDA, the obligation of the Borrower to timely pay the Agency the amounts due under this Agency Loan Note is assignable by the Borrower to its transferee in the Site, m defined in the 2809-DDA, upon thirty(30) calendar 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 Site,the assignee of the Borrower shall also assume the obligations of the Borrower under the note held by the Construction Lender or by the Permanent Lender, w then applicable. The Agency Loan Deed of Trust affects certain real property ® described in the 2009-DDA as the"Site"and/or the"Project". Th e Agency ""d 4T` " 14,1 914MS SRG;4RF9 B* THIS PFED OF eT AGGF5 C TV1T AS THIS T-WAM is hq.t he the ' _efiei..1 ef equiieMe, hethel -elmtar�- Af whethei, lq� sale, deed of installment gale on of the ecurn). interest of tigg Se iiei Lendef af 49 assignee 4852-10aoMA 6 OCTOBER 8,2 09BRAFT SECOND ft aaea:rmu Bola," sub pt GENERAL PROVISIONS_ Except as set forth in the next sentence of this paragraaph,following_ , runnattea: andea� the date of execution by the Borrower of this Agency Loan Note,upon the failure to pay any sum provided for in the 2994-DDA, in this Agency Loan Note or under the other Agency Loan Documents when due,or a material breach of the 2409-DDA,of the Agency Loan Deed of Trust or of the other Agency Loan Documents 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 Agency Loan Note. The sole recourse of the Holder to recover any sum under this Agency Loan Note shall be to the Site 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 2049-DDA or under the other Agency Loan Documents, (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 Site,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 Agency Loan Note or the other Agency Loan Documents,without losing them. Borrower and any other person who signs, guarantees or endorses this Agency Loan 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 Agency Loan Note, and unless otherwise expressly stated in writing, no party who signs this Agency Loan 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 Agency Loan 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 Agency Loan Note and/or the other Agency Loan Documents without the consent of or notice to anyone other than the party with whom the modification is made. All defined words,terms in phrases indicated by initial capital letters used in this Agency Loan Note and not specifically defined in this Agency Loan Note shall have the meanings ascribed to them in the 2049-DDA. Except as provided in this Agency Loan Note,upon the execution date by the Borrower of this Agency Loan Note,this Agency Loan Note shall be a nonrecourse obligation of the Borrower. Neither the Borrower nor any other party, including,without limitation, any partner(general or limited)of the Borrower,shall have personal liability for repayment of this Agency Loan. The sole recourse of the Agency for any obligation of the Borrower under this Agency Loan Nate _ , zexceot in the exereiseeven of (Al fraud by th_e_gets-L'-_-i hts- °°:'°'Borrower_or anv romwttetl:rwrc mb:,wm partner (B) any material mistepre ntation made by the Borrower or any oartner to the Aeency " romwt W rane wbr:lam under the DDA or under the other Agency Loan Documents. (C) misappropriation by the rormeana;FVrc aADr: Borrower or any Danner 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 any sssz-roro-asos.r 7 nn ec�nntn Formatted:Fart 5W,Na SUWWIpt/OPdkFF OGTOHER sub pt partner or(E)the presence of"Hazardous Substances"on the gSite as this term is defined in the _ Fom lttr :Fpm mb:num Agency Loan Deed of Trust,_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _\\ F«mattrd:Foat color:eiad \ FarmatEed:Fom mbr:Amp Formatted:Fmt mbr:Black I I <aszrmooeos.r 8 nn DR 44 ] rona.netl:rrr,e ada,no[swersalW OGTOBER Saascict PRIOR TO SIGNING THIS AGENCY LOAN NOTE, BORROWER HAS READ AND UNDERSTANDS ALL OF ITS PROVISIONS. BORROWER AGREES TO THE TERMS OF THIS AGENCY LOAN NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF. 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. Leanne Truofreh Secretary 4853-107MO5.1 9 Exhibit`B" Agency Loan Deed of Trust 15 P'UgmdssUgeMU Artedoni'ntsUgeMC A o oosUg -A=M MIM3-15-I4 Mda Heu—,Mnoolu Hihl -Am No I w 2 AR Jo Seoiar C,hzrn Rem Hooding DDA&" �r RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North "E" Street, Suite 301 San Bernardino,California 92401 (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 SUBORDINATE DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING AND SECURITY AGREEMENT (Agency Loan Deed of Trust) I 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 1604 Sepulveda Blvd., Suite 425, Los Angeles, CA 90025, 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"). WITNESSETH 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 1 P Wgmdu\Agenda AdachmMs5 hibilsVOIM3-15-10h Ha S-h"IM NighlW-Agency Uan Bad aTw (B ibh B)-FNA . w 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 2 P.UA,Mn,Agmba Amcbmrnts)Exhib @,@OIOW)-IS-10 Mme Housin6-Mag haHighlaM-ApngL D ofTmm(Exhibit B)-FNA Aom 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 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 Tmstor hereby grants to Beneficiary a security interest therein. 3 P UgeMuV,geMe AnecbmaaslBxMbne32010�U3-IS-10 Mau Housing-Me lie Hi,h[W-A,e loan DW ofT .(EAN,B)-pMAlA- 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 (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009, by and between the Trustor and the Beneficiary, as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March_, 2010 (collectively, the "2009 DDA") as evidenced by the Agency Loan Note, dated November 23, 2009, executed by the Trustor, as borrower, in favor of the Beneficiary, as lender, in the principal amount of Four Million Dollars, as amended by the Amended and Restated Agency Loan Note, dated March_, 2010, executed by the Trustor, as borrower, in favor of the Beneficiary, as lender, in the principal amount of Seven Million Dollars (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, 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 4 P Ugm"s\Agenda Att mentsMxWb sb 10b3-1540 Mm Iiwa -Magnolia 3Bgb1aM-Ape LinnOro1 ofTmg(E bit B)-FM d= 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 (t) 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, 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. 5 P�VngiwUpn& Hauling-Ma@uilia HighlW-Ag L Dad of`T A(Exhibit B)-FWA d= (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 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 revisi ms thereof within the fifteen (15) day period described above, Trustor shall provide written nc ..-e to Beneficiary of (� Beneficiary's failure to respond, at which time Beneficiary shall have an idditional forty-five V 6 P` SeMesWgenda Affaamems�hibits==34I 10 Me Homing-Magnolia Hilh].M-A,eu Loan dofT-1(Exhibit B7-Fl AL do: (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 occunence(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 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 V 6901 et seq.; (vi) all substances now or hereafter designated as "hazardous wastes" in Section 1 1 7 1 PA rndastAgenda AnachmentsTxblbits=1QW3-15-Io Mee Honing-Magnolia Highland-Agency Loan Deed ofTsuat Mxhibit B).MALdocx i 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 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 Tmstor 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; 8 P fts as%ApMA hmeiw hibitt1 IW3-ISIOM Hwang-WWlia Highland-Ag Lwn Boed ofTvn(Fhibit B)-FMAL den (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: (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 pree ous owner or user of the Property(and relating to Trustor's and/or such previous owner's r user's ownership of the Property), by any governmental entity or agency or Q any oa.-- person or entity and relating to Hazardous Materials or pursuant to Enviromr �ntal Laws; and 9 PAA@mAuUpw Arch . .63n,@OINA3-ISdOMm Hwang-Megiwlia HigAland-Agnixry Ivan ettd ofimn fErhibit B)-FMAL.dou (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; 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 P kAg< sXAg< AM mmtgF ibuvt2 =3-15-10 Mm Housing-ALgnolie NgblW-Ag Lwn Dztl ofhun(Exbibn B)-FMAL.EOu 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. 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 �✓ 11 P Vg MmNge Atlacgmq¢a1ExWb IU010b3-15-10 Mda Hording-Ma Iia HighlaM-Ag Loon Geed orTmd(Eabibil B)-MN AO 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, 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 12 P:\A,,ndeslAeMe A=e Me)EtbibiISWI0103-15-10 Mae Hoeing-MegeolieHi,bl.M-A6en,Lom Heed ofRum(Exbibi,B)-PMAL don 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. Assimment 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 p olicies and the proceeds of an y p olicies of insurance affecting the Property,rty, 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: 13 PUgmdaeUgeMa AnacMnemasE ahibi1sD010W1.15-10 Mna Housing-Magnolia Highland-Apmy Loan Dad ofTma(Exhibit B)-FM dc- (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: (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 14 P Vgm asNgendaA &6memaNxMbha12010A3-15-10 MN Haw -Mee HaKghx -Age L nDe ofTw (Exbibh B)-Fl AL.d= 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 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, 15 PWge&MgeMe MxchmeeTxhibiu120lm-15-10 MmH 6 -Magnolia Highland-Awe Loan Dad of (Exhibit H)-FMAL.d= 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. 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 'Mote plus all other sums due to Beneficiary from Trustor shall be paid-to Trustor or Trustor's assi,,iee. 6.a. 16 PNgeMae\Agenda Anatlmwole Wbnd2M3-15-10 Md Hauing-Ma HaHighland-Agency Laan DeW ofTUn(EHt\ -PMA ,. 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. Mortgalze 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. Tmstor shall bear and pay the full amount of such taxes. 17. Sl2ecial 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) Tmstor 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 17 P:UgendxeVpg Anw bmmtsEbibks @010b3-1510MneHw6ng-FLgwlie NigM1lanE-Agmry Lam Herd ofTmn(Exbibn B)-FMALdov 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. Reuort 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. 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 rime, 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 18 P:\Age ms\Agenda Much en,B%VNIa\t010\03-15-10M zHaudng-M1 gnolie HighlaM-Agency I.om aTMK(BMbi,B)-FMA d= 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 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. Truster 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. Truster, 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 -idemnify from and, on demand, reimburse Beneficiary and Trustee for, any and all loss, damat., expense or cost, including cost of evidence of title expert witness fees and attorneys' fees, cir ing out of or incurred in connection with any such suit, action or proceeding, and any 19 P\Agnddaa\• +da Am rnenasTxhiWts0 W3-l5-IU Mann Hnuaiag-Magnolia Highland-Ag LanB afTMO MxMbb B).FINA dm 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 `a 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 C 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. (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; amid Beneficiary's requirements of Trustor's preservation of its equity in the Property and the abse of debt that could increase the 20 PU asl ge Anach eMTxbibitsWIM 3-15-10 Ma Housing-Magiwlia HlgblaM-Ag yWan Ded of'1 o(Exbibn B)-FMAI..dacx 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 he 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. MSERVED -NO TEXTI. 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 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 21 P NSeWas4lgenda AnachmmleWxhibbO01UA1.15-10 Mee Housing-Magnolia HighlW-Agenry Lawn ofT (B ibit B)-FlN do C 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 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 6) Notwithstanding the remedies of Beneficiary set forth in Section © 29, below, the parties hereto agree that the Investor Limited Partner shall be entitled to 22 g:Upe kAge MBA sw bibbf1 IW3-15-10 MM sft-My 4MgblsM-Ag Unn Dad afTU>t) ibis B)-gMA d= 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. )fights 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 duty 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 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 23 P tAgadnMgenda Att¢bmmtsF hibi1sW1GW3-15-10 MM Homo,-Mag iaffigbland-Apmy Lone Deed of Trvn(Exhibit B)-FMAL.dooa 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. (t) 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 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 24 P.Wgendas\Agenda Anadh ms\ hibits�OIM-15-10Mm Housing-Mag lia HlgblaM Agenry ImnGeed MTrvn(EN3n B)-FMAL.dau 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 attomey-in-fact to endorse instruments received in payment thereof in the name C 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 frill 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 25 P'.WgeMasWgeMa A�m<M1mems�EnM1ibiiaV010Ag-IS-10 Mega Housing-Magnolia NigM1laM-Agary Lan Dad ofi,uw(FxM1ibn B)-PMAL.dax Trustor to Beneficiary under the Note and this Deed of 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. 0) 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 parry 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) Annointment 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 ai , part of the Property, the receiver or Beneficiary may: (i) use; operate, manage, comic and conduct business on the Property 26 P UgeMSeUgrMe.lttecbmmulB Mbbe1301dD3-15-10 Mqe Hw,in6-Meppolie Hieblud-ABUKY In^^U: fTn (Mibn B)-MH AO 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 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. 27 P.WScMas\Agenda Anachmenu\Exbibi =1=3-15-10 MMa Hwsing-Magwlia Highland-Agwry Low atTmA(Exh M1 B)-PMAL.dwx 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 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, 28 P WgmLaAAgcnda AnahmatAExhl1bftSW1b3-15.10 Mm Hawing-Magnolia HigbluN-Agag Imn Dad ofl mt(Exhibit B)-FlH tiax 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 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. 29 PUg as\Age aA=c Msl hibnsQOIM3-15-10Mtta Hawing-Magnolia Highland-Agency Iran Dcad ofTmat(Exbibil B)-FM doax 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 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 �•/ 30 PUgeM s\Agn aAoar nts Exhibin@0 M-15-10 Mna H....,-Magnolia Hi,hi.M-Agen,Lwn OeM off (Edibit8)-PMA A. 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. 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. L.. 31 P\ApM sl4enda AWnhmemnlE MWt,11010103-15-10 Mtl Hmsing-MWolia HiolaM-n .Cy loan Dad ofT=t MH ibit B7-FWA do 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 fast-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. 47. Reports and Statements. Trustor shall deliver to Beneficiary, within C 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 financial 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 32 P UgWav\Agmtla AttarJuMmv�ERbibnnVAlNDI-ISIO Mina Housing-Magwlia Highland-Apnq tanDW of T• (&1ibk B)-FI AO 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 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. Leeal 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. v 33 P Agent AVM&Amchmem,IBxhlbit VOJ W3-15-10 Mea Housing-M,Wia Highland-A,.,Imp D OofTmm( hibl B)-MAL.docx y� 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. 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. 34 P UgodaxUgeMaA 6a ntsEhibha==3-15-10 Mma Hmaing-Magmlia Hi&&M-Agn Loon Owd ofTmm(Exhibu B)-FMAL.Emx 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 he 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. 35 P 1ASeMasUgeM Anadmwsn xgibde@OIM3-15-10 MWHoming-Mn Iia HigMan d-Agenq Idn Uatl ofTw(Bx M B7-FMAL docx IN WITNESS WHEREOF, Trustor hereby duly executes this Agency Loan Deed of Trust as of the day and year first above written. TRUSTOR 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] S P:.4a \Age aAna6m s hibftsMIM3-15-10 Mm Hwsing-Ma Iia Highhry ;nq LaanOW OfTmn mobil B)-PMA Ad EXHIBIT"A" LEGAL DESCRIPTION OF PROPERTY 37 P UgmtluUgentle Anxhmmb�Fihibiu @OIOb]-U-10 Mtta Housing-Mafmlla Hifh�end-Agmry Loan�o(Tmn(Eahibit B)-FMAL.tlaa Exhibit "C5 Agency Regulatory Agreement and Covenants 16 p UgenEazVgmh At 0000m,Npn&AvazM1mewWgms-Ame 2010W-15-10Mew HWs,Ma,i Nm Hgh d AmeM.No 1b2009AF Wk Smim C�I "H S,UONAdocn RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino,California 92401 (Space Above Line Reserved For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISTION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF MARCH_, 2010. 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. 1 PUWe s\Agenda AftfinenuMxhiWsWIM3-15-10 MeeH ice-Magnolia Highland-Re Wory Agreement k Gnv &(Exiba C)-PMAL.dOa 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 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland L.P.)", dated as of August 3, 2009, as amended by the Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March . 2010 (collectively, 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 terns 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 2 not exceed 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 1/6) 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 terns and conditions of this Agency Regulatory Agreement. C • City. The tern"City"means and refers to the City of San Bernardino, California • Constriction Lender. The term "Construction Lender"means and refers to the entity or entities providing the Construction Loan to the Developer. • Construction Loan. The term "Constriction 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 constriction 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. 3 • 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. 4 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 Oualifvin$z 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; ') conduct a credit reporting agency or similar search; (3) obtain an income verification form from it applicant's current employer; (4) obtain an income verification form from the United States Soci I Security Administration and/or the California Department of Social Services, if the applicant receis s assistance from either of such agencies; or (5) if the applicant is unemployed and has no such 5 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 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. 6 (f) The "Temporary Period" shall commence on the date of recordation of this Regulatory I 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 Proiect. 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 i Code. (2) The lease shall not contain any of the following provisions: i (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; (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 Qlegal 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. 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 Developme !Scope of Work attached hereto as Exhibit "B" (the "Scope of Development"), within the period of 'me set forth under the Schedule of Performance attached hereto as Exhibit"C". 8 (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 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 gal 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. 9 (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. Section 6. Maintenance of the Proiect. 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 10 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 j Section 6(3). (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 11 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. i (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 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 12 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 he 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. Q (a) The provisions of this Agency Regulatory Agreement shall apply to the Site for a tern 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: (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 famished 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 13 i 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 Oof 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 i (ii) by other action at law or in equity 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(f)(7), no third party shall have any right or power to enforce any provision of this Agency 14 r^ 4v 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. 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: C 15 If to the Agency: Redevelopment Agency of the City of San Bernardino Atm.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 Phone: (909)663-1044 Fax: (909) 663-2294 If to the Developer: Magnolia Highland, L.P. Attn: John Huskey 1604 Sepulveda Blvd., Suite 425 Los Angeles, CA 90025 Phone: (310) 575-3543 Ext. 110 Fax: (310) 575-3563 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 i 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. (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. `rd 16 [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF MARCH _, 2009. 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.] c c 17 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, a public body,corporate and politic By: Chair Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency Counsel DEVELOPER Magnolia Highland, L.P., a California limited partnership © Dated: 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 i Its: Managing General Partner By: Graham Espley-Jones, President By_ Leanne Truofreh, Secretary Approved as to Form: By: Legal Counsel for Devc per I 18 Exhibit "D" Developer Project Pro Forma 17 P\ABeod geM ArvxM1mv UUgcM AM1xWmmlAgmla-Amend 3010`03-I5-10 Mee Ho-o6-Mamlia HigWl Mead.No l to 3W3 Affordable Senior Cmuo Roe H in DDA.o Meta Housing-Magnolia at Highland,LP Project Budget-Sources and Uses of Project Funds February 16,2010 e of Project Funds Source of Project Funds Tax Credit First Percentage enc Equity Morteage AMP Developer Total of Total Land Cost 2,450,000 2,450,000 12.87% Title/Escrow/Legal 27,605 27,605 0.15% Demolition 30,000 30,000 0.16% Off-Ske Improvements 600,000 200,000 800,000 4.20% Site Work 350,000 350,000 1.84% Structures 3,722,395 1,635,859 1,864,172 790,000 8,012,425 42.10% General Requirements 401,20D 401,200 2.11% Contractor Overhead 303,400 303,400 1.59% Contractor Profit 303,400 303,400 1.59% General Dabnty Insurance 137,670 (137670 0.72% Yot"41DGe4i 4on°$ireFtlVn ,�-.LL . ' ' 3 3064 3 „$71322395 $ 2 ` Architectural Design 100,000 430,000 530,000 2.78% Engineering 7000D 195,000 265,000 1.39% 7otil(SE .r -"""".. -`,"'. ".,• 3"ii9aoo $,,.- .s"5bu':; ,h�z r� - S, �r1f+,000 ' Construction Loan Interest 256,454 256,454 1.35% Origination Fee 70,030 70,000 0.37% Credit Enhancement App.Fee 20,OD0 20,000 0.11% Predevelopment Loan Origination Fee 20,000 20,000 0.11% Predevelopment Loan Interest 40,000 40,000 0.21% Insurance 116,446 116,446 0.61% Title and Recording 25,000 25,000 afCon4traaibnlateiesi%Feas 5 'sd79oo '`. S 61§33 ":: 2.98% Origination Fee 20,000 20,000 D.11% Credit Enhancement App.Fee 12,500 12,500 0.07% Title and Recording 12,500 12,500 0.07% To'tel6en'naneoFina'ndng2ists .S 4,1660 $ 45,000 i 3.24% Lender Legal Paid by Developer 40,000 40,000 0.21% Partnership Legal 100,000 100,000 0.53% Inysetor Due Dilligence Legal - 0.00% Accounting and Organizational 135,000 135,000 0.71% Total egal Fees $ 775;000 S 275,000 1.4596 3-month Operating Reserve 120,936 120,936 0.64% Appraisals 30,000 10,000 0.05% Construction Contingency 401,557 401,557 2.11% Total Cgatingen4y Wits $ 411;557 $ 120;936 5 ,537,493 180% TCAC Application/Monitoring Fees 70,000 70,000 0.37% Reproduction 25,000 25,000 0.13% Development Impact Fees 1,530,000 1,530,003 8.04% Permit Processing Fees 70,000 70,000 0.37% Marketing and Start-up 40,000 40,000 0.21% Furnishings 90,000 90,000 0.47% Studies/Surveys 60,000 60,000 0.32% Contingency 141,322 141,322 0.74% Tbt$10[h4rCOatr $ 1,916;322 $ 110,000 $ 2;020,322 - -10:05% Developer Overhead and Profit 1,982,046 11,331 1,993,377 10.47% Total"Deeekr iOverheadand Profk $ 1,984049 $ '11,331 $ 1,993,377 -10.47% .etal C;iWtq anent[asts $7,000,600 $ 9,089,353 5 2,140,103 $ 790,606 $ 11,931 S 19,030,792 100.00% Exhibit `gE" Fund Control Agreement 18 P UBerxL�sUgaW AmchmennUgmtla AvarBmmisUpo¢rAmeM 30101D3-IS-10MNllaviy-M�du Highbrd AmeM.No IWMARmd WSmi Churn IbOel Hwumg DDAE i ��&WA Est American Fund Control,Inc. ESCROW NO. Commerce,Irvine, CA 92602 (866) 536-0178 FAX (866) 536-0177 FUND CONTROL AGREEMENT THIS FUND CONTROL AGREEMENT(the "Agreement") is entered into and effective as of 2010, at Irvine, California by and between FIRST AMERICAN FUND CONTROL,INC., a California corporation("FAFC"); MAGNOLIA HIGHLAND,L.P., a California limited partnership ("Owner"); and the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic ("Lender"), on the basis of the following facts: RECITALS A. Owner and Lender have entered into that certain 2009 Affordable Senior Citizen Rental Housing Acquisition,Disposition and Development Agreement(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3,2009,by and between the Borrower and the Agency, as amended by that certain Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement thereto, dated as of March 2010 (collectively,the "DDA")pursuant to which Owner shall construct an affordable senior housing rental development(the "Project") on the real property commonly known as Parcel 1 of Tentative Parcel Map No. 19200 consisting of approximately S acres of land located on the southwest comer of Highland Street and Medical Center Drive, at , in the City of San Bernardino, County of San Bernardino, State of California(the "Property"). FAFC is not a party to the DDA and shall have no obligation or liability in connection therewith. 9 B. There shall be deposited, in a FAFC trust account,from time to time, funds in the aggregate amount of $ all of which shall be provided by Lender. FAFC is not a party to any loan documents and shall have no obligation or liability in connection therewith. C. Owner and Lender wish to have FAFC make disbursements concerning the Project as provided in this Agreement. AGREEMENT IT IS HEREBY AGREED,on the basis of the foregoing facts and for valuable consideration as follows: 1. Escrow. FAFC shall establish a separate escrow account for the Project (the "Escrow"). All funds delivered to FAFC shall be deposited in FAFC's trust account and credited to the Escrow in the manner as provided in Section 2.4 below. All funds disbursed by FAFC shall be disbursed from a trust account and debited to the Escrow. FAFC shall maintain a record of deposits and disbursements regarding the Escrow. Escrow funds shall not bear interest. 2. Disbursement Procedures. FAFC is authorized and instructed, subject to ava table Escrow funds,to make sbursements in accordance with the provisions set forth below. f�•�/ 2.1 Project Cost Breakdown. Owner shall provide FAFC with a Project Cost Br akdown(the "Breakdown"), approved by the Lender, setting forth the estimated costs for the Project y cost categories. The I P\A&< \ABmda Ha6,-MW.U.Hghia -Fund Co.l Agee (Exhibit E)-FMAL,d Breakdown is solely for the purpose of assisting FAFC in maintaining its records. FAFC shall have no obligation in connection with the Breakdown. The Breakdown may be modified from time to time upon the request of Owner without the prior written approval of Lender,provided that no increase in the aggregate amount of$ may nade without the prior written consent of Lender. 2.2 Requests for Advances. From time to time(but not more than once per calendar week) Owner shall provide FAFC with a request for advance which shall include(a)the amount of funds requested, (b) an allocation of the funds to the cost categories, (c)the name of each payee and(d)the amount to be disbursed to each payee (the "Request for Advance"). Each Request for Advance shall be accompanied by a Owner certification to FAFC that all information included within a Request for Advance shall be true, accurate in all material respects and not subject to qualification. FAFC is authorized to fully rely upon each Owner certification; and FAFC shall not incur any liability resulting from such reliance. 2.3 FAFC Report. Following receipt of a Request for Advance, FAFC shall provide Lender and Owner with a computer-generated report(the "Report") summarizing(a)the Request for Advance and(b)past disbursements by cost category, and amounts remaining unspent in each cost category. 2.4 Transfer of Funds. Upon Lender's approval of the Report in accordance with the loan arrangements among Lender and Owner, Lender shall transfer(but only to the extent available under the loan arrangements among Lender and Owner)to FAFC's trust account all or a portion of the funds identified in the Report (the "Transferred Amount"). In the event Lender imposes any conditions regarding the Transferred Amount(but only to the extent available under the loan arrangements among Lender and Owner), FAFC may withhold disbursement until the conditions are satisfied. 2.5 Vouchers. FAFC's form voucher("Voucher"), attached hereto as Exhibit"A", shall be used to request d*imrsemems, including the requirement for the provision that all necessary lien releases be duly signed by the ropriate parties. The "Authorized Individuals" (identified at the end of this Agreement are appointed and authorized by Owner and Lender to sign and deliver Vouchers. Only the Authorized Individuals may sign Vouchers. The Authorized Individuals shall deliver signed Vouchers to FAFC with applicable(a)receipts, invoices or bills and (b) applicable lien releases to the extent required under the loan arrangements among Lender and Owner (the Conditional Waiver and Releases are attached hereto as Exhibit"B"and the Unconditional Waiver and Releases are attached hereto as Exhibit"C".) FAFC is authorized to make disbursements pursuant to Vouchers. FAFC is authorized to conclusively presume that any Voucher and/or accompanying documentation is given in frill compliance with this Agreement and that all funds to be disbursed pursuant to the Voucher are for the purposes stated in the Voucher. FAFC shall incur no liability in making disbursements pursuant to the foregoing; unless FAFC's acts or omissions are grossly negligent or wrongful. 2.6 Disbursement by FAFC. Except as otherwise provided in this Agreement,upon FAFC's receipt of a signed Voucher,together with the documentation referred to in Section 2.5, FAFC shall disburse the amount set forth in the Voucher. Provided FAFC complies with this section, FAFC shall incur no liability to any person or entity for making or not making disbursements; unless FAFC's acts or omission are grossly negligent or wrongful. 3. Limitation on Disbursements. FAFC shall not be obligated to make disbursements which exceed the balance of funds in the Escrow. The parties to this Agreement shall cooperate fully with FAFC, including delivery of such documents and information as FAFC may request. FAFC is authorized, but not obligated,to withhold any disbursement pending receipt of such documents and information. 4. FAFC Fees. FAFC shall receive, as compensation for its basic services under this Agreement,the sum of Thousand Seven Hundred and Fifty Dollars ($1,750) set up fee plus $1.75 per thousand dollars isbursed/processed by FAFC. These fees shall be payable with the first payment deposit of the Transferred Amount. FAFC is authorized and instructed to immediately disburse such compensation to itself. 2 P Ngendu)Ageuda AtucM1meua)E M1ibi1s�301UO3-ISIO Mds Houung-Magno4e HigM1IW-FuM Com A® mmcoE ibn E)-FNAL I 4.1 Extraordinary Costs. In the event FAFC is required or requested to produce or duplicate documents; utilize messengers or delivery services other than fast-class U.S. mail; provide testimony or take action in any court, arbitration or other proceeding,the cost shall be paid to FAFC by the party which request such extraordinary ices,or the party whose conduct requires such extraordinary services. If FAFC receives more than one Request Advance during a calendar week(and FAFC elects to process the extra Requests), FAFC shall be entitled to $100 for each extra Request. Such amounts shall be in addition to the FAFC Fee and FAFC shall not be required to act until such reimbursement is made. FAFC is authorized to disburse such amounts to itself from funds in the Escrow. 5. Disputes. Should any controversy arise in connection with this Agreement,FAFC may withhold disbursements until the controversy is resolved by legal process or an agreement acceptable to FAFC. Prior to resolution of the controversy, FAFC may, but shall not be obligated to, (a)return the funds then held in the Escrow to the person who deposited the funds with FAFC, and/or(b) interpread the funds with the court. Upon either(a) or (b),FAFC shall be fully discharged and relieved from all liability in connection with such funds and shall be entitled to recover its costs and attorneys'fees in connection therewith. 6. FAFC's Obli ag tions. The obligations of FAFC are limited solely to making disbursements pursuant to Section 2 of this Agreement. Without limiting the generality of the foregoing, FAFC shall not(a) be responsible for or guarantee that the Project shall be constructed in accordance with the Breakdown,any plans and specifications or any contract or agreement to which FAFC is not a party; (b)have any duty to inspect the Project or to verify the information and materials it receives except to the extent as set forth in the Addendum hereto; or(c)be responsible to determine that funds disbursed by FAFC are actually used as stated in the Requests for Advance or the Vouchers. 7. Indemnitv. The parties to this Agreement,jointly and severally, agree to hold FAFC harmless and to indemnify and defend FAFC from and against any and all claims, demands,liabilities and legal actions, including " se of the undersigned, in connection with or allegedly in connection with this Agreement,the Escrow or the eject; and they further agree to pay FAFC's reasonable attorneys' fees and costs in connection therewith. FAFC is authorized to employ legal counsel of its choice; provided, however,this Section 7 shall be of no force or effect should any or all claims, demands, liabilities and legal actions, result or relate to the grossly negligent acts or omissions or wrongful conduct of FAFC,its agents, representatives,employees, successors or assigns, in connection with this Agreement,the Escrow or the Project. 8. Maintenance of Records. FAFC shall keep accurate records as to(a)amounts deposited in the Escrow; (b) amounts disbursed from the Escrow by cost categories; and (c)the undisbursed amount in each cost category (based upon the Breakdown). As required by California law, original documents shall remain at FAFC's office and upon reasonable notice shall be available for inspection by Lender or Owner. Upon not less than 48 hours notice to FAFC,Owner, or Lender may,through a bonded photocopying service,photocopy, at the requesting party's expense, documents which relate to this Agreement. In the event any photocopying is done by FAFC,the requesting party shall reimburse FAFC for the photocopying charges and labor charges relating thereto prior to delivery of the copies to the requesting party. 9. Amendments. This Agreement may only be amended, supplemented or modified by a written amendment executed by all parties hereto. 10. Attorneys' Fees. In any action between the parties regarding this Agreement, the Escrow or the Project, the prevailing party in that action shall be entitled to recover its reasonable costs and expenses, including reasonable attorneys' fees. 11. hrteMretati on. This Agreement shall be interpreted and construed in accordance with California law. Any action against FAFC involving this Agreement, shall be maintained in the appropriate court in Orange County, California. 3 P:WgcM Agm At mmisl ibkODIW3-15-10 bkullouviv8'Ma ie bfi&W-F.M Co.l Ag .e .(Fdbn E)- PRIAL.dov 12. No Third-Party Beneficiary. This Agreement is made and intended to be for the benefit of Owner, Lender and FAFC only and is not intended to be for the benefit of anyone else, including those furnishing labor or terials. 13. Mer er. This Agreement sets forth the full agreement between the parties regarding the Escrow and the obligations of FAFC. All prior agreements and understandings shall be deemed terminated and of no further force or effect. 14. Severability. In the event any provision of this Agreement should be determined by a court of competent jurisdiction as unenforceable or void under applicable law,that provision shall be deleted;but the remaining provisions of this Agreement shall remain in full force and effect. 15. Counterparts. This Agreement may be signed in multiple counterparts. 16. Captions. The Caption headings for the sections of this Agreement are for convenience only and shall not be considered to limit, expand or define the content of the sections. 17. Final Disbursement. Upon the written request of Owner and Lender, FAFC shall disburse any final balance in the Escrow without following the provisions of Section 2. FAFC may condition the disbursement upon receipt of(a) an indemnity agreement in form and content approved by FAFC and signed by Owner and/or Lender; and(b) FAFC's attorneys' fees incurred in connection therewith. 18. Bindi�ffect. This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns. V 19. Limitation of Liability. Liability of Owner and Lender shall be limited strictly to funds actually deposited into Escrow,pursuant to this agreement. i j End of Page i i 4 P UgeMU Sen"Anaab ls�ibi WIW3-15 Net Hau,in8-b3gWia H,Wu FUM C.m Agrcet (Ex iba E) FINL i IN WITNESS WHEREOF,the parties, individually or through their authorized representatives,have cuted this Agreement as of the date of this Agreement. Each individual executing this Agreement warrants and esents that he or she has the power and authority to execute this Agreement on behalf of the party for whom the execution is made. "Owner" 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 Tmofreh, Secretary "FAFC" FIRST AMERICAN FUND CONTROL,INC. a California Corporation By Its i i "Lender" REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic By Emil A. Marzullo, Interim Executive Director 5 P Ugendu4lgrnde lLLbcM1mente�F M1ibiu�2010�A3-IS-10 MN Hou4�.Ma�,olis HighlmW.Fund Cmmal A®eunem(EVM1ibit E)-FMAL.docx This Escrow Company holds Department of Corporations Escrow License No. 963-0921 Attach Exhibit"A"- Voucher Form(Front and Back) Cch Exhibit"B"-Conditional Waiver and Release Upon Progress Payment and Conditional Waiver and Release Upon Final Payment Attach Exhibit "C"-Unconditional Waiver and Release Upon Progress Payment and Unconditional Waiver and Release Upon Final Payment 6 P UgeMasUgeMa Anach.e E.Mbita1301M3-15-10M Housing-Magnolia High -Fund Comeol Agecmem(Eddbii E)-MQ A= AUTHORIZED INDIVIDUALS The "Authorized Individuals" are identified below. By signing this clause,the Authorized individuals agree and resent and warrant to FAFC that they will sign Vouchers only for labor, materials, services, and expenses .pally and properly incurred in the construction of the Project. The Authorized Individuals shall indemnify FAFC regarding any breach of the foregoing.Vouchers shall be signed as follows: -JOINTLY On behalf of the Lender one signature as noted below: _o Behalf of Magnolia Highland, L.P. one of the signature as noted to below: 7 P1 gcndasWgcMaA achmenLslE baa1201MA3-15-10 Mm WwiM.Magnoliafthla -FuM Comwl Agrtemem(Edbrt E)-FMAL.d. ADDENDUM TO FUND CONTROL AGREEMENT (Inspections—Lender Financing) � ,/ ESCROW NO. THIS ADDENDUM TO FUND CONTROL AGREEMENT(the "Addendum") is entered into and effective as of ,2010,by the undersigned,for the purpose of supplementing and providing additional terms and provisions for the Fund Control Agreement for the above-designated Escrow (the "Agreement"). This Addendum shall constitute a part of the Agreement and the terms and provisions of this Addendum shall be interpreted as though fully set forth in the Agreement. In the event any party to this Addendum is not a party to the Agreement,the party agrees to be bound by all of the terms and provisions of the Agreement. Any term not defined in this Addendum shall be defined as provided in the Agreement. 1. Frequency of Inspections. FAFC is hereby authorized to conduct job-site inspections at the Project once each month during the course of construction upon at least 24 hours prior written notice to Owner. FAFC shall conduct additional inspections if requested by Owner or Lender,provided that the request is made no less than three(3) working days prior to the date of the requested inspection. 2. Purpose of Inspections. The sole purpose of the inspections is to assist FAFC in processing Voucher disbursements according to the Agreement and to assist FAFC in maintaining records of disbursements by cost category. The inspections are neither for, nor intended to be for, the benefit of any person or entity other than FAFC and Lender; and such benefit is strictly limited to the purposes expressly stated above. inspections shall not be relied upon or interpreted 3. Limitation of Inspections. The p P as an examination or a n determination by FAFC or any other person or entity as to the Project's(a)proper construction; (b) compliance with building codes and/or governmental regulations and laws; and(c) specific compliance with the plans and ,pifications (other than an examination as to the approximate percentage of completion of construction phases as "Inpared to the plans and specifications) or any matter other than that expressly stated in the preceding section of this Addendum. 4. Confidentiality. Owner and Lender each agree that the reports and results of FAFC's inspections shall not be disclosed to any other person or entity without first obtaining FAFC's written consent hereto. 5. Inspection Fee. FAFC shall receive, in addition to its normal fee, an inspection fee of Five Hundred Dollars ($500.00)for each inspection. Owner agrees to provide a sufficient amount in the Breakdown for inspection fees. FAFC is authorized to disburse to itself, from the construction funds in its possession or under its control,the inspection fee for each inspection immediately upon completion of each inspection. 6. Cooperation. Owner hereby agrees to reasonably cooperate with, assist and provide information to FAFC to enable FAFC to conduct inspections. P'.1AgeMUWW&A mwsMxhi&SUO10b3-15-10Me Housing-Ma Iia fthla -Fund Comml Agra (E� E).FMA ,A "Lender" Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic By: Emil A. Marzullo,hrterim Executive Director Executed this day of 2010 "FAFC" First American Fund Control,Inc., a California Corporation By: James L. Rollings, C.O.O. Executed this day of , 2010 "Owner" 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 F Ugeudas\AVda Auacune=E%hlhi1NA101➢3-15.10 Mua Houvn,-Wgroga Highland-Fund Conwl Agrte .Mddbh E)-FM.LL.daa Exhibit "F" Amended and Restated Repayment Guaranty 19 P UgeMUUgmtla AOazhmennUgn6i Ma<hmwsV.gurus-Amrnd3010N]-IS-IO Mda Houunp-MCgod'u HigM1Wd-AmnW.N.1,.2MA16�daSILS.-Citiu Remo .,DDAE AMENDED AND RESTATED REPAYMENT GUARANTY THIS AMENDED AND RESTATED REPAYMENT GUARANTY (the "Guaranty") is made as of March _, 2010, by Meta Housing Corporation, a California corporation (the "Guarantor in favor of the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"). RECITALS A. Pursuant to the terms of that certain 2009 Affordable Senior Citizen Rental Housing Acquisition Disposition and Development Agreement (Northwestern Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.) between Magnolia Highland, L.P., a California limited partnership (the "Developer"), and the Agency, dated as of August 3, 2009 (the "2009 DDA"), as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March _, 2010 (the "Amendment") (the 2009 DDA, as amended by the Amendment shall collectively be referred to as the "DDA"), the Agency has agreed to advance to Developer an amount not to exceed the sum of ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00) (the "Advance") for the purposes specified in the DDA, which purposes include payment of approved predevelopment expenses in connection with the construction of seventy- nine (79) affordable senior citizen rental housing units on that certain real property legally described in Attachment No. 1A of the 2009 DDA (the "Property") in the City of San Bernardino, County of San Bernardino, State of California (the "Project"). B. Guarantor executed and delivered to the Agency the Repayment Guaranty, dated as of November 23, 2009, by the Guarantor in favor of the Agency (the "2009 Repayment Guaranty"). C. Guarantor and the Agency desire to cancel, revoke and rescind the 2009 Repayment Guaranty in its entirety and to replace the 2009 Repayment Guaranty with this Guaranty. D. The DDA provides that as one of the conditions precedent to the Agency's obligation to make the Advance, the Guarantor shall execute and deliver a guaranty for repayment of the Advance. E. The Agency will not execute, deliver and perform under the Amendment unless the Guarantor executes this Guaranty in favor of the Agency THEREFORE, to induce Agency to make the Advance and to execute, to deliver and to perform under the Amendment and the exhibits attached thereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor unconditionally guarantees and agrees as follows: 1. Guaranty. Guarantor hereby guarantees repayment by Developer of all amounts advanced by Agency under the Advance to Developer, pursuant to ?he terms of the DDA, up to ONE HUNDRED THOUSAND AND NO/100THS DOLLARS (: 00,000.00), plus interest thereon. 1 P 44mUsUgmia MS Im Highl -A —ded&Remted RCa uem Gum! F:xM1ibe F)-FIP1AL.d 2. Release. The Guarantor shall be deemed released from all of its obligations under this Guaranty and this Guaranty shall terminate upon the earlier to occur of: (a) close of Site Acquisition Escrow, as such a term is defined in the DDA; or (b) default by the Agency of any of its obligations under the DDA; 3. Obligations of Guarantor Upon Default By Developer. Upon any Event of Default by Developer under the DDA, subject to any notice and cure rights set forth therein, the Guarantor shall, within thirty (30) days of receipt written demand of Agency, pay to the Agency in lawful money of the United States, in immediately available funds, all amounts advanced by Agency under the Advance to Developer, pursuant to the terms of the DDA, up to ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon. Guarantor's obligations under this Guaranty shall not exceed the sum of ONE HUNDRED THOUSAND AND NOM 0oTHS DOLLARS ($100,000.00), plus interest thereon. 4. Remedies. If Guarantor fails to promptly perform its obligations under this Guaranty, Agency shall have the following remedies: 4.1 From time to time and without first requiring performance by Developer or exhausting any or all security for any loans Agency has made to Developer, to bring any action at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all loss, cost, damage, injury and expense sustained or incurred by Agency as a direct consequence of the failure of Guarantor to perform its obligations. 5. Guarantor's Waivers. Guarantor waives: (a) any defense based upon any legal disability or other defense of Developer, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Developer from any cause other than full payment and performance of those obligations of Developer which are guaranteed hereunder; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Developer or any principal of Developer or any defect in the formation of Developer or any principal of Developer; (c) any defense based upon the application by Developer of the proceeds of the Advance for purposes other than the purposes represented by Developer to Agency or intended or understood by Agency or Guarantor; (d) any and all rights and defenses arising out of an election of remedies by Agency, even though that election of remedies; (e) any defense based upon Agency's failure to disclose to Guarantor any information concerning Developer's financial condition or any other circumstances bearing on Developer's ability to pay and perform its obligations under the Advance and/or DDA; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Agency's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Agency may have against Developer Q) presentment, demand, protest and notice of any kind; and (k)the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor further waives any and all rights and defenses that Guarantor may have because Developer's debt is secured by real property; this means, among other things, that: (1) Agency may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Developer; (2) if 2 P\Agendas\Ag &Afte Ms\ hibits\2010\03-15-10 MW Homing-Magnolia HighlW-A m8 &Restated Reary ent Ounanry(EWbn F)-FlHAIA= Agency forecloses on any real property collateral pledged by Developer, then (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Agency may collect from Guarantor even if Agency, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Developer. Without limiting the generality of the foregoing or any other provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights and defenses, including without limitation any rights of subrogation, reimbursement, indemnification and contribution, which might otherwise be available to Guarantor under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433. 6. Guarantor's Warranties. Guarantor warrants and acknowledges that: (a)Agency would not make the Advance but for this Guaranty; (b) Guarantor has reviewed all of the terms and provisions of the DDA; (c) Guarantor has not and will not, without the prior written consent of Agency, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantors business. 7. Subordination. Guarantor subordinates all present and future indebtedness owing by Developer to Guarantor to the obligations at any time owing by Developer to Agency in connection with the Advance. Guarantor assigns all such indebtedness to Agency as security for this Guaranty. Guarantor agrees to make no claim for such indebtedness until all obligations of Developer in connection with the Advance have been fully discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Agency is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. S. Additional Independent and Unsecured Obligations. This Guaranty is independent of the obligations of Developer under any other loans Agency has made to Developer. Agency may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Developer or any other party or joining Developer or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty. 9. Attorneys' Fees Enforcement. If any attorney is engaged by Agency to enforce or defend any provision of this Guaranty, Guarantor shall pay to Agency, immediately upon demand all reasonable attorneys' fees and costs incurred by Agency in connection therewith. 10. Rules of Construction. The term "person" as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term "Guarantor" shall include all such persons. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. 11. Governing Law. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of California, except to the extent preempted by federal laws. Guarantor and all persons and entities in any manner obligated to Agency under this Guaranty consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 3 P ytgeMaaUgeeda At bhhxxxAExbibnet201M3-1510 Mae Hauaing-Mapoha HighlaM-AmixWM&RemtM Repaymem G a,ny(Exhibit F)-FMN,.EOCx 12. Miscellaneous. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, nominees, successors and assigns of Guarantor and Agency. The liability of all persons and entities who are in any manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. 13. Legal Effect. The 2009 Repayment Guaranty is cancelled, revoked and rescinded, in its entirety, and is replaced and superseded by this Guaranty. 14. Enforceability. Guarantor hereby acknowledges that: (a)the obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Agency's consideration for entering into this transaction, Agency has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and receive legal advice form skilled legal counsel in the area of financial transactions of that type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Agency that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii)the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. 15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY, AND BY ITS ACCEPTANCE HEREOF, AGENCY, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER ADVANCE AND/OR DDA, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE ADVANCE AND/OR DDA (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND AGENCY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND AGENCY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND AGENCY TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. [remainder of page intentionally left blank] 4 PWgendaaNgend aamema)Exbibba1201M3-15-10M Housing-Magnolia HigblaM-Amended&Restated RepaymentGuVa (Ehibit F)-FM doa IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty. ''GUARANTOR" Meta Housing Corporation, a California corporation By: John M. Huskey, President S - 1 PWgcMm\Apnda Attachmema hibitsVOIM3-15-10 Mm Howing Magnolia Hihind-AmtMed&Banned RepaymentGunny(Exhibit F)-FMA do Exhibit "G" Senior Citizen Rental Housing Use Covenant 20 PApmd Sm Avsbncm%4mm AuarAm XAN -Amend 201"3-1510 Mm Lq-MWWmNigLlmE-nmma.MoIm 2M Ma 1.S—C.RegJ xwu^6 DDA RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attention: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 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 August 3, 2009, as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development, dated as of March_, 2010 (collectively, 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 1 P\Ag< s\Agenda At mems�bi1eV01=3-15-10MM Housing-Magnolia HiMW-Smor CU=z W Housing Um Cawnam(E it G)Eoc (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 Agreemes'. 2 P VVnh kAgm M hmensl hibits1101M-1S10 M Fbueing-Mv Iia HigWend-SmorChizee RenW Homing Ur Cmwt(Ehibh L),A and, if not corrected, cured or remedied in the time period set forth in Section 6(b), shall constitute an"Event of Default"hereunder. (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 I /^ 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. 3 P'.U4Wa WMa At ents\Exbibbs\I M3.15.10Mm HwMM-Mn h.Highs -Seniar Chizen RnW Hausng Gn Coverem(Exhibit G).dac (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. 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. 4 P U,eM A,.de AmcbmrnblHxhibileMM03-15-10 M..Housing-Ma 11.Hi,WW-Smi,Ciliun R<.I H..IiI U.C—.(Exhibit G).O 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, a public body, corporate and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: G By. Agency Counsel [NOTARY JURAT ATTACHED] CITY City of San Bernardino By: By: Approved As To Form: By: City Attorney 5 P Age aMgcMa At mm ibitsWIPA3-15-10 Mm Hwssin -Ma iia H,hlW-S.w,Chian Renal. ,ml U.C.V..(R ibh G)doc Exhibit "H" Notice of Agreement 21 4=du genda Almchm=nv Sends Artssh MMg=-Amend]010N3-15-I0 Mm HOUaiog-Ma mHighland-Amend.No 1102W Aff blc Saiw Ci R H ing DDA dam RECORDING REQUESTED BY: AND V✓-IEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attention: Interim Executive Director 201 North`Bee Street, Suite 301 San Bernardino, California 92401 (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 (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.", dated as of August 3, 2009, as amended by the Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March , 2010(collectively,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: C 1 P:NgeMesVSgnda Anachmenul ExhibitsS010b3.15-10Mw HOUSinB-Me is H,W..d-Norio ofAgrtemenl(E bh H)dou Parcel 1 of Parcel Map No. 19200, Book e Page _ of Parcel Maps, Office of the Recorder San Bernardino, County 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 Attention: Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 (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 P Wge \Age aAtu ew\Exbibba1Z010\03-15-10 Mee Housing-Magnolia HigblaM-Nom aAprtemea(EMiibrt H)Ewa 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, a public body, corporate and politic Dated: By: Chair of the Community Development Commission of the City of San Bernardino, its governing board Dated: By: Emil A. Marzullo, Interim Executive Director Approved As To Form: Agency Counsel 3 P Wgndu\AgeoEa AttacbmewExbibW\2010\p J-IS-10 Mae Housing-Maooha Highlu -Notice of Agrtem offs bh H). O DEVELOPER Executed this day of 2010 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: i Legal Counsel for Developer a o�eo..n..sse...n.AnnchmemslExbibitS2010W3.15-10 bleu Housing-lfegnolie HighlaM Notice of Agrament(Exhibe H)Eocx I RESOLUTION NO. 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING 4 THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO 5 EXECUTE A DEMOLITION CONTRACT BY AND BETWEEN THE AGENCY AND MGP CONSTRUCTION FOR THE DEMOLITION OF 6 AGENCY PROPERTY LOCATED AT 2196 MEDICAL CENTER DRIVE, 7 SAN BERNARDINO, CA 92411 (NORTHWEST REDEVELOPMENT PROJECT AREA) 8 9 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") is a 10 community redevelopment agency duly created, established and authorized to transact business and i 11 exercise its powers, all under and pursuant to the California Community Redevelopment Law (the 12 "CRL"), codified under Division 24, Part 1 of the California Health and Safety Code commencing 13 at Section 33000 and is authorized to acquire and demolish blighted properties for redevelopment C14 purposes located within the approved redevelopment project areas in the City of San Bernardino 15 (the"City") in accordance with the CRL; and 16 WHEREAS, the Community Development Commission of the City of San Bernardino (the 17 "Commission"), as the governing board of the Agency, has authorized the Agency to assemble, 18 acquire real property and demolish blighted structures for community redevelopment purposes in 19 the City; and 20 WHEREAS, the hereinafter described property displays substantial and pervasive 21 symptoms of blight that cannot be remedied by private parties acting alone without community 22 redevelopment assistance; and 23 WHEREAS, on November 23, 2009, the Agency acquired title to the commercial property 24 located at 2196 Medical Center Drive, San Bernardino, California, which presently contains an 25 abandoned structure formerly used for miscellaneous automotive repair purposes (the "Project 26 Site"); and 27 WHEREAS, it has been determined that upon the purchase date of November 23, 2009, the 28 Project Site was vacant and continues to be vacant; and 1 ? 1 WHEREAS, on January 8, 2010, a notice requesting demolition services was issued to a list v 2 of Agency approved demolition contractors which was followed by a job walk of the Project Site 3 on January 14, 2010. As a result of these efforts, a total of five separate responses were received; 4 and 5 WHEREAS, MGP Construction (the "Contractor"), was determined to be the lowest 6 responsible bidder and the Agency desires to retain the Contractor to perform said demolition and 7 clearance of the Property in accordance with the terms and conditions of the Demolition Contract, 8 and Addendum(the "Contract') attached hereto and incorporated herein by said reference. 9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 11 FOLLOWS: 12 Section 1. The information set forth in the above recitals of this Resolution is true and 13 correct. 14 Section 2. The Commission hereby approves the Contract between the Agency and the 15 Contractor attached hereto as Exhibit "A", incorporated herein by reference, and waives any 16 irregularities in the bid as submitted by the Contractor as permitted by the bid documents. The 17 Commission further authorizes the appropriation of the Contract price to be derived from the Low 18 and Moderate Income Housing Funds authorized and allocated to the Magnolia - Highland 19 Affordable Senior Citizens Rental Housing Project (the "Project') in furtherance of the 20 development of the Project. 21 Section 3. The Interim Executive Director of the Agency is hereby authorized to 22 execute the Contract on behalf of the Agency in substantially the form attached hereto, together 23 with such changes therein as may be approved by the Interim Executive Director of the Agency and 24 the Agency Counsel. The Interim Executive Director of the Agency or such other designated 25 representative of the Agency is further authorized to do any and all things and take any and 0 26 actions as may be deemed necessary or advisable to effectu a the purposes of the Contract, 27 including making non-substantive modifications to the Contract. 28 Section 4. This Resolution shall become effective im Aiately upon its adoption. 2 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF 2 THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT 3 AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO 4 EXECUTE A DEMOLITION CONTRACT BY AND BETWEEN THE AGENCY AND MGP CONSTRUCTION FOR THE DEMOLITION OF 5 AGENCY PROPERTY LOCATED AT 2196 MEDICAL CENTER DRIVE, SAN BERNARDINO, CA 92411 (NORTHWEST REDEVELOPMENT 6 PROJECT AREA) 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 2010 by the following vote,to wit: 10 Commission Members: Aves Nays Abstain Absent 11 MARQUEZ — 12 DES JARDINS — 13 BRINKER — CC14 SHORETT 15 KELLEY — 16 JOHNSON — 17 MCCAMMACK — 18 19 Secretary 20 The foregoing Resolution is hereby approved this day of 12010. 21 22 Patrick J. Morris, Chairperson 23 Community Development Commission 24 of the City of San Bernardino Approved as to Form: 25 26 By: 27 Agency o sel 28 3 oa......ao....u.......ay.d,......vmmm.t.invn.vwinc.Inc_M.mnlia HivAlud V Anita.No.l-MGP CDC taw C Eoc REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DEMOLITION CONTRACT (ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT) THIS PUBLIC WORKS PROJECT CONTRACT for the asbestos/lead-based paint abatement and demolition/site clearance project of the free standing automotive services building located at 2196 Medical Center Drive, San Bernardino, California 92411 (this "Contract"), is made and entered into this 25th day of February, 2010, by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (referred to herein as the "Owner" or the "Agency') and MGP Construction,a Sole Proprietorship (the"Contractor"). IN WITNESS HEREOF, THE UNDERSIGNED PARTIES HAVE MUTUALLY COVENANTED AND AGREED TO THE FOLLOWING: i 1. THE CONTRACT DOCUMENTS. The complete contract is comprised of and includes: 1) The Instructions to Bidders (including asbestos/lead based paint survey); 2) Bidder's Proposal; 3) Equal Employment Opportunity Certification; 4) Minority Business Enterprises/Women's Business Enterprises ("MBE/WBE") Information; 5) Designation of Subcontractors; 6) Technical Specifications; 7)Certification of Insurance coverage; 8) Copies of the State of California Contractor's Licenses; 9) Copy of the City of San Bernardino ("City") Business License; 10) Copy of the Worker's Compensation Insurance. All of the above documents are intended to coordinate so that any work called for in one (1) and not mentioned in the other, or vice versa, is to be executed the same as if mentioned in all said documents. The documents comprising the complete contract are hereinafter referred to collectively as the "Contract Documents". 2. THE WORK The Contractor agrees to furnish all tools, apparatus, facilities, equipment, labor and materials (except that specifically mentioned as being furnished by others) necessary to perform and complete the work in a good and worker like manner as called for, and in the manner designated in, and in strict conformity with the Contract Documents which are identified by the signatures of the parties to this Contrast and are,collectively, entitled: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT 3. CONTRACT PRICE. The Agency agrees to pay and the Contractor agrees to accept, in full payment for the work above agreed to be done, the following compensation, to-wit: Amounts as determined by applying the information contained in the Contractor's bid proposal for the asbestos/lead-based paint abatement and demolition/site clearance of the free standing automotive services building located at 2196 Medical Center Drive, San Bernardino, California 92411 (the "Project"). The amount of the Contract for the Project is Thirteen Thousand Three Hundred Fifty Dollars and 00/100 ($13,350.00). Page 1 of 18 4. CONTRACT AMENDMENTS. The Interim Executive Director of the Agency is authorized to sign on his own authority amendments to this Contract which are of routine or technical nature, including minor adjustments to the Schedule of Performance unless otherwise specified in this Contract. All other amendments require the mutual agreement of both the Agency and the Contractor. 5. INCORPORATION BY REFERENCE OF PART 1, SECTIONS 1-9 OF THE GREENBOOK, 2009 EDITION. AS SUPPLEMENTED. The Greenbook, as supplemented by the publications entitled, "2009 Cumulative Supplements to Greenbook," are hereby incorporated by this reference into this Contract. The word "Project" means and refers to the "Project," as this term is defined in the Instructions to Bidders. To the extent that any provision of the printed text which appears in this Contract is in conflict with the printed text of the provisions of the Greenbook as incorporated into this Contract by this reference, then in such event, the printed text of this Contract shall take precedence over such printed text in the Greenbook. 6. PAYMENT. After the completion of the asbestos/lead based paint abatement and demolition/clearance for the Project, the Contractor may make a single request for payment to the Agency upon adequate verification of the completion of the demolition/clearance. After acceptance of the work by the Agency, the Agency shall review the payment request to determine if it is a proper payment request. If the Agency deems that the payment request is proper, the Agency shall make a payment in the amount of the Contractor's payment request, less a ten percent (10%) retention amount within thirty (30) calendar days after the Agency's acceptance. This ten percent (10%) retention amount of the payment request shall be retained by the Agency until completion of the entire Project that is covered by this Contract as evidenced by the Notice of Completion as hereinafter provided. With regard to the retention amount, the Agency will release the Contractor's retention amount within forty-five (45) calendar days after recordation of a Notice of Completion, as defined in California Civil Code Section 3093. Recordation of a Notice of Completion for the Project by the Agency shall constitute the Agency's acceptance of the completed Project. However, if any payment request as submitted for the completion of the Project is determined by the Agency not to be a proper payment request suitable for payment, such payment request shall be returned to the Contractor by the Agency within ten (10) working days after the Agency's receipt of the payment request. A payment request returned to the Contractor by the Agency under the provisions of this Section 6 shall be accompanied by a written document setting forth the reason or reasons why the payment request is not proper. The number of days for the Agency to make a certain payment as provided in this Contract, without incurring interest pursuant to this Section 6, shall be reduced by the number of days by which the Agency exceeds the ten (10) working days return period for such payment request, if determined to be improper, as set forth in this Section 6. For the purposes of this Section 6, a "request for payment" means all payments due to the Contractor under this Contract, exclusive of that portion of the final payment designated as retention amounts. Also, for the purposes of this Section 6, a payment request shall be considered properly executed by the Agency, if funds are available to pay the payment request and payment is not delayed due to an audit inquiry by the A. ancy's financial officer. © In th( vent that the Agency has not made payment within thirty (30) calendar days after the receipt of a payr o-nt request and acceptance of the Contractor's payment request and work,the Agency shall pay the C atractor interest on the amount of any portion of the payment request, excluding retention Page 2 of 18 amounts not made to the Contractor within thirty (30) calendar days after the Agency's receipt of a payment request and acceptance of the Contractor's work at the legal rate set forth in the California Code of Civil Procedure Section 685.010. 7. STOP WORK NOTICES. The Contractor shall promptly pay all valid bills and charges for material, labor, equipment or otherwise in connection with or arising out of the performance of this Contract, and will defend, indemnify, protect and hold the Agency free and harmless against all liens and/or claims of lien for material, labor or equipment filed against the Agency, and from and against all expenses and liability in connection therewith, including, but not limited to, court costs and attorney's fees resulting or arising therefrom. In the event any liens and/or claims of lien are filed for record against the Agency or any property owned by the Agency, or the Agency receives notice of any unpaid bill or charge in connection with the performance of this Contract, the Contractor shall, forthwith either pay and discharge the liens and/or claims of lien and cause same to be released of record, or the Contractor shall furnish the Agency with proper indemnity, either by satisfactory corporate Surety Bond or satisfactory title policy. Said indemnity shall also be subject to approval of the lien holder. 8. TIME FOR COMPLETION. All work under this Contract shall be completed by a date no later than sixty (60) calendar days from the date of the Contractor's receipt of a Notice to Proceed from the Agency which date may first occur; provided, however, it is anticipated that the Contractor may receive its Notice to Proceed by a date no later than 11 (T, 2010. 9. EXTENSION OF TIME. If the Contractor is delayed by acts of negligence of the Agency, or its employees or those under it by this Contract or otherwise, or by changes ordered in the work, or by strikes, lockouts, fire, unavoidable casualties, or any causes beyond the Contractor's control, or by delay authorized by the Agency, or by any justifiable cause which the Agency shall authorize, then the Contractor shall make out a written claim addressed to the Agency setting forth the reason for the delay and the extension of the time requested and forward a copy of the claim to the Agency for approval. The Agency will evaluate the claim and if the claim is justifiable, will request the Agency's approval. No such extension will be allowed unless written claim therefore, has been made within three (3)business days after the delay became apparent. 10. LIQUIDATED DAMAGES FOR DELAY. The provisions of Section 6.9 of the Greenbook are hereby modified to provide for liquidated damages in the amount of Two Hundred Dollars and 00/100 ($200.00) per working day for all unexcused delays on the performance by the Contractor under this Contract. 11. CHANGE ORDERS. No change in work, as described in the Contract Documents, shall be made except upon the written approval of the Agency. The Contractor shall not be entitled to any compensation for any additional work unless such written Project Change Order is written and entered into by the Contractor and the Agency. The Project Change Order shall describe the nature of the additional work in detail,the location of the work,the estimated time for completion thereof, and terms of compensation to be paid to the Contractor for its performance in accordance with this Contract as modified by the Project Change Order. 12. REAL PROPERTY LIENS. The Contractor shall promptly pay all valid bills and charges for material, labor or otherwise in connection with or arising out of the performance of this Contract, and ,%w will defend, indemnify, protect and hold the Agency free and hamiless against all liens and/or claims of lien for material and labor filed against the real property or any part thereof,and from and against all expenses and liability in connection therewith, including, but not limited to, court costs and attorney's Page 3 of 18 fees resulting or arising therefrom. In the event any liens and/or claims of lien are filed for record against the real property, or the Agency receives notices of any unpaid bill or charge in connection with the performance of this Contract, the Contractor shall forthwith either pay and discharge the liens and/or claims of lien and cause same to be released of record, or the Contractor shall furnish the Agency with proper indemnity, either by satisfactory corporate surety bond or satisfactory title policy. Said indemnity shall also be subject to approval of the lien holder. 13. INDEMNIFICATIONS AND HOLD HARMLESS. The Contractor shall defend, indemnify, protect and hold free and harmless the Agency, its officers, employees, and agents from and against any and all actions, suits, proceedings, claims, demands, losses, costs, injuries to or death of any person or persons and expenses, including attorney's fees, for injury or damage of any type claimed which is brought by any individual or entity, whether public or private, as a result of the acts, errors or omissions of the Contractor, its officers, employees, agents, and its Subcontractors arising from or related to performance of the work required hereunder to complete the Project. 14. INSURANCE. The provisions of Section 7-3 and Section 7-4 of the Greenbook are hereby amended to read, as follows, for the purposes of this Contract: The Contractor shall procure and maintain insurance policies meeting the minimum requirements set forth below. Insurance shall be provided by insurers satisfactory to the Agency. Certificates evidencing insurance coverage shall be delivered to the Agency for each policy required herein prior to commencement of any work. All insurance certificates shall name the Agency as an additional insured and provide for thirty(30)calendar days'prior written notice of cancellation to the Agency. a Comprehensive General Liability Insurance. The Contractor shall maintain comprehensive general liability insurance of not less than One Million Dollars and 00/100 ($1,000,000.00) combined single limit, per occurrence. The Contractor must provide Comprehensive General Liability Insurance Policy with appropriate endorsement for builder's course of construction and fire casualty loss. b. Automobile Insurance. The Contractor shall maintain comprehensive automobile liability insurance of not less tban One Million Dollars and 00/100($1,000,000.00) combined single limit per occurrence. c. Worker's Compensation. The Contractor shall maintain worker's compensation coverage in accordance with the laws of the State of California for all workers under which it employs and Subcontractors performing the work required herein. 15. LABOR PROVISIONS. a. Prevailing Wages. The Project is a "public work" as this term is defined under applicable State law (See California Labor Code Section 1720, et seq., and California Code of Regulations, Title 8, Section 16000, et seq.). (1) All laborers and mechanics employed or working upon the site of the Project will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at the time of payment computed at rates not less than those contained in the wage determination of the Director of the Department of Industrial Relations (the "Director") regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers Page 4 of 18 ............. .... .. ._......... __.... and mechanics. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in paragraph d. of this Section 15. Laborers or mechanics performing work in more than one(1) classification may be compensated at the rate specified for each classification for the time actually worked therein,provided that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination shall be posted at all times by the Contractor and its Subcontractors at the site of the Project in a prominent and accessible place where it can easily be seen by the workers. (2) Whenever the minimum wage rate prescribed in the Contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the Contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. (3) If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic, the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program,provided that the Director has found, upon the written request of the Contractor, that the applicable standards of the Prevailing Wage Law("PWL") have been met. The Director may require the Contractor to set aside, in a separate account, assets for the meeting of obligations under the plan or program. b. Withholding. The Agency shall, upon its own action or upon written request of an authorized representative of the Department of Industrial Relations, withhold or cause to be withheld from the Contractor under this Contract or any other Federal contract with the same Contractor, or any other contract subject to prevailing wage requirements,which is held by the same Contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper, employed or working on the site of the Project, all or part of the wages required by the contract referenced above or by this Contract, the Agency may after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment, advance or guarantee of funds until such violations have ceased. C. Payrolls and Basic Records. (1) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of three (3) years thereafter for all laborers and mechanics working at the site of the Project. Such records shall contain the name, address and social security number of each such worker, his or her correct classification, hourly rates of wages paid, daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Labor Commissioner has found under paragraph (3) of this clause that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under such plan or program, the Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual costs incurred in providing such benefits. If the Contractor employs apprentices or trainees under approved programs, the Contractor shall maintain written evidence of the �., registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. Page 5 of 18 (2) (i) The Contractor shall prepare weekly payrolls for each week in which any Contract work is performed. The payrolls shall set out accurately and completely all of the information required to be maintained under paragraph c (1) above. This information may be prepared in any form desired. The Contractor is responsible for obtaining copies of payrolls paid by all Subcontractors. (ii) Each payroll prepared shall be accompanied by a"Statement of Compliance," signed by the Contractor or Subcontractor or his or her agent who pays or supervises the payment of the persons employed under the Contract and shall certify the following: (A) That the payroll for the payroll period contains the information required to be maintained under paragraph c(1)above and that such information is correct and complete; (B) That each laborer and mechanic (including each helper, apprentice and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned,other than permissible deductions; (C) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into this Contract. (iii) Whenever a Contractor or Subcontractor is found by the Labor Commissioner to be in violation of the PWL with intent to defraud, the Contractor or Subcontractor shall be ineligible for a period of not less than one (1) year or more than three (3) years to bid or perform work on a public works contract. (3) The Contractor or Subcontractor shall make the records required under paragraph c (1) of this Section 15 available for inspection, copying or transcription by authorized representatives of the Agency, any office of the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards, and shall permit such representatives to interview employees during working hours on the job. If the Contractor or Subcontractor fails to submit the required records or to make them available, the Labor Commissioner may, after written notice to the Contractor or the Agency, take such action as may be necessary to cause the withholding of any further payment, advance or guarantee of funds by the Agency, and determination of a penalty as set forth in Labor Code Section 1775,et seq. d. Anorentices and Trainees. (1) Apprentices. Apprentices, as defined in Labor Code Section 3077, will be permitted to work at less than the predetermined rate for the work they perform when they are in training under apprenticeship standards that have been approved by the Chief of the Apprenticeship Standards and who are parties to written apprentice agreements under Chapter 4 (commencing with Section 3070) of Division 3 of the Labor Code. The allowable ratio of apprentices to journeymen on the Project site in any craft classification shall not be greater than the ratio permitted to the Contractor as to the entire work force under the rules and regulations of the California Apprenticeship Council. Any worker listed on a payroll at an apprentice wage rate, who is not employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the apprenticeship standards and agreements shall be paid not less than the applicable wage rate on the wage determination of the work actually performed. Every apprentice must be paid at not less than the rate specified in the apprenticeship agreement for the apprentice's level of progress, expressed Page 6 of 18 as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the `•' full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator of Apprentices determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. (2) Trainees. Trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in an"on-the-job training" program established pursuant to Labor Code Section 3093. The ratio of trainees to journeymen on the Project site shall not be greater than permitted under the program pursuant to Section 3093 by the California Apprenticeship Council in cooperation with the Department of Education, the Employment Development Department, and the Board of Governors of the California Community Colleges. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress. Trainees shall be paid fringe benefits in accordance with the provisions of the training program. If the training program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of Apprentices so determines. Any employee listed on the payroll at a trainee rate who is not registered and participating in an "on-the-job training" program established pursuant to Section 3093, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the Project site in excess of the ratio permitted under the "on-the-job training" program as established, shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Administrator of Apprentices withdraws approval of an "on-the-job training" program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined �- rate for the work performed until an acceptable program is approved. (3) Equal Employment Opportunity. The utilization of apprentices,trainees and journeymen under this part shall be in conformity with the prohibitory discrimination provisions of California law as set forth in the California Constitution, Article 1, Section 8, Government Code Section 12900, et seq. and Labor Code Sections 1735, 1777.6 and 3093. e. Subcontracts. The Contractor and each Subcontractor shall insert in any subcontracts the clauses contained in paragraphs a. through i. of this Section 15 of this Contract and such other clauses as may be required, and also a clause requiring the Subcontractors to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for the compliance by any Subcontractor or lower tier Subcontractor with all the Contract clauses and all requirements of the PWL. f. Contract Termination. A breach of this Contract based upon the clauses in paragraphs a. through i. of this Section 15 and a.through e. of Section 16 below are grounds for termination of this Contract, and for the withholding of payment by the Agency and notification to the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards,as applicable. g. Compliance With Prevailing Wage Law and Related Regulatory Requirements. All rulings and interpretations of the PWL and the related regulations promulgated thereunder, contained in 8 CCR Section 16000,et seq.,are herein incorporated by reference in this Contract. It. Disputes Concerning Labor Standards. Disputes arising from the labor standards provisions of this Contract shall not be subject to the general disputes provision of this Contract. Such Page 7 of 18 disputes shall be resolved in accordance with the procedures of the Department of Industrial Relations as set forth in California Code of Regulations, Title 8, Section 16000, et seq. Disputes within the (" meaning of this clause include disputes between the Contractor (or any of its subcontracts) and the �r Agency,the Department of Industrial Relations, or the employees or their representatives. i. Certification of Eli ibg ility. (1) By entering into this Contract, the Contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the Contractor's firm is a person or firm ineligible to be awarded a public works contract by virtue of Labor Code Section 1775,et seq. (2) No part of this Contract shall be subcontracted to any person or firm ineligible for award of a public works contract by virtue of Labor Code Section 1775, et seq. 16. CONTRACT WORK HOURS AND SAFETY STANDARDS REQUIREMENTS. As used in the following provision,the term"laborers" and"mechanics"include watchmen and guards. a. Overtime Requirements. Neither the Contractor nor any Subcontractor contracting for any part of the Project which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workday in which he or she is employed on such work to work in excess of eight (8) hours per day or in any workweek in which he or she is employed on such work to work in excess of forty (40) hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half(1 %z) times the basic rate of pay for all hours worked in excess of eight(8) hours in such workday or forty(40)hours in such workweek. b. Violation; Liability for Unpaid Wages; Liquidated Damages. In the event of any violation of the clause set forth in paragraph a. above, the Contractor and any Subcontractor responsible therefore, shall be liable for the unpaid wages. In addition, the Contractor and Subcontractor shall be liable to the Agency for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph a. above, in the sum of Ten Dollars and 00/100 ($10.00) for each calendar day on which such individual was required or permitted to work in excess of the standard workday of eight (8) hours or workweek of forty (40) hours without payment of the overtime wages required by the clause set forth in paragraph a. above. C. Withholding for Unpaid Wages and Liquidated Damages. The Agency shall, upon its own action or upon written request of an authorized representative of the Department of Industrial Relations withhold or cause to be withheld, from any monies payable on account of work performed by the Contractor or Subcontractor under any such contract or any other contract with the same Contractor, or any other contract subject to the California work hours and safety standards requirements, which is held by the same Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or Subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph b. above. d. Working conditions. Neither the Contractor nor any Subcontractor may require any laborer or mechanic employed in the performance of any contract to work in surroundings or under working conditions that are unsanitary, hazardous or dangerous to his health or safety as determined under construction safety and health standards issued by the Department of Industrial Relations. Page 8 of 18 e. Subcontracts. The Contractor and any Subcontractor shall insert in any subcontracts the clauses set forth in paragraphs a. through d. above and also a clause requiring the Subcontractor to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for compliance by any Subcontractor or lower tier Subcontractor with the clauses set forth in paragraphs a. through d. of this Section 16. 17. NONDISCRIMINATION. The Contractor, with regard to the work performed by it during the terms of this Contract, shall not discriminate on the grounds of race, color or national origin in the selection and retention of Subcontractors, including procurements of materials and leases of equipment. The Contractor shall not participate either directly or indirectly in the discrimination prohibited by the California Constitution and statutory provisions, including the PWL. 18. CITY OF SAN BERNARDINO MINORITY BUSINESS ENTERPRISES (MBE) AND WOMEN'S BUSINESS ENTERPRISES (WBE) PROGRAM PROVISIONS. A policy for establishing goals for participation of the MBE/WBE was adopted on November 20, 1995, by Resolution No. 95-409 of the Mayor and Common Council of the City of San Bernardino. This outreach program superseded Resolution No. 93-411 and the Standard Operation Procedures dated January 1995. Bidder's outreach efforts (good faith efforts)must reach out to MBE/WBE and all other business enterprises. Prime bidder's could reasonably be expected to produce a level of participation by interested subcontractors of fifteen percent (15%) MBE and five percent(5%) WBE on this Project. Bidder's shall make every reasonable effort to solicit bids from MBE/WBE. A justification shall be provided to support the rejection of any bid from a minority or women's business enterprise. It is the policy of the City to provide MBE/WBE and all other enterprises an equal opportunity to participate in the performance of all City contracts. Bidders shall assist the City in implementing this policy by taking all reasonable steps to ensure that all available business enterprises, including the local MBE/WBE, have an equal opportunity to compete for and participate in City and Agency contracts. If the City has established expected levels of participation for the MBE/WBE subcontractors, failure to meet those levels shall not be a basis for disqualification of the bidder. A determination of the adequacy of a bidder's good faith effort must be based on information provided on the Good Faith Effort Statement of MBE/WBE Participation form. The Contractor, sub-recipient or Subcontractor shall not discriminate on the basis of race, color, national origin or sex in the performance of this Contract. Failure by the Contractor to carry out these requirements is a material breach of this Contract, which may result in the termination of this Contract or such other remedy as the Agency deems appropriate. The Contractor agrees to pay each Subcontractor under this Contract for satisfactory performance of its contractual arrangement no later than ten (10) calendar days from the receipt of each payment the Contractor receives from the Agency. The Contractor agrees further to return retainage payments to each Subcontractor within seven (7) calendar days after the Subcontractor's work is satisfactorily completed. Any delay or postponement of payment from the above referenced time frame may occur only for good cause following written approval of the Agency. This clause applies to both the MBE and WBE. 19. CIVIL RIGHTS. The Contractor assures that it will comply with the California Constitution, Article I, Section 8,pertinent statutes, and such des are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin sex, age or handicap be excluded from participating in any activity conducted with or benefiting 1b n the Project. This provision binds the Contractor from the bid solicitation period through the c, npletion of this Contract. This provision shall be inserted in all subcontracts, subleases and other ; xeements at all tiers. Page 9 . 1'18 20. SOLICITATIONS FOR SUBCONTRACTS, INCLUDING PROCUREMENTS OF MATERIALS AND EOUIPMENT. In all solicitations either by competitive bidding or negotiation made by the Contractor for work to be performed under a subcontract, including procurements of materials or leases of equipment, each potential Subcontractor or supplier shall be notified by the Contractor of the Contractor's obligations under this Contract and the regulations relative to nondiscrimination on the grounds of race, color or national origin. 21. INFORMATION AND REPORTS. The Contractor shall provide all information and reports required by the regulations or directives issued pursuant thereto and shall permit access to its books, records, accounts, other sources of information and its facilities as may be determined by the Agency to be pertinent to ascertain compliance with such regulations, orders and instructions. Where any information required of a Contractor is in the exclusive possession of another who fails or refuses to furnish this information, the Contractor shall so certify to the Agency, as appropriate, and shall set forth what efforts it has made to obtain the information. 22. SANCTIONS FOR NONCOMPLIANCE. In the event of the Contractor's noncompliance with the nondiscrimination provisions of this Contract, the Agency shall impose such contract sanctions as determined to be appropriate, including, but not limited to: a. Withholding of payments to the Contractor under this Contract until the Contractor complies and/or; b. Cancellation,termination or suspension of this Contract, in whole or in part. 23. INSPECTION OF RECORDS. The Contractor shall maintain an acceptable cost accounting system. The Agency, the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards shall have access to any books, documents, papers and records of the Contractor which are directly pertinent to this Contract or the Project for the purposes of making an audit, examination, excerpts and transcriptions. The Contractor shall maintain all required records for three (3) years after the Agency makes final payment and all other pending matters are closed. 24. RIGHTS IN INVENTIONS. All rights to inventions and materials generated under this Contract are subject to regulations issued or as may hereafter be issued by the Agency. Information regarding these rights, as applicable, is available from the Agency. 25. BREACH OF CONTRACT TERMS. Any violation or breach of terms of this Contract on the part of the Contractor or its Subcontractors may result in the suspension or termination of this Contract or such other action that may be necessary to enforce the rights of the Agency under this Contract. The duties and obligations imposed by the Contract Documents and the rights and remedies available thereunder shall be in addition to and not a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law. This Contract shall be interpreted under the laws of the State of California. The venue for any legal proceeding to enforce or interpret any provisions of this Contract shall be in the Superior Court of the County of San Bernardino, Main Branch in the City of San Bernardino. In the event that legal proceedings may be initiated by one (1) party to enforce its rights under this Contract, then the prevailing party in such legal proceedings shall be entitled to. . © recover from the other party, its reasonable attorneys' fees either in such legal proceedings or in a: separate action to recover such reasonable attorneys' fees. In the case of the Agency, the words=-- "reasonable attorneys' fees" include the cost and expenses calculated on an hourly basis, of all lawyers retained by the Agency in connection with the legal representation of the Agency in any matter arising Page 10 of 18 from the Contract, including, without limitation, attorneys in the Office of the City Attorney and the Agency General Counsel 26. TERMINATION OF CONTRACT BY THE AGENCY. a. The Agency may, by written notice, terminate this Contract in whole or in part at any time, either for the Agency's convenience or because of the Contractor's failure to fulfill its Contract obligations. Upon receipt of such notice, services shall be immediately discontinued(unless the notice directs otherwise) and all materials as may have been accumulated in performing this Contract, whether completed or in process, delivered to the Agency. b. If the termination is for the convenience of the Agency, an equitable adjustment in the Contract price shall be made, but no amount shall be allowed for anticipated profit on unperformed services. C. If the termination is due to failure to fulfill the Contractor's obligations, the Agency may take over the work and prosecute the same to completion by this Contract or otherwise. In such case, the Contractor shall be liable to the Agency for any additional costs occasioned to the Agency thereby. d. If, after notice of termination for failure to fulfill the Contract obligations, it is determined that the Contractor had not so failed, the termination shall be deemed to have been effected for the convenience of the Agency. In such event, adjustment in the Contract price shall be made as provided in paragraph b. of this clause. e. The rights and remedies of the Agency provided in this Section 26 are in addition to any other rights and remedies provided by law or under this Contract. 27. INCORPORATION OF PROVISIONS. The Contractor shall include the provisions of this Contract in every subcontract, including procurements of materials and leases of equipment, unless exempt by the regulations of directives issued pursuant thereto. The Contractor shall take such action . with respect to any subcontract or procurement as the Agency may direct as a means of enforcing such provisions, including sanctions for noncompliance. Provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a Subcontractor or supplier as a result of such directive, the Contractor may request the Agency to enter into such litigation to protect the interests of the Agency and, in addition, the Contractor may request the Department of Industrial Relations to enter into such litigation to protect the interests of the State of California. 28. CONTRACTOR CLAIMS OF $74.500 OR LESS. Claims by the Contractor relating to the Project for (a) a time extension; (b)money or damages arising from work done by, or on behalf of the Contractor on the Project for which payment is not expressly provided for or to which the Contractor is not otherwise entitled; or (c) an amount that is disputed by the Agency, with a value of Seventy-Four Thousand Five Hundred Dollars and 00/100 ($74,500.00) or less, are subject to the claims procedures set forth in California Public Contract Code Sections 20104, et seq., except as otherwise provided in this Contract and the incorporated documents, conditions and specifications. A copy of the California Public Contract Code Sections 20104 through 20104.6 is attached to this Contract as Exhibit"A." 29. LOBBYING AND INFLUENCING EMPLOYEES. Page It of 18 (1) No public works funding shall be paid, by or on behalf of, the Contractor or its Subcontractors, to any person for influencing or attempting to influence an officer or employee of the Agency in connection with the Project. (2) The terms of the Conflict of Interest Code and any amendments thereto which have been incorporated by reference into the PWL and constitute the Conflict of Interest Code of the Department of Industrial Relations are hereby made a part of this Contract. 30. ASSIGNMENT OF CERTAIN RIGHTS TO THE AGENCY. In entering into this Contract or a subcontract to supply goods, services, or materials pursuant to this Contract,the Contractor and/or Subcontractor offers and agrees to assign to the Agency, all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. 15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services or materials pursuant to this Contract or the subcontract. This assignment shall be made and become effective at the time the Agency tenders final payment to the Contractor,without further acknowledgment by the parties. 31. ENERGY CONSERVATION REQUIREMENTS. The Contractor agrees to comply with mandatory standards and policies relating to energy efficiency that are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Public Law 94- 163). 32. PROTECTION. The Contractor shall, at all times, provide protection against weather, rain, wind, storm and heat so as to maintain all work, materials, apparatus and fixtures free from injury and damage. At the end of a day's work, all new work, and the premises likely to be damaged by failure to provide protection, as required above, shall be replaced or repaired at the Contractor's expense. 33. CONTRACTORS BEST SKILL. The Contractor shall supervise and direct the work using its best efforts, skill and attention to ensure the workmanship and materials are of good quality and that the work is completed in accordance with this Contract. The Contractor shall be solely responsible for all construction means, methods, techniques, sequences and procedures; safety on the work; and coordinating all portions on the Project to be performed by the Contractor's laborers, employees, vendors and subcontractors, if any. 34. LEAD-BASED PAINT. The Contractor agrees to submit to the Agency, an Abatement Plan, including workdays required and a cost breakdown per the State of California Department of Health Services Regulations and per the South Coast Air Quality Management District prior to the commencement of demolition work on the Project. The Agency assumes no liability for damages for personal injury, illness, disability or death to the Contractors, or employees, agents, or invitees of the Contractor, or to any other person, including members of the general public, arising from or incident to any activity causing or leading to contact of any kind whatsoever with lead-based paint on the demolition sites, whether the Agency has properly warned, or failed to properly warn, any persons injured. The Contractor agrees to cause all removal, transportation and disposal of the lead-based paint ... removed pursuant to this Contract and the Contract Documents without any cost or liability to the �,.. Agency whatsoever. The Contractor shall execute all required documents and pay such fees,taxes and other charges and assessments as may be charged, levied or assessed as to the removal, transportation and disposal of the lead-based paint pursuant to this Contract. The Contractor represents and warrants Page 12 of 18 that all such additional fees, taxes and other charges and assessments are included within the Contract price set forth in Section 3 hereof. F �✓ 35. ASBESTOS CONTAINING MATERIALS. The Contractor agrees to submit to the Agency, an Abatement Plan, including workdays required and a cost breakdown per the State of California Department of Health Services Regulations and per the South Coast Air Quality Management District prior to the commencement of demolition work on the Project. The Agency assumes no liability for damages for personal injury, illness, disability or death to the Contractors, or employees, agents, or invitees of the Contractor, or to any other person, including members of the general public, arising from or incident to any other activity causing or leading to contact of any kind whatsoever with asbestos on the demolition sites, whether the Agency has properly warned, or failed to properly warn, any persons injured. The Contractor agrees to cause all removal, transportation and disposal of the asbestos and asbestos containing materials removed pursuant to this Contract and the Contract Documents without any cost or liability to the Agency whatsoever. The Contractor shall execute all required documents and pay such fees, taxes and other charges and assessments as may be charged, levied or assessed as to the removal, transportation and disposal of the asbestos pursuant to this Contract. The Contractor represents and warrants that all such additional fees, taxes and other charges and assessments are included within the Contract price set forth in Section 3 hereof. 36. BUSINESS REGISTRATION CERTIFICATION. The Contractor warrants that it possesses, or shall obtain immediately after the execution and delivery of this Contract, and maintain Cduring the period of time that this Contract is in effect, a business registration certification pursuant to Title 5 of the City Municipal Code,together with any and all other licenses,contractor license,permits, qualifications, insurance and approvals of whatever nature that are legally required to be maintained by the Contractor to conduct its business activities within the City. 37. STATE OF CALIFORNIA PREVAILING WAGE DETERMINATIONS. The appropriate prevailing wage determinations may be obtained from the California Department of Industrial Relations Internet Web Site at www.dir.ca.gov/dirdatabases.html. Page 13 of 18 IN WITNESS WHEREOF, three(3) identical counterparts of this Contract, each of which shall for all purposes be deemed an original thereof, have been duly executed by the parties hereinabove named,on the day and year first herein written. AGENCY: Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Date: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency r sel CONTRACTOR: MGP Construction,a Sole Proprietorship Date: 2— 2.5 ZD( 1D By: - b• I�i01� � sS ( � A[ 0inG Type or Print Contractor's/Bidder's Business Address (City, State and Zip Code) sro'V7 9 k. 9 Contractor's License T Contractor License Classification qI30 111 4 CoAtractorl License Expiration Date Bond Number Page 14 of 18 EXHIBIT "A" California Public Contract Code Sections 20104 through 20104.6 Page 15 of 18 PUBLIC CONTRACT CODE SECTION 20104-20104.6 20104 . (a) (1) This article applies to all public works claims of three hundred seventy-five thousand dollars ($375, 000) or less which arise between a contractor and a local agency. (2) This article shall not apply to any claims resulting from a contract between a contractor and a public agency when the public agency has elected to resolve any disputes pursuant to Article 7.1 (commencing with Section 10240) of Chapter 1 of Part 2. (b) (1) "Public work" has the same meaning as in Sections 3100 and 3106 of the Civil Code, except that "public work" does not include any work or improvement contracted for by the state or the Regents of the University of California. (2) "Claim" means a separate demand by the contractor for (A) a time extension, (B) payment of money or damages arising from work done by, or on behalf of, the contractor pursuant to the contract for a public work and payment of which is not otherwise expressly provided for or the claimant is not otherwise entitled to, or (C) an amount the payment of which is disputed by the local agency. (c) The provisions of this article or a summary thereof shall be set forth in the plans or specifications for any work which may give © rise to a claim under this article. (d) This article applies only to contracts entered into on or after January 1, 1991. 20104 .2. For any claim subject to this article, the following requirements apply: (a) The claim shall be in writing and include the documents necessary to substantiate the claim. Claims must be filed on or before the date of final payment. Nothing in this subdivision is intended to extend the time limit or supersede notice requirements otherwise provided by contract for the filing of claims. (b) (1) For claims of less than fifty thousand dollars ($50, 000) , the local agency shall respond in writing to any written claim within 45 days of receipt of the claim, or may request, in writing, within 30 days of receipt of the claim, any additional documentation supporting the claim or relating to defenses to the claim the local agency may have against the claimant. (2) If additional information is thereafter required, it shall be requested and provided pursuant to this subdivision, upon mutual agreement of the local agency and the claimant. (3) The local agency' s written response_ to the claim, as urther odocumented, shall be submitted to the claimant within 15 day; after receipt of the further documentation or within a period of ti .e no greater than that taken by the claimant in producing the addl'. .ional information, whichever is greater. Page 16 of 18 (c) (1) For claims of over fifty thousand dollars ($50, 000) and less than or equal to three hundred seventy-five thousand dollars © ($375, 000) , the local agency shall respond in writing to all written claims within 60 days of receipt of the claim, or may request, in writing, within 30 days of receipt of the claim, any additional documentation supporting the claim or relating to defenses to the claim the local agency may have against the claimant. (2) If additional information is thereafter required, it shall be requested and provided pursuant to this subdivision, upon mutual agreement of the local agency and the claimant. (3) The local agency' s written response to the claim, as further documented, shall be submitted to the claimant within 30 days after receipt of the further documentation, or within a period of time no greater than that taken by the claimant in producing the additional information or requested documentation, whichever is greater. (d) If the claimant disputes the local agency's written response, or the local agency fails to respond within the time prescribed, the claimant may so notify the local agency, in writing, either within 15 days of receipt of the local agency' s response or within 15 days of the local agency' s failure to respond within the time prescribed, respectively, and demand an informal conference to meet and confer for settlement of the issues in dispute. Upon a demand, the local agency shall schedule a meet and confer conference within 30 days for settlement of the dispute. (e) Following the meet and confer conference, if the claim or any portion remains in dispute, the claimant may file a claim as provided in Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) of Part 3 of Division 3. 6 of Title I of the Government Code. For purposes of those provisions, the running of the period of time within which a claim must be filed shall be tolled from the time the claimant submits his or her written claim pursuant to subdivision (a) until the time that claim is denied as a result of the meet and confer process, including any period of time utilized by the meet and confer process. (f) This article does not apply to tort claims and nothing in this article is intended nor shall be construed to change the time periods for filing tort claims or actions specified by Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) of Part 3 of Division 3 . 6 of Title 1 of the Government Code. 20104 . 4 . The following procedures are established for all civil actions filed to resolve claims subject to this article: (a) Within 60 days, but no earlier than 30 days, following the filing or responsive pleadings, the court shall submit the matter to nonbinding mediation unless waived by mutual stipulation of both parties. The mediation_process shall provide for the selection pwithin 15 days by both parties of a disinterested third person as mediator, shall be commenced within 30 days of the submittal, and shall be concluded within 15 days from the commencement of the mediation unless a time requirement is extended upon a good cause Page 17 of 18 showing to the court or by stipulation of both parties. If the parties fail to select a mediator within the 15-day period, any party may petition the court to appoint the mediator. (b) (1) If the matter remains in dispute, the case shall be submitted to judicial arbitration pursuant to Chapter 2. 5 (commencing with Section 1141 . 10) of Title 3 of Part 3 of the Code of Civil Procedure, notwithstanding Section 1141. 11 of that code. The Civil Discovery Act (Title 4 (commencing with Section 2016. 010) of Part 4 of the Code of Civil Procedure) shall apply to any proceeding brought under this subdivision consistent with the rules pertaining to judicial arbitration. (2) Notwithstanding any other provision of law, upon stipulation of the parties, arbitrators appointed for purposes of this article shall be experienced in construction law, and, upon stipulation of the parties, mediators and arbitrators shall be paid necessary and reasonable hourly rates of pay not to exceed their customary rate, and such fees and expenses shall be paid equally by the parties, except in the case of arbitration where the arbitrator, for good cause, determines a different division. In no event shall these fees or expenses be paid by state or county funds. (3) In addition to Chapter 2. 5 (commencing with Section 1141. 10) of Title 3 of Part 3 of the Code of Civil Procedure, any party who after receiving an arbitration award requests a trial de novo but does not obtain a more favorable judgment shall, in addition to © payment of costs and fees under that chapter, pay the attorney' s fees of the other party arising out of the trial de novo. (c) The court may, upon request by any party, order any witnesses to participate in the mediation or arbitration process. 20104. 6. (a) No local agency shall fail to pay money as to any portion of a claim which is undisputed except as otherwise provided in the contract. (b) In any suit filed under Section 20104. 4, the local agency shall pay interest at the legal rate on any arbitration award or judgment. The interest shall begin to accrue on the date the suit is filed in a court of law. Page 18 of 18 EXHIBIT"B" ADDENDUM TO DEMOLITION CONTRACT (ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT) This Addendum to Demolition Contract(this "Addendum")is by and between the Redevelopment Agency of the City of San Bernardino (the "Agency") and MGP Construction, a Sole Proprietorship (the "Contactor"), and is an addendum and modification of the standard provisions contained in the Demolition Contract dated as of 2 ) 3- 2010 (the "Demolition Contract') to which this Addendum is attached. This Addendum is dated as of- ,2010. Section 1. Notwithstanding the standard terms and provisions as contained in the Demolition Contract, the following set forth specific conditions will apply to the Demolition Contract and will be deemed to amend, modify and supersede all other terms and provisions as contained in the Demolition Contract that may be contrary or inconsistent with the specific provisions set forth in this Addendum. Any inconsistencies between the content of this Addendum and the Demolition Contract shall be governed as set forth in this Addendum by the specific items addressed herein. Section 2. The following Sections in whole or certain provisions of the Demolition Contract as enumerated below shall not be a part of this Addendum and shall not be deemed to be a part of the final Demolition Contract: (a) Section 15 (b) Section 18 (c) Section 23, the phrase ", the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards" (d) Section 37 1 IN WITNESS WHEREOF, three (3) identical counterparts of this Addendum to the Demolition Contract, each of which shall for all purposes be deemed an original thereof, have been duly executed by the parties hereinabove named, on the day and year first herein written. AGENCY: Redevelopment Agency of the City of San Bernardino (First Party) By: (Authorized Representative) Interim Executive Director (Official Title) MGP Construction, a Sole Proprieto ship Q� By: � / Title: j '?y ar�Sr By. Title: 2 RESOLUTION NO. COPY 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND 4 AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 5 ("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, 6 DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN 7 THE AGENCY AND META HOUSING, INC. — MAGNOLIA HIGHLAND, L.P. (NORTHWEST REDEVELOPMENT PROJECT AREA) 8 9 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a _M public body, corporate and politic; and II WHEREAS, the Agency presently owns properties located on the southwest comer of 12 Highland Avenue and Medical Center Drive (APNs: 0143-191-38, 46 and 63, collectively 13 "Property"); and 14 WHEREAS, the Agency acquired the Property through an assignment of interest under a 15 purchase contract between Meta Housing, Inc. — Magnolia Highland, L.P. (the "Developer") and 16 other private parties to the Agency for purchase on an interim basis; and 17 WHEREAS, the Agency proposes to transfer the Property to the Developer in accordance 18 with the terms and conditions of Amendment No. 1 to the 2009 Affordable Senior Citizen Rental 19 Housing Acquisition, Disposition and Development Agreement(the "Amended Agreement") in the 20 form as attached hereto as Exhibit"A"; and 21 WHEREAS, the Developer shall develop and improve the Property as may hereafter be 22 transferred by the Agency to the Developer pursuant to the Amended Agreement with 79 units of 23 affordable senior citizen rental housing and one on-site manager's unit, using the design and 24 improvement standards which are consistent with City Tentative Parcel Map No. 19200 25 (Subdivision No. 09-02)and City Conditional Use Permit No. 09-05, as previously approved by the 26 City of San Bernardino Planning Commission("Planning Commission")on May 19,2009; and 27 28 1 � � � 1 WHEREAS, the Developer has the background, experience and financial capability to 2 develop the Project and is seeking a deferred payment second trust deed residual receipts loan from 3 the Agency in an amended amount up to $7,000,000; and 4 WHEREAS, the Agency loan will be combined with other funds the Developer is seeking 5 including an allocation of low-income housing tax credits from the California Tax Credit Allocation 6 Committee ("TCAC") in the amount of$9,089,353, a permanent first trust deed loan in an amount 7 up to $2,140,108 and a deferred payment subordinate loan from the Federal Home Loan 8 Bank/Affordable Housing Program in an amount up to $790,000 to complete the financing of the 9 Project with an estimated total development cost of approximately $19,030,792; and 10 WHEREAS, it had been determined that the environmental review of the Amended 11 Agreement with regards to the disposition and development of Agency Property is a "categorically 12 exempt project' for the reasons indicated in the Agency Staff Report and no potentially adverse 13 environmental effects are anticipated to be associated with the redevelopment of the Project; and 14 15 WHEREAS, the Agency has prepared and published a notice of joint public hearing in the 16 San Bernardino County Sun newspaper on February 24, 2010, and again on March 3, 2010, 17 regarding the consideration and disposition of the Property to the Developer; and 18 WHEREAS, pursuant to Health and Safety Code Section 33433(b), the Agency may transfer 19 the Property to the Developer subject to the Mayor and Common Council of the City of San 20 Bernardino ("Council') and the Community Development Commission of the City of San 21 Bernardino ("Commission") adopting a Resolution authorizing the Agency to transfer the Property 22 in light of the findings set forth herein, pursuant to Health and Safety Code Section 33433; and 23 WHEREAS, the Agency has prepared a Summary Report that describes the salient points of 24 the Amended Agreement and identifies the cost to the Agency of the disposition and development of 25 the Property. 26 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 27 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 28 FOLLOWS: 2 1 Section 1. The Recitals of this Resolution are true and correct. 2 Section 2. On March 15, 2010, the Community Development Commission of the City of 3 San Bernardino ("Commission") conducted a full and fair joint public hearing with the Mayor and 4 Common Council of the City of San Bernardino ("Council'), and considered the written Agency 5 Staff Report relating to the Amended Agreement, the Summary Report and the testimony submitted 6 relating to the disposition and redevelopment of the Property by the Developer pursuant to the terms 7 and conditions of the Amended Agreement. The minutes of the City Clerk for the March 15, 2010, 8 joint public hearing of the Commission and the Council shall include a record of all communication 9 and testimony submitted to the Commission and the Council at the joint public hearing by interested 10 persons relating to the Summary Report,the Project and the approval of the Amended Agreement. 11 Section 3. This Resolution is adopted in order to satisfy the provisions of Health and 12 Safety Code Section 33433 as those provisions relate to the disposition of the Property by the 13 Agency to the Developer on the terms and conditions set forth in the Amended Agreement. The f 14 Commission hereby finds and determines as follows: 15 (i). The Summary Report contains the information described in Health and Safety Code 16 Section 33433(a)(2)(B); 17 (ii). The disposition and redevelopment of the Property by the Developer in accordance 18 with the Amended Agreement is consistent with the affordable housing supply 19 preservation and expansion programs of the Agency Housing Implementation Plan; 20 (iii). The terms and conditions of the Amended Agreement contain assurances that the 21 Developer will redevelop the Property; 22 (iv). As required by Health and Safety Code Section 33433(b)(2), the disposition and 23 redevelopment of the Property by the Developer in accordance with the Amended 24 Agreement is at a price that is not less than the fair reuse value as affordable senior 25 housing and with the covenants and conditions and development costs authorized by 26 said Amended Agreement; and 27 28 3 I (v). The disposition of the Property to the Developer on the terms set forth in the Amended 2 Agreement shall assist in the elimination of conditions of blight on the Property and in 3 the Northwest Redevelopment Project Area. 4 Section 4. The Commission hereby finds and determines that the environmental review 5 of the Amended Agreement and the redevelopment activities contemplated thereunder is a 6 "categorically exempt project' for the reasons indicated in the Agency Staff Report. No potentially 7 adverse environmental effects are anticipated to be associated with the redevelopment of the 8 Property, and accordingly based upon its own independent review of the information provided to the 9 Commission regarding the Property; the Commission hereby authorizes the filing of a Notice of 10 Exemption under CEQA relating to the Project. 11 Section 5. The Commission hereby receives and approves the Summary Report and the 12 Amended Agreement in the form as submitted at this joint public hearing. 13 Section 6. The Commission hereby authorizes the Agency to allocate an additional 14 $2,400,000 in tax increment housing set aside rimds and $600,000 in Northwest Project Area 15 redevelopment funds to assist the Developer in developing the project more fully described in the 16 Amended Agreement. 17 Section 7. The Commission hereby approves the disposition of the Property by the 18 Agency to the Developer on the terms set forth in the Amended Agreement and hereby authorizes 19 the Interim Executive Director of the Agency to execute the Amended Agreement on behalf of the 20 Agency and the Interim Executive Director of the Agency is hereby authorized to make minor 21 corrections, additions, clarifications, interpretations to the Amended Agreement, provided said 22 changes are not substantive in nature, do not increase the monetary impact to the Agency and are 23 consented to by the Agency Counsel. 24 Section 8. This Resolution shall take effect upon its adoption and execution. 25 26 27 28 4 I RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND 2 AUTHORIZING THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO 3 ("AGENCY") TO EXECUTE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, 4 DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN 5 THE 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 2010,by the following vote to wit: 10 Commission Members: Ayes Nays Abstain Absent 11 MARQUEZ 12 — DESJARDINS 13 — BRINKER — SHORETT — b 14 KELLEY 15 JOHNSON 16 MC CAMMACK 17 — 18 Secretary 19 20 The foregoing Resolution is hereby approved this day of 2010. 21 Patrick J. Morris, Chairperson 22 Community Development Commission of the City of San Bernardino 23 Approved as to Form: 24 By: 25 Agency o tsel 26 27 28 5 AMENDMENT NO. 1 °— TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT This Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (the "Amendment") is made and entered into as of this 15'" day of March 2010, 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"), with reference to the following recitals of fact: RECITALS A. WHEREAS, the Developer and the Agency executed that certain 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009 (the"Original Agreement"); and B. WHEREAS, the Agency and Developer now desire to amend the Original Agreement in accordance with the terms, covenants and conditions set forth in this Amendment (the Original Agreement, as amended by the Amendment, shall be referred to as the "Agreement"). NOW THEREFORE, in consideration of the above recitals, the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt, legal sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows: AGREEMENT 1. Definitions. All initially capitalized words not defined in the Preamble of this Amendment, in the recitals of this Amendment or in this Amendment shall have the meanings provided for in the Original Agreement. Except for the definitions provided in this Amendment for the "Fund Control Agreement", for the "Off-Site Project Improvements" and for the "Repayment Guaranty" (which terms are defined for the first time in this Amendment), the following definitions set forth in Section 1.4 of the Original Agreement are hereby deleted in their entirety and replaced with the following: Agency Loan. The words "Agency Loan" means and refers to the loan to be originated by the Agency in favor of the Developer in a principal amount not to exceed Seven Million Dollars ($7,000,000). The Developer may use the proceeds of the Agency Loan to pay for the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000), in the aggregate. The provisions of the Agency Loan are set forth in Section 2.8. The Agency Loan shall be evidenced by the Agency Loan Note attached hereto and incorporated erein by this reference as Exhibit "A" which Agency Loan Note shall cancel, replace and sul ersede the Agency Loan Note, dated November 23, 2009, by the Developer, as borrower, in i :vor of the Agency, as lender, the general form of which was attached as 1 P'.Ay Agn Am[h— kgm Amchm AHmbA 201W IHOMft m ,p M.gml"HiOM d-Am dN, Iw2(X Aff E&bl,S—C—RmYl H—SDDAdm Attachment No. 10 to the Original Agreement) and shall be secured by the Agency Loan Deed of Trust and shall be evidenced or secured by the other Agency Loan Documents. Agency Loan Deed of Trust. The words "Agency Loan Deed of Trust" means and refers to the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement, which encumbers the Site and the Project as security for the repayment of the Agency Loan, as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. The general form of the Agency Loan Deed of Trust is attached hereto and incorporated herein by this reference as Exhibit `B" (which Agency Loan Deed of Trust shall cancel, replace and supersede the Agency Loan Deed of Trust that was attached as Attachment No. 11 to the Original Agreement). Agency Loan Documents. The words "Agency Loan Documents" means and refers to collectively, all of the instruments, documents and agreements executed by the Developer in favor of the Agency which either evidence or relate to the Agency Loan or provide the Agency with security for the repayment of the Agency Loan. The Agency Loan Documents include, without limitation, the Repayment Guaranty for the payment of the Initial Agency Loan Advance, the Agency Loan Note, the Agency Loan Deed of Trust, the Developer Assignment of Licenses, Permits and Contracts, and the Fund Control Agreement, all as may be amended from time-to-time by the Developer and by the Agency. Agency Loan Note. The words "Agency Loan Note" means and refers to the Amended and Restated Agency Loan Note, of even date herewith, by the Developer, as borrower, in favor of the Agency, as lender, in the principal amount not to exceed Seven Million Dollars ($7,000,000), attached hereto and incorporated herein by this reference as Exhibit "A", as amended from time-to-time by the Developer and by the Agency. This Agency Loan Note shall cancel,replace and supersede the Agency Loan Note, dated November 23, 2009, by the Developer, as borrower, in favor of the Agency, as lender, in the principal amount not to exceed Four Million Dollars ($4,000,000) (the general form of which was attached as Attachment No. 10 to the Original Agreement). Aeencv 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, conditions 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 to the Permanent Loan. The Agency Regulatory Agreement is attached hereto and incorporated herein by this reference as Exhibit "C" and cancels, replaces and supersedes the Agency Regulatory Agreement that was attached as Attachment No. 9 to the Original 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 the Original Agreement: 2 P'AFmEUd6[Ma AN[hn.mTAlmy AV.1 11,—¢ mmC N10I I}10.10 McYNwiog- Amend No I l021MNMmLLIeSmia CBen..,HminS.OA 0) Elias Chehade Antoun; (ii) Long Beach, LLC, a California limited liability company; and (iii) Rodeny J. Edmunds, Frances Hirsh, John S. Edmunds, and First American Trust. Developer Proiect Pro Forma. The words "Developer Project Pro Forma' means and refers to the document dated , 2010, prepared by the Developer and approved by the Agency on the date of approval of the Original Agreement, as amended by this Amendment in support of the Developer's request for the Agency to consider the approval of the Original Agreement, as amended by the Amendment. The Developer Project Pro Forma, includes the Project Construction Budget. The Developer Project Pro Forma is attached hereto and incorporated herein by this reference as Exhibit "D" and cancels, replaces and supersedes the Developer Project Pro Forma attached as Attachment No. 4 to the Original Agreement. Fund Control Agreement The words "Fund Control Agreement" means and refers to the Fund Control Agreement, by and between the Agency, the Developer and First American Fund Control, Inc., a California corporation, including the Addendum To Fund Control Agreement and Exhibit A, Exhibit B and Exhibit C to the Fund Control Agreement. The Fund Control Agreement is attached hereto and incorporated herein by this reference as Exhibit ..E„ Off-Site Proiect Improvements. The words "Off-Site Project Improvements" means and refers to the following Off-Site Project Improvements that the City, or any other governing authority, requires the Developer to construct, to install, to complete and to pay for in connection with the completion by the Developer of the Project: (i) traffic signal upgrades, including, without limitation, left turn lights for all four directions, (ii) the widening of the turning radius at each of the four Project Site comers, (iii) the removal of three utility poles and the underground installation of utilities, (iv) bus stop improvements, including cover and American with Disabilities Act upgrades and compliance, and/or(v) construction and installation of the curb, of the gutter and of street lights along Highland Avenue located in the City of San Bernardino, State of California. The Developer may use the proceeds from the Agency Loan to construct and to install the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000),in the aggregate. Repayment Guaranty. The Words "Repayment Guaranty"means and refers to the Amended and Restated Repayment Guaranty, of even date herewith, by Meta Housing Corporation, a California corporation, as guarantor, in favor of the Agency, as guarantee. The Repayment Guaranty is attached hereto and incorporated herein by this reference as Exhibit "F" and cancels, replaces and supersedes the Repayment Guaranty, dated November 23, 2009, by Meta Housing Corporation, as guarantor, in favor of the Agency, as guarantee, and the "Meta Housing Corporation Guaranty" where referenced and appearing in the Original Agreement". All references to the Meta Housing Corporation Guaranty in the Original Agreement and this Amendment shall be deemed to refer to this Repayment Guaranty. Senior Citizen Rental Housine Use Covenant. The words "Senior Citizen Rental Housing Use Covenant" means and refers to the land use covenant by and between the City and the Agency which shall be recorded concurrently with Parcel Map 14200. The form of the 3 P:Akm�+'AgmN MaAmmv Alm M¢Fina41pmWA 2 111.3 V III .11.ft W. No.IisEINN ARaLEIC5miaCllirm RmulNmiigg ODA.tlx Senior Citizen Rental Housing Use Covenant is attached hereto and incorporated herein by this reference as Exhibit "G" 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. This Senior Citizen Rental Housing Use Covenant cancels, replaces and supersedes the Senior Citizen Rental Housing Use Covenant attached as Attachment 7 to the Original Agreement. 2. A¢encv Loan. Section 2.8(a) through Section 2.8(h) of the Original Agreement are hereby deleted in its entirety and replaced with the following: 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 not to exceed Seven Million Dollars ($7,000,000). The Developer may use the proceeds from the Agency Loan to construct and to install the Off-Site Project Improvements, in an amount not to exceed Six Hundred Thousand Dollars ($600,000), in the aggregate. The outstanding principal balance of the Agency Loan shall bear a rate of interest of three percent (3%) per annum on the outstanding principal balance until all principal and accrued and unpaid interest is paid in full: (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 the Agency Loan Note to be executed by the Developer in favor of the Agency concurrently with this Amendment, and shall be secured initially by the Repayment Guaranty and upon the Close of the Site Transfer Escrow, by a subordinate deed of trust on the Site substantially in the form of the Agency Loan Deed of Trust and the other 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 Repayment Guaranty shall be fully executed and delivered no later than the date of this Amendment. 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 'the Agency Loan Note, repay the Agency Loan plus interest in installments as set forth a the Agency Loan Note. The installments of principal and interest that are due under the ,gency Loan Note 4 P>AgnNAEm&ARahh A9m4 MUabmmu AP -Ad 2010IMI 10 Mm NanieF M.F Iu 1l19Wp Am NO 110 21K ApwAbleSm L. Rmul K—S MkA t.r shall be payable by the Developer prior to its maturity solely from the special source of funds defined in the Agency Loan Note as"Residual Rental Receipts of the Project". (e) The Agency Loan Note shall be initially secured by the Repayment 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. (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 "Repayment 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 principal amount of the Initial Advance of the Agency Loan, not to exceed One Hundred Thousand Dollars ($100,000), plus interest thereon, together with all other amounts due thereunder, 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, v 2011, and the Agency elects to cause an acceleration of the Agency Loan Note. Upon the close of the Site Transfer Escrow, the Repayment Guaranty shall be released and discharged by the Agency, and thereafter, the Agency Loan shall not be further secured by the Repayment Guaranty. (ii) The term "Initial Advance of the Agency Loan" means and refers to a sum not to exceed Three Hundred Thousand Dollars($300,000), which may be disbursed to the Developer to pay for pre development expenses of the Developer, including, without limitation, architectural, engineering, design, and demolition costs, which have been reasonably approved by the Interim Executive Director of the Agency. (iii) The Initial Advance of the Agency Loan shall be disbursed to the Developer following the close of the Agency Acquisition Escrow and the satisfaction of the following conditions by the Developer: (A) the Developer has submitted a suitably detailed written listing of necessary and reasonable third party predevelopment costs for the Project as incurred by the Developer. Such a written listing of predevelopment costs shall be subject to the reasonable review and approval by the Interim Executive Director of the Agency; (B) the Developer has caused to be executed and delivered to the Agency the Repayment Guaranty; 5 P WeeMV'AB.ndv ANCBmenu ABv'nH Abu LmMa\ApniO-AmmE 3010W1-IS-IO M.V Hwuinp-Magwla HigM1latl Amml No 1W2�1[$e COUn Pe®I wg DDAtl (C) the Developer has executed and delivered to the Agency the Agency Loan Note, the Developer Assignment of Licenses, Permits and Contracts and the Amendment in final form as approved by the Interim Executive Director of the Agency; (D) the 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, the Amendment and related documents executed by the Developer, have been duly executed by the Developer and are valid, lawful and binding obligations of the Developer. (iv) Any portion of the Initial Advance of the Agency Loan not yet disbursed by the Agency to the Developer under the Agency Loan, in an amount not to exceed Three Hundred Thousand Dollars ($300,000), in the aggregate, and the Purchase Price, shall be disbursed by the Agency from the proceeds of the Agency Loan on the Close of the Site Transfer Escrow,provided: (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; (B) the Developer has delivered its written Notice of r— 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 Chant Deed for the Site and has executed and acknowledged 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 pay to the Developer any portion of the Initial Advance of the Agency Loan that has not been disbursed by the Agency to the Developer, and shall pay to the Agency the Purchase Price for the Site. (v) On and after the Close of the Site Transfer Escrow, pursuant to and in accordance with this Agreement and the Agency Loan Documents, including, without limitation, the Fund Control Agreement, the Agency shall make one or more disbursements of principal under the Agency Loan in a principal amount not to exceed the remaining balance of the Agency Loan (provided, without limitation, that the Developer is not in default under the Agreement and/or under the Agency Loan Agreements), to fund hard and soft costs that have been paid and/or incurred by the Developer and reasonably approved by the Interim Executive Director,provided: (A) The Interim Executive Director of the Agency shall approve the disbursement of the amount of the Agency Loan as provided in Section 2.8(v) of this Amendment upon the submission by the Developer of a 6 v ue woneem.mm� ouaa•wrwm��us�-n 2010%03-15-10M=H�- No i W2wAx kS� Cr a xa.isa DDAm written Agency Loan draw request delivered to the Interim Executive Director of the Agency not less than fifteen (15) days prior to the scheduled requested draw payment date 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 Agency Loan disbursement request submitted by the Developer under this Section 2.8(v); (3) Must be in compliance with the Agency Loan Documents, including, without limitation, the Fund Control Agreement; and (4) the Developer must not be in default under this Agreement and/or under any one of the Agency Loan Documents. (g) The Developer must not be in default under this Agreement or under any of the Agency Loan Documents. "(h) Intentionally Omitted". Section 2.8 (i) of the Original Agreement through Section 2.8(k) of the Original Agreement, are not modified or revised by this Amendment and remain in full, force and effect as if this Amendment had never been executed by the Developer and by the Agency. 3. Developer Demolition Activities on the Site. The following subparagraph is hereby added to the Original Agreement as Section 3.1(c): "(c) All demolition work at the Site shall be overseen by the Developer's construction manager. Prior to commencement of any demolition work at the Site, the Developer shall solicit and receive bids for the demolition work from at least three (3) contractors on the Agency's list of pre-approved contractors (the "Approved Contractor List"). In the event a contractor not appearing on the Approved Contractor List submits the lowest bid, the Developer shall have the right to select such contractor, provided that Agency Staff approves such bid, which approval shall not be unreasonably withheld,conditioned or delayed." 7 i NgmavNe�MUAmenuNgma.MadrttnYNgmY-Amato 201%Ll It-IO Mm lbury-A"pmlu HyhWa-Amend.N. I b 1A�AIIw&le$miorCmsn 0.mW Wuwg DDA. r- 4. Developer Compliance with Prevailing Wage Requirements. Section 3.4 of the Original Agreement is hereby deleted in its entirety and replaced with the following: "3.4 Developer Compliance with Prevailing Wage Requirements. 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." 5. Developer's Project Pro Forma. Attachment No. 4 to the Original Agreement is hereby deleted in its entirety and replaced with Exhibit "D", attached hereto. All references to the Developer's Project Pro Forma in the Original Agreement and in this Amendment shall be deemed to refer to the project pro forma attached hereto as Exhibit "D," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 6. Notice of Agreement. Attachment No. 8 to the Original Agreement is hereby deleted in its entirety and is replaced with the Notice of Agreement attached hereto and incorporated herein by this reference as Exhibit "H". All references to the "Notice of Agreement" in the Original Agreement and in this Amendment shall be deemed to refer to the Notice of Agreement attached hereto as Exhibit 7. Agency Loan Note. Attachment No. 10 to the Original Agreement is hereby deleted in its entirety and is replaced with the Amended and Restated Agency Loan Note attached hereto and incorporated herein by this reference as Exhibit "A". All references to the "Agency Loan Note" in the Original Agreement and in this Amendment shall be deemed to refer to the Amended and Restated Agency Loan Note attached hereto as Exhibit "A," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 8. Agency Loan Deed of Trust. Attachment No. 11 to the Original Agreement is hereby deleted in its entirety and is replaced with the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement attached hereto and incorporated herein by this reference as Exhibit "B". All references to the "Agency Loan Deed of Trust" in the Original Agreement and in this Amendment shall be deemed to refer to the Subordinate Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement attached 8 P UgeMy'Ag AMd Wn 'AgmG AO mmLL`Apmu-AmeM3410103-1510MN Mma "a MKOh -A dNo.1 b 2W Afttl IkS—CN R W gDDAE hereto as Exhibit `B," as the same may be amended from time-to-time with the mutual consent of the Developer and the Agency. 9. Letter Agreement. The Agency and the Developer hereby acknowledge that they are parties to that certain Letter Agreement dated as of November 20, 2009 (the "Letter Agreement'), and further acknowledge and agree that all references to the "Amended and Restated Note" in the Letter Agreement shall be deemed to refer to the Amended and Restated Agency Loan Note attached hereto as Exhibit"A". 10. Representations, Warranties and Covenants of the Developer and of the Agency. 10.1 The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Amendment by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: 10.1.1 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 Amendment and the instruments, documents and agreements referenced herein and to consummate the transactions contemplated hereby. The persons executing this Amendment and the instruments, documents and agreements referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. 10.1.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Amendment and the instruments, documents and agreements referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. 10.1.3 This Amendment is, and all instruments, documents and agreements to be executed by the Developer pursuant to this Amendment 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. 10.1.4 Neither the execution of this Amendment nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other instrument, document or agreement 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. 10.1.5 The Developer shall perform and fully comply with the Original Agreement, as amended by this Amendment, and with the Agency Loan Documents. 10.1.6 To the best knowledge of the Developer, no default has occurred, or will occur with the passage of time, the giving of notice, or both, under the Original Agreement, as amended by this Amendment, or under the Agency Loan Documents. 9 P:NgamaNgeoda AtoahnmuUgeMApadpmu�Aptm Anm1D11MOJ 15-10 Ma Npuiry Magndia KghW A dNo Ito 21Xt3Alf bl,Sooio,Cm[m& Hwue{DDAd OWN All representations and warranties contained in this Section 10.1 are true and correct on the effective date of this Amendment and the Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Amendment, shall' survive the execution and delivery of this Amendment. 10.2 The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Amendment by the Developer has been made in material reliance by the Developer on such covenants, representations and warranties: 10.2.1 Each and every undertaking and obligation of the Agency under this Amendment shall be performed by the Agency timely when due; and that all representations and warranties of the Agency under this Amendment and its exhibits shall be true in all material respects as of the effective date of this Amendment. 10.2.2 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 Amendment and to execute the instruments, documents and agreements referenced herein, and to consummate the transactions contemplated hereby. 10.2.3 The Agency has taken official action to approve this Amendment and the instruments, documents and agreements referenced herein and the consummation of the transactions contemplated hereby. 10.2.4 The persons executing any instruments, documents and agreements for or on behalf of the Agency have been authorized to act on behalf of the Agency and that this Amendment 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 Amendment by the Agency. 10.2.5 The Agency shall perform and fully comply with the Original Agreement, as amended by this Amendment,and with the Agency Loan Documents. 10.2.6 To the best knowledge of the Agency, no default has occurred, or will occur with the passage of time, the giving of notice, or both, under the Original Agreement, as amended by this Amendment,or under the Agency Loan Documents. All representations and warranties contained in this Section 10.2 are true and correct on the effective date of this Amendment and the Agency's liability for misrepresentation or breach of warranty, representation or ivenant, wherever contained in this Amendment, shall survive the execution and delivery of this Amendment. 10 P'.Ogmdv Agwli ASeh — mend 2010\03.15-10 Mm Hwfing-Ma 11 Hig -Amrn No Io2W Aff ble Snim Ci ga H ,ng DDA ltt 11. Condition. This Amendment shall not become effective until executed and approved by the Agency and by the Developer and not until the Developer has provided the Agency with a commitment or other evidence acceptable to the Agency, in its sole discretion, that the Developer has received an award of Affordable Housing Program Funds from the Federal Home Loan Bank of San Francisco in the amount of Seven Hundred Ninety Thousand Dollars($790,000). 12. Certificate of Completion. In Section 3.11 of the Original Agreement, the words "Attachment No. 15" shall Se deleted in their entirety and replaced by the following words" "Attachment No. 12". All other provisions of Section 3.11 remain unchanged. 13. Notices. In Section 6.3 of the Original Agreement, the address for the Developer shall be as follows: Magnolia Highland, L.P., 1604 Sepulveda Boulevard, Suite 425, Los Angeles, CA 90025, Attention: John M. Huskey. All other provisions of Section 3.11 remain unchanged. 14. Section Reference Corrections. The following Section-reference corrections shall be made to the Original Agreement: (i) in Section 2.1(e), the reference to Section 2.1(d) shall be deleted in its entirety and replaced by "Section 2.1(e)", (ii) in Section 2.11(d), the reference to Section 2.11(c)shall be deleted in its entirety and replaced by"Section 2.11(d)", (iii) in Section 2.1 l(f), the reference to Section 4.5(b) shall be deleted in its entirety and replaced by "Section 4.5", (iv) in Section 2.17(e)(vii), the reference to Section 3.9 shall be deleted in its entirety and replaced by "Section 3.6, (v) in Section 3-2, the reference to Section 6.5 shall be deleted in its entirety and replaced by "Section 6.3", and (vi) in Section 6.9, the reference to Section 6.9(a)shall be deleted in its entirety and replaced with"Section 6.9". 15. Fund Control Agreement. Within two (2) business days after the receipt by the Developer of the written request from the Agency, and prior to the transfer of the Site by the Agency to the Developer, the Developer shall execute, shall deliver and shall comply with the terms, covenants and conditions of the Fund Control Agreement. 16. Ratification. The Agency and the Developer hereby ratify, confirm, restate and agree to the terms, covenants and conditions of the Original Agreement. The terms, covenants and conditions of the Original Agreement shall remain unchanged and shall remain in full force and effect, except as modified by this Amendment. 17. Effect of Amendment. The Original Agreement, as amended by this Amendment, is referred to as "the Agreement". All terms and conditions of the Original Agreement will remain the same to the extent they are not expressly modified by this Amendment. To the extent any provision in the Original Agreement conflicts with this Amendment, the terms and conditions of this Amendment shall prevail. Unless otherwise defined in this Amendment, all defined terms used in this Amendment have the meanings set forth in the Original Agreement(unless the context otherwise clearly requires). 18. Counterparts. This Amendment may be signed in counterparts, including facsimile counterparts, each of which shall be deemed an original and all of which tiigether shall ` constitute one and the same agreement. 11 P`Ag,�UB�AludiimenuUgrnN/.FWmm4\AgMCAmm!3010[03.15-10 Moto Hyury-Mapiolu XighLnE-A.m.W.No I w lGW MoNMIe Seniu Co—Regal"wewg DDA lv'a 19. Severability. Whenever possible, each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable law, but if any provisions of this Amendment is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, and this Amendment shall be reformed, construed and enforced in such jurisdiction so as to best give effect to the intent of the parties under this Amendment. 20. Successors and Assigns. Except as otherwise provided in the Original Agreement, this Amendment shall bind and inure to the benefit of and be enforceable by the Developer and by the Agency and their respective successors and assigns. 21. Waiver. The failure of any party to enforce any of the provisions of this Amendment shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Amendment in accordance with its tetras. 22. Governing Laws. The Original Agreement, as amended by this Amendment, shall be governed and construed in accordance with the laws of the State of California. End of Page �.r r 12 01AgmN.lAgmY AmtAmmuUgm AOMmamUpnm-Amng NIM34340 MN H M-My Afth W-�.No 1 0 20 AH I,S—C— OOAEm IN WITNESS WHEREOF,the parties have caused this Amendment to be executed as of the day and year first above written. AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Dated: By: Emil A. Marzullo,Interim Executive Director Approved as to Form and Legal Content: By: Agency Couns DEVELOPER Executed this_day of 2010 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 13 P AF. nerve.�nougcn&A�' •-tee 2010w3-15-10 MVgelu R%M n No i W2m ,, gDDAm Exhibit "A" Amended and Restated Agency Loan Note 14 P UgnJei Agent AWChmrnYUgmtic Ab+cM1mrnYUpnY-Amnd 3010`O)I510 MN Ilvuing-MCpnlu NigphM-AmT1 No.l b 3009 ARaM1EIe Smiu firm RmYI Hwsiy DDAde� w ttre:coon eae,Nm Supe-crWV L Subs pt .\M16i➢.:",�.'� :", � :!.I'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 1604 Sepulveda Blvd.,Suite 425 201 North"E"Street,Suite 301 Los Angeles,CA 90025 San Bernardino.California 92401 Principal Amount: Date of Agency Loan Note: $47,000,000 -..:V_�rr' Rate of Interest Maturity Date of Agency Loan Note: 3% (See:Section 2.8(b)(i)and 2.8b(ii)of;+sw DDA) PROMISE TO PAY.- Magnolia Highland, L.P., a California limited partnership (the ^ ramuttee:No underline '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-Fe root to exceed Ses en Million Dollars ($47,000,000) 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 (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009,by and between the Borrower and the Agency=.he •8gethe .:un intelest an the w,ywv.mv.w,m.,�pv uvq.v 14 ... Ell' F', ♦ ... n � ..... d1 amended by that certain Amendment No I To The 2009 Affordable Senior Citizen Rental Housing Acquisition. Disposition and Development Aereernmt hereto. dared as of March 2010(collectively, the"DDA--)under and pursuant to this Amended and Restated Agency Loan Note(the "Agency Loan Note") The Borrower may use the proceeds of this Agency Loan to Pay for the Off-Sire Project Improvements (as defined in the DDA) in an amount not to exceed Six Hundred Thousand Dollars(%600.000). AMEND AND RESTATE This Agency Loan Note amends and restates in its entirety the Original Note. Upon execution of this Agency Loan Note.the Original Note shall be cancelled and of no further force and effect. The Original Note shall be returned to the Borrower at the address provided in the DDA marked"Cancelled". INDEBTEDNESS.—_This A�encY Loan Note evidences the indebtedness of the Borrower to rarmatrea:no undMim the Agency under the terms and conditions of the Agency Loan as provided for in the BOOS wsz-iaroasos.r I err' a iFOnnNba:Po :add.Not SaDMSap DDA. This Agency Loan Note is referred to in the DDA as the"Agency Loan Note". The Maturity Date of this Agency Loan Note is the fifty-fifth (551h)anniversary following the date the Project is completed (the"Maturity Date"). Capitalized terms not otherwise defined herein shall have the meanings set forth in the dm DDA. A copy of the 2+ ,, DDA is on file with the Agency Secretary as a public record of the Agency. PAYMENT.—_Notwithstanding the foregoing,_Bonower will pay the indebtedness evidenced F m ew:No wwml. by this Agency Loan Note to the Agency in accordance with the terms,covenants and conditions of this Agency Loan Note. Commencing one (1) year after the date that the Agency has executed and recorded the Certificate of Completion, as this term is defined in the ztau+ DDA (the "Project Acceptance Date"), in the official records of the county recorder's office for the County of San Bernardino, State of California, and annually thereafter for the term of this Agency Loan Note, the Borrower shall pay to the Agency annual installments of principal and interest fully-amortized over the remaining term of the Agency Loan. Borrower shall make such payments, in annual installment amounts, paid by the Borrower to the Agency from the "Residual Rental Receipts of the Project", as the term is defined in the DDA (each such - installment payment date referred to as a"scheduled debt service payment") until the Maturity Date or repayment in full of all outstanding principal,accrued and unpaid interest and all other fees, charges and amounts due under the Agency Loan. If on any scheduled debt service payment date, the Residual Rental Receipts of the Project are not sufficient to pay in full the interest accruing under this Agency Loan Note for the prior year,on such scheduled debt service payment date, that portion of such interest not then paid under this Agency Loan Note (the "interest deficiency debt service amount")shall be added to the outstanding principal balance of the Agency Loan on such scheduled debt service payment date and shall accrue interest in accordance with this Agency Loan Note and he subject to and governed by the terms,covenants and conditions of this Agency Loan Note,the Agency Loan Deed of Trust,as this term is defined _ in the 2099 DDA,and the Agency Loan Documents,as this term is defined in the No)DDA. If - on any scheduled debt service payment date,the Residual Rental Receipts are sufficient to pay in full the annual installment of principal and interest, the Borrower shall pay to the Agency the installment of principal and interest due on such scheduled debt service payment date. If on any scheduled debt service payment date, the Residual Rental Receipts exceed the amount of the installment of principal and interest then due,such excess amount shall be paid by the Borrower to the Agency and shall be applied by the Agency to reduce the outstanding principal balance of the Agency Loan. On the Maturity Date,a balloon payment of the remaining principal balance, accrued and unpaid interest and all other fees, charges and amounts then due under the Agency Loan Documents shall be due and payable by the Borrower to the Agency, 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, Califomia 92401, 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, including,without limitation,attorneys' fees and court costs,then to any late charges,then to any unpaid interest, and any remaining amount will be applied to principal. • The term "Residual Rental Receipts of the Project"and"Residual Rental Receipts"and "Residual Receipts" mean and refer to fifty percent (50%) of the "Revenues" of the een-�mamosr 2 OCT ORPR 8-3009 DPkFT Fantt•roea:Faa:add,not SUpbsfript! Sdxap Borrower remaining on any scheduled debt service payment date or other payment date under the Agency Loan Note or other Agency Loan Documents,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 tout; (3) cash payments to any reserves required by the Tax Credit Limited - Partnership Agreement or the documents evidencing the Construction Loan,as defined in the 200P DDA,and/or the Permanent Loan,as defined in the 1000 DDA; (4) repayment of general partner loans; (5) cash payments of deferred developer fees;and (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. • "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. • "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 4952-10o-om5.1 3 OCTOBFR -. '��Pormattetl:rmt adq apt SupnmiW sutagr 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 that such reserves and interest are used for the purposes for which the reserves were established. jNTEREST RATE.—_Interest shall.accrue on the outstandin"rincpal balance of this Agency ,foetna w:em widmme Loan Note at a fixed rate of interest. The rate of interest which shall accrue on the unpaid principal balance of this Agency Loan Note from the date of this Agency Loan Note through the Maturity Date shall be three percent(3%)per annum until paid in full. Interest on this Agency Loan Note is computed on a 3651360 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. FREPAYMENT.—_Borrower maypaywithout perm all or a portion of the amount owed ramatred:W wXWa under this Agency Loan Note earlier than it is due. .ATE CHARGE.— If a payment is ten(ID calendar days or more late,Borrower will also N rwmateed:no U dedit charged(in addition to the annual installment amount past due)five percent(5016)of the annual payment amount as a late charge. the Late Charge may he le,ied by the Lender for the purpose of defraying the expenses incident to handling such Jelin uent payment. The Late Churee represents a reasonable sum considering all of the circumstances exlstine on the date of this Agency Loan vote and mpresens a fair and reasonable estimate of the costs that will be f sustained by the LcnaerduttothC 14ilurc ofthe 13ort icer to make timel, ravrnents. fhe parties also further agree that Drool of actual damages would be costh or inconvenience The Laic Charge shall be paid without omiudice to the right of the Lender to collect an, other amounts provided to be paid or to declare a default under this Aacnev Loan Note:under the \gencv Loan Deed of Trust or under any .Agency Loan Documents or from exercising am nl the other rights and remedies of the Lender. pEFAULT_—Borrower will be in default if my_of the following happens:_ _ _ _ _ _ _ _ , —I ramtatted:uo w+dHline (a) Borrower fails to make any payment when due under this Agency Loan Note or under the other Agency Loan Documents. (b) Borrower fails to make any other payment when due under the 2909 DDA. (c) Borrower fails to comply with or to perform when due any other term, obligation, covenant, or condition contained in the 2404—DDA, this Agency Loan Note, in the other Agency Loan Documents or any agreement related to this Agency Loan 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 the Borrower's property or the Borrower's ability to repay this Agency Loan Note or the ability of the Borrower to perform its other obligations under this Agency asx-iomaws.r 4 OCTOBER 8-1000 PRAFT ' Fonn.uee:Polo:ado,W S pt/ Loan Note, the Agency Loan Deed of Trust or any of the other Agency Loan Documents. (e) Any representation or statement made or furnished to the Agency by the Borrower or on the Borrower's behalf under the?AOQ DDA, this Agency .Loan Note or any of the other Agency Loan Documents is false or misleading in any material respect either now or at the time made or famished. (f) Any creditor tries to take any of the Borrower's property on or in which the Agency has a lien or security interest. (g) A material adverse change occurs in the Borrower's financial condition,or the Agency reasonably believes the prospect of payment or performance of the indebtedness evidenced by this Agency Loan Note is materially impaired. Such a default may be cured(and in such event no default will be deemed to have occurred)if the Borrower,after receiving written notice from the Agency demanding cure of such default: (i) cures any payment default within seven(7)calendar days;or © (ii) cures any non-monetary default within thirty(30)calendar days;or (iii) If the cure requires more than thirty(30)calendar days,as determined by the Agency in its sole discretion,the Borrower 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 the exercise of any remedies by the Agency under this Agency Loan Note or the other Agency Loan Documents provided: (a) the Borrower initiates corrective action within said thirty (30)-calendar day period, and (b) the Borrower diligently,continuously, and in good faith works to effect a cure a soon as possible. JRIGHTS OF THE HOLDER. Upon default by the Borrower Ssubimt to any applicable notice ramat[ea:no vldennc and cure periods),the Agency may exercise any of its rights and remedies 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 Agency Loan Note that the entire unpaid principal balance of this Agency Loan Note, all accrued unpaid interest is immediately due and payable, and all other fees, charges and amounts due under the Agency Loan Note and under the other Agency Loan Documents,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 Agency Loan 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 Agency Loan Note,if the Borrower does not pay. The Borrower will pay the Holder the amount of any and all such 4853-10]O 5.1 5 ti I :tea:Boo,,Not au s 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-judgment collection services. The Borrower also will pay any court costs, in addition to all other sums provided by law..This Agency Loan 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 Agency Loan Note,the Superior Court of the State of California in San Bernardino County shall have jurisdiction of such lawsuit. This Agency Loan Note shall be governed by and construed in accordance with the laws of the State of California. CDLLATERAL.—_Upon closing of the Site Transfer Escrow, pursuant to the terms of the -rwmatted:no un a im 2001)DDA,the obligations of this Agency Loan Note ' Lire secured, without limitation,by the Agency Loan Deed of Trust. The Agency Loan Deed of Trust shall be subordinate to the security interest of the Construction Lender and of the Permanent Lender. Subject to the terms, covenants and conditions of the IWO" DDA, the obligation of the Borrower to timely pay the Agency the amounts due under this Agency Loan Note is assignable by the Borrower to its transferee in the Site, as defined in the 201tiDDA, upon thirty(30)calendar 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 Site,the assignee of the Borrower shall also assume the obligations of the Borrower under the note held by the Construction Lender or by the Permanent Lender, as then applicable. The Agency Loan Deed of Trust affects certain real property described in the 20v-DDA as the"Site"and/or the"Project". _-me, _mn „__._:__the uvveumuv, hall .L.. - -- ---- --- part of such eenveNmee�the . Il.eifflmfs shall got he deemed...be...._....:..I ... .._...f ..... .._..i.. 4852-1070-oeos1 6 i Fo.m :Font Bold,Not suoe pt/ L subs pt GENERAL PROVISIONS. Except as set forth in the next sentence of this paragraph,following -- FvmettM:No uMerhre the date of execution by the Borrower of this Agency Loan Note,upon the failure to pay any sum provided for in the 2AwrDDA, in this Agency Loan Note or under the other Agency Loan Documents when due,or a material breach of the 2+-1�-DDA,of the Agency Loan Deed of Trust or of the other Agency Loan Documents 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 Agency Loan Note. The sole recourse of the Holder to recover any sum under this Agency Loan Note shall be to the Site 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 2� DDA or under the other Agency Loan Documents, (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 Site,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 Agency Loan Note or the other Agency Loan Documents,without losing them. Borrower and any other person who signs, guarantees or endorses this Agency Loan 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 Agency Loan Note, and unless otherwise expressly stated in writing, no party who signs this Agency Loan 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 Agency Loan 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 Agency Loan Note and/or the other Agency Loan Documents 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 Agency Loan Note and not specifically defined in this Agency Loan Note shall have the meanings ascribed to them in the 2904DDA. Except as provided in this Agency Loan Note, upon the execution date by the Borrower of this Agency Loan Note,this Agency Loan Note shall be a nonrecourse obligation of the Borrower. Neither the Borrower nor any other party, including, without limitation, any partner(general or limited)of the Borrower,shall have personal liability for repayment of this Agency Loan-. The sole recourse of the Agency for any obligation of the Borrower under this Agency Loan slate streFF-beexceot in the ewreiseeven[of Al fizud by the ._-i_°__` °_°.a Borrower or an% rarmattee:rmtmb:rwm partner. (B)any material misrepresentation made b, the Borrower or art, partner to the Agencv� Formatted:ram crW:eum under the DDA or under the other Aeencv Loan Documents. IC) misaopropriation by the Formatted;Font mb:Ado j Borrower or any oartner of anv rents security deposits tax collection amounts,security deposits. or insurance or condemnation awards.(D)commission of bad faith waste by the Borrower or an 1e52-rmooeos.r 7 . 1) Fornotted.Fa M:BoIA,Not partner or(F I the rraenr Iaaro,< , su I, it ncoa irtl the�ite : zh , Jeilned in the � ttod:Ft OA.:NRn Veenc, Loan Deed of 1 rus', _ _ _ _ _ — Formattm:r tmlor Bwdt Formatted:Font mbr:AU F tted:Font mb:Bl etl3-IO1Bam5.l 8 -•O, E,• "'•• _ eomwttea:rant.add,not swerscdW Submnpt PRIOR TO SIGNING THIS AGENCY LOAN NOTE, BORROWER HAS READ AND UNDERSTANDS ALL OF ITS PROVISIONS. BORROWER AGREES TO THE TERMS OF THIS AGENCY LOAN NOTE AND ACKNOWLEDGES RECEIPT OF A COPY HEREOF. 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: Leanne Truofreh Secretary 4952-100oe05.1 9 Exhibit`B" Agency Loan Deed of Trust 15 V:`ApivdnVgrnEaAmrLmrnn�A9eM�AmWnemc�Apoiu-Nrc'd 201OW,-If-I0 Ma�-M,g .HOL -NmW.No I b 3W9ABpdWk S—Cm R[vW fYU+iog DDAE RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino,California 92401 (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 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 1604 Sepulveda Blvd., Suite 425, Los Angeles, CA 90025, 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'). WITNESSET 4 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 •ads adjoining the Property, and all access rights and easements appertaining thereto; and 1 P 1Age sVg Amchmeu hib6UOI=3.15-10 MCaH wM-Me IiO Highlu -Ag Lwn Drod ofTry ( ib'n B)-fbN da .� 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, chosen 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 2 P.Ugeo&s�Settle AnacM1mmmfExM1ibih1201P0)-IS-10 Mee Ho mn,-Mapolie MgM1IeM-ASe fanf of Toov( A,M B)-FWA do- 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 w 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 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. 3 P:IAgentlu)Ag<Ms AnerAmems�EaM1ibi�s13010WIIS-io Men Housing-Megrolis HlghleM-Agnnry Loons off g( Ibil B)-PMAL ar 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 (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009, by and between the Trustor and the Beneficiary, as amended by the Amendment No. I To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March_, 2010 (collectively, the "2009 DDA") as evidenced by the Agency Loan Note, dated November 23, 2009, executed by the Trustor, as borrower, in favor of the Beneficiary, as lender, in the principal amount of Four Million Dollars, as amended by the Amended and Restated Agency Loan Note, dated March _, 2010, executed by the Trustor, as borrower, in favor of the Beneficiary, as lender, in the principal amount of Seven Million Dollars (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, 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. rustor's Right to Contest Statutory Liens. As used herein the words �.+ "inechanic's lien" and `materialmen's lien" means and includes a stop notice as this term is 4 P.UgeMUTAge �mem,IERMibni 03-15-10 Mee Ra im -Mag lie Hlghle -A L p Off (E M1ibh B)-FMAL.Aaa 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, 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. S. 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 an'd Indemnity. 5 P%AVM Xfte AB lim sE�baVOIM3.15-10 MW Rwv%-Ma Jia Hi~-Ag lmnOaE ofTUU(ERbibn B)-FlNAL.AOV'R © (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 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 6 P. H N-M.SWio Hied"-ABaryl r ofTuv(Bhibo B)-RNAI.EOv (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 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 7 P.NAeMa,lAgeMe An hmemaExhLbinaOI W3-15-10 Md B mu -Mx Ew Hi~-A( loin ps1 aTN ( ft B)-FMAL 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 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; 8 P MYCbm ,TO ibi6V010 3-15-10 Made HrvPng-Mag ha Hlghl\M-Ape LoinD o(Tmn ME ibn B)-F ALdO (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 finther 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: (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 9 PMVWUU4 WA Memos ahib IWI=3-I5-10 Mee ff ei -M.WWw Higbl"-Agent'ImiDell ofTrve( iba B)-FlNAL (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. Truster 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; 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 P.UervJai%AgeMa AnacbmensTSobilsQ010\01-1S-10 Mae Housing-M.g lie HigMaM-A,n I—n flied of T..( Iibn Bp FlN d. 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. 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 F Aicies or a binder with evidence satisfactory to Beneficiary of payment of all premiums at _ ist 30 days before the policy expires. In lieu of the duplicate original policies to be delivered v Beneficiary under this 11 PugerNtiAgeM AmcM1metl�FiNbiD�1010b1-x'.10 Mqa HmunB-Mgmli XigM1lerq-Agnry 1m.Dot ofTutl(Fahibil B)-FMA. .z 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 Taut 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, 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 12 PV4M, ,SAgm At hmmu hibhs, 010W3-15-10MMHawing-MMmlia HieblaW-Ag lapD ofTry ( Irbil B).FlHAL 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. Assianment 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: 13 P:\ASM MB Ansshmemsl MbnsI 1=3-15-10 Meu IlwuiM-MM UNigM -Ag Oad offs ( htbn B) do © (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: (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 : _iterials furnished (which may, at Beneficiary's discretion, be subject to reasonable holdh, :ks required by Beneficiary,not exceeding ten percent(10%) of the total estimated 14 P.Ug sVg Ma a s, hibu,11010` M5-10 AMA ng-hl�lia HighlW-Ag la,n 4W olTmu( ibi,B)-FlN,U d. 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 construction loans, no defaults or misrepresentations of Trustor and Truster'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 Truster(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 Truster 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, togethetwith any other payments due to Beneficiary under the Note, and all other debts of Trustor to Boneficiary are discharged, 15 g:Wgm s\ApMe.en[hmenlsEhibasUOig'4IASAo Mtl Hmzie-Meg ha Highl"-ngc Lwn Dwtl ofT ( ibn B)-rMAL.EOn 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 famished or labor performed in connection with any work contemplated by this paragraph. 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. 16 P U�lV4 A hmms, hib*d01=3.15-10 Mm Re M-M. Ha HipblW-Ag WnDsA Ofrrvv(ERbibn B)-rMA ,. 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. Mortease 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. 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 17 P AVe Ia eMe AOehmnes� xhibhs101=3-IS 1OMtle Hw -Me N&HighW -ABeyIronC offma Nibh B)-FlNAL.daa 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 fiunished 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. 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 18 P:Vg"ul gm Aff h m,�xhibilemftl-IS10 Mm Moulin-M�UNigM -Ag Lamp ofTm ME ibn g)-PMA d. 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 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 19 P UgelduNgmtl�AOe[bmml�E 1tibi1,1IB10bJ-IS-10 Mae HweinB-Megrulin Hi861W-AB L n0.NofTrvv( ibil B)-FINAL.doc appeal or-petition4'or 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. (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 20 PV.gnks,Ug AtlrLmm sTx bzVOJ=3-I5-10n Houft-M9 68 MOW-Ag fT ME bn e)- FlNAL.doa 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 TEXT]. 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 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; fi (d) Any tourt(or similar tribunal) -ving jurisdiction over Trustor or any of the Property or other property of Trustor shall en :r a decree or order appointing a 21 P UgeMUNgndn AU�cM1nKnin�ENibnn�201 PA1-I510 MeeHwsinp-MSgnoliNigM1IeM A L nB .fTUA I ibn B)-PMAl.dov 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; (c) 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 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 0) Notwithstanding the remedies of Beneficiary set forth in Section 29, below, the parties hereto agree that the Investor Limited Partner shall be entitled to 22 P UpeMa\Agod�AnvAmmu�EaM1ibn,SZBINOl15-10 Mda Hou,in8-M�giwlia HBM1IUM-Agay Lwn Dad of Tuv(EZbibi,e)-FINAL dovx 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. Riehts 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 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 23 P IApM gm An,Obme $Wzhibh$UO1010 5-1 5-10 MM iy-M�li,Hi86hM-Ag Un Drug ofT,un( AIM B)-rMALdoa 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 retakin g. holdin g, preparing g 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 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 24 P Vy %UWS MUCK iz Eahibns1101 005-15-10Mda HmOn -Ma isa HiBhhM AB<rwyboen RMof mg hibh B)-FIHAL.doa 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 attomey-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 y 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 25 v\ngeMea�AgeMe A�u<hm<m,�E.�i4nf�201 U01-�s-t0 m<u xwaing-Mapnli<HigN.M ag<n<y w.n u«a nri,un(E+niee 91-r'R+.V..ao<. Trustor to Beneficiary under the Note and this Deed of 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, r 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 26 P.UgeMUV4p A�, hibi1,1t01M3-15-10 MN in-M�lia Hip4bM-Ag W,n Dwl of TM.lE,hibh B).MAL.Eaw 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 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. 27 P 11g<�Lkp< Anubme AA hlbnsUDI 3-15-10 MM Sing-Mftgg1ia 8igblu -Ag Lam OeN ofTh ( ibn 8)-PMAL.EOn 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 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, 28 P:Ug M S geM AOacMMSEebibbPV01=305-10 MCn Housing.Me lie HigbHM-Agee Loan D of Tau„Mxhibit B)-PM do- 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 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. r. 29 PS Maa\ pg Al dmmts ExAibna5101N01-15.10 Mau H—g-Mawba HightaM-Ag WnDeM OfTmO"ibn 6)-FMAL,daa 38. Successor Tmstec. 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 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 30 P Aunh—,s Exhibist OIM3.15-10 rude Hoofing-M�lis Hignlu -Ag L nDe 1 ofTUYME iba g)-FlN dI reconveyed at any time all or part of the said Property described herein, take or release any other .,r 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. 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 convevance 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. 31 P.Upe kApn AevBme sTxhiMsUOIb3-I5-10 Mm soM-M�pF FIgMVA-Ap l: U alT� (E bh 9)-Fwn J. 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 . 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 financial 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 32 P lAgeMajNpe Anchor s�hlbnUOIMDM 5-I0 Mes Housing-Meg ha HighlW-AgexyL n of mU f ibis B)-Fl ALdov ! ' 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 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. 33 P UgeM V4A Macbm[M,IExbib6,1301NO]-IS-10 M..H Iil-M�Iia Highl\M-Agecy Imp o(Try (E ibu B)-iMA da 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 Truster 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. 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 Aug-ement. 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 Truster 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. 34 P UWoliiaUgeMa AnacM1mems Exbibn,Il0IM3-15-10 Me Housing-Magralia H,gblaod-Ageory Loin Dmd ofToet(FM1ibil B)-FM do- (" 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, frill 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. V 35 P Uge sAgends Anwhme 3FxM1ib9s13010W3-15-10 MM Ha in-Mw is HiOIM-Ag Lam Ud nfTun( ibh B)-MNAL.Aou IN WITNESS WHEREOF, Trustor hereby duly executes this Agency Loan Deed of Trust as of the day and year first above written. TRUSTOR I 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] 36 P N{eMUUgeMe AnacM1mswF M1ibncU010AI-IS-10 MNe Hwcing-Megnolie HighleM-Agercy Loan DeeE o(TiuA(Exbibit B)-FMAL.tl¢e EXHIBIT"A" LEGAL DESCRIPTION OF PROPERTY III I i i i 37 p Apdd A e s�—Mss 26ibi1S3010\01-15-10 Mds Housing-MS lls High -AWn Iwn Ddd of TO �tlk B)-FMA dm Exhibit "C" Agency Regulatory Agreement and Covenants 16 P:Ag Ag Av CMlASm A��AR -A 2EMI-15-10 Mm No ,M as HlgS AmeM.No 1b2C AR Ic Smior Cw Rv Wfiy DDAEm RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 (Space Above Line Reserved For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISTION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE AMENDMENT NO. 1 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF MARCH_, 2010. 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. o...r 1 P V.gnMSa�geMa AnecM1menu�biuLL010`OI-IS-10 Mm Hmuivg-ALyrolu Xi{bluM-R,guWa,y Ageenm k�n:�bn C)-FWAL.Eac 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 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland L.P.)", dated as of August 3, 2009, as amended by the Amendment No. 1 to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March _, 2010 (collectively, 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 terns 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 tetra"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 ^I not exceed 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. C • City. The term"City"means and refers to the City of San Berardino,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 "M than Income" mean median income as determined by the United States Department of Housing and Urban Development for the San Bernardino—Riverside Metrop,. tan Area. 3 �•+ • 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's' any way modify or restrict the meaning of any of the terms or provisions hereof. A Section 2. Acknowledgment of the Developer and Acknowledgment of Subordination of the Agencv. (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 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 5 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 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 Proiect. 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; (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. Section 5. Development and Management of the Proiect. (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". R (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 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. 0 (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. Section 6. Maintenance of the Proiect. 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.V.: all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good . -pair and a neat, clean and orderly condition, ordinary wear and tear excepted: In the event that at any .ime during the Term, there is an occurrence of an adverse condition on any area of the Project wF It is subject to public view in contravention of the general maintenance s'andard described abe, (a "Maintenance Deficiency") then the Agency shall notify the Developer in writing of the Mairut ante in 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-awned 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). (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 11 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 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 I9 4r 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: (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 Re£ latory Agreement or the 2009 DDA is false or misleading in any material re4pect either now or at the t:r e made or furnished; (4) the dissolution r termination of the existence of the Developer as an ongoing business, insolvency, appoint of a ceiver for any part of the property of the Developer, any ii 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 (ii) by other action at law or in equity 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(f)(7), no third party shall have any right or power to enforce any provision of this Agency I 1 n 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 attomeys' 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. Severabiliri. 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. 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: is If to the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 Phone: (909)663-1044 Fax: (909) 663-2294 If to the Developer: Magnolia Highland, L.P. Attn: John Huskey 1604 Sepulveda Blvd., Suite 425 Los Angeles, CA 90025 Phone: (310) 575-3543 Ext. 110 Fax: (310) 575-3563 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. (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. iF [EDITOR'S NOTE: THE TEXT OF THIS REGULATORY AGREEMENT IS PRESENTED IN DRAFT FORM AS PART OF ATTACHMENT NO. 9 TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF AUGUST 3, 2009, AS AMENDED BY THE AMENDMENT NO. i TO THE 2009 AFFORDABLE SENIOR CITIZEN RENTAL HOUSING ACQUISITION, DISPOSITION AND DEVELOPMENT AGREEMENT, DATED AS OF MARCH _, 2009. 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.] 17 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, a public body,corporate and politic By: Chair Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency Counsel DEVELOPER Magnolia Highland, L.P., a California limited partnership �j Dated: 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 1R EXHIBIT"A" Legal Description of the Site rr/ 19 EXHIBIT`B" Scope of Development and Site Improvement Plan 20 EXHIBIT "C" Schedule of Performance (During Construction of the Project) Q 21 Exhibit"D" Developer Project Pro Forma 17 r.'wema.+aew.N,�nmme�+eew naam�u�AV�.�ezoionz-u.iow.,, es w�ao wain-�mme.ro.�m:wn•xmani�smac�nmuzwv�O�m.. Meta Housing-Magnolia at Highland, LP Project Budget-Sources and Uses of Project Funds February 16,2010 Use of Project Funds Source of Project Funds Tax Credit First Percentage Allen EEqyrty Morteaee AHP Developer Total of Total Land Cost 2,450,000 2,450,000 12.87% Title/Escrow/tegaf 27,605 27,605 0.15% Demolition _ 30,000 30,000 0.16% 7UMVti K�yugon $�2T,507,605 7S 2,07,605 13:18% OH-See Improvements 600,000 200,000 800,000 4.20% See Work 350,050 350,000 1.94% Structures 3,722,395 1,635,858 1,864,172 790,000 8,012,425 42.10% General Requirements 401,200 401,200 211% Contractor Overhead 303,400 303,400 1-59% Contractor Profit 303,400 303,400 1.59% General Liability insurance 137,670 137,670 0.72% 7oufotrecitonitrutilop " `:a,31i.39s `�'," ,�,�'.,'� :s6'd;5`°.., �"a9�.�00"L�•3"'�:�a-,y^4f'f°i5, �:rr%�`.;-.r'ii`i7� Architectural Design 100,000 430,000 _ 530;000 2.79% Engineering 70,000 195,000 265,000 1.39% Construction Loan Interest 256,454 256,454 1.35% Origination Fee 70,000 70,000 0.37% Credit Enhancement App.Fee 20,000 20,000 0.11% Predevelopment Loan Origination Fee 20,000 20,000 0-11% Predevelopment Loan Interest 40,000 40,000 0.21% Insurance 116,446 116,446 0.61% TRIe and Recording 25,000 25,000 0.13% otilconsW N rMerest/Fees $ 547,900 $ . ,947,900 .2.88% Origination Fee 20,000 20,000 0.11% Credit Enhancement App.Fee 12,500 12,500 0.07% Title and Recording _ 12,500 12,500 0.07% ,r7oufPemtinpAT ngcosrs_ - _ . _$ _45,000. $ 45,090 0.24% Lender legal Paid by Developer 40,000 40,000 0.21% Partnership legal 100,000 100,000 0.53% Invsetor Due Dilligence Legal - 0.00% Accounting and Organintional 135,000 135,000 0.71% f e 8 , s r 7 . � '. I k.. $ . . -275,bW 3-month Operating Reserve 120,936 120,936 0.64% Appraisals 10,000 10,000 0.05% Construction Contingency 401,557 401,557 2.11% TCAC Application/Monitoring Fees 70,000 70,000 037% Reproduction 25,000 25,000 0.13% Development Impact Fees 1,530,000 1,530,000 8.04% Permit Processing Fees 70,000 70,000 0.37% Marketing and Stan-up 40,000 40,000 0.21% Furnishings 90,000 90,010 0.47% Studies/Sumeys 60,000 60,OOD 0.32% Contingency 141,322 141,322 0.74% 11 . l._S1'y000 Developer Overhead and Profit 1,982,046 11,331 1,993,377�.r i10,47% 4oro"'�devp'I�p4r"`:bixr`�ei�� roBtF.s _...--�,,_ «-' y3lll�t Exhibit"E" Fund Control Agreement 18 p-`AgeWfU9eo4A limevu`AgrnN AmrAmmuUg�mn Anal 3010W]-IS-IOMUa{buine-M+B^da HipLLVd Ame d N, 1b2W ARO Ie S—,,Cmam PemJNw DDAJ iI%WA. FdC..nd first American Fund Control, Inc. ESCROW NO. ,00 Commerce,Irvine, CA 92602 (866) 536-0178 FAX(866) 536-0177 FUND CONTROL AGREEMENT THIS FUND CONTROL AGREEMENT (the "Agreement")is entered into and effective as of 2010,at Irvine, California by and between FIRST AMERICAN FUND CONTROL, INC., a California corporation("FAFC"); MAGNOLIA HIGHLAND,L.P., a California limited partnership ("Owner");and the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic ("Lender"),on the basis of the following facts: RECITALS A. Owner and Lender have entered into that certain 2009 Affordable Senior Citizen Rental Housing Acquisition,Disposition and Development Agreement(Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.), dated as of August 3, 2009,by and between the Borrower and the Agency, as amended by that certain Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition,Disposition and Development Agreement thereto, dated as of March_, 2010(collectively, the "DDA")pursuant to which Owner shall construct an affordable senior housing rental development (the "Project") on the real property commonly known as Parcel 1 of Tentative Parcel Map No. 19200 consisting of approximately 5 acres of land located on the southwest corner of Highland Street and Medical Center Drive, at , in the City of San Bernardino, County of San Bernardino, State of California(the "Property"). FAFC is not a party to the DDA and shall have no obligation or liability in connection therewith. B. There shall be deposited, in a FAFC trust account, from time to time, funds in the aggregate amount of $ all of which shall be provided by Lender. FAFC is not a party to any loan documents and shall have no obligation or liability in connection therewith. C. Owner and Lender wish to have FAFC make disbursements concerning the Project as provided in this Agreement. AGREEMENT IT IS HEREBY AGREED, on the basis of the foregoing facts and for valuable consideration as follows: 1. Escrow. FAFC shall establish a separate escrow account for the Project(the "Escrow"). All funds delivered to FAFC shall be deposited in FAFC's trust account and credited to the Escrow in the manner as provided in Section 2.4 below. All funds disbursed by FAFC shall be disbursed from a trust account and debited to the Escrow. FAFC shall maintain a record of deposits and disbursements regarding the Escrow. Escrow funds shall not bear interest. 2. Disbursement Procedures. FAFC is authorized and instructed, subject to available Escrow funds,to make ';sbursements in accordance with the provisions set forth below. 2.1 Project Cost Breakdown. Owner shall provide FAFC with a Project Cost Breakdown(the "Breakdown"),approved by the Lender, setting forth the estimated costs for the Project by cost categories. The I p UgcMU g< � sVO1NO3-15-10 MM Rnning-bdg i.Highdwd-Fund Cinuvl Ap OE bn E)-FMA d= Breakdown is solely for the purpose of assisting FAFC in maintaining its records. FAFC shall have no obligation in connection with the Breakdown. The Breakdown may be modified from time to time upon the request of Owner fthout the prior written approval of Lender,provided that no increase in the aggregate amount of$ may made without the prior written consent of Lender. 2.2 Requests for Advances. From time to time(but not more than once per calendar week)Owner shall provide FAFC with a request for advance which shall include (a)the amount of funds requested,(b) an allocation of the funds to the cost categories, (c)the name of each payee and (d) the amount to be disbursed to each payee(the "Request for Advance"). Each Request for Advance shall be accompanied by a Owner certification to FAFC that all information included within a Request for Advance shall be true, accurate in all material respects and not subject to qualification. FAFC is authorized to fully rely upon each Owner certification; and FAFC shall not incur any liability resulting from such reliance. 2.3 FAFC Report. Following receipt of a Request for Advance,FAFC shall provide Lender and Owner with a computer-generated report (the "Report") summarizing(a)the Request for Advance and(b)past disbursements by cost category, and amounts remaining unspent in each cost category. 2.4 Transfer of Funds. Upon Lender's approval of the Report in accordance with the loan arrangements among Lender and Owner, Lender shall transfer(but only to the extent available under the loan arrangements among Lender and Owner)to FAFC's trust account all or.a portion of the funds identified in the Report(the "Transferred Amount"). In the event Lender imposes any conditions regarding the Transferred Amount(but only to the extent available under the loan arrangements among Lender and Owner), FAFC may withhold disbursement until the conditions are satisfied. 2.5 Vouchers. FAFC's form voucher("Voucher"), attached hereto as Exhibit"A", shall be used to request ;bursements, including the requirement for the provision that all necessary lien releases be duly signed by the appointed and ed Individuals" identified at the end of this Agreement are appor PP ropriate parties. The "Authorized ( gr ndrvrduals may sign Vouchers. authorized by Owner and Lender to sign and deliver Vouchers. Only the Authorized I y gn The Authorized Individuals shall deliver signed Vouchers to FAFC with applicable(a)receipts, invoices or bills and (b) applicable lien releases to the extent required under the loan arrangements among Lender and Owner(the Conditional Waiver and Releases are attached hereto as Exhibit`B"and the Unconditional Waiver and Releases are attached hereto as Exhibit"C".) FAFC is authorized to make disbursements pursuant to Vouchers. FAFC is authorized to conclusively presume that any Voucher and/or accompanying documentation is given in full compliance with this Agreement and that all funds to be disbursed pursuant to the Voucher are for the purposes stated in the Voucher. FAFC shall incur no liability in making disbursements pursuant to the foregoing; unless FAFC's acts or omissions are grossly negligent or wrongful. 2.6 Disbursement by FAFC. Except as otherwise provided in this Agreement, upon FAFC's receipt of a signed Voucher,together with the documentation referred to in Section 2.5, FAFC shall disburse the amount set forth in the Voucher. Provided FAFC complies with this section, FAFC shall incur no liability to any person or entity for making or not making disbursements; unless FAFC's acts or omission are grossly negligent or wrongful. 3. Limitation on Disbursements. FAFC shall not be obligated to make disbursements which exceed the balance of funds in the Escrow. The parties to this Agreement shall cooperate fully with FAFC, including delivery of such documents and information as FAFC may request.FAFC is authorized,but not obligated,to withhold any disbursement pending receipt of such documents and information. 4. FAFC Fees. FAFC shall receive,as compensation for its basic services under this Agreement,the sum of one Thousand Seven Hundred and Fifty Dollars($1,750)set up fee plus$1.75 per thousand dollars disbursed/processed by FAFC. These fees shall be payable with the first payment deposit of the Transferred Amount. FAFC is authorized and instructed to immediately disburse such compensation to itself. 2 P,Apmtles�A6�rds A,ucM1memfFa6iLfu�3010`Ol.l 110 Mm llouuv9-Myeolis WpM1hetl-FwE[wvd Apeemn�,(E>de1'v E)-FM.1L.Eov 4.1 Extraordinary Costs. In the event FAFC is required or requested to produce or duplicate documents; utilize messengers or delivery services other than first-class U.S. mail; provide testimony or take action in any court, arbitration or other proceeding,the cost shall be paid to FAFC by the party which request such extraordinary rvices, or the party whose conduct requires such extraordinary services. If FAFC receives more than one Request for Advance during a calendar week(and FAFC elects to process the extra Requests), FAFC shall be entitled to $100 for each extra Request. Such amounts shall be in addition to the FAFC Fee and FAFC shall not be required to act until such reimbursement is made. FAFC is authorized to disburse such amounts to itself from funds in the Escrow. 5. Disputes. Should any controversy arise in connection with this Agreement, FAFC may withhold disbursements until the controversy is resolved by legal process or an agreement acceptable to FAFC. Prior to resolution of the controversy, FAFC may, but shall not be obligated to, (a)return the funds then held in the Escrow to the person who deposited the funds with FAFC, and/or(b) interpleed the funds with the court. Upon either(a)or (b),FAFC shall be fully discharged and relieved from all liability in connection with such funds and shall be entitled to recover its costs and attorneys' fees in connection therewith. 6. FAFC's Oblieations. The obligations of FAFC are limited solely to making disbursements pursuant to Section 2 of this Agreement. Without limiting the generality of the foregoing, FAFC shall not(a) be responsible for or guarantee that the Project shall be constructed in accordance with the Breakdown,any plans and specifications or any contract or agreement to which FAFC is not a party; (b)have any duty to inspect the Project or to verify the information and materials it receives except to the extent as set forth in the Addendum hereto; or(c) be responsible to determine that funds disbursed by FAFC are actually used as stated in the Requests for Advance or the Vouchers. 7. Indemnity. The parties to this Agreement,jointly and severally, agree to hold FAFC harmless and to indemnify and defend FAFC from and against any and all claims, demands, liabilities and legal actions, including use of the undersigned, in connection with or allegedly in connection with this Agreement,the Escrow or the roject; and they further agree to pay FAFC's reasonable attorneys' fees and costs in connection therewith. FAFC is authorized to employ legal counsel of its choice; provided,however,this Section 7 shall be of no force or effect should any or all claims, demands, liabilities and legal actions,result or relate to the grossly negligent acts or omissions or wrongful conduct of FAFC, its agents, representatives, employees, successors or assigns, in connection with this Agreement,the Escrow or the Project. 8. Maintenance of Records. FAFC shall keep accurate records as to (a) amounts deposited in the Escrow; (b)amounts disbursed from the Escrow by cost categories;and(c)the undisbursed amount in each cost category (based upon the Breakdown). As required by California law, original documents shall remain at FAFC's office and upon reasonable notice shall be available for inspection by Lender or Owner. Upon not less than 48 hours notice to FAFC,Owner, or Lender may,through a bonded photocopying service, photocopy, at the requesting party's expense,documents which relate to this Agreement. In the event any photocopying is done by FAFC,the requesting party shall reimburse FAFC for the photocopying charges and labor charges relating thereto prior to delivery of the copies to the requesting party. 9. Amendments. This Agreement may only be amended, supplemented or modified by a written amendment executed by all parties hereto. 10. Attorneys' Fees. In any action between the parties regarding this Agreement,the Escrow or the Project, the prevailing party in that action shall be entitled to recover its reasonable costs and expenses, including reasonable attorneys' fees. 11. Interpretation. This Agreement shall be interpreted and construed in accordance with California law. Any action against FAFC involving this Agreement, shall be maintained in the appropriate court in Orange County, California. 3 PUgmNN.g An hMM$%ExNbn$=I0 3-1510 Mw Ha M-M�"HigM1 -FU Co lAgamem(EI E)-FIHAI- 12. No Third-Party Beneficiary. This Agreement is made and intended to be for the benefit of Owner, ender and FAFC only and is not intended to be for the benefit of anyone else,including those furnishing labor or terials. 13. Mer er. This Agreement sets forth the full agreement between the parties regarding the Escrow and the obligations of FAFC. All prior agreements and understandings shall be deemed terminated and of no further force or effect. 14. Severability. In the event any provision of this Agreement should be determined by a court of competent jurisdiction as unenforceable or void under applicable law, that provision shall be deleted; but the remaining provisions of this Agreement shall remain in full force and effect. 15. Countemarts. This Agreement may be signed in multiple counterparts. 16. Captions. The Caption headings for the sections of this Agreement are for convenience only and shall not be considered to limit, expand or define the content of the sections. 17. Final Disbursement. Upon the written request of Owner and Lender, FAFC shall disburse any final balance in the Escrow without following the provisions of Section 2. FAFC may condition the disbursement upon receipt of(a)an indemnity agreement in form and content approved by FAFC and signed by Owner and/or Lender; and(b) FAFC's attomeys'fees incurred in connection therewith. 18. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective successors and assigns. C19. Limitation of Liability. Liability of Owner and Lender shall be limited strictly to funds actually deposited into Escrow, pursuant to this agreement. End of Page 4 P IAgeM Age ANCbmMSTIM'Cs 010`0115-10 Mu Nwsin,-M.p Ii.fthlW-Fwd C.1 Agr—e (E ibilE).FIti.LL..d- IN WITNESS WHEREOF, the parties, individually or through their authorized representatives,have ecuted this Agreement as of the date of this Agreement. Each individual executing this Agreement warrants and presents that he or she has the power and authority to execute this Agreement on behalf of the party for whom the execution is made. "Owner" 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 C By. Leanne Trnofreh, Secretary "FAFC" FIRST AMERICAN FUND CONTROL, INC. a California Corporation By Its "Lender" REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO, a public body, corporate and politic By Emil A. Marzullo, Interim Executive Director \.e 5 P IAgeM sAger A hmemslE�Ibn52O0\0J-15-IOMe H IM-Mag he H%hW .Fwd Con Agrteman(F�Fiba E)-FPl.11.d This Escrow Company holds Department of Corporations Escrow License No. 963-0921 Attach Exhibit "A"-Voucher Form (Front and Back) ttach Exhibit"B"-Conditional Waiver and Release Upon Progress Payment and Conditional Waiver and Release Upon Final Payment Attach Exhibit "C"- Unconditional Waiver and Release Upon Progress Payment and Unconditional Waiver and Release Upon Final Payment 6 P U4eM \Apm Av¢hmema�bn3 010W,15.10 mm Hmuing-M4 Iie MSW -FUM Cooed Ag mm(E bit E)-FM" dece AUTHORIZED INDIVIDUALS The "Authorized Individuals" are identified below. By signing this clause,the Authorized Individuals agree and present and warrant to FAFC that they will sign Vouchers only for labor, materials, services, and expenses actually and properly incurred in the construction of the Project. The Authorized Individuals shall indemnify FAFC regarding any breach of the foregoing. Vouchers shall be signed as follows: -JOINTLY On behalf of the Lender one signature as noted below: On Behalf of Magnolia Highland, L.P. one of the signature as noted to below: P Fund Ca Apn+mx(E+kUU E)-FINAL.d ADDENDUM TO FUND CONTROL AGREEMENT (Inspections—Lender Financing) ESCROW NO. THIS ADDENDUM TO FUND CONTROL AGREEMENT(the "Addendum") is entered into and effective as of , 2010,by the undersigned, for the purpose of supplementing and providing additional terms and provisions for the Fund Control Agreement for the above-designated Escrow(the "Agreement"). This Addendum shall constitute a part of the Agreement and the terms and provisions of this Addendum shall be interpreted as though fully set forth in the Agreement. In the event any party to this Addendum is not a party to the Agreement, the party agrees to be bound by all of the terms and provisions of the Agreement. Any term not defined in this Addendum shall be defined as provided in the Agreement. 1. Freauencv of Inspections. FAFC is hereby authorized to conductjob-site inspections at the Project once each month during the course of construction upon at least 24 hours prior written notice to Owner. FAFC shall conduct additional inspections if requested by Owner or Lender, provided that the request is made no less than three(3) working days prior to the date of the requested inspection. 2. Purpose of Inspections. The sole purpose of the inspections is to assist FAFC in processing Voucher disbursements according to the Agreement and to assist FAFC in maintaining records of disbursements by cost category. The inspections are neither for, nor intended to be for, the benefit of any person or entity other than FAFC and Lender; and such benefit is strictly limited to the purposes expressly stated above. 3. Limitation of Inspections. The inspections shall not be relied upon or interpreted as an examination or a determination by FAFC or any other person or entity as to the Project's(a) proper construction; (b) compliance with r+uilding codes and/or governmental regulations and laws;and(c) specific compliance with the plans and Cecifications (other than an examination as to the approximate percentage of completion of construction phases as compared to the plans and specifications) or any matter other than that expressly stated in the preceding section of this Addendum. 4. Confidentiality. Owner and Lender each agree that the reports and results of FAFC's inspections shall not be disclosed to any other person or entity without first obtaining FAFC's written consent hereto. 5. Inspection Fee. FAFC shall receive, in addition to its normal fee, an inspection fee of Five Hundred Dollars ($500.00)for each inspection. Owner agrees to provide a sufficient amount in the Breakdown for inspection fees. FAFC is authorized to disburse to itself, from the construction funds in its possession or under its control,the inspection fee for each inspection immediately upon completion of each inspection. 6. Cooperation. Owner hereby agrees to reasonably cooperate with, assist and provide information to FAFC to enable FAFC to conduct inspections. P MgeMg,\AgvWg,lvg[bmem,EWbiu1Z010101-ISIOMeu Housing M�rolis HigMUM-Fund Comml Ageemem(E4iibi E)-FfNAL.dou "Lender" Redevelopment Agency of the City of San Bernardino, CW a public body, corporate and politic By: Emil A. Marzullo, Interim Executive Director Executed this day of 2010 "FAFC" First American Fund Control,Inc., a California Corporation By: James L. Rollings,C.O.O. Executed this day of 2010 "Owner" 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 P Agm S%Ap< Art mrn Txhibtle`3010 15-10 MUpnIiUWgbiUM-FUM CO tApaeee"(E ibn E).FPIA ,. Exhibit "F" Amended and Restated Repayment Guaranty 19 p yymyi\AgmL Art 2mmuUBmM Am�LmewV.pnu-Amntl E410W3-I5-10M llU -MIPMiu HI-Il 1W2 ARUJbk Sm Cc R Ho Wk AMENDED AND RESTATED REPAYMENT GUARANTY THIS AMENDED AND RESTATED REPAYMENT GUARANTY (the "Guaranty") is made as of March _, 2010, by Meta Housing Corporation, a California corporation (the "Guarantor"), in favor of the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"). RECITALS A. Pursuant to the terms of that certain 2009 Affordable Senior Citizen Rental Housing Acquisition Disposition and Development Agreement (Northwestern Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.) between Magnolia Highland, L.P., a California limited partnership (the "Developer"), and the Agency, dated as of August 3, 2009 (the "2009 DDA"), as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March _, 2010 (the "Amendment") (the 2009 DDA, as amended by the Amendment shall collectively be referred to as the "DDA"), the Agency has agreed to advance to Developer an amount not to exceed the sum of ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00) (the "Advance") for the purposes specified in the DDA, which purposes include payment of approved predevelopment expenses in connection with the construction of seventy- nine (79) affordable senior citizen rental housing units on that certain real property legally described in Attachment No. 1A of the 2009 DDA (the "Property") in the City of San Bernardino, County of San Bernardino, State of California (the "Project"). B. Guarantor executed and delivered to the Agency the Repayment Guaranty, dated as of November 23, 2009, by the Guarantor in favor of the Agency (the "2009 Repayment Guaranty'). C. Guarantor and the Agency desire to cancel, revoke and rescind the 2009 Repayment Guaranty in its entirety and to replace the 2009 Repayment Guaranty with this Guaranty. D. The DDA provides that as one of the conditions precedent to the Agency's obligation to make the Advance, the Guarantor shall execute and deliver a guaranty for repayment of the Advance. E. The Agency will not execute, deliver and perform under the Amendment unless the Guarantor executes this Guaranty in favor of the Agency THEREFORE, to induce Agency to make the Advance and to execute, to deliver and to perform under the Amendment and the exhibits attached thereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by Guarantor, Guarantor unconditionally guarantees and agrees as follows: 1. Guaranty. Guarantor hereby guarantees repayment by Developer of all amounts advanced by Agency under the Advance to Developer, pursuant to the terms of the DDA, up to ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon. 1 P.NgeMaaUg<Ma Attic nt ES bit,010W,15.10 Mm H sta -M+ Iis MgBN -Nnem as Rm WAepaY Guu ( hieqr)-M+ do 2. Release. The Guarantor shall be deemed released from all of its obligations under this Guaranty and this Guaranty shall terminate upon the earlier to occur of: (a) close of Site Acquisition Escrow, as such a term is defined in the DDA; or (b) default by the Agency of any of its obligations under the DDA; 3. Obligations of Guarantor Upon Default By Developer. Upon any Event of Default by Developer under the DDA, subject to any notice and cure rights set forth therein, the Guarantor shall, within thirty (30) days of receipt written demand of Agency, pay to the Agency in lawful money of the United States, in immediately available funds, all amounts advanced by Agency under the Advance to Developer, pursuant to the terms of the DDA, up to ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon. Guarantor's obligations under this Guaranty shall not exceed the sum of ONE HUNDRED THOUSAND AND NO/100THS DOLLARS ($100,000.00), plus interest thereon. 4. Remedies. If Guarantor fails to promptly perform its obligations under this Guaranty, Agency shall have the following remedies: 4.1 From time to time and without first requiring performance by Developer or exhausting any or all security for any loans Agency has made to Developer, to bring any action at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all loss, cost, damage, injury and expense sustained or incurred by Agency as a direct consequence of the failure of Guarantor to perform its obligations. 5. Guarantor's Waivers. Guarantor waives: (a) any defense based upon any legal disability or other defense of Developer, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Developer from any cause other than full payment and performance of those obligations of Developer which are guaranteed hereunder; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Developer or any principal of Developer or any defect in the formation of Developer or any principal of Developer; (c) any defense based upon the application by Developer of the proceeds of the Advance for purposes other than the purposes represented by Developer to Agency or intended or understood by Agency or Guarantor; (d) any and all rights and defenses arising out of an election of remedies by Agency, even though that election of remedies; (e) any defense based upon Agency's failure to disclose to Guarantor any information concerning Developer's financial condition or any other circumstances bearing on Developers ability to pay and perform its obligations under the Advance and/or DDA; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Agency's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Agency may have against Developer Q) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor further waives any and all rights and defenses that Guarantor may have because Developer's debt is secured by real property; this means, among other things, that: (1) Agency may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Developer; (2) if 2 PVgeM geMe.lOxM1memslF bite12010b3-15-IOMe HouAinp-Me lie HigWeM-AmmtlM&RecuN 0.egyme,uC ugly(Pzhiba Fl-FP'N..dwx Agency forecloses on any real property collateral pledged by Developer, then (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Agency may collect from Guarantor even if Agency, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Developer. Without limiting the generality of the foregoing or any other provision hereof, Guarantor further expressly waives to the extent permitted by law any and all rights and defenses, including without limitation any rights of subrogation, reimbursement, indemnification and contribution, which might otherwise be available to Guarantor under California Civil Code Sections 2787 to 2855, inclusive, 2899 and 3433. 6. Guarantor's Warranties. Guarantor warrants and acknowledges that: (a)Agency would not make the Advance but for this Guaranty; (b) Guarantor has reviewed all of the terms and provisions of the DDA; (c) Guarantor has not and will not, without the prior written consent of Agency, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantor's business. 7. Subordination. Guarantor subordinates all present and future indebtedness owing by Developer to Guarantor to the obligations at any time owing by Developer to Agency in connection with the Advance. Guarantor assigns all such indebtedness to Agency as security for this Guaranty. Guarantor agrees to make no claim for such indebtedness until all obligations of Developer in connection with the Advance have been fully discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Agency is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. 8. Additional Independent and Unsecured Obligations. This Guaranty is independent of the obligations of Developer under any other loans Agency has made to Developer. Agency may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Developer or any other party or joining Developer or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty. 9. Attorneys' Fees: Enforcement. If any attorney is engaged by Agency to enforce or defend any provision of this Guaranty, Guarantor shall pay to Agency, immediately upon demand all reasonable attorneys' fees and costs incurred by Agency in connection therewith. 10. Rules of Construction. The term "person" as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term "Guarantor" shall include all such persons. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. 11. Governing Law. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of California, except to the extent preempted by federal laws. Guarantor and all persons and entities in any manner obligated to Agency under this Guaranty consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 3 P.�4eWas\ gcM �bi\s\010\03-1540 Ma Horsing-MWOha Higb -Arne &R—n R"Mem Cw (Fsbibn F).FIli do 12. Miscellaneous. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, nominees, successors and assigns of Guarantor and Agency. The liability of all persons and entities who are in any manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. 13. Legal Effect. The 2009 Repayment Guaranty is cancelled, revoked and rescinded, in its entirety, and is replaced and superseded by this Guaranty. 14. Enforceability. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Agency's consideration for entering into this transaction, Agency has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek and receive legal advice form skilled legal counsel in the area of financial transactions of that type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Agency that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. 15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY, AND BY ITS ACCEPTANCE HEREOF, AGENCY, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)ARISING UNDER ADVANCE AND/OR DDA, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE ADVANCE AND/OR DDA (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND AGENCY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND AGENCY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND AGENCY TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. [remainder of page intentionally left blank] 4 P.04geM$e Ape AYachmemsl Nbilsl 1=3-15-10M Hwm� -Ma lie MIWM -gmmded&Rpl p,Mlm GUu (F.ahibk FI-M. d= IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty. "GUARANTOR" Meta Housing Corporation, a California corporation By: John M. Huskey, President S - 1 v\A�A¢whb ,IFhibiu1301=3-1S10Meg Haire-Me iRHivMW-Nn BRou[etl ReWYmml GuvwY(E*H>u F) FMALEOu Exhibit "G55 Senior Citizen Rental Housing Use Covenant 20 p.`A8<^Q��ABeMa A�uv'Amcnu,ABervk AmdmewUgmu-Amntl 201=3-1510 Hwowy-MayvWUllighlwl-MUOI.NO.Ib ARatlabkS .C—R Wiuoeg DDAh RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attention: Interim Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 (Space Above Line For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 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 112009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement", dated as of August 3, 2009, as amended by the Amendment No. 1 To The 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development, dated as of March_, 2010 (collectively, 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 I. (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 1 PM4 V49a �VOIM3-15.10 MM n-Me ha ftWN -S wCal R<nW Ha mHrz Cowes¢(E bit G).tloc (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 513(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 naming 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 2 P:MgmluUg L Anach ulEWbhsU01"3-15-20 MM Ha M-M�Ii,High"-S wCit—Rm Housing Ux Cw (EV bh G)E and, if not corrected, cured or remedied in the time period set forth in Section 6(b), shall constitute an"Event of Default"hereunder. (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 expen, s incurred, including such fees and costs incurred on appeal, in addition to whatever other re!ef the prevailing party may be entitled to. As used in the preceding sentence, the words "reason ble attorney's fees" in the case of the City include the salary and benefits payable to lawyer employed in the Office of the City Attorney of the City, who provide legal counsel to the City it uch litigation as allocated on an hourly basis. 3 PMgeM�� M�AO�chme0ltlE�Itibna�3010q}I}IO Mee HOUVn,-M.g i.H.&W-S .Gftbenp H.u"%U.C�(F bn G).EOc C (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. Section 7. This Agreement shall be governed by the laws of the State of California. Section S. 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. 4 c.u&� Pu �MSMInw3-15-10 w x uV-NL�Ii•xqHw-sw Cg mn Hw ire U:C�obi c).tloc 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, a public body, corporate and politic Dated: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency Counsel [NOTARY JURAT ATTACHED] CITY City of San Bernardino By: By: Approved As To Form: By: City Attorney 5 P.Npe aUgeM Mwb em3E.hibitSW1003-15-10M H to -M, ha fthlW-S or Citizen Remal Hw ing Uae Cmew (Exhibit G).goc C EXHIBIT"A" Legal Description of the Site 6 P:Upeetl�sV.gpW AtuduneMa�EaMbiu\1010`03�15-10 Mau Hau�� Magnolia HigblaM-Swim Ciiixm Penal HawinP Uu Cmenun(F.xltibn G)drc E)CMBIT"B" Acknowledgement of Developer 7 P:AgeMaa'Agen&M bmemS£xhibiif1010W3-I5-10M Hoe -M�Ia Highiu g MCai ag"Ha ip UWC�(g Me)E Exhibit "H" Notice of Agreement 21 PU{mC'u\I�SmL ArtxAnt�mUpeah�mrLnirmlApw-AOmtl3010'O1�15-10 Mm Hyliry-M�p Yu FlyElmtl-NOmE.N. 1m3009�I.S--C.p l "DDkE RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attention: Interim Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 (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 (Northwest Redevelopment Project: Meta Housing Corporation and Magnolia Highland, L.P.", dated as of August 3, 2009, as amended by the Amendment No. I to the 2009 Affordable Senior Citizen Rental Housing Acquisition, Disposition and Development Agreement, dated as of March_,2010 (collectively, 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: 1 Parcel 1 of Parcel Map No. 19200, Book Page _ of Parcel Maps, Office of the Recorder San Bernardino, County 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 Attention: Executive Director 201 North"E" Street, Suite 301 San Bernardino, California 92401 (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 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, a public body, corporate and politic Dated: By: Chair of the Community Development Commission of the City of San Bernardino, its governing board Dated: By: Emil A. Marzullo, Interim Executive Director Approved As To Form: Agency Counsel ,y 3 DEVELOPER Executed this day of 2010 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: Legal Counsel for Developer 4 1 RESOLUTION NO. co F 2 3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING 4 THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO 5 EXECUTE A DEMOLITION CONTRACT BY AND BETWEEN THE AGENCY AND MGP CONSTRUCTION FOR THE DEMOLITION OF 6 AGENCY PROPERTY LOCATED AT 2196 MEDICAL CENTER DRIVE, 7 SAN BERNARDINO, CA 92411 (NORTHWEST REDEVELOPMENT PROJECT AREA) 8 9 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the "Agency") is a 10 community redevelopment agency duly created, established and authorized to transact business and 11 exercise its powers, all under and pursuant to the California Community Redevelopment Law (the 12 "CRL"), codified under Division 24, Part 1 of the California Health and Safety Code commencing 13 at Section 33000 and is authorized to acquire and demolish blighted properties for redevelopment 14 purposes located within the approved redevelopment project areas in the City of San Bernardino 15 (the "City") in accordance with the CRL; and 16 WHEREAS, the Community Development Commission of the City of San Bernardino (the 17 "Commission"), as the governing board of the Agency, has authorized the Agency to assemble, 18 acquire real property and demolish blighted structures for community redevelopment purposes in 19 the City; and 20 WHEREAS, the hereinafter described property displays substantial and pervasive 21 symptoms of blight that cannot be remedied by private parties acting alone without community 22 redevelopment assistance; and 23 WHEREAS, on November 23, 2009, the Agency acquired title to the commercial property 24 located at 2196 Medical Center Drive, San Bernardino, California, which presently contains an 25 abandoned structure formerly used for miscellaneous automotive repair purposes (the "Project 26 Site"); and 27 WHEREAS, it has been determined that upon the purchase date of November 23, 2009, the 28 Project Site was vacant and continues to be vacant; and 1 �30 I WHEREAS, on January 8, 2010, a notice requesting demolition services was issued to a list 2 of Agency approved demolition contractors which was followed by a job walk of the Project Site 3 on January 14, 2010. As a result of these efforts, a total of five separate responses were received; 4 and 5 WHEREAS, MGP Construction (the "Contractor"), was determined to be the lowest 6 responsible bidder and the Agency desires to retain the Contractor to perform said demolition and 7 clearance of the Property in accordance with the terms and conditions of the Demolition Contract, 8 and Addendum(the "Contract') attached hereto and incorporated herein by said reference. 9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 11 FOLLOWS: 12 Section 1. The information set forth in the above recitals of this Resolution is true and 13 correct. 14 Section 2. The Commission hereby approves the Contract between the Agency and the 15 Contractor attached hereto as Exhibit "A", incorporated herein by reference, and waives any 16 irregularities in the bid as submitted by the Contractor as permitted by the bid documents. The 17 Commission further authorizes the appropriation of the Contract price to be derived from the Low 18 and Moderate Income Housing Funds authorized and allocated to the Magnolia - Highland 19 Affordable Senior Citizens Rental Housing Project (the "Project') in furtherance of the 20 development of the Project. 21 Section 3. The Interim Executive Director of the Agency is hereby authorized to 22 execute the Contract on behalf of the Agency in substantially the form attached hereto, together 23 with such changes therein as may be approved by the Interim Executive Director of the Agency and 24 the Agency Counsel. The Interim Executive Director of the Agency or such other designated 25 representative of the Agency is further authorized to do any and all things and take any and all 26 actions as may be deemed necessary or advisable to effectuate the purposes of the Contract, 27 including making non-substantive modifications to the Contract. 28 Section 4. This Resolution shall become effective immediately upon its adoption. 2 1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF 2 THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING 3 THE INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") TO 4 EXECUTE A DEMOLITION CONTRACT BY AND BETWEEN THE AGENCY AND MGP CONSTRUCTION FOR THE DEMOLITION OF 5 AGENCY PROPERTY LOCATED AT 2196 MEDICAL CENTER DRIVE, SAN BERNARDINO, CA 92411 (NORTHWEST REDEVELOPMENT 6 PROJECT AREA) 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 , 2010 by the following vote,to wit: 10 Commission Members: Aves Nays Abstain Absent 11 MARQUEZ 12 DES JARDINS 13 BRINKER 14 SHORETT 15 KELLEY _ 16 JOHNSON _ 17 MC CAMMACK 18 19 Secretary 20 The foregoing Resolution is hereby approved this day of 2010. 21 22 Patrick J.Morris, Chairperson 23 Community Development Commission 24 of the City of San Bernardino Approved as to Form: 25 26 By: 27 Agencyt4sel 28 3 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO DEMOLITION CONTRACT (ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT) THIS PUBLIC WORKS PROJECT CONTRACT for the asbestos/lead-based paint abatement and demolition/site clearance project of the free standing automotive services building located at 2196 Medical Center Drive, San Bernardino, California 92411 (this "Contract"), is made and entered into this 25th day of February, 2010, by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (referred to herein as the "Owner" or the "Agency") and MGP Construction, a Sole Proprietorship(the"Contractor"). IN WITNESS HEREOF, THE UNDERSIGNED PARTIES HAVE MUTUALLY COVENANTED AND AGREED TO THE FOLLOWING: 1. THE CONTRACT DOCUMENTS. The complete contract is comprised of and includes: I) The Instructions to Bidders (including asbestos/lead based paint survey); 2) Bidder's Proposal; 3) Equal Employment Opportunity Certification; 4) Minority Business Enterprises/Women's Business Enterprises ("MBE(WBE") Information; 5) Designation of Subcontractors; 6) Technical Specifications; 7)Certification of Insurance coverage; 8)Copies of the State of California Contractor's Licenses; 9) Copy of the City of San Bernardino ("City") Business License; 10) Copy of the Worker's Compensation Insurance. All of the above documents are intended to coordinate so that any work called for in one (1) and not mentioned in the other, or vice versa, is to be executed the same as if mentioned in all said documents. The documents comprising the complete contract are hereinafter referred to collectively as the "Contract Documents". 2. THE WORK. The Contractor agrees to furnish all tools, apparatus, facilities, equipment, labor and materials (except that specifically mentioned as being famished by others) necessary to perform and complete the work in a good and worker like manner as called for, and in the manner designated in, and in strict conformity with the Contract Documents which are identified by the signatures of the parties to this Contract and are,collectively, entitled: REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT 3. CONTRACT PRICE. The Agency agrees to pay and the Contractor agrees to accept, in full payment for the work above agreed to be done, the following compensation, to-wit: Amounts as determined by applying the information contained in the Contractor's bid proposal for the asbestos/lead-based paint abatement and demolition/site clearance of the free standing automotive services building located at 2196 Medical Center Drive, San Bernardino, California 92411 (the "Project"). The amount of the Contract for the Project is Thirteen Thousand Three Hundred Fifty Dollars and 00/100 ($13,350.00). Page 1 of 18 4. CONTRACT AMENDMENTS. The Interim Executive Director of the Agency is authorized to sign on his own authority amendments to this Contract which are of routine or technical nature, including minor adjustments to the Schedule of Performance unless otherwise specified in this Contract. All other amendments require the mutual agreement of both the Agency and the Contractor. 5. INCORPORATION BY REFERENCE OF PART 1 SECTIONS 1-9 OF THE GREENBOOK, 2009 EDITION. AS SUPPLEMENTED The Greenbook, as supplemented by the publications entitled, "2009 Cumulative Supplements to Greenbook," are hereby incorporated by this reference into this Contract. The word "Project" means and refers to the "Project," as this term is defined in the Instructions to Bidders. To the extent that any provision of the printed text which appears in this Contract is in conflict with the printed text of the provisions of the Greenbook as incorporated into this Contract by this reference, then in such event, the printed text of this Contract shall take precedence over such printed text in the Greenbook. 6. PAYMENT. After the completion of the asbestos/lead based paint abatement and demolition/clearance for the Project, the Contractor may make a single request for payment to the Agency upon adequate verification of the completion of the demolition/clearance. After acceptance of the work by the Agency, the Agency shall review the payment request to determine if it is a proper payment request. If the Agency deems that the payment request is proper, the Agency shall make a payment in the amount of the Contractor's payment request, less a ten percent (10%) retention amount i within thirty (30) calendar days after the Agency's acceptance. This ten percent (10%) retention �... amount of the payment request shall be retained by the Agency until completion of the entire Project that is covered by this Contract as evidenced by the Notice of Completion as hereinafter provided. With regard to the retention amount, the Agency will release the Contractor's retention amount within forty-five (45)calendar days after recordation of a Notice of Completion,as defined in California Civil Code Section 3093. Recordation of a Notice of Completion for the Project by the Agency shall constitute the Agency's acceptance of the completed Project. However, if any payment request as submitted for the completion of the Project is determined by the Agency not to be a proper payment request suitable for payment, such payment request shall be returned to the Contractor by the Agency within ten (10) working days after the Agency's receipt of the payment request. A payment request returned to the Contractor by the Agency under the provisions of this Section 6 shall be accompanied by a written document setting forth the reason or reasons why the payment request is not proper. The number of days for the Agency to make a certain payment as provided in this Contract, without incurring interest pursuant to this Section 6, shall be reduced by the number of days by which the Agency exceeds the ten (10) working days return period for such payment request, if determined to be improper, as set forth in this Section 6. For the purposes of this Section 6, a "request for payment" means all payments due to the Contractor under this Contract, exclusive of that portion of the final payment designated as retention amounts. Also, for the purposes of this Section 6, a payment request shall be considered properly executed by the Agency, if funds are available to pay the payment request and payment is not delayed due to an audit inquiry by the Agency's financial officer. In the event that the Agency has not made payment within thirty (30) calendar days after the receipt of a payment request and acceptance of the Contractor's payment request and work, the Agency shall pay the Contractor interest on the amount of any portion of the payment request, excluding retention Page 2 of 18 amounts not made to the Contractor within thirty (30) calendar days after the Agency's receipt of a payment request and acceptance of the Contractor's work at the legal rate set forth in the California Code of Civil Procedure Section 685.010. 7. STOP WORK NOTICES. The Contractor shall promptly pay all valid bills and charges for material, labor, equipment or otherwise in connection with or arising out of the performance of this Contract, and will defend, indemnify, protect and hold the Agency free and harmless against all liens and/or claims of lien for material, labor or equipment filed against the Agency, and from and against all expenses and liability in connection therewith, including, but not limited to, court costs and attorney's fees resulting or arising therefrom. In the event any liens and/or claims of lien are filed for record against the Agency or any property owned by the Agency, or the Agency receives notice of any unpaid bill or charge in connection with the performance of this Contract, the Contractor shall, forthwith either pay and discharge the liens and/or claims of lien and cause same to be released of record, or the Contractor shall finish the Agency with proper indemnity, either by satisfactory corporate Surety Bond or satisfactory title policy. Said indemnity shall also be subject to approval of the lien holder. 8. TIME FOR COMPLETION. All work under this Contract shall be completed by a date no later than sixty(60)calendar days from the date of the Contractor's receipt of a Notice to Proceed from the Agency which date may first occur; provided, however, it is anticipated that the Contractor may receive its Notice to Proceed by a date no later than 11 1:5 1 2010. 9. EXTENSION OF TIME. If the Contractor is delayed by acts of negligence of the Agency, or its employees or those under it by this Contract or otherwise, or by changes ordered in the work, or by strikes, lockouts, fire, unavoidable casualties, or any causes beyond the Contractor's control, or by delay authorized by the Agency, or by any justifiable cause which the Agency shall authorize, then the Contractor shall make out a written claim addressed to the Agency setting forth the reason for the delay and the extension of the time requested and forward a copy of the claim to the Agency for approval. The Agency will evaluate the claim and if the claim is justifiable, will request the Agency's approval. No such extension will be allowed unless written claim therefore, has been made within three(3)business days after the delay became apparent. 10. LIQUIDATED DAMAGES FOR DELAY. The provisions of Section 6.9 of the Greenbook are hereby modified to provide for liquidated damages in the amount of Two Hundred Dollars and 00/100 ($200.00) per working day for all unexcused delays on the performance by the Contractor under this Contract. 11. CHANGE ORDERS. No change in work, as described in the Contract Documents, shall be made except upon the written approval of the Agency. The Contractor shall not be entitled to any compensation for any additional work unless such written Project Change Order is written and entered into by the Contractor and the Agency. The Project Change Order shall describe the nature of the additional work in detail, the location of the work,the estimated time for completion thereof, and terms of compensation to be paid to the Contractor for its performance in accordance with this Contract as modified by the Project Change Order. 12. REAL PROPERTY LIENS. The Contractor shall promptly pay all valid bills and charges for material, labor or otherwise in connection with or arising out of the performance of this Contract, and will defend, indemnify, protect and hold the Agency free and harmless against all liens and/or claims of lien for material and labor filed against the real property or any part thereof, and from and against all expenses and liability in connection therewith, including, but not limited to, court costs and attorney's Page 3 of 18 fees resulting or arising therefrom. In the event any liens and/or claims of lien are filed for record against the real property, or the Agency receives notices of any unpaid bill or charge in connection ,�►.w with the performance of this Contract, the Contractor shall forthwith either pay and discharge the liens and/or claims of lien and cause same to be released of record, or the Contractor shall fiunish the Agency with proper indemnity, either by satisfactory corporate surety bond or satisfactory title policy. Said indemnity shall also be subject to approval of the lien holder. 13. INDEMNIFICATIONS AND HOLD HARMLESS. The Contractor shall defend,indemnify, protect and hold free and harmless the Agency, its officers, employees, and agents from and against any and all actions, suits, proceedings, claims, demands, losses, costs, injuries to or death of any person or persons and expenses, including attorney's fees, for injury or damage of any type claimed which is brought by any individual or entity, whether public or private, as a result of the acts, errors or omissions of the Contractor, its officers, employees, agents, and its Subcontractors arising from or related to performance of the work required hereunder to complete the Project. 14. INSURANCE. The provisions of Section 7-3 and Section 7-4 of the Greenbook are hereby amended to read,as follows, for the purposes of this Contract: The Contractor shall procure and maintain insurance policies meeting the minimum requirements set forth below. Insurance shall be provided by insurers satisfactory to the Agency. Certificates evidencing insurance coverage shall be delivered to the Agency for each policy required herein prior to commencement of any work. All insurance certificates shall name the Agency as an additional insured and provide for thirty(30)calendar days' prior written notice of cancellation to the Agency. ti... a. Comprehensive General Liability Insurance. The Contractor shall maintain comprehensive general liability insurance of not less than One Million Dollars and 00/100 ($1,000,000.00) combined single limit, per occurrence. The Contractor must provide Comprehensive General Liability Insurance Policy with appropriate endorsement for builder's course of construction and fire casualty loss. b. Automobile Insurance. The Contractor shall maintain comprehensive automobile liability insurance of not less than One Million Dollars and 00/100 ($1,000,000.00) combined single limit per occurrence. c. Worker's Compensation. The Contractor shall maintain worker's compensation coverage in accordance with the laws of the State of California for all workers under which it employs and Subcontractors performing the work required herein. 15. LABOR PROVISIONS. a. Prevailing Wages. The Project is a "public work" as this term is defined under applicable State law (See California Labor Code Section 1720, et seq., and California Code of Regulations, Title 8, Section 16000,et seq.). (1) All laborers and mechanics employed or working upon the site of the Project will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at the time of payment computed at rates not less than those contained in the wage determination of the Director of the Department of Industrial Relations (the "Director") regardless of any contractual relationship which may be alleged to exist between the Contractor and such laborers Page 4 of 18 and mechanics. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in paragraph d. of this Section 15. Laborers or mechanics performing work in more than one (1) classification may be compensated at the rate specified for each classification for the time actually worked therein,provided that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination shall be posted at all times by the Contractor and its Subcontractors at the site of the Project in a prominent and accessible place where it can easily be seen by the workers. (2) Whenever the minimum wage rate prescribed in the Contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate,the Contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. (3) If the Contractor does not make payments to a trustee or other third person, the Contractor may consider as part of the wages of any laborer or mechanic, the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program,provided that the Director has found, upon the written request of the Contractor, that the applicable standards of the Prevailing Wage Law ("PWL") have been met. The Director may require the Contractor to set aside, in a separate account, assets for the meeting of obligations under the plan or program. b. Withholdine. The Agency shall, upon its own action or upon written request of an authorized representative of the Department of Industrial Relations, withhold or cause to be withheld from the Contractor under this Contract or any other Federal contract with the same Contractor, or any Eother contract subject to prevailing wage requirements, which is held by the same Contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees and helpers, employed by the Contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper, employed or working on the site of the Project, all or part of the wages required by the contract referenced above or by this Contract, the Agency may after written notice to the Contractor, take such action as may be necessary to cause the suspension of any further payment, advance or guarantee of funds until such violations have ceased. C. Payrolls and Basic Records. (1) Payrolls and basic records relating thereto shall be maintained by the Contractor during the course of the work and preserved for a period of three (3) years thereafter for all laborers and mechanics working at the site of the Project. Such records shall contain the name, address and social security number of each such worker, his or her correct classification, hourly rates of wages paid, daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Labor Commissioner has found under paragraph (3) of this clause that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under such plan or program, the Contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual costs incurred in providing such benefits. If the Contractor employs apprentices or trainees under approved programs, the Contractor shall maintain written evidence of the Nom/ registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. Page 5 of 18 (2) (i) The Contractor shall prepare weekly payrolls for each week in which any Contract work is performed. The payrolls shall set out accurately and completely all of the information required err to be maintained under paragraph c (1) above. This information may be prepared in any form desired. The Contractor is responsible for obtaining copies of payrolls paid by all Subcontractors. (ii) Each payroll prepared shall be accompanied by a"Statement of Compliance," signed by the Contractor or Subcontractor or his or her agent who pays or supervises the payment of the persons employed under the Contract and shall certify the following: (A) That the payroll for the payroll period contains the information required to be maintained under paragraph c (1)above and that such information is correct and complete; (B) That each laborer and mechanic (including each helper, apprentice and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions; (C) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into this Contract. (iii) Whenever a Contractor or Subcontractor is found by the Labor Commissioner to be in violation.of the PWL with intent to defraud, the Contractor or Subcontractor shall be ineligible for a period of not less than one (1) year or more than three (3) years to bid or perform work on a public works contract. (3) The Contractor or Subcontractor shall make the records required under paragraph c (1) of this Section 15 available for inspection, copying or transcription by authorized representatives of the Agency, any office of the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards, and shall permit such representatives to interview employees during working hours on the job. If the Contractor or Subcontractor fails to submit the required records or to make them available, the Labor Commissioner may, after written notice to the Contractor or the Agency, take such action as may be necessary to cause the withholding of any further payment, advance or guarantee of funds by the Agency, and determination of a penalty as set forth in Labor Code Section 1775, et seq. d. Aonrentices and Trainees. (1) Apprentices. Apprentices, as defined in Labor Code Section 3077, will be permitted to work at less than the predetermined rate for the work they perform when they are in training under apprenticeship standards that have been approved by the Chief of the Apprenticeship Standards and who are parties to written apprentice agreements under Chapter 4 (commencing with Section 3070) of Division 3 of the Labor Code. The allowable ratio of apprentices to journeymen on the Project site in any craft classification shall not be greater than the ratio permitted to the Contractor as to the entire work force under the rules and regulations of the California Apprenticeship Council. Any worker listed on a payroll at an apprentice wage rate, who is not employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in excess of the ratio permitted under the apprenticeship standards and agreements shall be paid not less than the applicable wage rate on the wage determination of the work actually performed. Every apprentice must be paid at not less than the rate specified in the apprenticeship agreement for the apprentice's level of progress, expressed Page 6 of 18 as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator of Apprentices determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. (2) Trainees. Trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in an "on-the-job training" program established pursuant to Labor Code Section 3093. The ratio of trainees to journeymen on the Project site shall not be greater than permitted under the program pursuant to Section 3093 by the California Apprenticeship Council in cooperation with the Department of Education, the Employment Development Department, and the Board of Governors of the California Community Colleges. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress. Trainees shall be paid fringe benefits in accordance with the provisions of the training program. If the training program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of Apprentices so determines. Any employee listed on the payroll at a trainee rate who is not registered and participating in an "on-the-job training" program established pursuant to Section 3093, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the Project site in excess of the ratio permitted under the "on-the-job training" program as established, shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Administrator of Apprentices withdraws approval of an "on-the-job training" program, the Contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (3) Equal Employment Onnortunity. The utilization of apprentices, trainees and journeymen under this part shall be in conformity with the prohibitory discrimination provisions of California law as set forth in the California Constitution, Article 1, Section 8, Government Code Section 12900, et seq. and Labor Code Sections 1735, 1777.6 and 3093. e. Subcontracts. The Contractor and each Subcontractor shall insert in any subcontracts the clauses contained in paragraphs a. through i. of this Section 15 of this Contract and such other clauses as may be required, and also a clause requiring the Subcontractors to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for the compliance by any Subcontractor or lower tier Subcontractor with all the Contract clauses and all requirements of the PWL. L Contract Termination. A breach of this Contract based upon the clauses in paragraphs a. through i. of this Section 15 and a. through e. of Section 16 below are grounds for termination of this Contract, and for the withholding of payment by the Agency and notification to the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards,as applicable. g. Compliance With Prevailing Wage Law and Related Regulatory Requirements. All rulings and interpretations of the PWL and the related regulations pr( iulgated thereunder, contained in 8 CCR Section 16000, et seq., are herein incorporated by reference in his Contract. h. Disputes Concerning Labor Standards. Disputes aril ag from the labor standards provisions of this Contract shall not be subject to the general disputes is vision of this Contract. Such Page 7 of 18 disputes shall be resolved in accordance with the procedures of the Department of Industrial Relations as set forth in California Code of Regulations, Title 8, Section 16000, et seq. Disputes within the meaning of this clause include disputes between the Contractor (or any of its subcontracts) and the Agency, the Department of Industrial Relations,or the employees or their representatives. i. Certification of Eligibility. (1) By entering into this Contract, the Contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the Contractor's firm is a person or firm ineligible to be awarded a public works contract by virtue of Labor Code Section 1775, et seq. (2) No part of this Contract shall be subcontracted to any person or firm ineligible for award of a public works contract by virtue of Labor Code Section 1775, et seq. 16. CONTRACT WORK HOURS AND SAFETY STANDARDS REQUIREMENTS As used in the following provision, the term"laborers"and"mechanics"include watchmen and guards. a. Overtime Requirements. Neither the Contractor nor any Subcontractor contracting for any part of the Project which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workday in which he or she is employed on such work to work in excess of eight (8) hours per day or in any workweek in which he or she is employed on such work to work in excess of forty (40) hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half(1 '/1) times the basic rate of pay for all hours worked in excess of eight (8) hours in such workday or forty(40) hours in such workweek. b. Violation• Liability for Unpaid Wages; Liquidated Damages. In the event of any violation of the clause set forth in paragraph a. above, the Contractor and any Subcontractor responsible therefore, shall be liable for the unpaid wages. In addition, the Contractor and Subcontractor shall be liable to the Agency for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph a. above, in the sum of Ten Dollars and 00/100 ($10.00) for each calendar day on which such individual was required or permitted to work in excess of the standard workday of eight (8) hours or workweek of forty (40) hours without payment of the overtime wages required by the clause set forth in paragraph a. above. C. Withholding for Unpaid Wages and Liquidated Damages. The Agency shall, upon its own action or upon written request of an authorized representative of the Department of Industrial Relations withhold or cause to be withheld, from any monies payable on account of work performed by the Contractor or Subcontractor under any such contract or any other contract with the same Contractor, or any other contract subject to the California work hours and safety standards requirements, which is held by the same Contractor, such sums as may be determined to be necessary to satisfy any liabilities of such Contractor or Subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph b. above. d. Working conditions. Neither the Contractor nor any Subcontractor may require any laborer or mechanic employed in the performance of any contract to work in surroundings or under - - working conditions that are unsanitary, hazardous or dangerous to his health or safety as determined under construction safety and health standards issued by the Department of Industrial Relations. Page 8 of 18 e. Subcontracts. The Contractor and any Subcontractor shall insert in any subcontracts the clauses set forth in paragraphs a. through d. above and also a clause requiring the Subcontractor to include these clauses in any lower tier subcontracts. The Contractor shall be responsible for compliance by any Subcontractor or lower tier Subcontractor with the clauses set forth in paragraphs a. through d.of this Section 16. 17. NONDISCRIMINATION. The Contractor, with regard to the work performed by it during the terms of this Contract, shall not discriminate on the grounds of race, color or national origin in the selection and retention of Subcontractors, including procurements of materials and leases of equipment. The Contractor shall not participate either directly or indirectly in the discrimination prohibited by the California Constitution and statutory provisions,including the PWL. 18. CITY OF SAN BERNARDINO MINORITY BUSINESS ENTERPRISES (MBE) AND WOMEN'S BUSINESS ENTERPRISES (WBE) PROGRAM PROVISIONS A policy for establishing goals for participation of the MBE/WBE was adopted on November 20, 1995, by Resolution No. 95-409 of the Mayor and Common Council of the City of San Bernardino. This outreach program superseded Resolution No. 93-411 and the Standard Operation Procedures dated January 1995. Bidder's outreach efforts (good faith efforts)must reach out to MBE/WBE and all other business enterprises. Prime bidder's could reasonably be expected to produce a level of participation by interested subcontractors of fifteen percent (15%) MBE and five percent(5%) WBE on this Project. Bidder's shall make every reasonable effort to solicit bids from MBE/WBE. A justification shall be provided to support the rejection of any bid from a minority or women's business enterprise. It is the policy of the City to provide MBE/WBE and all other enterprises an equal opportunity to participate in the performance of all City contracts. Bidders shall assist the City in implementing this policy by taking all reasonable steps to ensure that all available business enterprises, including the local MBE/WBE, have an equal opportunity to compete for and participate in City and Agency contracts. If the City has established expected levels of participation for the MBE/WBE subcontractors, failure to meet those levels shall not be a basis for disqualification of the bidder. A determination of the adequacy of a bidder's good faith effort must be based on information provided on the Good Faith Effort Statement of MBE/WBE Participation form. The Contractor, sub-recipient or Subcontractor shall not discriminate on the basis of race, color, national origin or sex in the performance of this Contract. Failure by the Contractor to carry out these requirements is a material breach of this Contract, which may result in the termination of this Contract or such other remedy as the Agency deems appropriate. The Contractor agrees to pay each Subcontractor under this Contract for satisfactory performance of its contractual arrangement no later than ten (10) calendar days from the receipt of each payment the Contractor receives from the Agency. The Contractor agrees further to return retainage payments to each Subcontractor within seven (7) calendar days after the Subcontractor's work is satisfactorily completed. Any delay or postponement of payment from the above referenced time frame may occur only for good cause following written approval of the Agency. This clause applies to both the MBE and WBE. 19. CIVIL RIGHTS. The Contractor assures that it will comply with the California Constitution, Article I, Section 8,pertinent statutes, and such rules are promulgated to assure that no person shall, on the grounds of race, creed, color, national origin, sex, age or handicap be excluded from participating in any activity conducted with or benefiting from the Project. This provision binds the Contractor from the bid solicitation period through the completion of this Contract. This provision shall be inserted in all subcontracts, subleases and other agreements at all tiers. Page 9 of 18 20. SOLICITATIONS FOR SUBCONTRACTS, INCLUDING PROCUREMENTS OF MATERIALS AND EQUIPMENT. In all solicitations either by competitive bidding or negotiation made by the Contractor for work to be performed under a subcontract, including procurements of materials or leases of equipment, each potential Subcontractor or supplier shall be notified by the Contractor of the Contractor's obligations under this Contract and the regulations relative to nondiscrimination on the grounds of race, color or national origin. 21. INFORMATION AND REPORTS. The Contractor shall provide all information and reports required by the regulations or directives issued pursuant thereto and shall permit access to its books, records, accounts, other sources of information and its facilities as may be determined by the Agency to be pertinent to ascertain compliance with such regulations, orders and instructions. Where any information required of a Contractor is in the exclusive possession of another who fails or refuses to famish this information, the Contractor shall so certify to the Agency, as appropriate, and shall set forth what efforts it has made to obtain the information. 22. SANCTIONS FOR NONCOMPLIANCE. In the event of the Contractor's noncompliance with the nondiscrimination provisions of this Contract, the Agency shall impose such contract sanctions as determined to be appropriate, including,but not limited to: a. Withholding of payments to the Contractor under this Contract until the Contractor complies and/or; b. Cancellation, termination or suspension of this Contract,in whole or in part. 23. INSPECTION OF RECORDS. The Contractor shall maintain an acceptable cost accounting system. The Agency, the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards shall have access to any books, documents, papers and records of the Contractor which are directly pertinent to this Contract or the Project for the purposes of making an audit, examination, excerpts and transcriptions. The Contractor shall maintain all required records for three (3) years after the Agency makes final payment and all other pending matters are closed. 24. RIGHTS IN INVENTIONS. All rights to inventions and materials generated under this Contract are subject to regulations issued or as may hereafter be issued by the Agency. Information regarding these rights,as applicable, is available from the Agency. 25. BREACH OF CONTRACT TERMS. Any violation or breach of terms of this Contract on the part of the Contractor or its Subcontractors may result in the suspension or termination of this Contract or such other action that may be necessary to enforce the rights of the Agency under this Contract. The duties and obligations imposed by the Contract Documents and the rights and remedies available thereunder shall be in addition to and not a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law. This Contract shall be interpreted under the laws of the State of California. The venue for any legal proceeding to enforce or interpret any provisions of this Contract shall be in the Superior Court of the County of San Bernardino, Main Branch in the City of San Bernardino. In the event that legal proceedings may be initiated by one (1) party to enforce its rights a Eder this Contract, then the prevailing party in such legal proceedings shall be entitled to recover :f om the other party, its reasonable attorneys' fees either in such legal proceedings or in a separate ction to recover such reasonable attorneys' fees. In the case of the Agency, the words "reasons le attorneys' fees" include the cost and expenses calculated on an hourly basis, of all lawyers retained y the Agency in connection with the legal representation of the Agency in any matter arising Page 10 of 18 from the Contract, including, without limitation, attorneys in the Office of the City Attorney and the Agency General Counsel 26. TERMINATION OF CONTRACT BY THE AGENCY. a. The Agency may, by written notice, terminate this Contract in whole or in part at any time, either for the Agency's convenience or because of the Contractor's failure to fulfill its Contract obligations. Upon receipt of such notice, services shall be immediately discontinued(unless the notice directs otherwise) and all materials as may have been accumulated in performing this Contract, whether completed or in process, delivered to the Agency. b. If the termination is for the convenience of the Agency, an equitable adjustment in the Contract price shall be made, but no amount shall be allowed for anticipated profit on unperformed services. C. If the termination is due to failure to fulfill the Contractor's obligations, the Agency may take over the work and prosecute the same to completion by this Contract or otherwise. In such case, the Contractor shall be liable to the Agency for any additional costs occasioned to the Agency thereby. d. If, after notice of termination for failure to fulfill the Contract obligations, it is determined that the Contractor had not so failed,the termination shall be deemed to have been effected for the convenience of the Agency. In such event, adjustment in the Contract price shall be made as provided in paragraph b. of this clause. e. The rights and remedies of the Agency provided in this Section 26 are in addition to any other rights and remedies provided by law or under this Contract. 27. INCORPORATION OF PROVISIONS. The Contractor shall include the provisions of this Contract in every subcontract, including procurements of materials and leases of equipment, unless exempt by the regulations of directives issued pursuant thereto. The Contractor shall take such action with respect to any subcontract or procurement as the Agency may direct as a means of enforcing such provisions, including sanctions for noncompliance. Provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a Subcontractor or supplier as a result of such directive, the Contractor may request the Agency to enter into such litigation to protect the interests of the Agency and, in addition, the Contractor may request the Department of Industrial Relations to enter into such litigation to protect the interests of the State of California. 28. CONTRACTOR CLAIMS OF $74500 OR LESS. Claims by the Contractor relating to the Project for (a) a time extension; (b)money or damages arising from work done by, or on behalf of, the Contractor on the Project for which payment is not expressly provided for or to which the Contractor is not otherwise entitled; or (c) an amount that is disputed by the Agency, with a value of Seventy-Four Thousand Five Hundred Dollars and 00/100 ($74,500.00) or less, are subject to the claims procedures set forth in California Public Contract Code Sections 20104, et seq., except as otherwise provided in this Contract and the incorporated documents, conditions and specifications. A copy of the California Public Contract Code Sections 20104 through 20104.6 is attached to this Contract as Exhibit"A." 29. LOBBYING AND INFLUENCING EMPLOYEES.--4 Page 11 of 18 (1) No public works funding shall be paid, by or on behalf of, the Contractor or its Subcontractors, to any person for influencing or attempting to influence an officer or employee of the Agency in connection with the Project. (2) The terms of the Conflict of Interest Code and any amendments thereto which have been incorporated by reference into the PWL and constitute the Conflict of Interest Code of the Department of Industrial Relations are hereby made a part of this Contract. 30. ASSIGNMENT OF CERTAIN RIGHTS TO THE AGENCY. In entering into this Contract or a subcontract to supply goods, services, or materials pursuant to this Contract, the Contractor and/or Subcontractor offers and agrees to assign to the Agency, all rights, title, and interest in and to all causes of action it may have under Section 4 of the Clayton Act (15 U.S.C. Sec. 15) or under the Cartwright Act (Chapter 2 (commencing with Section 16700) of Part 2 of Division 7 of the Business and Professions Code), arising from purchases of goods, services or materials pursuant to this Contract or the subcontract. This assignment shall be made and become effective at the time the Agency tenders final payment to the Contractor, without further acknowledgment by the parties. 31. ENERGY CONSERVATION REQUIREMENTS. The Contractor agrees to comply with mandatory standards and policies relating to energy efficiency that are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Public Law 94- 163). 32. PROTECTION. The Contractor shall, at all times, provide protection against weather, rain, wind, storm and heat so as to maintain all work, materials, apparatus and fixtures free from injury and damage. At the end of a day's work, all new work, and the premises likely to be damaged by failure to provide protection, as required above, shall be replaced or repaired at the Contractor's expense. 33. CONTRACTORS BEST SHILL. The Contractor shall supervise and direct the work using its best efforts, skill and attention to ensure the workmanship and materials are of good quality and that the work is completed in accordance with this Contract. The Contractor shall be solely responsible for all construction means, methods, techniques, sequences and procedures; safety on the work; and coordinating all portions on the Project to be performed by the Contractor's laborers, employees, vendors and subcontractors, if any. 34. LEAD-BASED PAINT. The Contractor agrees to submit to the Agency, an Abatement Plan, including workdays required and a cost breakdown per the State of California Department of Health Services Regulations and per the South Coast Air Quality Management District prior to the commencement of demolition work on the Project. The Agency assumes no liability for damages for personal injury, illness, disability or death to the Contractors, or employees, agents, or invitees of the Contractor, or to any other person, including members of the general public, arising from or incident to any activity causing or leading to contact of any kind whatsoever with lead-based paint on the demolition sites, whether the Agency has properly warned, or failed to properly warn, any persons injured. The Contractor agrees to cause all removal, transportation and disposal of the lead-based paint removed pursuant to this Contract and the Contract Documents without any cost or liability to the �► Agency whatsoever. The Contractor shall execute all required documents and pay such fees,taxes and other charges and assessments as may be charged, levied or assessed as to the removal, transportation and disposal of the lead-based paint pursuant to this Contract. The Contractor represents and warrants Page 12 of 18 that all such additional fees, taxes and other charges and assessments are included within the Contract price set forth in Section 3 hereof. 35. ASBESTOS CONTAINING MATERIALS. The Contractor agrees to submit to the Agency, an Abatement Plan, including workdays required and a cost breakdown per the State of California Department of Health Services Regulations and per the South Coast Air Quality Management District prior to the commencement of demolition work on the Project. The Agency assumes no liability for damages for personal injury, illness, disability or death to the Contractors, or employees, agents, or invitees of the Contractor, or to any other person, including members of the general public, arising from or incident to any other activity causing or leading to contact of any kind whatsoever with asbestos on the demolition sites, whether the Agency has properly warned,or failed to properly warn, any persons injured. The Contractor agrees to cause all removal, transportation and disposal of the asbestos and asbestos containing materials removed pursuant to this Contract and the Contract Documents without any cost or liability to the Agency whatsoever. The Contractor shall execute all required documents and pay such fees, taxes and other charges and assessments as may be charged, levied or assessed as to the removal, transportation and disposal of the asbestos pursuant to this Contract. The Contractor represents and warrants that all such additional fees, taxes and other charges and assessments are included within the Contract price set forth in Section 3 hereof. 36. BUSINESS REGISTRATION CERTIFICATION. The Contractor warrants that it possesses, or shall obtain immediately after the execution and delivery of this Contract, and maintain during the period of time that this Contract is in effect, a business registration certification pursuant to Title 5 of the City Municipal Code,together with any and all other licenses, contractor license, permits, qualifications, insurance and approvals of whatever nature that are legally required to be maintained by the Contractor to conduct its business activities within the City. 37. STATE OF CALIFORNIA PREVAILING WAGE DETERMINATIONS. The appropriate prevailing wage determinations may be obtained from the California Department of Industrial Relations Internet Web Site at www.dir.ca.gov/dirdatabases.hmil. Page 13 of 18 IN WITNESS WHEREOF, three (3) identical counterparts of this Contract,each of which shall for all purposes be deemed an original thereof, have been duly executed by the parties hereinabove named,on the day and year first herein written. AGENCY: Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Date: By: Emil A. Marzullo, Interim Executive Director Approved as to Form and Legal Content: By: Agency'C6#el CONTRACTOR: MGP Construction, a Sole Proprietorship Date: 2— 2S -LC>( D By:� P- 0. ( m ci n (o S Type or Print Contractor's/Bidder's Business Address (City, State and Zip Code) V ()�79 g Contractor's License Contrac tor License Classification 4 30 f it 4 Con'tractor'§License Expiration Date Bond Number Page 14 of 18 EXHIBIT "A" Cal ifornia Public Contract Code Sections 20104 through 20104.6 Page 15 of 18 PUBLIC CONTRACT CODE SECTION 20104-20104.6 20104 . (a) (1) This article applies to all public works claims of three hundred seventy-five thousand dollars ($375, 000) or less which arise between a contractor and a local agency. (2) This article shall not apply to any claims resulting from a contract between a contractor and a public agency when the public agency has elected to resolve any disputes pursuant to Article 7. 1 (commencing with Section 10240) of Chapter 1 of Part 2. (b) (1) "Public work" has the same meaning as in Sections 3100 and 3106 of the Civil Code, except that "public work" does not include any work or improvement contracted for by the state or the Regents of the University of California. (2) "Claim" means a separate demand by the contractor for (A) a time extension, (B) payment of money or damages arising from work done by, or on behalf of, the contractor pursuant to the contract for a public work and payment of which is not otherwise expressly provided for or the claimant is not otherwise entitled to, or (C) an amount the payment of which is disputed by the local agency. (c) The provisions of this article or a summary thereof shall be O set forth in the plans or specifications for any work which may give rise to a claim under this article. (d) This article applies only to contracts entered into on or after January 1, 1991 . 20104.2. For any claim subject to this article, the following requirements apply: (a) The claim shall be in writing and include the documents necessary to substantiate the claim. Claims must be filed on or before the date of final payment. Nothing in this subdivision is intended to extend the time limit or supersede notice requirements otherwise provided by contract for the filing of claims. (b) (1) For claims of less than fifty thousand dollars ($50, 000) , the local agency shall respond in writing to any written claim within 45 days of receipt of the claim, or may request, in writing, within 30 days of receipt of the claim, any additional documentation supporting the claim or relating to defenses to the claim the local agency may have against the claimant. (2) If additional information is thereafter required, it shall be requested and provided pursuant to this subdivision, upon mutual agreement of the local agency and the claimant. (3) The local agency' s written response to the claim, as further © documented, shall be submitted to the claimant within 15 days after receipt of the further documentation or within a period of time no greater than that taken by the claimant in producing the additional information, whichever is greater. Page 16 of 18 (c) (1) For claims of over fifty thousand dollars ($50, 000) and © less than or equal to three hundred seventy-five thousand dollars ($375, 000) , the local agency shall respond in writing to all written claims within 60 days of receipt of the claim, or may request, in writing, within 30 days of receipt of the claim, any additional documentation supporting the claim or relating to defenses to the claim the local agency may have against the claimant. (2) If additional information is thereafter required, it shall be requested and provided pursuant to this subdivision, upon mutual agreement of the local agency and the claimant. (3) The local agency' s written response to the claim, as further documented, shall be submitted to the claimant within 30 days after receipt of the further documentation, or within a period of time no greater than that taken by the claimant in producing the additional information or requested documentation, whichever is greater. (d) If the claimant disputes the local agency' s written response, or the local agency fails to respond within the time prescribed, the claimant may so notify the local agency, in writing, either within 15 days of receipt of the local agency' s response or within 15 days of the local agency's failure to respond within the time prescribed, respectively, and demand an informal conference to meet and confer for settlement of the issues in dispute. Upon a demand, the local agency shall schedule a meet and confer conference within 30 days for settlement of the dispute. © (e) Following the meet and confer conference, if the claim or any portion remains in dispute, the claimant may file a claim as provided in Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) of Part 3 of Division 3. 6 of Title 1 of the Government Code. For purposes of those provisions, the running of the period of time within which a claim must be filed shall be tolled from the time the claimant submits his or her written claim pursuant to subdivision (a) until the time that claim is denied as a result of the meet and confer process, including any period of time utilized by the meet and confer process. (f) This article does not apply to tort claims and nothing in this article is intended nor shall be construed to change the time periods for filing tort claims or actions specified by Chapter 1 (commencing with Section 900) and Chapter 2 (commencing with Section 910) of Part 3 of Division 3. 6 of Title 1 of the Government Code. 20109 . 9 . The following procedures are established for all civil actions filed to resolve claims subject to this article: (a) Within 60 days, but no earlier than 30 days, following the filing or responsive pleadings, the court shall submit the matter to nonbinding mediation unless waive by mutual stipulation of both parties. -The mediation process s 11 provide for the selection within 15 days by both parties of disinterested third person as mediator, shall be commenced withi 30 days of the submittal, and shall be concluded within 15 days rom the commencement of the mediation unless a time requiremei is extended upon a good cause Page 17 c' 18 showing to the court or by stipulation of both parties. If the © parties fail to select a mediator within the 15-day period, any party may petition the court to appoint the mediator. (b) (1) -If the matter remains in dispute, the case shall be submitted to judicial arbitration pursuant to Chapter 2 . 5 (commencing with Section 1141. 10) of Title 3 of Part 3 of the Code of Civil Procedure, notwithstanding Section 1141. 11 of that code. The Civil Discovery Act (Title 4 (commencing with Section 2016. 010) of Part 4 of the Code of Civil Procedure) shall apply to any proceeding brought under this subdivision consistent with the rules pertaining to judicial arbitration. (2) Notwithstanding any other provision of law, upon stipulation of the parties, arbitrators appointed for purposes of this article shall be experienced in construction law, and, upon stipulation of the parties, mediators and arbitrators shall be paid necessary and reasonable hourly rates of pay not to exceed their customary rate, and such fees and expenses shall be paid equally by the parties, except in the case of arbitration where the arbitrator, for good cause, determines a different division. In no event shall these fees or expenses be paid by state or county funds. (3) In addition to Chapter 2. 5 (commencing with Section 1141 . 10) of Title 3 of Part 3 of the Code of Civil Procedure, any party who after receiving an arbitration award requests a trial de novo but does not obtain a more favorable judgment shall, in addition to G payment of costs and fees under that chapter, pay the attorney' s fees of the other party arising out of the trial de novo. (c) The court may, upon request by any party, order any witnesses to participate in the mediation or arbitration process. 20104 . 6. (a) No local agency shall fail to pay money as to any portion of a claim which is undisputed except as otherwise provided in the contract. (b) In any suit filed under Section 20104 . 4, the local agency shall pay interest at the legal rate on any arbitration award or judgment. The interest shall begin to accrue on the date the suit is filed in a court of law. Page 18 of 18 © EXHIBIT`B" ADDENDUM TO DEMOLITION CONTRACT (ASBESTOS/LEAD-BASED PAINT ABATEMENT AND DEMOLITION/SITE CLEARANCE PROJECT) This Addendum to Demolition Contract (this"Addendum") is by and between the Redevelopment Agency of the City of San Bernardino (the "Agency") and MGP Construction, a Sole Proprietorship (the "Contactor"), and is an addendum and modification of the standard provisions contained in the Demolition Contract dated as of ),I , 2010 (the "Demolition Contract') to which this Addendum is attached. This Addendum is dated as of ;L 2010. Section 1. Notwithstanding the standard terms and provisions as contained in the Demolition Contract, the following set forth specific conditions will apply to the Demolition Contract and will be deemed to amend, modify and supersede all other terms and provisions as contained in the Demolition Contract that may be contrary or inconsistent with the specific provisions set forth in this Addendum. Any inconsistencies between the content of this Addendum and the Demolition Contract shall be governed as set forth in this Addendum by the specific items addressed herein. Section 2. The following Sections in whole or certain provisions of the Demolition Contract as enumerated below shall not be a part of this Addendum and shall not be deemed to be a part of the final Demolition Contract: (a) Section 15 (b) Section 18 (c) Section 23, the phrase ", the Division of Labor Standards Enforcement or the Division of Apprenticeship Standards" (d) Section 37 t IN WITNESS WHEREOF, three (3) identical counterparts of this Addendum to the Demolition Contract, each of which shall for all purposes be deemed an original thereof, have been duly executed by the parties hereinabove named, on the day and year first herein written. AGENCY: Redevelopment Agency of the City of San Bernardino (First Party) By: (Authorized Representative) Interim Executive Director (Official Title) MGP Construction, a Sole Proprieto ship By:Xw.� Ct Title: © By: Title: 2