Brisbane City Council
May 21, 2026

Required Property Insurance
The proposed ground lease would require HEART to obtain certain mandatory insurance coverages, such as commercial liability insurance. Flood insurance was not included as an insurance requirement in the RFP. The Authority Board, however, requested staff to discuss with HEART whether flood insurance could be economically obtained. HEART obtained multiple flood insurance quotes and the lowest annual premium quoted for the structure, which lies outside of a mapped flood hazard area, was approximately $11,000 annually with a maximum payout of $500,000 and a $5,000 deductible.

The practical outcome of requiring flood insurance would be diverting Residual Receipts that would be allocated to loan payments to flood insurance premiums, with HEART projecting a 31% reduction of residual receipt loan payments over 30 years (approximately $1.45 million compared to approximately $1.95 million). HEART has offered instead to fund a flood reserve (amount to be determined) and hold it in an interest bearing account if the Authority feels strongly about having some kind of flood safety net. If the Authority is amenable to this solution, staff will work with HEART to provide this provision in the Ground Lease.

BRIDGE/BSH Related Documents
As indicated under Background, HEART would only be assuming about $3.1 million of the existing BSH debt associated with the existing Authority loans. BSH has requested that this difference of $968,069 be “forgiven” and staff is recommending that this request be granted for two reasons. First, the loans that were made to BRIDGE were non-recourse loans meaning that neither BRIDGE nor BSH to whom the loans were assigned have a legal obligation to repay the loans; the Housing Authority’s recourse if the loans were in default would be to foreclose on the leasehold improvements. Second, forgiving the unpaid loan amount does not constitute a gift of public funds.

Under the State Constitution, a public agency may not make a gift of public funds but this Low Income
Households
60% 6 $2094
Moderate Income
Households
120%; rents restricted
to 80% AMI
4 $2828
Note: Approximate rents are based on State Housing and Community Development Department limits. Utilities not included.

prohibition does not preclude a forgiveness of public funds even if a private person incidentally benefits so long as the reasons for the forgiveness further a public purpose. The determination of a public purpose lies within the discretion of the legislative body and will not be set aside unless the reasons are totally arbitrary.

Here, the underlying project is a project that houses 14 rent restricted rental units for seniors.

When the RDA made the initial loans for the construction of the project from the Low and Moderate Income Housing Asset Fund with no guarantee that the loans would be repaid, the RDA made an implicit finding that the use of those funds would serve a public purpose. Here, if the unpaid balance of the two loans were not forgiven, for example by requiring that HEART-SV assume the full balance of the loans, HEART-SV would not agree to enter into a new lease that will allow the project to continue to provide affordable rents to seniors for another 55 years. If there is not a new lease with HEART-SV, BSH will continue to manage and operate the project until January 2028 during which time the Authority would need to find either another lessee or a new operator for the project. In that the Authority received only one proposal—the HEARTSV proposal—in response to the RFP, finding another lessee or operator in next 18 or so months would not only be challenging but also would put at risk the project itself, meaning that 14 affordable rental units to seniors could well be lost. For that reason, a public purpose is served by forgiving the unpaid balance of the loans.

There are a number of BRIDGE/BSH related documents that are of record. These include the existing Ground Lease, and its assignment to BSH, the deeds of trust for the RDA/Authority loans, and Declarations of Restrictions concerning the rents at the project. If the Authority and the County choose to proceed with the HEART proposal, those documents will need to be terminated of record and documents to accomplish that are attached as Attachment 4. In addition, BRIDGE/BSH will execute a quit claim deed to the Authority to ensure that all of its interest in the property have reverted to the Authority and the attached resolution (Attachment 9) includes the Authority’s acceptance of such deed.

Fiscal Impact
If the Authority adopts the attached resolution (Attachment 9), the Authority will loan HEARTSV $390,250 ”new money” from the Authority’s Low and Moderate Income Housing Asset Fund, in addition to HEART-SV's assuming $3,062,564 of the current BSH loan balance. As discussed above, the Authority would be forgiving $968,069 of the BSH loan balance. The total loan amount--$3,452,814_—would be repaid over the next 55 years from available Residual Receipts but there is no guarantee that the full amount of the loan will be repaid.

Environmental Impact
Adoption of the attached resolution does not require further environmental review under the California Environmental Quality Act as it involves a governmental funding mechanism that does not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment and hence it is not a project under CEQA. CEQA

Guidelines, Section 15378 (b)(4).

Attachments

1. Draft Ground Lease with HEART-SV

2. Draft Regulatory Agreement with HEART-SV

3. Draft loan documents with HEART-SV

4. BSH/BRIDGE Termination Documents

5. HEART/HEART-SV Proposal

6. Property Appraisal

7. Capital Needs Assessment

8. Brisbane Senior Housing, Inc. letter to Housing Authority regarding loan forgiveness

9. Resolution authorizing the Executive Director of the Brisbane Housing Authority (a) to execute with HEART-SV a Ground Lease and other documents City Manager Approval
Jeremy Dennis, City
Manager
05/15/2026

GROUND LEASE
by and between
Brisbane Housing Authority, as Lessor
and
HEART-SV, as Lessee
Dated as of ______________________, 2026
ATTACHMENT 1

TABLE OF CONTENTS
Page
i
GROUND LEASE...........................................................................................................................1 ARTICLE 1. Definitions..................................................................................................................1 Section 1.1 Definitions.: ......................................................................................................1 Section 1.2 Exhibits:............................................................................................................6 ARTICLE 2. Lease of the LAND....................................................................................................6 Section 2.1 Lease of the Land..............................................................................................6 Section 2.2 Lease Term........................................................................................................6 Section 2.3 Use. ...................................................................................................................6 Section 2.4 Possession. ........................................................................................................7 Section 2.5 Memorandum of Ground Lease........................................................................7 Section 2.6 No Right to Encumber Fee. ..............................................................................7 Section 2.7 Community Room.............................................................................................7 ARTICLE 3. The LEASED Premises..............................................................................................7 Section 3.1 Liens..................................................................................................................7 Section 3.2 Permits, Licenses and Easements. ....................................................................9 Section 3.3 Title to Premises. ..............................................................................................9 Section 3.4 Benefits of Improvement During Term. .........................................................10 Section 3.5 No Abandonment............................................................................................10 ARTICLE 4. Rents.........................................................................................................................10 Section 4.1 Ground Rent....................................................................................................10 Section 4.2 Residual Receipts............................................................................................10 Section 4.3 Distribution of Residual Receipts...................................................................11 Section 4.4 Payments and Fiscal Reporting.......................................................................12 ARTICLE 5. Taxes and Other Impositions; Utilities ....................................................................12 ATTACHMENT 1

TABLE OF CONTENTS
Page
ii
Section 5.1 Payment of Impositions. .................................................................................12 Section 5.2 Possessory Interest Taxes. ..............................................................................13 Section 5.3 Contested Taxes and Other Impositions. ........................................................13 Section 5.4 Valuation Assessment/Property Tax Exemption. ...........................................13 Section 5.5 Failure to Pay Impositions. .............................................................................14 Section 5.6 Utilities............................................................................................................14 ARTICLE 6. Insurance ..................................................................................................................14 Section 6.1 Required Insurance Coverage.........................................................................14 Section 6.2 Insurance Policies and Premiums. ..................................................................15 Section 6.3 Proceeds of Insurance. ....................................................................................16 Section 6.4 Limitation of Liability.....................................................................................16 ARTICLE 7. MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS ..........17 Section 7.1 Maintenance of Leased Premises; Landscaping. ............................................17 Section 7.2 Landscaping Maintenance. .............................................................................17 Section 7.3 Alterations to Leased Premises.......................................................................18 Section 7.4 Indemnifications. ............................................................................................19 Section 7.5 Capital Replacement Reserve Account...........................................................19 Section 7.6 Operating Reserve Account. ...........................................................................19 Section 7.7 Reserve Accounts Upon Termination.............................................................20 ARTICLE 8. MORTGAGE LOANS.............................................................................................20 Section 8.1 Liens and Encumbrances Against the Leasehold Estate.................................20 Section 8.2 Cost of Approved Loans to be Paid by Lessee. ..............................................23 Section 8.3 Proceeds of Approved Loans..........................................................................23 Section 8.4 Notice and Right to Cure Defaults Under Approved Loans...........................23 ATTACHMENT 1

TABLE OF CONTENTS
Page
iii
ARTICLE 9. REPRESENTATIONS, WARRANTIES AND COVENANTS .............................23 Section 9.1 Representations, Warranties and Covenants of Lessor...................................23 Section 9.2 Representations, Warranties and Covenants of Lessee...................................24 Section 9.3 Hazardous Materials. ......................................................................................25 Section 9.4 Hazardous Materials Indemnification.............................................................26 Section 9.5 Prevailing Wage Requirements.......................................................................26 Section 9.6 Compliance with Laws. ..................................................................................27 Section 9.7 Affordability and Use Restrictions. ................................................................27 Section 9.8 Non-Discrimination; Compliance with Fair Housing Laws. ..........................28 Section 9.9 Fair Housing....................................................................................................28 Section 9.10 Management Entity.......................................................................................28 Section 9.11 Subleases.......................................................................................................28 ARTICLE 10. EMINENT DOMAIN ............................................................................................29 Section 10.1 Termination of Lease. ...................................................................................29 Section 10.2 Continuation of Lease and Presumption of Restoration. ..............................29 Section 10.3 Temporary Taking. .......................................................................................29 Section 10.4 Apportionment of Award..............................................................................29 Section 10.5 Joinder...........................................................................................................31 Section 10.6 Reservation of Rights....................................................................................31 ARTICLE 11. DAMAGE OR DESTRUCTION...........................................................................31 Section 11.1 Damage or Destruction to Leased Premises. ................................................31 Section 11.2 Damage or Destruction Near End of Term...................................................32 Section 11.3 Distribution of Insurance Proceeds...............................................................32 Section 11.4 Insurance Requirements................................................................................32 ATTACHMENT 1

TABLE OF CONTENTS
Page
iv
ARTICLE 12. EVENTS OF DEFAULT.......................................................................................32 Section 12.1 Events of Default: .........................................................................................32 Section 12.2 Rights and Remedies.....................................................................................34 Section 12.3 Default by Lessor..........................................................................................35 Section 12.4 Notices. .........................................................................................................36 ARTICLE 13. GENERAL PROVISIONS ....................................................................................36 Section 13.1 Quiet Enjoyment. ..........................................................................................36 Section 13.2 Lessor's Right of Inspection..........................................................................36 Section 13.3 Vacation Upon Termination. ........................................................................36 Section 13.4 Non-Merger...................................................................................................37 Section 13.5 Permitted Transfer by Lessee........................................................................37 Section 13.6 Consents........................................................................................................37 Section 13.7 Enforced Delay; Extension of Times of Performance. .................................37 Section 13.8 Interpretation.................................................................................................38 Section 13.9 Entire Agreement: Modifications. ................................................................38 Section 13.10 Governing Law. ..........................................................................................38 Section 13.11 Binding Effect.............................................................................................38 Section 13.12 Severability. ................................................................................................38 Section 13.13 Further Assurances......................................................................................39 Section 13.14 Authority to Execute Agreement. ...............................................................39 Section 13.15 Lease Administration and Approvals..........................................................39 Section 13.16 Captions. .....................................................................................................39 Section 13.17 Gender.........................................................................................................39 Section 13.18 Exhibits. ......................................................................................................39 ATTACHMENT 1

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Page
v
Section 13.19 References...................................................................................................40 Section 13.20 Cumulative..................................................................................................40 Section 13.21 Notices. .......................................................................................................40 Section 13.22 Counterparts................................................................................................40 Section 13.23 Time of Essence..........................................................................................41 Section 13.24 No Third Party Beneficiaries. .....................................................................41 Section 13.25 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship. ..........................................................................................................41 Section 13.26 No Personal Liability. .................................................................................41 Section 13.27 Expenditure of Authority Loan...................................................................41 Exhibit A: Legal Description of the Leased Premises
Exhibit B: Memorandum of Ground Lease
Exhibit C: Sublease Agreement (Community Room)
ATTACHMENT 1

1 GROUND LEASE
Visitacion Garden Senior Apartments
This Ground Lease (the "Lease") is entered into as of __________, 2026, between the Brisbane Housing Authority, a California public agency_______________ (“Authority” or "Lessor"), and HEART-SV, a California Joint Powers Authority ("Lessee").

RECITALS
A. Lessor is the owner of that certain real property in the City of Brisbane, County of San Mateo, State of California, more particularly described in the legal description attached hereto as Exhibit A (the "Property").

B. Lessor desires to ground lease the Land (“the Land”) to Lessee for a period of five-five (55) years pursuant to the terms of this Lease; Lessee desires to acquire and operate the existing 14 unit senior rental housing development on the Land with long term affordability requirements (“the Premises”).

C. Capitalized terms which are referred to and utilized throughout this Lease are defined in Article 1 of this Lease.

NOW, THEREFORE, for and in consideration of the foregoing premises, the covenants, representations, warranties and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE 1.

DEFINITIONS
Section 1.1 Definitions. For the purposes of this Lease, the following defined terms shall have the meanings ascribed thereto in this Article 1:
(a) Annual Operating Expenses: As defined in Section 4.3. (b) Applicable Laws: As defined in Section 9.6.
(c) Approved Loans: All loans, approved in writing by Lessor, including without limitation, obtained from time to time by Lessee for operating the Leased Premises. (d) Affordability Requirements: Lessor’s requirements pursuant to Section

9.7. (e) Authority: The Brisbane Housing Authority.

ATTACHMENT 1

2 (f) Authority Loan: Means the loan from the Authority to HEART-SV, pursuant to the terms set forth in the Authority Loan Documents, in the amount of Three Hundred Ninety Thousand, Two Hundred Fifty Dollars ($390,250). (g) Authority Loan Documents: means collectively: the Loan Agreement, Promissory Note, Leasehold Deed of Trust, and any other documents necessary to memorialize the Authority Loan from the Authority to HEART-SV.
(h) Casualty: As defined in Article 11 hereof.
(i) Claims: means collectively: claims, demands, actions, causes of action, suits, judicial or administrative proceedings, damages, losses, liabilities, costs, expenses (including without limitation reasonable attorneys' fees), damages, penalties, deficiencies, fines, orders, charges, judgments, remedial action requirements, and enforcement actions of any kind. (j) Commencement Date: The date that the Memorandum of Ground Lease is recorded in the Official Records of San Mateo County.
(k) County: The County of San Mateo, California.
(l) County Loan: means the loan made by the County to HEART-SV in the amount of $227,436.
(m) Deferred Developer Fee: That portion of the Developer Fee that is not paid to HEART-SV at the time that the Memorandum of Ground Lease is recorded, and is paid out over time from Residual Receipts as described in Section 4.3. (n) Developer Fee: Compensation paid to HEART-SV for managing the Leased Premises’ risks, costs, acquisition, financing, and/or rehabilitation. (o) Dwelling Units: The fourteen (14) rental units on the Property, which are and will be occupied by Tenants.
(p) Environmental Laws: All federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of Hazardous Materials, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of Hazardous Materials or the remediation of air, surface waters, groundwater or soil, as now or may at any later time be in effect, together with any regulations promulgated thereunder.
(q) Event of Default: As described in Article 12 of this Lease.

ATTACHMENT 1

3 (r) Gross Revenue: As defined in Section 4.3.
(s) Governmental Authorities: Any applicable federal, State or local governmental or quasi-governmental entities, subdivisions, agencies, authorities or instrumentalities having jurisdiction over the Leased Premises, the Premises, Lessor, or Lessee. (t) Hazardous Materials: means: (i) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos or asbestos-containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any other agricultural chemical, and (ii) any waste, substance or material defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "toxic materials", "toxic waste", "toxic substances," or words of similar import under any Hazardous Materials Law (1) which poses a hazard to the Leased Premises, to adjacent properties, or to persons on or about the Leased Premises, (2) which causes the Leased Premises to be in violation of any of the aforementioned laws or regulations, or (3) the presence of which on or in the Leased Premises requires investigation, reporting or remediation under any such laws or regulations. Hazardous Materials shall exclude hazardous materials customarily used in construction or operation of a multi-family residential development, provided that such materials and substances are used in accordance with all applicable laws. (u) Hazardous Materials Law: means any federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, health, industrial hygiene, environmental conditions, or the regulation or protection of the environment, and all amendments thereto as of this date and to be added in the future and any successor statute or rule or regulation promulgated thereto.
(v) HEART: means the Housing Endowment and Regional Trust of San Mateo County.
(w) HEART Loan: means the loan made by HEART to HEART-SV in the amount of $390,250.
(x) Impositions: All taxes, including without limitation, possessory interest taxes, assessments, water and sewer charges, charges for public utilities, excises, levies, license and permit fees and other charges that shall or may be assessed, levied or imposed during the Term by any Governmental Authorities upon the Leased Premises or any part thereof, including the buildings or Premises now or hereafter located thereon, trade fixtures, furnishings, equipment, and all other personal property of Lessee contained in the Leased Premises. "Impositions" shall not include any income tax, capital levy, estate, succession, inheritance, or similar taxes of Lessor. Except for a tax, assessment, or charge resulting from Lessee's use of the Leased Premises pursuant to this Lease, "Impositions" shall not include any franchise tax imposed upon any owner of the fee of the Leased Premises, or any income, profits or revenue tax, assessment or charge imposed upon the rent or other benefit received by Lessor under this Lease by any Governmental Authorities.
(y) Indemnitees: Lessor and its elected and appointed officials, officers, employees, agents, contractors, representatives and volunteers.

ATTACHMENT 1

4 (z) Insurance Requirements: The requirements, whether now or hereafter in force, of any insurer or insurance carrier, any board of fire underwriters or any other company, bureau, organization or entity performing the same or similar functions, applicable to the Leased Premises and/or the Premises, or any portion thereof, to the extent so applicable. (aa) Lease: This Ground Lease between Lessor and Lessee and shall include any and all amendments made to it.
(bb) Lease Term: The fifty-five (55) year period set forth in Section 2.2, during which this Lease shall be in effect unless earlier terminated in accordance with the provisions of this Lease.
(cc) Lease Year: Twelve (12) month periods, with the first Lease Year commencing on the Term Commencement Date, provided if the Term Commencement Date is other than the first day of a month, the first Lease Year shall also include the partial month during which the Term Commencement Date falls, and each subsequent Lease Year shall begin on the first day of the same month that is the first full month of the first Lease Year. (dd) Leased Premises: The Land, together with the Premises and any other Premises now or hereafter located thereon, together with all and singular rights, easements, licenses, privileges and appurtenances thereunto attaching or in any way belonging thereto. (ee) Leasehold Mortgage: Any mortgage, deed of trust, security agreement or collateral assignment pursuant to an Approved Loan encumbering Lessee's Estate as a leasehold mortgage lien.
(ff) Legal Requirements: All laws, statutes, codes, ordinances, orders, rules, regulations and requirements of all Governmental Authorities and the appropriate agencies, officers, departments, boards and commissions thereof, whether now or hereafter in force applicable to Lessor, Lessee, the Leased Premises, the Premises, or any portion thereof, to the extent so applicable.
(gg) Lender: The holder, mortgagee, grantee or secured party under any Leasehold Mortgage.
(hh) Lessee's Estate or Leasehold Estate: During the Term of this Lease, Lessee's leasehold interest in the Land and Lessee's leasehold interest in the Premises. (ii) Lessor's Estate: Lessor's fee interest in the Land and the reversionary interest in the Premises pursuant to this Lease.
(jj) Loan Documents. All documents executed by Lessee evidencing, governing or securing an Approved Loan, including, without limitation, each Leasehold Mortgage.
(kk) Management Agent: The Person designated from time to time as "Management Agent" of all or any portion of the Premises under any management agreement entered into from time to time with Lessee.

ATTACHMENT 1

5 (ll) Net Condemnation Award: The net amounts owed or paid to the Parties or to which either of the Parties may be or become entitled by reason of any Taking or pursuant to any agreement with any condemning authority which has been made in settlement of any proceeding relating to a Taking, less any costs and expenses incurred by the Parties in collecting such award or payment.
(mm) Party: Lessor or Lessee, as applicable. Lessor and Lessee shall be referred to collectively as the "Parties."
(nn) Person: An individual, partnership, corporation, public benefit corporation, trust, unincorporated association, or other entity or association. (oo) Premises: The buildings, structures, and other improvements, containing the fourteen (14) rental units providing affordable housing for income-eligible households, previously constructed, related onsite structures, parking garage, office space for property management, community amenities, including a community room, landscaping, and other improvements located on the Land.
(pp) Property: As defined in Recital A.
(qq) Regulatory Agreement: The Regulatory Agreement between the Housing Authority and HEART-SV memorializing the restrictions of the use and occupancy of the Leased Premises.
(rr) Rent: As described in Section 4.1 hereof.
(ss) Resident Sublease(s): Any sublease entered into by Lessee with Tenants. (tt) Residual Receipts: As defined in Section 4.2.
(uu) Taking: A taking during the Term hereof of all or any part of the Leased Premises and/or the Premises, or any interest therein or right accruing thereto, as a result of the exercise of the right of condemnation or eminent domain materially affecting the Leased Premises or any part thereof. A conveyance in lieu of or in anticipation of the exercise of any such right of condemnation or eminent domain shall be considered a Taking. Any such Taking shall be deemed to have occurred upon the earlier to occur of (a) the date on which the property, right or interest so taken must be surrendered to the condemning authority, or (b) the date title vested in a condemning authority or other party pursuant to any Taking. (vv) Tenant(s): Any subtenant, sublessee of Lessee under any Resident Sublease(s).
(ww) Term: The period of time described in Section 2.2 hereof. (xx) Transfer: Any sale, assignment, transfer, conveyance, lease, sublease, encumbrance, mortgage, or hypothecation, in any manner or form or any agreement to do any of the foregoing.

ATTACHMENT 1

6 Section 1.2 Exhibits. The Exhibits referred to in this Lease and attached hereto are:

Exhibit A: Legal Description of the Land
Exhibit B: Memorandum of Ground Lease
Exhibit C: Sublease Agreement (Community Room)
ARTICLE 2.

LEASE OF THE LAND
Section 2.1 Lease of the Land.

Subject to the terms hereof and in consideration of the covenants of payment and performance stipulated herein, Lessor leases the Land to Lessee, and in consideration thereof, Lessee takes, hires and leases the Land from the Lessor, pursuant to the terms of this Lease. This Lease, the interests of Lessor and Lessee hereunder, and the Leased Premises, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rightsof-way, and easements of record prior to the date of this Lease. Lessee hereby accepts the Leased Premises and acknowledges that the Leased Premises is in the condition required by this Lease.

Section 2.2 Lease Term.

Unless sooner terminated pursuant to the provisions hereof, this Lease shall continue in full force and effect for a term ("Term") of 55 years, commencing on the Commencement Date.

Section 2.3 Use.

Subject to the provisions hereof, Lessee shall use the Leased Premises for the operation of the Premises, in accordance with the restrictions and requirements set forth in Article 2 hereof.

Further, Lessee agrees:
(a) that all uses conducted on the Leased Premises, including, without limitation, all activities undertaken by Lessee pursuant to this Lease, shall conform to all applicable provisions of the City of Brisbane Municipal Code and the Regulatory Agreement; (b) not to use the Leased Premises for any disorderly or unlawful purpose; (c) to use its best efforts to prevent any Tenant from committing or maintaining any nuisance or unlawful conduct on or about the Leased Premises; (d) to use its best efforts to prevent any action by any Tenant that would cause Lessee to violate any of the covenants and conditions of this Lease with respect to the Premises; (e) to take reasonable action, if necessary, to abate any action by any Tenant that violates, or that would cause Lessee to violate, this Lease; and ATTACHMENT 1

7 (f) subject to the laws of the State of California and the rights of Tenants, to permit Lessor to inspect the Leased Premises or any part thereof at any reasonable time during the Term.

Section 2.4 Possession.

Upon recordation of the Memorandum of Ground Lease and except as set forth in Section

2.7, Lessor shall provide possession of the Leased Premises to Lessee free and clear of all rights to possession or use by any lessee, tenant, or other individuals or entities other than Lessee (except as disclosed to Lessee, for example the Community Room, or apparent from Lessee's inspection, for example, the 14 subtenant households and the Community Room), and free and clear of any encumbrances except as expressly approved by Lessee in writing.

Section 2.5 Memorandum of Ground Lease.

The Parties shall execute and acknowledge a Memorandum of Ground Lease, substantially in the form attached hereto as Exhibit B, which shall be recorded in the Official Records of the County of San Mateo at Lessee's expense.

Section 2.6 No Right to Encumber Fee.

Lessee acknowledges and agrees that Lessee shall not have the right to encumber or mortgage Lessor's fee interest in the Land.

Section 2.7 Community Room.

Lessee shall, concurrent with the execution of this Lease, sublease a portion of the Leased Premises to the City of Brisbane (“City”) for the City’s exclusive use as a Community Room, as set forth in the Sublease Agreement, attached hereto as Exhibit C. As set forth in that Exhibit, the rent for the Community Room shall be one dollar annually. The existing Community Room Sublease Agreement dated April 10, 2000 between Bridge Housing, Inc. and the City of Brisbane shall be terminated.

ARTICLE 3.

THE LEASED PREMISES
Section 3.1 Liens.

Lessee shall not have any right, authority or power to bind Lessor, Lessor's Estate, or any interest of Lessor in the Land or the Leased Premises, for any claim for labor or material, or for any other charge or expense, lien or security interest incurred in connection with Lessee's use of the Land, or the operation of the Leased Premises, or any change, alteration of addition thereto.

Lessee shall have the right to encumber Lessee's Premises with security instruments required in connection with the Approved Loans. Prior to entering into an Approved Loan, Lessee shall submit a copy of proposed loan documents to Lessor and shall obtain written approval from Lessor of any Approved Loan. Lessee shall have the right to enter into utility easements and other customary easements necessary and incidental to the operation of the Leased Premises, ATTACHMENT 1

8 provided that such easements are subject to the approval of Lessor, which shall not be unreasonably withheld, conditioned or delayed("Permitted Easements").

The Lessee shall not create or permit or suffer to be created or to remain upon the Lessor's Estate or any interest of Lessor in the Land or the Leased Premises, or upon the Leased Premises, or any part thereof, and will discharge, any lien, including, but not limited to, the liens of mechanics, laborers, materialmen, suppliers or vendors for work or materials alleged to be done or furnished in connection with the Leased Premises, or any part thereof. If any claim of lien is filed against the Lessor's Estate or any interest of Lessor in the Land or the Leased Premises, or a stop notice is served on any other lender or other third party in connection with the Leased Premises or the Premises, or upon the Leased Premises, or any part thereof, then the Lessee shall, within twenty (20) days after such filing or service, either pay or contest such claim diligently and in good faith, provided that Lessee fully discharges the lien or stop notice, effects the release of such lien or stop notice by delivering to the Lessor a surety bond in sufficient form and amount, or provides the Lessor with other assurance satisfactory to the Lessor that the claim of lien or stop notice will be paid or discharged. If the Lessee fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Lease, then in addition to any other right or remedy, the Lessor may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Lessee's expense. Any expense incurred by Lessor pursuant to this Section shall be immediately due and payable by Lessee to Lessor. The Lessee shall have the right to contest in good faith and by appropriate legal proceedings the validity or amount of any mechanics', laborers', materialmen's, suppliers' or vendors' lien or claimed lien; provided that the Lessee shall utilize all reasonable means (including the posting of adequate security for payment) to protect the Leasehold Estate, the Lessor's Estate and any other interest of Lessor in the Land or the Leased Premises against foreclosure. In addition to any other indemnities provided in this Lease, Lessee shall indemnify, protect, defend (with counsel of Lessor's choosing), and hold harmless the Indemnitees from any and all alleged or actual Claims arising by reason of a mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied to Lessee or anyone holding the Leased Premises, or any part thereof, through or under Lessee.

Nothing in this Lease shall be construed as constituting the consent of the Lessor, expressed or implied, to the performance of any labor or the furnishing of any materials or any specific Premises, alterations of or repairs to the Leased Premises, or any part thereof, by any contractor, subcontractor, laborer or materialman, nor as giving the Lessee or any other person any right, power or authority to act as agent of or to contract for, or permit the rendering of, any services or the furnishing of any materials in such manner as would give rise to the filing of mechanics' liens or other claims against the Lessor's Estate or any other interest of Lessor in the Land or the Leased Premises. The Lessor shall have the right at all reasonable times to post and keep posted on the Leased Premises any notices which the Lessor may deem necessary for the protection of the Lessor and of Lessor's Estate or any other interest of Lessor in the Land or the Leased Premises from mechanics' liens or other claims. In addition, but subject to the paragraph above, the Lessee shall make, or cause to be made, prompt payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to the Lessee, or any of its respective contractors or subcontractors in connection with the Leased Premises. The provisions of this Section shall survive the expiration or termination of this Lease.

ATTACHMENT 1

9 Lessor’s fee interest in the Leased Premises shall be senior to, and not be subordinated to, any financing obtained by Lessee in connection with the Leased Premises.

Section 3.2 Permits, Licenses and Easements.

Lessor agrees to use Lessor's best reasonable efforts to assist Lessee in obtaining any and all permits, licenses, easements and other authorizations required by any Governmental Authority with respect to any construction or other work to be performed on the Leased Premises and to grant, or to assist Lessee in obtaining, as applicable, all permits, licenses, easements and other governmental authorizations that are necessary or helpful for electric, telephone, gas, cable television, water, sewer, drainage, access and such other public or private utilities or facilities as may be reasonably necessary or desirable in connection with the construction or operation of the Premises. Payment of all fees, costs and expenses associated with any of the foregoing shall be the responsibility of Lessee, and Lessor shall have no responsibility to pay any such fees, costs or expenses.

Section 3.3 Title to Premises.
(a) During the Term. Upon the recordation of the termination of Lessor’s existing ground lease with Bridge Housing, Inc, and thereafter during the Term, Lessor hereby grants to Lessee, without warranty express or implied, any right, title, or interest that Lessor may have in the Premises now or hereafter located on the Leased Premises. Notwithstanding any provision in this Lease to the contrary, the Premises and all alterations, additions, equipment, and fixtures built, made or installed by Lessee in, on, under or to the Leased Premises shall be the sole property of Lessee until the expiration of the Term or other termination of this Lease; provided, however, that Lessee shall have no right to destroy, demolish or remove the Premises except as specifically provided for in this Lease or as approved in writing by Lessor. (b) After the Term. Upon the expiration of the Term or other termination of the Lease, the Premises and all alterations, additions, equipment and fixtures shall be deemed to be and shall automatically become the property of Lessor, without cost or charge to Lessor. At such time, Lessee shall peaceably and quietly leave and surrender the Leased Premises and the Premises to Lessor in good order, condition, and repair, reasonable wear and tear and obsolescence excepted. Lessee shall leave in place and in good order, condition, and repair, all fixtures and machinery; except Lessee shall have the right to remove only Lessee-owned appliances, other unattached equipment, furniture and merchandise that Lessee shall have installed, which removal must be done without damage to the Leased Premises or Premises.

Lessor agrees that Lessee, at any time prior to the expiration or other termination of this Lease, may remove from the Leased Premises any and all equipment which Lessee has furnished for maintenance purposes or for the use of the Management Agent, provided that Lessee shall repair any physical damage to the Leased Premises caused by the removal of such equipment and property. Lessee agrees to execute, at the request of Lessor at the end of the Term, a confirmatory quitclaim deed of the Premises and/or Leased Premises to Lessor to be recorded at Lessor's option and expense and any other documents that may be reasonably required by Lessor or Lessor's title company to provide Lessor title to the Leased Premises and the Premises free and clear of all monetary liens, and, monetary encumbrances or other encumbrances not caused or agreed to by Lessor. Without limiting the foregoing, upon the expiration or sooner ATTACHMENT 1

10 termination of this Lease, Lessee shall deliver the Leased Premises and the Premises to Lessor free of all monetary liens and encumbrances unless otherwise consented to in writing by Lessor.

Any equipment or other personal property not removed from the Leased Premises by the expiration of the Term shall become the property of Lessor, and Lessor shall have the right to dispose of such equipment and property in the manner of Lessor's choosing.

Section 3.4 Benefits of Improvement During Term.

Lessor acknowledges and agrees that any and all depreciation, amortization and tax credits for federal or state tax purposes relating to the Premises located on the Leased Premises and any and all additions thereto, substitutions therefor, fixtures therein and other property relating thereto shall be deducted or credited exclusively by Lessee during the Term.

Section 3.5 No Abandonment.

Lessee shall not abandon or vacate the Leased Premises or the Premises at any time during the Term. If Lessee shall abandon, vacate, or otherwise surrender the Leased Premises or the Premises, or be dispossessed thereof by process of law or otherwise, the same shall constitute a default under this Lease on the part of Lessee and, in addition to any other remedy available on the part of Lessor, any of Lessee’s property left in, upon or about the Leased Premises or the Premises shall, at Lessor’s option, be deemed to be abandoned and shall become the property of Lessor. The appointment of a receiver pursuant to a Lender’s exercise of its rights under a Leasehold Mortgage, or the foreclosure of a Leasehold Mortgage, shall not be a default under this Section.

ARTICLE 4.

RENTS
Section 4.1 Ground Rent.

For each Lease Year during the Term, Lessee shall pay to Lessor on the Commencement Date of this Lease and on each succeeding anniversary thereof rent in advance for the next succeeding Lease Year ("Rent") in the amount of One Dollar ($1.00) per Lease Year or partial Lease Year.

Section 4.2 Residual Receipts
“Residual Receipts” shall mean, with respect to Lessee’s fiscal year, the amount by which Project’s "Gross Revenue" exceeds "Annual Operating Expenses". (a) "Gross Revenue" means all rental and incidental income from the Leased Premises, but excluding tenant security deposits, loan proceeds and capital contributions and any interest earned on said deposits, amounts released from operating reserves or replacement reserves.
(b) "Annual Operating Expenses" means reasonable costs actually incurred for operations and maintenance of the Leased Premises and the administration of the Leased ATTACHMENT 1

11 Premises to the extent that they are consistent with an annual budget submitted by Lessee to Lessor and approved by Lessor. Costs associated with the Leased Premises operations and maintenance and the administration of the Leased Premises include the following:
(1) property taxes and assessments imposed on the Leased Premises; (2) premiums for property damage and liability insurance; (3) utility services not paid for directly by Tenants, including, but not limited to water, sewer, trash collection, gas, and electricity; maintenance and repairs, including but not limited to, pest control, landscaping and grounds maintenance, painting and decorating, cleaning, common systems repairs, general repairs, janitorial supplies and services; (4) any license or certificates of occupancy fees required for operation of the Leased Premises; general administrative expenses, including but not limited to advertising, marketing, security services and systems,
(5) professional fees for legal, audit, accounting and tax returns, and other such services;
(6) property management fees and reimbursements, including on-site manager expenses, if any, not to exceed fees and reimbursements which are customary in affordable housing developments with income and rent restrictions similar to those imposed on the Leased Premises;
(7) tenant services;
(8) annual cash deposited into a reserve for capital replacements of the Premises, in an amount of at least ten percent (10%), but not greater than twenty percent (20%), of Gross Revenue or such higher amount if in any particular fiscal year Lessee substantiates the need for a higher amount to the reasonable satisfaction of Lessor, and Lessor, in its sole discretion, approves the higher percentage;
(9) cash deposited into an operating reserve for the Leased Premises and such other reserves as may be required by Lessee's senior lender if approved by Lessor; (10) payments of any Deferred Developer Fee. For avoidance of doubt, any Deferred Developer Fee remaining after the recording of the Memorandum of Ground Lease may be paid only from Residual Receipts.

Section 4.3 Distribution of Residual Receipts
The distribution of the Residual Receipts between the approved lenders shall be as follows:
(a) 47.3% of total Residual Receipts shall be allocated to pay the Deferred Developer Fee, which amount is estimated to be $60,000; ATTACHMENT 1

12 (b) 47.7% of total Residual Receipts shall be allocated to pay the HEART Loan; provided, however, that immediately after the Deferred Developer Fee is paid in full,

68.8% of the total Residual Receipts shall be allocated to pay the HEART Loan; (c) 5% of total Residual Receipts shall be allocated to pay the County Loan and the Authority Loan in accordance with the proportional ratio of their respective outstanding principal loan amounts (County Loan principal loan amount estimated to be $227,436, and Authority Loan principal loan amount estimated to be $3,452,814); provided, however, that immediately after the Deferred Developer Fee is paid in full, 31.2% of the Total Residual Receipts shall be allocated to pay the County Loan and the Authority Loan in accordance with the proportional ratio of their outstanding principal loan amounts; and further provided that immediately after the Housing and Endowment Regional Trust Loan is paid in full, 100% of the total Residual Receipts shall be allocated to the County Loan and the Authority Loan in accordance with the proportional ratio of their outstanding principal loan amounts.

Section 4.4 Payments and Fiscal Reporting.

Payments of Residual Receipts shall be due no later than one hundred twenty (120) days after the end of each Fiscal Year. With the payment, or no later than 120 days after the end of the Fiscal Year if there is no payment of Residual Receipts in any particular Fiscal Year, Lessee shall deliver to Lessor a budget versus actual expense report based on the approved budget submitted annually as described in Section 4.2(b). At the request of Lessor, but at least once every three (3) years, a certified public accountant, using generally accepted accounting principles, shall perform an independent audit and deliver it to Lessor. The audit shall delineate the annual Residual Receipts and provide financial and cash flow statements for the past three fiscal years.

All Rent, and other sums, if any, due Lessor hereunder shall be paid by Lessee to Lessor at the address of Lessor set forth hereinafter for notices, or to such other person and/or at such other address as Lessor may direct by written notice to Lessee, without notice or demand, and without abatement, deduction or set off. Lessee may pay all Rent due at the rate set forth in Section 4.1 for the entire Term of this Lease in advance.

ARTICLE 5.

TAXES AND OTHER IMPOSITIONS; UTILITIES
Section 5.1 Payment of Impositions.

As and when the same shall become due, Lessee will pay all of the Impositions, except that if any Imposition that Lessee is obligated to pay in whole or in part is permitted by law to be paid in installments, Lessee may pay or cause to be paid such Imposition (or its proportionate part thereof) in installments as and when such installments become due. Upon the written request of Lessor, Lessee shall provide to Lessor evidence satisfactory to Lessor of payment of all Impositions. During the first and last years of the Term, all Impositions that become payable during each calendar, fiscal, tax or Lease Year, as applicable, shall be ratably adjusted on a per diem basis between Lessor and Lessee in accordance with the respective portions of such ATTACHMENT 1

13 calendar, fiscal, tax, assessment or Lease Year during the Term. If any special assessments are payable in installments, Lessee shall pay only those installments that are due and payable during the Term.

Section 5.2 Possessory Interest Taxes.

In accordance with California Revenue and Taxation Code Section 107.6(a), Lessor notices Lessee that by entering into this Lease, a possessory interest subject to assessment and collection of property taxes may be created. Lessee or any other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. If possessory interest taxes are assessed, Lessee agrees it is responsible for payment thereof and Lessor has no obligation or liability of any kind or nature relating to payment of property taxes.

Lessee shall, at its sole cost and expense, seek exemption from, or contest the payment of, assessments and the collection of property taxes pursuant to Revenue and Taxation Code Section 214, or a successor statute. During the pendency of such contest or request, Lessee’s nonpayment of assessments or taxes when due shall not constitute a default hereunder if (i) the validity of such assessments and taxes is actively contested in good faith and by appropriate proceedings, (ii) Lessee has demonstrated to Lessor’s reasonable satisfaction that leaving such assessments or taxes unpaid pending the outcome of such proceedings could not result in conveyance of the Leased Premises in satisfaction of such assessments or taxes or otherwise impair Lessor’s estate in the Leased Premises, and (iii) upon the final disposition of such proceedings, Lessee shall promptly pay all taxes and assessments then due, inclusive of any unpaid accrued penalties and interest. Lessor is a public agency and no property taxes will be or are legally assessable against its fee interest.

Section 5.3 Contested Taxes and Other Impositions.
(a) Lessee, in its own name or in the name of Lessor if prior written consent of Lessor is obtained by Lessee, may contest the validity or amount of any Imposition relating to all or any portion of the Leased Premises, in which event the payment thereof, if authorized by applicable law, may be deferred during the pendency of such contest and for which adequate reserves have been provided in accordance with generally accepted accounting principles, if diligently prosecuted. If applicable law is silent on or expressly disallows deferring payment pending the contest of validity, Lessee shall timely pay any Imposition that is subject to dispute under protest, reserving any and all rights for repayment from the applicable taxing entity if resolution of such contest results in a decision or judgment in Lessee's favor. (b) As may be necessary or desirable, Lessor or Lessee, as applicable, upon the request of the other Party, shall use its best reasonable efforts to assist in any such proceeding to contest the validity or amount of any Imposition.

Section 5.4 Valuation Assessment/Property Tax Exemption.

If applicable, Lessee may attempt to obtain a lowering of the assessed valuation of the Leased Premises for any year or obtain a property tax exemption for the purpose of reducing taxes thereon.

ATTACHMENT 1

14 Section 5.5 Failure to Pay Impositions.

If Lessee shall fail to pay any Impositions before the same become delinquent, except if Lessee is in good faith contesting such Impositions pursuant to Section 5.5 hereof, Lessor, at its election, may pay such Impositions (but shall not be obligated to pay same), together with any interest and penalties due thereon, and the amount so paid by Lessor shall be repayable to Lessor by Lessee, within thirty (30) days.

Section 5.6 Utilities.

Lessee shall pay all charges for all utilities used, rendered or supplied upon or in connection with the Leased Premises and the operation or construction thereof including, but not limited to, all charges for gas, electricity, light, heat or power, all telephone and other communications services, all water rents and sewer service charges, and all sanitation fees or charges (all of the foregoing, collectively "Utility Charges") levied or charged against the Leased Premises during the Term; provided, however, that Lessee shall have no responsibility hereunder for the payment of Utility Charges for utilities supplied by the respective providers directly to Tenants for such Tenants' use in connection with the occupancy of their respective residential units unless otherwise provided in the applicable Resident Sublease. Notwithstanding any contrary provision of this Lease, Lessor shall have no responsibility for payment of any Utility Charges.

ARTICLE 6.

INSURANCE
Section 6.1 Required Insurance Coverage.

Standard "All Risk" Casualty and Fire and Extended Coverage Endorsement. Lessee shall during the Lease Term keep the Leased Premises insured against loss or damage by a standard all risk policy in amounts such that the proceeds of such insurance shall not be less than the full replacement value of the Leased Premises unless otherwise consented to in writing by Lessor and the other Lenders.
(a) Liability and Property Damage Insurance. During the Lease Term, Lessee shall keep in full force and effect a policy or policies of comprehensive general liability and property damage insurance against liability for bodily injury to or death of any person or property damage arising out of an occurrence on or about the Leased Premises. The limits of such insurance shall be not less than One Million Dollars ($1,000,000) combined single limit each occurrence, Two Million Dollars ($2,000,000) annual aggregate, together with One Million Dollars ($1,000,000) excess liability coverage, or such other policy limits as Lessor may require in its reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds. (b) Workers' Compensation Insurance. Lessee shall carry or cause to be carried workers' compensation insurance covering all persons employed in connection with the Leased Premises and with respect to whom death, bodily injury, or sickness insurance claims could be asserted against Lessor and/or Lessee. Lessee shall furnish or cause to be furnished to ATTACHMENT 1

15 Lessor evidence satisfactory to Lessor that Lessee and any contractor that has contracted for the performance of work on the Land or otherwise pursuant to this Lease carries statutory Workers' Compensation insurance and Employer's Liability insurance in a minimum amount of One Million Dollars ($1,000,000) per accident.
(c) Property Insurance. During the Lease Term, Lessee shall keep in full force and effect a policy or policies of insurance against fire, extended coverage, vandalism, and malicious mischief, and such other additional perils, hazards, and risks as now are or may be included in the standard “all risk” form in general use in the County of San Mateo, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. The above insurance policy or policies shall include coverage for earthquakes to the extent generally and commercially available at commercially reasonable rates, if such insurance is generally obtained for affordable multifamily housing projects in the County of San Mateo. Lessor shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement.

Section 6.2 Insurance Policies and Premiums.
(a) All liability policies required by this Lease or any of the Lenders shall be written on an occurrence basis, and shall name the Indemnitees as additional insureds. Duplicate copies of such policies or certificates of such insurance shall be promptly furnished to Lessor. (b) All policies of insurance shall include an endorsement that provides that notice of any change or cancellation of said policy must be made in writing and sent to Lessee and Lessor at their respective principal offices at least thirty (30) days before the effective date of change or cancellation. However in the case of non-payment of premiums, it shall be at least ten (10) days written notice.
(c) The rights of Lessor to receipt of any insurance proceeds will be subject and subordinate to the rights of any Lender pursuant to and in accordance with applicable Loan Documents.
(d) Companies writing the insurance required hereunder shall be approved to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than A: VII or industry standard approved by Lessor. The Commercial General Liability policies required hereunder shall name the Indemnitees as additional insureds. Builder’s Risk and property insurance shall name Lessor as loss payee. (e) If any insurance policy or coverage required hereunder is canceled or reduced, Lessee shall, within thirty (30) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Lessor a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, Lessor may, with notice and at its option, procure such insurance coverage at Lessee's expense, and Lessee shall promptly reimburse Lessor for such expense upon receipt of billing from Lessor.

ATTACHMENT 1

16 (f) Coverage provided by Lessee shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by Lessor, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the Lessor. Lessee shall furnish the required certificates and endorsements to Lessor prior to the commencement of rehabilitation or construction work on the Leased Premises, and shall provide Lessor with certified copies of the required insurance policies upon request of Lessor. (g) Deductibles/Retentions. Any deductibles or self-insured retentions shall be declared to, and be subject to approval by, Lessor's Risk Manager. At the option of and upon request by Lessor's Risk Manager if the Risk Manager determines that such deductibles or retentions are unreasonably high, either the insurer shall reduce or eliminate such deductibles or self-insurance retentions as respects the Indemnitees or Lessee shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. (h) Adjustments. The limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not less than every five (5) years after the Commencement Date nor more than once in every three (3) year period) to address changes in circumstances, including, but not limited to, changes in the purchasing power of the dollar and the litigation climate in California. Within thirty (30) days following Lessor's delivery of written notice of any such adjustments, Lessee shall provide Lessor with amended or new insurance certificates and endorsements evidencing compliance with such adjustments.

Section 6.3 Proceeds of Insurance.
(a) For so long as any Leasehold Mortgage on the Leased Premises is outstanding: All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the Leased Premises damaged or destroyed if (i) Lessee agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each Lender permits such repair or rebuilding, provided that the extent of the Lessee's obligation to restore the Leased Premises shall be limited to the amount of the insurance proceeds. (b) If the Leased Premises are not repaired or rebuilt, all such proceeds shall be applied in a manner consistent with the terms of the Leasehold Mortgages. (c) In the event that no Leasehold Mortgage is outstanding, all insurance proceeds received under the policies set forth in this Article 6 shall be paid to Lessee, provided that Lessee agrees that it shall apply such proceeds for reconstruction or repair of the Leased Premises unless such repair or reconstruction is not economically feasible. (d) To the extent any of the above provisions are inconsistent with the provisions of any of the Loan Documents, the Loan Documents shall be controlling.

Section 6.4 Limitation of Liability.
(a) In addition to any other indemnities provided in this Lease, Lessee shall indemnify, protect, defend (with counsel reasonably acceptable to Lessor), and hold harmless the ATTACHMENT 1

17 Indemnitees from and against all Claims arising out of, attributable to or otherwise occasioned, in whole or in part, by any act or omission of Lessee, its agents, contractors, servants, employees, or invitees, arising from or relating to breach of Lessee's representations and warranties or the operation of the Leased Premises, except to the extent any such Claim arises from the active negligence or willful misconduct of Lessor or the Indemnitees. (b) The provisions of this Section 6.4 shall survive the expiration or termination of this Lease for liability arising from events prior to the expiration or termination of this Ground Lease.

ARTICLE 7.

MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS
Section 7.1 Maintenance of Leased Premises; Landscaping.

During the Term, at Lessee's sole cost and expense, Lessee shall keep and maintain the Leased Premises, all Premises hereafter developed, and all appurtenances thereunto belonging, in good and safe order, condition and repair, free of debris, waste, and graffiti, in compliance with the terms of all applicable provisions of the City of Brisbane’s Municipal Code, and in accordance with the standard of maintenance of high quality apartment projects within the San Mateo County region. To accomplish the maintenance, Lessee shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Lease. All such maintenance and repair shall conform to and comply with all Legal Requirements affecting the Leased Premises. Subject to maintenance provisions of any leaseback agreement or lease for the community room by the Lessor, Lessee agrees that Lessor shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Premises and the Leased Premises. Lessee hereby waives all rights to make repairs or to cause any work to be performed at the expense of Lessor as may be provided for in Section 1941 and 1942 of the California Civil Code, if applicable.

Section 7.2 Landscaping Maintenance.
(a) Lessee, at no expense to the Lessor, shall maintain in healthful, attractive and reasonably weed-free manner all the landscaped areas related to the Leased Premises. "Landscaped areas" as used in this Lease shall mean plantings and irrigation systems which have been installed, or are proposed to be installed, pursuant to the Lessor-approved landscaped plan for the Premises including those in public rights-of-way. All plantings shall be maintained using generally accepted methods of cultivation to ensure reasonably normal, healthy plant growth.

Maintenance shall include replacement of plantings, when necessary, and all ordinary and usual care, including, but not limited to, irrigation, fertilization, pest and disease control, weeding, rotation of plantings and the removal of trimmings, rubbish, debris, and other solid waste.

Lessee shall, at no expense to the Lessor, install, maintain, repair, and replace, where necessary, such irrigation systems as are required to provide adequate irrigation in compliance with water conservation practices.

ATTACHMENT 1

18 (b) If, in the reasonable judgment of the Lessor, Lessee has failed to maintain properly any landscaping as required by this Lease, the Lessor may perform such maintenance, at its option, after thirty (30) days' prior written notice to Lessee of such failure to maintain. In such event, the Lessor's performance of such maintenance shall be at the Lessee's sole expense and Lessee, upon demand by the Lessor, shall pay to the Lessor all reasonable expenses incurred by the Lessor in the performance of such maintenance.
(c) If any maintenance, repair, or replacement of landscaping needs immediate correction as a result of a public safety or health hazard, as reasonably determined by the Lessor, and such maintenance is not performed, or cannot be performed, by Lessee within twenty-four (24) hours of receipt of such notice thereof, the Lessor may perform or cause to be performed such maintenance at Lessee's expense, and Lessee, upon demand by the Lessor, shall pay to the Lessor all reasonable expenses incurred by the Lessor in the performance of such maintenance.

Section 7.3 Alterations to Leased Premises.

Lessee may make any additions, alterations or changes (sometimes collectively referred to herein as "Alterations") in or to the Leased Premises without the prior written approval of Lessor subject to the following conditions:
(a) No Alterations shall be made that would tend to impair the structural soundness of the Leased Premises;
(b) No Alterations shall be undertaken that are prohibited by, or would cause the Leased Premises, the Premises, Lessee, or Lessor to be in breach or violation of any Legal Requirements;
(c) No Alterations shall be undertaken until Lessee shall have procured, to the extent the same may be required from time to time, all permits and authorizations of all applicable Governmental Authorities, all required consents of any Lender, and the written consent of Lessor;
(d) Any Alterations shall be performed in good, skillful and professional manner and in compliance with all applicable Legal Requirements and all applicable Insurance Requirements;
(e) Any and all Alterations shall be consistent with the use of the Leased Premises as authorized under this Lease; and
(f) Any Alteration that (i) will exceed the sum of Fifty Thousand Dollars ($50,000) in cost, with said cost subject to CPI inflationary increases, and either was not included in the annual budget approved by the Lessor or exceeds the cost allocated in the approved annual budget by twenty percent (20%) or more shall require Lessor's advance written consent. In the event the Lessor fails to approve or disapprove any such Alteration within thirty (30) days of receipt of written request from Lessee, such Alteration shall be deemed approved.

Any Alteration made pursuant to an emergency shall not require the Lessor's prior consent, but ATTACHMENT 1

19 Lessee shall inform Lessor of such work and costs in writing within thirty (30) days of commencing such work.

Section 7.4 Indemnifications.

Notwithstanding any other provision of this Lease to the contrary, and in addition to any other indemnities provided in this Lease, to the fullest extent permitted by law, Lessee hereby agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to Lessor) the Indemnitees from and against any and all Claims, arising from or relating to Lessee's obligations under this Lease or the construction or operation of the Leased Premises or any Alterations except to the extent any such Claim arises from the active negligence or willful misconduct of the Indemnitees. In addition, if any contractor or subcontractor which performed any construction work for Lessee or Lessee's affiliates on the Leased Premises or Alterations shall assert any claim against Lessor on account of any damage alleged to have been caused by reason of acts of negligence of Lessee or Lessee's affiliates, members, partners, officers, directors, affiliates, agents, employees or construction contractors, Lessee shall defend at its own expense any suit based upon such Claim; and if any judgment or Claim against Lessor shall be allowed, Lessee shall pay or cause to be paid or satisfied such judgment of claim and pay all costs and expenses in connection therewith. The provisions of this Section shall survive the expiration or termination of this Lease.

Section 7.5 Capital Replacement Reserve Account.

Lessee shall establish and maintain a capital reserve account at all times during the Term (“Capital Reserve Account”). The funds to be placed and maintained in the Capital Reserve Account shall be not less than Twenty Thousand Dollars ($20,000) in any individual fiscal year, nor less than Fifty Thousand Dollars ($50,000) when averaged over three fiscal years. The funds in the Capital Reserve Account shall be expended only for capital repairs and replacements to the fixtures and equipment with a long useful life and which are normally capitalized under generally accepted accounting principles. Capital repairs to and replacement shall include, without limitation, the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing and gutter repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting. The non-availability of funds in the Capital Reserve Account does not in any manner relieve or lessen Lessee’s obligation to undertake any and all necessary capital repairs or replacements and to continue to maintain the Leased Premises in the manner prescribed herein. Not less than once per year, Lessee shall submit to Lessor an accounting for the Capital Reserve Account.

Section 7.6 Operating Reserve Account.

Lessee shall establish an operating reserve account (the “Operating Reserve Account”).

The funds to be placed and maintained in the Operating Reserve Account shall be not less than ATTACHMENT 1

20 three (3) months of operating costs, as shown in the most recent accounting budget. The Operating Reserve Account shall be used to cover shortfalls between annual revenue and actual operating expenses, but shall in no event be used to pay for capital items or capital costs properly payable from the Capital Reserve Account. As per Section 4.4, and not less than once per year, Lessee shall submit to Lessor an accounting for the Operating Reserve Account.

Section 7.7 Reserve Accounts Upon Termination
Upon termination of this Lease, the Lessee shall pay to Lessor all funds remaining in any reserve accounts relating to the Leased Premises; all outstanding security deposits; and all advance payments of rent for periods beyond the end of the Term.

ARTICLE 8.

MORTGAGE LOANS
Section 8.1 Liens and Encumbrances Against the Leasehold Estate.

The Lessee shall have the right to encumber the Leasehold Estate and the Premises with leasehold deeds of trust, mortgages, and regulatory and affordability agreements related to the Approved Loans and all amendments, modifications and/or supplements thereof entered into from time to time, in each instance only with Lessor's consent (collectively, "Liens") provided that all documents evidencing such Liens are consistent with the terms and conditions of this Lease.
(a) For as long as there is any Lien securing any Approved Loan:
(1) Lessor shall not agree to any mutual termination or accept any surrender of this Lease, nor shall Lessor consent to any material amendment or modification of this Lease without the prior written consent of the Lenders that have outstanding Approved Loans, if and to the extent required by any such Lenders. In the event that Lessor receives competing or conflicting offers to cure any default under this Lease, Lessor shall accept the offers to cure in the following order: first, Lessee then each Lender in the same relative priority as their respective Liens.
(2) Notwithstanding any default by Lessee under this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall have given the Lenders that have outstanding Approved Loans written notice of such default and such Lenders shall have failed to remedy such default or acquire the Leasehold Estate or commence foreclosure or other appropriate proceedings as set forth in, and within the time specified by, this Section 8.1. (3) Any Lender that has an outstanding Approved Loan shall have the right, but not the obligation, at any time to pay any or all of the Rent due pursuant to the terms of this Lease, and do any other act or thing required of Lessee by the terms of this Lease, to prevent termination of this Lease. Each Lender shall have sixty (60) days after receipt of notice from Lessor describing such default to cure the default, which notice shall include, with respect to any monetary default, a detailed statement identifying the amounts due and the obligations to which amounts relate and with respect to any non-monetary default, a detailed statement identifying the ATTACHMENT 1

21 obligations breached and the cure expected by Lessor; provided, however, that if the default is not susceptible to cure within such period, the Lender shall have such longer period, not to exceed an additional ninety (90) days, as may be necessary to cure the default, so long as such Lender is diligently prosecuting such cure to completion (the "Initial Cure Period"). All payments so made and all things so done shall be as effective to prevent a termination of this Lease as the same would have been if made and performed by Lessee instead of by the Lender(s).
(4) Lessor shall provide estoppel certificates reasonably requested by Lenders which estoppel certificates shall be approved as to form by Lessor. (5) If the Lenders are prohibited, stayed or enjoined by any bankruptcy or insolvency proceeding of any court, including without limitation a court having jurisdiction over Lessee in such proceeding, from commencing or prosecuting foreclosure proceedings or otherwise effecting any remedy of a Lessee default in accordance with the terms of Section

8.1(a)(3) above, the times specified for commencing or prosecuting such foreclosure or other proceedings or effecting any such remedy shall be extended for the period of such prohibition; provided that any Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease, including without limitation any monetary obligations to third parties which have become, or threaten to become, liens against the Leased Premises or any portion thereof, and shall continue to pay currently such monetary obligations when the same fall due; provided, further, that, subject to subsection (1) of this Section 8.1(a), such Lender shall not interfere with Lessor's efforts to seek compliance by Lessee with any non-monetary obligation under this Lease.
(6) Lessor shall mail or deliver to any Lenders that have any outstanding Approved Loans a duplicate copy of any notice of default which Lessor may deliver to Lessee pursuant to this Lease, provided, the Lessor shall have no liability to such Lenders for its failure to do so. Lessee shall deliver to Lessor the name and contact information for all Lenders that have outstanding Approved Loans, including successors in interest to Approved Loans. (7) The foreclosure of an Approved Loan, any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the leasehold mortgage securing the Approved Loan, or any conveyance of the Leasehold Estate created hereby from Lessee to a Lender through or in lieu of foreclosure (a "Foreclosure Event"), shall not require the consent of Lessor or constitute a breach of any provision of this Lease. In the event any Lender or its Nominee (as defined herein) becomes Lessee under this Lease by such means or pursuant to any new lease obtained under paragraph (9) of this Section 8.1(a) below, Lessor shall recognize the Lender or its Nominee as Lessee hereunder or under such new lease and the Lender shall be liable under this Lease or such new lease only for the period of time that the Lender or its Nominee remains Lessee thereunder, provided that the Lender or its Nominee attorns to Lessor and agrees to be subject to the restrictions of this Lease, and provided further, that the liability of any Lender in connection therewith shall be limited to such Lender’s interest in the Leased Premises. If a Lender or its Nominee becomes the lessee under this Lease or any such new lease, any assignment or sublease of this Lease or such new lease, shall require the prior written consent of the Lessor. Nothing in this Section shall be construed to obligate any ATTACHMENT 1

22 Lender to remedy any default of Lessee, and any failure of any Lender to complete any such cure after commencing the same shall not give rise to any liability of any Lender to Lessor or Lessee. (8) In the event (A) a Lender becomes the legal owner of the Leasehold Estate, (B) Lessor terminates this Lease by reason of any Event of Default (as defined herein) or if (C) this Lease shall otherwise terminate, then, upon written request by Lender given within sixty (60) days after such transfer or receipt of notice of such termination of the Leasehold Estate, Lessor shall execute and deliver a new lease of the Leased Premises to such Lender (the "Nominee"), provided that, if such Nominee is not wholly owned by one or more Lenders, such Nominee is approved by Lessor in its reasonable discretion. Such new lease shall be substantially in the same form as this Lease, shall have a term equal to the remainder of the Term with the same agreements, covenants, reversionary interests and conditions (except for any requirements which have been fulfilled by Lessee prior to termination) as are contained in this Lease and with priority equal to this Lease with respect to encumbrances of Lessor's interest in the Land or the Leased Premises or encumbrances of Lessee's interest in the Leased Premises permitted or caused by Lessor, together with any provisions legally required in the event the Nominee is a governmental entity; provided, however, that any defaults by Lessee susceptible to cure by the Lender have been cured or reasonable assurance has been provided to Lessor that such defaults shall be cured. Upon execution and delivery of such new lease by Lessor and the Nominee, the Nominee shall have acquired all the right, title and interest of Lessee under this Lease prior to its termination. Lessor shall cooperate in taking such action as shall be necessary to cancel and discharge this Lease and to remove Lessee from the Leased Premises. (9) If a Lender subsequently transfers its interest under this Lease after acquiring such interest by foreclosure or deed in lieu of foreclosure which transfer has been approved by Lessor in writing and, in connection with any such transfer, the Lender takes a mortgage or deed of trust encumbering such leasehold interest to secure all or any portion of the purchase price given to the Lender for such transfer, then such mortgage or deed of trust shall be considered an Approved Loan hereunder so long as such mortgage or deed of trust is substantially in the form previously executed for the benefit of such Lender in connection with its Approved Loan or if Lessor has otherwise been provided an opportunity to review and approve the documents evidencing and securing such mortgage or deed of trust and the obligations secured thereby, and the Lender shall be entitled to receive the benefit of and to enforce the provisions of this Lease or the new lease approved pursuant to paragraph (9) of this Section 8.1(a).
(10) Unless the Lenders otherwise consent in writing, Lessor and Lessee each hereby waives, and agrees not to assert or otherwise take the benefit of, that portion of Section 365(d)4, or any other applicable provisions, of the United States Bankruptcy Code (11 U.S.C. Section 101 et seq.), which provides for the deemed rejection of a lease in certain circumstances, so long as the trustee is paying the rent due under the Lease and performs, or causes the performance of, the uses of the Leased Premises pursuant to this Lease. (11) Lessor may not encumber or consent to the recordation of any liens against Lessor’s Estate, without in each instance obtaining the prior written consent of the Lenders.

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23 (b) Any Leasehold Mortgage shall be subject to the provisions of this Lease and all rights of Lessor under this Lease. Notwithstanding any contrary provision of this Lease, in no event may any mortgage or other security instrument, including without limitation any Leasehold Mortgage, be recorded against Lessor's fee interest in the Land or reversionary interest in the Leased Premises without Lessor's prior written consent, which Lessor may grant or withhold in the exercise of Lessor's sole discretion.

Section 8.2 Cost of Approved Loans to be Paid by Lessee.

Lessee affirms that it shall bear all of the costs and expenses in connection with (a) the preparation and securing of the Approved Loans, (b) the delivery of any instruments and documents and their filing and recording, if required, and (c) all taxes and charges payable in connection with the Approved Loans.

Section 8.3 Proceeds of Approved Loans.

It is expressly understood and agreed that all Approved Loan proceeds shall be paid to and become the property of Lessee, and that Lessor shall have no right to receive any such Approved Loan proceeds.

Section 8.4 Notice and Right to Cure Defaults Under Approved Loans.

Upon the recording of a memorandum of this Lease, Lessor may record in the Official Records of the County of San Mateo a request for notice of any default under each Approved Loan. In the event of default by Lessee under an Approved Loan, Lessee or Lessor shall have the right, but not the obligation, to cure the default in accordance with the Loan Documents.

Any payments made by Lessor to cure a default shall be paid by Lessee within thirty (30) days of the date on which the payment was made by Lessor.

ARTICLE 9.

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 Representations, Warranties and Covenants of Lessor.

As an inducement to Lessee to enter into and proceed under this Lease, Lessor warrants and represents to Lessee as follows, which warranties, representations and covenants are true and correct as of the date of this Lease, to the actual knowledge of Lessor:
(a) Lessor has the right, power and authority to enter into this Lease and to lease the Leased Premises to Lessee in accordance with the terms, provisions and conditions contained in this Lease, and, following the recordation of the termination of the ground lease with Bridge Housing, Inc., no other party has any right or option to lease the Leased Premises; (b) Lessor has received no written notice and has no actual knowledge of any litigation or action, pending or threatened, materially and adversely affecting the Leased Premises;
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24 (c) Lessor has received no written notice and has no actual knowledge of any pending or threatened Taking relating to all or any part of the Leased Premises; (d) the entry by Lessor into this Lease with Lessee and the performance of all of the terms, provisions and conditions contained herein will not, or with the giving of notice or the passage of time, or both, would not, violate or cause a breach or default under any other agreement relating to the Leased Premises to which Lessor is a party or by which it is bound; (e) except as disclosed to Lessee or as is apparent from Lessee's inspection, there is no tenant, lessee or other occupant of the Leased Premises having any right or claim to possession or use of the Leased Premises;
(f) there are no unpaid special assessments of which Lessor has received notice for sewer, sidewalk, water, paving, gas, electrical or utility Premises or other capital expenditures affecting the Leased Premises;
(g) Lessor has received no written notice and has no actual knowledge of any violations of any Legal Requirements affecting any portion of the Leased Premises that materially affect the development of the Premises;
(h) there is no lien encumbering Lessor’s Estate that is senior in priority to the Lessee’s Estate in the Leased Premises conveyed to Lessee pursuant to the terms of this Lease; and
(i) Lessor makes no representation or warranty with respect to the condition of the Leased Premises or its fitness or availability for any particular use, and Lessor shall not be liable for any latent or patent defect therein.

Section 9.2 Representations, Warranties and Covenants of Lessee.

As an inducement to Lessor to enter into and to proceed under this Lease, Lessee warrants and represents to Lessor as follows, which warranties, representations and covenants are true and correct as of the date of this Lease:
(a) Authority. Lessee has the right, power and authority to enter into this Lease and the right, power and authority to comply with the terms, obligations, provisions and conditions contained in this Lease;
(b) No Breach of Obligations. The entry by Lessee into this Lease and the performance of all of the terms, provisions and conditions contained herein will not, or with the giving of notice or the passage of time, or both, would not, violate or cause a breach or default under any other agreements to which Lessee is a party or by which it is bound; (c) Litigation. Lessee has received no written notice and has no actual knowledge of any litigation or action, pending or threatened, materially and adversely affecting Lessee’s ability to carry out its obligations hereunder; and ATTACHMENT 1

25 (d) Bankruptcy. Lessee is not the subject of a pending or to its knowledge, threatened bankruptcy proceeding.

Section 9.3 Hazardous Materials.

Lessee (i) shall not cause or permit any Hazardous Materials to be placed, held, located or disposed of on, under or at the Leased Premises or any part thereof, except in commercially reasonable amounts used in the construction and operation of the Leased Premises and in accordance with Legal Requirements, or as may be authorized by an environmental agency of applicable jurisdiction (e.g., San Francisco Regional Water Quality Control Board), and (ii) shall not cause or permit any Hazardous Materials contamination of the Leased Premises or any part thereof, except as may be authorized by an environmental agency of applicable jurisdiction (e.g., San Francisco Regional Water Quality Control Board.)
Lessee shall take commercially reasonable action to prevent the release of any Hazardous Materials into the environment from the Leased Premises. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with the standards generally applied by apartment complexes in the County of San Mateo, California, as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials.

Notwithstanding the obligation of Lessee to indemnify Lessor, and its respective officers, officials, members, employees, agents, and representatives pursuant to this section, and provided no Hazardous Materials came to be located on the Leased Premises during Lessor's ownership prior to the Effective Date or as a result of Lessor’s action, Lessee shall, at its sole cost and expense, promptly take (i) all actions required by any federal, state, regional, or local governmental agency or political subdivision or any Governmental Requirements and (ii) all actions necessary to make full economic use of the Leased Premises for the purposes contemplated by the Regulatory Agreement and this Lease, which requirements or necessity arise from the presence upon, about, or beneath the Leased Premises, of any Hazardous Materials. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Leased Premises, the preparation of any feasibility studies or reports, and the performance of any cleanup, remedial, removal, or restoration work.

In the event of a release of any Hazardous Materials into the environment other than those authorized by an environmental agency of applicable jurisdiction, Lessee shall, as soon as possible after it becomes aware of the release, furnish to the Lessor a copy of any and all final reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of the Lessor, Lessee shall furnish to the Lessor a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Leased Premises including, but not limited to, all permit applications, permits, and reports, including, without limitation, those final reports and other matters which may be characterized as confidential, excepting those which are characterized as attorney work product or privileged.

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26 Section 9.4 Hazardous Materials Indemnification.

From and after the Commencement Date, Lessee hereby agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to Lessor) the Indemnitees from and against any and all Claims arising directly or indirectly, in whole or in part, out of (i) any activity by Lessee, its affiliates or its agents or contractors carried on or undertaken on or off the Leased Premises in connection with the handling, treatment, removal, storage, decontamination, cleanup, transport or disposal of any Hazardous Materials located or present in, on, under or about the Leased Premises; or (ii) the failure of Lessee to comply with any Environmental Laws relating to the handling, treatment, presence, removal, storage, decontamination, cleanup, transportation, or disposal of Hazardous Materials into, on, under or from the Leased Premises, except to the extent any such Claim arises from the active negligence or willful misconduct of the Indemnitees. Provided, under no condition shall Lessee have any obligation under this Section 9.4 for Claims arising from or related to negligent or intentional actions of the Lessor or the presences of Hazardous Materials first arising at the Leased Premises during Lessor's ownership and prior to the Effective Date. The provisions of this Section shall survive the expiration or termination of this Lease.

Section 9.5 Prevailing Wage Requirements.
(a) To the extent applicable, the Lessee shall and shall cause its contractors and subcontractors to pay prevailing wages in the construction of the Premises as those wages are determined pursuant to Labor Code Sections 1720 et seq., and the implementing regulations of the Department of Industrial Relations (the "DIR"), to employ apprentices as required by Labor Code Sections 1777.5 et seq., and the implementing regulations of the DIR and comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., 1810- 1815 and implementing regulations of the DIR.
(b) All calls for bids, bidding materials and the construction contract documents for the construction of the Premises must specify that:
(1) No contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the construction of the Premises unless registered with the DIR pursuant to Labor Code Section 1725.5.
(2) The Leased Premises are subject to compliance monitoring and enforcement by the DIR.
(c) The Lessee, as the "awarding body", shall register the Leased Premises as required by Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within two (2) days after entering into any construction contract and provide evidence of such registration to the Lessor within two (2) days of such registration and any additional registration reporting to the DIR.
(d) In accordance with Labor Code Sections 1725.5 and 1771.1, Lessee shall require that its contractors and subcontractors be registered with the DIR, and maintain such registration as required by the DIR.

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27 (e) Pursuant to Labor Code Section 1771.4, any construction on the Leased Premises is subject to compliance monitoring and enforcement by the DIR. The Lessee shall and shall require its contractors and subcontractors to submit payroll and other records electronically to the DIR pursuant to Labor Code Sections 1771.4 and 1776 et seq., or in such other format as required by the DIR.
(f) The Lessee shall, and shall cause its contractors and subcontractors to, keep and retain such records as are necessary to determine if prevailing wages have been paid as required pursuant to Labor Code Sections 1720 et seq., and that apprentices have been employed as required by Labor Code Section 1777.5 et seq., and shall, from time to time upon the request of the Lessor provide to the Lessor such records and other documentation reasonably requested by the Lessor.
(g) The Lessee shall, and shall cause its respective contractors and subcontractors to, comply with all other applicable provisions of Labor Code, including without limitation, Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and implementing regulations of the DIR in connection with any construction on the Leased Premises or any other work undertaken or in connection with the Land or the Leased Premises.
(h) Copies of the currently applicable current per diem prevailing wages are available from the DIR website, www.dir.ca.gov. The Lessee shall cause its respective contractors to post the applicable prevailing rates of per diem wages at the Leased Premises and to post job site notices, in compliance with Title 8 California Code of Regulations 16451(d) or as otherwise as required by the DIR.

Section 9.6 Compliance with Laws.

Lessee shall operate the Leased Premises in conformity with all applicable federal, state and local laws, rules, ordinances and regulations ("Applicable Laws"), including without limitation, all applicable federal and state labor laws and standards, the City of Brisbane's zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City of Brisbane's Municipal Code, and all applicable disabled and handicapped access requirements. To the greatest extent allowed by law, Lessee shall indemnify, defend (with counsel approved by Lessor) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Lessee's obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims. This Section shall survive the expiration or termination of this Lease.

Section 9.7 Affordability and Use Restrictions.

Lessee hereby covenants and agrees that the Leased Premises shall be used solely for the operation of a senior multifamily rental housing development in compliance with the requirements set forth in that certain Regulatory Agreement recorded against the Property.

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28 Section 9.8 Non-Discrimination; Compliance with Fair Housing Laws.

Lessee shall not restrict the rental, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person.

Lessee covenants for itself and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the condition 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 Leased Premises or part thereof, nor shall Lessee or any person claiming under or through Lessee 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, of, or for the Leased Premises or part thereof.

Lessee shall include such provision in all leases and rental agreements affecting the Leased Premises or part thereof, and shall enforce the same diligently and in good faith.

Section 9.9 Fair Housing.

Lessee shall comply with state and federal fair housing laws in the marketing and rental of the units in the Leased Premises. Lessee shall accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto.

Section 9.10 Management Entity.

In recognition of Lessor's significant financial contribution to the Leased Premises, Lessor shall have the right to review and approve any placement and replacement of the management entity proposed by Lessee for the Leased Premises, and shall have the right to review and approve any agreement executed between Lessee and the management entity, which approval of agreement shall not be unreasonably withheld. The contracting of management services to a management entity shall not relieve Lessee of its primary responsibility for proper performance of management duties. Upon Lessor’s determination and delivery of written notice to Lessee that Lessee has failed to operate the Leased Premises in accordance with this Lease, Lessor may, subject to any applicable cure period, require Lessee to contract with a qualified management agent selected by Lessor subject to approval of the Lenders, if required, to operate the Leased Premises, or to make such other arrangements as Lessor deems necessary to ensure performance of the required functions.

Section 9.11 Subleases.

All subleases made by Lessee to residents of the individual residential units in the Leased Premises (“Resident Subleases”) shall be subject to the following provisions and restrictions:

Each Resident Sublease shall contain a provision, satisfactory to Lessor, requiring the Subtenant to attorn to Lessor upon (a) an Event of Default by Lessee under this Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and instructions to make such ATTACHMENT 1

29 Subtenant’s rental payments to Lessor. On any termination of this Lease prior to the expiration of the Term, all of Lessee’s interest as sublessor under any and all existing valid and enforceable Resident Subleases for which Lessor has issued a non-disturbance agreement shall be deemed automatically assigned, transferred, and conveyed to Lessor and subtenants under such Resident Subleases shall be deemed to have attorned to Lessor. Lessor shall thereafter be bound on such Resident Subleases to the same extent Lessee, as sublessor, was bound thereunder and Lessor shall have all the rights under such Resident Subleases that Lessee, as sublessor, had under such Resident Subleases; provided, however, that any amendments to any such Resident Sublease made after the issuance of a non-disturbance agreement to a subtenant shall not be binding on Lessor. Each Resident Sublease shall expressly provide that it is subject to each and all of the covenants, conditions, restrictions, and provisions of this Lease.

ARTICLE 10.

EMINENT DOMAIN
Section 10.1 Termination of Lease.

Lessor and Lessee agree that, in the event of a Taking such that Lessee reasonably determines that the Leased Premises cannot continue to be operated, at reasonable cost, for its then-current use, then, subject to the rights of Lenders, this Lease shall, at Lessee's sole option, terminate as of the date of the Taking.

Section 10.2 Continuation of Lease and Presumption of Restoration.

Lessor and Lessee agree that, in the event of a Taking that does not result in the termination of this Lease pursuant to Section 10.1 above, this Lease shall continue in effect as to the remainder of the Leased Premises, and the Net Condemnation Award will be disbursed in accordance with Section 10.4 below to Lessor and Lessee and/or any Lender, if the terms of the applicable Leasehold Mortgage so require, and shall be used so as to make the same a complete, unified and efficient operating unit as nearly as reasonably possible to the condition existing prior to the Taking, subject to any applicable requirements of the Lender.

Section 10.3 Temporary Taking.

If there shall be a temporary Taking with respect to all or any part of the Leased Premises or of Lessee's interest in this Lease, then the Term shall not be reduced and Lessee shall continue to pay in full all Rents, Impositions and other charges required herein, without reduction or abatement thereof at the times herein specified; provided, however, that Lessee shall not be required to perform such obligations that Lessee is prevented from performing by reason of such temporary Taking.

Section 10.4 Apportionment of Award.

If there is a Taking, whether whole or partial, Lessor and Lessee shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed, taking into consideration Lessor's fee interest in the Land (as encumbered by this Lease) and ATTACHMENT 1

30 reversionary interest in the Leased Premises upon the expiration of the Term or termination of this Lease and, with respect to Lessee’s portion, the rights of Lenders under their respective Loan Documents. If the Leased Premises are restored as in contemplated in Section 10.2 above, Lessee shall be entitled to recover the costs and expenses reasonably incurred in such restoration out of any Net Condemnation Award payable to Lessee. Thereafter, if the condemning authority does not make separate awards, the Parties agree that any Net Condemnation Award will be allocated as follows on a proportionate basis reflecting the Parties' respective interests in the Land and the Leased Premises and the remaining duration of the Term as follows:
(a) Award on Total or Substantial Taking. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order:
(1) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.
(2) To Lessor that portion of the award equal to the fair market value of the Land. Any "bonus value" attributable to this Lease shall be paid to Lessor. (3) To Lessee, that portion of the award equal to the fair market value of the Leased Premises (subject to Lessor's reversionary interest), less the amount paid to the Lenders pursuant to (a) above.
(4) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Leased Premises, exclusive of Lessor's reversionary interest. (b) Award on Partial Taking. In the event of a partial taking, after application of the Award for restoration, any remaining portion of such award shall be apportioned as follows, in the following order:
(1) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.
(2) To Lessor, that portion of the award attributable to the fair market value of the portion of the Land taken.
(3) To Lessee, that portion of the award equal to the fair market value of the portion of the Leased Premises taken (subject to Lessor's reversionary interest), less the amount paid to the Lenders pursuant to (a) above, but only to the extent that the proceeds of the award are not used for restoration of the Leased Premises. (4) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Leased Premises exclusive of the reversionary interest of Lessor. Any "bonus value" attributable to this Lease shall be paid to Lessor. (5) Any severance damages awarded or payable because only a portion of the Land and Leased Premises are taken by eminent domain shall be equally divided ATTACHMENT 1

31 between Lessee and Lessor except to the extent needed to replace any Premises taken by eminent domain with equivalent Premises on the remainder of the Land).

Section 10.5 Joinder.

If a Leasehold Mortgage exists, the Lenders, to the extent permitted by law, shall be made a party to any Taking proceeding.

Section 10.6 Reservation of Rights.

Notwithstanding any provisions in this Lease to the contrary, nothing herein does or shall be construed to limit or require Lessor or the City of Brisbane to exercise its ability to condemn any property, including the Leased Premises, in accordance with applicable law. Nothing in this Lease does or shall be construed as requiring Lessor or the City of Brisbane to pay to Lessee, any Lender, or any other third party with an interest in the Leased Premises, any amount of money, as compensation for alleged condemnation or otherwise, if Lessor or the City Brisbane (or their successors) seeks to enforce any of the rights and obligations under this Lease and any executed attachments thereto. Except when Lessor or the City of Brisbane exercises its ability to condemn the Leased Premises by adoption of a resolution of necessity and pursuant to other provisions of applicable law, Lessor or the City of Brisbane shall not be a construed as pursuing or effectuating a Taking or acting as a "condemning authority" under this Lease.

ARTICLE 11.

DAMAGE OR DESTRUCTION
Section 11.1 Damage or Destruction to Leased Premises.

Lessee shall give prompt written notice to Lessor after the occurrence of any fire, earthquake, act of God or other casualty to or in connection with the Leased Premises, the Premises or any portion thereof (hereinafter sometimes referred to as "Casualty"). Subject to Section 11.2 below, if during the Term the Leased Premises shall be damaged or destroyed by Casualty, Lessee shall repair or restore the Leased Premises, so long as Lessee and Lessor determine, that it is feasible to do so and in such event Lessee provides or causes to be provided sufficient additional funds which, when added to such insurance proceeds, will fully effect such repair or restoration. Upon the occurrence of any such Casualty, Lessee, promptly and with all due diligence, shall apply for and collect all applicable insurance proceeds recoverable with respect to such Casualty, for the benefit of the Lenders. In the event that Lessee and Lessor shall determine, subject to the rights of the Lenders, by notice to Lessor given within thirty (30) days after receipt by Lessee of any such insurance proceeds, that it is not economically practical to restore the Leased Premises to substantially the same condition in which they existed prior to the occurrence of such Casualty, then Lessee may terminate this Lease as of a date that is not fewer than thirty (30) days after the date of such notice. If Lessee terminates this Lease pursuant to this Section 11.1, Lessee shall surrender possession of the Leased Premises to Lessor immediately and assign to Lessor (or, if same has already been received by Lessee, pay to Lessor) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Lender therein, as referenced in Section 11.3 below.

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32 Section 11.2 Damage or Destruction Near End of Term.

If, during the last seven (7) years of the Term, the Premises shall be damaged by Casualty, then Lessee shall have the option, to be exercised within one hundred twenty (120) days after such Casualty:
(a) to repair or restore the Leased Premises as hereinabove provided in this Article 11; or
(b) subject to the rights of Lenders, to terminate this Lease by notice to Lessor, which termination shall be deemed to be effective as of the date of Casualty. If Lessee terminates this Lease pursuant to this Section 11.2, Lessee shall surrender possession of the Leased Premises to Lessor immediately and assign to Lessor (or, if same has already been received by Lessee, pay to Lessor) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Lender therein, as referenced in Section 11.3 below.

Section 11.3 Distribution of Insurance Proceeds.

In the event that this Lease is terminated pursuant to Sections 11.1 or 11.2 hereof, the insurance proceeds received as the result of such Casualty shall be distributed as follows: (a) first, if Leasehold Mortgage(s) are in place, to the Lenders to the extent of any indebtedness then owed to such Lender in order of the Lien priority of the Leasehold Mortgages; (b) second, the balance, if any, of such insurance proceeds shall be paid to Lessee or, as applicable pursuant to Sections 11.1 and 11.2 above, assigned or paid over to Lessor.

Section 11.4 Insurance Requirements.

Nothing in this Article 11 does or shall be construed as permitting Lessee to maintain less than the minimum insurance requirements set forth in this Lease.

ARTICLE 12.

EVENTS OF DEFAULT
Section 12.1 Events of Default. Each of the following shall be an "Event of Default" by Lessee hereunder:
(a) failure by Lessee to pay any Rent when due if such failure shall continue for a period of thirty (30) days after notice thereof has been given by Lessor to Lessee; (b) Lessee's default in the performance of any term, provision or covenant under this Lease (other than an obligation enumerated in this Section 12.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for thirty (30) days in the event of a monetary default or sixty (60) days in the event of a nonmonetary default following the date upon which Lessor shall have given written notice of the default to Lessee, or if the non-monetary default cannot be cured within sixty (60) days, Lessee ATTACHMENT 1

33 shall not be in breach so long as Lessee is diligently undertaking to cure such breach and such breach is cured within one hundred twenty (120) days;
(c) Lessee's failure to maintain insurance on the Leased Premises as required hereunder, and the failure of Lessee to cure such default within thirty (30) days; (d) Subject to Lessee's right to contest the following charges, Lessee's failure to pay taxes or assessments due on the Leased Premises or failure to pay any other charge that may result in a lien on the Leased Premises, and Lessee's failure to cure such default within thirty (30) days of delinquency;
(e) Lessee abandons, vacates, or otherwise surrenders the Leased Premises, or is dispossessed (other than dispossession as the result of a Taking subject to Section 10 hereof by process of law or otherwise);
(f) A Transfer occurs, either voluntarily or involuntarily, in violation of this Lease;
(g) The subjection of any right or interest of Lessee in this Lease to attachment, execution, or other levy, or to seizure under legal process, if not released within sixty (60) days;
(h) Lessee shall have voluntarily or involuntarily suspended its business for a period in excess of thirty (30) days for reasons other than Force Majeure, or Lessee shall have been dissolved or terminated;
(i) The appointment of a receiver, to take possession of Lessee's Estate or of Lessee's operations of the Leased Premises for any reason, if such receivership is not terminated, dismissed or vacated within ninety (90) days after the appointment of the receiver; (j) Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Lessee or any member thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Lessee or any member thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Lessee or any member thereof or for the Leased Premises; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; (k) The filing against Lessee of any involuntary proceedings under such Bankruptcy Code or similar law, if such proceedings have not been vacated or stayed within ninety (90) days of filing;
(l) The appointment of a trustee or receiver for Lessee or for all or the major part of Lessee's property or the Leased Premises, in any involuntary proceeding, or the taking of jurisdiction by any court over all or the major part of Lessee's property or the Leased Premises in any involuntary proceeding for the reorganization, dissolution, liquidation or winding up of Lessee, if such trustee or receiver shall not be discharged or such jurisdiction relinquished or vacated or stayed on appeal or otherwise stayed within ninety (90) days; and ATTACHMENT 1

34 (m) Any of Lessee's representations or warranties contained in this Lease or in any financial statement, certificate or report submitted to Lessor in connection with this Lease proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to Lessor.

Section 12.2 Rights and Remedies.

At any time after the occurrence of an Event of Default hereunder, subject in all respects to the provisions of this Lease with respect to Lessor's rights to cure defaults by Lessee and with respect to the rights of any Lenders, Lessor may, in addition to any other rights and remedies available at law or in equity, terminate this Lease by giving Lessee written notice thereof (with a copy of such notice to the Lenders), setting forth in such notice an effective date for termination which is not less than thirty (30) days after the date of such notice, in which event this Lease and Lessee's Estate created hereby and all interest of Lessee and all parties claiming by, through or under Lessee shall automatically terminate upon the effective date for termination as set forth in such notice, with the same force and effect and to the same extent as if the effective date of such notice had been the date originally fixed in Article 2 hereof for the expiration of the Term. (a) In such event, Lessor, its agents or representatives, shall have the right, without further demand or notice, to re-enter and take possession of the Leased Premises (including all buildings and other Premises comprising any part thereof) at any time from and after the effective termination date without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of Rent or existing breaches of covenants; provided that Lessor shall not be entitled to disturb possession of any Tenants or others in possession pursuant to Resident Subleases with Lessee so long as such Tenant or others are not in default thereunder and attorn to Lessor as their lessor.
(b) Upon the exercise of Lessor's remedies pursuant to this Section 12.2, Lessee shall execute such releases, deeds and other instruments in recordable form as Lessor shall reasonably request in order to accurately set forth of record the then current status of Lessee's Estate and Lessee's rights hereunder.
(c) If Lessee shall have failed to cure a default by Lessee after expiration of the applicable time for cure of a particular default, Lessor, at its election, but without obligation therefor (i) may seek specific performance of any obligation of Lessee, after which Lessor shall retain, and may exercise and enforce, any and all rights that Lessor may have against Lessee as a result of such default, (ii) from time to time without releasing Lessee in whole or in part from the obligations to be performed by Lessee hereunder, may cure the default at Lessee's cost, (iii) may terminate this Lease, (iv) subject to the rights of Lenders, may have a receiver appointed to take possession of Lessee's interest in the Leasehold Estate with power in the receiver (a) to administer Lessee's interest in the Leasehold Estate, (b) to collect all funds available in connection with the operation of the Leased Premises, and (c) to perform all other acts consistent with Lessee's obligations under this Lease, as the court deems proper, and/or (v) may exercise any other remedy given hereunder or now or hereafter existing at law or in equity. Any reasonable cost incurred by Lessor in order to cure such a default by Lessee shall be due immediately from Lessee, together with interest, and may be offset against any amounts due from Lessor to Lessee.

ATTACHMENT 1

35 (d) Remedies Cumulative. No remedy provided in this Section shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised from time to time and as often as occasion may arise or as may be deemed expedient. (e) No Election of Remedies. The rights given in this Section to receive, collect or sue for any rent or rents, moneys or payments, or to enforce the terms, provisions and conditions of this Lease, or to prevent the breach or nonobservance thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or toll the right or power of Lessor upon the conditions and subject to the provisions in this Lease to terminate Lessee's right of possession because of any default in or breach of any of the covenants, provisions or conditions of this Lease beyond the applicable cure period.
(f) Survival of Obligations. Nothing herein shall be deemed to affect the right of Lessor to indemnification for liability arising prior to the termination of the Lease for personal injuries or property damage or in connection with any other Claim, nor shall anything herein be deemed to affect the right of Lessor to equitable relief where such relief is appropriate.

No expiration or termination of this Lease by operation of law or otherwise, and no repossession of the Leased Premises or any part thereof, shall relieve Lessee of any of its obligations to indemnify and defend the Indemnitees pursuant to the provisions of this Lease, and all such provisions, and all of Lessee's accrued liabilities and obligations hereunder, shall survive such expiration, termination or repossession for liability that arises from events prior to the termination of the Lease .
(g) No Waiver. No waiver by Lessor of any breach by Lessee of any of its obligations, agreements or covenants hereunder shall be deemed to be a waiver of any subsequent breach of the same or any other covenant, agreement or obligation, nor shall any forbearance by Lessor to seek a remedy for any breach by Lessee be deemed a waiver by Lessor of its rights or remedies with respect to such breach.

Section 12.3 Default by Lessor.
(a) Events of Default. Lessor shall be in default of this Lease if it fails to perform any provision of this Lease that is obligated to perform or if any Lessor's representations or warranties is untrue or becomes untrue in any material respect, and if the failure to perform or the failure of such representation or warranty is not cured within sixty (60) days after written notice of the default has been given to Lessor. If the default cannot reasonably be cured within sixty (60) days, Lessor shall not be in default of this Lease if Lessor commences to cure the default within one hundred twenty (120) days and diligently and in good faith continues to cure the default until completion.
(b) Right to Cure; Lessee's Remedies. If Lessor shall have failed to cure a default by Lessor after expiration of the applicable time for cure of a particular default, Lessee, at its election, but without obligation therefor (i) may seek specific performance of any obligation of Lessor, after which Lessee shall retain, and may exercise and enforce, any and all rights that ATTACHMENT 1

36 Lessee may have against Lessor as a result of such default, (ii) from time to time without releasing Lessor in whole or in part from the obligation to be performed by Lessor hereunder, may cure the default at Lessor's cost provided that Lessor has been given thirty (30) days advance written notice of Lessee's election to do so and Lessor has not within such time notified Lessee that Lessor will cure the default, and/or (iii) may terminate this Lease.

Section 12.4 Notices.

Notices given by Lessor under Section 12.1 or by Lessee under Section 12.4 shall specify the alleged default and the applicable Lease provisions, and shall demand that Lessee or Lessor, as applicable, perform the appropriate provisions of this Lease within the applicable period of time for cure. No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice.

ARTICLE 13.

GENERAL PROVISIONS
Section 13.1 Quiet Enjoyment.

Lessor covenants and warrants that Lessee, upon payment of all sums herein provided and upon performance and observance of all its covenants herein contained, shall peaceably and quietly have, hold, occupy, use and enjoy, and shall have the full, exclusive and unrestricted use and enjoyment of, all of the Leased Premises during the Term, subject only to the provisions of this Lease and all applicable Legal Requirements.

Section 13.2 Lessor's Right of Inspection.

Notwithstanding Section 13.1 above, Lessor, in person or through its agents, upon reasonable prior notice to Lessee, shall have the right, subject to the rights of Tenants, to enter upon the Leased Premises for purpose of reasonable inspections performed during reasonable business hours in order to assure compliance by Lessee with its obligations under this Lease, except in the event of an emergency or health and safety related matter, in which case no prior notice is required.

Section 13.3 Vacation Upon Termination.

Lessee covenants that upon any termination of this Lease, whether by lapse of time or because of any of the conditions or provisions contained herein, Lessee will peaceably and quietly yield and surrender possession of the Leased Premises to Lessor. The foregoing, however, will be subject to the rights of Tenants or others in possession pursuant to Resident Subleases with Lessee, provided that such Tenants are not in default thereunder and attorn to Lessor as their lessor. An action of forcible detainer shall lie if Lessee holds over after a demand for possession is made by Lessor.

ATTACHMENT 1

37 Section 13.4 Non-Merger.

Except upon expiration of the Term or upon termination of this Lease, there shall be no merger of either this Lease or Lessee's Estate created hereunder with Lessor's fee interest in the Land or Lessee's fee interest in the Leased Premises by reason of the fact that the same person may acquire, own or hold, directly or indirectly, (a) this Lease, Lessee's Estate created hereunder or any interest in this Lease or the Leased Premises, and (b) a fee interest in the Land or the Leased Premises, unless and until Lessor and all persons, including any assignee of Lessor, having an interest in (i) this Lease or Lessee's Estate created hereunder, and (ii) the fee estate in the Leased Premises or any part thereof, shall join in a written instrument effecting such merger and shall duly record the same.

Section 13.5 Permitted Transfer by Lessee.
(a) Except as provided in this Section 13.5, Lessee shall have no right to Transfer, assign or sublease any legal or beneficial interest in Lessee's Estate hereunder without Lessor's prior written consent which shall not be unreasonably withheld. Notwithstanding the foregoing, by its execution of this Lease, Lessor is deemed to have consented to the following ("Permitted Transfers"):
(1) Approved Loans and Leasehold Mortgages; and
(2) a conveyance of the Lessee's Estate resulting from the foreclosure of a Leasehold Mortgage (or an assignment, new lease or deed-in-lieu of such a foreclosure) to a Lender;
(b) Upon the granting of any consent (deemed or otherwise) by Lessor with respect to a Transfer by Lessee, this Lease shall be binding upon and shall inure to the benefit of Lessor and Lessee and their respective heirs, successors, assigns, legal representatives, Lenders, Tenants and other transferees.

Section 13.6 Consents.

Lessor agrees not to unreasonably withhold or delay its consent to matters requiring Lessor's consent hereunder unless the applicable provision of this Lease permits Lessor to exercise Lessor's sole discretion with respect to a particular matter.

Section 13.7 Enforced Delay; Extension of Times of Performance.

Time is of the essence in the performance of each of the Parties' respective obligations set forth in this Lease. Except as expressly set forth in this Section 13.7, performance by any Party hereunder shall not be deemed to be in default and such Party shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the reasonable control and without the fault of such Party, including as applicable: war; acts of terrorism, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God, acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement), unusually severe weather; inability to secure necessary labor, materials or ATTACHMENT 1

38 tools; acts of the other Parties; acts or the failure to act of any public or governmental agency or entity (except that acts or the failure to act of Lessor shall not excuse performance of the Lessor); or other causes beyond the control or without the fault of the Party claiming an extension of time to perform ("Force Majeure"). An extension of time for any cause permitted under this Section

13.7 shall be limited to the period of the enforced delay, which period 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 fifteen (15) days of knowledge of the commencement of the cause. If no written notice is sent within fifteen (15) days, for purposes of measuring the extension period for performance of the obligation in question, the period of the enforced delay shall commence to run from the date written notice is sent to the other Party. Times of performance under this Lease may be extended by mutual written agreement of the Parties.

Section 13.8 Interpretation.

The terms of this Lease shall be construed in accordance with the meaning of the language used and shall not be construed for or against any Party by reason of the authorship of this Lease or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Lease.

Section 13.9 Entire Agreement: Modifications.

This Lease supersedes all prior discussions and agreements between the Parties with respect to the leasing of the Leased Premises. This Lease contains the sole and entire understanding between the parties with respect to the leasing of the Leased Premises. This Lease shall not be modified or amended in any respect, except by written instrument specifically referencing such modification or amendment which is executed by or on behalf of the Parties in the same manner as this Lease is executed and, to which each Lender has consented in writing (if required by the applicable Loan Documents).

Section 13.10 Governing Law.

This Lease, and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the substantive laws of the State of California without regard to conflict of law principles. Venue for any dispute hereunder shall be in the County of San Mateo, California.

Section 13.11 Binding Effect.

This Lease shall inure to the benefit of and be binding upon the Parties hereto, their successors, administrators, executors and permitted assigns.

Section 13.12 Severability.

In the event any provision or portion of this Lease is held by any court of competent jurisdiction to be invalid or unenforceable, such holdings shall not affect the remainder hereof, and the remaining provisions shall continue in full force and effect to the same extent as would have been the case had such invalid or unenforceable provision or portion never been a part ATTACHMENT 1

39 hereof, except to the extent the rights and obligations of the parties have been materially altered by such unenforceability.

Section 13.13 Further Assurances.

From and after the date of this Lease, Lessor and Lessee, at the request of the other Party, shall make, execute and deliver or obtain and deliver all such affidavits, deeds, certificates, resolutions and other instruments and documents, and shall do or cause to be done all such other things that either Party may reasonably require in order to effectuate the provisions and the intention of this Lease.

Section 13.14 Authority to Execute Agreement.

Each Party represents and warrants to the other Party that by proper action the persons executing this Lease on behalf of such Party have been duly authorized to execute and deliver this Lease.

Section 13.15 Lease Administration and Approvals.

The Executive Director of Lessor, or his or her designee, shall be the person designated by Lessor to administer this Lease on behalf of Lessor. The Executive Director of Lessor shall have the authority to consent to any matter requiring Lessor approval or consent as provided in this Lease, and to perform and carry out any activities concerning this Lease, including but not limited to, the execution of any additional agreements, addenda or amendments so long as such actions do not substantially affect the rights and obligations of Lessor as specified herein.

Section 13.16 Captions.

All captions, headings, paragraphs, subparagraphs, letters and other reference captions are solely for the purpose of facilitating convenient reference to this Lease, shall not supplement, limit or otherwise vary the text of this Lease in any respect, and shall be wholly disregarded when interpreting the meaning of any terms or provisions hereof. All references to particular articles, sections, subsections, paragraphs and subparagraphs by number refer to the text of such items as so numbered in this Lease.

Section 13.17 Gender.

Words of any gender used in this Lease shall be held and construed to include any other gender, and words of a singular number shall be held to include the plural, and vice-versa, unless the context requires otherwise.

Section 13.18 Exhibits.

Each and every exhibit referred to or otherwise mentioned in this Lease is attached to this Lease and is and shall be construed to be made a part of this Lease by such reference or other mention at each point at which such reference or other mention occurs, in the same manner and with the same effect as if each exhibit were set forth in full at length every time it is referred to and otherwise mentioned.

ATTACHMENT 1

40 Section 13.19 References.

All references to paragraphs or subparagraphs shall be deemed to refer to the appropriate paragraph or subparagraph of this Lease. Unless otherwise specified in this Lease, the terms "herein," "hereof," "hereinafter," "hereunder" and other terms of like similar import, shall be deemed to refer to this Lease as a whole, and not to any particular paragraph or subparagraph hereof.

Section 13.20 Cumulative.

Except as expressly limited by the terms of this Lease, all rights, powers and privileges conferred hereunder shall be cumulative and not restrictive of those provided at law or in equity.

Section 13.21 Notices.

All notices, requests, demands, or other communications required or permitted to be given hereunder shall be in writing and shall be addressed and delivered by certified mail, return receipt requested; by reputable commercial delivery service; or by hand delivery by a reputable courier, to each Party at the addresses set forth below. Any such notice, request, demand or other communication shall be considered given or delivered, as the case may be, on the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the item was returned as undeliverable. By giving prior written notice thereof, any Party, from time to time, may change its address for notices under this Lease.

To Lessor: Brisbane Housing Authority
25A Park Place
Brisbane, CA 94005
Attn: Jeremy Dennis, Executive Director
With copies to: City of Brisbane
50 Park Place
Brisbane, CA 94005
Attn: Community Development Director
To HEART-SV: HEART-SV
2905 S. El Camino Real
San Mateo, CA 94403
Attn: Executive Director
With copies to: c/o San Mateo County Counsel
500 County Center, 4th Floor
Redwood City, CA 94063
Section 13.22 Counterparts.

This Lease may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same agreement.

ATTACHMENT 1

41 Section 13.23 Time of Essence.

Time is and shall be of the essence in this Lease.

Section 13.24 No Third Party Beneficiaries.

Except as expressly set forth herein, nothing contained in this Lease is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

Section 13.25 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.

Nothing in this Lease is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of Lessee and Lessor is and shall remain solely that of a tenant and landlord, and shall not be construed as a joint venture, equity venture, partnership or any other relationship. Lessor neither undertakes nor assumes any responsibility or duty to Lessee (except as expressly provided in this Lease) or to any third party with respect to the Premises.

Section 13.26 No Personal Liability.

Notwithstanding anything contained in this Lease to the contrary, the obligations of Lessor under this Lease (including any actual or alleged breach or default by Lessor) do not constitute personal obligations of the individual officers or employees of Lessor, and Lessee shall not seek recourse against the individual officers or employees of Landlord, or against any of their personal assets for satisfaction of any liability with respect to this Lease.

Section 13.27 Expenditure of Authority Loan
As set forth in a Loan Agreement between Lessor and Lessee, Lessor is loaning to Lessee $390,250 from Lessor’s Low and Moderate Income Housing Asset Fund. Lessee shall use these funds for capital repairs as identified in the Capital Reserve Plan, dated January 27, 2026 and prepared by Association Reserves, previously provided by Lessee to Lessor. Lessee shall expend such funds by no later than December 31, 2030.

SIGNATURES ON FOLLOWING PAGE
ATTACHMENT 1

42 IN WITNESS WHEREOF, this Lease is made and entered into in multiple original counterparts on the day and year first above written.

LESSOR:

BRISBANE HOUSING AUTHORITY
By:

Jeremy Dennis, Executive Director
Attest:
______________________________________
Ingrid Padilla, Authority Secretary
Approved as to Form:
______________________________________
Michael Roush, Legal Counsel
LESSEE:

HEART-SV, a California Joint Powers Authority
By:

Armando F. Sanchez, Executive Director
ATTACHMENT 1

A-1

EXHIBIT A
Legal Description of Leased Premises
ATTACHMENT 1

B-1

EXHIBIT B
Form of Memorandum of Ground Lease

RECORDING REQUESTED BY AND WHEN
RECORDED RETURN TO:

WHEN RECORDED RETURN TO:
__Brisbane Housing Authority__________________
__25 Park Place__________________
__Brisbane, CA 94005_________________
____________________
Attention: _Board Secretary__________
__________________________________________________________________________ (SPACE ABOVE THIS LINE FOR RECORDER'S USE)
Exempt from filing fees: Government Code Section 6103

MEMORANDUM OF GROUND LEASE
THIS MEMORANDUM OF GROUND LEASE (the "Memorandum") is entered into as of __________________, 2026, by and between the Brisbane Housing Authority, a California public agency (the "Lessor") and HEART-SV, a California Joint Powers Authority (the "Lessee"), with respect to that certain Ground Lease dated _____________, 2026 (the "Lease"), between the Lessor and the Lessee. All capitalized terms used in this Memorandum and not defined shall have the meaning set forth in the Lease.

1. Pursuant to the Lease, Lessor leases to Lessee and Lessee leases from Lessor that certain real property, more particularly described in Exhibit A, attached hereto and incorporated herein (the "Leased Premises"). The Lease shall commence on as set forth in the Commencement Date defined in the Lease and shall remain in effect for the fifty-five (55) year term of the Lease, unless sooner terminated pursuant to the terms and conditions of the Lease.

2. As more particularly set forth in the Lease and a recorded Regulatory Agreement, certain affordability and occupancy restrictions apply to the use of the Leased Premises.

3. This Memorandum shall incorporate herein all of the terms and provisions of the Lease as though fully set forth herein.

4. This Memorandum is solely for recording purposes and shall not be construed to alter, modify, amend or supplement the Lease, of which this is a Memorandum. In the event of any ATTACHMENT 1

B–2
inconsistency between the terms and conditions of this Memorandum and the terms and conditions of the Lease, the terms and conditions of the Lease shall control.

5. This Memorandum may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts so executed shall together constitute but one and the same instrument. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
ATTACHMENT 1

B–3
IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly executed as of the date first above written.

LESSOR:

BRISBANE HOUSING AUTHORITY,
a California public agency
By: __________________________________
Jeremy Dennis
Its: Executive Director
LESSEE:

HEART-SV,
a California Joint Powers Authority
By: __________________________________
Its: __________________________________
[SIGNATURES MUST BE NOTARIZED]
ATTACHMENT 1

C-1

EXHIBIT C
Sublease Agreement (Community Room)
ATTACHMENT 1

1 Visitacion Garden Apartments
Regulatory Agreement

RECORDING REQUESTED BY
AND WHEN RECORDED, MAIL TO:

Brisbane Housing Authority
25 Park Place, Brisbane, CA 94005
Attention: Board Secretary
Exempt from Recording fees pursuant to
Section 27383 of the Government Code
(This Space for Recorder's Use Only)
APN: 007-221-180

REGULATORY AGREEMENT AND DECLARATION OF

RESTRICTIVE COVENANTS FOR VISITACION GARDEN SENIOR APARTMENTS

THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS FOR Visitacion Garden Senior Apartments ("Regulatory Agreement") is made and entered into as of ____________ ___, 202_, by and among the Brisbane Housing Authority, a California public agency ("Authority"), and HEART-SV, a California Joint Powers Authority.

W I T N E S S E T H:

RECITALS
WHEREAS, on ____________ ___, 202_, HEART-SV entered into a Ground Lease agreement with the Authority, to lease the property located at 2-8 Visitacion Avenue, in the City of Brisbane, California (the "Property") for the purpose of acquiring, rehabilitating, and operating a fourteen (14) unit residential senior apartment building (the “Project”); WHEREAS, the Authority is providing a loan to HEART-SV, in the principal amount of Three Million Four Hundred Fifty Two Thousand Eight Hundred Fourteen Dollars ($3,452,814) (the “Loan”), pursuant to the Loan Agreement between Borrower and the Authority dated as of the date herewith (the "Loan Agreement");
WHEREAS, HEART-SV is utilizing the Loan to lease the Property and acquire and operate the Project, including the continued preservation of fourteen (14) housing Units to be made available at affordable rents to households between 30% of the Area Median Income (AMI) and 120% of AMI, including three (3) units at 30% of AMI, one (1) unit at 50% of AMI, six (6) at 60% of AMI, and four (4) at 120% of AMI (the “Authority Units”); WHEREAS, due to the additional difficulty for those renting or working in the City of Brisbane (the “City”) in finding affordable, accessible, and appropriate senior housing, the Project ATTACHMENT 2

2 Visitacion Garden Apartments
Regulatory Agreement
will give a preference qualifying households if the City has adopted an ordinance establishing affordable housing preference guidelines (“Guidelines”); WHEREAS, the expenditure of funds for the acquisition, rehabilitation, and operating costs for extremely-low to moderate-income housing is eligible under Authority’s Low and Moderate Income Housing Fund (“Housing Fund)”and the Project is consistent with Authority’s affordable housing goals;
WHEREAS, in consideration of the Authority making the Loan, as defined in Article 1, HEART-SV has agreed to observe and perform all of the terms and conditions set forth in this Regulatory Agreement, and in order to ensure that the Project will be used and operated in accordance with certain restrictions concerning affordability, operation, and maintenance during such period, the parties wish to enter into this Regulatory Agreement.

NOW THEREFORE, in consideration of the mutual promises and covenants and terms, conditions and provisions set forth in this Regulatory Agreement and for other valuable consideration, the parties agree as follows:

ARTICLE 1: DEFINITIONS
The following terms as used in this Regulatory Agreement shall have the respective meanings assigned to them in this Article 1 unless the context clearly indicates otherwise:
“Acquisition Date” means the date that HEART-SV acquires the Project. "Affordability Restrictions" means the use, occupancy and rent restrictions set forth in Section 2.1 hereof.
“Affordable Rent” meansrent that shall not exceed thirty percent (30%) of the Area Median Income, as determined in the California Health and Safety Code section 50053 or HOME rents published annually by San Mateo County Department of Housing. “AMI” means the Area Median Income.
“Authority” means the Brisbane Housing Authority.
“Authority Unit” means any or all of the fourteen (14) apartment Units that are subject to the use, occupancy and rent restrictions of this Regulatory Agreement, for a household with gross income between 30% of the Area Median Income and 120% of the Area Median Income. “City” means the City of Brisbane, California.
“County” means the County of San Mateo.
"Extremely Low-Income Household" means a household with gross income that does not exceed 30% of the Area Median Income.
“HEART” means the Housing Endowment and Regional Trust of San Mateo County.

ATTACHMENT 2

3 Visitacion Garden Apartments
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"Loan" means the loan in the principal amount of $3,452,814 to be made by the Authority to HEART-SV pursuant to the Loan Agreement.
"Loan Agreement" means the Loan Agreement by and between the Authority and HEARTSV dated as of even date herewith. "Low-Income Household" means a household with gross income that does not exceed 80% of the Area Median Income.
“Moderate Income Household” means a household with gross income that does not exceed 120% of the Area Median Income.
"Mortgagee" means a mortgagee of a mortgage, beneficiary of a deed of trust, or the secured party under any other financing device encumbering the Project. "Party" means any party to this Regulatory Agreement. The "Parties" shall be all parties to this Regulatory Agreement.
“Project” means the acquisition, rehabilitation, and operation of the buildings, structures, and other improvements on the Property for the purpose of providing 14 rental housing units, which shall be offered for rent and occupied as provided in this Regulatory Agreement. "Property" means the land, buildings, structures, and other improvements comprising the 14-unit rental apartment complex known as Visitacion Garden Apartments. “Qualifying Household” means a household that intends to reside in an Affordable Unit and upon initial income certification, and each year thereafter (subject to the terms of this Regulatory Agreement) meets the income restrictions as set forth in Section 2.2 of this Regulatory Agreement for the applicable Affordable Unit, based on a household size appropriate for the Affordable Unit.
"Regulatory Agreement" means this "Regulatory Agreement and Declaration of Restrictive Covenants for Visitacion Garden Senior Apartments".
"Rent" means the sum total of all monthly payments to be made by the Tenant of a Unit for the following privileges: use and occupancy of the Unit and associated facilities, including parking; any separately charged fees or service charges assessed by HEART-SV which are required of all Tenants, other than security deposits; and the cost of an adequate level of service for utilities paid by the Tenant, as determined by the applicable utility allowance for the Units as set by the San Mateo County Department of Housing (“DOH”). "Tenants" (individually, "Tenant") means the occupants of the Units. "Term" means a term of 55 years from the Acquisition Date. "Unit or Units" means one of the 14 rental apartment units in the Project. "Very Low-Income Household" means a household with gross income that does not exceed ATTACHMENT 2

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50% of the Area Median Income.
“60% AMI” means a household with gross income that does not exceed 60% of the Area Median Income.

ARTICLE 2: AFFORDABILITY COVENANTS

2.1 Use, Occupancy and Rent Restrictions.

The Project shall result in the operation and maintenance of 14 Units of multifamily rental housing, with all 14 Units subject to the affordability covenants of this Regulatory Agreement. At all times during the term of this Regulatory Agreement, unless subsequently revised in a written amendment approved by the Authority, all of the Units shall be made available to Extremely-Low to Moderate-Income Households as described herein.

2.2 Restriction of the Units: At all times during the term of this Regulatory Agreement:
a. As required by the Authority, at least three (3) Units shall be rented and occupied by, or if vacant, made available for rental and occupancy by Extremely-Low Income Households at a rent affordable to a household at 30% Area Median Income (AMI), as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.
b. As required by the Authority, at least one (1) Unit shall be rented and occupied by, or if vacant, made available for rental and occupancy by a Very-Low Income Household at a rent affordable to a household at 50% Area Median Income (AMI), as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.
c. As required by the Authority, at least six (6) Units shall be rented and occupied by, or if vacant, made available for rental and occupancy by households at a rent affordable to a household at 60% of the Area Median Income (AMI), as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.
d. As required by the Authority, at, no more than four (4) Units shall be rented and occupied by, or if vacant, made available for rental and occupancy by ModerateIncome Households at a rent affordable to a household at 120% Area Median Income (AMI), as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.
e. The maximum monthly Rent for fourteen (14) of the Units shall not exceed the limits set by the California Health and Safety Code 50053, as published annually, based on the unit type.
f. As required by the County of San Mateo, one (1) Unit shall be rented and occupied by, or if vacant, made available for rental and occupancy by a Very-Low Income ATTACHMENT 2

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Household at a rent affordable to a household at 50% Area Median Income (AMI), but shall not exceed the Low HOME Rent, based on the unit type, published annually by San Mateo County DOH, and as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter. g. As required by the County of San Mateo, four (4) Units shall be rented and occupied by, or if vacant, made available for rental and occupancy by Households at a rent that shall not exceed the High HOME Rent, based on the unit type, published annually by San Mateo County Department of Housing (“DOH”), and as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.
h. As required by HEART, two (2) Units shall be rented and occupied by, or if vacant, made available for rental and occupancy by Extremely-Low Income Households at a rent affordable to a household at 30% Area Median Income (AMI) for San Mateo County), as published annually by both the California Department of Housing and Community Development (“HCD”) and the Federal Department of Housing and Urban Development (“HUD”), and as certified according to Section 4.1 immediately prior to each Tenant's initial occupancy and annually thereafter.

2.3 Noncompliance
A failure by HEART-SV to maintain the rent affordability and occupancy restrictions required by this Regulatory Agreement will constitute a default of this Regulatory Agreement subject to the notice and cure provisions of Section 5. The Project will be deemed to be in compliance with the affordability covenants, notwithstanding a temporary noncompliance with the provisions of this Article, if the noncompliance arises as a result of an increase in the income of any Tenant and the next vacancy is then filled in accordance with this Regulatory Agreement.

2.4 Lease Provisions
HEART-SV shall include in the leases or rental agreements for all Units occupied by Extremely Low-, Very Low-, Low-, and Moderate-Income Households a provision which authorizes HEART-SV, as Lessor under its Ground Lease with the Authority, to immediately terminate the tenancy of any Tenant, after HEART-SV determines that one or more members of such Tenant's household has misrepresented any fact material to the Tenant's qualification for occupancy. Each lease or rental agreement shall provide that the Tenant is subject to the requirement for the execution of an annual income certification in accordance with Section 4.1 below, and that, if the Tenant's income increases above the applicable income limits, such Tenant's Rent may be increased.

ARTICLE 3: COVENANTS AND CONDITIONS

3.1 General
In consideration for receiving the Loan, HEART-SV will acquire, rehabilitate, and operate the Project with 14 units renting at rents affordable to households between Extremely Low- and ATTACHMENT 2

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Moderate-Income.

3.2 Non-transient Residential Use
None of the Units shall be operated as transient housing; provided, however, the Units shall not be considered to be used on a transient basis merely because any of the Units are rented on a month-to-month basis or rented under a transitional housing program; provided, however every Tenant of a Restricted Unit shall initially occupy the Unit pursuant to a lease having a term of at least twelve months.

3.3 Insurance
HEART-SV, at its sole cost and expense, shall obtain and maintain during the term of this Regulatory Agreement, insurance with responsible companies authorized to engage in the offering of insurance services in California in such amounts and against such risks as shall be satisfactory to the Authority 's risk manager, including, without limitation, workers' compensation as required by law, employer's liability, commercial general liability, comprehensive automobile liability, personal injury and property damage insurance, as appropriate, as set forth in Exhibit "B", as appropriate, insuring against all liability of HEART-SV and its respective partners, directors, officers, employees, agents, and representatives arising out of or in connection with the Project, or HEART-SV's performance or non-performance under this Regulatory Agreement. Modifications of any insurance requirements set forth in Exhibit "B" shall be submitted, in writing, to the Authority for approval by the Authority's risk manager. Any such modification shall receive the concurrence of the Authority’s legal counsel. HEART-SV shall name the Authority as an additional insured on all policies of insurance required under the terms of other financing.

3.4 Taxes and Assessments
HEART-SV shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property or the Project; provided, however, that HEART-SV shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event HEART-SV exercises its right to contest any tax, assessment, or charge against it, HEART-SV, on the final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest.

3.5 Costs of Operation and Maintenance
HEART-SV will be responsible for all costs of operating and maintaining the Project, including but not limited to taxes, insurance and utilities. HEART-SV shall maintain the Project in good repair and working order, ordinary wear and tear excepted, and in a manner consistent with the housing quality standards set forth in Federal, State, and all applicable City ordinances.

HEART-SV shall:

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i. Keep the Property and the Project in decent, safe, sanitary, tenantable condition and repair, and to permit no waste thereof, normal wear and tear excepted; j. Not commit or suffer to be done or exist on or about the Property any condition causing the Property to become materially less valuable (normal depreciation and wear and tear excepted), and except in accordance with this Regulatory Agreement; k. Not construct any buildings or improvements on the Property, other than the buildings and improvements contemplated; or add to, remove, demolish or structurally alter any buildings or improvements now or hereinafter located on the Property;
l. Comply with all applicable laws affecting the Property and the Project, and not suffer or permit any violations of any such applicable law, nor of any covenant, condition or initiate or acquiesce in any change in any zoning or other land use or legal classification which affects any of the Property without Authority’s and the City’s prior written consent; and
m. Not alter the use of all or any part of the Property without Authority’s prior written consent.

3.6 Property Inspections
Authority, or its authorized representatives, shall have the right to make periodic on-site inspections of the Property, the Project and the Units during working hours upon reasonable notice to HEART-SV and notice and subject to the rights of Tenants under their respective leases.

3.7 Budgets
HEART-SV shall submit a budget and related financial materials as set forth in Section

4.4 of the Ground Lease between the Authority and HEART-SV.

3.8 Intentionally deleted.

3.9 Nondiscrimination
All of the Units shall be available for occupancy on a continuous basis to members of the general public in accordance with the affordability covenants of Article 2. There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, age, familial status, sex, sexual orientation, marital status, national origin, ancestry, handicap, source of income or any other arbitrary discrimination based on personal characteristics, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit, nor shall HEART-SV or any person claiming under or through HEART-SV, 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, sub lessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the construction, operation and management of any Unit.

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3.10 Selection Criteria for Applicants for Tenancy
To the extent permitted under all applicable laws, HEART-SV will give a preference in the selection of Tenants for Authority Units to qualified households, if the City has adopted an ordinance establishing affordable housing preferences for qualified households and as set forth in the Guidelines, provided that the preference is subject to and will not be applied prior to the adoption of a valid ordinance establishing the Guidelines, which Guidelines will be applicable City-wide and be based on a study, which study may be reviewed periodically and modified to comply with applicable law, showing that administration of the preferences will not result in a disparate impact on protected classes contrary to applicable law.

HEART-SV will use the definitions and procedures applicable to the Guidelines, as described in (c) below, to administer preferences under this Section 3.10.

HEART-SV shall adopt written tenant selection policies and criteria that:
a. are consistent with the purpose of providing affordable rental housing for Qualifying Households at an Affordable Rent;
b. are reasonably related to tenant eligibility and ability to perform the obligations of the lease for an Authority Unit;
c. subject to applicable fair housing laws, give reasonable preference for Authorityrestricted units to eligible households as set forth in the Guidelines, provided that such preferences may be waived for Units receiving Project-Based Section 8 assistance;
d. provide for the selection of tenants from a written waiting list held by previous lessee, or by the Authority at the time of acquisition by HEART-SV, providing similar affordable housing in the chronological order of their application, insofar as is practicable;
e. give prompt written notice to any rejected applicant of the grounds for rejection; f. provide for all of the Authority Units to be available for occupancy on a continuous basis to Qualifying Households at an Affordable Rent;
g. do not give preference to any particular class or group of persons in leasing or renting the Authority Units, except as provided in this subsection (c) and to the extent that a tenant must be a Qualifying Household;
h. provide 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 Property, nor shall ATTACHMENT 2

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HEART-SV or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the Property. Notwithstanding the immediately preceding sentence, with respect to familial status, this Section 3.10 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code.

With respect to familial status, nothing in this Section 3.10 shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens, and Subdivision (d) of Section 51 of the Civil Code.

All deeds, leases or contracts made or entered into by HEART-SV as to Authority Units or the Property shall contain covenants prohibiting discrimination, as set forth in Health and Safety Code Section 33436(b).

ARTICLE 4: INCOME CERTIFICATION AND REPORTING

4.1 Income Certification
HEART-SV will obtain, complete and maintain on file, immediately prior to initial occupancy and annually thereafter, an income certification from each Tenant renting any of the Units. HEART-SV shall make a good faith effort to verify that the income provided by an applicant, or occupying household, in an income certification application is accurate in accordance with City below market rental guidelines, if any, and as they may be amended from time to time.

Copies of tenant income certifications shall be made available to the Authority, including its designated representatives upon request.

4.2 Reporting and Provision of Information
HEART-SV will submit reports in a format and at a time specified by the Authority. The reports will contain such information as the Authority may then require to document compliance with the use and occupancy restrictions and other requirements of this Regulatory Agreement. The Authority, including its designated representatives, shall have the right to examine and make copies of all books, records or other documents of HEART-SV which pertain to the Property, the Project, or any Unit and HEART-SV shall provide any information reasonably requested.

4.3 Records
HEART-SV shall maintain complete, accurate and current records pertaining to the Property, the Project, and the Units, and shall permit any duly authorized representative of the Authority to inspect records, including records pertaining to incomes and household sizes of Tenants' households, and the rents and other charges for occupancy of the Units during business hours upon reasonable notice. All Tenants lists, applications and waiting lists relating to the Project shall at all times be kept separate and identifiable from any other business of HEART-SV and shall be maintained as required by the Authority, in a reasonable condition for proper audit and subject to examination by representatives of the Authority.

4.4 Financial Audits
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At the request of Authority, during the term of this Regulatory Agreement but at least once every three (3) years, a certified public accountant, using generally accepted accounting principles, shall perform an independent audit and deliver it to the Authority. The audit shall delineate the annual Residual Receipts and provide financial and cash flow statements for the past three fiscal years. The Authority reserves the right, during the term of this Regulatory Agreement, to audit the records, including the financial records supporting the aforementioned financial statements, and other records and documents pertaining to the operations of the Property.

4.5 Assignment or Transfer or Encumbrance
Except for leases with the Tenants in the ordinary course of business and as otherwise permitted under the terms of the documents evidencing the Loan, HEART-SV shall not cause or permit any voluntary transfer, assignment or encumbrance of its interest in the Property or lease or permit a sublease of all or any part of the Property without first obtaining the Authority's written consent. Any transfer, assignment, encumbrance, or lease without the Authority's written consent shall be voidable and, at the Authority's election, shall constitute a breach of this Regulatory Agreement. No consent to any assignment, encumbrance or lease shall constitute a consent to any subsequent assignment, encumbrance or lease, or a waiver of any of the Authority's rights under this Regulatory Agreement.

ARTICLE 5: DEFAULT
The Authority shall be permitted, upon written notice, to (a) immediately terminate its commitment to loan funds under the Loan Agreement, and (b) declare the principal amount of the Loan to be immediately due and payable, whereupon the same shall become immediately due and payable, if any of the following events of default have occurred and have not been remedied:

5.1 HEART-SV makes a representation in this Regulatory Agreement which shall prove to have been false in any material respect when made; or

5.2 HEART-SV shall default in the payment, when due, of any principal or interest under the Loan after the expiration of applicable cure periods or any other sums payable by HEART-SV under this Regulatory Agreement; or

5.3 HEART-SV shall default for a period of thirty (30) days (or if such default cannot be cured within 30 days despite HEART-SV's prompt commencement and diligent prosecution of cure upon receiving notice, then such period shall be extended, but in no event beyond 90 days after notice) in the performance of any non-financial obligation to be performed by HEART-SV under this Regulatory Agreement; or

5.4 HEART-SV shall apply for or consent to the appointment of a receiver, trustee, or liquidator, or is unable, or admits in writing its inability to pay its debts as they fall due, or makes a general assignment for the benefit of its creditors, or is adjudicated a bankrupt or insolvent, or files a voluntary petition in bankruptcy; or
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5.5 HEART-SV is subjected to the entry of an order, decree, or judgment approving the reorganization of HEART-SV, and such order, decree, or judgment is unstayed for a period of more than ninety (90) days, or such period as may be permitted by law; or

5.6 HEART-SV fails to comply with the covenants, terms and conditions of this Regulatory Agreement, including, without limitation, the failure of HEART-SV to abide by the use, occupancy and rent restrictions set forth in Section 2.1 and the other provisions of Article 2 of this Regulatory Agreement, for a period of thirty (30) days (or if such default cannot be cured within 30 days despite HEART-SV’s prompt commencement and diligent prosecution of cure upon receiving notice, then such period shall be extended, but in no event beyond 90 days after notice); or

5.7 Except as expressly otherwise provided in Section 4.5 and in the documents evidencing the Loan, HEART-SV shall not cause or permit a sale, voluntary transfer, assignment or encumbrance of its ownership interest in the Project, or permit a sublease of all or any part of its interest without first obtaining Authority's written consent. Any such sale, transfer, assignment, encumbrance, or lease without the Authority's written consent shall be voidable and, at the Authority's election, shall constitute a breach of this Regulatory Agreement. No consent to any assignment, encumbrance or lease shall constitute consent to any subsequent assignment, encumbrance or lease, or a waiver of any of the Authority's rights under this Regulatory Agreement.

ARTICLE 6: MISCELLANEOUS PROVISIONS

6.1 The Authority and HEART-SV shall cause this Regulatory Agreement, and all amendments and supplements to it, to be, recorded in the Official Records of the County of San Mateo. This Regulatory Agreement shall continue in effect until the expiration of the Term.

6.2 HEART-SV and any successor in interest shall follow all applicable local, state and federal fair housing laws, including but not limited to the California Fair Employment and Housing Act (FEHA) and the federal Fair Housing Act (FHA). Failure to do so will constitute a default under this Regulatory Agreement.

6.3 Nothing contained in this Regulatory Agreement, nor any act of the Authority, shall be interpreted or construed as creating the relationship of third-party beneficiary, limited or general partnership, joint venture, employer or employee, or principal and agent between the Authority, on the one hand, and HEART-SV, or HEART-SV’s agents, employees or contractors. HEARTSV shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its respective agents, or both, observe the covenants and conditions imposed on it by the terms of this Regulatory Agreement. HEART-SV has retained and hereby retains the right to exercise full control of employment, direction, compensation and discharge of all persons assisting in the performance of services recognized hereunder. HEART-SV agrees to be solely responsible for its own acts and those of its respective officers, partners, employees, agents, contractors, subcontractors and representatives.

6.4 Neither the failure nor the delay on the part of the Authority to exercise any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. Any of the requirements of this Regulatory ATTACHMENT 2

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Agreement may be expressly waived by the Authority in writing, but no waiver by the Authority of any requirement of this Regulatory Agreement shall, or shall be deemed to, extend to or affect any other provision of this Regulatory Agreement.

6.5 HEART-SV shall lack any authority or power to pledge the credit of Authority or incur any obligation in the name of the Authority. This Regulatory Agreement shall not be construed or deemed to be an agreement for the benefit of any third party, except as expressly provided herein, and no third party shall have any claim or right of action hereunder for any cause whatsoever.

6.6 Any amendment to this Regulatory Agreement shall be binding upon the parties, provided such amendment is set forth in a writing signed by the parties, and duly recorded in the real property records of the County of San Mateo, California. The Authority Executive Director is authorized to execute non-substantive amendments to this Regulatory Agreement, and confer any consents or approvals that may be provided by the Authority.

6.7 The covenants, agreements, terms, and conditions of this Regulatory Agreement shall inure to and be binding on the successors and assigns of the parties. Any provision of this Regulatory Agreement which is characterized as a covenant or a condition shall be deemed both a covenant and a condition. If any provision of this Regulatory Agreement shall be determined by a court of competent jurisdiction to be invalid, illegal, void, or unenforceable in any respect, the validity of all other provisions herein shall remain in full force and effect.

6.8 This Regulatory Agreement has been drafted through a cooperative effort of all the parties, and all the parties have had an opportunity to have the Regulatory Agreement reviewed and revised by legal counsel. No party shall be considered the drafter of this Regulatory Agreement, and no presumption or rule that an ambiguity shall be construed against the party drafting the clause shall apply to the interpretation or enforcement of this Regulatory Agreement.

6.9 This Regulatory Agreement shall be deemed a contract made under the laws of the State of California, and for the purposes hereof shall be governed and construed by and in accordance with the laws of the State of California. All exhibits referred to in this Regulatory Agreement and any addenda, appendices, attachments, and schedules which may, from time to time, be referred to in any duly executed amendment hereto are by such reference incorporated in this Regulatory Agreement and shall be deemed to be part hereof. This Regulatory Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. The paragraph headings are not a part of this Regulatory Agreement and shall have no effect upon the construction or interpretation of any part of this Regulatory Agreement.

6.10 HEART-SV shall indemnify and save harmless the Authority, it officers, agents, employees and servants from all claims, suits or actions of every name, kind and description, brought for, or on account of, injuries to or death of any person, including HEART-SV, or damage to property of any kind whatsoever and to whomsoever belonging, including but not limited to, the concurrent active or passive negligence of the Authority, officers, agents, or employees and servants, resulting from the performance of any work required by this Regulatory Agreement of HEART-SV, provided that this indemnity shall not apply to injuries or damage for which the Authority has been found in a court of competent jurisdiction to be solely liable by reason of its ATTACHMENT 2

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own negligence or willful misconduct. The duty of HEART-SV to indemnify and save harmless, as set forth herein, shall include the duty to defend as set forth in Section 2778 of the California Civil Code. The provisions of this Section 6.10 shall survive the termination of this Regulatory Agreement.

6.11 In the event that suit is brought by either party, the parties agree that trial of such action shall be vested exclusively in the San Mateo County Superior Court. Each party shall bear its own attorney’s fees and costs and no party in any action brought to enforce the terms of this Regulatory Agreement or arising out of this Regulatory Agreement shall recover its reasonable costs and attorneys' fees expended in connection with such an action from the other party, regardless of which party is, or is deemed, a prevailing party.

6.12 The provisions of this Regulatory Agreement shall apply to the Property and the Project for the entire term hereof. This Regulatory Agreement shall bind any successor, heir or assign of HEART-SV, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by the Authority by a written amendment, signed by the Authority, and recorded in the Official Records of San Mateo County. HEART-SV acknowledges that the Authority has made the Loan on the condition that the provisions of this Regulatory Agreement shall apply to the Property and the Project for its entire term, and in consideration of this provision, and would not have done so otherwise.

6.13 Each person signing this Regulatory Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Regulatory Agreement. Each party represents and warrants to the other that the execution and delivery of the Regulatory Agreement and the performance of such party’s obligations hereunder have been duly authorized and that the Regulatory Agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms.

6.14 The Authority and HEART-SV hereby declare their express intent that the covenants and restrictions set forth in this Regulatory Agreement shall run with the land and shall bind all successors in interest to the Property, provided, however, that on the expiration of the term of this Regulatory Agreement, the covenants and restrictions shall expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof shall be held conclusively to have been executed, delivered and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless the Authority expressly releases such conveyed portion of the Property from the requirements of this Regulatory Agreement.

6.15 If HEART-SV fails to perform any obligation under this Regulatory Agreement, and fails to cure the default within 30 days after the Authority has notified HEART-SV in writing of the default or, if the default cannot be cured within 30 days, fails to commence to cure promptly and thereafter diligently pursue such cure, the Authority shall have the right to enforce this Regulatory Agreement by any remedy provided by law or equity, including, but not limited to an action for specific performance to enforce the covenants and restrictions herein.

6.16 The rights of Authority under this Regulatory Agreement may be made subject to one or more subordination agreements between lenders with security interests in the Project.

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6.17 The parties agree that they will take such further actions, and execute such further documents, as may be necessary or appropriate in order to carry out the purposes of this Regulatory Agreement.

6.18 Notices
All notices, consents, communications or transmittals required by this Regulatory Agreement shall be made, in writing, and shall be communicated by the United States mail, certified, return receipt requested or by express delivery with a delivery receipt, and shall be deemed given as of the date shown on the delivery receipt as the date of delivery or the date on which delivery was refused, and shall be addressed to the following addresses, or such other address as either party may designate, from time to time, by written notice sent to the other party in like manner:

To Authority: Brisbane Housing Authority
25A Park Place
Brisbane, CA 94005
Attn: Executive Director
Copy to: City of Brisbane
50 Park Place
Brisbane, CA 94005
Attn: Community Development Director
To HEART-SV: HEART-SV
2905 S. El Camino Real
San Mateo, CA 94403
Attn: Executive Director
Copy to: c/o San Mateo County Counsel
500 County Center, 4th Floor
Redwood City, CA 94063
[signature page follows]
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IN WITNESS WHEREOF, HEART-SV and the Authority have caused this Regulatory Agreement to be signed, acknowledged and attested on their behalf by their duly authorized representatives, as set forth below, as of the day and year first written above.

AUTHORITY:

BRISBANE HOUSING AUTHORITY
By: ___________________________
Jeremy Dennis, Executive Director
Attest:
______________________________________
Ingrid Padilla, Authority Secretary
Approved as to Form:
______________________________________
Michael Roush, Legal Counsel
HEART-SV:

HEART-SV, a California Joint Powers Authority
By: __________________________
Armando F. Sanchez, Executive Director
All signatures must be acknowledged.

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State of California )
) ss.

County of ________________________ )
On ___________________ before me, _________________________________, Notary Public, personally appeared
___________________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name 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.
_______________________________________ Place Notary seal above

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.

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State of California )
) ss.

County of ________________________ )
On ___________________ before me, _________________________________, Notary Public, personally appeared
___________________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name 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.
_______________________________________ Place Notary seal above

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.

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Exhibit "A"

LEGAL DESCRIPTION
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Loan Agreement

LOAN AGREEMENT
by and between

THE BRISBANE HOUSING AUTHORITY
A California Public Agency
and

HEART-SV
a California Joint Powers Authority
For the Real Property Located at:
2-8 Visitacion Avenue, Brisbane, CA
(APN: 007-221-180)
Dated ____________ ___,202_
ATTACHMENT 3

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TABLE OF CONTENTS
Page
RECITALS 4
ARTICLE 1: DEFINITIONS AND EXHIBITS 5
Section 1.1 Definitions …………………………………………………………………... 5
Section 1.2 Exhibits …………………………………………………….………………... 7
ARTICLE 2: LOAN PROVISIONS 7
Section 2.1 Loan ………………….……………………………………………………… 7
Section 2.2 Interest ………………………………………………………………………. 7
Section 2.3 Use of Funds ………….…………………………..…………………………. 7 Section 2.4 Security ……………….………………………..……………………………. 7
Section 2.5 Subordination ……………………………………..…………………………. 8 Section 2.6 Disbursement Requirements ……………………….………………...……… 9 Section 2.7 Repayment of the Authority Loan …………………..……………..……..… 10 Section 2.8 Non-Recourse ……………………………………….…………………...… 14 Section 2.9 Budget and Project Cost Savings ……………………..…………………….. 15 ARTICLE 3: FINANCING PLAN 15
Section 3.1 Financing Plan ……………………………………………………………… 15
ARTICLE 4: ONGOING OBLIGATIONS 16
Section 4.1 Information ………………………………………………………………… 16
Section 4.2 Records ………………………………………………………….……….… 16
Section 4.3 Audits ………………………………………………………….…………… 16
Section 4.4 Compliance with Laws; Prevailing Wages ………………………….……… 17 Section 4.5 Relocation …………………………………………………….…….……… 17
Section 4.6 Hazardous Materials …………………………………………….….……… 18 Section 4.7 Maintenance and Damage …………………………………………..……… 20 Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion .….………..… 21 Section 4.9 Fees and Taxes ..……………………………………………….…………… 21 Section 4.10 Notices ………………………………………………………….………… 22
Section 4.11 Non-Discrimination …………………………………………….………… 22 Section 4.12 Insurance Requirements ……………………………………….……….… 22 Section 4.13 Transfer ………………………………………………………….……….. 23
Section 4.14 Other Indebtedness and Liens ………………………………….………… 23 Section 4.15 Use as Affordable Housing …………………………………….………… 23 ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF BORROWER 24 ATTACHMENT 3

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Section 5.1 Representations and Warranties ……………………………….…………… 24 Section 5.2 Survival of Representations and Warranties …………………….……….… 26 ARTICLE 6: TERMINATION, DEFAULT AND REMEDIES 26
Section 6.1 Events of Default ……………..……………………………….……….…… 26 Section 6.2 Remedies ……………………..……………………………….……….…… 27
Section 6.3 Right of Contest ……………………………………………….………….… 28 Section 6.4 Remedies Cumulative ………………………………………….………...… 28 ARTICLE 7: GENERAL PROVISIONS 29
Section 7.1 Agreement Coordination ……..……………………………………..……… 29 Section 7.2 Relationship of Parties ……….……………………………….………….… 29 Section 7.3 No Claims ……………………..……………………………….…………… 29
Section 7.4 Amendments ………………………………..………………….……...…… 29 Section 7.5 Entire Understanding of the Parties …………………………….………..… 30 Section 7.6 Indemnification ……….……….……………………………….……..…… 30 Section 7.7 Non-Liability of LENDER and LENDER Officials …………………….… 30 Section 7.8 No Third Party Beneficiaries ….……………………………….……..….… 30 Section 7.9 Action by the LENDER; Amendments ………………………….……….… 30 Section 7.10 Waivers …………….……….……………………………….………….… 31
Section 7.11 Notices, Demands and Communications …………………….…………… 31 Section 7.12 Applicable Law and Venue ….……………………………….…………… 32 Section 7.13 Parties Bound ……….……….……………………………….…………… 32 Section 7.14 Attorneys' Fees ……..……….……………………………….……….…… 32 Section 7.15 Severability ………………….……………………………….…………… 32 Section 7.16 Force Majeure ……………….……………………………….…………… 32 Section 7.17 Conflict of Interest ….……….……………………………….…………… 33 Section 7.18 Time of Essence …….……….……………………………….…………… 33 Section 7.19 Title of Parts and Sections; Exhibits ………………………….………..…. 33 Section 7.20 Multiple Originals; Counterpart …………………………….……….…… 33 Section 7.21 Further Actions ……..……….……………………………….………….… 34 EXHIBIT A: LEGAL DESCRIPTION OF THE PROPERTY 36
EXHIBIT B: PROMISSORY NOTE 37
EXHIBIT C: LEASEHOLD DEED OF TRUST XX
EXHIBIT D: FINANCING PLAN XX
EXHIBIT E: INSURANCE REQUIREMENTS XX
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LOAN AGREEMENT
(Address)
This Loan Agreement (the "Agreement") is made and entered into on ____________ ___, 202 (the “Effective Date”), by and between the BRISBANE HOUSING AUTHORITY, a California public agency (the “AUTHORITY” or “LENDER”), and HEART-SV, a California Joint Powers Authority (the "BORROWER").

RECITALS
A. LENDER and BORROWER wish to promote the continued preservation of affordable rental housing in the City of Brisbane and to provide a greater choice of housing opportunities for extremely-low to moderate income seniors; and B. AUTHORITY desires to lease certain real property located at 2-8 Visitacion Avenue, Brisbane, California (the “Property”), to BORROWER for a period of fifty-five (55) years pursuant to the terms of a lease executed by AUTHORITY and BORROWER (the “Lease”); a legal description of the Property is attached as Exhibit A; and C. BORROWER proposes to lease the Property and acquire, rehabilitate, and operate approximately fourteen (14) residential senior rental units existing on the property (the “Project”), to be made available at affordable rents to households between 30% of the Area Median Income (AMI) and 120% of AMI (“Units”), of which three (3) units will be at 30% of AMI, one (1) unit at 50% of AMI, six (6) at 60% of AMI, and four (4) at 120% of AMI.

D. To acquire, rehabilitate, and operate the Project for the use as affordable housing, BORROWER wishes to borrow from the LENDER and the LENDER wishes to extend to the BORROWER a loan of up to Three Million Four Hundred Fifty Two Thousand Eight Hundred Fourteen Dollars ($3,452,814) (the “Authority Loan”) to assist in the acquisition and preservation of the Project. The Authority Loan will be evidenced by a Promissory Note (the “Note”, attached as Exhibit B) executed by the BORROWER in favor of the LENDER and secured by a Leasehold Deed of Trust recorded against the Property (the “Leasehold Deed of Trust,” attached as Exhibit C).

E. Of the $3,452,814, $3,062,564 represents LENDER’S restructuring and reducing a loan balance of $930,115 from previous loans that LENDER provided to Bridge Senior Housing, Inc., and that amount constitutes BORROWER’s acquisition of the Project. The balance of LENDER’s loan to BORROWER ($390,250) is for the repair and/or replacement of capital improvements to the Project.

F. LENDER has established the Low and Moderate Income Housing Asset Fund (“Fund”) for the purpose of providing loans to support the preservation of affordable rental housing. There is a severe shortage of rental housing affordable to senior household of extremelylow to moderate-incomes in the City of Brisbane (the “City”) and nearby areas. The expenditure of funds for the preservation of the Units is an eligible activity under the AUTHORITY’s Fund.

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G. BORROWER and LENDER desire to enter into this Agreement to establish certain terms and conditions relating to the Authority Loan.

NOW, THEREFORE, in consideration of the mutual covenants and agreements specified herein, and subject to its terms and provisions, the parties to this Agreement hereby agree as follows:

AGREEMENT
The foregoing recitals are hereby incorporated by reference and made part of this Agreement.

This Agreement is entered into to assist the BORROWER in the acquisition and the rehabilitation and operation of the Project, which consists of multifamily senior rental housing reserved for occupancy by extremely-low to moderate-income households. This Agreement sets forth the respective duties and responsibilities of LENDER and BORROWER, establishes a schedule of performance by BORROWER, and provides for a termination of this Agreement under certain conditions.

ARTICLE 1: DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.

The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided.
(a) “Acquisition Date” means the date that BORROWER acquires the Property. (b) "Agreement" is defined in the first paragraph of this Agreement. (c) “Annual Operating Expenses” is defined in Section 2.7 below. (d) “AUTHORITY” is defined in the first paragraph of this Agreement. (e) “Authority Executive Director” means the Executive Director of the AUTHORITY or the Executive Director’s designee.
(f) “Authority Loan” is defined in Recital D. The Authority Loan is more particularly described in Section 2.1 below.
(g) “BORROWER” is defined in the first paragraph of this Agreement. (h) “City” is defined in Recital F.
(i) “County” is defined as the County of San Mateo.
(j) “County Loan” means the loan made by the County to BORROWER, in the amount of $227,436, for the Project.

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(k) “Default” has the meaning set forth in Section 6.1 below. (l) “Default Rate” has the meaning set forth in Section 2.2 below. (m) “Deferred Developer Fee” means that portion of the Developer Fee that is not paid to BORROWER at the time that the Memorandum of Ground Lease for the Property is recorded, and is paid out over time from Residual Receipts as described in Section 2.7. (n) “Developer Fee” means the compensation paid to BORROWER for managing the Leased Premises’ risks, costs, acquisition, financing, and/or rehabilitation. (o) “Effective Date” is defined in the first paragraph of this Agreement. (p) “Financing Plan” has the meaning set forth in Section 3.1 below. (q) “Force Majeure” is defined in Section 7.16 below.
(r) “Gross Revenue” is defined in Section 2.7 below.
(s) “Hazardous Materials” has the meaning set forth in Section 4.6 below. (t) “Hazardous Materials Claim” has the meaning set forth in Section 4.6 below. (u) “Hazardous Materials Law” has the meaning set forth in Section 4.6 below. (v) “HEART” is defined as the Housing Endowment and Regional Trust of San Mateo County.
(w) “HEART Loan” means the loan made by HEART to BORROWER, in the amount of $390,250, for the Project.
(x) “Leasehold Deed of Trust” is defined in Recital D. The form of the Leasehold Deed of Trust is attached hereto as Exhibit C.
(y) “LENDER” is defined in the first paragraph of this Agreement. (z) “Loan Documents” means this Agreement, the Note, the Leasehold Deed of Trust, and any other document or agreement evidencing the Authority Loan. (aa) “Note” is defined in Recital D. The form of the Note is attached hereto as Exhibit B.
(bb) “Project” is defined in Recital C.
(cc) “Project Budget” is the pro forma acquisition and rehabilitation budget for the Project, including sources and uses of funds, as approved by the LENDER, and attached as Exhibit D.

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(dd) “Property” is defined in Recital B, and is more particularly described in the attached Exhibit A.
(ee) “Regulatory Agreement” means covenants entered into between the LENDER and the BORROWER, to be recorded on the Acquisition Date, which requires that the Project be maintained and operated as housing affordable to extremely-low to moderate-income households.
(ff) “Residual Receipts” are defined in Section 2.7 below. (gg) "Security" is defined in Section 2.4 below.
(hh) “Senior Lenders” are defined in Section 2.5 below. (ii) “Senior Loan” is defined in Section 2.5 below.
(jj) “Term” is defined in Section 2.7 below.
(kk) “Transfer” has the meaning set forth in Section 4.13 below.

Section 1.2 Exhibits.

The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:

EXHIBIT A: Legal Description of the Property
EXHIBIT B: Note
EXHIBIT C: Leasehold Deed of Trust
EXHIBIT D: Financing Plan
EXHIBIT E: Insurance Requirements
ARTICLE 2: LOAN PROVISIONS
Section 2.1 Loan.

Subject to satisfaction of the conditions set forth in Section 2.6, and as explained in Recital E, LENDER shall loan to the BORROWER the Authority Loan in the principal amount of up to Three Million Four Hundred Fifty Two Thousand Eight Hundred Fourteen Dollars ($3,452,814) for the purposes set forth in Section 2.3 of this Agreement. The obligation to repay the Loan shall be evidenced by the Note in the form attached hereto as Exhibit B.

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Section 2.2 Interest.
(a) Subject to the provisions of Section 2.2(b) below, the outstanding principal balance of the Authority Loan will bear simple interest at the rate of three percent (3%) per annum commencing with the date of the Acquisition Date.
(b) In the event of a Default, interest on the Authority Loan will begin to accrue, as of the date of Default and continue until such time as the Authority Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of eight percent (8%) per annum, compounded annually (the “Default Rate”) and the highest rate permitted by law.

Section 2.3 Use of Funds.

BORROWER shall use the Authority Loan to fund the acquisition, rehabilitation, and operate the Project. BORROWER shall not use the Authority Loan for any other purpose without the prior written consent of the LENDER.

Section 2.4 Security.

The BORROWER shall secure its obligation to repay the Authority Loan, as evidenced by the Note, by executing the Leasehold Deed of Trust, and recording it as a lien against the Property, senior in lien priority to all other deeds of trust recorded against the Property, except as provided in Section 2.5 below.

Section 2.5 Subordination.

The Leasehold Deed of Trust, and/or Note may be subordinated to other loans approved by the LENDER (in each case, a “Senior Loan”), but only on condition that all of the following conditions are satisfied:
(a) Regulatory Agreement. the Regulatory Agreement shall not be subordinated to any senior lender Deeds of Trust, and shall only be subordinate, as approved by the LENDER, to other Regulatory Agreements.
(b) Subordination to Senior Loans. The LENDER shall subordinate the Leasehold Deed of Trust, and/or Note to Senior Loans, if required by Senior Lenders, as applicable, and if the conditions set forth in subsection (c) of this Section have been complied with. (c) Conditions Applicable to All Subordination Agreements. In addition to compliance with the requirements of subsection (a) or (b) above, all of the following conditions must be satisfied in all agreements subordinating the LENDER’s Loan Documents:
(1) All of the proceeds of the proposed Senior Loan, less any transaction costs, must be used to provide acquisition, rehabilitation, and/or operation of the Project; (2) BORROWER must demonstrate to the LENDER’s reasonable satisfaction that subordination of the Leasehold Deed of Trust, and/or Note is necessary to secure adequate ATTACHMENT 3

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refinancing, rehabilitation and/or preservation financing to ensure the operation of the Project, if approved, as affordable housing, as required by the Loan Documents. To satisfy this requirement, BORROWER must provide to the LENDER, in addition to any other information reasonably required by the LENDER, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate refinancing, rehabilitation and/or operation financing to ensure the viability of the Project, and that adequate financing for the Project would not be available without the proposed subordination;
(3) The subordination agreement(s) must be structured to minimize the risk that the Leasehold Deed of Trust, and/or Note would be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Loan. To satisfy this requirement, the subordination agreement must provide the LENDER with adequate rights to cure any defaults by BORROWER, including: (i) providing the LENDER or its successor with copies of any notices of default at the same time and in the same manner as provided to BORROWER; and (ii) providing the LENDER with a reasonable cure period to cure any default;
(4) No subordination may limit the effect of the Leasehold Deed of Trust, and/or Note before a foreclosure, nor require consent of the holder of the Senior Loan to exercise of any remedies by the LENDER under the Loan Documents; (5) The subordination(s) described in this Section 2.5 may be effective only during the original term of the Senior Loan and any extension of its term or refinancing approved in writing by the LENDER.

Upon a determination by the Authority Board that the conditions in this Section have been satisfied, the Authority Executive Director or his/her designee will be authorized to execute the approved subordination agreement without the necessity of any further action or approval.

Section 2.6 Disbursement Requirements.

The LENDER is not obligated to make any disbursement of the Authority Loan or take any other action under the Loan Documents unless all of the following conditions precedent are satisfied:
(a) There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under this Agreement, or under any other agreement between the LENDER and the BORROWER;
(b) BORROWER has delivered to the LENDER copies of all of BORROWER’s organizational documents, a certificate of status for the BORROWER, and a copy of the ATTACHMENT 3

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organization’s authorizing resolution authorizing BORROWER’s execution of the Loan Documents;
(c) BORROWER has furnished the LENDER with evidence of the insurance coverage meeting the requirements of Exhibit E;
(d) BORROWER has executed and delivered to escrow, with copy to the LENDER, the Loan Documents and any other instruments and policies required under the Loan Documents; (e) BORROWER has executed and delivered to the LENDER all other documents, instruments, and policies required under the Loan Documents; (f) A title insurer reasonably acceptable to the LENDER is unconditionally and irrevocably committed to issuing an ALTA Lender’s Policy of insurance insuring the priority of the Note and Leasehold Deed of Trust in the amount of the Authority Loan, subject only to such exceptions and exclusions as may be reasonably acceptable to the LENDER, and containing such endorsements as the LENDER may reasonably require; and
Section 2.7 Repayment of the Authority Loan
(a) Term. The “Term” of this Agreement and the Authority Loan commences as of the Acquisition Date, and expires, unless sooner terminated in accordance with this Agreement, fiftyfive (55) years after the Acquisition Date. (b) Due in Full. BORROWER shall pay all outstanding principal and accrued interest on the Authority Loan, in full, on the earliest to occur of: (i) any Transfer not authorized by the LENDER, (ii) a Default (following the expiration of all applicable notice and cure periods), or (iii) the expiration of the Term. The LENDER and the BORROWER shall have the right, but not the obligation, to extend the period for repayment of the Authority Loan or to modify the terms of the Authority Loan if desirable to serve the purposes of this Agreement. (c) Annual Payments. No later than one hundred twenty (120) days after the end of each Fiscal Year, BORROWER shall make repayments of the Authority Loan for that prior fiscal year based on the Payment Schedule, as defined below in Section 2.7(c)(1), under the Lenders’ Share of Residual Receipts, as defined below in Section 2.7(c)(4). The Lenders’ Share of Residual Receipts shall be divided proportionately between the LENDER and the County of San Mateo in proportion to their respective loan amounts to the Project. The HEART Loan, as defined below, shall have a separate share of Residual Receipts from the Lenders’ Share (“HEART’s Share”). The LENDER’s proportionate share of these payments shall be credited first against accrued interest and then against outstanding principal of the Authority Loan and shall be accompanied by the BORROWER’s report of Residual Receipts and independent Project audit delivered to the LENDER as per Section 2.7(d). The BORROWER shall provide the LENDER with any documentation reasonably requested by the LENDER to substantiate the BORROWER’s ATTACHMENT 3

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determination of Residual Receipts. The following definitions shall apply for the purposes of this subsection (c):
(1) The distribution of the Residual Receipts between the approved lenders (the “Payment Schedule”) shall be as follows, and follows the proforma and all other documents provided to and approved by LENDER as part of the Financing Plan. (i) 47.3% of total Residual Receipts shall be allocated to pay BORROWER’s Deferred Developer Fee, which amount is estimated to be $60,000; (ii) 47.7% of total Residual Receipts shall be allocated to pay the HEART Loan (“HEART’s Share)” (principal loan amount estimated to be $390,250); provided, however, that immediately after the Deferred Developer Fee is paid in full, 68.8% of the total Residual Receipts shall be allocated to pay the HEART Loan;
(iii) 5% of total Residual Receipts shall be allocated to pay the County Loan and the Authority Loan (“Lenders’ Share”), in accordance with the proportional ratio of their respective outstanding principal loan amounts (County Loan principal loan amount estimated to be $227,436, and Authority Loan principal loan amount estimated to be $3,452,814); provided, however, that immediately after the Deferred Developer Fee is paid in full, 31.2% of the Total Residual Receipts shall be allocated to pay the County Loan and the Authority Loan in accordance with the proportional ratio of their outstanding principal loan amounts; and further provided that immediately after the HEART Loan is paid in full, 100% of the total Residual Receipts shall be allocated to the County Loan and the Authority Loan in accordance with the proportional ratio of their outstanding principal loan amounts.
(2) “Net Cash Flow” is defined as Project Gross Receipts less Project Permitted Expenses.
(3) “Residual Receipts” is defined as the amount by which actual Project’s Gross Receipts, as defined in Section 2.7(c)(4), exceeds actual Project Permitted Expenses, as defined in Section 2.7(c)(5), for a particular fiscal year, as documented by the expenditure report submitted to Lender, and at the request of Lender, independently audited financial statements. (4) “Project Gross Receipts” is defined as all revenue, income, receipts, and other consideration actually received from operation and leasing of the Project, but does not include tenant security deposits, loan proceeds, capital contribution or similar advances. “Project Gross Receipts” shall include, but is not limited to:
(i) All rents, fees, and charges paid by tenants (including rent on commercial or common space within the Project). Section 8 payment or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, ATTACHMENT 3

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cancellation fees, price index adjustments, and any other rental adjustments to leases or rental agreements resulting in actual income; (ii) Proceeds from vending and laundry room machines;
(iii) Interest on reserves, unless such interest remains in the applicable reserve account;
(iv) Insurance proceeds or condemnation awards received by BORROWER after casualty to or condemnation of the Project; provided, however, BORROWER shall not be deemed to have “received” (nor shall Project Gross Receipts include) all or any portion of insurance proceeds or condemnation award that is applied by a senior lender, if any, towards payment of costs and expenses or in payment of outstanding principal, interest, and/or charges under the senior lender’s loan or deed of trust securing the loan or not utilized to repair or rebuild the Project.
(5) “Project Permitted Expenses” is defined as the following costs reasonably and actually incurred costs and expenses for operation and maintenance of the Project to the extent that they are consistent with an annual budget submitted to Lender and upon request by Lender, ATTACHMENT 3

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an independent audit performed by a certified public accountant using generally accepted accounting principles:
(i) Property real estate taxes (if a full property tax welfare exemption become ineligible) assessments and impositions that are not exempt under the welfare exemption imposed on the Project;
(ii) Property management fees and reimbursements, excluding incentive management fees, not to exceed fees and reimbursements which are standard in the industry;
(iii) Premiums for property damage, commercial general liability, and other insurance policies required by the lenders of the approved financing. (iv) Utility services not paid for directly by tenants, including water, sewer, and trash collection;
(v) Maintenance and repair of the Project;
(vi) Any annual license or certificate of occupancy fees required for operation of the Project;
(vii) Security services;
(viii) Reasonable advertising, marketing and promotional expenses or disbursements connected with the rental of the units;
(ix) Annual Cash deposited into reserves for capital replacements for the Project in the amount of at least ten percent (10%), but not greater than twenty percent (20%), of Gross Receipts, or such higher amount as may be required and approved by LENDER, and annual cash deposit into an operating reserve account for the Project such that the operating reserve account has three months of operating expenses as determined by the operating expenses in the prior fiscal year; (x) Extraordinary operating costs or expenses approved by LENDER; (xi) Payments of deductibles in connection with casualty insurance claims not normally paid from reserves, and the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves; (xii) Payments for property management staffing. including without limitation the salary of on-site property managers and supervision of such managers ATTACHMENT 3

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and any other costs related to any property management function required by any regulatory agreement or similar document or as approved by the LENDER; and (xiii) Such other ordinary and reasonable operating expenses approved by LENDER not listed above.

Project Permitted Expenses do not include the following items (or, to the extent that such items have been included, the following items shall be subtracted out; for example, if funds are withdrawn from operating reserves and spent on operating expenses, either those expenses would not be included in Project Permitted Expenses or those expenses would be offset by a deduction for the amount withdrawn from reserves): (a) non-cash expenses, including without limitation, depreciation; (b) funds expended from reserves; and (c) any penalties or interest resulting from Borrower’s failure to pay when due any sums that Borrower is obligated to pay to third parties (e.g., penalties and interest for late payment of real property taxes).

In the event that there are no Residual Receipts, no annual payment on behalf of the BORROWER shall be due.
(d) Records Regarding Residual Receipts. In connection with the annual payments required by Section 2.9(c), within one hundred twenty (120) days of the end of the BORROWER’s fiscal year, BORROWER shall provide to lender a budget versus actual expenditure report, and at the request of the LENDER, and at least once every three (3) years, a certified public accountant, using generally accepted accounting principles, shall perform an independent audit and deliver it to LENDER. The audit shall delineate the annual Residual Receipts and provide financial and cash flow statements for the past three fiscal years.
(1) The BORROWER shall keep and maintain on the Property, or at its principal place of business, or elsewhere with the LENDER’s written consent, full, complete and appropriate books, records and accounts relating to the Project, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail the BORROWER’s calculation of Residual Receipts. Books, records and accounts relating to the BORROWER’s compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied and shall be consistent with requirements of this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the LENDER, its auditors or other LENDER authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that the BORROWER may be required to furnish any governmental agency shall at all reasonable times and upon reasonable notice be open for inspection by the LENDER at the place that the books, records and accounts of the BORROWER are kept. The BORROWER shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) ATTACHMENT 3

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years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (g) below then pending.
(2) The receipt by the LENDER of any statement pursuant to subsection (b) above or any payment by the BORROWER or acceptance by the LENDER of any Authority Loan repayment for any period shall not bind the LENDER as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the LENDER or any designated agent or employee of the LENDER at any time shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of the BORROWER and other places where records are kept. Immediately after the completion of an audit, the LENDER shall deliver a copy of the results of such audit to the BORROWER. If it shall be determined as a result of such audit that there has been a deficiency in a Authority Loan repayment to the LENDER, then such deficiency shall become immediately due and payable with interest at the non-default rate set forth in the Note (unless BORROWER’s failure, refusal, or repeated failure to correctly calculate and/or submit the repayment constitutes an event of default, in which case interest shall be paid at the Default Rate), determined as of and accruing from the date that said payment should have been made.
(e) Right to Prepay. BORROWER may prepay the Authority Loan at any time without premium or penalty. All prepayments shall be credited first applied to accrued interest and then to outstanding principal. The Leasehold Deed of Trust shall remain in effect for the entire Term to secure the Regulatory Agreement, when recorded.

Section 2.8 Non-Recourse.

Except as provided below, neither BORROWER, nor any member of BORROWER, has any personal liability for payment of the principal of, and interest on, the Authority Loan.

Following recordation of the Leasehold Deed of Trust, the sole recourse of the LENDER with respect to the principal of, or interest on, the Note will be to the property described in the Leasehold Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability limits or impairs the enforcement of all the rights and remedies of the LENDER against all such security for the Note, or impairs the right of LENDER to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation of liability is intended to apply only to the obligation to repay the principal and interest on the Note. Except as hereafter set forth; nothing contained herein is intended to relieve BORROWER of its obligation to indemnify the LENDER under Sections 4.5, 4.6, 4.7, and 7.6 of this Agreement, or liability for (i) loss or damage of any kind resulting from waste, fraud or willful misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Leasehold Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by BORROWER other than in accordance with the Leasehold Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance policies or ATTACHMENT 3

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awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Property.

Section 2.9 Budget and Project Cost Savings.
(a) Budget Cost Savings.
(1) Definition of Budget Cost Savings. “Budget Cost Savings” shall mean the positive difference between the amount of a line item in the budget submitted as part of the Financing Plan and the amount expended for work (including materials) under such line item, provided such work was completed without the expenditure of the entire amount allocated in the budget to such line item, and all contractors, subcontractors, material suppliers and other persons have been paid in full for such work.
(2) Budget Reallocation – Cost Savings Contingency. If there is a Budget Cost Savings in a particular line item of the budget, BORROWER may, upon approval by LENDER, which approval shall not be unreasonably withheld, reallocate such savings to the Capital Reserve account, subject to Section 2.7(c)(5)(ix).
(3) Budget Reallocation - Budget Revisions. A copy of the budget updated to reflect any Budget Costs Savings and/or reallocations shall be prepared after each reallocation and promptly delivered to the LENDER.

ARTICLE 3: FINANCING PLAN
Section 3.1 Financing Plan.
(a) The preliminary Project budget is shown in Exhibit D. Prior to the Acquisition Date, BORROWER shall submit for LENDER approval a Final Financing Plan (the “Financing Plan”) containing the following:
(1) An updated Project budget showing a “sources and uses” breakdown of the costs of repairing and replacing capital improvements in the Project. (2) An operating proforma for the first thirty (30) years of operation of the Project.
(3) Copies of all required funding commitments for the Project; or proposed funding, as applicable.
(4) Any other information that is reasonably necessary for the LENDER to determine that BORROWER has the financial capability to pay all costs of operating the Project. (b) Prior to the Acquisition Date, the LENDER shall review the Financing Plan to determine if, in the LENDER’s reasonable judgment, BORROWER has the financial capability (taking into account all committed funds) to pay all realistically established costs of operating the Project. The LENDER shall review the Financing Plan and shall either approve or disapprove the ATTACHMENT 3

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Financing Plan in writing within thirty (30) days of receipt. If disapproved, the LENDER shall give specific reasons in writing for disapproval and the required revisions to the previously submitted Financing Plan. If the Financing Plan is disapproved. BORROWER shall resubmit, a revised Financing Plan within thirty (30) days of notification of disapproval. The LENDER shall either approve or disapprove the submitted revised Financing Plan within thirty (30) days of the date such revised Financing Plan is received by the LENDER. If LENDER has not provided a response to Borrower within thirty (30) days, the Financing Plan shall be deemed approved. (c) BORROWER shall submit any material revision to an approved Financing Plan to the LENDER for its review and approval. Any proposed revised Financing Plan shall be considered and approved or disapproved by the LENDER in the same manner and according to the same timeframe set forth in subsection (b) above.

ARTICLE 4: ONGOING OBLIGATIONS
Section 4.1 Information.

BORROWER shall provide any information reasonably requested by the LENDER in connection with the Property and the Project.

Section 4.2 Records.

BORROWER shall maintain, on a current basis, complete records, including books of original entry, source documents supporting accounting transactions, service records, a general ledger, canceled checks, timesheets, and related documents and records to assure proper accounting of funds and performance of the terms of this Agreement. BORROWER shall furnish any and all information and reports which may be reasonably required by LENDER in connection with this Agreement. BORROWER shall further permit access to its books, records and accounts by the representatives and employees of LENDER during regular business hours, for the purpose of investigation or audit to ascertain compliance with all applicable laws, regulations, rules and orders and for the purpose of evaluating and monitoring BORROWER’s compliance with the provisions of this Agreement. All such records shall be retained by BORROWER and made available to LENDER upon request for review or audit for a period of at least five (5) years following the expiration or termination of this Agreement.

Section 4.3 Audits.

BORROWER shall provide LENDER, during the term of this Agreement, with copies of audited financial statements of BORROWER, including any management letter comments on the adequacy of internal or operational controls, within one hundred twenty (120) days of the close of each fiscal year of the BORROWER. LENDER reserves the right, during the term of this Loan Agreement, to audit the records, including the financial records supporting the aforementioned financial statements, and other records and documents pertaining to the operations of the Project.

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Section 4.4 Compliance with Laws; Prevailing Wages.
(a) BORROWER shall comply with all applicable laws, ordinances, rules, and regulations of federal, state, county, or municipal governments or agencies now in force or that maybe enacted hereafter, including (without limitation and where applicable) the prevailing wage provisions of Sections 1770 et seq., of the California Labor Code and implementing rules and regulations as set forth below, in owning and maintaining the Property. (b) Nothing in this Agreement constitutes a representation or warranty by the LENDER regarding the applicability of the provisions of Labor Code Section 1720 et seq., and the hiring of apprentices pursuant to Labor Code Sections 1777.5 et seq., to the Authority Loan or approved financing. To the extent applicable, BORROWER shall pay and shall cause contractors and subcontractors to pay prevailing wages in connection with the maintenance and repair of the Property, as those wages are determined pursuant to Labor Code Section 1720 et seq., to employ apprentices as required by Labor Code Sections 1777.5 et seq., and the implementing regulations of the Department of Industrial relations (“DIR”). BORROWER shall and shall cause the consultants and contractors to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., and implementing regulations of the DIR. BORROWER shall cause the contractors to keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to Labor Code Section 1720 et seq., and apprentices have been employed are required by Labor Code Sections 1777.5 et seq. Copies of the currently applicable current per diem prevailing wages are available from DIR. (c) BORROWER shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the LENDER) the LENDER against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including BORROWER, its contractor and subcontractors) to pay prevailing wages as determined pursuant to Labor Code Section 1720 et seq., to employ apprentices pursuant to Labor Code Sections 1777.5 et seq., and implementing regulations of the DIR or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with any other work undertaken or in connection with the Property. The requirements in this subsection (c) shall survive the repayment of the Authority Loan and the reconveyance of the Leasehold Deed of Trust.

Section 4.5 Relocation.

If and to the extent that the rehabilitation of the Project will result in the permanent or temporary displacement of persons entitled to relocation benefits, then BORROWER shall comply with all applicable local, state, and federal statutes and regulations, (including without limitation the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, California Government Code Section 7260 et seq., and accompanying regulations) with respect to preparation of a relocation plan, relocation planning, advisory assistance, and payment of monetary benefits. BORROWER shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. BORROWER shall indemnify, defend and hold harmless, (with counsel ATTACHMENT 3

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reasonably acceptable to the LENDER), the LENDER and its councilmembers, employees, agents, successors and assigns against any claim for damages, compensation, fines, penalties, relocation payments or other amounts and expenses (including reasonable attorneys’ fees) arising out of the failure or alleged failure of any person or entity (including BORROWER, or the LENDER) to satisfy relocation obligations related to the acquisition of the Property. This obligation to indemnify shall survive termination of this Agreement.

Section 4.6 Hazardous Materials.
(a) BORROWER shall keep and maintain the Property in compliance with and shall not cause or permit the Property to be in violation of any Hazardous Materials Law (defined below), including, but not limited to, soil and groundwater conditions. BORROWER shall not, and shall not cause or permit the use, generation, manufacture, storage, or disposal of on, under, or about the Property, or transportation to or from the Property of: (i) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos or asbestoscontaining material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, pesticides, herbicides, or any other agricultural chemical; and (ii) any waste, substance, or material defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic materials,” “toxic waste,” “toxic substances,” or words of similar import under any Hazardous Materials Law (collectively referred to herein as “Hazardous Materials”). BORROWER shall cause any persons who may come onto the Property to comply with the foregoing. Notwithstanding anything to the contrary contained herein, Hazardous Materials shall not include substances typically used in the ordinary course of developing, operating, and maintaining apartment complexes, provided that such substances are used in accordance with all applicable laws.
(b) BORROWER shall immediately notify the LENDER in writing if at any time it receives notice of: (i) any and all enforcement, cleanup, removal, or other governmental or regulatory actions instituted, completed, or threatened against BORROWER or the Property pursuant to any applicable federal, state, or local laws, ordinances, or regulations relating to any Hazardous Materials, health, industrial hygiene, environmental conditions, or the regulation or protection of the environment, and all amendments thereto as of this date to be added in the future and any successor statute or rule or regulation promulgated thereto (“Hazardous Materials Law”); (ii) all claims made or threatened by any third party against BORROWER or the Property relating to damage, contribution, cost recovery compensation, loss, or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as “Hazardous Materials Claims”); and (iii) BORROWER’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as “border-zone property” under California Health and Safety Code Sections 25220 et seq., or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on ownership, occupancy, transferability, or use of the Property under any Hazardous Materials Law.
(c) The LENDER shall have the right to join and participate in, as a party if it so elects, and be represented by counsel of its own choice in, any legal proceedings or actions initiated in ATTACHMENT 3

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connection with any Hazardous Materials Claims, and to have its reasonable attorneys’ fees in connection therewith paid by BORROWER.
(d) BORROWER shall indemnify and hold harmless the LENDER and its councilmembers, directors, officers, employees, agents, successors, and assigns from and against any loss, damage, cost, fine, penalty, judgment, award, settlement, expense, or liability, directly or indirectly arising out of or attributable to: (i) any actual past or present violation of any Hazardous Materials Law; (ii) any Hazardous Materials Claim; (iii) any actual past or present use, generation, manufacture, storage, release, threatened release, discharge, disposal, transportation, or presence of Hazardous Materials on, under, or about the Property; (iv) any investigation, cleanup, remediation, removal, or restoration work of site conditions of the Property relating to Hazardous Materials (whether on the Property or any other property); and (v) the breach of any representation of warranty by or covenant of BORROWER in this Section 4.6 and Section 5.1(h), excluding claims resulting exclusively from the gross negligence and/or willful misconduct of the LENDER.

Such indemnity shall include, without limitation: (i) all consequential damages; (ii) the costs of any required or necessary investigation, repair, cleanup, or detoxification of the Property, and the preparation and implementation of any closure, remedial, or other required plans; and (iii) all reasonable costs and expenses incurred by the LENDER in connection with clauses (i) and (ii), including but not limited to reasonable attorneys’ fees and consultant fees. This obligation to indemnify shall survive termination of this Agreement and shall not be diminished or affected in any respect as a result of any notice, disclosure, knowledge, if any, to or by the LENDER of Hazardous Materials.
(e) Without the LENDER’s prior written consent, which shall not be unreasonably withheld, BORROWER shall not take any remedial action in response to the presence of Hazardous Materials on, under, or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any claims made or threatened by any third party against BORROWER, any tenant, or the Property relating to any damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials, which remedial action, settlement, consent decree or compromise might, in the LENDER’s reasonable judgment, impair the value of the LENDER’s security hereunder; provided, however, that the LENDER’s prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety, or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the LENDER’s consent before taking such action, provided that in such event BORROWER shall notify the LENDER’s as soon as practicable of any action so taken.

The LENDER agrees not to withhold its consent, where such consent is required hereunder, if either: (i) a remedial action is ordered by a court of competent jurisdiction; (ii) BORROWER will or may be subject to civil or criminal sanctions or penalties if it fails to take a required action; (iii) BORROWER establishes to the reasonable satisfaction of the LENDER that there is no reasonable alternative to such remedial action which would result in less impairment of the LENDER’s security hereunder; or (iv) the action has been agreed to by the LENDER. (f) BORROWER acknowledges and agrees that: (i) this Section is intended as the LENDER’s written request for information (and BORROWER’s response) concerning the ATTACHMENT 3

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environmental condition of the Property as required by California Code of Civil Procedure Section 726.5; and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by the Parties to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736. (g) In the event that any portion of the Property is determined to be “environmentally impaired” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without limiting or in any way affecting the LENDER’s or the trustee’s rights and remedies under the Leasehold Deed of Trust, the LENDER may elect to exercise its rights under California Code of California Code of Civil Procedure Section 726.5(a) to: (i) waive its lien on such environmentally impaired or affected portion of the Property; and (ii) exercise (1) the rights and remedies of an unsecured creditor, including reduction of its claim against BORROWER to judgment, and (2) any other rights and remedies permitted by law. For purposes of determining the LENDER’s right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), BORROWER shall be deemed to have willfully permitted or acquiesced in a release or threatened release of Hazardous Materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and BORROWER knew or should have known of the activity by such lessee, occupant, or user which cause or contributed to the release or threatened release. All costs and expenses, including (but not limited to) reasonable attorneys’ fees, incurred by the LENDER in connection with any action commenced under this paragraph, including any action required by the California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the rate specified in the Note until paid, shall be added to the indebtedness secured by the Leasehold Deed of Trust and shall be due and payable to the LENDER upon demand made any time following the conclusion of such action.

Section 4.7 Maintenance and Damage.
(a) BORROWER shall maintain the Property and the Project in good repair and in a neat, clean and orderly condition, ordinary wear and tear excepted. If there arises a condition in contravention of this requirement, and if BORROWER has not cured such condition within thirty (30) days after receiving a notice from the LENDER of such a condition (or such longer period as may be reasonably necessary provided Borrower has commenced a cure within such 30 day period and is diligently prosecuting such cure to completion), then in addition to any other rights available to the LENDER, the LENDER shall have the right to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property. (b) If any improvement constructed on the Property by BORROWER, now or in the future, is damaged or destroyed, then BORROWER shall, at its cost and expense, diligently undertake to repair or restore such improvement consistent with any plans and specifications approved by the LENDER. Such work or repair shall be commenced no later than the later of one ATTACHMENT 3

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hundred twenty (120) days, or such longer period approved by the LENDER in writing, after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and shall be complete within one (1) year thereafter. Any insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, then BORROWER shall make up the deficiency.

Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Property or a stop notice affecting the Authority Loan is served on the LENDER or any other lender or other third party in connection with the Project, then BORROWER shall, within thirty (30) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the LENDER a surety bond in sufficient form and amount, or provide the LENDER with other assurance satisfactory to the LENDER that the claim of lien or stop notice will be paid or discharged.
(b) If BORROWER fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section, then in addition to any other right or remedy, the LENDER may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at BORROWERS’s expense. Alternately, the LENDER may require BORROWER to immediately deposit with the LENDER the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The LENDER may use such deposit to satisfy any claim or lien that is adversely determined against BORROWER.
(c) BORROWER shall file a valid notice of cessation or notice of completion upon cessation of construction on the Project and take all other reasonable steps to forestall the assertion of claims of lien against the Property. BORROWER authorizes the LENDER, but without any obligation, to record any notices of completion or cessation of labor, or any other notice that the LENDER deems necessary or desirable to protect its interest in the Property.

Section 4.9 Fees and Taxes.

BORROWER shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Property or the Project to the extent owned by BORROWER, and shall pay such charges prior to delinquency. However, BORROWER shall not be required to pay and discharge any such charge so long as: (a) the legality there of is being contested diligently and in good faith and by appropriate proceedings, and(b) if requested by the LENDER, BORROWER deposits with the LENDER any funds or other forms of assurance that the LENDER in good faith from time to time determines appropriate to protect the LENDER from the consequences of the contest being unsuccessful.

Section 4.10 Notices.

BORROWER shall notify the LENDER promptly in writing of any and all of the following:

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(a) Any litigation known to BORROWER materially affecting BORROWER, or the Property or the Project and of any claims or disputes that involve a material risk of litigation; (b) Any written or oral communication BORROWER receives from any governmental, judicial, or legal authority giving notice of any claim or assertion that the Property or Project fails in any respect to comply with any applicable governmental law; (c) Any material adverse change in the physical condition of the Property (including any damage suffered as a result of fire, earthquakes, or floods); (d) Any material adverse change in BORROWER’s financial condition, any material adverse change in BORROWER’s operations, or any change in the management of BORROWER; (e) That any of the statements in Section5.1(h) regarding Hazardous Materials are no longer accurate;
(f) Any Default or event which, with the giving of notice or the passage of time or both, would constitute a Default; and
(g) Any other circumstance, event, or occurrence that results in a material adverse change in BORROWER’s ability to timely perform any of its obligations under any of the Loan Documents.

Section 4.11 Non-Discrimination.

BORROWER shall not discriminate or segregate concerning the Project, or operation or rehabilitation of the Project on the basis of race, color, creed, ancestry, national origin, religion, sex, sexual orientation, marital status, age, disability, medical condition, familial status, source of income or any other arbitrary basis. BORROWER shall otherwise comply with all applicable local, state, and federal laws concerning discrimination.

Section 4.12 Insurance Requirements.

BORROWER, at its sole cost and expense, shall obtain and maintain during the term of this Agreement, insurance provided by responsible companies authorized to engage in the offering of insurance services in California in such amounts and against such risks as shall be satisfactory to LENDER’s risk manager, including, without limitation, worker’s compensation. employer’s liability, commercial general liability, comprehensive automobile liability, personal injury and property damage insurance, as appropriate, as set forth in Exhibit E, insuring against all liability of BORROWER and its directors, officers, employees, agents, and representatives arising out of or in connection with the acquisition, construction and development of the Project or BORROWER’s performance or nonperformance under this Agreement.

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Section 4.13 Transfer.
(a) For purposes of this Agreement, “Transfer’ is any sale, assignment, or transfer, whether voluntary or involuntary, of: (i) any rights and/or duties under this Agreement, and/or (ii) any interest in the Project, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Project is transferred and the BORROWER retains title. “Transfer” shall exclude the leasing of any single unit in the Project to a tenant and the transfer of an easement interest in the Property for utility purposes. The Authority’s Executive Director or his/her designee is authorized to execute assignment and assumption agreements on behalf of the LENDER to implement any approved Transfer. (b) LENDER is entering into this Agreement based on the experience, skill, and ability to perform of BORROWER. The BORROWER recognizes that its qualifications and identity are of particular concern to the LENDER, in view of: (i) the importance of affordable housing to the general welfare of the community; (ii) the reliance by the LENDER upon the unique qualifications and ability of the BORROWER to ensure the quality of the affordability, use, operation, and maintenance of the Project; (iii) the requirement that the Property be used for affordable housing; and (iv) BORROWER’s representation that the Property is not to be acquired or used for speculation, but only for use by the BORROWER for affordable housing. (c) No Transfer not specifically authorized in this Section 4.13 shall be permitted without the prior written consent of the LENDER, which the LENDER may withhold in its sole discretion. The Authority Loan shall automatically accelerate and be due in full upon any Transfer made without the prior written consent of the LENDER.

Section 4.14 Other Indebtedness and Liens.

BORROWER shall not incur any indebtedness of any kind or encumber the Property with any liens without the prior written consent of the LENDER, which shall not be unreasonably withheld.

Section 4.15 Use as Affordable Housing.

In consideration for the Authority Loan to be provided to the BORROWER on belowmarket terms, the BORROWER hereby agrees to comply with the requirements of Article 3 of this Agreement. The use, occupancy and rent restrictions in the Regulatory Agreement shall be compatible with the restrictions of other approved lenders. BORROWER’s compliance with this Section 4.15 is of particular importance to LENDER and the main purpose of the Authority Loan.

The BORROWER shall record against the Property, at the time of Acquisition, the Regulatory Agreement, which shall, unless approved in writing by the LENDER, survive any transfer or foreclosure.

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ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties.

As a material inducement to the LENDER’s entry into this Agreement, BORROWER hereby represents and warrants to the LENDER as follows and acknowledges, understands, and agrees that the representations and warranties set forth in this Article 5 are deemed to be continuing during all times when any portion of the Authority Loan remains outstanding:
(a) Organization. BORROWER is duly organized, validly existing, and in good standing under the laws of the State of California and has the power and authority to lease property and carry on its business as now being conducted.
(b) Authority of BORROWER. BORROWER has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement 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 BORROWER’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken.
(d) Valid Binding Agreements. This Agreement and the Loan Documents and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of enforceable against it in accordance with the irrespective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on BORROWER, or any provision of the organizational documents of BORROWER, or will conflict with or constitute a breach of or a default under any agreement to which BORROWER is a party, or will result in the creation or ATTACHMENT 3

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imposition of any lien upon any assets or property of BORROWER, other than liens established pursuant hereto.
(f) Pending Proceedings. BORROWER is not in 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 affect BORROWER’s ability to repay the Authority Loan or impair the security to be given to the LENDER pursuant hereto.
(g) Title to Land. At the time of recordation of the Leasehold Deed of Trust, BORROWER will have good and marketable ground lease for the Property and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable, and liens in favor of the LENDER or approved in writing by the LENDER. (h) Hazardous Materials. To the best of BORROWER’s knowledge, except as disclosed in writing by BORROWER to the LENDER or in the following reports, prior to the date of this Agreement: (i) no Hazardous Material has been disposed of, stored on, discharged from, or released to or from, or otherwise now exists in, on, under, or around, the Property, (ii) no aboveground or underground storage tanks are now or have ever been located on or under the Property, (iii) neither the Property, nor BORROWER, is in violation of any Hazardous Materials Law; and (iv) neither the Property, nor BORROWER, is subject to any existing, pending or threatened Hazardous Materials Claims.
(i) Financial Statements. The financial statements of BORROWER and other financial data and information furnished by BORROWER to the LENDER fairly present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of BORROWER from that shown by such financial statements and other data and information.
(j) Taxes. BORROWER and its subsidiaries have filed all federal and other material tax returns and reports required to be filed, and have paid all federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their income or the Property otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with generally accepted accounting principles. There is no proposed tax assessment against BORROWER or any of its subsidiaries that could, if made, be reasonably expected to have a material adverse effect upon the Property, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of BORROWER and its subsidiaries, taken as a whole, which would be expected to result in a material impairment of the ability of BORROWER to perform ATTACHMENT 3

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under any Loan Document to which it is a party, or a material adverse effect upon the legality, validity, binding effect or enforceability against BORROWER of any Loan Document.

Section 5.2 Survival of Representations and Warranties.

All representations and warranties of BORROWER shall survive the making of the Authority Loan and have been or will be relied on by the LENDER notwithstanding any investigation made by the LENDER.

ARTICLE 6: TERMINATION, DEFAULT AND REMEDIES
Section 6.1 Events of Default.

Upon the occurrence of Default, as defined in this Section, the LENDER will give written notice to BORROWER and each Lender. If the Default continues uncured for thirty (30) days after receipt of written notice thereof from the LENDER to BORROWER or, if the breach cannot be cured within thirty (30) days, BORROWER diligently undertakes to cure such breach within thirty (30) days but such breach remains uncured within one hundred eighty (180) days, then LENDER may exercise all remedies available at law or equity; provided, however, that if a different period or notice requirement is specified under any other provision of this Article 6, the specific provisions shall control. Each of the following shall constitute a “Default” by BORROWER under this Agreement:
(a) Failure to Make Payment. Failure to repay the principal and any interest on the Loan within fifteen (15) days after receipt of written notice from the LENDER that such payment is due pursuant to the Loan Documents.
(b) Breach of Covenants. Failure of BORROWER to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents, subject to any applicable cure period.
(c) Default Under Other Loans. A default is declared under any other financing for the Project by the lender of such financing, or BORROWER fails to make any payment or perform any of its other covenants, agreements, or obligations under any other agreement with respect to financing for the Project. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the LENDER, the indebtedness evidenced by the Note.
(d) Adverse Financial Condition. A material adverse change in BORROWER’s financial condition, or an event or condition materially impairing BORROWER’s intended use of the Property, or BORROWER’s ability to repay the Authority Loan occurs. (e) Insolvency. A court having jurisdiction shall have made or entered any decree or order (1) adjudging BORROWER to be bankrupt or insolvent. (2) approving as properly filed a petition seeking reorganization of BORROWER or seeking any arrangement for BORROWER under the bankruptcy law or any other applicable debtor’s relief law or statute of the United States ATTACHMENT 3

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or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of BORROWER in bankruptcy or insolvency or for any of their properties, (4) directing the winding up or liquidation of BORROWER, if any such decree or order described in clauses (1) to (4), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or (5) BORROWER shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (1) to (5), inclusive. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the LENDER, the indebtedness evidenced by the Note.
(f) Assignment; Attachment. BORROWER shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the LENDER, the indebtedness evidenced by the Note.
(g) Suspension; Dissolution. BORROWER shall have voluntarily suspended its business or the dissolution of BORROWER.
(h) Liens on Property and the Project. There shall be filed any claim of lien (other than liens approved in writing by the LENDER) against the Project, the Property, or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Authority Loan and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days without discharge or satisfaction thereof or provision therefor (including, without limitation, the posting of bonds) satisfactory to the LENDER. (i) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Property and the Project, except that condemnation by the LENDER shall cause the Authority Loan to accelerate but shall not be a Default. (j) Unauthorized Transfer. Any Transfer other than as permitted by Section 4.13. (k) Representation or Warranty Incorrect. Any representation or warranty of BORROWER contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the LENDER in connection with any of the Loan Documents, proves to have been incorrect in any material and adverse respect when made.

Section 6.2 Remedies.

The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the LENDER or automatically where so specified, relieve the LENDER of any obligation to make or continue the Authority Loan and shall give the LENDER the right to proceed with any and all remedies set forth in this Agreement and the Loan Documents, including but not limited to the following:

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(a) Acceleration of Note. The LENDER shall have the right to cause all indebtedness of BORROWER to the LENDER under this Agreement and the Note, together with any accrued interest thereon, to become immediately due and payable. BORROWER waives all right to presentment, demand, protest or notice of protest or dishonor. The LENDER may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the LENDER as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Leasehold Deed of Trust. BORROWER shall be liable to pay the LENDER on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney’s fees and expenses) paid or incurred by the LENDER in connection with the collection of the Authority Loan and the preservation, maintenance, protection. sale, or other disposition of the security given for the Authority Loan.
(b) Assignment of Documents. The LENDER may exercise all rights under the Assignment of Documents.
(c) Specific Performance. The LENDER shall have the right to mandamus or other suit, action or proceeding at law or in equity to require BORROWER to perform its obligations and covenants under the Loan Documents or to enjoin acts or things which may be unlawful or in violation of the provisions of the Loan Documents.
(d) Right to Cure at BORROWER’s Expense. The LENDER shall have the right (but not the obligation) to cure any monetary default by BORROWER under a loan other than the Authority Loan. BORROWER agrees to reimburse the LENDER for any funds advanced by the LENDER to cure a monetary default by BORROWER upon demand therefore, together with interest thereon from the date of expenditure until the date of reimbursement at the Default Rate.

Section 6.3 Right of Contest.

BORROWER shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute a Default hereunder. Any such contest shall be prosecuted diligently and, in a manner, unprejudicial to the LENDER or the rights of the LENDER hereunder.

Section 6.4 Remedies Cumulative.

No right, power, or remedy given to the LENDER by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the LENDER by the terms of any such instrument, or by any statute or otherwise against BORROWER and any other person or entity. Neither the failure nor any delay on the part of the LENDER to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the LENDER of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy.

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ARTICLE 7: GENERAL PROVISIONS
Section 7.1 Agreement Coordination.
(a) Authority’s Executive Director shall represent LENDER for all purposes under this Agreement. Authority’s __________________________ is designated by the Executive Director as the project manager, and his or her designee shall supervise the progress and execution of this Agreement.
(b) The Executive Director of BORROWER shall represent BORROWER for all purposes under this Agreement and, as the project director for BORROWER, shall supervise the progress and execution of this Agreement.
(c) Each party may change the party representing it by notice to the other party.

Section 7.2 Relationship of Parties.

Nothing contained in this Agreement shall be interpreted or understood by any of the parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the LENDER and BORROWER or BORROWER’s agents, employees or contractors, and BORROWER shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement.

BORROWER has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. BORROWER agrees to be solely responsible for its own acts and those of its agents and employees.

Section 7.3 No Claims.

Nothing contained in this Agreement shall create or justify any claim against the LENDER, by any person BORROWER may have employed or with whom BORROWER may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the development of the Project, and BORROWER shall include similar requirements in any contracts entered into for the development of the Project.

Section 7.4 Amendments.

Any amendment to this Agreement shall be binding upon the parties, provided such amendment is set forth in a writing signed by the parties. The Authority’s Executive Director is authorized to execute any amendments to this Agreement after approval by the Authority Board and to confer any consents or approvals that may be provided by the Authority’s Board pursuant to this Agreement.

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Section 7.5 Entire Understanding of the Parties.

This Agreement constitutes the entire understanding and agreement of the Parties with respect to the Authority Loan.

Section 7.6 Indemnification.

Except as directly caused by the LENDER’s proven gross negligence or willful misconduct. BORROWER agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the LENDER) the LENDER, and its councilmembers, officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens directly or indirectly arising out of or resulting from: (i) the making of the Authority Loan; (ii) BORROWER’s performance or non-performance of its obligations under this Agreement; (iii) any act or omission of BORROWER, any of its agents, employees, licensees, tenants, contractors, subcontractors or material suppliers, or other person or entity with respect to the Authority Loan or the Property; (iv) the acquisition, ownership and maintenance of the Property; (v) the development, marketing, rental and operation of the Project; or (vi) any documents executed by BORROWER in connection with the Project. The provisions of this Section 7.6 shall survive the repayment and cancellation of the Note, the release and reconveyance of the Leasehold Deed of Trust, and termination of this Agreement but shall only apply to actions or events that occurred prior to the repayment and cancellation of the Note.

Section 7.7 Non-Liability of LENDER and LENDER Officials, Employees and Agents.

No member, official, employee or agent of the LENDER shall be personally liable to BORROWER, or any successor in interest, in the event of any Default or breach by the LENDER, or for any amount which may become due to BORROWER or its successor or on any obligation under the terms of this Agreement.

Section 7.8 No Third Party Beneficiaries.

BORROWER lacks any authority or power to pledge the credit of LENDER or incur any obligation in the name of LENDER. This Agreement shall not be construed or deemed to be an agreement for the benefit of any third party, and no third party shall have any claim or right of action hereunder for any cause whatsoever.

Section 7.9 Action by the LENDER; Amendments.

Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, extension of time, waiver of condition, or other action by the LENDER is required or permitted under this Agreement, such action may be given, made, or taken by the Authority’s Executive Director, at the Executive Director’s discretion, without further approval by the Authority Board, and any such action shall be in writing.

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Section 7.10 Waivers.

Any waiver by the LENDER of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the LENDER to take action on any breach or Default of BORROWER or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to BORROWER to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the LENDER to any act or omission by BORROWER shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the LENDER’s written consent to future waivers.

Section 7.11 Notices, Demands and Communications.

All notices, consents, communications or transmittals required by this Loan Agreement shall be made, in writing, and shall be communicated by the United States mail, certified, return receipt requested or by express delivery or overnight courier service with a delivery receipt, and shall be deemed given as of the date shown on the delivery receipt as the date of delivery or the date on which delivery was refused, and shall be addressed to the following addresses, or such other address as either party may designate, from time to time, by written notice sent to the other party in like manner:

TO LENDER: Brisbane Housing Authority
25A Park Place
Brisbane, CA 94005
Attn: Executive Director
Copy to: City of Brisbane
50 Park Place
Brisbane, CA 94005
Attn: Community Development Director
TO BORROWER: HEART-SV
Attn: Executive Director
2905 S. El Camino Real
San Mateo, CA 94403
with copy to: c/o San Mateo County Counsel
500 County Center, 4th Floor
Redwood City, CA 94063
Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt for delivery or refusal of delivery.

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Section 7.12 Applicable Law and Venue.

This Agreement shall be deemed a contract made under the laws of the State of California, and for the purposes hereof shall be governed and construed by and in accordance with the laws of the State of California. except for those provisions relating to choice of law or those provisions preempted by federal law. In the event that suit is brought by either party, the parties agree that trial of such action shall be vested exclusively in the County of San Mateo or the United States District Court for the Northern District of California.

Section 7.13 Parties Bound.

Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, administrators, executors, legal representatives, successors and assigns. Any provision of this Loan Agreement which is characterized as a covenant or a condition shall be deemed both a covenant and a condition. This Agreement is intended to run with the land and shall bind BORROWER and its successors and assigns in the Property and the Project for the entire Term, and the benefit hereof shall inure to the benefit of the LENDER and its successors and assigns.

Section 7.14 Attorneys' Fees.

If any lawsuit is commenced to enforce any of the terms of this Agreement, each party shall bear its own attorney’s fees and costs. No party shall be awarded its attorney’s fees or costs and no prevailing party will have the right to recover its attorneys’ fees and costs of suit from the other party.

Section 7.15 Severability.

If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability.

Section 7.16 Force Majeure.

In addition to specific provisions of this Agreement, performance by either party shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock outs or other labor disturbances, one or more acts of a public enemy, war, riot, sabotage, blockade, embargo, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of transportation, court order, delays or failures of performance by any governmental authority or utility company (other than the acts or failure to act of the LENDER and so long as the party seeking the extension has adequately complied with the applicable processing requirements of such governmental authority or utility company), delays resulting from changes in any applicable laws, rules, regulations, ordinances or codes, or a change in the interpretation thereof by any governing body with jurisdiction, or any other cause (other than lack of funds of BORROWER) beyond the reasonable control or without the fault of the party claiming an extension of time to ATTACHMENT 3

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perform or an inability of performance. An extension of time for any cause will be deemed granted if notice by the party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and the party granting the extension agrees to the extension in writing.

In no event shall the LENDER be required to agree to cumulative delays in excess of one hundred eighty (180) days.

Section 7.17 Conflict of Interest.
(a) Except for payment of salaries and administrative costs, no person who is an employee, agent, consultant, officer or official of BORROWER who exercises or has exercised any functions or responsibilities concerning the activities under this Agreement, or who is in a position to participate in a decision making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from any such activity, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for him or herself or for those with whom he or she has family or business ties, during his or her tenure or for one year thereafter.
(b) BORROWER further covenants that it presently has no interest and shall not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the services hereunder. BORROWER also covenants that, in the performance of this Agreement, no person having such interest shall be employed by BORROWER. In addition, BORROWER certifies that no one who has or will have any financial interest under this Agreement is an officer or employee of LENDER.

Section 7.18 Time of Essence.

Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Agreement.

Section 7.19 Title of Parts and Sections; Exhibits.

Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement’s provisions. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules which may, from time to time, be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and shall be deemed to be part hereof.

Section 7.20 Multiple Originals; Counterpart.

This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.

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Section 7.21 Further Actions.

The parties agree that they will take such further actions, and execute such further documents, as may be necessary or appropriate in order to carry out the purposes of this Agreement.
[Signature Page Follows]
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WHEREFORE, this Agreement has been entered into by the undersigned as of the date first above written.

BORROWER:

HEART-SV, a California Joint Powers Authority
By:

Armando F. Sanchez, Executive Director
LENDER:

BRISBANE HOUSING AUTHORITY
By: ______________________________
Jeremy Dennis, Executive Director
Attest:
______________________________________
Ingrid Padilla, Authority Secretary
Approved as to Form:
______________________________________
Michael Roush, Legal Counsel
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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
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EXHIBIT B

PROMISSORY NOTE
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EXHIBIT C

LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY

AGREEMENT, AND FIXTURE FILING
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EXHIBIT D

FINANCING PLAN
Item # Cost
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EXHIBIT E

INSURANCE REQUIREMENTS
ATTACHMENT 3

1 RECORDED AT THE REQUEST OF
AND RETURN TO:

BRISBANE HOUSING AUTHORITY
25 PARK PLACE
BRISBANE, CA 94005

EXEMPT FROM RECORDING FEES
GOVERNMENT CODE, SECTIONS 6103/27383

TERMINATION OF GROUND LEASE
THIS TERMINATION OF GROUND LEASE is made _______2026 by the Brisbane Housing Authority, a public agency (“AUTHORITY’), as successor in interest to the Redevelopment Agency of the City of Brisbane (“RDA”) and Bridge Senior Housing , Inc., a California nonprofit public benefit corporation, (“BRIDGE SENIOR”), as successor in interest to the Bridge Housing Corporation (“BRIDGE HOUSING”).

RECITALS
A. AUTHORITY is the owner of real property in the City of Brisbane, County of San Mateo, State of California, located at 2-8 Visitacion Avenue, Brisbane, California, as more particularly described in Exhibit A, attached hereto and incorporated herein by reference (the “LAND”).

B. In 1998, the RDA and BRIDGE HOUSING entered into a Ground Lease (“GROUND LEASE”) by which RDA would lease the LAND to BRIDGE HOUSING and BRIDGE HOUSING would develop the LAND with a multifamily housing development for low and moderate income seniors consisting of fourteen residential units.

C. The GROUND LEASE defines a number of terms and “Improvements” is defined to mean the buildings, structures, and other improvements, including the building fixtures therein; the GROUND LEASE provides that at the termination of the GROUND LEASE, the Improvements revert to the Lessor.

D. The GROUND LEASE was recorded on February 26, 1998, Instrument Number 98- 025157, Official Records of San Mateo County.

ATTACHMENT 4

2 E. RDA and BRIDGE HOUSING amended the terms and conditions of the GROUND LEASE and recorded the amendments on November 17, 1998, Instrument Number 98- 189580, and on June 6, 2000, Instrument Number 2000-66952, Official Records of San Mateo County.

F. In 2000, BRIDGE HOUSING assigned its interest in the GROUND LEASE to BRIDGE SENIOR; the assignment was recorded on February 18, 2000. Instrument Number 2000- 20412, Official Records of San Mateo County.

G. Upon the state wide dissolution of redevelopment agencies, the former RDA assigned its interest in the GROUND LEASE to the AUTHORITY; the assignment was recorded on October 16, 2018, Instrument Number 2018-79966.

H. AUTHORITY and BRIDGE SENIOR now wish to terminate the GROUND LEASE, as amended, and to terminate the GROUND LEASE, as amended, of record.

NOW, THEREFORE, in consideration of the mutual promises herein, AUTHORITY and BRIDGE SENIOR agree as follows:

1. The GROUND LEASE as referenced in Recitals B and D, as amended as referenced in Recital E, is hereby terminated.

2. All of the Improvements on the LAND, as referenced in Recital C, shall revert to the AUTHORITY at no cost to the AUTHORITY.

3. BRIDGE SENIOR shall execute a quit claim deed to AUTHORITY not only to quitclaim any and all of its interest in the LAND but also in and to all and any of its interest in the Improvements on the LAND.

4. BRIDGE SENIOR shall pay to AUTHORITY all funds remaining in any reserve accounts to the extent payments into those reserve accounts were deducted in calculating Surplus Cash, all outstanding security deposits, and all advance payments of rent for periods beyond the termination of the GROUND LEASE.

5. This Termination of GROUND LEASE shall be recorded in the official records of San Mateo County.

BRISBANE HOUSING AUTHORITY BRIDGE SENIOR HOUSING, INC.

Jeremy Dennis, Executive Director

ATTACHMENT 4

3 Attest
Ingrid Padilla, Authority Secretary
Approved as to form:

Michael Roush, Legal Counsel
ATTACHMENT 4

1 RECORDED AT THE REQUEST OF
AND RETURN TO:

BRISBANE HOUSING AUTHORITY
25 PARK PLACE
BRISBANE, CA 94005

EXEMPT FROM RECORDING FEES
GOVERNMENT CODE, SECTIONS 6103/27383

TERMINATION OF DECLARATION OF RESTRICTIONS
THIS TERMINATION OF DECLARATION OF RESTRICTIONS is made _______2026 by the Brisbane Housing Authority, a public agency (“AUTHORITY’), as successor in interest to the Redevelopment Agency of the City of Brisbane (“RDA”) and Bridge Senior Housing , Inc., a California non-profit public benefit corporation, (“BRIDGE SENIOR”), as successor in interest to the Bridge Housing Corporation (“BRIDGE HOUSING”).

RECITALS
A. AUTHORITY is the owner of real property in the City of Brisbane, County of San Mateo, State of California, located at 2-8 Visitacion Avenue, Brisbane, California, as more particularly described in Exhibit A, attached hereto and incorporated herein by reference (the “LAND”).

B. In 1998, the RDA and BRIDGE HOUSING entered into a ground lease (“GROUND LEASE) by which BRIDGE HOUSING would develop on the LAND a multifamily housing development for low and moderate income seniors consisting of fourteen residential units.

C. RDA and BRIDGE HOUSING entered into a Declaration of Restrictions concerning the rents to be imposed on the tenants in the fourteen residential units, which Declaration of Restrictions was recorded on December 31, 1998, Instrument Number 98-214507, Official Records of San Mateo County.

D. In 2000, BRIDGE HOUSING assigned its interest in the GROUND LEASE to BRIDGE SENIOR and the assignment was recorded on February 18, 2000, Instrument Number 2000-20412, Official Records of San Mateo County.

E. Upon the dissolution of redevelopment agencies statewide, the former RDA assigned its interest in the GROUND LEASE to the AUTHORITY and the assignment was ATTACHMENT 4

2 recorded on October 16, 2018, Instrument Number 2018-79966, Official Records of San Mateo County.

F. AUTHORITY and BRIDGE SENIOR have now terminated the GROUND LEASE and, by reason of such termination, there is no continued need for the 1998 Declaration of Restrictions to remain of record and the AUTHORITY and BRIDGE SENIOR wish to terminate of record the 1998 Declaration of Restrictions.

NOW, THEREFORE, in consideration of the mutual promises herein, AUTHORITY and BRIDGE SENIOR agree as follows:

1. The 1998 Declaration of Restrictions referenced in Recital C above is hereby terminated.

2. This Termination of Declaration of Restrictions shall be recorded in the official records of San Mateo County.

BRISBANE HOUSING AUTHORITY BRIDGE SENIOR HOUSING, INC.

Jeremy Dennis, Executive Director
Attest:

Ingrid Padilla, Authority Secretary
Approved as to form:

Michael Roush, Legal Counsel
ATTACHMENT 4

1 RECORDED AT THE REQUEST OF
AND RETURN TO:

BRISBANE HOUSING AUTHORITY
25 PARK PLACE
BRISBANE, CA 94005

EXEMPT FROM RECORDING FEES
GOVERNMENT CODE, SECTIONS 6103/27383

TERMINATION OF DECLARATION OF RESTRICTIONS
THIS TERMINATION OF DECLARATION OF RESTRICTIONS is made _______2026 by Bridge Senior Housing, Inc., a California non-profit public benefit corporation, (“BRIDGE SENIOR”), as successor in interest to the Bridge Housing Corporation (“BRIDGE HOUSING”).

RECITALS
A. The Brisbane Housing Authority (“AUTHORITY”) is the owner of real property in the City of Brisbane, County of San Mateo, State of California, located at 2-8 Visitacion Avenue, Brisbane, California, as more particularly described in Exhibit A, attached hereto and incorporated herein by reference (the “LAND”).

B. In 1998, the former Redevelopment Agency of the City of Brisbane (“RDA”) and BRIDGE HOUSING entered into a ground lease (“GROUND LEASE”) by which BRIDGE HOUSING would develop on the LAND a multifamily housing development for low and moderate income seniors consisting of fourteen residential units.

C. In 2000, BRIDGE HOUSING assigned its interest in the GROUND LEASE to BRIDGE SENIOR; such assignment was recorded on February 18, 2000, Instrument Number 2000- 20412, Official Records of San Mateo County.

D. In 2000, BRIDGE SENIOR recorded a Declaration of Restrictions against the LAND, recorded February 15, 2000, Instrument Number 2000-18755, Official Records of San Mateo County.

E. Upon the state wide dissolution of redevelopment agencies, the former RDA assigned its interest in the GROUND LEASE to the AUTHORITY; such assignment was ATTACHMENT 4