3. Preliminary Award Letter — Anaheim City Council, April 18, 2023

April 18, 2023

Ms. Rebecca Clark
Linc Housing Corporation
3590 Elm Avenue
Long Beach, CA 90807
SUBJECT: Preliminary Award Letter regarding Certain Financial Assistance by the City of Anaheim and the Anaheim Housing Authority, including a Loan sourced from the HOME ARP, HOPWA Program Funds and/or Housing Asset Funds, 87 Section 8 PBVs for the Proposed Conversion and Rehabilitation of the previous 119-Unit Studio 6 Extended Stay Motel located at 1251 N Harbor Boulevard to a Permanent Supportive Housing Project in Anaheim.

Dear Ms. Clark:

This Preliminary Award Letter (“PAL”) constitutes the City’s commitment to provide certain financial assistance as herein contained to Linc Housing Corporation (“LH”), a California non-profit corporation, or another legal entity under the control of LH (in either case, “Developer”) for the project described below, which financing will be evidenced by grant, loan and/or regulatory agreements setting forth the parties’ rights and obligations.

Background
Developer submitted an application to the City of Anaheim (“City”) and the Anaheim Housing Authority (“Authority”)1 for financial assistance for the proposed affordable housing project commonly known as “North Harbor (FKA Studio 6 Anaheim) located at 1251 N Harbor Boulevard, Anaheim, CA”, which is a conversion and rehabilitation of the previous 119-unit Studio 6 Extended Stay Motel currently being used as an interim housing site for homeless individuals as part of the State’s Project Homekey Round 2 Program.

On January 25, 2022, the Anaheim City Council approved the submission of an application to the California Department of Housing and Community Development (“HCD”) for Homekey grant funds (“Homekey Application”). The Application was submitted in partnership with the Developer and the project’s supportive services provider, American Family Housing USA, a California non-profit corporation. On March 28, 2022, the City was notified by HCD that the Homekey Application was approved and the City would be awarded $26,537,559 to acquire and operate the

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”.

City of Anaheim

ANAHEIM HOUSING AUTHORITY

Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 2 of 15 ends

Studio 6 Extended Stay Motel for interim housing. During the Interim Supportive Housing Phase (Phase I), the Developer requested that the City provide a loan of approximately $2,877,959 from the Authority’s Low and Moderate Income Housing Asset Fund (“LMIHAF”) to support the capital match requirement of HCD and a grant of approximately $7,523,282 in Homeless Housing Assistance Program ( “HHAP”) funds to support the operational match requirement. The Authority and Developer entered into an Affordable Housing Agreement and associated document for the duration of the “Interim Housing Period” as defined by the Affordable Housing Agreement. The Interim Housing Period (or Phase I) involved the rehabilitation of eighty-nine (89) units for the purposes of interim housing as required by the Homekey funding guidelines, with a 15 year affordability covenant . The eighty-nine (89) units were in fair condition and ready for occupancy after minor repairs, with the exception of units that required renovation to meet the Homekey accessibility and hearing/visual requirements. During Phase I, the leasing and temporary community space were updated and some of the units were utilized for counseling and office spaces.

As contemplated when the Authority entered into an Affordable Housing Agreement with Developer for Phase I, the project will now be transitioning into the development of Permanent Supportive Housing (Phase II), which will involve converting the existing 119-unit motel currently being utilized for interim housing to an 89-unit affordable permanent supportive housing project (“Project”). The Project will include sixty-seven (67) studio units, twenty (20) one-bedroom units, plus two two-bedroom manager units. For Phase II, the Developer has requested that the City provide, and the City hereby commits to provide, a loan of up to $4,900,649 consisting of any or all of the following funding sources: HOME American Rescue Plan Act (HOME ARP) program funds , Housing Opportunities for Persons with Aids (HOPWA) and/or moneys from the Authority’s Low and Moderate Income Housing Asset Fund (“LMIHAF”) (“Anaheim Loan”) . The Developer additionally requested that the Authority provide up to 87 Project-Based Section 8 Vouchers (“PBV Assistance”) to the Developer for the Project pursuant to the Project Based Voucher Law, 42 U.S.C. 1437f(o)(13), and the federal regulations promulgated thereunder set forth at 24 CFR Part 983 (collectively, the “Section 8 Program”). As specifically referenced in Recital F of the Affordable Housing Agreement, and as authorized by Section 15.10, the Affordable Housing Agreement will be amended and restated to address Phase II, making various changes for consistency and compliance with this PAL, and extending the term of the Affordable Housing Agreement. In addition to extending the term of the Affordable Housing Agreement, the amended and restated Affordable Housing Agreement will specifically provide that the term of the $2,877,959 LMIHAF loan from the City will also be extended for a new term of 55 years and bear s imple interest at 3% per annum. Any further references to an Affordable Housing Agreement, or AHA, in this PAL shall mean the Amended and Restated Affordable Housing Agreement (for Phase I).

Page 3 of 15 ends

It is required that Developer will also be applying for Tax Credit funding providing an estimated additional $20,447,388 in 9% tax credit equity for the project for Phase II, for two (2) successive rounds, if unsuccessful in the first round, and for 4% tax credit equity for one additional (3 rd) round, if necessary, in the manner and with any limitations that may be designated in this P AL and any additional agreements entered into in furtherance of this PAL.

Land Use Entitlement and Anaheim Assistance
In connection with seeking to undertake the Project (Phase II as noted) , the Developer submitted to the City and the Authorit y a request for financial assistance and other benefits as herein defined and described (together, “Anaheim Assistance”).

As part of the State’s Project Homekey Program, Developer submitted a request to the City for concurrence with the CEQA and Land use preemption pursuant to Assembly Bill 140 (“AB 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 for interim housing projects that will subsequently be converted into permanent supportive housing units , subject to specific requirements enumerated in Health and Safety Code section 50675.1.4.

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)).

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 Building Plan Check and, if approved, 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, more fully described herein, and has agreed to meet certain obligations in order to receive that Anaheim Assistance.
• The Developer will submit applications for Tax Credit financing, as detailed above, to complete Phase II (Permanent Supportive Housing) development of the s ite and satisfy the provisions of the California Tax Credit Allocation Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 4 of 15 ends

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. (“T CAC 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 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 is required to make an application to the California Tax Credit Allocation Committee (CTCAC) for first round 9% Tax Credits scheduled for April 2023.

If the Developer’s application for 9% Tax Credits is unsuccessful , the Authority will agree to one (1) additional successive application to CTCAC for an allocation of 9% Tax Credits . If that second round is not successful, Developer shall apply for California Debt Limit Allocation Committee (CDLAC) for tax exempt bonds and to CTCAC for 4% tax credits for one additional (third) 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, Anaheim and Developer agree 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 April 18, 2023 at a public meeting authorized and approved issuance of this letter evidencing the preliminary award and commitment of the 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 Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 5 of 15 ends

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 Assistance 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 t o the Developer for the Project subject to the conditions described below. Further, Anaheim 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.

The amount of the HOME ARP, HOPWA 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 ARP , HOPWA and/or LMIHAF Loan and PB V Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to Anaheim as part of its Application, as contained in Exhibit A, including the distribution of housing units (“Unit Mix”) to which the PBV Assist ance 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, HOPWA and/or LMIHAF Funds in the Anaheim Loan, would include the following terms as well as other provisions designated by the Authority which are customary to agreement s 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 loan of Four Million Nine Hundred Thousand Si x Hundred and Forty -Nine Dollars ($4,900,649) (the “Anaheim Loan”). The Anaheim Loan anticipated to be sourced from one or more of the following sources of money: (1) moneys transferred to the Authority by the City, as such funds have been received by Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 6 of 15 ends

the City as a participating jurisdiction under the federal HOME Investment Partnerships Act and the HOME 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 H OME Program regulations codified at 24 CFR Part 92, and provided there is and shall be no “commitment” of funds to the requirements of Section 92.2 (described herein) are fully satisfied ( "HOME Program") and/or (2) funding provided by HUD pursuant to the Housing Opportunities for Persons With AIDS ("HOPWA") program authorized under the AIDS Housing Opportunity Act (42 U.S.C. 12901 et seq.) and/or (3) money held in the Authority’s LMIHAF pursuant to the Dissolution Law, Health and Safety Code Sections 34170, et seq., in particular sections 34176 and 34176.1 (“LMIHAF Moneys”). The Anaheim Loan will be a residual receipts loan in no lower than third lien position and subordinate to the Primary Loan. It is anticipated that approximately Four Million, Nine Hundred Thousand Six Hundred and Forty -Nine Dollars ($4,900,649)(the “Authority Amount”) would consist of LMIHAF Moneys and/or HOME ARP Program funds and/or (3) HOPWA Funds2;
• Disbursement procedures for release of the loan proceeds; • Principal amount shall bear three and No/100ths percent (3%) simple interest per annum;
• Repayment from 70% of Residual Receipts (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees to be described in the AHA);
• Remaining principal and accrued interest due upon the 55 th anniversary of the Closing or earlier upon sale, refinancing or default.
• Construction of the Project must be competitively bid in accordance with applicable federal, state and local laws and regulations, in particular the HUD requirements;
• 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 and local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq.

2 In this PAL, Anaheim Loan and or “HOME ARP, HOPWA and/or LMIHAF Loan” are used interchangeably.

Page 7 of 15 ends

• Developer shall include funding in the Project proforma to pay for the Authority’s legal costs, including attorney’s fees and other associated costs, related to any changes requested or proposed by the Developer after execution and closing of the AHA .
• Cost savings from the Project, if any, will be applied first to pay down the Anaheim Loan, subject to compliance with the TCAC Regulations.
• If the Developer applies for and receives 9 % Tax Credits from C 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 requested increase in the amount of the Anaheim Loan described herein would require approval by the City Council and the Authority Board; provided that no increase in the Anaheim Loan is contemplated.
• The Developer shall continue to apply for other funding sources; such additional funding sources, including the conditions related to the provision of such other funding, shall be subject to prior written approval by the Authority. If other funding is secured, the Anaheim Loan shall be reduced on a dollar for dollar basis. • Developer acknowledges it will be required to enter into agreements containing insurance provisions, as required and determined in the sole discretion of the Anaheim Risk Manager, that will include, but not be limited to the following:
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 agents as addit ional insureds or co -insureds.

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

Page 8 of 15 ends

 (b) shall contain no special limitations on the scope of protection afforded to City and Authority 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 D eveloper’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 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 arising 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 before or after termination of any a greement, or (b) any litigation, administrative or adjudicative challenge by third parties to the validity, applicability, interpre tation or implementation of any agreement, or the certification or approval of the environmental document(s) with respect to the Project and this PLA, or (c) any default of any agreement by Developer.

The Anaheim Loan and additional subsidies to the Project and the PBV Assistance are subject to each of the following requirements:

Page 9 of 15 ends

1. Entering into an AHA by and between the Authority and Developer that more specifically describes and authorizes the disbursement of the Anaheim Loan proceeds to the Developer for construction of specified housing units at the Project and the application and use of PBV Assistance for the Project, the restriction of the rents at 87 out of the 89 housing units at the Project to levels that are affordable at 30% of the Area Median Income (“AMI”) for a minimum of 55 years. The City’s HOME ARP Program funds and/or the HOPWA funds for the Anaheim Loan will be transferred to the Authority pursuant to a cooperation agreement to be entered into between the City and Authority pursuant to the HOME and HOPWA Program.

2. Compliance with the HOME Program, the HOPWA Program, the LMIHAF funds, 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 sta tutory 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 to issuance of funds.

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 t he CTCAC. (Pursuant to July 2010 HUD Notice, CTCAC may, and is now, performing Subsidy Layering Review for and on behalf of HUD.)

7. Eighty-Seven (87) of the Eighty-Nine (89) “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 (2) Housing Units will be r ented to on- site property managers; the manager’s units shall not be required to be rent-restricted.

8. A unit matrix of all units in the Project of Eighty-Nine (89) units is attached hereto and fully incorporated by this reference as Exhibit A (“Unit Mix Matrix”).

Page 10 of 15 ends

9. All designated HOME ARP units shall be covenanted as HOME ARP units with affordable rent charged to the tenant household. The number of units restricted at the low HOME ARP rent and/or high HOME ARP rent will be determined based on the total HOME ARP Program funds allocated to the Project . 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 financing 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. No units within the Project shall be restricted on the basis of age.

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

11. The HOME ARP and/or HOPWA 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.

12. If HOME ARP and/or HOPWA Program moneys are ultimately 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 and/or applicable regulations and requirements for the HOPWA Program, including, but not limited to, 42 U.S.C. 12901 et seq. and 24 CFR Part 574.

13. If LMIHAF Moneys are used to make the Anaheim Loan, the Developer shall comply with all applicable requirements of the Californi a 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.

14. The Developer shall comply with the Housing Assistance Law (HAL) and any and all other applicable federal, state and local laws and regulations.

15. 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 construction, as required by applicable HUD regulations, specifically including the HOME Program regulations as amended by the 2013 HOME Final Rule.

16. 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 87 Housing Units to receive PBV Assistance.

Page 11 of 15 ends

17. 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.

18. 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 and local laws and regulations for public works, including without limitation California Labor Code Section 1720, et seq.

19. As and if applicable, the Developer will comply with the federal Davis-Bacon Act and California Labor Code Section 1720, et seq., relating 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.

20. 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 and the National Environmental Protection Act ("NEPA") and approval thereof, as applicable.

21. 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.)

22. 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.

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

24. If HOPWA funds are used to provide the Anaheim Loan, Developer will be required to comply with HOPWA Regulations, which are incorporated herein by this reference.

25. The Anaheim Loan proceeds will be disbursed during construction at suc h 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.

Page 12 of 15 ends

26. 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 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 completion 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, as described in 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 o f 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 Project 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.

27. The AHA shall provide that each of the following conditions precedent shall be met prior to payment under 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.
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.

Page 13 of 15 ends

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 Social Services 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 fully programmed kitchen (to include stove, oven, refrigerator, microwave, dishwasher) must be well suited for strong programming. The Social Services Plan shall address how the proposed programming will support the small unit size concerns and dealing with socialization. In addition, Developer shall provide an Operational Services Budget for provision of the social services contemplated by this PAL, as contained in the Social Services Plan.

28. The AHA shall provide that each of the following conditions precedent shall be met prior to t he disbursement of any portion of the Anaheim Loan and prior to execution of the AHAP:
a. Developer shall have secured all necessary financing and funding for the construction and operation of the applicable phase of the Project. Such financing and funding shall be sufficient to pay all Project development costs, through lease-up, as set forth in a final budget (to be defined in the AHA) consistent with the approved Proforma (or as otherwise approved by Anaheim).

29. 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 Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 14 of 15 ends

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.

30. Nothing herein shall be construed as a commitment to issue development entitlements, nor shall it limit in any way the City’s discretion with respect to approval of development entitlements , which shall be independent of funding commitments.

31. By consideration and action to approve this PAL, 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 A gency 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, 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.

32. Further, the Executive Director (or his/her duly authorized representative) is authorized to implement 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 P AL, 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 PAL and the AHA, as necessary t o 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 PAL and the AHA.

33. In addition, the Executive Director is authorized, 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 PAL, 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 P AL and the AHA. Any and all substantial changes to this PAL 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.

34. The City’s obligation to provide the Anaheim 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 Ms. Rebecca Clark
Linc Housing Corporation
Preliminary Award by City of Anaheim and Anaheim Housing Authority of HOME ARP, HOPWA Program Funds, and/or Housing Asset Funds for the 87-Unit Permanent Supportive Housing Project in Anaheim, California
April 18, 2023

Page 15 of 15 ends

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.

35. In addition to the foregoing, 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 constitu te a commitment of federal funds, and that such commitment of funds may occur only upon satisfactory completion of 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 AHA 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.

36. Developer and Authority are further prohibited from undertaking or committing any federal funds to physical or choice- limiting actions, includin g 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 Ruiz-Stepter, Executive Director, at (714) 765- 4315 or by email at ([email protected]).

Sincerely,

Grace Ruiz-Stepter
Executive Director

cc: Andy Nogal, Deputy Director
Housing and Community Development Department

EXHIBIT A

NORTH HARBOR APARTMENTS PROJECT

AFFORDABLE HOUSING UNITS

MATRIX OF UNIT-MIX BY INCOME AND BEDROOM SIZE

Bedroom

Quantity

AMI

Studio

67 30%

1-Bedroom

20 30%

2-Bedroom (Manager’s Unit)

2 Market Rate

Anaheim City CouncilApril 18, 2023

Anaheim City Council
April 18, 2023