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16-1101_SEASONS SAN JUAN CAPISTRANO, AR L.P_B4_Agenda ReportSJCHA 11/1/2016 San Juan Capistrano Housing Authority Agenda Report TO : Honorable Chair and Members of the Authority FROM: ~n Siegel, Executive Director SUBMITIED BY : Joel Rojas, Development Services Di re ct o~ Ken Al-lmam, Director of Finance PREPARED BY : Laura Stokes, Housing Coordinator I Assistant Planner(j} DATE: November 1, 2016 84 SUBJECT: Consideration of a Loan Request from Seasons San Juan Capistrano AR, L. P., to Provide Rehabilitation and Energy Efficiency Improvements to 112 Senior Units Within the Seasons at San Juan Capistrano Apartments RECOMMENDATION : By motion, approve and authorize the Executive Director to execute a $1,000 ,000 loan agreement with Seasons San Juan Capistrano AR, LP, to fund rehabilitations and energy efficiency improvements to 112 senior units within the Seasons at San Juan Capistrano Apartments. EXECUTIVE SUMMARY : On April 27, 2016, the City of San Juan Capistrano received a request for funding from Highridge Costa Housing Partners LLC , in order to provide energy efficiency rehabilitations to 112 units within Seasons at San Juan Capistrano Apartments, located at 31641 Rancho Viejo Road. Staff reviewed the request and identified Housing Authority housing bond funds which are available to be used for rehabilitation of affordable housing units. Staff has worked with representatives from Seasons San Juan Capistrano AR, L.P. to prepare a loan document which identifies that the City will provide a $1,000,000 loan at 3% interest, to be repaid in annual installments equal to 50% of available cash flow from net operating income, after debt service and after repayment of the deferred developer fee note. The loan document is provided as Attachment 1. The loan will be dispersed once rehabilitation and energy efficient improvements are completed and confirmed by staff. The proposed rehabilitation and energy efficient improvements are listed in Attachment 5 of the loan document. Staff is recommending that the Housing Authority approve the $1 , 000,000 loan and authorize the Executive Director to Execute all necessary loan documents . Housing Authority Agenda Report November 1, 2016 Page 2 of 3 BACKGROUND : In 1995, the City's former Redevelopment Agency ("Agency") issued San Juan Capistrano Housing Investors, L.P. a development loan for $1,550,000 in conjunction with a 57 -year Owner Participation Agreement and Restrictive Covenpnts to provide housing affordable to lower income residents. As of April 27, 2016, approximately $90,000 remains outstanding from the original loan. San Juan Capistrano Housing Investors, L.P. is proposing to sell Seasons at San Juan . Capistrano Apartments to Seasons San Juan Capistrano AR, L.P., which includes Highridge Costa Housing Partners LLC as an Administrative General Partner. Seasons San Juan Capistrano AR, L.P. anticipates the outstanding balance of the Agency's loan to be approximately $7,400 in December 2016, when they expect the property transfer to be finalized. Seasons San Juan Capistrano AR, L.P. is pursuing multiple financial sources to purchase and rehabilitate the property. Seasons San Juan Capistrano AR, L.P. has provided a request for a $1,000,000 loan with 3% interest from the Housing Authority, to be repaid in annual installments equal to 50% of available cash flow from net operating income, after debt service and after repayment of the deferred developer fee note. Seasons San Juan Capistrano AR, L.P. has detailed that the Housing Authority's loan will help provide necessary rehabilitations and energy efficiency improvements to 112 senior units within the Seasons at San Juan Capistrano Apartments. The energy efficiency rehabilitations to 112 senior units are projected to have a total expense of approximately $2,870,000. The proposed energy efficiency upgrades that would be undertaken with funds received from the loan include: convert lighting to LED, install photovoltaic in common areas, install drought tolerant landscaping and irrigation, replace all windows, repair dry rot, replace existing boilers and pumps, replace existing refrigerators and stoves, and install new faucet aerators, showerheads, and toilets. These energy efficiency upgrades are designed to reduce the project's consumption of energy and reduce the water used on the property up to 10%. Many of the items proposed with the rehabilitation require permits and inspections. Staff will conduct final inspections of all work associated with the rehabilitation prior to releasing the loan funds. This way, the Authority will effectively reimburse Seasons San Juan Capistrano AR, L.P. for rehabilitation work up to $1,000,000. As the new property owner, Seasons San Juan Capistrano AR, L.P. would take responsibility of the existing affordability covenants over the 112 residential units through December 20, 2053. The loan agreement proposes to modify the term of the affordability covenants to 55 years from the date the new agreement, which would extend affordability by 18 years. FISCAL IMPACT: The Housing Authority currently has approximately $6 million in housing bond funds, which are required to be used on housing projects affordable to lower income residents. The proposed rehabilitations and energy efficiency improvements to 112 affordable senior units within the Seasons at San Juan Capistrano Apartments, with the required Housing Authority Agenda Report November 1, 2016 Page 3 of 3 extension of affordability covenants, meet the use requirements of the housing bond funds. There are currently no other plans or requests for the use of Housing Authority bond funds and therefore there are sufficient housing bond funds to meet the needs of this request. ENVIRONMENTAL IMPACT: The proposed loan together with the proposed energy efficiency rehabilitation of 112 existing affordable senior residential units, is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to a Class 1 exemption for existing facilities. These energy efficiency upgrades are designed to reduce the project's consumption of energy and do not change the density or intensity of use. State CEQA Guidelines, section 15301 provides that operation, repair, maintenance, or minor alteration of existing private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of use beyond that existing at the time of the City's exemption determination are categorically exempt from CEQA. None of the exceptions to the use of the Class 1 categorical exemption identified in State CEQA Guidelines section 15300.2 apply. The project will not result in a cumulative impact from successive projects of the same type in the same place, over time. There are no unusual circumstances surrounding the project that result in a reasonably possibility of a significant effect on the environment. The project will not damage scenic resources, including trees, historic buildings, rock outcroppings, or similar resources. The project does not include any hazardous waste sites, and the project will not cause a substantial adverse change in the significance of a historical resource. Thus, the Class 1 exemption applies, and no further environmental review is required. PRIOR HOUSING AUTHORITY REVIEW: On August 2, 2016, the Housing Authority authorized staff to negotiate with representatives from Seasons San Juan Capistrano AR, L.P. on the terms of the proposed $1,000,000 loan request. COMMISS ION/BOARD REV IEW AND RECOMMENDATIONS: Not Applicable. NOTIFICATION: Highridge Costa Housing Partners, LLC ATIACHMENTS: Attachment 1 -Affordable Housing Loan Agreement AFFORDABLE HOUSING LOAN AGREEMENT By and Between the SAN JUAN CAPISTRANO HOUSING AUTHORITY, and SEASONS SAN JUAN CAPISTRANO AR, L.P. a California limited partnership SEASONS AT SAN JUAN CAPISTRANO APARTMENTS PROJECT 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 ATTACHMENT 1 TABLE OF CONTENTS Page 100. DEFINITIONS .................................................................................................................... 2 101. Terms ............................................................................................................................ 2 200. LOAN AGREEMENT ........................................................................................................ 7 201. Loan .............................................................................................................................. 7 202. Repayment of Loan ....................................................................................................... 7 203. Use of Funds ................................................................ Enor! Bookmark not defined. 204. Conditions Precedent to Disbursement of Loan Funds ................................................. 7 205. Authority Not Liable ..................................................................................................... 9 300. REPRESENTATIONS AND WARRANTIES ................................................................... 9 301. Authority Representations ............................................................................................ 9 301.1 Authority ........................................................................................................... 9 301.2 No Conflict. ....................................................................................................... 9 301.3 No Bankruptcy .................................................................................................. 9 302. Borrower's Representations .......................................................................................... 9 302.1 302.2 302.3 302.4 302.5 302.6 302.7 302.8 302.9 302.10 302.11 302.12 302.13 302.14 Organization ...................................................................................................... 9 Authority to Borrow .......................................................................................... 9 Authority of Persons Executing Documents ..................................................... 9 No Conflict ...................................................................................................... 10 Compliance with Laws; Consent and Approvals ............................................ 10 Valid Binding Agreement ............................................................................... 10 Pending Proceedings ....................................................................................... 1 0 Financial Statements ....................................................................................... 10 No Material Adverse Event ............................................................................ 1 0 Accuracy ......................................................................................................... 1 0 Disclosure of Information ............................................................................... 11 No Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . .. . . . . . . .. . . . . . .. . .. .. . .. .. . .. . . .. . .. .. . . 11 Eligible Costs .................................................................................................. 11 FIRPTA ........................................................................................................... 11 400 . COVENANTS OF BORROWER. .................................................................................... 11 401. Borrower's Financing ................................................................................................. 11 402. Rehabilitation of Project ............................................................................................. 11 403. Permits, Licenses and Approvals ................................................................................ 12 404. Notices to Authority .................................................................................................... 12 405. Insurance ..................................................................................................................... 12 4852-2143-6984 .v4 6114 7.10045\29142630.8 4814-6623-9034. v2 405.1 Required Insurance ......................................................................................... 12 405.2 Nature of Insurance ......................................................................................... 12 405.3 Policy Requirements and Endorsements ......................................................... 13 406. Indemnity .................................................................................................................... 14 406.1 Borrower Indemnity Obligations .................................................................... 15 406.2 Independence oflnsurance Obligations .......................................................... 15 406.3 Survival oflndemnification and Defense Obligations .................................... 15 406.4 Indemnification Procedures ............................................................................ 15 407. Financial Statements and Reports ............................................................................... 16 408. Books and Records ..................................................................................................... 16 409. Compliance ................................................................................................................. 16 500 . CONSTRUCTION OF PROJECT .................................................................................... 17 501. [Intentionally Omitted] ............................................................................................... 17 502. Project Entitlements .................................................................................................... 17 503. Cost Breakdown .......................................................................................................... 17 504. Cost of Construction ................................................................................................... 17 505. [Intentionally Omitted] ................................................ Error! Bookmark not defined. 506. [Intentionally Omitted] ............................................................................................... 17 507. Permits and Approvals ................................................................................................ 17 508. Anti-Discrimination .................................................................................................... 17 509. Certificate of Completion ........................................................................................... 17 600. USE AND MAINTENANCE OF THE PROPERTY; NONDISCRIMINATION; RIGHTS OF SECURITY FINANCING HOLDERS ............................................................. 18 601. Restrictive Covenants ................................................................................................. 18 602. Maintenance ofthe Property ....................................................................................... 18 603. Obligation to Refrain from Discrimination ................................................................. 19 604. Form ofNondiscrimination and Nonsegregation Clause ............................................ 19 605. Rights of Access ......................................................................................................... 20 606. Effect and Duration of Covenants ............................................................................... 20 700. DEFAULTS AND REMEDIES ....................................................................................... 20 701. Default. ........................................................................................................................ 20 702. Remedies ..................................................................................................................... 20 702.1 Authority ......................................................................................................... 20 702.2 Borrower ......................................................................................................... 20 4852-2143-6984 .v4 61147.10045\29142630 .8 4814-6623-9034 .v2 11 703. Rights and Remedies Cumulative ............................................................................... 21 800. GENERAL PROVISIONS ............................................................................................... 21 801. Notices ........................................................................................................................ 21 802. Applicable Law ........................................................................................................... 21 803. Enforced Delay; Extension of Times for Performance ............................................... 22 804. Transfers oflnterest in Property or Agreement .......................................................... 22 804.1 Prohibition ....................................................................................................... 22 804.2 Permitted Transfers ......................................................................................... 22 804.3 Transfer by Authority ..................................................................................... 23 805. Relationship Between Authority and Borrower .......................................................... 23 806. Authority Approvals and Actions ............................................................................... 23 807. Counterparts ................................................................................................................ 23 808. Integration ................................................................................................................... 24 809. Attorneys' Fees ........................................................................................................... 24 810. Titles and Captions ..................................................................................................... 24 811. Interpretation ............................................................................................................... 24 812. No Waiver ................................................................................................................... 24 813. Modifications .............................................................................................................. 24 814. Severability ................................................................................................................. 24 815. Incorporation ofRecita1s ............................................................................................. 25 816. Incorporation of Attachments ..................................................................................... 25 817. Legal Advice ............................................................................................................... 25 818. Time of Essence .......................................................................................................... 25 819. Cooperation ................................................................................................................. 25 820. Conflicts of Interest ..................................................................................................... 25 821. Time for Acceptance of Agreement ............................................................................ 25 822. Agreement Binding ..................................................................................................... 25 823. Non-Liability of Officials and Employees of Authority ............................................. 25 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034.v2 lll Attachment No.1 Attachment No.2 Attachment No.3 Attachment No.4 Attachment No. 5 Attachment No. 6 Attachment No.7 Attachment No.8 4852-2143-6984.v4 6114 7.10045\29142630 .8 4814-6623-9034.v2 ATTACHMENTS Legal Description of Property Map of Property Scope of Development [Intentionally Omitted] Initial Cost Breakdown Form of Promissory Note Form of Deed ofTrust Form of Regulatory Agreement IV AFFORDABLE HOUSING LOAN AGREEMENT (SEASONS AT SAN JUAN CAPISTRANO APARTMENTS PROJECT) This Affordable Housing Loan Agreement (Seasons at San Juan Capistrano Apartments Project) ("Agreement") is entered into as of , 2016, by and among the SAN JUAN CAPISTRANO HOUSING AUTHORITY ("Authority") and SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership ("Borrower"). RECITALS The following recitals are incorporated as a substantive part of this Agreement. A. The City Council of the City of San Juan Capistrano ("City"), in 1983, adopted the Redevelopment Plan (as amended, the "Redevelopment Plan") for the San Juan Capistrano Central Redevelopment Project area (the "Project Area"). Until February 1, 2012, the San Juan Capistrano Community Redevelopment Agency ("Redevelopment Agency") was responsible for carrying out the Redevelopment Plan in the Project Area in accordance with the Community Redevelopment Law (Health and Safety Code, Section 33000 et seq.). B. As part of its responsibility in carrying out the Redevelopment Plan, the Redevelopment Agency was required to deposit twenty percent (20%) of all tax increment revenues received by the Redevelopment Agency in a separate Low and Moderate Income Housing Fund ("LMIHF"), to be used for the purpose of increasing, improving and preserving the community's supply oflow-and moderate-income housing. C. Pursuant to Assembly Bill IX 26, adopted in 2011, the decision of the California Supreme Court in California Redevelopment Association et a!. v. Ana Matosantos, et a!., Assembly Bill 1484, adopted in 2012, and other subsequently adopted legislation (all, collectively, the "Dissolution Act"), all redevelopment agencies throughout the State were deemed dissolved on February 1, 2012. D. Pursuant to the authority provided in Health and Safety Code Section 34176, the City Council adopted Resolution No. , on January 10, 2012, assigning the housing functions of the Redevelopment Agency to the Authority, and as such, all the housing assets and functions previously performed by the Redevelopment Agency and all housing related rights, powers, duties and obligations of the Redevelopment Agency were transferred to the Authority, as the "Housing Successor" to the Redevelopment Agency. Following dissolution of the Redevelopment Agency, any funds transferred to the Housing Successor, together with any funds generated from housing assets, are to be maintained in a separate Low and Moderate Income Housing Asset Fund ("LMIHAF") created by the Housing Successor. Pursuant to Health and Safety Code Section 34176.1, funds in the LMIHAF shall be used in accordance with the provisions of the Community Redevelopment Law relating to the LMIHF . E. In June 2008, prior to its dissolution, the Redevelopment Agency issued its 2008 Tax Allocation Bonds -Series B, which were specifically issued for affordable housing purposes, and pursuant to Health and Safety Code Section 34176(g)(2), said funds must be used and committed in a manner consistent with the purposes of the LMIHAF. 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034.v2 F. The Borrower and Authority desire to enter into this Agreement pursuant to which the Authority will loan to Borrower bond funds from the LMIHAF to assist Borrower in financing the acquisition and rehabilitation of certain property, as more particularly described herein. NOW, THEREFORE, Authority and Borrower hereby agree as follows: AGREEMENT 100. DEFINITIONS 101. Terms. The following terms, as used in this Agreement, shall have the meaning ascribed them in this Section: a. "Additional Borrower Financing" has the meaning set forth in Section 401. b. "Agreement" means this Affordable Housing Loan Agreement ("Seasons at San Juan Capistrano Apartments Project"). c. "Area Median Income" means the area median income for the Orange County Metropolitan Statistical Area as published by the U.S. Department of Housing and Urban Development (HUD) as the same may be adjusted for small and larger households. d. "Authority" means the San Juan Capistrano Housing Authority, a public agency created under the California Housing Authorities Law, Health and Safety Code Section 34200 et seq. (the "Housing Authorities Law"). As noted above, all housing assets and functions previously performed by the Redevelopment Agency and all housing related rights, powers, duties and obligations of the Redevelopment Agency were transferred to the Authority, as the "Housing Successor" to the Redevelopment Agency. e. "Borrower" means the Seasons San Juan Capistrano AR, L.P., a California limited partnership, whose managing general partner is LINC-Gardena Associates, LLC, a California limited liability company, whose administrative general partner is HCHP Affordable Multi-Family, LLC, a California limited liability company, and whose limited partner is Victoria Capital, LLC, a California limited liability company. f. "Certificate of Completion" means the certificate to be issued by the Authority upon satisfaction of the conditions described in Section 509. g. "Certificate of Costs Incurred" means a certification signed by the Borrower describing Eligible Costs incurred in connection with completion of the Project Improvements, along with such supporting documentation as the Authority may reasonably request. h. "City" means the City of San Juan Capistrano, a municipal corporation of the State of California. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 2 i. "Claim" means any claim, loss, cost, damage, expense, liability, Lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind. J. "Conditions Precedent to Disbursement" has the meaning set forth in Section 204.1. k. "Community Redevelopment Law" means the California Community Redevelopment Law ofthe State of California (Health and Safety Code Section 33000, et seq.). I. "Cost Breakdown" has the meaning set forth in Section 503. m. "Deed of Trust" means the 'Short Form Deed of Trust and Assignment of Rents," attached hereto as Attachment No. 7, to be executed by and between the Authority and Borrower, and recorded as a lien against the Project for the purpose of securing Borrower's obligations under the Loan. n. "Effective Date" means the date upon which this Agreement shall have been executed by the Authority. o. "Eligible Costs" means hard costs directly related to the rehabilitation of the Project. p. "Environmental Claim" means any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including reasonable attorney's fees and costs of environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever, directly or indirectly, relating to or arising from any actual or alleged violation of any Environmental Law or Hazardous Substance Discharge. q. "Environmental Document" means any exemption determination, any Negative Declaration (mitigated or otherwise) or any Environmental Impact Report (including any addendum or amendment to, or subsequent or supplemental Environmental Impact Report) required or permitted pursuant to the National Environmental Policy Act (codified as 42 U.S.C. §§ 4321 et seq.) or the California Environmental Quality Act (codified as Public Resources Code Sections 21000 et seq.), as applicable, to issue any discretionary Approval required to approve this Agreement. r. "Environmental Law" means any Federal or California law regarding any of the following at, in, under, above, or upon the Property: (a) air, environmental, ground water, or soil conditions; or (b) clean-up, remediation, control, disposal, generation, storage, release, discharge, transportation, use of, or liability or standards of conduct concerning, Hazardous Substances, as now or may, at any later time, be in effect. s. "Financing Deadline" has the meaning set forth in Section 401. 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034.v2 3 t. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the United States accounting profession, which are applicable to the circumstances as of the date of determination. u. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees, ofthe United States, the state, the county, City, or any other political subdivision in which the Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Authority, Borrower or the Project. v. "Hazardous Substance" means any flammable substances, explosives, radioactive materials, asbestos, asbestos-containing materials, polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, medical wastes, toxic substances or related materials, explosives, petroleum, petroleum products and any "hazardous" or "toxic" material, substance or waste that is defined by those or similar terms or is regulated as such under any Law, including any material, substance or waste that is: (a) defined as a "hazardous substance" under Section 311 of the Water Pollution Control Act (33 U.S.C. § 1317), as amended; (b) substances designated as "hazardous substances" pursuant to 33 U.S.C. § 1321; (c) defined as a "hazardous waste" under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., as amended; (d) defined as a "hazardous substance" or "hazardous waste" under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq., or any so-called 'superfund" or 'superlien" law; (e) defined as a "pollutant" or "contaminant" under 42 U.S.C. § 9601(33); (f) defined as "hazardous waste" under 40 C.F.R. Part 260; (g) defined as a "hazardous chemical" under 29 C.F .R. Part 191 0; (h) any matter within the definition of "hazardous substance" set forth in 15 U.S.C. § 1262; (i) any matter, waste or substance regulated under the Toxic Substances Control Act ("TSCA") [15 U.S.C. Sections 2601, et seq.]; G) any matter, waste or substance regulated under the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; (k) those substances listed in the United States Department of Transportation (DOT) Table [49 C.F.R. 172.101]; (1) any matter, waste or substances designated by the EPA, or any successor authority, as a hazardous substance [40 C.F.R. Part 302]; (m) any matter, waste or substances defined as "hazardous waste" in Section 25117 of the California Health and Safety Code; (n) any substance defined as a "hazardous substance" in Section 25316 of the California Health and Safety Code; (o) any matter, waste, or substance that is subject to any other Law regulating, relating to or imposing obligations, liability or standards of conduct concerning protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property free from the presence in the environment of any solid, liquid, gas, odor or any form of energy from whatever source; or (p) other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under Law or in the regulations adopted pursuant to said Law, including manure, asbestos, polychlorinated biphenyl, flammable explosives and radioactive material. Notwithstanding the foregoing, "Hazardous Substances" 4852-2143-6984.v4 6114 7 .I 0045\29142630 .8 4814-6623-9034.v2 4 shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Project including, without limitation, alcohol, aspirin, tobacco and saccharine. w . "Hazardous Substance Discharge" means any deposit, discharge, generation, release, or spill of a Hazardous Substance that occurs at on, under, into or from the Property, or during transportation of any Hazardous Substance to or from the Property, or that arises at any time from the construction, rehabilitation, use or operation of the Project or any activities conducted at, on, under or from the Property, whether or not caused by a Party. x. "Land Use Laws" has the meaning set forth in Section 502. y. "Liability Insurance" means commercial general liability insurance against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Property, the Project or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CGOOOl, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence. z. "LMIHAF" has the meaning set forth in Recital D. aa. "Loan" has the meaning set forth in Section 201. bb. "Loan Documents" means the documents, instruments and agreements evidencing and securing the Loan including, but not limited to, this Agreement, the Note, the Deed of Trust and the Regulatory Agreement. cc. "Note" means the "Promissory Note," attached hereto as Attachment No . .Q, to be executed by Borrower, for the purpose of evidencing Borrower's repayment obligations under the Loan. dd . "Official Records" means the Official Records of the County of Orange, State of California. ee. "Prevailing Wage Action" means any of the following: (a) any determination by the California Department of Industrial Relations that prevailing wage rates should have been paid, but were not; (b) any determination by the California Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal action or proceeding arising from any failure to comply with the Federal Davis-Bacon Act (codified as 40 U.S. C. § § 3141 et seq.) or California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, 4852-2143-6984.v4 6114 7.10045\29142630 .8 4814-6623-9034. v2 5 including maintaining certified payroll records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity. ff. "Project" means the 112-unit, affordable senior rental apartment complex currently located on the Property, to be acquired and rehabilitated by Borrower as set forth herein. The Project includes 1 and 2 bedroom units (each a "Unit" and collectively, the "Units"). Of the Units included in the Project, not less than twenty (20) of the Units shall be made available and rented to persons or families whose income does not exceed fifty percent (50%) of the Area Median Income (the "50% Units"), and not less than ninety (90) of the Units shall be made available and rented to persons or families whose income does not exceed sixty percent (60%) of the Area Median Income (the "60% Units"), for the full term of the Regulatory Agreement; two (2) Units shall be unrestricted employee exempt units. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those Units) for the 60% Units shall not exceed one-twelfth of 30% of 60% of the Area Median Income, adjusted by household size appropriate for the Unit. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those Units) for the 50% Units shall not exceed one-twelfth of 30% of 50% of the Area Median Income, adjusted by household size appropriate for the Unit. Notwithstanding the foregoing, rent levels will be established based on those published by the California Tax Credit Allocation Committee (TCAC) for Low Income Housing Tax Credit projects. The Project shall be rehabilitated as more specifically provided in the Scope of Development. gg. "Project Improvements" means the Project improvements, repairs, and replacements, including energy efficiency improvements, described on Attachment No.5 hereto. hh. "Property" means the real property located at, and commonly referred to as, 31641 Rancho Viejo Road, San Juan Capistrano, California (APN 666-241-10), including the affordable housing apartment complex and all related improvements currently located thereon, to be acquired by the Borrower and rehabilitated and operated pursuant to this Agreement. ii. "Property Insurance" means insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of Orange, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Project (excluding excavations and foundations) and in any event sufficient to avoid co-insurance and with no co-insurance penalty provision, with "ordinance or law" coverage. To the extent customary for like properties in the County of Orange at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an "increased cost of construction" endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits. jj. "Redevelopment Agency" means the former San Juan Capistrano Community Redevelopment Agency. 4852-2143-6984.v4 61 147.10045\29142630.8 4814-6623-9034.v2 6 kk. "Regulatory Agreement" means the "Affordable Housing Regulatory Agreement" attached hereto as Attachment No. 8, to be executed by Authority and Borrower, for the purpose of ensuring that the Project shall continue to be operated as an affordable multi- family residential development in accordance with the terms ofthis Agreement. ll. "Scope of Development" means the "Scope of Development" attached hereto as Attachment No. 4. mm. "Tax Credit Partnership" has the meaning set forth in Section 804.2. nn. "Third Person" means any Person that is not a Party, an affiliate of a Party, or an elected official, officer, director, manager, shareholder, member, principal, partner, employee or agent of a Party. 200. LOAN AGREEMENT 201. Loan. Authority hereby agrees make a loan (the "Loan") to Borrower in the amount of ONE MILLION DOLLARS ($1,000,000.00), or such lesser amount as may be evidenced in the Certification of Costs Incurred. The Loan shall be funded from the proceeds of housing bonds issued by the former Redevelopment Agency, which are required to be used by the Housing Successor for affordable housing purposes. The Loan shall be evidenced by, and repayable in accordance with, the Note and secured by the Deed of Trust. Authority and Borrower shall execute the Note, Deed of Trust and Regulatory Agreement as a condition precedent to disbursement of the Loan, or any portion thereof, and the Deed of Trust and Regulatory Agreement shall thereafter be immediately recorded in the Official Records. 202. Repayment of Loan. The Loan shall be repaid from Residual Receipts, as defined in and in accordance with the Note. The entire unpaid balance of the Loan shall be due and payable in full at the earlier of (i) sale of the Property or transfer of all or any interest in the Borrower, other than a transfer permitted under Section 804.2 hereof; (ii) a Default under this Agreement or any of the Loan Documents and the expiration of any applicable cure period; or (iii) forty ( 40) years after the date of execution of the Note (the "Maturity Date"). The Loan shall bear simple interest at the rate of three percent (3%) per annum, commencing upon the date of Disbursement of the Loan. 203. Reimbursement of Eligible Costs. Loan funds disbursed to Borrower shall be attributable to Eligible Costs incurred in connection with completion of the Project Improvements as evidenced by the Certification of Costs Incurred. 204. Conditions Precedent to Disbursement of Loan Funds. The Authority shall disburse the Loan funds (the "Disbursement") upon completion of the Project Improvements by the Borrower and concurrently with the issuance of a Certificate of Completion by the Authority. The Authority's obligation to make the Disbursement is conditioned upon the satisfaction or waiver by Authority of each and all of the conditions precedent described below ("Conditions Precedent to Disbursement"), which are solely for the benefit of the Authority, and which shall be fulfilled or waived by the time periods provided for herein. If the Conditions Precedent to 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 7 Disbursement are not satisfied or expressly waived by the Authority, then either party may terminate this Agreement by delivering written notice of such termination to the other party, and thereafter neither party shall have any further rights, liability or obligations under this Agreement. The Conditions Precedent to Disbursement include: a. Execution and delivery of the Regulatory Agreement, the Note and the Deed of Trust, and evidence that the Regulatory Agreement and Deed of Trust have been recorded against the Property. b. A title insurance company acceptable to the Authority has issued to the Authority a lender's policy of Title Insurance with any endorsements the Authority may reasonably require, insuring the Authority in the principal amount of the Loan, of the validity and priority of the Deed of Trust upon the Property, subject only to liens and matters of record approved by the Authority in writing, including, without limitation, that certain Shared Use Agreement and Grant of Reciprocal Non Exclusive Easements recorded on October 17, 2008 as Document No. 2008000479988, and showing fee simple title to the Property in the name of the Borrower. c. Borrower shall have provided the Authority with a copy of the resolution of the Borrower approving and authorizing execution of this Agreement and all documents contemplated hereby on behalf of Borrower and with such other documentation required by the Authority regarding Borrower's creation, status and authority to enter into this transaction. d. Borrower shall have provided Authority with a certificate showing it to be in good standing under the laws of the State of California. e. Borrower shall have obtained all City and other governmental permits required for the rehabilitation of the existing improvements on the Property, and have completed the Project Improvements. f. Borrower shall have satisfied all of the applicable terms and conditions set forth in this Agreement, including without limitation providing evidence that it possesses the insurance required by Section 405 ofthis Agreement. g. Borrower shall not be in default under this Agreement or any of the Loan Documents. h . Borrower shall have received a Certificate of Completion from the Authority. i. Borrower shall have submitted to the Authority a Certificate of Costs Incurred, evidencing Eligible Costs at least equal to the Loan funds to be disbursed. j. All of the representations and warranties made by the Borrower in this Agreement and in the Note, the Deed of Trust and the Regulatory Agreement shall be true and correct in all material respects as of the date of the Disbursement. 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034. v2 8 205. Authority Not Liable. In no event shall Authority be liable to Borrower or any other party, including but not limited to any lender, contractor or subcontractor, for any damage whatsoever which may result in whole or in part from any action or inaction of Authority hereunder, including without limitation, failure or delay in making any disbursement of Loan funds, except to the extent of Authority's gross negligence or willful misconduct. 300. REPRESENTATIONS AND WARRANTIES 301. Authority Representations. Authority represents and warrants to Borrower as follows: 301.1 Authority. This Agreement is entered into by the Authority in its capacity as the Housing Successor to the Redevelopment Agency under the Dissolution Act, to assist in the creation of affordable housing in the City for the benefit of low and moderate-income households. 301.2 No Conflict. To the best of Authority's knowledge, Authority's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Authority is a party or by which it is bound. 301.3 No Bankruptcy. Authority is not the subject of a bankruptcy proceeding. 302. Borrower's Representations. To induce Authority to make the Loan, Borrower hereby makes the following representations and warranties to Authority, and shall remake these representations and warranties on the date of disbursement of Loan proceeds. The Borrower shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section not to be true, immediately provide written notice of such fact or condition to Authority. 302.1 Organi zation. Borrower is a duly organized California limited partnership in good standing. Borrower was established by its partners, LINC-Gardena Associates, LLC, HCHP Affordable Multi-Family, LLC, and Victoria Capital, LLC, for the purpose of entering into this Agreement and acquiring and rehabilitating the Property. The copies of the documents evidencing the organization of Borrower which have been delivered to Authority are true and complete copies of the originals, as amended to the date of Borrower's execution of this Agreement. 302.2 Authority to Borrow. Borrower has full power and authority to execute and deliver this Agreement, to make and accept the borrowings contemplated hereunder, to execute and deliver all applicable Loan Documents and to perform and observe the terms and provisions of all of the above. 302.3 Authority of Persons Exe cuting Documents. The applicable Loan Documents have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all actions required under the Borrower's 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034.v2 9 organizational documents and applicable governing law for the authorization, execution, delivery and performance of the Loan Documents have been duly taken. 302.4 No Conflict. The execution, delivery and performance by Borrower of the Loan Documents to which it is a party will not, to the best of Borrower's knowledge, (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Borrower or the Property; or (ii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which any of its properties may be bound or, except as specifically contemplated herein, result in the creation of any lien on any asset of Borrower. 302.5 Compliance with Laws; Consent and Approvals. The rehabilitation and operation of the Project shall comply with all Governmental Requirements, including all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency as applicable. 302.6 Valid Binding Agr emerrt. The Loan Documents executed by Borrower constitute, or if not yet executed, will constitute when so executed, legal, valid and binding obligations of Borrower enforceable by and against it in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the rights of creditors generally and general principals of equity. 302.7 Pending Proceedings. Borrower is not in material default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially and adversely affect Borrower's ability to repay the Loan or rehabilitate and operate the Project. 302.8 Financial Statements. All financial statements and information delivered to Authority by or on behalf of Borrower, including information relating to the financial condition of Borrower and the Property, fairly and accurately represent the financial condition of the subject thereof and have been prepared in accordance with GAAP, consistently applied, or another sound accounting practice consistently applied as previously submitted by Borrower to the Authority and approved by the Authority. Borrower acknowledges and agrees that Authority may request and obtain additional information from third parties. 302.9 No Material Adverse Event. There has been no material adverse change in the value or physical condition of the Property or in the financial condition of Borrower since the dates of the latest financial statements of Borrower furnished to Authority, and except as otherwise disclosed to Authority in a specified writing, Borrower has not entered into any material transaction that is not disclosed in such financial statements. 302.10 Accuracy. All reports, documents, instruments, information and forms of evidence delivered to Authority concerning the Loan or security for the Loan or required by the 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 10 Loan Documents are accurate, correct and sufficiently complete to give Authority true and accurate knowledge of their subject matter and do not contain any material misrepresentation or OmiSSIOn. 302.11 Disclosure of Information. All material information concernmg the Property or the Project known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, has been disclosed to Authority. All material information concerning the Property or the Project known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, has been disclosed to Authority. There are no facts or information known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, that would make any of the information furnished to Authority by Borrower inaccurate, incomplete, or misleading in any material respect. 302.12 No Condemnation. No condemnation proceeding or moratorium is pending or threatened against the Property or any portion thereof that would impair the use, occupancy or full operation of the Project in any manner whatsoever. 302.13 E ligible Costs. The proceeds of the Loan shall be attributable to Eligible Costs as reflected in the Cost Breakdown. 302.14 FIRPTA. Borrower is not a "Foreign Person" within the meaning of FIRPT A, or is exempt from the provisions of FIRPT A, and Borrower has complied and will comply with all ofthe requirements under FIRPTA. 400. COVENANTS OF BORROWER 401. Borrower's F inancing. In connection with rehabilitation ofthe Project, the Borrower anticipates securing financing of approximately TWENTY FOUR MILLION SEVEN HUNDRED SEVENTY-FOUR THOUSAND FIVE HUNDRED TWENTY-FIVE DOLLARS ($24,774,525), which shall consist of loans funded with the proceeds of California Debt Limit Allocation Committee ("CDLAC") tax exempt bonds in the aggregate amount of $18,949,000 and seller financing in the approximate amount of $5,825,525 (the "Additional Borrower Financing"). In addition, Borrower intends to apply to TCAC requesting annual federal tax credits of approximately $[815,495]. The Authority agrees that the Deed of Trust shall be subject to and subordinate to the terms and conditions of one or more senior mortgage loans (including the loans from America First Multifamily Investors, L.P. to be funded by the proceeds of the tax exempt bonds) obtained by Borrower as part of the Additional Borrower Financing, pursuant to the terms of a subordination agreement executed by the Authority and such lender(s), the terms of which shall be subject to the approval of the Authority, which approval shall not be unreasonably withheld, and provided the total aggregate amount of financing secured by the Deed of Trust together with the outstanding indebtedness secured by such senior lender deeds of trust shall not exceed the total appraised value of the Property. 402. Rehabilitation of Project. In connection with rehabilitation of the Project, Borrower shall comply with all existing and future Governmental Requirements and other laws, regulations, orders, building codes, restrictions and requirements of, and all agreements with and 4852-2143-6984.v4 61 I 47.10045\29142630.8 4814-6623-9034. v2 11 commitments to, all governmental, judicial or legal authorities having jurisdiction over the Property, including those pertaining to the construction of the Project, and with all recorded covenants and restrictions affecting the Property. 403. Permits, Licenses and pprovals. Borrower shall properly obtain, comply with and keep in effect all permits, licenses and approvals which are required to be obtained in order to rehabilitate and operate the Project, if any. 404. Notices to Authority. Borrower shall promptly notify Authority in writing of: a. Any litigation affecting Borrower, where the amount claimed is Fifteen Thousand Dollars ($15,000.00) or more; b. Any communication, whether written or oral, that Borrower may receive from any governmental, judicial or legal authority, giving notice of any claim or assertion that any portion of the Property or the Project fail in any respect to comply with any Governmental Requirement; c. Any material adverse change in the physical condition of the Property (including any damage suffered as a result of earthquakes or floods), or in Borrower's business condition (financial or otherwise), property or Borrower's ability to repay the Loan; d. Any lien or encumbrance filed or recorded against or affecting the Property or the Project of $25,000 or more; or e. The institution of any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision in such litigation or proceeding, which may cause a material adverse effect to Borrower, the Property or the completion of the construction. 405. Insurance. 405.1 Required Insmance. Upon completion of rehabilitation of the Project, Borrower shall maintain Liability Insurance and Property Insurance (or their then reasonably available equivalent). 405.2 Nature of Insurance. The Liability Insurance and Property Insurance policies required by this Agreement shall be issued by carriers that: (a) are listed in the then current "Best's Key Rating Guide-Property/Casualty-United States & Canada" publication (or its equivalent, if such publication ceases to be published) with a minimum financial strength rating of "A-" and a minimum financial size category of "XI" (exception may be made for the California Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in California. A Party may provide any insurance under a "blanket" or "umbrella" insurance policy, provided that: (i) such policy or a certificate of such policy shall specify the amount(s) of the total insurance allocated to the Property and the Project, which amount(s) shall equal or exceed the amount(s) required by this Agreement; and (ii) such policy otherwise complies with this Agreement. 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 12 405.3 Policy Requirements and Endor ements. All insurance policies required by this Agreement shall contain (by endorsement or otherwise) the following provisions: a. Insured. Liability Insurance policy shall name Authority, City or their successor in interest, as applicable, as "additional insured." Property Insurance policy shall name Authority and City as a "loss payee." The coverage afforded to Authority and City shall be at least as broad as that afforded to Borrower regarding the Property and the Project and may not contain any terms, conditions, exclusions, or limitations applicable to Authority and City that do not apply to Borrower. b. Primary Coverage. Any insurance or self-insurance maintained by Authority or City or its successor in interest shall be in excess of all insurance required under this Agreement and shall not contribute to any insurance required under this Agreement. c. Contractual Liability. Liability Insurance policies shall contain contractual liability coverage, for Borrower's indemnity obligations under this Agreement. Borrower's obtaining or failure to obtain such contractual liability coverage shall not relieve Borrower from nor satisfy any indemnity obligation of Borrower under this Agreement. d. Deliveries to Authority. Borrower shall deliver to Authority evidence of all insurance policies required by this Agreement as set forth in Section 405.1. No later than three (3) days before any insurance required by this Agreement expires, is cancelled or its liability limits are reduced or exhausted, Borrower shall deliver to Authority evidence of Borrower's maintenance of all insurance this Agreement requires. Each insurance policy required by this Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days' advance written notice of such action has been given to Authority by certified mail, return receipt requested; provided, however, that thirty (30) days advance written notice shall be required for any such action arising from non-payment of the premium for the insurance. Phrases such as "endeavor to" and "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall not be included in the cancellation wording of any certificates or policies of insurance applicable to Authority pursuant to this Agreement. e. Waiver of Certain Claims. Borrower shall cause each insurance carrier providing any Liability Insurance or Property Insurance coverage under this Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to Authority, if not already in the policy. To the extent that Borrower obtains insurance with a Waiver of Subrogation, the Parties release each other, and their respective authorized representatives, from any Claims for damage to any Person or property to the extent such Claims are paid by such insurance policies obtained pursuant to and in satisfaction of the provisions of this Agreement. f. No Claims Made Coverage. None of the insurance coverage required under this Agreement may be written on a claims-made basis. 4852-2143-6984. v4 61147.10045\29142630.8 4814-6623-9034.v2 13 g. Fully Paid and Non-Assessable. All insurance obtained and maintained by Borrower pursuant to this Section 405 shall be fully paid for and non-assessable. However, such insurance policies may be subject to insurer audits. h. Authority Option to Obtain Coverage. During the continuance of a Default arising from the failure of Borrower to carry any insurance required by this Agreement, Authority may, at its sole option, purchase any such required insurance coverage and Authority shall be entitled to immediate payment from the Borrower of any premiums and associated reasonable costs paid by Authority for such insurance coverage. Any amount becoming due and payable to Authority under this Section 405 that is not paid within fifteen (15) calendar days after written demand from Authority for payment of such amount, within an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of ten percent (10%) per annum or the maximum interest rate allowed by applicable law, whichever is less. Any election by Authority to purchase or not to purchase insurance otherwise required by the terms of this Agreement to be carried by the Borrower shall not relieve the Borrower of its obligation to obtain and maintain any insurance coverage required by this Agreement. i. Separation of Insured. All Liability Insurance shall provide for separation of insured for Borrower and the Authority. Insurance policies obtained in satisfaction of or in accordance with the requirements of this Agreement may provide a cross-suits exclusion for suits between named insured persons, but shall not exclude suits between named insured persons and additional insured persons. j. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions under insurance policies required by this Agreement shall be declared to and approved by Authority. Borrower shall pay all such deductibles or self-insured retentions regarding Authority or, alternatively, the insurer under each such insurance policy shall eliminate such deductibles or self-insured retentions with respect to Authority. k. No Separate Insurance. Borrower shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Agreement, unless Authority and City are made an additional insured thereon as required by this Agreement. · l. Insurance Independent of Indemnification. The insurance requirements of this Agreement are independent of the Parties' indemnification and other obligations under this Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Parties' indemnification or other obligations or to limit the Parties' liability under this Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall the provision of such insurance preclude Authority from taking such other actions as are available to it under any other provision of this Agreement or otherwise at law or in equity. 406. Indemnity. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034. v2 14 406.1 Borrower Indemnity Obligations. Borrower shall indemnify Authority and City against any Claim to the extent such Claim arises from any wrongful intentional act or gross negligence of Borrower. Borrower shall also indemnify Authority and City for Claims to the extent arising from any of the following: (a) any application made by or at Borrower's request; (b) any agreements that Borrower (or anyone claiming by or through Borrower) makes with a Third Person regarding the Property or the Project; (c) any workers compensation claim or determination relating to any employee of Borrower or their contractors; (d) any Prevailing Wage Action relating to this Agreement or the Project; and (e) any Environmental Claim attributable to any action or failure to act by Borrower. Borrower assumes the risk of delays and damages that may result to Borrower from any Third Person legal actions related to Authority's approval of this Agreement or any associated approvals, even in the event that an error, omission or abuse of discretion by Authority is determined to have occurred. If a Third Person files a legal action regarding Authority's approve this Agreement or any associated approval (exclusive of legal actions alleging violation of Government Code Section 1090 by officials of Authority or City), Borrower shall indemnify Authority and City against such Third Person legal action, including all legal costs, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Authority shall reasonably cooperate in its defense in any legal action subject to this Section 406 subject to Borrower's indemnity obligations for such legal action. Nothing contained in this Section 406 is intended to be nor shall be deemed or construed to be an express or implied admission that Authority may be liable to Borrower or any other party for damages or other relief regarding any alleged or established failure of Authority to comply with any law. Any legal action that is subject to this Section 406 (including any appeal periods and the pendency of any appeals) shall constitute an Enforced Delay and the time periods for performance by any Party under this Agreement may be extended pursuant to the provisions of this Agreement in Section 803. 406.2 Jndependence of Insurance Obligation . The indemnification obligations made by Borrower under this Agreement shall not be construed or interpreted as in any way restricting, limiting, or modifying Borrower insurance or other obligations under this Agreement. Borrower's obligation to indemnify Authority and City under this Agreement is independent of Borrower's insurance and other obligations under this Agreement. Borrower's compliance with its insurance obligations and other obligations under this Agreement shall not iri any way restrict, limit, or modify Borrower's indemnification obligations under this Agreement and are independent of Borrower's indemnification and other obligations under this Agreement. 406.3 Survival of Indemnification and Defense Obligation . The indemnity and defense obligations of the Parties under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations. 406.4 Indemnification Procedures. Wherever this Agreement requires any Party to indemnify the other Party: 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 15 a. Prompt Notice. The indemnifying Party shall promptly notify the other Party of any claim. b. Selection of Counsel. The indemnifying Party shall select counsel reasonably acceptable to the other Party. Counsel to indemnifying Party's insurance carrier that is providing coverage for a claim shall be deemed reasonably satisfactory, except in the event of a potential or actual conflict of interest for such counsel regarding such representation or such counsel proves to be incompetent regarding such representation. Even though the indemnifying Party shall defend the claim, the other Party may, at its option and its own expense, engage separate counsel to advise it regarding the claim and its defense. The other Party's separate counsel may attend all proceedings and meetings. The indemnifying Party's counsel shall actively consult with the other Party's separate counsel. The indemnifying Party's counsel shall, however, control the defense, except to the extent that the other Party waives its rights to indemnity and defense of such Claim. c. Cooperation. The other Party shall reasonably cooperate with the indemnifying Party's defense of the other Party. d. Settlement. The indemnifying Party may only settle a claim without the consent of other Party, if the claim is within the policy limits of applicable insurance policies provided in satisfaction of the requirements of this Agreement and such settlement procures a release of other Party from the subject claims, does not require other Party to make any payment to the claimant and neither the indemnified Party nor indemnifying Party on behalf of the indemnified Party admits any liability. e. Insurance Proceeds. The indemnifying Party's obligations shall be reduced by any net insurance proceeds actually received by the other Party for the matter giving rise to the indemnification obligation. 407. Financial Statements and Reports. Borrower shall furnish to Authority, within ten (10) days after demand, the financial statements of Borrower, which may be internally prepared, on a consolidating and consolidated basis and in conformity with GAAP, consisting of at least statements of income, cash flow, changes in financial position and stockholders' equity, and a consolidated balance sheet, setting forth in each case in comparative form corresponding figures from the previous financial statements delivered to Authority pursuant to this Section. 408. Books and Records. Borrower shall keep adequate and proper records and books of account in connection with the Project, including rehabilitation of the Project, in which full and correct entries will be made of its dealings, business and affairs. All records and books of accounts and other materials deemed to be relevant to the Project shall be accessible upon forty- eight ( 48) hours advance notice during business hours to the authorized representatives of Authority for the purpose of examination or audit. 409. Compliance. Borrower shall comply and shall cause the Property and Project to comply at all times in all material respects with all Governmental Requirements to which they may be subject. 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034.v2 16 500. CONSTRUCTION OF PROJECT 501. [Intentionally Omitted] 502. Project E ntitlements. Borrower acknowledges and agrees that the rehabilitation of the Project shall be subject to the City's zoning, building and land use regulations (whether contained in ordinances, the municipal code of the City, conditions of approval or elsewhere) (collectively, "Land Use Laws"). No action by Authority with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any Land Use Laws required for the rehabilitation of the Project as applicable to Borrower, any successor in interest of Borrower, or any successor in interest to the ownership, use or occupancy of the Property. Land Use Laws may only be changed or waived by modification or variance approved by the City. 503. Cost Breakdown. An itemization of the anticipated costs of funding to complete the rehabilitation of the Project (as revised from time to time, the "Cost Breakdown") is attached hereto as Attachment No.5. Upon completion of rehabilitation ofthe Project, Borrower shall submit, along with the Certificate of Costs Incurred, a revised Cost Breakdown reflecting the costs incurred in connection with completion of the Project Improvements 504. Cost of Construction. All cost and expense in performing the rehabilitation of the Project, and for all materials and equipment related thereto, shall be borne solely by Borrower. 505. [Intentionally Omitted]. 506. [Intentionally Omitted]. 507. Permits and Approvals. Before commencement of the Project Improvements, Borrower shall secure or cause to be secured any and all permits and approvals which may be required pursuant to any Governmental Requirements for such rehabilitation work. Authority staff will work cooperatively with Borrower to assist in coordinating the expeditious processing and consideration of all necessary permits, entitlements and approvals that may be required from City. 508. Anti-Discrimi nation. Borrower, for itself and its successors and assigns, agrees that, in performing the rehabilitation of the Project, it shall not discriminate against any employee or applicant for employment on account of any basis listed in subdivision (a) or (d) of Section 12955 ofthe Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code. 509. Certificate of Completion. Authority's obligation to issue a Certificate of Completion shall be subject to the satisfaction of the following conditions precedent in addition to the other requirements set forth in this Section 509: a. If applicable, Borrower shall have secured and delivered to Authority final inspection sign-offs as required by any government authorities certifying that the rehabilitation 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 17 of the Project and its intended uses are m compliance with all applicable Governmental Requirements; and b. Borrower shall deliver to Authority evidence that (i) all cost and expense related to the rehabilitation of the Project shall have been paid in full; and (ii) the period for filing mechanic's liens has expired or conditional final lien waivers and releases in form and substance satisfactory to Authority have been obtained by Borrower from all applicable contractors, subcontractors, mechanics and materialmen. Promptly after the completion of the rehabilitation of the Project, Borrower's delivery of the items set forth in (a) and (b) above to Authority's satisfaction, and upon the written request by Borrower, Authority shall inspect the Project and furnish Borrower with a Certificate of Completion, which shall evidence and determine the satisfactory completion of the rehabilitation of the Project. The Certificate of Completion shall not be withheld or delayed by Authority unless Borrower shall have failed to satisfactorily complete the construction in substantial compliance with the terms and provisions hereof. A Certificate of Completion shall not be deemed or construed to constitute evidence of compliance with or satisfaction of any obligation of Borrower to any holder of a mortgage or any insurer of a mortgage securing money loaned to finance improvements on the Property, or any portion thereof. Such Certificate of Completion is not a notice of completion as referred to in Section 3093 of the California Civil Code. 600. USE AND MAINTENANCE OF THE PROPERTY; NONDISCRIMINATION; RIGHTS OF SECURITY FINANCING HOLDERS 60 1. Restrictive Covenants. Borrower covenants and agrees for itself, its successors, assigns, and every successor in interest to devote the Property to the continued operation of an affordable housing project in accordance with the terms of the Regulatory Agreement and this Agreement for the period of time specified therein. The foregoing covenant shall run with the land. 602. Maintenance of the Property. For the period of time set forth in Section 606, Borrower shall keep the Property in good condition, order and repair and shall not commit waste or permit impairment, demolition or deterioration of the Property; shall comply with all applicable state and federal regulations addressing the physical condition of the Property and buildings located on the Property and all applicable standards of the City including but not limited to building standards, planning regulations, and utilities code; shall complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed and to pay when due all claims for labor performed and materials furnished; shall maintain the buildings in a habitable condition; and do all other acts which from the character or use of the Property may be reasonably necessary. The Authority shall have the right to inspect the Property during normal business hours, provided Borrower and the occupant are given at least seventy-two (72) hours written notice prior to any such inspection. 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 18 603. Obligation to Refrain from Discrimination. The Borrower covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property, or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 ofthe Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Borrower itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 604. Form ofNondiscrimination and Nonsegregation Clause. The Borrower shall refrain from restricting the rental, sale or lease of the Property on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses. In deeds. "The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sub lessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." In leases. "The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." In contracts. "There shall be no discrimination against or segregation of any person or group ofpersons on account of any basis listed in subdivision (a) or (d) of Section 12955 ofthe Government Code, as those basis are defined in Sections 12926, 12936.1, subdivision (m) and 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034 .v2 19 paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 605. Rights of Access. For the purposes of assuring compliance with this Agreement, upon forty-eight ( 48) hours prior notice representatives of the Authority shall have the reasonable right of access to the Property during business hours or other agreed upon time without charges or fees for the purpose of inspection of the Property as to maintenance of the improvements thereon. Such representatives of the Authority shall be those who are so identified in writing by the Authority. 606. Effect and Duration of Covenants. The covenants contained in Sections 601 and 602 of this Agreement shall remain in effect for fifty-five (55) years commencing with the date the Regulatory Agreement is recorded on the Property. The covenants against discrimination contained in Sections 603 and 604 of this Agreement shall remain in effect in perpetuity. The coveants established in this Agreement shall, without regard to technical classification and designation, be binding on the part of the Borrower and any successors and assigns to the Property or any part thereof, and the tenants, lessees, sublessees and occupants of the Property, for the benefit of and in favor of the Authority and any successor in interest thereto. 700. DEFAULTS AND REMEDIES 701. Default. A party to this Agreement shall be in default if it fails to perform or satisfy any obligation or requirement set forth (i) herein after thirty (30) days for obligations or requirements that can be satisfied by the payment of money, or after forty-five (45) days (or such longer period as may be reasonably required so long as such party has commenced such cure within such forty-five (45) day period and diligently pursues such cure to completion) for any other obligations or requirements, of receiving written notice from the non-defaulting party of such default; or (ii) under any applicable Loan Document after any applicable cure period. Borrower's limited partner shall have the right, but not the obligation, to cure any default hereunder or under any Loan Document, and any such cure shall be accepted by Lender as if rendered by Borrower. 702. Remedies. 702.1 Authority. Upon default by Borrower, Authority shall not be obligated to disburse any Loan proceeds pursuant to this Agreement and Borrower shall immediately remit to Authority all cost and expense, interest and principal due Authority under the Note. 702.2 Borrower. Upon default by Authority, Borrower's sole remedy for such breach shall be to institute an action at law or equity to seek specific performance of the terms of this Agreement. Borrower shall not be entitled to recover damages for any default by Authority hereunder. Such legal actions must be instituted in the Superior Court of the County of Orange, 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 20 State of California, or in the United States District Court for the District of California in which Orange County is located. 703. Ri ghts ru1d R emedi es umul ativ e. The rights and remedies of Authority hereunder are cumulative, and the exercise by Authority 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 caused by the Borrower. 800. GENERAL PROVISIONS 801. Notices. Any notice required or authorized under this Agreement, or service of process, shall be effective if, and only if, in writing and if, and only if, personally served or mailed, postage prepaid, by registered or certified mail, to the party in question at the address shown below: Borrower: Seasons San Juan Capistrano AR, L.P. 330 West Victoria Street Gardena, CA 90248 Attn: Michael Costa With a copy to Borrower's limited partner at the following address , or at such other address as Borrower may provide to Lender: Authority: Victoria Capital, LLC 330 West Victoria Street Gardena, CA 90248 Attn: Michael Costa San Juan Capistrano Housing Authority 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: With a copy to: Best Best & Krieger LLP Attn: Elizabeth Hull 181 01 Von Karman A venue, Suite 1000 Irvine , CA 92612 An address set forth in this Section may be changed by the respective party providing the other party with written notice indicating the new address for purposes of this Section. 802. Appl icabl e Law. The laws ofthe State of California shall govern the interpretation and enforcement of this Agreement. 4852-2143-6984 .v4 6114 7.10045\29142630.8 4814-6623-9034 .v2 21 803. Enforced Delay: Extension of Times for Performance. In addition to specific provisions of this Agreement, performance by a party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; inability to secure necessary labor, materials or tools; acts or omissions of the other party; acts or failures to act of Authority or any other public or governmental agency or entity (other than the acts or failures to act of Authority which shall not excuse performance by Authority); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Authority and Borrower. Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the construction of the Project on the Property shall not constitute grounds of enforced delay pursuant to this Section. 804. Transfers oflnterest in Property or Agreement. 804.1 Prohibition. The qualifications and identity of Borrower are of particular concern to Authority. It is because of those unique qualifications and identity that Authority has entered into this Agreement with Borrower. Borrower shall not transfer, assign, sell or grant any interest in this Agreement or any portion of the Property except as expressly set forth herein. 804.2 Permitted Transfers. Authority approval of a transfer of this Agreement or an interest in the Property, or any part thereof, shall not be required in connection with any of the following transfers: a. Any requested assignment for purposes of financing the acquisition and rehabilitation ofthe improvements upon the Property; b. Any mortgage, deed of trust, or other form of conveyance for all or any portion of the Additional Borrower Financing approved by the Authority, as provided in Section 401, but Borrower shall notify Authority in advance of any such mortgage, deed of trust or other form of conveyance for financing pertaining to the Property; c. Any mortgage, deed of trust or other form of conveyance for restructuring or refinancing of any amount of indebtedness described in subsection (b) above, provided any such restructuring or refinancing does not result in any release of funds to Borrower, typically referred to as a "cash-out" loan; d. Admission of a tax credit investor that IS obligated to make capital contributions as the limited partner; 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 22 e. (A) Sale, transfer, conveyance or pledge of limited partnership interests in Borrower to another party, or (B) the appointment by the partners of Borrower of an additional or substitute general partner in accordance with the partnership agreement of Borrower; provided Borrower delivers prior written notice thereof to the Authority, and such additional or substitute general partner shall be subject to the approval of the Authority, which approval shall not be unreasonably withheld, conditioned, or delayed, provided that such approval shall not be required if (i) the substitute administrative general partner is an affiliate of the limited partner or administrative general partner of Borrower or (ii) the substitute managing general partner is an entity holding an organizational clearance certificate issued by the California Board of Equalization; f. [Intentionally Omitted]; g. [Intentionally Omitted]; h. The lease of residential units at the Project to qualified tenants; or i. Transfer of the Project or partnership interests in Borrower to a general partner of Borrower at the end of the fifteen year tax credit initial compliance period. In the event of a transfer by Borrower under subparagraphs (a) through (i), inclusive except for subparagraph (h), above, not requiring Authority's prior approval, Borrower nevertheless agrees that at least ten (10) days prior to such assignment it shall give written notice to Authority of such transfer and satisfactory evidence that the transferee has assumed the obligations of this Agreement, if applicable. 804.3 Transfer by Author ity. Authority may assign, sell, transfer or grant any of its rights or obligations under this Agreement to any third party. 805. Relationship Between Authority and Borrower. It is hereby acknowledged that the relationship between Authority and Borrower is not that of a partnership or joint venture and that Authority and Borrower shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein, Authority shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Property. Borrower agrees to indemnify, hold harmless and defend Authority from any claim made against Authority arising from a claimed relationship of partnership or joint venture between Authority and Borrower with respect to the development, operation, maintenance or management of the Property. 806. Authority Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by the Authority, the Executive Director of the Authority or his or her designee is authorized to act on behalf of Authority unless specifically provided otherwise or the context should require otherwise. 807. Counterparts. This Agreement may be executed in any number of counterparts and by different signatories hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the 23 4852-2143-6984.v4 6114 7.10045\29142630 .8 4814-6623-9034.v2 same instrument, for the same effect as if all signatories hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages. 808. Integration. This Agreement and the Loan Documents contain the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous agreements, understandings, representations and statements , oral or written, are merged into the Loan Documents and shall be of no further force or effect. Each party is entering into the Loan Documents upon the representations set forth in the Loan Documents and upon each party's own independent investigation of any and all facts such party deems material. 809. Attorneys Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of the Loan Documents, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. 810. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 811. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 812. No Waiver. Authority may at any time and from time to time waive any one or more of the terms or conditions contained in this Agreement, but any such waiver shall be deemed to be made pursuant to this Agreement and not in modification thereof, and any such waiver in any instance or under any particular circumstances shall not be construed a waiver of such term or condition or of any subsequent default. In order to be effective, all such waivers must be in writing. The failure of Authority to promptly exercise its rights or remedies shall not be deemed to be a waiver or grounds for the claim of estoppel. 813. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 814. everability. If any term, provision, condition or covenant ofthis Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, 4852-2143-6984.v4 61147 .10045\29142630 .8 4814-6623-9034.v2 24 condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 815. Incorporation of Recitals. The recitals set forth above, and all defined terms set forth in such recitals and in the introductory paragraph preceding the recitals, are hereby incorporated into this Agreement as if set forth in full. 816. Incorporation of Attachments. All attachments referenced in this Agreement are hereby incorporated into this Agreement by this reference. 817. Legal Advice. Each party represents and warrants to the other the following: they have carefully read the Loan Documents, and in signing the Loan Documents, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in the Loan Documents, or have knowingly chosen not to consult legal counsel as to the matters set forth in the Loan Documents; and, they have freely signed the Loan Documents without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in the Loan Documents, and without duress or coercion, whether economic or otherwise. 818. Time of Essence. Time is expressly made of the essence with respect to the performance by Authority and Borrower of each and every obligation and condition of the Loan Documents. 819. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, shall execute any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 820. Conflicts oflnterest. No member, official or employee of Authority or City shall have any personal interest, direct or indirect, in the Loan Documents, nor shall any such member, official or employee participate in any decision relating to the Loan Documents which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 821. Time for Acceptance of Agreement. This Agreement, when executed by Borrower and delivered to Authority, must be authorized, executed and delivered by Authority on or before forty-five ( 45) days after signing and delivery of this Agreement by Borrower or this Agreement shall be void, except to the extent that Borrower shall consent in writing to a further extension oftime for the authorization, execution and delivery of this Agreement. 822. Agreement Binding. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. 823. Non-Liability of Officials and Employees of Authority. No member, official or employee of Authority or City shall be personally liable to Borrower, or any successor in 25 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034.v2 interest, in the event of any default or breach by the Authority or City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower hereby waives and releases any claim it may have against the members, officials or employees of the Authority or City with respect to any default or breach by the Authority or City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower makes such release with full knowledge of Civil Code Section 1542 and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 [Signatures to appear on the following page.] 26 IN WITNESS WHEREOF, Authority and Borrower have executed this Agreement on the respective dates set forth below. Date: ATTEST: APPROVED AS TO FORM: Date: 4852-2143-6984.v4 61147 .10045\2914263 0 .8 4814-6623-9034. v2 AUTHORITY: SAN JUAN CAPISTRANO HOUSING AUTHORITY By: Title: BORROWER: SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership 27 By: LINC-Gardena Associates, LLC, a California limited liability company, its managing general partner By: LINC Housing Corporation, a California nonprofit public benefit corporation, its sole member and manager By: Name : Title: By: HCHP Affordable Multi-Family, LLC, a California limited liability company, its administrative general partner By: Thomas Erickson Senior Vice President 4852-2143-6984.v4 6114 7 .I 0045\29142630 .8 4814-6623-9034.v2 28 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034. v2 ATTACHMENT NO.1 LEGAL DESCRIPTION [To Be Inserted.] Attachment 1 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034. v2 ATTACHMENT NO.2 PROPERTY MAP [To Be Inserted.] Attachment 2 ATTACHMENT NO.3 SCOPE OF DEVELOPMENT The rehabilitation of the Property shall substantially conform with the following prOVlSlOnS. A. General. The Property shall be rehabilitated and improved in accordance with the provisions of this Agreement and the plans, drawings and related documents approved by the Authority and the City, if any. B. The Project. Borrower will acquire the Property, and rehabilitate the existing improvements located on the Property consisting of 112 multi-family apartment units, and related improvements and amenities. The rehabilitation work to be performed on the Property will improve the energy efficiency of each residential building by approximately 10%, and endeavor to reduce the Project's overall water consumption as is mandated by California water supply agencies. The actual scope of the rehabilitation work to be performed will be determined following a physical needs assessment of each individual apartment unit and all other aspects of the entire Project site, termite report and energy audit to be completed by the Borrower. C. Affordable Housing. Of the 112 housing units in the Project, a minimum of twenty (20) units will be affordable to persons or families of very-low income (up to 50% HCD AMI), a minimum of ninety (90) units will be affordable to persons or families of low income (up to 60% HCD AMI), and two (2) of the housing units will be employee exempt units. For purposes hereof, "HCD AMI" shall mean the area median income for the Orange County Area, adjusted for family size appropriate to the unit, as established on an annual basis by the California State Department of Housing and Community Development. Rents levels will be established based on those required by the California Tax Credit Allocation Committee (TCAC) for Low Income Housing Tax Credit projects. D. Applicable Codes. The Project shall be rehabilitated in accordance with the Uniform Building Code (with City modifications) and applicable City standards and ordinances. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034. v2 Attachment 3 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 ATTACHMENT NO.4 [INTENTIONALLY OMJTTEDJ Attachment 4 ATTACHMENT NO.5 INITIAL COST BREAKDOWN !Seasons Senior (SJCI 111 Units vith R~reatlon Center ........ ~ a.-... ''"' 4 .. 92 10 4 20 2 1 112 12 5 E Ef!!d n.e.rn ~!!!X m,e r av:eft\~t.: I a.,; ~r: t. ~ (7 o..o!<kr,;: 1 237.000 l Pc;t~ P~:.cr: "'itt-> E~·;y Sw lola n-tv: 111 8!,150 3S"-~179"" 1~14 4ltec:>l~~ ~~Wni<IM: _12.100 5 PV SF ~"' L"'O,OCIO 6lt..~a)X • ....: '"'n~ Rec!.c:.o~ L50.000 i lllc.:lbc E...c:...: R>~: (1Uj 97.000 £ VI~ RcJ>L,-cc......,t f>ducir:; Sl""~ Door: 1.610.792 9 l ~Tai'-,.;u, '-·'lo..Te><:et HGPM (W I S6,000 IC ~~~;«[_..,.,..e.. C.fl; l.~t Firt<JTe! ... itHID F "'""'! 57000 1 MI>Oii~/CD"'""""d1>0r 12 'S25Al00 SOD.OOO 2 Ert<orior hi~r; ZAIO,IfiJD 3 Repa;, ~ ,,,..., ,~, ,~oo..,,_ 200 U' 14.100 .: S.rl<l Shny )<><l St-i~ Pllrl<l"C lot ~000 S lr:otall AI"'""""" c...,_...: {112.1 SZ4.8110 6~~/T~T~~/f ~~cP~mT~ 40,000 7 Re-o :; ...... a-e;.: ~w;,lk. deci:= af"'ld 0\lti'b y ~! e:a~t~ dreclli....: ;rtC ~~ 9).000 S P~~ -.'OC.Id t~:!f~ oove:r ~~ ;~/~xe ....,,.~"~ \;r) '!T'.atc:ri«f t:..SOO 9 Up;ndt u.~~i; Offia hcili~> '7,619 ol£><y Ro< ltef»ir 8-! 195 t iP,.,....: 2$.000 wm-OT£~1 1) General !Wquifements 2) Contrartor Overheild 3) Contrartor Profit 4) Construction Contincency Subto~l T"tal Aeh~tb lkAd&d Attachment 6 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 11 .. 5 1,l56,J~ 2.405. 144300 610 48,10<1 Z'.O 144,100 fi'• 117.465 s• ... 464 u.:; 1,869,165 ATTACHMENT N0.6 FORM OF PROMISSORY NOTE PROMISSORY NOTE (Seasons at San Juan Capistrano Apartments Project) Principal Sum Not to Exceed ----------' 20_ $1,000,000.00 San Juan Capistrano, California FOR VALUE RECEIVED, SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partners (the "Maker" or "Borrower"), having an address at 330 West Victoria Street, Gardena, CA 90248, promises to pay the SAN JUAN CAPISTRANO HOUSING AUTHORITY ("Payee" or "Authority"), the principal sum not to exceed ONE MILLION DOLLARS ($1,000,000.00) (the "Loan"), or so much of such principal as may be advanced from time to time, with interest at the rate of three percent (3%) per annum accruing against the principal balance outstanding from time to time. Interest shall be simple interest only. 1. Purpose. This Note is made and delivered pursuant to and in implementation of that certain Affordable Housing Loan Agreement entered into between Authority and Borrower, dated 2016 (the "Loan Agreement"), which provides for the acquisition of the Property and rehabilitation by the Maker of the Project described in Section 3 below. The term "Property" means that real property located at 31641 Rancho Viejo Road, San Juan Capistrano, California, and more particularly described in the Deed of Trust securing this Note. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Agreement. 2. Security. Payment of this Note is secured by a deed oftrust, assignment ofrents, security agreement and fixture filing (the "Deed of Trust") from Maker to Payee recorded against the Property. 3. Project. Maker will acquire the Property and rehabilitate the 112-unit multi-family residential apartment affordable housing complex, including all related improvements and amenities located on the Property (the "Project"). The 112 units that are contained in the Project are referred to herein as the "Housing Units." The Project shall consist of a minimum of twenty (20) Housing Units that are made available and rented to persons or families whose income does not exceed fifty percent (50%) of the Area Median Income (the "50% Units"), a minimum of ninety (90) Housing Units that are made available and rented to persons or families whose income does not exceed sixty percent (60%) of the Area Median Income (the "60% Units"), and two (2) of the Housing Units will be employee exempt units. For purposes hereof, "Area Median Income" shall mean the area median income for the Orange County Area as published by the U.S. Department of Housing and Urban Development (HUD) as the same may be adjusted for small and larger households. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those units, and a utility allowance) for the 60% Units shall not 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 6 exceed one-twelfth of 30% of 60% of the Area Median Income, adjusted by household size appropriate for the unit. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those units, and a utility allowance) for the 50% Units shall not exceed one- twelfth of 30% of 50% of the Area Median Income, adjusted by household size appropriate for the unit. Notwithstanding the foregoing, rent levels will be established based on those required by the California Tax Credit Allocation Committee (TCAC) for Low Income Housing Tax Credit projects. The Project shall be maintained and operated in accordance with that certain Affordable Housing Regulatory Agreement by and between Authority and Borrower, dated _______ , 20 _, and recorded concurrently with the Deed of Trust ("Regulatory Agreement"). 4. Maturity Date. This Note shall be due and payable in full at the earlier of (i) sale of the Property or transfer of all or any interest in the Borrower other than a transfer permitted under Section 804.2 of the Loan Agreement or Section 4.02 of the Regulatory Agreement; (ii) a Default under the Loan Agreement or any of the Loan Documents beyond any applicable cure period; or (iii) forty ( 40) years after the date hereof (the "Maturity Date"). 5. Payment. Maker shall make annual payments of principal and interest to the Payee in an amount equal to the Residual Receipts Payment defined herein. The payments described hereinabove shall be paid to Holder no later than one hundred twenty (120) days after the end of Maker's fiscal year. Residual Receipts Payments received by Payee shall be credited first to accrued but unpaid interest, then to current interest due and owing, and lastly to principal. A. The "Residual Receipts Payment" shall equal fifty percent (50%) of the Residual Receipts, as defined below. The Residual Receipts Payment as set forth herein constitutes the cumulative annual payment due to the Payee under this Note. B. For the purposes of this Note, "Residual Receipts" shall mean the sum of money computed as follows: i. All rents, revenues, consideration or income (of any form) derived by Maker in connection with or relating to the ownership or operation of the Project, including any net revenue derived from any refinancing of the Project and any revenue from contributions, loans or grants which is not required to meet future project obligations (but excluding tenants' security deposits, partner capital contributions and similar advances) less all of the following: all customary and reasonable costs and expenses in connection with the operation and maintenance of the Project approved by Payee in the budget described below, including but not limited to premiums for property and liability insurance, utility services not paid directly by tenants, maintenance and repair, security services, asset management fees not to exceed $18,000 per year (subject to an annual 3% increase), a partnership management fee in the amount of $7,500 per year increased annually by 4%, deferred developer fee, provided that the aggregate developer fee does not exceed the maximum fee allowed by TCAC or pursuant to any other agreements entered into between the Maker and Payee, deferred general contractor fee, property management fees not to exceed six percent ( 6%) of income; payments of principal and interest due on financing from sources reviewed and approved in writing by Payee (including on 4852-2143-6984.v4 6114 7 .I 0045\29142630 .8 4814-6623-9034.v2 Attachment 6 development and deficit loans made by Maker or any partner of Maker); provided, however, that no such written approval from Payee shall be required with respect to development and deficit loans made by Maker or any Partner of Maker to prevent a default or other material breach under any of the Additional Borrower Financing; repayment of any other loans made by partners of Borrower to Borrower pursuant to Borrower's governing partnership agreement, as amended from time to time; payment of any credit adjusters; amounts approved by Payee expended to restore the Project after a casualty loss or condemnation; reasonable and customary cost for accounting and auditing the books and records of the Project; taxes; franchise tax filing fees; local, state and federal monitoring compliance fees; and deposits to Project reserves approved by Payee or required by any other lender or the tax credit investor. ii. Notwithstanding the generality of the foregoing, the following items are not expenses or deductible in computing Residual Receipts: (a) Payment of any fees or expenses or of any portion of the Residual Receipts to Maker, except as expressly provided in Section 5.B.i, above; (b) Income taxes imposed upon Borrower's income; and (c) Depreciation, cost recovery, amortization and similar items which do not involve the expenditure of cash. 6 Payment Location. Payment shall be made in lawful money of the United States to the San Juan Capistrano Housing Authority, 32400 Paseo Adelanto, San Juan Capistrano, California 92675. The place of payment may be changed from time to time as the Payee may from time to time designate in writing. 7. Default. The occurrence of any of the following shall constitute an event of default under this Note: A. Maker fails to pay any amount due hereunder within thirty (30) days of its due date; or B. Any other default by Maker under this Note, the Deed of Trust, the Loan Agreement or the Regulatory Agreement recorded against the Property after the expiration of all applicable cure periods Maker shall not be considered in default under this Note until the expiration of all notice and cure periods provided to Maker. Upon the occurrence of any uncured event of default, or at any time thereafter , at the option of the Payee hereof, the entire unpaid principal and interest owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee's option. Payee's failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Payee's failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034 .v2 Attachment 6 shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof. 8. Default Interest Rate. At all times when Maker is in default hereunder by reason of Maker's failure to pay principal due under this Note within applicable cure periods, the interest rate on the sums as to which Maker is in default (including principal, if Payee has elected to declare it immediately due and payable), shall be the highest rate then allowed by law as of the date of the default or ten percent (10%) whichever is lower. 9. Waivers. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability. 10. Costs. Maker agrees to pay immediately upon demand all costs and expenses of Payee including reasonable attorneys' fees: A. If after default and the expiration of all notice and cure periods this Note is placed in the hands of an attorney or attorneys for collection, B. If after a default hereunder or under the Deed of Trust or Loan Agreement and after the expiration of all notice and cure periods Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefor or to the protection of its rights under this Note, the Deed of Trust, the Loan Agreement or other loan document executed in connection with the Project, or C. If Payee seeks to have the Property abandoned by or reclaimed from any estate in bankruptcy, or attempts to have any stay or injunction prohibiting the enforcement or collection of this Note or prohibiting the enforcement of the Deed of Trust or any other agreement evidencing or securing this Note lifted by any bankruptcy or other court. D. If Payee shall be made a party to or shall reasonably intervene in any action or proceeding, whether in court or before any governmental entity, affecting the Property or the title thereto or the interest of the Payee under the Deed of Trust, including, without limitation, any form of condemnation or eminent domain proceeding, Payee shall be reimbursed by Maker immediately upon demand for all costs, charges and reasonable attorneys' fees incurred by Payee in any such case, and the same shall be secured by the Deed of Trust as a further charge and lien upon the Property. 11. Notices. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in the Loan Agreement or at such address as either party may designate by written notice. 12. Successors. This Note shall be binding upon Maker, its successors and assigns. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 6 13. California Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 14. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 15. Nonrecourse. This Note is a nonrecourse obligation of Maker. Neither Maker nor any of its officers, directors or general and limited partners shall have any personal liability for repaying the principal or interest of the Note. In any action brought to enforce the obligations of Maker under this Note, the Deed of Trust or any other instrument or agreement evidencing, securing or relating to the indebtedness evidenced by this Note, the judgment or decree shall be enforceable against Maker solely and only to the extent of its interest in the property described in the Deed of Trust or its interest in any other security loaned by Maker as security for this Note, and Payee shall not seek any deficiency judgment against the Maker. The foregoing provisions shall not prevent recourse to the collateral security for the loan or constitute a waiver, release or discharge of or otherwise affect the obligation to pay, any indebtedness evidenced by the loan documents executed in connection with the Project or limit the right of any person to name the Maker or any other person claiming an interest in or right to such collateral as party defendant in any action or suit for judicial foreclosure or in the exercise of any other remedy, including injunctive or other equitable relief, under any of the loan documents executed in connection with the Project so long as no deficiency judgment shall be sought against the Maker. The foregoing limitation shall not apply to any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys' fees and expenses) to the extent incurred by Payee as a result of any: A. Fraud or material misrepresentation under or in connection with the loan or any Loan Document executed in connection with the Project; B. Intentional bad faith waste of the Property by the Maker; C. Losses resulting from Maker's failure to maintain insurance as required under the Deed of Trust; or D. Misappropriation of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security by the Maker. If any of the events listed in the foregoing (A) through (D) occurs, Payee shall have the right to proceed directly against Maker at the time the event giving rise to the recourse liability occurred to recover any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys' fees and expenses) incurred by Payee. 16. Nonliability of Maker and Payee Official and Employees. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 6 A. No member, official or employee of the Payee shall be personally liable to the Maker in the event of any default or breach by the Payee or on any obligations under the terms of this Note. B. No member, official or employee of the Maker shall be personally liable to the Payee in the event of any default or breach by the Maker or for any amount which may become due to the Payee or on any obligations under the terms of this Note. 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034 .v2 SEASONS SAN JUAN CAPISTRANO AR, L.P ., a California limited partnership By: LINC-Gardena Associates, LLC, a California limited liability company, its managing general partner By: LINC Housing Corporation, a California nonprofit public benefit corporation, its sole member and manager By: Name: Title: By: HCHP Affordable Multi-Family, LLC, a California limited liability company, its administrative general partner By: Attachment 6 Thomas Erickson Senior Vice President When Recorded Mail Document To: San Juan Capistrano Housing Authority 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn:-------- Exempt from recording fees pursuant to Government Code Section 27383 APN: 666-241-10 ATTACHMENT NO.7 FORM OF DEED OF TRUST SPACE ABOVE THIS LINE FOR RECORDER'S USE SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS THIS DEED OF TRUST, together with the ADDENDUM TO DEED OF TRUST attached hereto as Exhibit B and incorporated herein by this reference, both made as of _______ , 20 _, between SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership, herein called TRUSTOR, whose address is 330 West Victoria Street, Gardena, CA 90248-3527; Fidelity National Title, a California corporation, herein called TRUSTEE, and the SAN JUAN CAPISTRANO HOUSING AUTHORITY, herein called BENEFICIARY, whose address is 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. WITNESSETH: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to TRUSTEE IN TRUST, WITH POWER OF SALE, that PROPERTY in Orange County, California, described as: SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF TOGETHER WITH the rents, issues and profits thereof, SUBJECT, HOWEVER, to the right, power and authority given to and conferred upon Beneficiary by paragraph (10) of the provisions incorporated herein by reference to collect and apply such rents, issues and profits. For the Purpose of Securing: 1. Performance of each agreement of Trustor incorporated by reference or contained herein . 2. Payment of the indebtedness evidenced by one Promissory Note, dated as of 20_, and any extension or renewal thereof, in the principal sum of One Million Dollars ($1,000,000.00) executed by Trustor in favor of Beneficiary or order. 3. Payment of such further sums as the then record owner of said property hereafter may borrow from Beneficiary, when evidenced by another note (or notes) reciting it is so secured. 4852-2143-6984.v4 61147 .10045\29142 630.8 4814-6623-9034. v2 Attachment 7 To Protect the Security of this Deed of Trust, Trustor Agrees: By the execution and delivery of this Deed of Trust and the Promissory Note secured hereby, that provisions (1) to (14), inclusive, of the fictitious deed of trust recorded in Santa Barbara County and Sonoma County October 18, 1961, and in all other counties October 23, 1961, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, viz: C'OlJ~TY BOOK PAGE co iTY BOOK l'A OE. co f:'o.I"TY BOOK PAGE COL:ITY BOOK PAGE Ahm~ -1.>5 684 l.Gng; 79:2 8" .).J Placer 895 301 S!I!Ir.l 19 335 Alpine 1 :!50 Lake 6] 39 P!umns 151 5 Si kryou 468 1S1 • .\mad or 104 348 ~n 111 ~7 1 Rl~de 3005 523 Solano 1105 1S2 Butte I U5 1 Lo;~~e7 T2055 899 Sarr:unento 4331 62 Sonoma 1851 689 Ca.lnt·e•m 145 1 5~ .1adera. 810 170 San Benito 271 383 Stani•us li15 456 Colusi\ 296 617 :yf.mu 150& 339 San. 5567 61 Suiter 572 297 Bentardino Conln 3978 47 .. 1.lnp05.11 77 291 s~n F I :\DCI'iCO A332 905 Teh= 401 189 Costa Dell\ one 78 414 , ftndocino 579 530 San Joaquin 2470 311 Trinity 93 366 El Dorl!do 568 456 !virn:rd 1547 538 San L\ris 11S1 12 Tulare 2294 275 Fresno 4626 572 .1odoc t!W 851 Obispo San, 1ateo 4078 420 Tuolumne 135 47 Glem~ 422 184 .1ouo 52 429 Sanu Barbara 1878 860 Ve!~lura 2062 386 Humboldt 657 517 ~· .lonlm•y 219 4 538 Santa Clara 5336 341 Yolo 653 145 lmperia.l 1091 501 .. npa 639 86 Santa Cruz 1431 494 Yuro 334 486 lnJO 147 598 ~e-.-ada 305 320 Sh:;sta 684 528 Kern 3427 60 Ornuge 5889 611 San Diego ~rie> ~Book 1961, Page 183887 which provisions, identical in all counties, (printed on the attached unrecorded pages) are hereby adopted and incorporated herein and made a part hereof as fully as though set forth herein at length; that Trustor will observe and perform said provisions; and that the references to property, obligations and parties in said provisions shall be construed to refer to the property, obligations, and parties set forth in this Deed of Trust. The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him at his address hereinbefore set forth. TRUSTOR: SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership By: LINC-Gardena Associates, LLC, a California limited liability company, its managing general partner By: LINC Housing Corporation, a California nonprofit public benefit corporation, its sole member and manager 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034. v2 Attachment 7 By: Name: Title: By: HCHP Affordable Multi-Family, LLC, a California limited liability company, its administrative general partner By: Thomas Erickson Senior Vice President 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034. v2 Attachment 7 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ____________________ ___ ) On before me, Notary Public (insert name and title of the officer) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature----------------------(Seal) 4852-2143-6984.v4 6114 7.10045129142630.8 4814-6623-9034. v2 Attachment 7 DO NOT RECORD The following is a copy of provisions (1) to (14), inclusive, of the fictitious deed of trust, recorded in each county in California, as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: (1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefore; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed. ( 4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034. v2 Attachment 7 (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. (6) That any award of damages in connection with any condemnation for public use of or InJury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (8) That at any time or from time to time, without liability therefore and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or JOin m any extension agreement or any agreement subordinating the lien or charge hereof. (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters 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." Five years after issuance of such full reconveyance, Trustee may destroy said note and this Deed (unless directed in such request to retain them). (10) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such, rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034. v2 Attachment 7 (11) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash of lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at 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 proceeding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and expenses of Trustee and ofthis Trust, including cost of evidence of title in connection with sale, 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 amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (12) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and pages where this Deed is recorded and the name and address of the new Trustee. (13) That this Deed applies to , inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (14) That Trustee accepts this Trust when this Deed, duly executed and acknowledged , is made a public record as provided by law. Trustee is not obligated to notify any party hereto of 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034. v2 Attachment 7 pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 Attachment 7 EXHIBIT A PROPERTY LEGAL DESCRIPTION [To Be Inserted] APN: ____________________________ __ 4852-2143-6984.v4 6 114 7 .I 0045\29142630 .8 4814-6623-9034.v2 Exhibit A to Attachment 7 EXHIBIT B ADDENDUM TO DEED OF TRUST This Addendum to Deed of Trust is part of the Deed of Trust dated __________ , 20_, to which it is attached, by and between SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership, as "Trustor," and the SAN JUAN CAPISTRANO HOUSING AUTHORITY, as "Beneficiary." The following provisions are made a part of the Deed of Trust: 1. No Discrimination. The Trustor covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 ofthe Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. 2. Nondiscrimination Clauses. All deeds, leases or contracts made relative to the Property, the improvements thereon or any part thereof, shall contain or be subject to the nondiscrimination clauses set forth in California Health and Safety Code Section 33436. 3. Subordination. Beneficiary agrees that the terms and conditions of this Deed of Trust shall be subject to and subordinate to the terms and conditions of financing, for the purpose of developing the Property, obtained by Trustor through a lender acceptable to Beneficiary pursuant to the terms of such subordination agreement executed by Beneficiary and such lender; provided the total aggregate amount of financing secured by the Trustor together with the indebtedness secured by this Deed of Trust shall not exceed the total appraised value of the Property. 4. Default. Notwithstanding any other prov1s10ns in this Deed of Trust, the occurrence of any of the following shall constitute an event of default under the Promissory Note secured by this Deed of Trust and this Deed of Trust, and a default may be declared under this Deed of Trust solely upon the occurrence of any of the following: Any failure by Trustor to (i) pay any amount due or perform any obligation under the Promissory Note within thirty (30) days of its due date; (ii) perform any of the terms or conditions of that certain Affordable Housing Regulatory Agreement, dated 20_, by and between Trustor and Beneficiary, after expiration of applicable notice and cure periods; (iii) perform any of the terms or conditions of that certain Affordable Housing Loan Agreement, dated _________ , 20_, by and between Trustor and Beneficiary after any applicable notice and cure periods; and (iv) perform any obligation or covenant under this Deed of Trust within forty-five ( 45) days after receiving written notice from Beneficiary of such default, or such longer period as may reasonably be required to cure such default provided that Trustor has 4852-2143-6984 .v4 61147 .10045129142630 .8 4814-6623-9034.v2 Exhibit B to Attachment 7 commenced the cure within such forty-five (45) day period and diligently prosecutes such cure to completion. 5. Casualty. Beneficiary acknowledges and agrees that Trustor shall have the absolute right, subject to the rights of any senior lienholders, to prosecute, settle, and adjust any insurance claims, and use the proceeds thereof, provided Trustor holds and applies any insurance proceeds following a casualty toward the restoration or rebuilding of the improvements on the Property. 6. Hazardous Substances. (a) As used in this Section 6, the following terms shall have the following meanmgs: (i) "Environmental Laws" means all statutes, ordinances, orders, rules, regulations, plans, policies or decrees and the like now or hereafter in effect relating to (A) Hazardous Substance Activity or Hazardous Substances; (B) the generation, use, storage, transportation or disposal of Hazardous Substances, or solid waste; or (C) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health, safety or welfare, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act (49 U.S.C. Section 180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.); the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.); the Clean Air Act (42 U.S.C. Section 740 et seq.); the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.); the Occupational Safety and health Act (29 U.S.C. Section 651 et seq.); the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.); the Porter-Cologne Water Quality Control Act (California Water Code Section 13020 et seq.); the Safe Drinking Water and Toxic Enforcement Act of 1986 (California Health & Safety Code Section 25249.5 et seq.); the Hazardous Substance Account Act (California Health & Safety Code Section 25300 et seq.); the Hazardous Waste Control Act (California Health & Safety Code Section 25100 et seq.); The California Environmental Quality Act (California Public Resources Code Section 2100 et seq.); and the rules, regulations and ordinances of the City of San Juan Capistrano or any applicable federal, state and local agencies or bureaus, as amended from time to time. [REVISE DEFINITION TO MATCH DEFINITION IN LOAN AGREEMENT] (ii) "Foreclosure Transfer" means the transfer of title to all or any part of the Property or the Trust Estate at a foreclosure sale under the Deed of Trust, either pursuant to judicial decree or the power of sale contained in the Deed of Trust, or by deed in lieu of such foreclosure. (iii) "Hazardou Substances" means (A) any chemical, compound, material, mixture or substance that is now or hereafter defined or listed in, or otherwise classified pursuant to, any Environmental Laws as a "hazardous substance," "hazardous material," "hazardous waste," "extremely hazardous waste," "acutely hazardous waste," "radioactive waste," "infectious waste," "biohazardous waste," "toxic substance," "pollutant," "toxic 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 Exhibit B to Attachment 7 pollutant," "contaminant" as well as any other formulation not mentioned herein intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "EP toxicity" or "TCLP toxicity"; (B) petroleum, natural gas, natural gas liquids, liquified natural gas, synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas) and ash produced by a resource recovery facility utilizing a municipal solid waste stream, and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas, or geothermal resources; (C) "hazardous substance" as defined in Section 2782.6( d) of the California Civil Code; (D) "waste" as defined in Section 13050(d) ofthe California Water Code; (E) asbestos in any form; (F) urea formaldehyde foam insulation; (G) polychlorinated biphenyls (PCBs); (H) radon; and (I) any other chemical, material, or substance that, because of its quantity, concentration, or physical or chemical characteristics, exposure to which is limited or regulated for health and safety reasons by any governmental authority, or which poses a significant present or potential hazard to human health and safety or to the environment if released into the workplace or the environment. (iv) "Hazardou ub tance Activity" means any actual, proposed, or threatened use, storage, holding, existence, location, release (including, without limitation, any spilling, leaking, leaching, pumping, pouring, emitting, emptying, dumping, disposing into the environment, and the continuing migration into or through soil, surface water, groundwater or any body of water or the air), discharge, deposit, placement, generation, processing, construction, treatment, abatement, removal, disposal, disposition, handling, or transportation of any Hazardous Substance from, under, in, into, or on the Property, including without limitation, the movement or migration of any Hazardous Substances from surrounding property, surface water, groundwater or any body of water, or the air under, in, into or onto the Property and any residual Hazardous Substances contamination in, on, or under the Property. (v) "Losses" means all charges, losses, liabilities, damages (whether actual, consequential, punitive, or otherwise denominated), costs, fees, demands, claims for personal injury or real or personal property damage), actions, administrative proceedings (including informal proceedings), judgments, causes of action, assessments, fines, penalties, costs, and expenses of any kind or character, foreseeable and unforeseeable, liquidated and contingent, proximate and remote, including, without limitation, the following: (A) the reasonable fees and expenses of outside legal counsel; (B) the reasonable fees and expenses of accountants, third-party consultants, and other independent contractors retained by an Beneficiary; (C) costs, including capital, operating and maintenance costs, incurred in connection with any investigation or monitoring of site conditions or any clean-up, remedial, removal or restoration work required or performed by any federal, state or local governmental agency or political subdivision or performed by any non-governmental entity or person that is required by Environmental Laws or administrative ruling or directive because of the presence, suspected presence, release or suspected release of Hazardous Substances in violation of Environmental Laws in the air, soil, surface water or groundwater at the Property; (D) any and all diminution in value ofthe Property, loss of use or damage to the Property, or loss of profits or loss ofbusiness opportunity; and (E) reasonable costs and expenses of enforcing this Section 6. 4852-2143-6984.v4 6114 7.10045\29142630 .8 4814-6623-9034. v2 Exhibit B to Attachment 7 (vi) "Environmenta l Losse s" means Losses rising out of or as a result of: (A) the occurrence of any Hazardous Substance Activity; (B) any violation of any applicable Environmental laws relating to the Property or to the ownership, use, occupancy or operation thereof; (C) any investigation, inquiry, order, hearing, action, or other proceeding by or before any governmental agency in connection with any Hazardous Substance Activity; or (D) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which directly or indirectly relates to, arises from or is based on any of the matters described in clause s (A), .(ill, or .(Q, or any allegation of any such matters. (b) Trustorrepresents and warrants to Beneficiary that Trustor has conducted as appropriate inquiry and investigation, and, to the best of Trustor's knowledge, based on such inquiry and investigation, no portion of the Property is being used or has ever been used at any previous time, for the disposal, storage, treatment, processing or other handling of Hazardous Substances, nor have any Hazardous Substances migrated onto or from the Property. Neither the Property nor Trustor is in violation of or subject to any existing, pending or threatened investigation by any governmental authority under any Environmental Law. Trustor's prior and intended use of the Property will not result in the disposal or release of any Hazardous Substances on, under, about or to the Property or the migration of any Hazardous Substances from the Property. The foregoing representations and warranties shall be continuing and shall be true and correct for the period from the date hereof to the release of this Deed of Trust (whether by payment of the indebtedness secured hereby or foreclosure or action in lieu thereof), and these representations and warranties shall survive such release. (c) Trustor represents and warrants to Beneficiary that Trustor has complied with all recommendations by any engineers retained by Trustor and all requirements of any applicable department of environmental resources, environmental protection agency or similar governmental agency, and there are no recommendations by said engineers or requirements ordered by said agency or any other governmental body for environmental investigation or cleanup with respect to the Property. (d) On and after the date hereof, Trustor shall not (a) allow any Hazardous Substances to be installed, used, introduced, stored, treated, disposed of, generated, manufactured, discharged, dumped, transported or brought in, upon or over the Property in violation of applicable law; (b) allow any soil or ground water contamination or pollution with any Hazardous Substances on the Property in violation of applicable law; (c) allow any Hazardous Substances to migrate from the Property in violation of applicable law; (d) allow any Hazardous Substances to migrate onto the Property from any adjacent properties in violation of applicable law; or (e) allow or cause the Property to be in violation of, or to trigger a duly initiated and prosecuted investigation of the Property by any governmental authority under applicable limitations , restrictions, conditions, standards, prohibitions, requirements, obligations, schedules or timetables contained in any local, state and/or federal laws, regulations , codes, ordinances, plans, administrative or judicial orders, decrees, judgments, notices or demand letters issued, entered, promulgated or approved thereunder relating to the environment, land use, water and air quality and Hazardous Substances ("Environmental Requirements"). 4852-2143-6984.v4 61147.1 0045\29142630.8 4814-6623-9034. v2 Exhibit B to Attachment 7 (e) If the presence of any Hazardous Substances on the Property caused or permitted by Trustor results in any contamination of the Property, Trustor shall promptly take all actions, at its sole expense, as are necessary to return the Property to the condition existing prior to the introduction of any such Hazardous Substances to the Property; provided that Beneficiary's approval of such actions shall first be obtained, which approval shall not be unreasonably withheld, conditioned, or delayed, so long as such actions would not potentially have any material adverse long-term or short-term effect on the Property. (f) At any time after the occurrence and during the continuance of any default under this ection 6, Beneficiary shall have the following rights and remedies, in addition to any other rights and remedies Beneficiary has under this Deed of Trust: (i) As provided in California Code of Civil Procedure Section 564, Beneficiary or its employees, acting by themselves or through a court appointed receiver may do any of the following: (i) enter upon, possess, manage, operate, dispose of, and contract to dispose of the Property or any part thereof; (ii) take custody of all accounts; (iii) negotiate with governmental authorities with respect to the Property's environmental compliance and remedial measures; (iv) take any action necessary to enforce compliance with environmental provisions, including spending Rent Payments to abate any environmental problem; (v) make, terminate, enforce or modify leases of part or all of the Property; (vi) contract for goods and services, hire agents, employees, and counsel, make repairs, alterations, and improvements to the Property necessary in Beneficiary's judgment to protect or enhance the security hereof; and/or (vii) take any and all other actions which may be necessary or desirable to comply with Trustor's obligations hereunder and under the Loan Documents. All sums realized by the receiver or Beneficiary under this subparagraph, less all costs and expenses incurred by either of them under this subparagraph, including attorneys' fees, and less such sums as Beneficiary or the receiver deems reasonably appropriate as a reserve to meet future expenses under this subparagraph, shall be applied on any indebtedness secured hereby in such order as Beneficiary shall determine. Neither application of said sums to said indebtedness, nor any other action taken by Beneficiary or the receiver under this subparagraph shall cure or waive any default or notice of default hereunder, or nullify the effect of any such notice of default. Beneficiary, or any employee or agent of Beneficiary, or a receiver appointed by a court, may take any action or proceeding hereunder without regard to the adequacy of the security for the indebtedness secured hereunder, the existence of a declaration that the indebtedness secured hereby has been declared immediately due and payable, or the filing of a notice of default. (ii) With or without notice, and without releasing Trustor from any obligation hereunder, to cure any default of Trustor or in connection with any such default, Beneficiary or its agents, acting by themselves or through a court-appointed receiver, may enter upon the Property or any part thereof and perform such acts and things as Beneficiary deems necessary or desirable to inspect, investigate, assess, and protect the security hereof, including of any of Beneficiary's other rights: (i) to obtain a court order to enforce Beneficiary's right to enter and inspect the Property under California Civil Code Section 2929.5 (in respect of which the decision of Beneficiary as to whether there exists a release or threatened release of hazardous substance, as defined therein, onto the Property shall be deemed reasonable and conclusive as between the parties hereto); and (ii) to have a receiver appointed under California Code of Civil 4852-2143-6984.v4 6114 7 .I 0045\29142630.8 4814-6623-9034.v2 Exhibit B to Attachment 7 Procedure Section 564 to enforce Beneficiary's right to enter and inspect the Property for hazardous substances as defined therein. All reasonable costs and expenses incurred by Beneficiary with respect to the audits, tests, inspections, and examinations which Beneficiary or its agents or employees may conduct, including the fees of engineers, laboratories, contractors, consultants, and attorneys, shall be paid by Trustor. All such reasonable costs and expenses incurred by Trustee and Beneficiary pursuant to this subparagraph (including court costs, consultant fees and attorney fees, whether incurred in litigation or not and whether before or after judgment) shall bear interest at the Note Rate, from the date they are incurred until said sums have been paid. (iii) Beneficiary may seek a judgment that Trustor has breached its covenants, representations and/or warranties with respect to the environmental matters set forth above in this Section 6, by commencing and maintaining an action or actions in any court of competent jurisdiction for breach of contract pursuant to California Code of Civil Procedure Section 736, whether commenced prior to foreclosure of the Property or after foreclosure of the Property, and to seek the recovery of any and all reasonable costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses actually incurred by Beneficiary or advanced by Beneficiary (collectively, the "Environmental Costs") relating to the cleanup, remediation or other response action required by applicable law or which Beneficiary believes reasonably necessary to protect the Property, it being presumed between Beneficiary and Trustor that all such Environmental Costs incurred or advanced by Beneficiary relating to the cleanup, remediation, or other response action respecting the Property were made by Beneficiary in good faith. All Environmental Costs incurred by Beneficiary under this subparagraph (including court costs, consultant fees and attorney fees, whether incurred in litigation or not and whether before or after judgment) shall bear interest at the Note Rate, from the date of expenditure until said sums have been paid. Beneficiary shall be entitled to bid, at any sale of the Property held hereunder, the amount of said costs, expenses and interest in addition to the amount of the other obligations hereby secured as a credit bid, the equivalent of cash. (iv) As provided in California Code of Civil Procedure Section 726.5, Beneficiary may waive its lien against the Property or any portion thereof, to the extent such property is found to be environmentally impaired as defined therein, and to exercise any and all rights and remedies of an unsecured creditor against Trustor and all of Trustor's assets and property for the recovery of any deficiency and Environmental Costs, including seeking an attachment order under California Code of Civil Procedure Section 483.010. Beneficiary and Trustor each represents and warrants for itself that it has no actual knowledge of any release of any Hazardous Substance (as defined in Section 726.5) on, to or under the Property. As between Beneficiary and Trustor, for purposes of California Code of Civil Procedure Section 726.5, Trustor shall have the burden of proving that Trustor or any related party (or any affiliate or agent of Trustor or any related party) did not cause or contribute to, and was not in any way negligent in permitting, any release or threatened release of the Hazardous Substance. (v) Trustor acknowledges and agrees that notwithstanding any term or provisiOn contained herein or in the Loan Documents, the Environmental Costs and all judgments and awards entered against Trustor pursuant to ection 6([)(iv) above shall be 4852-2143-6984.v4 61147.10045129142630.8 4814-6623-9034.v2 Exhibit B to Attachment 7 exceptions to any nonrecourse or exculpatory provision of the Loan Documents, and Trustor shall be fully and personally liable for the Environmental Costs and such judgments and awards and such liability shall not be limited to the original principal amount of the obligations secured by this Deed of Trust, and Trustor's obligations shall survive the foreclosure , deed in lieu of foreclosure, release, reconveyance, or any other transfer of the Property or this Deed of Trust. (g) Trustor hereby agrees to indemnify, defend and hold harmless Beneficiary from and against any and all Environmental Losses except to the extent caused by the Authority's negligence or misconduct. TRUSTOR: SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership By: LINC-Gardena Associates, LLC, a California limited liability company, its managing general partner By: LINC Housing Corporation, a California nonprofit public benefit corporation, its sole member and manager By: Name: Title: By: HCHP Affordable Multi-Family, LLC, a California limited liability company, its administrative general partner By: Thomas Erickson Senior Vice President 4852-2143-6984 .v4 61147 .10045\29142630 .8 4814-6623-9034.v2 Exhibit B to Attachment 7 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ____________________ ___ ) On before me, Notary Public (insert name and title of the officer) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature _____________ (Seal) 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 Exhibit B to Attachment 7 ATTACHMENT NO.8 FORM OF AFFORDABLE HOU JNG REGULATORY AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Housing Authority 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn.: AFFORDABLE HOUSING REGULATORY AGREEMENT This Affordable Housing Regulatory Agreement dated , 20_ (the "Regulatory Agreement"), is between the SAN JUAN CAPISTRANO HOUSING AUTHORITY (the "Authority") and SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership ("Borrower"). RECITALS A. The Authority intends to create affordable rental housing opportunities for persons and families of low income and very low income. Pursuant to an Affordable Housing Loan Agreement between the Authority and Borrower dated 20_ (the "Loan Agreement"), the Authority has made a loan to Borrower for the purpose of acquiring the certain real property as described in Exhibit A attached hereto and incorporated herein by reference (the "Property") and rehabilitating the 112 multi-family residential apartment units located thereon (the "Housing Units"), to be available at an affordable rent to persons and families of low and very low income levels (the "Project") as set forth in this Regulatory Agreement. Under the Loan Agreement, the Authority has provided Borrower with a loan in the amount of not to exceed ONE MILLION DOLLARS ($1 ,000,000) (the "Loan"). Borrower has executed a promissory note for the Loan (the "Note"), which is secured by a deed of trust recorded against the Property (the "Deed of Trust"). B. Pursuant to the Loan Agreement, in the event of any default under this Regulatory Agreement and following the expiration of all applicable notice and cure periods, Borrower agrees to repay Authority all amounts owing under the Note and the Deed of Trust recorded against the Property. C. The Authority and Borrower desire by the execution of this Regulatory Agreement to assure the Property remains affordable to Eligible Households for a minimum of fifty-five (55) years following the recordation of this Regulatory Agreement. NOW THEREFORE, the parties acknowledge and agree as follows: ARTICLE 1. ELIGIBLE HOUSEHOLDS 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034. v2 Attachment 8 1.01. Households meeting the income restrictions as set forth in Section 2.01 shall be referred to as "Eligible Households." ARTICLE 2. AFFORDABILITY REQUIREMENTS FOR THE PROJECT 2.01. Rent and Income Restrictions. From the date of recordation of this Regulatory Agreement, and for fifty-five (55) years thereafter, Borrower by and for itself and any successors in interest, hereby covenants and agrees that the Borrower shall limit the rental of (i) a minimum oftwenty (20) of the Housing Units to persons or families of low income whose income does not exceed 50% of the Area Median Income (the "50% Units"); and (ii) the remaining not more than a minimum of ninety (90) of the Housing Units to persons or families of very low income whose income does not exceed 60% of the Area Median Income (the "60% Units"). Notwithstanding the foregoing, two (2) units in the Project shall be employee units and shall be unrestricted so long as said employee units are occupied by an employee ofthe Project's management company. For purposes hereof, "Area Median Income" shall mean the area median income for the Orange County Area as published by the U.S. Department of Housing and Urban Development (HUD) as the same may be adjusted for small and larger households. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those units, and a utility allowance) for the 60% Units shall not exceed one-twelfth of 30% of 60% of the Area Median Income, adjusted by household size appropriate for the unit. The gross monthly rent (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency to those tenants or on behalf of those units, and a utility allowance) for the 50% Units shall not exceed one-twelfth of 30% of 50% of the Area Median Income, adjusted by household size appropriate for the unit. Notwithstanding the foregoing, rent levels established based on those required by the California Tax Credit Allocation Committee (TCAC) for Low Income Housing Tax Credit projects shall be deemed to comply with this Section 2.01. During such period the other requirements of this Article 2 shall apply. 2.02. Reporting Requirements. An annual report and annual income recertifications must be submitted to the Authority. The reports, at a minimum, shall include: A. The number of persons per unit; B. Tenant name and Initial occupancy date; C. Gross income per year as certified by Borrower; D. Rent paid per month and percent ofrent paid in relation to income. The annual reports and annual income recertifications submitted by Borrower shall be in the form as provided by Authority. Annual income recertifications shall also contain those documents used to certify eligibility. Authority may from time to time during the term of this Agreement request Attachment 8 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034.v2 additional or different information and Borrower shall promptly supply such information in the reports required hereunder. Borrower shall maintain all necessary books and records, including property, personal and financial records, in accordance with requirements prescribed by the Authority with respect to all matters covered by this Regulatory Agreement. Borrower, at such time and in such forms as Authority may require, shall furnish to Authority statements, records, reports, data and information pertaining to matters covered by this Regulatory Agreement. Upon reasonable advance request for examination by Authority, Borrower, at any time during normal business hours, shall make available all of its records with respect to all matters covered by this Regulatory Agreement. Borrower shall permit Authority to audit, examine and make excerpts or transcripts from these records at Authority's sole cost. ARTICLE 3. PROVISION OF SERVICES AND MAINTENANCE OF PROPERTY 3.01. Maintenance. During the duration of this Regulatory Agreement, Borrower shall keep the Property in good condition, order and repair and shall not commit waste or permit impairment, demolition or deterioration of the Property; shall comply with all applicable state and federal regulations addressing the physical condition of the Property and buildings located on the Property and all applicable standards of the City of San Juan Capistrano including but not limited to building standards, planning regulations, and utilities code; shall complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed and to pay when due all claims for labor performed and materials furnished; shall maintain the buildings in a habitable condition; and do all other acts which from the character or use of the Property may be reasonably necessary. Authority shall have the right to inspect the Property during normal business hours, provided Borrower and the occupant are given reasonable notice prior to any such inspection. ARTICLE 4. NO TRANSFER 4.01. Prohibition. The identity and qualifications of Borrower as an experienced and successful Borrower and operator of affordable rental housing developments are of particular concern to the Authority. It is because of this identity and these qualifications that the Authority has entered into this Regulatory Agreement with the Borrower. No voluntary or involuntary successor in interest of the Borrower shall acquire any rights or powers under this Regulatory Agreement by assignment or otherwise, nor shall Borrower make any total or partial sale, transfer, conveyance, encumbrance to secure financing, assignment or lease of the whole or any part of the Property without the prior written approval of the Authority pursuant to Section 4.03 hereof, except as expressly set forth herein, which approval shall not be unreasonably withheld. 4.02. Permitted Transfers. Notwithstanding any other provision of this Regulatory Agreement to the contrary, Authority approval of an assignment or transfer of this Regulatory Agreement, the Loan, the Loan Agreement, or conveyance of the Property or any part thereof pursuant to Section 4.03 shall not be required in connection with any of the following (the "Permitted Transfers"): A. Any requested assignment for purposes of financing the construction of improvements upon the Property; 4852-2143-6984.v4 61147 .10045\29142630 .8 4814-6623-9034.v2 Attachment 8 B. Any mortgage, deed of trust, or other form of conveyance for all or any portion of the Additional Borrower Financing, as provided in the Loan Agreement, but Borrower shall notify Authority in advance of any such mortgage, deed of trust or other form of conveyance for financing pertaining to the Property; C. Any mortgage, deed of trust or other form of conveyance for restructuring or refinancing of any amount of indebtedness described in subsection B, above; provided any such restructuring or refinancing does not result in any release of funds to Borrower, typically referred to as a "cash-out" loan; D. Admission of a tax credit investor that 1s obligated to make capital contributions as the limited partner; E. (A) Sale, transfer, conveyance or pledge of limited partnership interests in Borrower to another party, or (B) the appointment by the partners of Borrower of an additional or substitute general partner in accordance with the partnership agreement of Borrower; provided Borrower delivers prior written notice thereof to the Authority, and such additional or substitute general partner shall be subject to the approval of the Authority, which approval shall not be unreasonably withheld, conditioned, or delayed, provided that such approval shall not be required if (i) the substitute administrative general partner is an affiliate of the limited partner or administrative general partner of Borrower or (ii) the substitute managing general partner is an entity holding an organizational clearance certificate issued by the California Board of Equalization; F. [Intentionally Omitted]; G. [Intentionally Omitted]; H. The lease of residential units at the Project to qualified tenants; or I. Transfer of the Project or partnership interests in Borrower to a general partner of Borrower at the end of the fifteen year tax credit initial compliance period In the event of a transfer by Borrower under subparagraphs A through I, inclusive, above, except for subparagraph H, above, not requiring Authority's prior approval, Borrower nevertheless agrees that at least ten (1 0) days prior to such assignment it shall give written notice to Authority of such transfer and satisfactory evidence that the transferee has assumed the obligations of this Regulatory Agreement, if applicable. 4.03. Authority Consideration of Requested Transfer. The Authority agrees that it will not unreasonably withhold, condition or delay approval of a request made pursuant to this ARTICLE 4, provided (a) the Borrower delivers written notice to the Authority requesting such approval, and (b) the proposed assignee or transferee possesses comparable operational experience and capability, and comparable net worth and resources, as the proposed transferor or assignor, and (c) the assignee or transferee assumes the obligations of the Borrower under this Regulatory Agreement in a form which is reasonably acceptable to the Authority. Such notice shall be accompanied by evidence regarding the proposed assignee's or purchaser's 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034.v2 Attachment 8 qualifications and experience and its financial commitments and resources sufficient to enable the Authority to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 4.03 and other criteria as reasonably determined by the Authority. The Authority shall approve or disapprove the request within thirty (30) days of its receipt of the Borrower's notice and all information and materials required herein. In no event, however, shall the Authority be obligated to approve the assignment or transfer of the Loan, Note or Deed of Trust pursuant to this Section 4.03, except to an approved transferee or assignee of the Borrower's rights in and to the Project. 4.04. uccessors and A signs. This Regulatory Agreement shall run with the land, and all of the terms, covenants and conditions of this Regulatory Agreement shall be binding upon the Borrower and the permitted successors and assigns of the Borrower. Whenever the term "Borrower" is used in this Regulatory Agreement, such term shall include any other permitted successors and assigns as herein provided. In the event of a transfer or assignment under Section 4.03, all rights and obligations of the transferor Borrower shall be assumed by the transferee Borrower and the transferor Borrower shall have no further obligation or liability under this Regulatory Agreement. ARTICLE 5. NO DISCRIMINATION 5.01. Borrower covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 ofthe Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Borrower itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. ARTICLE 6. NONDISCRIMINATION CLAUSES 6.01. All deeds, leases or contracts made relative to the Property, the improvements thereon or any part thereof, shall contain or be subject to substantially the following nondiscrimination clauses: A. In deeds: Borrower herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Borrower himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, 4852-2143-6984.v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 8 use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. B. In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. C. In contracts. There shall be no discrimination against or segregation of any person or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Section 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 ofthe Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in land. ARTICLE 7. NO IMPAIRMENT OF LIEN 7.01. No violation or breach of the covenants, conditions, restrictions, provisions or limitation contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted under the Loan Agreement and this Regulatory Agreement; provided, however, that any successor of Borrower to the Property shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. ARTICLE 8. GENERAL 8.01. Notices to Authority. Notices required to be sent to the Authority hereunder shall be sent by certified mail, return receipt requested, to the following address as may change from time to time: San Juan Capistrano Housing Authority 32400 Paseo Adelanto 4852-2143-6984.v4 6114 7.10045\29142630.8 4814-6623-9034.v2 Attachment 8 San Juan Capistrano, CA -2675 Attn.: __________ _ 8.02. Notices to Borrower. Notices required to be sent to Borrower hereunder shall be sent by certified mail, return receipt requested, to the following address as may change from time to time: Seasons San Juan Capistrano AR, L.P. 330 West Victoria Street Gardena, CA 90248 Attn: Michael Costa With a copy to Borrower's limited partner at the following address, or at such other address as Borrower may provide to Lender: Victoria Capital, LLC 330 West Victoria Street Gardena, CA 90248 Attn: Michael Costa 8.03. Duration. The covenants set forth in Articles 1, 2 and 3 herein shall be covenants rulll1ing with the land until fifty-five (55) years from the date of recordation of this Regulatory Agreement against the Property. The covenants set forth in Articles 5 and 6 shall be covenants rulll1ing with the land. All the covenants contained herein shall inure to the benefit of the San Juan Capistrano Housing Authority, the City of San Juan Capistrano ("City"), and their successors and assigns and are enforceable by the Authority, the City or their successors or assigns, without regard to whether the Authority or the City is an owner of any land or interest to which such covenants relate. The Authority and such aforementioned parties, in the event of any breach of any such covenants contained herein, following the expiration of all applicable notice and cure periods shall have the right to exercise all of its rights and remedies allowed by law and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach. The covenants and agreements established in this Regulatory Agreement, without regard to technical classification and designation, shall be binding upon all parties having any right, title, or interest in the Property, or any portion thereof and on their heirs, successors in interest and assigns until the covenants terminate. The parties agree that all future deeds or transfers of interest shall show the applicable restrictions of this Agreement and, during the duration of this Regulatory Agreement, any transfer of the Property shall be subject to the terms and conditions ofthis Regulatory Agreement. 8.04. Successors and Assigns. Borrower, by and for itself and each successor to any interest in the Property, hereby specifically acknowledges and agrees to be bound by the covenants contained herein. 8.05. Amendment. This Agreement may be amended only in writing by the Authority and the owner of the Property. 4852-2143-6984 .v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 8 8.06. Non-Liability of Official s and E mplo ye es of th e Authority and the Borrower. No member, official or employee of the Authority or the City shall be personally liable to the Borrower, or any successor in interest, in the event of any default or breach by the Authority or for any amount which may become due to the Borrower or its successors, or on any obligations under the terms of this Regulatory Agreement. 8.07. Relationship Between Authority and Borrower. It is hereby acknowledged that the relationship between the Authority and the Borrower is not that of a partnership or joint venture and that the Authority and the Borrower shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, the Authority shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Project. The Borrower agrees to indemnify, hold harmless and defend the Authority and the City from any claim made against the Authority arising from a claimed relationship of partnership or joint venture between the Authority and the Borrower with respect to the development, operation, maintenance or management of the Property or the Project. 8.08. Authority A pprova ls and Actions. Whenever a reference is made herein to an action or approval to be undertaken by the Authority, the Executive Director of the Authority or his or her designee is authorized to act on behalf of the Authority unless specifically provided otherwise or the context should require otherwise. 8.09. Counterparts. This Regulatory Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Regulatory Agreement is executed in three (3) originals, each of which is deemed to be an original. 8.1 0. Titles and Caption s . Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Regulatory Agreement or of any of its terms. References to section numbers are to sections in this Regulatory Agreement, unless expressly stated otherwise. 8.11. Inte rpretation. As used in this Regulatory Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Regulatory Agreement shall be interpreted as though prepared jointly by both parties. 8.12. No Waiver. A waiver by either party of a breach of any of the covenants , conditions or agreements under this Regulatory Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Regulatory Agreement. 8.13. Modificat ion s. Any alteration, change or modification of or to this Regulatory Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 4852-2143-6984 .v4 61147 .10045\29142630 .8 4814-6623-9034 .v2 Attachment 8 8.14. Severability. If any term, provision, condition or covenant of this Regulatory Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Regulatory Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 8.15. Computation of Time. The time in which any act is to be done under this Regulatory Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any, act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 8.16. Legal Advice . Each party represents and warrants to the other the following: they have carefully read this Regulatory Agreement, and in signing this Regulatory Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Regulatory Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Regulatory Agreement, and, they have freely signed this Regulatory Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Regulatory Agreement, and without duress or coercion, whether economic or otherwise. 8.17. Time of Essence. Time is expressly made of the essence with respect to the performance by the Authority, the Borrower of each and every obligation and condition of this Regulatory Agreement. 8.18. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Regulatory Agreement including, but not limited to, releases or additional agreements. 8.19. Conflicts of Interest. No member, official or employee of the Authority or the City shall have any personal interest, direct or indirect, in this Regulatory Agreement, nor shall any such member, official or employee participate in any decision relating to the Regulatory Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 8.20. Governing Law. This Regulatory Agreement, and the rights and obligations of the parties, shall be governed and interpreted in accordance with the laws of the State of California. Should litigation occur, venue shall be in Superior Court of Orange County. 8.21. Default; Cure. A party to this Agreement shall be in default if it fails to perform or satisfy any obligation or requirement set forth herein after thirty (30) days for obligations or requirements that can be satisfied by the payment of money, or after forty-five (45) days (or such 4852-2143-6984 .v4 61147 .10045\29142630.8 4814-6623-9034.v2 Attachment 8 longer period as may be reasonably required so long as such party has commenced the cure within such forty-five (45) day period and diligently pursues such cure to completion) for any other obligations or requirements, of receiving written notice from the non-defaulting party of such default. Borrower's limited partner shall have the right, but not the obligation, to cure any default hereunder, and any such cure shall be accepted by Authority as if rendered by Borrower. 8.22. Date of Agreement. The date of this Regulatory Agreement shall be the date set forth in the first paragraph hereof. Date: APPROVED AS TO FORM: 4852-2143-6984.v4 61147.10045\29142630.8 4814-6623-9034.v2 SAN JUAN CAPISTRANO HOUSING AUTHORITY "AUTHORITY" SEASONS SAN JUAN CAPISTRANO AR, L.P., a California limited partnership By: LINC-Gardena Associates, LLC, a California limited liability company, its managing general partner By: LINC Housing Corporation, a California nonprofit public benefit corporation, its sole member and manager By: Name: Title: By: HCHP Affordable Multi-Family, LLC, a California limited liability company, its administrative general partner By: Attachment 8 Thomas Erickson Senior Vice President 4852-2143-6984.v4 6 1147.10045\29142630 .8 4814-6623-9034.v2 EXHIBIT A Legal Description of Property [to be inserted] Exhibit A to Attachment 8 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ____________________ ___ ) On before me, Notary Public (insert name and title of the officer) personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature -------------(Seal) 4852-2143-6984.v4 61147.10045\29142630 .8 4814-6623-9034.v2 Exhibit A to Attachment 8