1. Amended and Restated Preliminary Funding Award Letter — Anaheim City Council, April 12, 2022

City of Anaheim

ANAHEIM HOUSING AUTHORITY
ANAHEIM WEST TOWER, 201 S. ANAHEIM BLVD, ANAHEIM CA 92805 April 12, 2022

Ms. Rebecca Clark
Linc Housing Corporation
3590 Elm Avenue
Long Beach, CA 90807
SUBJECT: Amended and Restated Preliminary Award Letter regarding Certain Financial Assistance by the City of Anaheim and the Anaheim Housing Authority, the Pro posed Conversion and Rehabilitation of the 119- Unit Studio 6 Extended Stay Motel located at 1251 N Harbor Boulevard to an Interim and Permanent Supportive Housing Project in Anaheim, California in Conjunction with the Authority and Linc Housing Corporation & American Family Housing USA’s Joint Application to the State of California’s Homekey Round 2 Program
Dear Ms. Clark:

This amended and restated Preliminary Award Letter (the “Amended and Restated Letter”) amends, restates and supercedes the Preliminary Award Letter issued by the Anaheim Housing Authority (“Authority”) to the partnership formed by Linc Housing Corporation (LH), a California non-profit corporation, and American Family Housing USA, a California non-profit corporation, (“Developer”) on January 25, 2022 (the “Prior Letter”), for the proposed conversion and rehabilitation of the 119 unit Studio 6 Motel located at 1251 North Harbor Boulevard to an interim and permanent housing project (“Project”), conditioned on the parties entering into mutual ly agreeable terms of a grant , loan and/or regulatory agreement setting forth the parties’ rights and obligations as well as any additional documentation necessitated by the application to and award of funds under the Homekey Round 2 Program (Homekey).

The Prior Letter provided the Developer $2,877,959 in HOME American Rescue Plan (HOME ARP) funds to meet the Homekey programs capital match requirement.

However, after additional research it was determined the HOME ARP funds would require the site to operate as interim housing for a minimum of ten (10) years. This requirement hinders our ability to convert the Project from interim to permananent supportive housing within the three to five year timeframe as desired by the Authority and Developer . Due to the HO ME ARP requirements, we are amending the Prior Letter to substitute the HOME ARP funds for Authority Low Moderate Income Housing Asset Funds (LMIHAF) funds, which do not require a minimum operation period. All other commitments made under the Prior Letter remain.

Ms. Rebecca Clark
Linc Housing Corporation
Amended and Restated Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP Program Funds, HHAP, HOME funds and/or Housing Asset Funds for the 119-Unit Studio 6 Extended Stay Interim and Permanent Supportive Housing Project in Anaheim, California
April 12, 2022

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Background
Developer submitted an application to the City of Anaheim (“City”) and the Anaheim Housing Authority (“Authority”) for financial assistance for the proposed affordable housing project called “ Studio 6 Extended Stay Interim and Permanent Supportive Housing Project”, which is a conversion and rehabilitation of a 119 -unit motel located in Anaheim, California (“Project”) , to serve individuals experiencing homelessness or who are at risk of homelessness and who are inherently impacted by or at increased risk for medical diseases or conditions due to the COVID -19 pandemic or other communicable disease, as contemplated by the Homekey Round 2 Program and/or other target population, as interim and, subsequently, permanent supportive housing.

Request for Matching Funds
Specifically, during the Interim Supportive Housing Phase (Phase I) the Developer has requested that the City provide a loan of approximately $2,877,959 in LMIHAF funds to support the capital match requirement and a grant of approximately $7,523,282 in Homeless Housing Assistance Program (HHAP) to support the operational match requirement. During the Permanent Supportive Housing Phase (Phase II), the Developer has requested that the City provide a loan of up to $3,969,274 in HOME program funds or moneys from the Authority’s LMIHAF and 89 Project Based Section 8 Vouchers (“PBV Assistance”). Developer has also submitted an application for funds under the Homekey Round 2 Program for capital funding for eighty -nine (89) units in t he amount of approximately $20,097,959 (“Homekey Funds”) and operational expenses in the amount of approximately $3,549,600. It is anticipated that Developer will also be applying for Tax Credit funding providing an additional $24,638,140 in 9% tax credit equity for the project for Phase II, for three (3) successive rounds in the manner and with any limitations that may be designated in this Preliminary Award Letter and any additional agreements entered into in furtherance of this PAL.

With respect to Home key funds, City and Authority anticipate joint application between the Authority and Developer for Homekey Round 2 funds. Regulations were issued by the Department on September 9, 2021 in its Notice of Funding Availability (NOFA) pertaining to application requirements, disbursement, administration and expenditure of funds, as contained in Article I though VI of the NOFA. As part of the joint -application, the City and Authority agree to enter into, execute and deliver a Standard Agreement and any and all documents required or deemed necessary or appropriate to secure the Homekey Round 2 f unds from the Department and to participate in the Homekey Round 2 Program, and all amendments thereto.

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Land Use Entitlement and Anaheim Assistance
In connection with seeking to undertake the Project, the Developer submitted to the City of Anaheim (the “City”) and the Authority1 an application for financial assistance and other benefits as herein defined and described (together, “Anaheim Assistance”). Said application is att ached as Exhibit A (“Application”) and incorporated herein by this reference.

As part of its application, Developer has advised the Authority and the City that Developer intends to prepare and submit to the City a request for concurrence with the CEQA and Land use preemption pursuant to Assembly Bill 140. Homekey Round 2 Program projects are entitled to apply for and receive a California Environmental Quality Act (CEQA) exemption and land use streamlining per AB140.

Homekey Round 2 projects are eligible for such streamlining and are deemed consistent and in conformity with any applicable local plan, standard, or requirement, and any applicable coastal plan, local or otherwise and allowed as a permitted use, within the zone in which the structure is located, and shall not be subject to a conditional use permit, discretionary permit, or any other discretionary reviews or approvals. (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h)).

According to the Developer, as herein described, t he Project will be completed and financed in two phases. To clarify, Interim Supportive Housing Phase (Phase I) will use anticipated Homekey Round 2 Program funds, matching funds from the City, as herein described, and an acquisition loan to acquire the property. This initial phase will involve the rehabilitation eighty-nine (89) units for the purposes of interim housing as required by Homekey funding guidelines. The eighty -nine (89) units are in fair condition and ready for occupancy after minor repairs with the exception of units that will require renovation to meet the Homekey accessibility and hearing/visual requirements. During the Interim Housing Phase (Phase 1) the leasing and temporary community space will be updated and some of the units will be utilized as counseling and office space. With respect to Permanent Supportive Housing Phase (Phase II), as noted, the parties anticipate further discussion to determine appropriate design, structure and operational standards such as space requirements for resident services, income targeting requirements, required parking spaces, amenities and other matters.

The Developer proposes that with the written consent of the Authority, as applicable, the Developer shall prepare and submit to the City an application for Buil ding Plan

1 The City is a California municipal corporation and charter city; and, the Authority is a public body corporate and politic organized and existing pursuant to the Housing Authorities Law, California Health and Safety Code Section 34200, et seq. (“HAL”). In this Preliminary Award Letter , the City and the Authority are referred to together as “Anaheim”.

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Check and, if approved, with construction subject to the City’s development standards, zoning and other laws and regulations unless otherwise exempt per AB140 (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h).).

In connection with implementation of the Project, the Developer has requested that Anaheim provide to the Developer , by this PAL, the Anaheim Assistance described below.
• Anaheim states its objective at this time with respect to the proposed development as described by Developer, as referenced in this Preliminary Award Letter, is to successfully be awarded Homekey Round 2 Program funds, in which the Developer will then acquire the property and begin the Phase I (Interim Housing Phase) development consisting of rehabilitation of the eighty -nine (89) homekey units to meet Homekey program ADA requirements. Persons who occupy the Homekey units must become participants in the Interim Housing program which includes case management, social services, mental health services, and assis tance to find temporary or permanent housing. Eighty -seven (87) units will be occupied by participants in the Interim Housing program and two (2) units will be occupied by property management staff. Occupancy of the eight -nine (89 ) units is anticipated t o begin shortly thereafter , and no later than eight (8) months, to satisfy the provisions of the Homekey Round 2 Program application and funding request. The Developer will subsequently submit an application for Tax Credit financing to complete the Phase II (Permanent Supportive Housing) development of the s ite, with additional details to be determined, but satisfying the provisions of the California Tax Credit Allocation Committee (“TCAC”) Regulations Implementing the Federal and State Low Income Housing Tax Credit Laws, California Code of Regulations, Title 4, Division 17, Chapter 1, Section 10300, et seq. (“TCAC Regulations”), in particular Section 10326, albeit there is no intention to violate HOME Program requirements, in particular 24 CFR 92.2. If the Developer receives an award of low -income housing tax credits (“Tax Credits”), then the Developer (or, if applicable, Developer and Anaheim) may negotiate and enter into a comprehensive agreement for the operation of affordable rental housing improvements (the “AHA”) in implementation of the Tax Credits and the Anaheim Assistance.

• With respect to Tax Credits and for further clarification, the Developer plans to make an application to the California Tax Credit Allocation Committee (CTCAC) for first round 9% Tax Credits anticipated to be scheduled for March, 2023. If the Developer’s application for 9% Tax Credits is unsuccessful, provided that the Developer has acted diligently and it appears to the Authority reasonably likely that a resubmittal would be successful, the

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Authority will agree to two (2) additional successive applications to CTCAC for an allocation of 9% Tax Credits , but if the project appears competitive, Developer may apply for California Debt Limit Allocation Committee (CDLAC) for tax exce mpt bonds and to CTCAC for 4% tax credits in one successive round; provided, however, that the Authority shall have no obligation to increase the amount of Anaheim Assistance to the Project from that described in this PAL . If no award is made, the Anaheim and Developer agreed to meet and confer as to the next steps, as may be more fully memorialized in an agreement executed in furtherance of the PAL.

Anaheim Assistance
The City and Authority have reviewed the Developer’s requests for assistance and on January 25, 2022 at a public meeting authorized and approved issuance of this letter evidencing the preliminary award of the HOME ARP, Anaheim HHAP, County of Orange HHAP, CoC HHAP, County general funds, HOME and/or LMIHAF loan and PBV Assistance to the Develop er for the Project under 24 CFR 92.504(c)(3) (together, “Anaheim Assistance”). Anaheim has made the Developer aware of the 2013 HOME Final Rule, specifically including the amendments to the definition of “commitment” in 24 CFR 92.2 that prohibits the City as a participating jurisdiction (“PJ”) from providing a commitment (as the term is defined therein) of HOME Program funds to any specific local project until “the [City] and project owner [Developer] have executed a written legally binding agreement under which HOME assistance will be provided to the owner for an identifiable project for which all necessary financing has been secured, a budget and schedule have been established, and underwriting has been completed and under which construction is scheduled to start within twelve months of the agreement date.” (Italics added.) Notwithstanding the definition of “commitment” in 24 CFR 92.2 as amended by the 2013 HOME Final Rule, 24 CFR 92.504(c)(3) authorizes the City to “ preliminarily award HOME funds for a proposed project, contingent on conditions such as obtaining other financing for the project” [italics added]; however, this section goes on to clearly confirm that “[t]his preliminary award is not a commitment to a project.

The written agreement committing the HOME funds to the project must meet the requirements of ‘commit to a specific local project’ in the definition of ‘commitment’ in §92.2 …” Thus, while this letter is not a commitment as defined under the HOME Program of federal funds for Anaheim Ass istance as the term commitment is defined therein, Anaheim intends that this letter evidence the City’s and Authority’s preliminary award of the Anaheim Assistance to the Developer for the Project subject to the conditions described below. Further, Anahei m states its objective for the Developer to satisfy the provisions of the TCAC Regulations, in particular Section 10326, albeit there is no intention to violate HOME Program requirements, in particular 24 CFR 92.2.

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The approximate amount of the HOME and/or LMIHAF Loan and Project Based Voucher (“PBV”) Assistance to be provided to the Project has been determined, and this letter is provided , and based on, Anaheim’s review of the Developer’s application for the HOME and/or LMIHAF Loan and PBV Assistance and t he development proforma and projected cash flows for the Project submitted by the Developer to Anaheim as part of its Application, as contained in Exibit A, including the distribution of housing units (“Unit Mix”) to which the PBV Assistance will be applied as set forth in the Proforma. The Unit Mix is an important part of the Developer’s consideration to Anaheim because the Project is intended to serve a target population: Extremely Low Income persons who currently reside in motel rooms, other unstable or substandard housing, or are otherwise homeless. The Authority Executive Director has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Anaheim Assistance is not materially increased or extended.

The AHA, which would include the infusion of HOME ARP, HHAP, HOME or LMIHAF Loan would include the following terms as well as other provisions designated by the Authority which are customary to agreements of the Authority providing for the development or rehabilitation of affordable rental housing units and which involve the use of HOME or other federal funding; such AHA will also be subject to review by the City Attorney and/or special counsel engaged by the Authority:
• Covenants will be recorded which protect the interests of the Authority in the affordable rental units developed; such covenants shall not be subordinated to deeds of trust or other instruments and, in addition, shall be enforceable by the City as well as the Authority. If a density bonus agreement is entered into, the provisions of such density bonus agreement shall also be senior to any deeds of trust or other instruments.
• A Phase I loan of approximately $2,877,959 in Anahiem LMIHAFcapital funds (Phase 1 Capital Loan) and grant of approximately $7,523,282 in operating subsidy consisting of $3,593,634 in Anaheim HHAP funds and $3,929,648 in County of Orange funds consisting of County of Orange HHAP funds, County general funds and Continuum of Care (CoC) HHAP funds . (the “Phase I Operating Grant”). Funding shall be based and in compliance with LMIHAF and HHAP regulations, which shall be incorporated in any agreements entered into in furtherance of the Preliminary Award Letter.

A Phase II Loan (“Phase II Development Loan”, together “Development Loan(s)”) of approximately $3,969,274.00) from HOME and/or the Authority’s Low and Moderate Income Housing Asset Fund (“LMIHAF ”) with 1) funds transferred to the Authority by the City, as such funds have been received by

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the City as a participating jurisdiction under the federal HOME Investment Partnerships Act and the HOM E Investment Partnerships Program, in accordance with Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S .C. 12701 et seq.) and the HOME Program regulati ons codified at 24 CFR Part 92, and provided there is and shall be no “commitment” of funds to pay such purchase price until the requirements of Section 92.2 (described herein) are fully satisfied ( "HOME Program") or (2) money held in the Authority’s LMIHA F pursuant to the Dissolution Law, Health and Safety Code Sections 34170, et seq., in particular sections 34176 and 34176.1 (“LMIHAF Moneys”). The Development Loan(s) will be a residual receipts loan in no lower than second lien position and subordinate to a primary loan.

Disbursement procedures for release of the loan proceeds shall be in accordance with the applicable funding source and/or regulations and shall be proportional relative to the disbursement of County funds. Further, these limitations and any other required terms and conditions shall be memorialized as appropriate by the City Manager or his/her designee in any documents executed in furtherance of this PLA consistent with the goals and obligations set forth in this Letter;
• Principal amount shall bear three and No/100ths percent (3%) simple interest per annum but will be deferred during Phase I; and
• Repayment from Residual Receipts (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees to be described in the AHA); shall be negotiated at Phase II.
• Remaining principal and accrued interest due upon the 55 th anniversary of the Closing or earlier upon sale, refinancing or default. Anaheim Housing Authority will be entitled to receive residual receipts equal to the percentage determined under the preceding bullet point.
• Construction of the Project must be competitively bid in accordance with applicable federal, state and local laws and regulations, in particular the HUD requirements;
• Developer is responsible for determining the applicability of all federal and state labor laws, including without limitation federal Davis Bacon and related prevailing wage, labor, contracting and contractor requirements and, if applicable,

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compliance with said laws. Additionally, the Project is also a “public works project” and is subject to all state and local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq.

Developer explicitly acknowledges and agrees that it shall be independently responsible for reviewing the applicable laws and regulations with respect to the payment of prevailing wages and complying therewith, including responsibity for determining applicability of any requirements and any exemptions. • Cost savings from the Project, if any, will be applied first to pay down the HOME ARP/HOME/LMIHAF Loan, subject to compliance with the TCAC Regulations. • If the Developer applies for and receives 9% Tax Credits from TCAC, the Development Loan, if any, to be provided as part of the Anaheim Assistance described above would be in an amount to be determined upon the approval of Developer’s 9% Tax Credit applications. Any increase in the amount of the Anaheim Assistance described herein will require approval by the City Council and the Authority Board; provided that no increase in the Anaheim Assistance is contemplated.
• The Developer shall continue to apply for other funding sources; such additional funding sources, including the conditions related to the provision of suc h other funding, shall be subject to prior written approval by the Authority. If other funding is secured the Authority loan shall be reduced on a dollar for dollar basis. • Developer agrees that any unused funds obtained through the Homekey Round 2 Program that are not expended or anticipated to be expended for any phase of the Project shall be returned to the City and Authority within a reasonable amount of time not to exceed forty -five (45) days, with written notice of the City and/or Authority.
• Developer acknowledges it will be required to enter into agreements containing standard insurance provisions that will include, but not be limited to the following:
o Developer shall certify in writing to City and Authority that it is in compliance with the Homekey Program insurance requirements, as set forth in Article VI, section 600 of the HCD Homekey Notice of Funding Availability (NoFA).
o Further, Developer shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City and Authority duplicate originals or appropriate endorsements of commercial general liability insurance policies in the amount of at least Two Million Dollars ($2,000,000) combined single limits, naming City and Authority and its officers, employees, and agent s as additional insureds or co- insureds.

Developer shall also furnish or cause to be furnished to City and

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Authority evidence of builder’s risk coverage written on a completed value basis in an amount equal to the full replacement cost of the improvements with coverage available on the so -called non-reporting “all risk” form of policy, including coverage against collapse, fire, and water damage, with such insurance to be in such amounts and form and written by such companies as shall be approved by City and Authority.

Such policy shall name City and Authority as a loss payee. The foregoing insurance policies:

 (a) shall be primary insurance and not contributory with any other insurance which City and Authority may have;

 (b) shall contain no special limitations on the scope of protection afforded to City andAuthority and its officers, employees, agents, and representatives;

 (c) shall be “date of occurrence” and not “claims made” insurance;

 (d) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability;

 (e) shall provide that the policy will not be cancelled by the insurer or Grantee unless there is a minimum of thirty (30) days prior written notice to City and Authority;

 (f) shall be written by a good and solvent insurer admitted in California and registered with the California State Department of Insurance; and

 (g) shall be endorsed to state that any failure to comply with the reporting provisions of the policies shall not affect coverage provided to City and Authority.

o Developer shall also furnish or cause to be furnished to City and Authority evidence reasonably satisfactory to City and Authority that Developer’s Contractor(s) carry workers’ compensation insurance as required by law.

• Developer shall defend, indemnify, assume all responsibility for, and hold City and Authority and their officers, officials, members, employees, agents, and representatives harmless from all claims, demands, damages, defense costs or liability of any kind or nature relating to (a) any damages to property or death or

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injuries to persons (including reasonable attorneys’ fees and costs and expert witness fees), which may be caused by any acts or omissions of Devel oper arsing from or related to the Project and this PLA , whether such activities or performance be by Developer or by anyone directly or indirectly employ ed or contracted with by Developer and whether such damage shall accrue or be discovered befor e or af ter termination of any a greement, or (b) any litigation, administrative or adjudicative challenge by third parties to the validity, applicability, interpretation or implementation of any a greement, or the certification or approval of the environmental document(s) with respect to the Project and this PLA , (c) any default of any a greement by Developer, or (d) any activities or conditions in, on or under or related to the Studio 6 Extended Stay Motel.

The City’s obligation to provide the HOME ARP, HOME and/ or LMIHAF Loan and additional subsidies to the Project and the Authority’s obligation to provide PBV Assistance to the Project are subject to each of the following conditions:

1. Approval by the Governing Board of the Authority of an AHA by and between the Authority and Developer that more specifically describes and authorizes the disbursement of the HOME ARP, HOME and/or LMIHAF Loan proceeds to the Developer for rehabilitation of specified housing units at the Project and the application and use of PBV Assistance for the Project, the restriction of the rents at 89 out of the 119 housing units at the Project to levels that are affordable at 30% of the Area Median Income (“AMI”) for a minimum of 55 years, and execution of said AHA contract in a form approved by the City Attorney/Authority General Counsel. The City’s HOME ARP, HOME Program funds for the HOME Loan will be transferred to the Authority pursuant to a cooperation agreement to be entered into between these entities pursuant to the Home Program.

2. Compliance with the HOME Program , the Section 8 Program, and applicable federal regulations set forth in 24 CFR Part 92 (as amended by the 2013 HOME Final Rule) and 24 CFR Part 983.

3. Compliance with the California Environmental Quality Act (CEQA) requirements unless, pursuant to AB 140 or other basis, as a statutory exemption for this Project, as determined to be applicable and appropriate.

Although Developer
has requested concurrence with CEQA and Land use preemption, n othing herein shall be construed to limit Anaheim’s discretion to conduct environmental review and/or determine one or more appropriate basis for exemption. (Health and Safety Codes 50675.1.4 and 50675.1.3, Subdivision (h)).

4. Compliance with the National Environmental Protection Act (“NEPA”) and approval thereof must be adhered to. NEPA clearance for the Project is currently underway and must be completed and approved by HUD prior issuance of funds.

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5. Determination of federal Department of Housing and Urban Development (“HUD”) “fair market rent” for purposes of implementing the PBV Assistance to the Project will be based and contingent upon approval of an independent appraisal.

6. Receipt of Subsidy Layering Review approval from the Tax Credit Allocation Committee (“TCAC”). (Pursuant to July 2010 HUD Notic e, TCAC may, and is now, performing Subsidy Layering Review for and on behalf of HUD.)

7. During the tax credit period or Phase II, 87 of the units “Housing Units” at the Project shall and will be restricted to “Affordable Rent” as defined by the TCAC Regulations for a period not less than 55 years pursuant to conditions, covenants and restrictions recorded against the Project in the Official Records, County of Orange, California. Two Housing Units will be rented to an on- site property management personnel. The management units shall not be required to be rent-restricted. Pursuant to Homekey Regulations, Article 34 of the California Constitution, restricting is explicitly acknowledged and deemed inapplicable based Government Code section 37001(h) which exempts all development costs of acquisition, rehabilitation, reconstruction, alterations work, or any combination thereof, for housing under the Homekey Program from the restrictions of Article

34. Additionally, the City has received approval from the voters f or the development of low income housing and therefore this Project is consistent with Article 34.

8. A unit matrix of all units in the Project of One -hundred and Nineteen (119) units is attached hereto and fully incorporated by this reference as Exhibit B ( “Unit Mix Matrix”).

9. Eighty-seven (87) of the One -hundred and Nineteen (119) Units shall be covenanted as designated Homekey units with affordable rent charged to the tenant household. Further, all housing units at the Project, shall be restricted as set forth herein and in the AHA for a minimum of fifty -five (55) years pursuant to a regulatory agreement with conditions, covenants and restrictions restricting the Developer’s and successors’ use, ownership, operation, management, maintenance, transfer and fi nancing of the Project, and such fifty -five (55)-year regulatory agreement shall be recorded against the Project and Site in the Official Records, County of Orange, California. Additional covenants requirement shall be determined as additional information is obtained and clarified with respect to other funding and Permanent Supportive Housing Phase (Phase II).

10. No units within the Project shall be restricted on the basis of age.

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11. Execution of the AHA shall be in a form to be reviewed and approved by Anaheim’s City Attorney and/or special counsel.

12. The HOME ARP, HOME Program funds for the Anaheim Loan will be transferred by the City to the Authority pursuant to a cooperation agreement to be considered and action taken by and between the City and Authority pursuant to the HOME Program.

13. If HOME ARP and HOME Program moneys are used to make any portion of the Anaheim Loan, the Developer shall comply with the HOME ARP, HOME Program and applicable federal regulations set forth in 24 CFR Part 92 (as amended by the 2013 HOME Final Rule) and 24 CFR Part 983.

14. If LMIHAF Moneys are used to make the Anaheim Loan, the Developer shall comply with all applicable requirements of the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq., and the Dissolution Act, Health and Safety Code Section 34170, et seq., in particular Sections 34176 and 34176.1.

15. The Developer shall comply with the HAL and any and all other applicable federal, state and local laws and regulations.

16. All Housing Units at the Project must pass Housing Quality Standard (or other standards as applicable) inspections as required by applicable funding sources and, including at the completion of Phase 2 construction, as required by applicable HUD regulations, specifically including the HOME Program regulations as amended by the 2013 HOME Final Rule.

17. Execution of an Agreement to Enter into a Housing Assistance Payment Contract (“AHAP”) with respect to the provision of PBV Assistance to the Project for the anticipated 89 Housing Units to receive PBV Assistance.

18. Execution of a Housing Assistance Payment Contract (“HAP Contract”) with respect to the provision of PBV Assistance to the Project pursuant to the requirements of the AHAP.

19. Developer This a federally -funded Project and is therefore subject to all federal and state labor laws, including without limitation federal Davis Bacon and related prevailing wage, labor, contracting and contractor requirements. Additionally, the Project is also a “public works project” and is subject to all state an d local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq.

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20. As and if applicable, the Developer will comply with the federal Davis -Bacon Act and California Labor Code Section 1720, et seq., relati ng to prevailing wages (“Prevailing Wage Laws”); in this regard, the Authority and the Developer understand that such laws and regulations include exemptions that may apply to the Project, but under the AHA the Developer will assume responsibility for and indemnify the Authority (and the City) relating to the Prevailing Wage Laws as such may be applicable to the Project.

21. Developer shall comply with and complete environmental review of the Project pursuant to all applicable federal and state laws and regulat ions, including the California Environmental Quality Act ("CEQA") and the National Environmental Protection Act ("NEPA") and approval thereof, as applicable.

22. Receipt of Subsidy Layering Review approval from TCAC. (Pursuant to July 2010 HUD Notice, TCAC may, and is now, performing Subsidy Layering Review for and on behalf of HUD.)

23. Determination of the HUD “fair market rent” for purposes of implementing the PBVs for the Project will be based and contingent upon approval of an independent appraisal.

24. If HOME P rogram funds are used to provide the Anaheim Assistance, for the twenty (20)-year term required by the HOME Program, all housing units at the Project must pass HOME Program construction, occupancy, and physical condition requirements as well as federal Housing Quality Standards annual inspections, (and other standards, as applicable) at the completion of construction and thereafter, as required by HOME Program regulations as amended by the 2013 HOME Final Rule, and meet federal program limitations and other applicable federal, state and local laws and regulations as to be set forth in the AHA.

25. If HOME ARP funds are used to provide the Anaheim Assistance, Developer will be required to comply with HOME ARP Regulations, which are incorporated herein by this reference.

26. The Anaheim Loan proceeds (Phases I and II) will be disbursed during construction at such time as all funding sources are committed and available and subject to such terms and conditions precedent as are customary for AHA’s entered into by the Authority and in accordance with any applicable requirements, including, but not limited to regulations contained in the NOFA for the Homekey Round 2 Program, and any limitations contained herein or as may be further memorialized in agreements in furtherance of this PAL.

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27. The AHA shall provide that the Closing and each of the following conditions precedent shall be met prior to the disbursement of any portion of the Development Loan(s) as well as such additional and other conditions as are customarily included by City and Authority in its affordable housing agreements:
a. All grading and/or building permits shall have been issued, or be ready to issue, and the City shall have issued a letter stating that building permits are ready to issue, subject only to the compl etion of grading of the Site for the Project.
b. The Developer shall have provided evidence to Anaheim that the Developer has obtained insurance policies, certificates, and additional insured or other endorsements therefor acceptable to Anaheim, and as required by any applicable funding sources, including the Homekey Round 2 Program, and as described in this PLA and the AHA. c. The Developer shall have provided construction security in favor of Anaheim, which may include a completion guarantee or a letter of credit, and/or payment and performance bonds from the general contractor and subcontractors for the Project (or some combination of any or all of the above), with election at the sole discretion of Anaheim, in an amount sufficient to ensure the Project will be completed, all invoices paid, and all workers paid in conformity with applicable federal and state labor laws, and otherwise in compliance with applicable federal and state laws, and placed in service within the time set forth in the schedule for the Proj ect as approved by Anaheim.
d. The Developer shall submit and obtain approval of the Authority for (i) the construction contract with its general contractor and the subcontracts therefor, (ii) the limited partnership agreement for the limited partnership entity to be formed to own and operate the Project, (iii) management, scope and funding for all required supportive services, and (iv) the marketing and tenant selection plans for the Project.

28. The AHA shall provide that each of the following conditions precedent shall be met prior to the release of the PBVs:
a. A final certificate of occupancy for completion of the Project shall have been issued by the City’s building official.
b. The final HAP contract has been duly entered into between the Authority and the Developer pursuant to the Section 8 Laws and all other applicable federal, state and local laws and regulations.

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c. The Developer shall have maintained and have on file with Anaheim up-to-date insurance policies and certificates or endorsements therefor acceptable to Anaheim, as described in the AHA.
d. The Developer shall have prepared, and the Authority shall have approved, a detailed Social and Supportive Services Plan (“Social Services Plan”), which shall describe the social and supportive services to be provided at the Project, and a detailed budget for the social and supportive services described in the Social Services Plan. The Social Services Plan shall further describe the goals and objectives of the social and supportive services to be provided at the Project. The approved Social Services Plan shall be made a part of the HAP contract and contingent on final HAP approval for the PBVs. The Social Services Plan shall include a robust level of social services offered at the Project and suitable for the residents’ needs and provided by professionally trained staff. Services must include an assessment of clients’ needs, link to services and verification of services obtained. The Social Services Plan must also provide clear outcome measurements related to services provided and must clearly identify if services will be provided by the Developer or by third party entity(ies). For services to be provided by the Developer, the Social Services Plan shall clearly identify the budget and resources available for the services. For services to be provided by third party entity(ies), the Social Services Plan must include copies of the agreements or memoranda of understanding that govern provision of the services. The Plan shall include strong programming that engages future tenants on a daily basis , and that will have a positive social impact on the residents as it relates to mental wellness and social integration. The Social services plan shall address how the proposed programming will support the small unit size concerns and dealing with socialization.

29. The AHA shall provide that each of the following conditions precedent shall be met prior to the disbursement of any portion of the HOME ARP, HOME and/or LMIHAF Loan and prior to execution of the AHAP:
a. All grading and/building permits shall have been issued or the City shall have issued a letter stating that building permits are ready to issue, subject only to payment of fees and the completion of grading of the Project site.
b. Developer shall have secured all necessary financing and funding for the construction and operation of the applicable phase of the Project; Developer shall not be required to have obtained financing for Phase 2 in order to close on Phase 1 financing. Such financing and funding shall be sufficient to pay al l Project development costs, through lease -up, as set

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forth in a final budget consistent with the approved Proforma (or as otherwise approved by Anaheim).
c. Developer shall have provided evidence to Anaheim that Developer has obtained insurance policies and certificates or endorsements therefor acceptable to Anaheim, as described in the AHA.
d. Developer shall have provided construction security in favor of Anaheim, which may include a completion guarantee from Developer and/or a letter of credit and/or performance bonds from the general contractor for the Project (or some combination of these), in an amount sufficient to ensure the Project will be completed and placed in service within the time set forth in the Project schedule approved by Anaheim.
e. Developer shall submit and obtain Authority approval of the applicable construction contract for each phase prior to closing the financing for each such phase, Developer’s limited partnership agreement for the limited partnership entity to be formed to own and operate the Project, and management, marketing and tenant selection plans for the Project.

30. Anaheim’s preliminary award of the Anaheim Assistance is and shall remain subject to all covenants, conditions, and restrictions set forth in the AHA, and in particular Anaheim’s analysis of all the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project, including without limitation all funding sources and terms therefor including the supportable debt ( construction and permanent financing), market value of Tax Credits and tax credit investor equity, deferred developer fee, if any, and other subordinate debt, if any.

31. Nothing herein shall be construed as a commitment to a particular project nor shall it limit in any way the City and Authority’s discretion with respect to project approvals, which shall be independent of funding commitments.

32. By consideration and action to approve this Preliminary Award Letter, Anaheim hereby authorizes the Executive Director to sign this Preliminary Award Letter on behalf of Anaheim (both the City and the Authority) , with any non- substantive changes to be made by the City Attorney or agency counsel . Further the Executive Director is authorized to cause to be prepared and executed the AHA, including the AHAP and HAP contracts for the PBVs, and any all documentation required by HCD for participation in the Homekey Round 2 program, in implementation of this Preliminary Award Letter so long as the terms and provisions of the AHA and each and all implementing agreements and instruments therefor are substantially consistent, financially and legally, with this Preliminary Award Letter.

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33. Further, the Executive Director (or his/her duly authorized representative) is authorized to implem ent the AHA and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by this Preliminary Award Letter, and thereafter the AHA including all exhibits, instruments and implementing agreements thereto.

To the extent necessary during the implementation hereof and thereof, the Executive Director is authorized to make technical or minor changes and interpretations of this Preliminary Award Letter and the AHA, as necessary to properly implement and carry out the Project provided any and all such changes shall not in any manner substantially affect Anaheim’s rights and obligations under this Preliminary Award Letter and the AHA.

34. In addition, the Executive Director is authori zed, on behalf of both the City and the Authority, to sign any and all other documents necessary or appropriate to carry out and implement this Preliminary Award Letter, the AHA and the Project, including all exhibits thereto and including causing the issuance of warrants in implementation thereto, and to administer Anaheim’s obligations, responsibilities and duties to be performed thereunder so long as substantially consistent with this Preliminary Award Letter and the AHA. Any and all substantial changes to this Preliminary Award Letter or to the terms and provisions of the AHA and implementing agreements and instruments thereto shall require the consideration and action of the City Council and/or the Authority Board, as applicable.

35. The City’s obligation to provide the HOME ARP, HOME and/or LMIHAF Loan and additional local subsidies and the Authority’s obligation to provide PBV Assistance to the Project are and shall remain subject to all covenants, conditions, and restrictions set forth in the AHA, and in particular Authority’s analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project.

36. In addition to the authorization to enter into the
Standard Agreement with HCD
for par ticipation in the Homekey Round 2 Program, and any and all documents required or deemed necessary or appropriate to secure the Homekey Funds from the Department, it is anticipated that parties will enter into, and the Executive Direct or is specifically aut horized execute, any agreements, including memoranda of understanding, setting forth operational, security and maintenance obligations with Developer with respect to the Project and its participation in the Homekey Round 2 Program.

37. In addition to the foreg oing, notwithstanding any statement set forth in this letter or provisions of the AHA, Developer, City and Authority agree and acknowledge that the AHA will not constitute a commitment of federal funds, and that such commitment of funds may occur only upon satisfactory completion of

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environmental review and receipt by Authority and/or City, as applicable, of a release of funds from the U.S. Department of Housing and Urban Development under 24 CFR Part 58. Developer and Authority will further agree in the A HA that the provision of any federal funds to the Project is and shall be conditioned on Anaheim’s determination to proceed with, modify or cancel the Anaheim Assistance based on the results of a subsequent NEPA environmental review and the outcome of the Subsidy Layering Review.

38. Developer and Authority are further prohibited from undertaking or committing any federal funds to physical or choice- limiting actions, including property acquisition, demolition, movement, rehabilitation, conversion, repair or construction prior to the environmental clearance; Developer and Authority understand that the violation of this provision may result in the denial of any federal funds under the AHA.

Should you have any questions or require additional information, please contact Grace Stepter, Executive Director, at (714) 765- 4315 or by email at ([email protected]).

Sincerely,

Grace Stepter
Executive Director
cc: Andy Nogal, Community Investment Manager

Anaheim City CouncilApril 12, 2022

Anaheim City Council
April 12, 2022