Fountain Valley City Council
October 23, 2025

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that (1) ”dedicates 80 percent of units, exclusive of a manager’s unit or units, to lower income households” and (2) is funded through either or both: (I) federal or state Low Income Housing Tax Credits, and/or (II) tax-exempt private activity bonds or general obligation bonds (herein, “Standalone Affordable Project”). In this regard, HAU has provided guidance to City and Developer (and Affordable Developer) to follow the following technical assistance (x) letter dated as of August 4, 2025 to the Christina Bibler, Director of Economic Development, City of San Diego (https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/san-diego-sportsarena-disposition-080425.pdf), which opines, in part, that in order to achieve required DBL affordable units, a master developer that plans to partner, and partners, with an affordable housing developer to build and operate separately financed affordable housing development utilizing Low Income Housing Tax Credits can apply HSC Section 50053(b)(2) (rather than (b)(1)) for calculation and determination of Affordable Rent, and (y) letter dated as of September 25, 2025 to Omar Dadabhoy, Community Development Director, City of Fountain Valley from David Zisser, Assistant Deputy Director, Local Government Relations and Accountability (https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/fountain-valley-hau2388-ta-092525.pdf.) Therefore, in the event the Affordable Units are completed in such Standalone Affordable Project and such project meets the requirements of HSC Section 50053(b)(2), then the term “Affordable Rent” under the Agreement and these City Covenants will be as defined in HSC Section 50053(b)(2). Provided in the event no Standalone Affordable Project that meets the requirements of HSC Section 50053(b)(2) is undertaken, completed, and operated, thereby Developer’s obligation to cause construction, completion, and operation of covenanted Affordable Units shall occur within the overall 606-unit Project and without funding through (1) federal or state Low Income Housing Tax Credits, or (2) tax exempt private activity bonds or general obligation bonds, then the term Affordable Rent in the Agreement and these City Covenants shall mean and apply HSC Section 50053(b)(1).
“Affordability Period” shall mean the duration of this Agreement and the City Covenants, including without limitation the affordable housing requirements that are required by the Entitlement and the DBL. The Affordability Period shall continue until the fifty-fifth (55th) anniversary of the date the issuance of the final certificate of occupancy by the City’s Building Official for completion of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, as the affordable housing component of the overall Project.
“Affordable Unit” and “Affordable Units” means each and all of eighty-two (82) Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, plus one (1) Manager Unit required to be developed as Low Income affordable housing pursuant to this Agreement, including one or more implementing agreements, for the 55-year Affordability Period. “Agreement” means this Density Bonus and Affordable Housing Agreement (16300 Euclid Street, Fountain Valley) as defined in the first paragraph hereof. “Area” and “AMI” mean the Orange County Statistical Area, which is part of the Anaheim-Santa Ana-Irvine Metropolitan Statistical Area. A Metropolitan Statistical Area is a geographical area with a population of at least 50,000 people, and adjacent areas that are highly integrated with the core area socially and economically. MSAs are periodically defined by HUD, and AMI income limits are promulgated annually by State HCD, and as applicable by TCAC and CDLAC as to affordable housing the series of income categories, including Low Income.

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“Assignment and Assumption Agreement” means that certain Assignment and Assumption Agreement, including conveyance instrument(s) and ancillary agreement(s), by which Developer assigns, and Affordable Developer assumes, Developer’s obligation to construct, complete and operate the Senior Apartments project on the Affordable Parcel. In connection and concurrent therewith, Developer shall enter into a disposition agreement by which Developer conveys fee title to the Affordable Parcel to Affordable Developer for development and operation of the Senior Apartments project. Further such agreement(s) shall include Affordable Developer’s obligation to form a single-entity limited partnership in connection with Affordable Developer’s application(s) to TCAC and CDLAC for funding approvals (“New LP”). Such New LP is required by the tax credit rules and CDLAC, of which Affordable Developer (or its Affiliate) will be the managing general partner. The formation of the New LP shall occur prior to submittal of the first application to TCAC for a reservation of tax credits and to CDLAC for an award of a bond allocation. The City and its legal counsel shall be afforded the right to review the documents forming such New LP prior to execution thereof.
“Building Permit” or “Building Permits” shall mean each and all of the building permit(s) issued by the City and required to commence construction of the Project and includes any permit or other approval required by any other public agency with jurisdiction over the Site. “Building Official” means the City of Fountain Valley Building Official. “Cal Code Regs” means the California Code of Regulations as such regulations are adopted, amended or repealed by state agencies pursuant to the Administrative Procedure Act (https://oal.ca.gov/publications/ccr/).
“Capital Replacement Reserve” means the greater of (i) a per unit reserve fund for each and all of the Affordable Units, or (ii) such higher per unit or annual amount required by a Lender of Developer, whether for the Affordable Units or all housing units within the Project, which reserve shall be established by Developer and maintained as set forth herein. “Certificate of Occupancy” or “CoO” means the final certificate of occupancy issued by the City’s Building Official for the Affordable Units, whether the Senior Apartments or otherwise the Affordable Units completed within the overall Project.
“CDLAC” means the California Debt Limit Allocation Committee, which entity implements federal laws that limit how much tax-exempt debt a state can issue in a calendar year for private projects that have a qualified public benefit. CDLAC sets and allocates California’s annual debt ceiling and administer the State’s tax-exempt bond program to issue the debt, including bond financing of affordable housing developments, and other bond programs. “CDLAC Regulations” mean the California Debt Limit Allocation Regulations set forth in 4 CCR § 5000, et seq. that implement Government Code section 8869.82, et seq. “Certificate of Continuing Program Compliance” means a certificate in the form attached hereto as. Attachment No. 7.
“City” means the City of Fountain Valley, California, a municipal corporation and general law city.

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“City Code” or “FVMC” means the Municipal Code of the City of Fountain Valley as may be amended from time to time, and includes, without limitation, the Uniform Codes. “City Covenants” means the City Covenants Agreement evidencing the non-subordinate, senior covenants related to use, ownership, and operation of the Affordable Units for affordable housing purposes as expressly required by and related to the land use/zoning covenants imposed as a part of the conditions of approval of the land use Entitlement for the Site and Project and in compliance with the DBL and Inclusionary Housing Program as entered into between Developer and City which, together with the Memorandum of Agreement, shall be recorded against the Site in a senior, nonsubordinate position; and, the City Covenants shall be substantially in the form of Attachment No. 4 hereto. As provided in the Entitlement, in no event shall the City Covenants be made junior or subordinate to any deed of trust or other documents providing financing for the construction or operation of the Project on the Site or ownership of the Site, or any other lien or encumbrance whatsoever against the Site for the Affordability Period, except as expressly mandated by California statute or federal law.

Developer’s obligation to cause completion of the Affordable Units may occur on the duly subdivided separate Affordable Parcel as undertaken by the Affordable Developer pursuant to the Term Sheet and implementing agreement(s). Upon and subject to issuance of a final Certificate of Occupancy by the City’s Building Official for the construction and completion of the eighty-two (82) Affordable Units plus one (1) Manager Unit, the City will prepare and cause recording of a termination instrument affecting this Agreement, the Memorandum of Agreement, and City Covenants as to the market-rate residential parcels of the Project; nevertheless, this unrecorded Agreement along with the recorded Memorandum of Agreement and City Covenants, shall remain in full force and effect as to the Affordable Units whether developed on the Affordable Parcel or otherwise within the overall Project.

Notwithstanding the foregoing, in the event the Affordable Developer does not develop the Senior Apartments project on the Affordable Parcel, Developer acknowledges and agrees that the Affordable Units required by the DBL cannot be satisfied by payment of In-Lieu Fees and must be constructed, completed and operated within the greater Site as Affordable Units available at an Affordable Rent to Low Income Households for the 55-year Affordability Period. In the event such occurs, this Agreement and the City Covenants shall be amended to conform to the facts of how many units of the Project are Affordable Units required by the DBL and how the City’s Inclusionary Housing Program will be satisfied by Developer either via payment of In-Lieu Fees or inclusion of Low Income Affordable Units on the greater Site. In such event, the City Covenants, as amended, shall remain in full force and effect as to the Site and requirements for onsite Affordable Units required by the Entitlement and this Agreement.
“City Council” means the City Council of the City of Fountain Valley, California. “City Manager” means the City Manager of the City or her or his designee. “City Monitoring Fee” means a fee to be charged by City annually to defray costs of monitoring the creation and maintenance of the Affordable Units as rental units for occupancy by Lower Income Households at an Affordable Rent throughout the Affordability Period, subject to the provisions, if applicable, of Government Code Section 65915.3. The City Monitoring Fee shall be $125/unit that equates to $10,375 per Year, and shall be payable on the first anniversary of the issuance of the final Certificate of Occupancy for the Project issued by the City’s Building Official,

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and thereafter the City Monitoring Fee shall be payable concurrent with the submittal of each Annual Report. Further, the City Monitoring Fee shall be increased each Year by three percent (3%) but not be more than the increase in the Consumer Price Index for the applicable prior Year. “Closing of Financing/Affordable Developer” means the recording in the Official Records of the deed of trust securing Affordable Developer’s primary construction loan as part of Affordable Developer’s financing for development of the Senior Apartments on the Affordable Parcel. “Closing of Financing/Developer or Affiliate” means the recording in the Official Records of the deed of trust securing Developer’s (or its Affiliate) primary construction loan for development of the Affordable Units whether on the Affordable Parcel or otherwise within the Apartments Component or within the Site.
“Closing of Financing Deadline/Affordable Developer” or “Outside Date for Affordable Units Financing/Affordable Developer” means the first and earliest to occur of (a) two (2) years from the date of issuance of the Initial City Permit, or (b) the outside date for Closing of Financing (i) under the Tax Credit Rules, and (ii) CDLAC requirements, which is anticipated to occur about one hundred eighty (180) days after Affordable Developer receives its TCAC 4% reservation of Tax Credits and CDLAC bond allocation for development of the Senior Apartments. Notwithstanding the earlier date of (a) or (b) in this definition and hereunder, Developer may request in writing asking the City to enter into negotiations with and among City, Developer, and Affordable Developer to set a new Outside Date for Affordable Units Financing to occur later than (a) or (b), provided however, the City shall and hereby retains sole and complete discretion to approve or disapprove such request for a later outside date.
“Closing of Financing Deadline/Developer or Affiliate” or “Outside Date for Affordable Units Financing/Developer or Affiliate” means one year after the occurrence of the Outside Date for Affordable Units Financing/Affordable Developer.
“Completion/Final CoO for Affordable Units/Affordable Developer” means the date that is two (2) years after the occurrence of the Outside Date for Affordable Units Financing. In this regard, a period of up to four (4) years will have elapsed from the date of the Initial City Permit.

After such four-year period, if the Affordable Units have not been completed as evidenced by the final CoO for construction thereof, then Developer shall be in Default under this Agreement, and the City, as obligee may, if not earlier accessed, may receive payment in full under the Surety Bond for In-Lieu Fees and may seek any and all remedies available at law or equity for Developer’s failure to cause development of the Affordable Units in the Project, including that Developer shall cause covenanting of 82 units of the multifamily Apartments component as affordable housing for Low Income Households at an Affordable Rent required by HSC 50053(b)(1) for the 55-year Affordability Period as further described in Section 7.1.1 and 7.1.1(a). “Completion/Final CoO for Affordable Units/Developer or Affiliate” means the date that is one year after the occurrence of the Outside Date for Affordable Units Financing/Developer or Affiliate. In this regard, a period of up to four (4) years will have elapsed from the date of the Initial City Permit. After such four-year period, if the Affordable Units have not been completed as evidenced by the final CoO for construction thereof, then Developer shall be in Default under this Agreement, and the City (1) as obligee may, if not earlier accessed, may receive payment in full under the Surety Bond for In-Lieu Fees, (2) may notice Guarantor under the Completion Guaranty that Guarantor is obligated to cause construction through development of the Affordable Units on the

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Site, and (3) may seek any and all remedies available at law or equity for Developer’s failure to cause development of the Affordable Units in the Project. In this regard, the Affordable Units shall be timely constructed and completed by Developer (or Affiliate) or by Guarantor pursuant to the Completion Guaranty. In lieu of construction of the Affordable Units, Developer (or Guarantor) may cause covenanting of 82 units of the multifamily units in the Apartments Component as affordable housing for Low Income Households at an Affordable Rent required by HSC 50053(b)(1) for the 55-year Affordability Period as further described in Section 7.1.1 and 7.1.1(a). “Completion Guaranty” means a guaranty to be executed by [Shopoff Opportunity Fund VI, L.P., a Delaware limited partnership or other City-approved Shopoff Affiliate] (as ”Guarantor”), in favor of City, which shall be delivered to City at or prior to the issuance of the Initial City Permit, in substantially the form attached hereto as Attachment No. 10. The Completion Guaranty is for and guaranties construction through completion of the Affordable Units in the event the Affordable Developer fails to obtain a reservation of Tax Credits and/or allocation for issuance of Bonds for Affordable Developer to construct, complete, and operate the Affordable Units on the Affordable Parcel. Developer is obligated under the Entitlement, DBL, and this Agreement to cause construction through completion of the Affordable Units, but in the event Developer fails to timely so perform this legal, statutory, and contractual obligation, the Guarantor under the Completion Guaranty shall be obligated to cause completion of construction of the Affordable Units as further described herein and therein.
“County” means the County of Orange, California.
“Date of Agreement” means October 23, 2025.
“DBL” means California Government Code Section 65915, et seq. and Fountain Valley Municipal Code, Chapter 21.08.050(a), together as the Density Bonus Law or DBL. “Developer” means Euclid & Heil FV Owner, LLC, a Delaware limited liability company, or a permitted successor or assign, as provided below.

As of the Date of Agreement, Euclid & Heil FV Owner, LLC is a joint venture entity with two members each holding fifty percent (50%) of the Site comprised of (1) SOF - FV, LLC, a Delaware limited liability corporation (“SOF” or “Shopoff” entity), and (2) Lennar Homes of California, Inc. (“Lennar”).

As background facts, Developer represents to the City that concurrent with or prior to issuance of the Initial City Permit, SOF intends to convey its ownership share of the Site to Lennar, and the Lennar entity will undertake and complete the Site Preparation. Upon Lennar’s completion of Site Preparation, Lennar will convey back to SOF the land/parcels on which the Apartments component and the Senior Apartments will be constructed. Then, Developer or SOF will grant to Affordable Developer an option to acquire the Affordable Parcel (or fee disposition), which will provide Affordable Developer the “site control” required under the Tax Credit Rules and CDLAC Regulations to apply to TCAC for a reservation of Tax Credits and to CDLAC for a bond allocation to develop the Senior Apartments.
“Developer Certificate” means a certificate in the form of Attachment No. 6 hereto.

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“Development Plans” means the Schematic Design Drawings, Design Development Drawings, Grading Plans, Landscape Plans, and Construction Drawings for the Project to be submitted to the City for review and approval pursuant to the Entitlement and this Agreement. “Entitlement” means the land use entitlement and approvals that the City (as applicable, by final action of the City Council, Planning Commission, zoning administrator, or other City board, commission or committee) has approved and granted to Developer for the Project, which comprises all City discretionary actions and any and all conditions of approval related thereto, and any amendments, supplements, and modifications thereto, which are set forth in and required by the DBL, City ordinances, resolutions, and related instruments as adopted or otherwise approved by the Planning Commission and thereafter the City Council, and as such entitlement may be hereafter amended, and as summarized in the Recitals of this Agreement. Prior to the Date of Agreement, the City received from Developer an application for approval of a precise plan and all conditions of approval therefor (“Precise Plan No. 579”) for construction, development, and operation of the Project on the Site as described in the Recitals, the final action by the Planning Commission approving the development of the Project occurred on June 25, 2025 through the adoption of the following: Resolution No. 25-11.
“Environmental Laws” means all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C.

Section 9601, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; all comparable state and local laws, laws of other jurisdictions or orders and regulations; and all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, City, Developer, or the Site. “Escrow Holder” means the holder of the Escrow for the recordation of the Project Documents, which shall be the same as the Title Company. For this Agreement and to implement the Project, Developer has opened with Title Company’s escrow department, Escrow and Title Order No. [__________].
“Event of Default” and “Default” have the meaning set forth in Section 7.1. “Fair Housing Laws” means the Fair Housing Act of 1968 as amended from time to time 42 U.S. Code Sections 3601-3619 and 3631, 24 CFR Part 100, Unruh Civil Rights Act (California Civil Code Section 51, et seq.), California Government Code Section 12920, Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the prohibition against discrimination on the basis of marital status per Smith v. Fair Employment & Housing Commission, 12 Cal. 4th 1143 (1996), and the prohibition on discrimination based upon personal characteristic or trait, such as physical attributes or a tenant’s receipt of public assistance (per Harris v. Capital Growth Investors XIV, 52 Cal. 3d 1142 (1991);

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in addition, the fair housing laws include applicable federal and state laws and regulations to affirmatively further fair housing (“AFFH”) as AFFH, including without limitation, 80 CFR

5.150-5.180 , Government Code Sections 8899.50, 65583, 65583.2, and as such laws and regulations exist and are hereafter amended (See: State and HUD information:
https://www.hcd.ca.gov/community-development/affh/docs/AFFH_Document_Final_4-27- 2021.pdf#page=23, and https://www.hud.gov/sites/dfiles/FHEO/documents/AFFH-Fact-Sheet.pdf.) “Fannie Mae” means the Federal National Mortgage Association (FNMA) or typically known as Fannie Mae. Developer acknowledges and agrees that in no event shall any loan issued or underwritten or otherwise connected to Fannie Mae (or Freddie Mac) result in the subordination of this Agreement, the City Covenants, or the Memorandum of Agreement, which shall remain senior, nonsubordinate encumbrances against the Site and Project. “Freddie Mac” means the Federal Home Loan Mortgage Corporation. Developer acknowledges and agrees that in no event shall any loan issued or underwritten or otherwise connected to Freddie Mac (or Fannie Mae) result in the subordination of this Agreement, the City Covenants, or Memorandum of Agreement, which shall remain senior, nonsubordinate encumbrances against the Site and Project.
“GAAP” means generally accepted accounting practices.
“Governmental Requirements” is defined within the definition of Hazardous Materials, below.
“Guarantor” means [Shopoff Opportunity Fund VI, L.P., a Delaware limited partnership or other City-approved Shopoff Affiliate], which entity is the guarantor of Developer’s statutory, legal, and contractual obligation to cause construction through completion of the Affordable Units within the Site. The DBAHA requires the Completion Guaranty to be duly executed by Guarantor as a Condition Precedent to the issuance of the Initial City Permit, which will ensure compliance with the conditions of approval in the Entitlement and requirements of the DBL to cause timely development through completion of the Low Income Affordable Units on the Affordable Parcel or otherwise within the Site. Guarantor is an Affiliate of Developer, has a substantial financial interest in the business and affairs of Developer, and will receive substantial economic benefit from development of the overall Project.
“Hazardous Material” or “Hazardous Materials” means and include any substance, material, or waste which is or becomes regulated by any local governmental authority, including the County, Orange County Health Care City, the Regional Water Quality Control Board, the State of California, or the United States Government, including, but not limited to, any material or substance which is: (i) defined as a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter Presley Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials;

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(vii) lead based paint or any lead based or lead products; (viii) polychlorinated biphenyls, (ix) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903); (xi) Methyl tertiary Butyl Ether; (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any “Governmental Requirements” (as defined herein) either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defined in the Lead Based Paint Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U.S.C. § 4800, et seq., specifically §§ 4821–4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities below attainment levels identified in one or more of the enactments identified above as Governmental Requirements, including those product and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and residence of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population of residents, including without limitation alcohol, aspirin, tobacco and saccharine. “Hazardous Materials Contamination” means the contamination (whether presently existing or hereafter occurring) of the Improvements, facilities, soil, groundwater, air or other elements on, in, or under the Site by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time (whether before or after the Date of Agreement) emanating from the Site.
“HSC” means and refers to the California Health and Safety Code. “HUD” means the United States Department of Housing and Urban Development. “Improvements” means all of the improvements described or referenced in the Entitlement and the approved Development Plans, and as herein further described. “Inclusionary Housing Program” and “Inclusionary Ordinance” means that certain affordable housing program established by Ordinance No. 1604 adopted on December 19, 2023 by the City Council of the City of Fountain Valley approving, among other provisions, amendment of the Fountain Valley Municipal Code, adding Chapter 21.17, et seq., called and referred to as the City’s “Inclusionary Housing Program”. The Inclusionary Housing Program requires that all new Residential Development Projects (defined therein) shall rent (or sell) fifteen percent (15%) of the units at an affordable housing cost, here at an Affordable Rent. Under Chapter 21.17, the 15% inclusionary affordable units may be achieved using any combination of percentage of units affordable to income categories of Low Income or below, or the 15% may also be achieved using a combination of built units and the payment of In-Lieu Fees. The Inclusionary Housing Program, FVMC Section 21.17.050, sets forth the In-Lieu Fee option, which is further implemented by City Council resolution setting the amount of per/unit In-Lieu Fees instead of development onsite of the inclusionary housing affordable units. As described in the Entitlement, Developer’s Project is

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subject to, and Developer shall implement its rights and obligations in compliance with the Inclusionary Housing Program pursuant to the Entitlement and this Agreement. “Income Verification” means Attachment No. 7 to this Agreement. “Initial City Permit” means issuance by the City of the first, initial permit(s) for development to Developer or to Lennar for Site Preparation; likely, this will be the initial grading permit(s)) (herein, “Initial City Permit”) for the Project. “In-Lieu Fees” means that certain component of the City’s Inclusionary Housing Program, in particular FVMC Section 21.17.050, that describes the in-lieu fee option that is further implemented by City Council resolution setting the amount of per/unit in-lieu fee instead of development onsite of the inclusionary housing affordable units. “Intercreditor and Subordination Agreement” means one or more estoppel, intercreditor and/or subordination agreement(s) or instrument(s) as may be requested by a Lender or other entity for approval by the City Manager and legal counsel, subject to the terms thereof and herein that in no event shall any Lender or other person or entity require or otherwise include subordination or modification of the City Covenants or the Memorandum of Agreement evidencing this Agreement of record. Within five (5) business days of Developer’s receipt thereof, Developer shall provide to City complete, legible Word versions of each and any requested estoppel, intercreditor and/or subordination agreement(s) or instrument(s), and each form thereof, shall be subject to the review and approval of the City through the City Manager and legal counsel in his/her/their sole, reasonable discretion.
“Legal Description of the Site” means Attachment No. 2 to this Agreement. “Lender” means each of the responsible financial lending institutions or entities that may issue to Developer a loan or loans secured by the Site and/or Project relating in any manner to acquisition or assembly of the Site, construction financing, permanent financing, any other financing for construction, development, and/or operation of the Project on the Site. A Lender for the Affordable Units shall not include the financial entities or agencies commonly referred to as FannieMae or FreddieMac; provided however, the foregoing prohibition shall not be construed to prohibit a transfer or assignment of such loan on the secondary market so long as such transfer does not require a rider, amendment or other modification to this Agreement or the City Covenants, or Entitlement or other document to which the City is a party, signatory or intended beneficiary. “Lender Consent” means a “Lender Consent and Subordination Agreement” that Developer must obtain from each lender that holds, or will hold, a security interest in the Site during the Affordability Period. In the event the Affordable Units are developed on the separate Affordable Parcel as the Senior Apartments, this Lender Consent requirement will apply only as to that separate Affordable parcel; provided, however, until completion of construction and issuance of the final CoO by the Building Official for the Senior Apartments this Lender Consent obligation shall remain in full force and effect. Upon completion of the Senior Apartments, the Lender Consent obligation shall continue in full force and effect as to the Affordable Parcel for the Affordability Period. Each Lender Consent shall be recorded as a substantive part hereof. As of the Date of Agreement for each and all existing lender(s), if any, Developer shall obtain Lender Consent(s) and cause to be duly executed and notarized, then delivered to the City for recording prior to recording the Memorandum of Agreement (Attachment No. 3) and City Covenants (Attachment No. 4) and as a condition to the

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issuance the first, initial permit(s) for grading and/or construction (herein, “Initial City Permit”) for the Project; and thereafter during the Affordability Period Developer shall obtain and cause to be recorded for each subsequent lender a Lender Consent.

The form of the Lender Consent shall include expressly the following provisions:

NOTICE: THIS LENDER'S CONSENT AND SUBORDINATION RESULTS IN LENDER’S SECURITY INTERESTS IN THE PROPERTY BECOMING SUBJECT TO

AND OF A LOWER PRIORITY THAN THAT DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (16300 EUCLID).

The undersigned (“Lender”), as owner and holder of security interests (“Security Interests”) evidenced by that certain [insert full applicable title of the Lender’s Deed of Trust with Assignment of Leases and Rents, Security Agreement and Fixture Filing] made by Borrower [Developer] as trustor in favor of [insert full legal entity name of Lender] as beneficiary, dated as of ________________ and recorded on _______________ as Instrument No._____________ in the Official Records of the County of Orange, State of California, hereby acknowledges its consent to the terms and provisions of that certain Density Bonus and Affordable Housing Agreement (16300 Euclid) (“DBAHA”) dated as of October 23, 2025. The undersigned further agrees that its Security Interests are and shall unconditionally be and remain at all times junior, subordinate and subject to the terms, covenants, conditions and restrictions of the DBAHA, provided that in consideration of Lender’s covenants and agreements contained in the DBAHA, City and its designated agencies hereby agree for the benefit of Lender that concurrently with any notice from City to the Developer that a default or breach exists under the terms of the DBAHA, City shall send a copy of such notice to Lender and Lender shall have the right, but not the obligation to cure any defaults within thirty (30) days after the expiration of any cure period set forth in the notice from City to Borrower [Developer] regarding such Developer default. The provisions of this Lender Consent and Subordination Agreement are intended to supplement, and not to limit, waive, modify or replace, those provisions of law pertaining to notice and cure rights of junior lenders including, without limitations, those set forth in California Civil Code Sections 2924b and 2924c. Lender intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Security Interests in favor of the DBAHA. “Lennar” means Lennar Homes of California, Inc. or its Affiliate, which entity, as of the Date of Agreement, holds a 50% ownership in the Site and Project as a joint venturer with SOF holding the other 50% joint venture interest thereof.
“Low Income” and “Low Income Households” are defined in in HSC Section 50093(a) and include “persons and families of low income” or “persons of low income” who are eligible for financial assistance specifically provided by a governmental agency for the benefit of occupants of housing financed pursuant to Division 31 of the HSC. The term Low Income Households also includes Senior Low Income Households so long as the primary tenant of the household qualifies as a Senior.
“Lower Income” and “Lower Income Households” mean households earning not greater than eighty percent (80%) of Area Median Income, adjusted for family size and as defined in and provided under the income standard set forth in HSC Section 50079.5 and the implementing regulations in Title 25 CCR Section 6910, et seq., in particular Section 6928. The term

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Lower Income Households also include Senior Lower Income Households so long as the primary tenant of the household qualifies as a Senior.
“Manager Unit” mean one (1) two-bedroom unit of the Affordable Units, inclusive of the Senior Apartments, that is designated for occupancy as the personal residence of the onsite manager and such unit is not rent-restricted.
“Material Adverse Change” shall mean any event any occurrence of which is reasonably likely to have a material adverse effect on Developer’s ability to fulfill its obligations under this Agreement or any form or type of implementing document (“Transaction Document”), including without limitation:
(a) a voluntary or involuntary bankruptcy of Developer (which is not dismissed within ninety (90) days of institution);
(b) a court order placing Developer under receivership; (c) a sale of all or substantially all of the assets held by Developer, except any such sale made in accordance with the terms of this Agreement; (d) any violation of Developer or other failure of Developer to comply at all times with any applicable law, statute, ordinance, code, rule, regulation, judgment, order, ruling, condition or other requirement of a statutory, regulatory, administrative, judicial or quasi-judicial nature or any other legal or governmental requirement of whatever kind or nature related to the Project, which violation is likely to have a material adverse effect on the ability of Developer to perform its duties and obligations under any Transaction Document; and/or (e) Developer incurs one or more liabilities, contingent or otherwise, or pending or threatened litigation or any asserted claim or unasserted claim known to the Developer exists against Developer with respect to the Project, which would have a material adverse effect on its ability to perform its duties and obligations under any Transaction Document. “Memorandum of Agreement” means a memorandum of agreement in the form of Attachment No. 3 to this Agreement.

Developer’s obligation to cause completion of the Affordable Units may occur on the duly subdivided separate Affordable Parcel as undertaken by the Affordable Developer pursuant to the Term Sheet and implementing agreement(s). Upon and subject to issuance of a final Certificate of Occupancy by the City’s Building Official for the construction and completion of the eighty-two (82) Affordable Units plus one (1) Manager Unit, the City will prepare and cause recording of a termination instrument affecting this Agreement, this Memorandum of Agreement, and the City Covenants as to the market-rate residential parcels of the Project; nevertheless, this unrecorded Agreement along with the recorded Memorandum of Agreement and City Covenants, shall remain in full force and effect as to the Affordable Units whether developed on the Affordable Parcel or otherwise within the overall Project.

Notwithstanding the foregoing, in the event the Affordable Developer does not develop the Senior Apartments project on the Affordable Parcel, Developer acknowledges and agrees that the Affordable Units required by the DBL cannot be satisfied by payment of In-Lieu Fees and must be

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constructed, completed and operated within the greater Site as Affordable Units available at an Affordable Rent to Low Income Households for the 55-year Affordability Period. In the event such occurs, this Agreement and the City Covenants shall be amended to conform to the facts of how many units of the Project are Affordable Units required by the DBL and how the City’s Inclusionary Housing Program will be satisfied by Developer either via payment of In-Lieu Fees or inclusion of Low Income Affordable Units on the greater Site. In such event, the City Covenants, as amended, shall remain in full force and effect as to the Site and requirements for onsite Affordable Units required by the Entitlement and this Agreement.
“Notice” means a notice in the form prescribed by Section 9.2 hereof. “Official Records” means the official land records of the County Recorder of the County of Orange, State of California, unless the context otherwise requires another county of a state. “Operating Year” means the period commencing as of the Date of Agreement and ending as of December 31 of that calendar year, then each succeeding calendar year thereafter during the Affordability Period.
“Permitted Transfer” means any of the following:
(a) The Assignment and Assumption Agreement between Developer and Affordable Developer, including grant of an option to acquire or full disposition of the Affordable Parcel to Affordable Developer by SOF or Developer for development and operation of the Senior Apartments on the Affordable Parcel, subject to the City’s rights to review such agreement and related instruments for the purpose of evidencing Affordable Developer’s assumption of all rights, performance duties and obligations of Developer under this Agreement as to undertaking development and operation of the Senior Apartments on the Affordable Parcel. (b) A full or partial conveyance of the Site by Developer to Lennar in connection with Site Preparation as described in Recitals W., X. and Y. The City acknowledges that Developer has represented that such conveyance(s) of all or part of the Site is/are necessary for Lennar to cause Site Preparation.
(c) A full or partial conveyance of the Site by Lennar to SOF or Developer. The City acknowledges that Developer has represented that post-Site Preparation such conveyance(s) of all or part of the Site by Lennar back to SOF or Developer are necessary for Developer or SOF to convey to Affordable Developer an option to acquire, or disposition of, the Affordable Parcel thereby establishing Affordable Developer’s site control required in connection with its application(s) to TCAC and CDLAC for part of the financing for development of the Senior Apartments. (d) A conveyance of a security interest in Developer’s estate in the Site, or the Senior Apartments on the Affordable Parcel, in connection with any monetary lien for construction or permanent financing of the Project, including the Senior Apartments on the Affordable Parcel, that is junior and subordinate to this Agreement and the City Covenants, and any subsequent transfer of title by foreclosure, foreclosure deed, or other conveyance instrument in lieu of foreclosure in connection therewith, so long as this Agreement and the City Covenants are and remain senior and nonsubordinate to any and all monetary liens.

In furtherance and clarification of (d) above, in the event of (A) foreclosure initiated by a Lender for construction or permanent financing and conveyance of the Site and Project,

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or the Senior Apartments and Affordable Parcel, to a third party buyer (not an Affiliate of Developer) through a trustee’s sale, or (B) conveyance by a deed in lieu of foreclosure of the Site and Project, or the Senior Apartments and Affordable Parcel, to a third party (not an Affiliate of Developer or Affordable Developer, as applicable) but only after at least ninety (90) days have elapsed since the filing of the notice of default commencing foreclosure (described in (A)) and the Lender (or its agent) has caused to be recorded a notice of trustee's sale setting forth the date, time, and place of the trustee's sale, then commencing after recordation of the trustee’s deed or deed in lieu of foreclosure described in (A) or (B) above and continuing for the remainder of the 55-year Affordability Period the new owner of the Affordable Units, also as “Developer”, shall ensure the eighty-two (82) Affordable Units (plus one unrestricted Manager Unit) are operated and maintained in compliance with the income and rent standards for Lower Income Households at an Affordable Rent. (e) A conveyance of the Site, or the Senior Apartments and Affordable Parcel, by Developer (or Affordable Developer) to an Affiliate so long as such Affiliate (or Developer or Affordable Developer as applicable) retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management control of the transferee entity or entities; (f) The lease for occupancy of all or any part of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, subject to the requirements of the Entitlement and this Agreement for operation of the Affordable Unit, provided that the requirement to provide the City the assignment described in Section 7.8.3 shall not apply to any lease for occupancy of any of the Affordable Units; and
(g) The granting of easements or permits to facilitate development of the Site in accordance with this Agreement and the Entitlement.

Notwithstanding the above, in the event the Senior Apartments are developed on the separate Affordable Parcel, the provisions regarding Transfer and Permitted Transfer shall remain applicable only as to that separate Affordable Parcel comprising the Senior Apartments; provided, however, until completion of construction and issuance of the final CoO by the Building Official of the Affordable Units, inclusive of the Senior Apartments if such occur, these provisions shall remain in full force and effect as to the entire Site, and after such final CoO for the Affordable Units, inclusive of the Senior Apartments if such occur, these provisions shall remain in effect for the Affordability Period as to fee owner of the Affordable Units (land and improvements), inclusive of the Senior Apartments if such occur.
“Portable Voucher” shall mean Section 8 rental vouchers under 24 Code of Federal Regulations (“CFR”) part 982 (Section 8 Tenant-Based Assistance: Housing Choice Voucher Program), and comparable documents evidencing participation in any tenant-based rental assistance program under any other federal or state or local tenant-based rental assistance programs as such now exist and as may hereafter be amended.
“Prescribed Rent Level” and “Unit Mix” or “Prescribed Rent Level and Unit Mix” for the Senior Apartments inclusive of the Manager Unit, means:
 Seventy-one (71) one-bedroom units for Lower Income Households at an Affordable Rent; and
 Twelve (12) two-bedroom units for Lower Income Households at an Affordable Rent, provided that one of the 12 two-bedroom units will be designated as the unrestricted Manager Unit.

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In the event development of the Senior Apartments on the Affordable Parcel does not occur, then this Agreement and the City Covenants shall be amended to reflect the facts of the Unit Mix of the Affordable Units for Low Income Households, in particular the allocation of unit type and size; and, as so amended the amended definition shall remain in full force and effect as to all requirements affecting the Affordable Units required by the DBL, Entitlement, and this Agreement.

The Affordable Units shall meet the Prescribed Rent Level and Unit Mix as required despite a temporary noncompliance with the defined Affordable Rent, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by Developer to ensure that each and all vacancies of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, are filled in accordance with the applicable Prescribed Rent Level and Unit Mix until the noncompliance is corrected.

A tenant who qualified as a Low Income Household, including a Senior Low Income Household, at initial occupancy of an Affordable Unit shall be deemed to continue to be so qualified until such time (annually or sooner) as re-verification and certification of the tenant household’s gross income shows that such tenant no longer qualifies as a Low Income Household. An existing tenant household occupying an Affordable Unit whose income exceeds the qualifying limit for a Low Income Household may continue to occupy that Affordable Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Affordable Unit as published by State HCD, so long as such continued tenancy does not exceed six (6) months. Such restrictions and requirements about re-verification and recertification of household income to be and remain eligible for occupancy and tenancy of an Affordable Unit shall be expressly stated and separately initialed by each adult member of the tenant household in the lease or other rental agreement for each tenant of each Affordable Unit. “Project” means the 606-unit housing development on the 18.09-acre Site located at 16300 Euclid Street, Fountain Valley, California 92708 that will include a 304-Apartments constructed in a five-story wrap building on a 3.31-acre parcel, 83 rental Senior Apartments in a five-story building developed on a 0.78-acre parcel of which 82 (of 83) apartments shall be covenanted for occupancy by qualified Low Income Households, including Senior Low Income Households in the Senior Apartments, at an Affordable Rent (as the terms are defined herein) and one (1) unit (1 of 83) will be designated as a Manager Unit, and 219 for-sale, ownership units comprised of 183 Townhomes and 12 Triplexes (36 units) developed on a 14-acre parcel, plus all appurtenances and amenities as approved by the City under the Entitlement and further described therein, along with related offsite improvements, as more particularly described in the Entitlement and Development Plans, and as operated in conformity with the Entitlement, this Agreement, and the City Covenants.
“Project Documents” means, collectively, this Agreement, City Covenants, Memorandum of Agreement, Request for Notice of Default, Surety Bond for In-Lieu Fees, Completion Guaranty, and all other Attachments to this Agreement, and any other agreement, document, or instrument that City requires in connection with the execution and implementation of the Entitlement and this Agreement as necessary from time-to-time to effectuate the purposes of the Entitlement and this Agreement.

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“Property Management Plan” and “Management Plan” means a plan prepared by the Developer and approved by the City Manager describing in detail the management of the Affordable Units, including marketing, tenant selection criteria and process, waiting list management, application of utility allowances in setting Affordable Rent, and similar details of the operation, annual monitoring inspections, file maintenance, file review, and a schedule of initial rents. The Property Management Plan is further described in Sections 3.2(h) and 5.6.2. “Relocation” or “Relocation Laws” shall mean all federal and state relocation laws and regulations, as, if and when applicable, if at all, including without limitation, (i) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”), 42 U.S.C. 4601–4655, and the implementing regulations thereto set forth in 49 CFR Part 24, (ii) the California Relocation Assistance Act, Government Code Section 7260, et seq. and the implementing regulations thereto set forth in Title 25, Section 6000, et seq. of the California Code of Regulations, and (iii) any other applicable federal, state or local enactment, regulation or practice providing for relocation assistance, benefits, or compensation for moving and for property interests (including without limitation goodwill and furnishings, fixtures and equipment, and moving expenses), and (iv) any federal law or regulation prohibiting payment of relocation benefits or assistance to persons ineligible for relocation benefits or assistance. Developer shall be solely responsible for payment of all costs, expenses, and payments required to be made and/or incurred pursuant to any and all applicable Relocation Laws; City shall not incur any costs or expenses as a result of the application of the Relocation Laws to the Project or this Agreement.
“Request for Notice of Default” means Attachment No. 5. “Senior Apartments” shall mean the 82 Affordable Units plus one (1) Manager Unit that comprise the affordable housing component of the Project, which, except as to the Manager Unit, shall be restricted as to occupancy by Senior Low Income Households at an Affordable Rent. The Senior Apartments shall meet all requirements of a senior citizen housing development as defined in Civil Code Sections 51.3. Developer may satisfy the obligation to develop the Affordable Units by causing development by Affordable Developer of the Senior Apartments on the Affordable Parcel.

The completion of such development as evidenced by a final CoO issued by the Building Official will satisfy Developer’s obligation to provide the Affordable Units as required by the Entitlement. “Senior”, “Senior Citizen” and “Senior Households” shall mean a household where at least one (1) person in residence is fifty-five (55) years of age or older and who intends to reside in a Housing Unit as his or her primary residence on a permanent basis, and any other person residing in the unit is a “qualified permanent resident” or a “permitted health care resident” as provided in California Civil Code Section 51, et seq., or in the Federal Fair Housing Act, 42 U.S.C. Section 3607, and any other applicable federal, state or local laws and regulations governing the use and occupancy of the Affordable Component.
“Senior Low Income Household” and “Senior Low Income Households” means and are defined in HSC Section 50093(a) (with the addition of the term “Senior” as defined above) and include “persons and families of low income” or “persons of low income” who are eligible for financial assistance specifically provided by a governmental agency for the benefit of occupants of housing financed pursuant to Division 31 of the HSC. The term Senior Low Income Household also includes Low Income Households so long as the primary tenant of the household qualifies as a Senior.

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“Site” means that 18.09-acre parcel of real property depicted on the Site Map and described with greater particularity by the Legal Description of the Site, Attachment No. 2. “Site Map” means Attachment No. 1 to this Agreement.
“SOF” means SOF - FV, LLC, a Delaware limited liability corporation, which entity, as of the Date of Agreement, holds a 50% ownership in the Site and Project as a joint venture with Lennar holding the other 50% joint venture interest thereof. SOF also refers to the Shopoff entity in such joint venture with Lennar.
“Surety Bond for In-Lieu Fees” shall mean and include a payment bond issued by a responsible surety entity admitted in the State of California in the amount of 100% of the In-Lieu Fees required under the Inclusionary Housing Program, and as further described herein, as security for Developer’s performance obligation to cause construction through completion of the Affordable Units as such completion is evidenced by the issuance of a final CoO by the Building Official for the Affordable Units, which may include the Senior Apartments. The Surety Bond for In-Lieu Fees shall name the City as obligee, i.e., the party protected by and is beneficiary of the bond, which bond shall be delivered to City prior to and as a condition to the City’s issuance of the first CoO for the first market-rate housing unit in the Project, whether the Apartments or the Townhomes, or Triplexes. The Surety Bond for In-Lieu Fees is further described in Section 3.1(f).

Notwithstanding the foregoing, Developer acknowledges and agrees that Affordable Units required by the DBL cannot be satisfied by payment of In-Lieu Fees under the Inclusionary Housing Program and the number of Affordable Units required by the DBL must be constructed, completed and operated within the greater Site as Affordable Units available at an Affordable Rent to Low Income Households for the 55-year Affordability Period. In the event such occurs, this Agreement and the City Covenants shall be amended to conform to the facts of how many units of the Project are Affordable Units required by the DBL and how the City’s Inclusionary Housing Program will be satisfied by Developer either via payment of In-Lieu Fees or inclusion of Low Income Affordable Units within the greater Site. In such event, this Agreement and the City Covenants, as amended, shall remain in full force and effect as to the Site and requirements for onsite Affordable Units required by the DBL, Entitlement, and this Agreement.

The Surety Bond for In-Lieu Fees shall expressly state, in addition to other provisions, that City may receive payment on the full amount of the bond; provided that such payment does not and shall not dilute or other obviate Developer’s obligation to cause development of the Affordable Units as required by this Agreement, DBL, and the Entitlement. “Standalone Affordable Project” is defined in Recital Q. and means the Senior Apartments on the Affordable Parcel.
“TCAC” means the Tax Credit Allocation Committee of the State of California. “Tax Credit Rules” means the provisions of Section 42 of the Internal Revenue Code and/or, if applicable, California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California HSC Section 50199, et seq., as the foregoing may be amended from time to time, to the extent applicable to the Project and the rules and regulations implementing the foregoing, including the regulations set forth in Title 4 Cal. Code Regs. Section 10300, et seq.

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“Tax Credits” or “4% Tax Credits” means 4% Low Income Tax Credits that Affordable Developer shall submit one or more applications to TCAC seeking an award and reservation tax credits granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California HSC Section 50199, et seq., which will be part of the financing for Affordable Developer to undertake and complete the Senior Apartments on the Affordable Parcel.
“Third Party Costs” is defined and described in Section 9.7 herein. “Title Company” shall be First American Title Company or another title insurer mutually acceptable to City and Developer.
“Transfer” is defined and described in Section 7.8 herein. “Uniform Codes” means each of the following as in effect from time to time as approved by City: the Uniform Building Code, the Uniform Housing Code, the National Electrical Code, the Uniform Plumbing Code, the Uniform Mechanical Code, and the Uniform Code for the Abatement of Dangerous Buildings.
“Year” means a calendar year.

1.2. Singular and Plural Terms. Any defined term used in the plural in this Agreement or any Project Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class.

1.3. References and Other Terms. Any reference to this Agreement or any Project Document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term “document” is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments, and other written material of every kind. The terms “including” and “include” mean “including (include) without limitation.”

1.4. Exhibits Incorporated. All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference.

1.5. Representations and Warranties.

1.5.1. City Representations. City represents and warrants to Developer as follows:
(a) City. City is a California municipal corporation and general law city and authorized to transact business pursuant to action of City Council. City has full right, power, and lawful authority with respect to the execution, performance, and delivery of this Agreement by City has been fully authorized by all requisite actions on the part of City. The parties who have executed this Agreement on behalf of City are authorized to bind City by their signatures hereto. (b) No Conflict. To the best of City Manager’s actual knowledge, City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a

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default or a breach under any contract, agreement or order to which City is a party or by which it is bound.
(c) No City Bankruptcy. City is not the subject of a bankruptcy proceeding.

Until the recordation of the non-subordinate Memorandum of Agreement and the City Covenants, City shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.1 not to be true, immediately give written Notice of such fact or condition to Developer.

1.5.2. Developer Representations. Developer represents and warrants to City as follows:
(a) Powers and Authorizations. Developer is a duly organized Delaware limited liability company in good standing and lawfully operating under and in compliance with the laws of the State of Delaware and the State of California. Developer has full right, power, and lawful authority to own and operate the Site and undertake all obligations as provided in the Entitlement and herein and the execution, performance and delivery of this Agreement and the City Covenants by Developer has been fully authorized by all requisite actions on the part of Developer. The parties who have executed this Agreement on behalf of Developer are authorized to bind Developer by their signatures hereto.
(b) Litigation. To the best of Developer’s knowledge, there are no material actions, suits, claims, legal proceedings, or any other proceedings affecting Developer, at law or in equity before any court or governmental agency, domestic or foreign. (c) No Conflict. To the best of Developer’s knowledge, Developer’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound.
(d) No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding.
(e) Developer Experience; Sophisticated Party. The principals of Developer are sophisticated parties, with substantial experience in the acquisition, rehabilitation, development, financing, obtaining financing for, marketing, and operation of multi-family residential development projects with an affordable housing component, and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the development and operation of the Project and has obtained advice from any advisers of its own choosing in connection with this Agreement.
(f) Ownership of the Site. As of the Date of Agreement, Developer holds fee simple marketable title to the Site.
(g) Due Authorization and Execution; Studies Completed. Developer has duly authorized the execution of this Agreement, the City Covenants, and all other Project Documents. Developer completed its due diligence as to the Site and hereby represents to its best

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knowledge that Developer is not aware of and has not received any notice or communication from any government agency having jurisdiction over the Site notifying Developer (or any Affiliate) of the presence of surface or subsurface zone Hazardous Materials in, on, or under the Site, or any portion thereof. The term “best knowledge,” as used herein, shall not impose a duty of investigation, and shall be limited to the best knowledge of Developer.

After the Date of Agreement, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.2 not to be true in all material respects, immediately give written Notice of such fact or condition to City. Such exception(s) to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which City shall have a right to approve or disapprove if such exception would have an effect on the development and/or operation of the Site.

1.5.3. No Material Adverse Change. Developer hereby represents and warrants, as of the Date of Agreement, that all documents, materials and information provided by Developer to City relating to Developer’s qualifications, financial strength, and ability to perform its obligations hereunder are true, correct and complete in all material respects as of their respective dates and no Material Adverse Change has occurred or is reasonably likely to occur that would make any such documents, materials or information incorrect, incomplete, or misleading in any material respect. (a) Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in Sections 1.5.2 and 1.5.3 above not to be true in all material respects, immediately give written Notice of such fact or condition to the City.

Such exception(s) to a representation shall not be deemed a Default by the Developer hereunder, but shall constitute an exception which the City shall have a right to approve or disapprove if City, in its sole, reasonable discretion, determines that such exception would have an effect on the Project or Developer’s ability to perform Developer’s obligations under this Agreement or other Project Documents.

1.5.4. Survival of Representations. During the Affordability Period, within thirty (30) days following a written request from City, Developer shall either re-affirm in writing the material truth and accuracy of the representations and warranties set forth in Sections 1.5.2 and 1.5.3 or identify any material inaccuracies of such representations and warranties. The fact that a representation or warranty contained in Sections 1.5.2 and 1.5.3 has become inaccurate or misleading shall not, in and of itself, constitute a breach under this Agreement or the Project Documents; however, (i) failure to notify City of material inaccuracies in these representations and warranties within thirty (30) calendar days of City’s request for such information, and (ii) any overt material misrepresentation by Developer relating to such representations and warranties shall each constitute a Default under this Agreement, subject to delivery of Notice and expiration of the cure rights provided in this Agreement.
(a) During the entire Affordability Period, Developer shall have the ongoing obligation to promptly (but in no event later than 30 days following a Material Adverse Change) inform City (in writing) of the occurrence of any Material Adverse Change.

Section 2. SITE CONTROL.

2.1. Ownership of the Site; Obligation to Develop and Operate. Developer represents it owns the Site and has undertaken and completed at its expense investigations of the Site, including

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without limitation condition of title, the presence of any Hazardous Materials and other surface and subsurface conditions, and the suitability of the Site development of the Project.

2.2. Environmental Condition of the Site.

2.2.1. Studies and Reports. Developer may obtain data and make any other or additional surveys, tests, studies, and reports necessary to evaluate the suitability of the Site for the Project, including the investigation of the environmental condition of the Site (collectively, the “Studies”). Any studies undertaken on the Site by Developer shall be done at the sole expense of Developer. Any studies shall be undertaken only after Developer has secured the consent of any occupants or holders of interests in the Site and obtained any necessary permits therefor from the appropriate governmental agencies, including without limitation, City.

2.2.2. Indemnification. Developer agrees to and shall save, protect, pay for, defend (with counsel acceptable to City), indemnify and hold harmless City and its elected and appointed officials, officers, employees, attorneys, representatives, volunteers, contractors and agents (collectively, “Indemnitees”) from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses (including, without limitation, consultants’ fees, investigation and laboratory fees, attorneys’ fees and remedial and response costs and third-party claims or costs) (the foregoing are hereinafter collectively referred to as “Liabilities”) that may now or in the future be incurred or suffered by Indemnitees by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of or any act, inaction or condition related to the Site, including without limitation: (i) any claim of damage to property, real or personal, or personal injury, including death, to any person arising from or related in any manner whatsoever to Hazardous Materials and Environmental Laws in connection with the Site and prior or current ownership thereof; (ii) the presence, use, release, escape, seepage, leakage, spillage, emission, generation, discharge, storage, or disposal of any Hazardous Materials in, on, under, or about, or the transportation of any such Hazardous Materials to or from, the Site without regard to the time of occurrence or discovery and without regard to the cause thereof; (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, leakage, spillage, emission, escape, discharge, storage, disposal, or transportation of Hazardous Materials in, on, under, or about, or to or from, the Site; (iv) the physical and environmental condition of the Site, and (v) any Liabilities relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or physical condition of the Site. The foregoing indemnification shall continue in full force and effect regardless of whether such condition, liability, loss, damage, cost, penalty, fine, and/or expense shall accrue or be discovered before or after the termination of the Affordability Period, provided however, the foregoing indemnification shall not apply to any Liabilities that arise out of the Indemnitees’ active sole gross negligence or willful misconduct. This indemnification supplements and in no way limits the general indemnification provisions set forth herein.

2.2.3. Duty to Prevent Hazardous Material Contamination. During Developer’s ownership of the Site and during Developer’s construction, development, operation and management of the Project, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Site. Such precautions shall include, but not be limited to, compliance with all Environmental Laws and other Governmental Requirements.

Developer shall notify City, and provide to City a copy or copies of any notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed

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pursuant to self-reporting requirements and reports filed or applications made pursuant to all Environmental Laws and other Governmental Requirements, and Developer shall report to City, as soon as possible after each incident, any unusual or potentially important incidents in the event of a release of any Hazardous Materials into the environment.

2.2.4. Release of Indemnitees. With respect to Hazardous Materials, Environmental Laws, and Liabilities relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or physical condition of the Site (collectively, the “Environmental Liabilities”), Developer waives, releases and discharges forever the Indemnitees from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, including attorneys’ fees, court and litigation costs and fees of expert witnesses, present and future, arising out of or in any way connected with Developer’s possession or use of the Site, improvement of the Site in accordance with this Agreement and the Entitlement obtained by Developer for the Project, and for the operation of the Project at the Site and the Senior Apartment on the Affordable Parcel, of any Hazardous Materials on the Site including the Affordable Parcel, or the existence of Hazardous Materials contamination in any state on, under, or about thereof, however they came to be located there.
(a) In connection with the foregoing, Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code that provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT

TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING

THE RELEASE AND THAT, IF KNOWN BY HIM OR HER,

WOULDHAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASED PARTY.
__________________
Developer Initials
As such relates to this Section 2.2.4, Developer hereby waives and relinquishes all rights and benefits that it may have under Section 1542 of the California Civil Code in connection with the Environmental Liabilities.

2.2.5. Environmental Inquiries. Developer shall notify City upon receipt, and provide to City a copy or copies, of the following environmental permits, disclosures, applications, entitlements or inquiries relating to the Site and the Project: notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Environmental Laws and other applicable Governmental Requirements relating to Hazardous Materials and underground tanks, and Developer shall report to City, as soon as possible after each incident, all material information relating to or arising from such incident, including, but not limited to, the following:
(a) All required reports of releases of Hazardous Materials, including notices of any release of Hazardous Materials as required by any Governmental Requirements;

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(b) All notices of suspension of any permits relating to Hazardous Materials;
(c) All notices of violation from federal, state, or local environmental authorities relating to Hazardous Materials;
(d) All orders under the State Hazardous Waste Control Act and the State Hazardous Substance Account Act and corresponding federal statutes, concerning investigation, compliance schedules, clean up, or other remedial actions; (e) All orders under the Porter Cologne Act, including corrective action orders, cease and desist orders, and clean up and abatement orders; (f) Any notices of violation from OSHA or Cal OSHA concerning employees’ exposure to Hazardous Materials;
(g) All complaints and other pleadings filed against Developer relating to Developer’s storage, use, transportation, handling, or disposal of Hazardous Materials on or about the Site; and
(h) Any and all other notices, citations, inquiries, orders, filings, or any other reports containing information which would have a materially adverse effect on the Site including the Affordable Parcel or City’s liabilities or obligations relating to Hazardous Materials.

In the event of a release of any Hazardous Materials into the environment, Developer shall, as soon as possible after the release, furnish to City a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of City, but subject to any limitations imposed by law or by court order, Developer shall furnish to City a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site in Developer’s possession and/or shall notify City of any environmental entitlements or inquiries relating to or affecting the Site within Developer’s actual or constructive knowledge if Developer is not in possession of same, including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential.

Section 3. CONDITIONS PRECEDENT TO COMMENCEMENT OF CONSTRUCTION OF THE PROJECT.

3.1. Conditions Precedent in Favor of City. Upon satisfaction of the conditions set forth in this Section 3.1, City may issue the Initial City Permit and Developer may commence construction of the Project. Each and every one of the following “Conditions Precedent” shall have been fully satisfied by Developer before the City issues the Initial City Permit and Developer (or its member or partner or Affiliate) commences construction of any component of the Project, which conditions are for the benefit of City, as determined in good faith by the City Manager (each of which condition(s), if it requires action by Developer, shall also be a covenant of Developer):
(a) Land Use Entitlement Conditions of Approval. Developer shall be in compliance with the applicable conditions of approval in the Entitlement that are required to have been satisfied by Developer prior to issuance of the Initial City Permit for the construction of the

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Project on the Site. In connection therewith, the Entitlement requires that Developer cause to be entered into this Agreement and to cause recording of the Memorandum of Agreement and the City Covenants in a senior, non-subordinate lien position with respect to the Site and Project; and, in this regard, the Memorandum of Agreement and City Covenants shall be ready for recording prior to issuance of the Initial City Permit and shall be and remain as senior nonsubordinate encumbrances. (b) Title Insurance. Developer shall have and maintain fee title to the Site and shall have delivered to the City Manager a copy of its grant deed (duly recorded in the Official Records) and a title policy evidencing such fact along with evidence from the title insurer that the Memorandum of Agreement and City Covenants are the senior and nonsubordinate encumbrances against the Site.
(c) Grading Permit and Building Permit Readiness Letter; Payment of Applicable Fees for Building Permits. Developer shall have received from City a letter stating that the City is ready to issue the Initial City Permit to commence construction of the Project or the first phase thereof (“readiness letter”), which readiness letter shall include express conditions that concurrent with issuance of the Initial City Permit Developer shall pay all fees charged and due to City, if any, as well as each and all other governmental agencies that charge fees in connection with the Project, including fees assessed by school districts, sanitary districts, water districts, utility company(ies) (subject to the provisions of Government Code Section 66007, et seq. and Senate Bill 937), if such payments are made to City and/or directly to the other governmental agency(ies) if such agency(ies) customarily collect such fees (with submittal of evidence to City from such governmental agency(ies) that full payment has been received) or shall have delivered to City evidence satisfactory to the Authority Director (or City Manager) that Developer has made arrangements mutually agreeable by Developer and corresponding governmental agency (other than City) with regard to the payment of the applicable fees.
(d) Proof of Insurance. Developer shall have provided to City certificates of insurance and endorsements that satisfy all requirements of Section 4.4 hereof as to the Site and Project.
(e) Corporate Resolution. Developer shall deliver to City certified copies of Developer resolution(s) specifically authorizing (or ratifying) the execution of this Agreement, Memorandum of Agreement, City Covenants, and all other implementing Project Documents and identifying the individual(s) with authority to enter into non-material implementation agreements and/or amendments to this Agreement, the construction of the Improvements, and operation of the Project.
(f) Completion Guaranty. Developer shall deliver to City the Completion Guaranty duly executed by Guarantor substantially in the form of Attachment No. 10. (g) Relocation. City shall be reasonably satisfied that Relocation, if any, is required from the Site, will be conducted in compliance with all applicable Relocation Laws, and this Agreement, and Developer and the Project shall be in compliance with all Relocation obligations pursuant to this Agreement and the Relocation Laws.
(h) Lien Priority; Senior Encumbrances of Agreement. The Memorandum of Agreement and City Covenants shall be recorded in the Official Records and concurrent therewith Developer shall cause each and all existing lienholders, if any, to enter into a

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subordination agreement of their lien to this Agreement, City Covenants and Memorandum of Agreement because the DBL density bonus approved for the Project by the City is embedded in the Project land use approval and Entitlement.
(i) In addition to or as provided expressly in a subordination agreement, to the extent as of the Date of Agreement there are any monetary liens of record, Developer shall cause the beneficial holder of such lien or encumbrance to execute a Lender Consent in form and content consistent this Agreement.
(1) In furtherance of (i) above, Developer shall cause its existing Lender(s) to execute Lender Consent(s). Based on Developer’s representation to the City that it owns fee simple marketable title to the Site, to the extent there exist, if any, monetary liens or other encumbrances of record presently, excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees to cause the full and unconditional subordination of such liens and encumbrances in the Lender Consent(s), which evidence that this Agreement is the senior, nonsubordinate encumbrance of record as to the Property. (i) Approval of Development Plans. City shall have approved the Development Plans for the Project, or applicable first phase thereof, prepared and submitted by Developer as being in substantial conformity with the Entitlement, this Agreement, and the FVMC. (j) No Default; Representations and Warranties. Developer shall not be in Default of any of its obligations under the terms of this Agreement. All representations and warranties of Developer contained herein shall be true and correct in all material respects.

All conditions set forth in this Section 3.1, or to City’s obligations hereunder, are for City’s benefit only and City Manager may waive all or any part of such rights by written Notice to Developer.

3.2. Payment of Certain Fees at Certificate of Occupancy. In addition to those City fees and other fees required to have been paid as provided above in Section 3.1, prior to the issuance of the CoO for the Project by the City’s Building Official, Developer shall have delivered to City evidence that additional fees, if any, payable to any other governmental agency have been paid that may not have otherwise been required to have been remitted by Developer therefor shall have been paid in full by Developer.

3.3. Review of Title.

3.3.1. Preliminary Report. Within thirty (30) days of the Date of Agreement, Developer shall submit to City a true copy of an up to date (not older than thirty (30) days) preliminary report issued by the Title Company and shall include hyperlinks to complete and legible copies for each of the title exceptions set forth in said preliminary report. Developer acknowledges that City must be reasonably satisfied concerning the exceptions to title. All monetary encumbrances and exceptions to title are hereby objected to by City, and Developer is on notice to cause the title company to remove or evidence unconditional subordination thereof of any and all monetary exceptions (other than liens for current real property taxes and assessments not yet due and payable.) (a) Existing Encumbrances and/or Monetary Liens of Record. Based on Developer’s representation to the City that it owns fee simple marketable title to the Site, to the

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extent there exist, if any, monetary liens or other encumbrances of record presently, excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees that as a Condition Precedent to receiving grading permits, Building Permits, or other permits (whichever are to be issued first) Developer shall cause the full and unconditional subordination of such liens and encumbrances to this DBAHA, and Memorandum of Agreement therefor, and the City Covenants Agreement, so that and to evidence that such instruments and agreements are and remain senior, nonsubordinate of record. (i) As provided in the Entitlement, in no event shall the Memorandum of Agreement or the City Covenants be made or become junior or subordinate to any deed of trust, encumbrance, or other documents including those providing financing for the construction or operation of the Project on the Site or ownership of the Site, or any other lien or encumbrance whatsoever against the Site for the Affordability Period, except as expressly mandated by California statute or federal law.
(ii) Each and any subordination agreement (inclusive of Lender Consent) therefor shall be in a form and content acceptable to the City’s legal counsel. (b) Condition of Title. City shall be reasonably satisfied that Developer continues to have and hold an insured and insurable fee simple marketable title to the Site with no mortgage, lien, pledge, encroachment, exception, or other encumbrance of any character whatsoever, except the following:
(i) liens for current real property taxes and assessments not yet due, payable, or ascertainable;
(ii) as applicable, subordination or intercreditor instrument(s), subject to City’s right to review and approve such document(s), which approval shall not be unreasonably withheld or delayed, that evidence and cause subordination of each and any existing lien or encumbrance as required under subsection (a) of this Section 3.3.1 and in implementation of the Entitlement to ensure this DBAHA, Memorandum of Agreement and City Covenants are and remain senior, nonsubordinate encumbrances of record;
(iii) Memorandum of Agreement;
(iv) City Covenants;
(v) the deed of trust for any loan or loans to construct the Project, provided each Lender shall have agreed in writing to the senior nonsubordinate priority of this DBAHA, the Memorandum of Agreement, and the City Covenants; (vi) Request for Notice of Default;
(vii) other subordination or intercreditor instrument(s), subject to City’s right to review and approve such document(s), which approval shall not be unreasonably withheld or delayed; and
(viii) any other matters approved in writing by City.

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3.4. Recordation. The Escrow Holder and Title Company shall be prepared to cause recording of the Memorandum of Agreement, City Covenants, and Request for Notice against the Site pursuant to the terms of this Agreement and the Project Documents.

Section 4. DEVELOPMENT PLANS; INSURANCE AND INDEMNITY, FINANCING.

4.1. Development. Developer shall develop the Project and Improvements (including all onsite and offsite improvements, if any), in particular the Affordable Units at the Project that may include the Senior Apartments on the Affordable Parcel, in accordance with the Entitlement and the approved Development Plans.

4.1.1. Site Preparation. Developer is responsible to prepare the Site for construction, including the demolition, relocation of utilities insofar as necessary, grading and site preparation, and all other actions required to prepare the Site ready for the construction of all Improvements that comprise the Project. In this regard, City acknowledges that Developer has disclosed that Lennar will undertake and complete Site Preparation for all components of the overall residential Project.

4.2. Design Review; Development Plans for Project. Developer represents that it will cause the construction, operation, management, and maintenance of a high quality affordable housing projects, with the term “high quality” meaning a successfully developed and well-managed and maintained affordable housing project in Southern California. Therefore, the provisions of this section 4.2 set forth a process for review and approval of the Development Plans for the overall Project to be (or caused to be) designed, constructed, developed, and completed by the Developer hereunder. The parties acknowledge and agree the review process described in this section of the Agreement is in addition to, and is not and shall not be, a substitute for, any process or submittal required by the City (or any other governmental entity) relating in any respect to the Entitlement and/or obtaining all grading permits, Building Permits, or other permits necessary to undertake and complete the Project. The Site shall be developed as established in the approved Development Plans, except for such changes which may be mutually agreed upon between the Developer and City in writing and subject to the change order provisions in this Section 4.2. The parties agree that the final Development Plans shall evidence the high quality development that Developer is required to construct and thereafter operate, manage, and maintain in compliance with and for the periods required under this Agreement.

4.2.1. Grading Plans. Developer shall prepare and submit to the City for review and approval, 100% complete grading plans (“Grading Plans”). The Grading Plans shall be prepared by a registered civil engineer, who may be the same firm as the Developer’s architect. The grading plans shall be consistent with the Entitlement and all conditions of approval therein.

4.2.2. Landscaping Plans. The Landscaping Plans shall be consistent with the Entitlement and all conditions of approval therein. Developer shall prepare and submit to the City for review and approval, the 100% complete landscaping plans (for both hardscape and softscape) (“Landscape Plans”) with such plans depicting and evidencing the high quality development required by this Agreement. The Landscaping Plans shall be prepared by a licensed landscape architect, who may be the same firm as the Developer’s architect.

4.2.3. Construction Drawings. Developer shall prepare and submit to City for review, and to City for review and approval 100% complete working drawings and construction

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plans that are consistent with the approved Design Development Drawings, Grading Plans and Landscaping Plans (“Construction Drawings”), which shall depict and evidence all Improvements, materials, interior and exterior improvements, all toward evidencing the high quality development as intended by the Entitlement and this Agreement. The Construction Drawings shall be substantially consistent with the prior stages of the development plans submitted to and approved by the City, inclusive of changes, if any, thereto. The Construction Plans shall be prepared by a licensed architect in consultation with a licensed civil engineer. Particular attention and detail shall be evidenced in the Construction Drawings relating to all housing units, including the Affordable Units, common areas, common and other accessways, and interior and exterior improvements, and such submittal(s) shall identify materials to be used, including moveable and immoveable improvements (such as appliances, cabinetry, windows, HVAC, etc.) The 100% complete Construction Drawings, if and when approved by the City, shall be the final plans and specifications for construction of the Project.

4.2.4. Development Plans; Review and Approval. The cumulative stages of this design and working drawings submittal, review, and approval (or disapproval) process (Sections

4.2.1 through 4.2.5) include: (i) (iii) Grading Plans, (iv) Landscaping Plans and (v) Construction Drawings, which together are referred to as the “Development Plans”. (a) City shall have all rights to review and approve or disapprove each stage of the Development Plans and all other required submittals in accordance with the City Code, the City’s development standards, and the Entitlement and nothing set forth in this Agreement (nor City’s execution of this Agreement) shall be construed as the City’s prejudgment or approval, expressly or impliedly, thereof, or any other submittal required hereunder.

4.2.5. Revisions. Any and all change orders or revisions to the Development Plans required by the City and its inspectors that are required by the Fountain Valley Municipal Code and all other applicable Uniform Codes (e.g., Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be incorporated into and included by Developer in the Construction Drawings and shall be completed during the construction of the Project.

4.2.6. Defects in Development Plans. City shall not be responsible either to Developer or to third parties in any way for any defects in any of the Development Plans, nor for any structural or other defects in any work done according to the approved Development Plans, or for any delays reasonably caused by the review and approval processes established hereunder.

4.2.7. City and Other Governmental Permits. Before commencement of construction of the Project, Developer shall secure or cause its contractor to be secured any and all Building Permits that may be required by the City or any other governmental agency affected by such construction. Developer shall pay all necessary fees and take all actions necessary to obtain any and all such permits. City will cause City staff, without obligation to incur liability or expense therefor, to use reasonable efforts to expedite the City’s issuance of Building Permits for construction that meets the requirements of the Fountain Valley Municipal Code, and all other applicable laws and regulations and that comply with the Development Plans.

4.2.8. Cooperation re Development Plans; Revisions and Change Orders.

During the preparation of the Development Plans and throughout construction of the Project, City staff and authorized representatives of Developer shall hold joint progress meetings to coordinate the preparation of, submission to, and review of the Development Plans. City staff and authorized Developer representatives shall communicate and consult informally as frequently as is necessary to

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ensure that the formal submittal of any documents to City can receive prompt and thorough consideration. City shall designate City staff persons or consultant to serve as the project manager for the Project, who shall be responsible for the coordination of City’s (and City’s) activities under this Agreement and for coordinating the permitting process. (a) In the event City disapproves or conditionally approves the Development Plans, or any part(s) thereof, or if Developer desires to propose any substantial revisions to the approved Development Plans, or any part(s) thereof, Developer shall submit its revisions or proposed changes thereto to City Manager (with copy to Community Development Director), and shall also proceed in accordance with any and all Governmental Requirements regarding such revisions, within the time frame set forth in the Schedule of Performance for the resubmittal of such Development Plans, or any part(s) thereof. Any revision or change to such Development Plans proposed by Developer may be disapproved by City (including the City Manager or her/his designee) in her or his reasonable discretion pursuant to subdivision (i) below. Any and all change orders or revisions required by the City and their inspectors that are required under the City Code and Uniform Codes or other governmental requirements shall be included by Developer in its Development Plans and completed during the construction of the Project. In the event Developer requests revisions, alterations, or modifications to the Development Plans, or any part(s) thereof, for any reason including increased construction costs because of unforeseen occurrences or conditions relating to the construction of the Project, any revisions, alterations, or modifications shall be subject to the approval of City in their reasonable discretion pursuant to subdivision (i) below. Developer shall be required to pay any and all increased costs of construction due to any such revisions, alterations, or modifications of the Development Plans, or any part(s) thereof. (i) Developer shall not be required to obtain City approval of any change orders or other revisions or modifications to the Construction Drawings, so long as each change order, revision, or modification is consistent with the approved Development Plan, does not cause any value engineering not previously authorized by City and does not materially affect the design, materials, and architectural quality and integrity of the high quality affordable housing Project intended by the parties (any such change order, revision or modification is referred to herein as an “Exempt Change Order”). Notwithstanding the immediately preceding sentence, Developer shall be required to obtain City approval, which approval shall not be unreasonably withheld or delayed, to the extent any change order, revision, or modification is inconsistent with the approved Development Plans, causes any value engineering not previously approved by City , or materially changes the design, materials or architectural quality and integrity of the Project “Non-Exempt Change Order”). Further, the determination of whether any proposed change order constitutes an Exempt Change Order or a Non-Exempt Change Order shall be made jointly between and among City and Developer, each in their reasonable discretion, and promptly after receipt of any change order request.

4.2.9. Periodic Submittals to City during Construction. During the course of construction and until the final CoO for the Project is issued by City, Developer shall ensure that City receives a copy of each Non-Exempt Change Order received by Developer from its Contractor or subcontractors within three (3) business days following Developer’s receipt. In no event shall any request for a Non-Exempt Change Order be deemed approved by City unless Developer provides additional written Notice to City (on or after the fifth (5th) business day following City’s receipt of such submittal) requesting affirmative approval or disapproval of such requested Non-Exempt Change Order and City fails to respond within an additional three (3) business days following such additional written Notice from Developer.

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4.2.10. Selection of General Contractor. For the work of the General Contractor, Developer agrees to and shall select an experienced, qualified, licensed, insured, and bonded general contractor to be its General Contractor for construction of the Affordable Units.

4.3. Cost of Construction; Performance under other Agreements. The cost of planning, designing, developing, and constructing the Project shall be borne solely by Developer.

All fees imposed by any governmental entity in connection with the Site and Project shall be borne by Developer and shall be paid when due by Developer.

4.4. Insurance Requirements. As a Condition Precedent to issuance of the Initial City Permit for the Project, and continuing throughout the Affordability Period, Developer shall maintain at Developer’s sole expense, with insurers reasonably approved by City, the following policies of insurance in form and substance reasonably satisfactory to City with the coverage limits, conditions, and endorsements defined herein. Insurance for Developer, contractors and subcontractors shall be provided to City upon request within ten (10) days of request.

In this regard, Developer shall obtain and maintain (and Developer shall cause its Affordable Developer to obtain and maintain) the insurance required by this Section 4.4 as follows and for the following periods: (a) for Developer, these insurance requirements shall be satisfied from the date of issuance of the Initial City Permit, and (ii) for Affordable Developer, if it causes development through completion of the Affordable Units as the Senior Apartments, these insurance requirements shall be met from the date of the “Closing of Financing” for the Senior Apartments after receiving a reservation of tax credits until the end of the Affordability Period, and during such period of (ii) the term Developer shall also mean and refer to the Affordable Developer for purposes of the insurance requirements of this Agreement and the City Covenants.

4.4.1. Insurance Coverage from Commencement of Construction through the term of the Affordability Period. For each of the following periods: (1) for the Developer as to the Site commencing on the date of issuance of the Initial City Permit and continuing through completion of the market-rate ownership and rental development on the Site as evidenced by the final CoO for such market-rate components of the Project, and (2) for the Affordable Developer as to the Affordable Parcel commencing on the Closing of Financing for construction of the Senior Apartments on the Affordable Parcel and continuing through end of the Affordability Period, each of Developer, and then also Affordable Developer, shall obtain and maintain the following policies of insurance covering all activities relating to construction and development on the Site by Developer as to clause (1) above, and construction and operation of the Senior Apartments on the Affordable Parcel as to clause (2). In each of the insurance requirements described below the term Developer shall mean and refer to clause (1) for Developer for that applicable period, and clause (2) for Affordable Developer for that applicable period.
(a) Workers’ compensation insurance. Developer shall maintain Workers Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance with limits of at least $1,000,000 for Developer’s employees in accordance with the laws of the State of California, Section 3700 of the Labor Code. Developer shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, officials, employees, agents, and volunteers.
(i) Developer shall execute and deliver to City that certain Workers’ Compensation Certificate for limited liability companies and Sole Proprietors and fully

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incorporated herein by this reference, which certificate is Developer’s representation and warranty that it is a limited liability company or sole proprietorship and is not legally required to carry Workers’ Compensation Insurance at the time of execution of this Agreement. (b) Commercial general liability insurance. Developer shall maintain commercial general liability insurance with coverage at lease as broad as Insurance Services Office form CG 00 01, in an amount not less Ten Million Dollars ($10,000,000) per occurrence and Ten Million Dollars ($10,000,000) general aggregate for bodily injury, personal injury and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insurance contract” language will not be accepted. Coverage shall include contractual, on-going operations and products-completed operations (Claims made and modified occurrence policies are not acceptable.)
(c) Automobile liability insurance. Developer shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Developer arising out of or in connection with work to be performed under this Agreement, including coverage for any owned, hired, non-owned, leased, or rented vehicles, in an amount not less than Two Million Dollars ($2,000,000), combined single limit for each accident. As used herein the term “automobile” means any vehicle licensed or required to be licensed under the State of California. Such insurance shall apply to all operations of Developer both on and away from the Site. In the event that any drivers are excluded from coverage, such drivers will not be permitted to drive in connection with construction of the Project. (d) A policy of Builder’s All-Risk property insurance in an amount not less than one hundred percent (100%) of the full replacement value of the Project. Policy provided shall be “All Risk” or “Special Form” covering at minimum fire, theft, vandalism, malicious mischief, collapse, false work, temporary structures, materials in transit and on-site materials, debris removal, including demolition due to code enforcement. A Loss Payee Endorsement shall designate the City as a loss payee.
(e) Umbrella or Excess Liability insurance. Developer shall provide umbrella or excess liability coverage for any underlying policy that does not meet the insurance requirements set forth herein. Developer may only use a maximum of $5,000,000 umbrella or excess coverage to meet the required $10,000,000 commercial general liability insurance limit. (i) Umbrella liability insurance requirements. Developer is required to secure and maintain an umbrella liability insurance policy that offers comprehensive coverage. This policy must include coverage for bodily injury, personal injury, and property damage, and it must extend to encompass commercial general liability, automobile liability, and employer’s liability. The policy must incorporate the following terms and conditions: (1) A drop-down feature that activates if any primary insurance becomes partially or wholly uncollectible for any reason, excluding the bankruptcy or insolvency of the primary insurer; (2) Coverage must be administered on a “pay on behalf of” basis, as opposed to reimbursement model, to ensure direct payment of claims by the insurer; (3) policy effective dates must align with those of the underlying primary insurance policies to ensure continuous coverage.
(ii) Excess Liability insurance requirements. Developer is required to secure and maintain an excess liability insurance policy. This policy must be structured to provide additional coverage over the Developer’s existing commercial general liability, automobile

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liability, and employer’s liability policies. The requirements for the policy are as follows: (1) the policy must follow form and adhere strictly to the terms and conditions of the underlying policies, ensuring seamless integration of coverage; (2) the excess policy must respond as primary coverage in the event that the underlying insurer is unable to pay a claim due to insolvency, unless an insolvency exclusion specifically applies; (3) coverage must be administered on a “pay on behalf of” basis, as opposed to a reimbursement model, to ensure direct payment of claims by the insurer; (4) the policy effective dates must align with those of the underlying policies to prevent any gaps in coverage.

All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ rating of A- (or higher), and Financial Size Category Class VII (or larger), in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by City.

4.4.2. Additional Insurance Provisions and Requirements. (a) Proof of insurance. Developer shall provide certificates of insurance and required endorsements to City as evidence of the insurance coverage required herein. Insurance certificates and endorsements must be approved by the City’s Risk Manager. Current certification shall be kept on file with the City for the agreement period and any additional length of time required thereafter. City reserves the right to require complete, certified copies of all required insurance policies, at any time.
(b) Duration of Coverage. Developer shall procure and maintain from the date of the Closing of Financing through end of the Affordability Period, and any additional length of time required thereafter, insurance against claims for injuries to persons or damages to property, or financial loss which may arise from or in connection with the performance of the Work hereunder by Developer, their agents, representatives, employees, or subcontractors/subconsultants. Developer must maintain general liability and umbrella or excess liability insurance for as long as there is a statutory exposure to completed operations claims. City of Fountain Valley, and its officers, officials, employees, and agents shall continue as additional insureds under such policies. (c) Primary Coverage. Coverage provided by Developer shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and noncontributory basis for the benefit of City before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured.
(d) Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against City of Fountain Valley, its elected or appointed officers, agents, officials, employees, and volunteers or shall specifically allow Developer or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Developer hereby waives its own right of recovery against City and shall require similar written express waivers and insurance clauses from each of its subcontractors/ subconsultants.

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(e) Requirements Not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Developer maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Developer. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
(f) Notice of Cancellation. Developer agrees to oblige its insurance agent or broker and insurers to provide the City with a thirty (30) day notice of cancellation (except for nonpayment for which a ten (10) day notice is required) or nonrenewal of coverage for each required coverage. If any of the Developer’s insurers are unwilling to provide such notice, then Developer shall have the responsibility of notifying the City immediately in the event of Developer’s failure to renew any of the required insurance coverages, or insurer’s cancellation or non-renewal. (g) Additional Insureds. With the exception of the workers compensation policy, the City of Fountain Valley, and officers, officials, employees, agents, and volunteers shall be named as additional insureds on all policies, including the umbrella/excess liability policy.

Developer shall provide:
(i) Additional Insured Endorsements, covering on-going and products-completed operations, for the policy under 4.4.1(b), Commercial General Liability.

Endorsements shall designate the City of Fountain Valley, and its officers, officials, employees, agents, and volunteers as additional insureds for liability arising out of all work or operations performed by or on behalf of the Developer. Developer shall provide to City proof of insurance and endorsement forms that conform to City’s requirements, as approved by City. (Forms CG 20 26 (Designated Person or Organization and CG 20 38 (Automatic Additional Insured – Other Parties or equivalent). Endorsements provided must not be limited to “work performed for the Additional Insured”.
(ii) An Additional Insured Endorsement for the policy under section 4.4.1(c), Automobile Liability, shall designate the City of Fountain Valley and its officers, officials, employees, agents, and volunteers as additional insureds for automobiles owned, leased, hired, or borrowed. Developer shall provide to City proof of insurance and endorsement forms that conform to City’s requirements, as approved by City.
(h) No Limiting Endorsements. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing.. (i) Additional Insured Endorsement. If the Developer procures Umbrella or Excess Liability Insurance coverage in order to meet required limits, an Additional Insured Endorsement for the policy under section 4.4.1(e), Umbrella or Excess Liability Insurance, shall designate the City of Fountain Valley and its officers, officials, employees, agents, and volunteers as additional insureds.

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(j) Deductibles or Self-Insured Retention. Any deductibles or selfinsured retentions in excess of $250,000 must be declared to and approved by the City. City reserves the right to require that self-insured retentions in excess of $250,000 be eliminated, lowered, or replaced by a deductible, or require proof of ability to pay losses and related investigations, claims administration, and defense expenses within the retention through confirmation form the underwriter. (k) No Waiver. Developer acknowledges and agrees that any actual or alleged failure on the part of the City to inform Developer of noncompliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. (l) Other Insurance. Developer shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. (m) Increases in Policy Limits. If required by City, Developer and/or and subcontractors shall, from time to time, increase the limits of its insurance policies to reasonable amounts customary for owners of improvements similar to those on the Site. In the event any policy of insurance required under this Agreement does not comply with these requirements or is cancelled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Developer.

4.4.3. Insurance Requirements of Contractors and Subcontractors. All of Developer’s contractors and subcontractors shall be required to provide the same insurance as required of Developer herein, including coverage types, limits, and other insurance provisions and requirements.. Developer shall be responsible to collect and maintain insurance from all Contractors and subcontractors. Developer shall require in any contract with a contractor or subcontractor for work performed related to this Agreement that Contractor’s/ Subcontractor’s insurance complies with the insurance requirements herein including naming the City of Fountain Valley, and its officers, officials, employees, agents, and volunteers as additional insureds on the required policies. In addition to the insurance required of Developer herein, Contractors/ Subcontractors are also required, and shall provide the following insurance coverages:

Environmental liability (if applicable) Not less than $1,000,000 per occurrence and $2,000,000 general aggregate
Professional Liability
(Architectural/ Design Services)
Not less than $5,000,000 per claim and in the
aggregate. Coverage must be maintained for a
minimum of five (5) years after project
completion.

Subcontractor Default Insurance (SDI) Coverage for financial losses resulting from a subcontractor’s failure to perform. Limits will
be based on the total value of the subcontracted
work.

4.4.4. Reduction in Requirements. The City Manager, or if designated the City’s risk manager, is hereby authorized to reduce the insurance requirements set forth herein, on a temporary or permanent basis, in the event they determine, in their sole discretion, that such reduction is in City ’s best interest.

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4.5. Indemnity. Developer shall pay for, defend (by counsel reasonably satisfactory to City), indemnify and save and hold harmless the City and its City Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, attorneys’ fees and court costs) arising from or relating to: (i) this Agreement; (ii) a claim, challenge, or cause of action that any person has or asserts against the Project; (iii) a claim, challenge or cause of action that any person has or asserts against any approval, whether discretionary or ministerial, by the City, the City, zoning administrator, or any other board, commission or committee of the City; (iv) a claim, demand or cause of action that any person has or asserts against Developer (v) any act or omission of Developer, any Contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Site or the Project; or (vi) the ownership, occupancy or use of the Site or the Project. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of sole gross negligence or sole willful misconduct of City. Developer’s obligations under this Section 4.5 shall survive the issuance of the CoO. The requirements under this Section 4.5 are in addition to and do not limit the obligations of Developer under the City Covenants.
(a) Developer shall reimburse City immediately upon written demand for all fees and costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Project Documents, and all related matters including the following: (a) City’s or City’s commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Document, and (b) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Project Documents. Such reimbursement obligations shall bear interest at the local agency investment fund rate (“LAIF”) based upon the amounts and times of disbursement by City, provided that City gives written demand to Developer.

Such reimbursement obligations shall survive the issuance of the CoO and termination of this Agreement and are in addition to and do not limit the obligations of Developer under the City Covenants.
(b) Developer indemnifies City from any real estate commissions or brokerage fees which may arise from the Site, or the leasing of dwelling units on the Site in conformity with this Agreement.

4.6. Rights of Access. Prior to the issuance of the CoO, for purposes of assuring compliance with this Agreement, representatives of City shall have the right of access to the Site, without charges or fees, at normal construction hours during the period of construction, including but not limited to, the inspection of the work being performed so long as City representatives comply with all safety rules. City representatives shall, except in emergency situations, notify Developer prior to exercising its rights pursuant to this Section 4.6. City shall have access as necessary to enforce all applicable laws.

4.7. Compliance with Laws. Developer shall carry out the design, construction and operation of the Project in conformity with all applicable laws, including all federal and state labor standards, as and when applicable, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Code, Fair Housing Laws, and the California Building Standards Code, HSC Section 18900, et seq., and Labor Code Section 218.7.

Developer, including but not limited to its contractors and subcontractors, shall comply with applicable federal and state laws, including the California Labor Code with regard to the undertaking,

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constructing, and completing the Project. Developer shall be solely responsible for determining and effectuating compliance with the applicable laws, and City make no final representation as to the applicability or non-applicability of laws to the overall Project or construction thereof or any part thereof. Developer hereby releases from liability, and agrees to indemnify, defend, assume all responsibility for and hold City and its Indemnitees harmless from any and all claims, demands, actions, suits, proceedings, fines, penalties, damages, expenses resulting from, arising out of, or based upon Developer’s acts or omissions pertaining to the compliance with the laws.

4.8. Nondiscrimination in Employment. Developer certifies and agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, sexual orientation, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability.

4.9. Taxes and Assessments. Developer, and as applicable Affordable Developer, shall pay prior to delinquency all ad valorem real estate taxes and assessments, Developer as to the Site during construction of the market-rate Project, and Affordable Developer as to the Senior Apartments on the Affordable Parcel until the expiration of the Affordability Period. Developer or as applicable Affordable Developer shall remove or have removed any levy or attachment made on the Site including the Affordable Parcel, or any part thereof, which is owned or leased by Developer or as applicable Affordable Developer, or shall assure the satisfaction thereof within a reasonable time, but in no event to exceed sixty (60) days; and each shall additionally defend, indemnify, and hold harmless City from and against any taxes, assessments, mechanic’s liens, claims of materialmen and suppliers, or other claims by private parties in connection with (a) activities undertaken by either or both Developer and/or Affordable Developer, (b) on the Site including Affordable Parcel.

4.10. Liens and Stop Notices. Developer shall not allow to be placed on the Site or any part thereof any mechanic’s or materialmen’s lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting the Project Developer shall within thirty (30) days of such recording or service or within five (5) days of City’s demand whichever last occurs:
(a) pay and discharge the same; or
(b) effect the release thereof by recording and delivering to City a surety bond in sufficient form and amount, or otherwise; or
(c) provide City with indemnification from the Title Company against such lien or other assurance which City deems, in its sole discretion, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of City from the effect of such lien or bonded stop notice.

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4.11. Further Assurances.

4.11.1. By Developer. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Project Documents or otherwise to carry out the purposes of the Project Documents.

4.11.2. By City. City shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Developer all documents, and take all actions, reasonably required by Developer from time to time to confirm the rights created or now or hereafter intended to be created under the Project Documents or otherwise to carry out the purposes of the Project Documents.

4.11.3. Mortgages, Deeds of Trust for the Project. Mortgages and deeds of trust shall be permitted but only for the purpose of securing loans of funds to be used for financing the construction and operation of the Project (including architecture, engineering, legal, construction period carrying costs such as property taxes, insurance and interest, and related direct costs as well as indirect costs) on or in connection with the Project and the Site, and the obtaining of a permanent loan in the amount of the outstanding balance of the construction loan or such greater amount as may be permitted hereunder, subject to and so long as the Memorandum of Agreement and City Covenants are and shall remain senior, nonsubordinate encumbrances against the Site.

4.11.4. Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust on Developer’s interest in the Site authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct, complete, or operate the Project or any portion thereof, or to guarantee such construction, completion, or operation; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon, other than those uses or Improvements provided for or authorized by the Entitlement, this Agreement, and the City Covenants.

4.11.5. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure.

With respect to any mortgage or deed of trust granted by Developer as to the Site as provided herein, whenever City may deliver any Notice or demand to Developer with respect to any breach or default by Developer under this Agreement, City shall at the same time deliver to each first lien holder of record of a mortgage or deed of trust a copy of such Notice or demand; provided that the failure to notify each or any holder of record shall not vitiate or affect the effectiveness of notice to Developer.

Each such holder shall (insofar as the rights granted by City, respectively, are concerned) have the right, at its option, within sixty (60) days after the receipt of the Notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage or deed of trust.
(a) Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Project, or any portion thereof (beyond the extent necessary to conserve or protect the Improvements or construction already made) without first having expressly assumed Developer’s obligations to City by written agreement reasonably satisfactory to City. The holder, in that event, must agree to complete the Project in compliance with the Entitlement and this Agreement, but on a schedule which takes into

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account the time reasonably required for the holder to obtain title to and possession of Developer’s interest in the Site, analyze and negotiate amendments to plans, specifications, construction contracts and operating contracts or to negotiate new construction contracts and operating contracts. Any such holder properly completing such Improvements shall be entitled, upon compliance with the requirements herein to a CoO. It is understood that a holder shall be deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or remedy a Developer default which requires title and/or possession of Developer’s interest in the Site (or portion thereof) if and to the extent any such holder has within such sixty (60) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default.

4.12. Surety Bond for In-Lieu Fees. The Surety Bond for In-Lieu Fees shall be issued to the City as oblige prior to and as a condition precedent to the first CoO to be issued by the Building Official for the first residential unit completed within the overall 606-unit Project. The surety bond shall be a three-party contract and bond among (a) the named obligee (City of Fountain Valley, a California municipal corporation), (b) principal (Developer and its joint venturers SOF and Lennar), and (c) the City-approved surety carrier. The City as obligee is the party with a vested interest in Developer’s performance under this Agreement and thereby the City requires a remedy, accessible and liquid, to protect against the potential failure of Developer to cause construction through completion of the inclusionary housing, i.e., 82 Affordable Units. The completion of the Affordable Units shall be evidenced by the issuance of a final CoO by the Building Official for all Affordable Units, inclusive of DBL and inclusionary units; provided however, if the Surety Bond for In-Lieu Fees is accessed and drawn upon to pay In-Lieu Fees, then the number of Affordable Units shall be the number of DBL units required by the Entitlement. The term of the Surety Bond shall be in effect until a final CoO for all Affordable Units issued by the Building Official. The City may make a claim against the bond, demand payment under the bond, and surety company shall pay the City as obligee the damages incurred from the principal's failure to cause completion of the Affordable Units. (a) The Surety Bond for In-Lieu Fees shall be reviewed and approved by the City and legal counsel and delivered to the City and such bond shall remain in full force and effect until the first to occur of: (i) thirty (30) days after the issuance of a final CoO by the Building Official for the Affordable Units, or (2) Developer’s payment in full of the total amount of In-Lieu Fees due under Inclusionary Housing Program, or (iii) Developer failure to cause Completion/Final CoO for Affordable Units within four (4) years of the issuance of the Initial City Permit. (i) As of the Date of Agreement, pursuant to the Inclusionary Housing Program the City Council by resolution set the In-Lieu Fee at $44,542.00/per market rate unit for every Residential Development Project (as the term is defined in the FVMC); provided however, under the Inclusionary Housing Program, the per/unit In-Lieu Fee “shall be periodically reviewed and updated by the City Council. The amount of In-Lieu Fees shall be included in the City’s master fee schedule and may be adjusted annually for inflation using an appropriate index, as determined by the City Council.” Therefore, the amount of the Surety Bond for In-Lieu Fees shall include escalators for (A) increase in per/unit fee both at the time of issuance of the surety bond and at the time such payment is due to the City, and/or bond accessed and paid to City, and (B) plus the accrued interest at the LAIF rate described below.
(ii) Generally, In-Lieu Fees are remitted as a condition precedent to the Initial City Permit, but as an accommodation to Developer, here, the Surety Bond for In-Lieu Fees will not be issued to the City until and as a condition precedent to the first CoO to be issued by

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the Building Official for the first residential unit completed within the overall 606-unit Project.

Therefore, there will have been a significant time delay, and the City will not have had the benefit of the In-Lieu Fees on account for timely expenditure for affordable housing purposes as required by the Inclusionary Housing Program. Thus, the terms of the bond shall have escalator clauses in the amount of coverage, including the full amount shall bear interest at the Local Agency Investment Fund (LAIF) rate set by the State of California Treasurer’s Office, calculated as follows: 606 total units less/subtract 82 Affordable Units equals 524 units multiplied by the then per/unit In-Lieu Fee, plus accrued interest at LAIF rate for the period commencing on the date of issuance of the Initial City Permit until such payment in full.
(A) By way of example, if Developer were to
remit In-Lieu Fees at issuance of the Initial City Permit, then the amount is $44,542.00 x 524 = $23,349,008, but that figure is a current calculation in 2025, and will increase in the event the per/unit In-Lieu Fees are higher at the time of bond issuance and later due to accruing interest component when and if the bond is accessed by City and paid by surety company.

Notwithstanding the foregoing, Developer acknowledges and agrees that Affordable Units required by the DBL cannot be satisfied by payment of In-Lieu Fees and must be constructed, completed and operated either (i) as the Senior Apartments, or (ii) within the greater Site as Affordable Units available at an Affordable Rent to Low Income Households for the 55-year Affordability Period. In the event the Senior Apartments are not completed, this Agreement and the City Covenants shall be amended to conform to the facts of how many units of the Project are Affordable Units required by the DBL and how the City’s Inclusionary Housing Program will be satisfied by Developer either via payment of In-Lieu Fees or inclusion of Low Income Affordable Units within the greater Site. In such event, this Agreement and the City Covenants, as amended, shall remain in full force and effect as to the Site and requirements for onsite Affordable Units required by the Entitlement and this Agreement.

Section 5. COVENANTS AND RESTRICTIONS.

5.1. Use Covenants. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that Developer shall devote the Site, the Project, and all Improvements thereon to the uses and operational covenants specified in the Entitlement and this Agreement and shall own, manage, maintain and otherwise operate the Project on the Site in conformity with the DBL, Entitlement, this Agreement, and the City Covenants, whichever are the more restrictive in each case unless expressly provided to contrary effect herein.

All uses conducted on the Site, including, without limitation, all activities undertaken by Developer pursuant to this Agreement, shall conform to all applicable provisions of the FVMC.

Upon and subject to issuance of a final Certificate of Occupancy by the City’s Building Official for the construction and completion of the eighty-two (82) Affordable Units plus one (1) Manager Unit, the City will prepare and cause recording of a termination instrument affecting the greater Site (exclusive of the Affordable Units) and terminating this Agreement, the City Covenants, and Memorandum of Agreement as to the market-rate residential parcels of the Project; nevertheless, this unrecorded Agreement along with the recorded Memorandum of Agreement and City Covenants, shall remain in full force and effect as to the Affordable Units whether developed on the Affordable Parcel or otherwise within the overall Project.

5.2. Affordable Housing Requirements.

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5.2.1. Number of Affordable Units. Developer agrees to make available, restrict occupancy to, and rent eighty-two (82) Affordable Units at Affordable Rent (plus one (1) unrestricted Manager Unit) in conformity with the Prescribed Rent Level and Unit Mix to Low Income Households. An example of the calculation of Affordable Rent for the Affordable Units is attached hereto as Attachment No. 7 and incorporated herein. It is the responsibility of Developer to comply with all income and rent standards.

5.2.2. Duration of Affordability Requirements. The Affordable Units shall be maintained as rental units available at and rented to Low Income Households (including Senior Low Income Households of the Senior Apartments, if such development occurs) throughout the 55-year Affordability Period, as described herein, in the Entitlement, and more particularly required and set forth in the City Covenants.

5.2.3. Selection of Tenants. Developer shall be responsible for the selection of tenants for the Affordable Units in compliance with the criteria set forth in Section 5.2 of this Agreement. All of the Affordable Units shall be restricted for occupancy by Low Income Households and subject to the Fair Housing Laws. In this regard, tenant selection for the Affordable Units shall comply with applicable provisions that are most restrictive and protective of tenants under federal and state laws, and all lawful and reasonable criteria, as set forth in the Management Plan that is required to be submitted to and approved by City under this Agreement. Developer shall use its commercially reasonable efforts to rent vacant Affordable Units to eligible Low Income Households on City’s tenant interest list (if one is maintained by City). (a) Developer shall adopt a tenant selection system for the Affordable Units that shall be approved by City Manager in her or his reasonable discretion, which establishes a chronological waiting list system for selection of tenants and meets the requirements of this Section 5.2.3.
(b) Developer shall provide written notice to City at least thirty (30) days prior to Developer commencing its marketing activities for the initial lease-up of the Affordable Units in conformance with the approved Management Plan. In addition, this prior notice from Developer to City also shall include a complete copy of the form of the “application” with a description of necessary supporting materials to be completed by applicants for prospective tenancy of an Affordable Unit.
(c) Posting advertisements and notices of the vacancy(ies) at City Hall, on the City’s website, and at several public buildings, such as the senior center, community center, local library, or post office located in the City.

5.2.4. Income of Tenants. Each tenant of an Affordable Unit shall qualify as a Low Income Household (in accordance with the Prescribed Rent Level and Unit Mix) that meets the eligibility requirements established for an Affordable Unit, and Developer shall obtain a certification from each tenant renting or leasing each Affordable Unit that substantiates such fact. Developer shall verify the income certification of each tenant household as set forth in Section 5.2 hereof. Prior to the first rental of an Affordable Unit, and in addition upon request therefor by City, Developer shall submit to City or its designee, at Developer’s expense, a completed income computation and certification form, in a form approved by the City.

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5.2.5. Determination of Affordable Rent for the Affordable Units. Each and all Affordable Units shall be rented at an Affordable Rent as established and provided herein:
the maximum monthly rental amount for the Affordable Units shall be determined in accordance with the following and shall not to exceed affordable rent under HSC Sections 50052.5 and 50053 for each Household qualifying as Lower Income as the term Affordable Rent is defined herein.

The monthly housing cost means the maximum amount to be charged by Developer and paid by the Low Income Households occupying the Affordable Units, including Senior Low Income Households at the Senior Apartments on the Affordable Parcel, if such project occurs. (a) Further, the term includes the total of monthly payments by the tenants of an Affordable Unit for (a) use and occupancy for an Affordable Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer that are required of all tenants, other than security deposits (but not including fees or charges in connection with voluntary items paid for, leased, or otherwise purchased by tenants of Affordable Units (and required to be paid for, leased or otherwise purchased by tenants of the market rate units) that, for example, might include additional parking spaces(s) above and beyond what is required to be provided to tenants under State and local laws and this Agreement, fees relating to pet ownership or amenities in connection therewith such as dog washing facilities, etc., (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of the Orange County Housing Authority pursuant to 24 CFR Section 5.609, et seq. and (d) possessory interest, taxes or other fees or charges assessed for the use of the unit and facilities associated therewith by a public or private entity other than Developer.

5.2.6. Increases in Tenant Household Income. The Affordable Units shall meet the Prescribed Rent Level and Unit Mix as required despite a temporary noncompliance with tenant qualification as a Low Income Household at an Affordable Rent, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by Developer to ensure that each and all vacancies of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, are filled in accordance herewith until the noncompliance is corrected. (a) A tenant who qualified as a Low Income Household at initial occupancy of the Affordable Unit in compliance with this Agreement shall be deemed to continue to be so qualified until such time as re-verification and certification of the tenant household’s gross income shows that such tenant no longer qualifies as a Low Income Household. An existing tenant household occupying an Affordable Unit whose income exceeds the qualifying limit for a Low Income Household may continue to occupy that Affordable Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Affordable Unit as published by State HCD, so long as such continued tenancy does not exceed six (6) months. Such restrictions and requirements about verification and reverification of household income to be and remain eligible for occupancy and tenancy of an Affordable Unit shall be expressly stated and separately initialed by each adult member of the tenant household in the lease or other rental agreement for each tenant of each Affordable Unit.

5.2.7. Household Size Appropriate to an Affordable Unit. The term “household size appropriate to the unit” for the purpose of the calculation of Affordable Rent herein (and without regard to actual occupancy), means HSC Sections 50052.5 and 50053. Notwithstanding the foregoing portion of this Section 5.2.7, Developer agrees that Affordable Rent shall not exceed the Prescribed Rent Level for Low Income Households, including Senior Low Income Households. It is

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the responsibility of Developer to comply with all income and rent standards. Developer acknowledges that such Prescribed Rent Level may further diminish rental income from the overall Project.

5.3. Verifications.

5.3.1. Income Verification. Developer shall verify the income of each proposed and existing Low Income Household as an existing tenant (or prospective tenant) of the each and all Affordable Units.

5.3.2. Annual Reports. Following the issuance of the final CoO, and on or before the next following March 30 and on or before March 30 in each following Year of the Affordability Period, Developer, at its expense, shall submit to City or its designee such reports as are designated from time to time by the City Manager, in the form prescribed by City (each an “Annual Report”).

Each annual report shall cover the immediately preceding Year. Concurrent with submittal of each Annual Report, Developer shall remit to the City the City Monitoring Fee, subject to the provisions, if applicable, of Government Code Section 65915.3.
(a) Developer shall maintain on file each tenant’s executed lease and Income Verification and rental records for all Affordable Units. Developer shall maintain complete and accurate records for all Affordable Units and will permit any duly authorized representative of City to inspect the books and records of Developer pertaining to this Agreement and the Affordable Units. Included with each Annual Report, Developer shall prepare and submit to the City Manager on the first March 30 following the issuance of the final CoO and continuing on each Year on or before March 30 throughout the Affordability Period, a Certificate of Continuing Program Compliance. Such documentation shall state for each Affordable Unit: the unit size, the rental amount, the number of occupants, the income of the occupants, whether the tenant holds a Portable Voucher, and any other information which may be used to determine compliance with the terms of this Agreement and the City Covenants.
(i) As provided in the Entitlement and pursuant to this Agreement, Developer shall make all tenant files relating to the Affordable Units available to City and its representatives for review each Year of the Affordability Period (or more often as reasonably necessary); and, City will provide Developer a 24-hour notice prior to and related to such inspection. (b) As part of its annual report, Developer shall include shall evidence in accordance with GAAP that the amounts on deposit and amounts expended, if any, in and form the Capital Replacement Reserve comply with this Agreement. (i) Developer agrees that Developer shall cooperate fully with City, its staff, counsel, and consultants in providing information necessary or convenient, in the reasonable judgment of City, and City may conduct an audit. Keyser Marston Associates or another firm or economist mutually acceptable to City and Developer, will be employed to determine compliance with the Entitlement, this Agreement, and the City Covenants. If an audit becomes necessary, the costs of employing such consulting professional(s) shall be borne by City initially; however, if any audit reveals noncompliance as to one or more Years, Developer shall reimburse City for costs of the audit and professional review (which may require engagement of accountants, attorneys, or other professionals).

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5.4. Maintenance of Site. Developer agrees for itself and its successors in interest to maintain the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in conformity with this Agreement, the City Code, the Entitlement, and City Covenants, and shall keep the Affordable Units free from any accumulation of debris or waste materials. Developer shall also maintain the landscaping planted thereon in a healthy condition.

5.4.1. Maintenance Standards. Developer and its maintenance staff, contractors or subcontractors shall comply with the following standards as to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel (collectively, “Maintenance Standards”):
(a) The Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, shall be maintained in conformance and in compliance with the approved final as-built plans, and reasonable Maintenance Standards that comply with industry standards (industry standards applicable at such time) for high quality affordable housing development projects in Southern California. In this regard the standard of maintenance and upkeep of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, (both interior and exterior improvements), hardscape, and landscaping shall be commensurate with other high quality affordable housing projects in Southern California at such relevant time during the compliance periods required under this Agreement; provided however, when determining comparable projects, the age of the improvements shall be considered; provided that nothing in such comparison shall modify, expressly or impliedly, the maintenance and property management standards set forth in this Section 5.4.1 and otherwise in this Agreement.
(b) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
(c) Clean-up maintenance shall include, but not be limited to:
(i) maintenance of all sidewalks, paths and other paved areas in clean and weed-free condition; (ii) maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; (iii) removal of all trash, litter, bulky items, and other debris from improvements and landscaping prior to mowing; (iv) clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves, debris, and other discarded items are properly disposed of by maintenance workers. (d) Repair maintenance includes work to fix, repair, or correct exterior conditions of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, common areas, parking, and overall development, including: (i) painted surfaces, materials, other surfaces, and all onsite amenities are maintained free from fading, peeling, chipping, cracked surfaces, holes or other damage; and (ii) all broken fixtures, lights, and other improvements are repaired or replaced.
(e) Repair maintenance also includes work to repair and fix broken or other non-functional appliances (only those provided by Developer as part of an Affordable Unit), plumbing, electrical, HVAC and structural improvements of the interiors of Affordable Units consistent with property management standards required herein, subject to exclusions referenced in a

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tenant’s lease for damages such as that caused by tenant’s intentional action or inaction from misuse or neglect within the housing unit.

5.4.2. Notice re Non-Compliance. City agrees to notify Developer in writing (including by email) if the conditions of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, do not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Developer to cure the deficiencies. Upon notification of any maintenance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification relates to a problem that is urgent and relating to the public health and safety as reasonably determined in writing by the police department, fire department, department of public works, building department or other first responder public agency, then Developer shall have forty-eight (48) hours (or any such longer time as may be reasonable under the circumstances) to rectify the problem. In the event Developer does not maintain the Site in the manner set forth herein and in accordance with the Maintenance Standards, City shall have, in addition to any other rights and remedies hereunder, the right to maintain the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, or to contract for the correction of such deficiencies, after written Notice to Developer, and Developer shall be responsible for the payment of all such costs incurred by City.

5.4.3. Program Maintenance. In addition to the routine maintenance and repair required pursuant to Section 5.4 and the requirements set forth herein and in the City Covenants, Developer shall perform the following minimum programmed maintenance of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel:
(a) Interior painting, interior carpets in common areas, and window covering replacement at least every seven (7) years;
(b) Exterior painting at least every ten (10) years;
(c) Repair, resurfacing, and re-striping of parking areas and walkways at least every five (5) years;
(d) Replacement of all deteriorated or worn landscaping at least every five (5) years; and
(e) Replacement of all deteriorated or worn recreational and play equipment at least every five (5) years.

Notwithstanding the foregoing, if the City Manager reasonably determines that the Project suffers from significant and unexpected wear and tear requiring any of the above items of maintenance to be performed sooner than as set forth above, City may require that such maintenance actions be performed within a reasonable time, even if sooner than the time periods set forth above.

Upon the request of Developer, the City Manager, at her/his sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements.

5.4.4. Occupancy Limits. Developer agrees to comply with the following minimum and maximum occupancy for the Affordable Units provided however, subject to applicable

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law, nothing herein shall prohibit the Developer from utilizing or complying with more restrictive occupancy limits imposed with respect to the Site or Project: (i) for the one-bedroom units the maximum occupancy is three (3) persons, and (ii) for the two-bedroom units the maximum occupancy is five (5) persons, and the minimum occupancy for 2-bedroom units is two persons. In this regard, maximum occupancy is two persons per bedroom plus one person.

5.5. Nondiscrimination Covenants. Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site or any portion thereof.

The foregoing covenants shall run with the land.

5.5.1. Required Clauses. Developer shall refrain from restricting the rental, sale, or lease of the Site on the basis of race, color, religion, sex, marital status, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on 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 premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”

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In contracts: “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 premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

5.6. Management of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel.

5.6.1. Property Manager. Developer shall, or shall cause, the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, to be managed in a prudent and business-like manner, consistent with good property management standards for other high quality developments in Southern California. Developer may contract with a property management company or property manager, to operate, manage, and maintain the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in accordance with the terms of this Section 5.6 (“Property Manager”); provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in her or his discretion. The Property Manager shall manage the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in accordance with the definitions of Affordable Rent, the tenant selection requirements, and the definitions relating to Lower Income Households (and Senior Low Income Households) as set forth herein. Developer shall conduct due diligence and background evaluation of any potential third party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager of affordable housing. Any proposed property manager shall have significant and relevant prior experience with affordable housing properties comparable to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) by Developer prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by City Manager shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the City Manager shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. The replacement of a Property Manager by Developer and/or the selection by Developer of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements.

5.6.2. Property Management Plan. Prior to and as a Condition Precedent to the issuance of the first CoO by the Building Official for the first of the 82 Affordable Units, Developer shall prepare and submit to the City Manager for review and approval, a management plan for the Affordable Units that includes a detailed plan and strategy for long term marketing, operation, maintenance, repair and security thereof at the Project, inclusive of the method of selection of tenants, rules and regulations for tenants, and other rental policies for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel (“Property Management Plan”). City Manager

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shall review and shall act reasonably to approve or disapprove the Property Management Plan within a reasonable time. Subsequent to approval of the Property Management Plan by the City Manager, the ongoing management and operation of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel shall be in compliance with the approved Property Management Plan.

During the Affordability Period, Developer and its Property Manager may from time to time submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager. (a) Lease/Rental Agreement. Prior to and as a Condition Precedent to the issuance of the first CoO by the Building Official for the first of the 82 Affordable Units, Developer shall have submitted to City and shall have approved the standard form lease/rental agreement in conformance with the City Covenants for rental of the Affordable Units to Lower Income Households, including Senior Lower Income Households, at an Affordable Rent in accordance with the terms of this Agreement, which approval shall not be unreasonably withheld or delayed. Developer shall include certain terms in the standard form lease/rental agreement which clearly describe the requirements of qualification and rental to Low Income Households, including without limitation: (i) the obligation to provide complete and timely income verifications, as and when reasonably requested by Developer and/or City, but not less frequently than prior to initial occupancy and then annually during the term of tenancy, (ii) a description of the Affordable Rent for the Senior Low Income Households, (iii) the rules and regulations for use, occupancy, and quiet enjoyment of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, (iv) tenant protections relating to notices, eviction, and such other matters as required by applicable laws, and (v) such other terms as Developer and/or City deem reasonably necessary.

5.6.3. -Gross Mismanagement. During the Affordability Period, and in the event of “Gross Mismanagement” (as defined below) of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, the City (acting through the City Manager) shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, and further to direct and require the immediate removal of the Property Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of written Notice from the City Manager. If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written Notice (with evidence of such submitted to the City Manager, as applicable), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thirty (30) days as reasonably determined by the non-defaulting party), then Developer and its Property Manager shall have an additional 45 days to complete the cure of Gross Mismanagement condition(s). In no event shall any condition of Gross Mismanagement continue uncured for a period exceeding seventy-five (75) days from the date of the initial written Notice of such condition(s), except that the conditions described in subdivisions (iv) and (v) below may exist for up to, but no longer than, ninety (90) days without triggering City’s right to remove the Property Manager as described in the immediately following sentence as long as Developer is diligently working to cure such conditions of Gross Mismanagement. If such condition(s) do persist beyond such period, the City Manager shall have the absolute right to immediately and without further notice to Developer (or to Property Manager or any other person/entity) to remove the Property Manager and replace the Property Manager with a new property manager of City Manager’s selection at the sole cost and expense of Developer. If Developer takes steps to select a new Property Manager that selection is subject to the requirements set forth above for selection of a Property Manager.

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(a) For purposes of this Agreement (and the City Covenants), the term “Gross Mismanagement” means management of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in a manner that violates the terms and/or intention of the Entitlement, this DBAHA, and the City Covenants for operation of a high quality affordable housing development and shall include, but is not limited to, any one or more of the following:
(i) Leasing Affordable Units to tenants who do not qualify as Senior Low Income Households;
(ii) Charging rent in excess of Affordable Rent for the Affordable Units;
(iii) Allowing tenants of the Affordable Units to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (iv) Under-funding required Capital Replacement Reserve accounts;
(v) Failing to timely maintain the Affordable Units in accordance with the Property Management Plan and in compliance with the Maintenance Standards; (vi) Failing to submit timely and/or adequate annual reports to City as required herein as to operation of the Affordable Units; (vii) Fraud or embezzlement of funds allocable to the Affordable Units, including without limitation funds in reserve accounts; (viii) Failing to fully cooperate with the Fountain Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the Senior Apartments, in maintaining a crime free environment within the Affordable Units, or in implementing measures recommended by the Fountain Valley Police Department;
(ix) Failing to fully cooperate with the Fountain Valley Fire Department or other local public safety agency(ies) with jurisdiction over the Affordable Units, in maintaining a safe and accessible environment of the Senior Apartments on the Affordable Parcel, or in implementing measures recommended by the Fountain Valley Fire Department; (x) Failing to fully cooperate with the Fountain Valley Community Development Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Senior Apartments in maintaining a decent, safe, and sanitary environment or in implementing measures recommended by the Fountain Valley Community Development Department;
(xi) Failing to conduct, or refer to appropriate third party(ies) to conduct, health, safety and welfare checks as reasonable for residents who are reasonably known to Developer, its Property Manager, onsite resident manager(s), social and supportive services providers, or other onsite workers be infirm, ill, incapacitated, or otherwise in need of close supervision of their living arrangement and ability to conduct their basic activities of daily living; and

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(xii) Maintaining or allowing the Affordable Units to be maintained as a public nuisance or in a manner in conflict with any provision of the City Code; and (xiii) Spending funds from the Capital Replacement Reserve account for items that are not defined as eligible costs, including eligible capital and/or replacement costs, under the standards imposed by GAAP (and/or, as applicable, generally accepted auditing principles).
(b) Notwithstanding the requirements of the Property Manager to correct any condition of Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time and, if necessary, to replace the Property Manager of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, as provided above. Developer shall include advisement and provisions of the foregoing requirements and requirements of this Agreement and the City Covenants within any contract between Developer and its Property Manager for the property management of the Affordable Units.

5.6.4. Code Enforcement. Developer acknowledges and agrees the City and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of Senior Apartments on the Affordable Parcel, both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Developer and/or an individual tenant. If such notice is provided by City representative(s) to Developer, then Developer (or its Property Manager) shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Senior Apartments on the Affordable Parcel to be made available and open for inspection.

Developer shall include express advisement of such inspection rights within the lease/rental agreements for each and all Affordable Units in order for each and every tenant and tenant household to be aware of this inspection right.

5.7. Capital Reserve Requirements. Commencing upon issuance of the CoO, Developer shall annually set aside an amount of not less than Two Hundred Fifty Dollars ($250.00) per Affordable Unit (83 units times $250 equals $20,750) or such increased amount required by a Lender from the gross rents received from the Affordable Units, into a separate interest bearing trust account defined as the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements, and replacements to the Project, including fixtures and equipment, which are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Affordable Units in the manner prescribed herein. Not less than once per year, Developer, at its expense, shall submit to the City Manager an accounting for the Capital Replacement Reserve for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. Capital improvements and repairs to, and replacements for Affordable Units shall include only those items with a long useful life, including without limitation the following: carpet and drapery 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 repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line replacement; lighting fixture

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replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting. In connection with each annual report, to the City Manager by Developer, City Manager will evaluate the cumulative amount on deposit in the Capital Replacement Reserve account and exercise his/her sole, reasonable discretion to determine if existing balance(s) in, proposed deposits to, shortfalls, if any, and/or a cumulative unexpended/unencumbered account balance in such Capital Replacement Reserve account are adequate to provide for necessary capital repairs and improvement for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel.

Notwithstanding the foregoing portion of this Section 5.7, in the event a Lender prescribes particular amounts to be set aside as a capital replacement reserve that exceeds the requirements of this Section 5.7, compliance therewith shall be deemed to comply with this Section 5.7.

5.8. Effect of Violation of the Terms and Provisions of this Agreement after CoO Issued. City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the City Covenants running with the land have been provided, without regard to whether City has been, or is, or becomes, an owner of any land or interest in the Site or the Affordable Parcel. City shall have the right, if the Agreement or any covenants in any agreement pursuant to this Agreement, including without limitation the City Covenants, are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and such covenants may be entitled.

Section 6. DEVELOPER’S GENERAL REPRESENTATIONS AND WARRANTIES.

In addition to the representations under Section 1.5, Developer represents and warrants to City that:

6.1. Formation, Qualification and Compliance. Developer (a) is a Delaware limited liability company validly existing and in good standing under both the laws of the State of Delaware and the State of California for its operations and property ownership in the State of California; (b) has all requisite authority to conduct its business and own, purchase, improve and sell its properties. Developer is in compliance in all material respects with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with any governmental agency that are necessary for the transaction of its business; (c) Developer has and will in the future duly authorize, execute and deliver this Agreement and any and all other agreements and documents required to be executed and delivered by Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement; (d) Developer does not have any material contingent obligations or any material contractual agreements which could materially adversely affect the ability of Developer to carry out its obligations hereunder; (e) There are no material pending or, so far as is known to Developer, threatened, legal proceedings to which Developer is or may be made a party or to which any of its property is or may become subject, which have not been fully disclosed by Developer to City in this Agreement which could materially adversely affect the ability of Developer to carry out its obligations hereunder; and (f) There is no action or proceeding pending or, to Developer’s best knowledge, threatened, looking toward the dissolution or liquidation of Developer and there is no action or proceeding pending or, to Developer’s best knowledge, threatened by or against Developer which could affect the validity and enforceability of the terms of this Agreement, or materially and adversely affect the ability of Developer to carry out its obligations hereunder.

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Each of the foregoing items (a) to (f), inclusive, shall be deemed to be an ongoing representation and warranty. Developer shall advise City in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items (a) to (f), inclusive.

6.2. Execution and Performance of Project Documents. Developer has all requisite authority to execute and perform its obligations under the Project Documents. The execution and delivery by Developer of, and the performance by Developer of its obligations under, each Project Document has been authorized by all necessary action and do not and will not violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws, or other governing document applicable to Developer.

Section 7. DEFAULTS, REMEDIES, AND TERMINATION.

7.1. Default Remedies. Subject to the extensions of time set forth in this Section 7, failure by a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a “Default” or “Event of Default” under this Agreement. A party claiming a Default shall give written Notice of Default to the other parties specifying the Default. Except as otherwise expressly provided in this Agreement, and without limiting or affecting rights of parties hereto to terminate this Agreement, the claimant shall not institute any proceedings against any other party, and such other party shall not be in Default if such party within thirty (30) days from receipt of such Notice, immediately and with due diligence, commences to cure, correct or remedy the specified Default and shall complete such cure, correction or remedy with diligence. In the event the party in Default, or causing such Default, fails to cure within said thirty (30) days, or if such breach is of a nature that it cannot be cured within said thirty (30) days, then the defaulting party shall commence to cure in an additional fifteen (15) days (i.e., within forty-five (45) days of Notice of Default) and the defaulting party shall diligently complete such cure, correction or remedy within a reasonable time thereafter but in no event later than one hundred twenty (120) days from the date of the Notice of Default.

7.1.1. Affordable Units within Apartments Component. The term Default includes without limitation, Developer’s failure to (a)timely meet the one year period of the Outside Date for Affordable Units Financing/Developer or Affiliate, and, thereafter (b) to timely meet the Outside Date Completion/Final CoO for Affordable Units/Developer or Affiliate. In such Event of Default, (i) City, as obligee may, if not earlier accessed, may receive payment in full under the Surety Bond for In-Lieu Fees, and/or, (ii) City may avail all rights under the Completion Guaranty, and/or (iii) City may seek any and all remedies available at law or equity for Developer’s failure to cause development of the Affordable Units in the Project. (a) In the event of such Default(s) described above in Section 7.1.1, the City may immediately notify Guarantor and avail City of all rights and remedies under the Completion Guaranty that obligate Guarantor to commence and complete construction of the Affordable Units within the Site, or timely effect the alternative next described in subsection

7.1.1.(b) and (b)(i).
(b) Alternatively, Developer may notify the City that instead of new construction of the Affordable Units, within fifteen (15) days of the occurrence of the Outside Date Completion/Final CoO for Affordable Units/Developer or Affiliate, Developer may and shall cause recordation of City Covenants, as amended, for the required DBL Affordable Units within the completed multifamily Apartments Component, which shall be the mandated onsite affordable

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housing for Low Income Households available at an Affordable Rent (HSC 50053(b)(1)) for the 55- year Affordability Period, which recording of the amended City Covenants shall occur within sixty (60) days after the Outside Date Completion/Final CoO for Affordable Units/Developer or Affiliate. The foregoing obligation of Developer shall not prevent City from availing other remedies, at law or equity, due to Developer’s failure to cause timely development of the Affordable Units. (i) If the City avails its rights and remedies under the Completion Guaranty, then Guarantor or Affiliate may take steps to cause recordation of City Covenants, as amended, for the required DBL Affordable Units within the completed multifamily Apartments Component, which shall be the mandated onsite affordable housing for Low Income Households available at an Affordable Rent (HSC 50053(b)(1)) for the 55-year Affordability Period, which recording of the amended City Covenants shall occur within sixty (60) days after the Outside Date Completion/Final CoO for Affordable Units/Developer or Affiliate. The foregoing right of Guarantor shall not prevent City from availing other remedies, at law or equity, under the Completion Guaranty due to Developer’s failure to cause timely development of the Affordable Units.

7.2. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, any party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California.

7.3. Acceptance of Service of Process. In the event that any legal action is commenced against City, service of process on City shall be made by personal service upon the City Clerk Administrator or in such other manner as may be provided by law. In the event that any legal action is commenced against Developer, service of process on Developer shall be made in such manner as may be provided by law and shall be effective whether served inside or outside of California.

7.4. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by a party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party.

7.5. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

7.6. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.

7.7. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to: war; insurrection; riots; floods; unusually severe weather; earthquakes; fires; casualties; acts of God; acts of the public enemy; acts or omissions of another party, or acts or

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failures to act of City or any other public or governmental agency or entity (excepting that acts or failures to act of City shall not excuse performance by City. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause (or such longer period as is reasonably needed under the circumstances), if Notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Developer. The City Manager shall have authority to approve extensions on behalf of City not to exceed a cumulative total of one hundred eighty (180) days.

7.8. Transfers.

7.8.1. General Prohibition of a Transfer without City Consent; Covenant Not to Transfer Except in Conformity. Developer has demonstrated to the City its qualifications and experience as a successful owner, operator and developer of multifamily developments that include affordable housing components, along with the experience and qualifications of the Affordable Developer for development of the Affordable Units as the Senior Apartments pursuant to the Term Sheet and subsequent implementing documents to be reviewed and approved by the City. Further, Developer has selected as the Affordable Developer (or its Affiliate) as the initial property management entity. In this regard, the long-term ownership, operation, and property management of the Affordable Units are of particular concern to the City and Developer (and its successor(s), if any) shall be subject to this Section 7.8 until the issuance of a final Certificate of Occupancy by the City’s Building Official for the construction and completion of the Affordable Units. And as to the Affordable Developer, the Transfer and Permitted Transfer limitations and requirements of this Section 7.8 shall remain in effect from the date earlier to occur of (A) date of assignment and assumption of this Agreement, City Covenants and Memorandum of Agreement by Euclid & Heil FV Owner, LLC to National Community Renaissance of California, or (B) Affordable Developer’s Closing of Financing for development of the Senior Apartments on the Affordable Parcel, and shall continue until the expiration of the Affordability Period. Accordingly, commencing upon the recordation of the Memorandum of Agreement and the City Covenants and continuing to the end of the Affordability Period, no voluntary or involuntary successor-in-interest of Developer (or successor including Affordable Developer) shall acquire any rights or powers under this Agreement or the City Covenants, nor shall Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the Site or Project or any part thereof, in particular that includes the Affordable Units, or this Agreement, or the City Covenants (each and collectively referred to herein as a “Transfer”) without the prior written approval of the City, except as expressly set forth herein for a Permitted Transfer, which approval shall not be unreasonably withheld or delayed. (a) Therefore, for each proposed Transfer, Developer shall first obtain the prior written consent of the City through the City Manager, which consent shall not be unreasonably withheld or delayed. The City Manager retains all rights and her sole discretion to submit a proposed Transfer to the City Council for consideration and action to approve (or disapprove) in their reasonable discretion. In connection with and prior to any Transfer, (a) Developer, as transferor, shall evidence its compliance with this Agreement, including without limitation submittal of a current rent roll for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, with household income for each Low Income Household as tenant, Affordable Rent charged, and notation of whether the household holds a Section 8 tenant-based portable voucher, (b) Developer shall submit supporting documentation evidencing the proposed transferee’s development experience and qualifications in the ownership and operation of facilities similar to the

62 4930-6338-0083v1/200348-0011
Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, its financial commitments and resources, (c) information about the transferee’s property manager and its qualifications, (d) Developer shall provide the form of and terms and conditions of the proposed assignment by Developer, as transferor, and assumption by transferee, of this Agreement and the City Covenants and that such instruments are and shall remain senior and nonsubordinate as required under the DBL and Entitlement for the Affordability Period, and (e) financial terms of the proposed Transfer in sufficient detail to enable City to reasonably evaluate and approve (or disapprove) the proposed Transfer. Any Transfer without such prior consent shall, at City’s option, be void.

7.8.2. City Consideration of Requested Transfer. City agrees that it will consider in good faith Developer’s request for a Transfer after the achievement of occupancy of all of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, and following the issuance by City of the CoO, provided Developer delivers written Notice and complete submittal to the City requesting such approval, and provided that the City Covenants remain in full force and effect and Developer is in compliance therewith. As described herein, each Notice shall be accompanied by information, evidence, and supporting documentation about the proposed Transfer and transferee (assignee or purchaser) in sufficient detail to enable City to reasonably evaluate and approve (or disapprove) the proposed assignee or purchaser pursuant to the criteria set forth in this Section 7.8.
(a) Within sixty (60) days after the receipt of Developer’s written Notice requesting approval of a proposed Transfer pursuant to this Section 7.8, City shall either approve or disapprove such proposed Transfer and assignment or shall respond in writing by stating what further information, if any, City reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Developer shall promptly furnish to City such further information as may be reasonably requested. (b) Notwithstanding the foregoing, a Transfer shall not entitle City to receive compensation in connection therewith, excepting the City shall be reimbursed and paid for all Third Party Costs incurred related to such request for Transfer and assignment. (c) An assignment and assumption agreement in form satisfactory to City’s legal counsel shall also be required for each Transfer. Developer agrees and acknowledges that in connection with a Transfer and assignment approved by City under this Agreement, Developer shall remain liable for performance pursuant to this Agreement for a period of five (5) years following such assignment.

7.8.3. Permitted Transfers. The term Permitted Transfer is defined in Section 1.1; in such regard, each Permitted Transfer shall be subject to the terms and conditions in that definition.

In the event of a Permitted Transfer as set forth in subparts (a) to (e) inclusive such definition, Developer nevertheless agrees that at least fifteen (15) calendar days prior to such Permitted Transfer (subparts (a) to (e) thereof) it shall give written notice to City of such assignment and satisfactory evidence that the assignor is then presently in compliance with this Agreement and the City Covenants, and that the assignee will assume all of the obligations thereof of this Agreement and the City Covenants in writing through an assignment and assumption agreement in a form reasonably acceptable to the City and its legal counsel. The form of each assignment and assumption agreement shall be submitted to the City for review and reasonable approval by the City’s counsel not later than fifteen (15) calendar days prior to the proposed date of the Permitted Transfer.

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7.9. Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon Developer and its permitted successors and assigns. Whenever the term “Developer” is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.

7.10. Assignment by City. City may assign or transfer any of its rights or obligations under this Agreement and/or the City Covenants to the Fountain Valley Housing Authority without the consent or other approval of Developer.

7.11. Non-Liability of Officials and Employees of City. No member, official, officer or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any Default or breach by City or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Agreement.

7.12. Relationship between City and Developer. It is hereby acknowledged that the relationship between City and Developer is not that of a partnership or joint venture and that City, on the one hand, and Developer, on the other hand, shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided in this Agreement, including the Attachments hereto, City shall not have any rights, powers, duties, or obligations with respect to the development, operation, maintenance or management of the market-rate components of the Project or the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel.

7.13. City Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager is authorized to act on behalf of City (and, if applicable, when action or approval of City is necessary, then the City Manager is authorized to act on behalf of City), unless specifically provided otherwise or the law otherwise requires. Nonetheless, the City Manager may in her or his sole discretion present the proposed request or action to the City Council for their review, direction, and approval (or disapproval).

7.14. Real Estate Brokers. Developer represents and warrants to City that no broker or finder is entitled to any commission or finder’s fee in connection with this transaction and agrees to defend and hold harmless City from any claim to any such commission or fee resulting from any action on its part.

7.15. Developer Requests and Submittals. Each and any written request by Developer to City submitted to the City and/or City Manager for review, action, and/or approval (or disapproval) shall be a complete submittal with proper supporting documentation as described herein, and in this regard, the time period for City consideration shall not commence unless and until a complete request is presented therefor.

Section 8. RELOCATION.

8.1. Developer Responsible for Relocation. Developer agrees to and shall be fully responsible for administering Relocation, if any is required, including determinations of eligibility, extent of advisory assistance, and scope and amount of benefits and monetary payments pursuant to the applicable Relocation Laws, subject to review by the City Manager. Developer shall cause to be provided and shall pay any and all Relocation assistance and benefits, if any due, in accordance with Relocation Laws and in a manner and in amounts expressly approved by City Manager to each eligible displaced person or business, if any. City Manager’s approval rights in the preceding

64 4930-6338-0083v1/200348-0011
sentence shall be limited solely to determining compliance with Relocation Laws. Developer is and shall remain solely responsible to pay all out-of-pocket costs for direct payments to eligible person(s), household(s) and business(es), if any, for Relocation assistance and benefits due and paid and for any other costs incurred related to Relocation, including a Relocation consultant, and any and all costs or fees incurred pursuant to Section 8.2 below.

8.2. Indemnification by Developer Relating to Relocation. Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for, and defend the City, City and their Indemnitees from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including without limitation penalties, fines, and monetary sanctions), losses, costs, or expenses, including without limitation consultants’ and attorneys’ fees, or relocation benefits claimed or payable under the Relocation Laws (for purposes of this Section 8.2, the foregoing shall be referred to as “Liabilities”) which may now or in the future be incurred or suffered by Indemnitees by reason of, or resulting, in full or in part, or in any respect whatsoever from the displacement and Relocation of persons or businesses pursuant to or resulting from the implementation of this Agreement. At the request of Developer, City shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that City shall not be obligated to incur any expense in connection with such cooperation or assistance.

8.2.1. Release. Developer, on behalf of itself and its Affiliates, and any and all successors and assigns hereby fully and finally releases the Indemnitees from any and all manner of actions, causes of action, suits, obligations, liabilities, judgments, executions, debts, claims and demands of every kind and nature whatsoever, known and unknown, which Developer and any of its affiliates, successors or assigns may now have or hereafter obtain against the Indemnitees by reason of, arising out of, relating to, or resulting from in full or in part, the election of Developer to proceed with the Project pursuant to this Agreement except to the extent arising out of the negligence or willful misconduct of any of the Indemnitees or a breach by City of any representation, warranty or covenant contained in this Agreement or any of the other Project Documents (collectively, “Claims”), which release shall include but not be limited to any Claims for Relocation assistance or benefits under federal, state, local, or any other applicable laws or Governmental Requirements. The parties agree that, with respect to the release of Claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AND THAT, IF KNOWN BY HIM OR HER,

WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASING PARTY.

Developer Initials: ______

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Section 9. MISCELLANEOUS.

9.1. Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by Developer against City in connection with the Site or the Project or the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, Developer hereby waives any right it might otherwise have (a) to offset any such obligation, liability or claim against Developer’s obligations under this Agreement (including without limitation the attachments hereto), or (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Project Documents.

9.2. Notices. All Notices, demands, approvals and other communications provided for in the Project Documents shall be in writing and be delivered to the appropriate party at its address as follows:

If to Developer: Euclid & Heil FV Owner, LLC
18565 Jamboree Rd, Suite 200
Irvine, CA 92612
Attn: [________]
With a copy to: Jackson Tidus, a Law Corporation
2030 Main Street, 15th Floor
Irvine, CA 92614
Attn: Gregory P. Powers, Esq.

If to City: City of Fountain Valley
10200 Slater Avenue
Fountain Valley, CA 92708
Attn: City Manager
with a copy (the mailing of which shall not constitute notice to City) to:

Harper & Burns LLP
Legal Counsel, City of Fountain Valley
453 S. Glassell Street
Orange, California 92866
Attn: Colin R. Burns, Esq.
and, copy to (the mailing of which shall not constitute notice to City):

Stradling Yocca Carlson & Rauth LLP
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attn: Celeste Stahl Brady
Addresses for Notice may be changed from time to time by written Notice to all other parties.

All communications shall be effective when actually received; provided, however, that nonreceipt of any communication as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.

66 4930-6338-0083v1/200348-0011

9.3. No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and City in implementation of the Entitlement as such relates to the Affordable Units, and no other person; provided however, the Fountain Valley Housing Authority is an intended third party beneficiary of this Agreement and there are no other third party beneficiaries hereunder.

9.4. Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. Developer shall not assign any of its rights or obligations under any Project Document without the prior written consent of the City Manager, which consent may be withheld in her or his sole and absolute discretion. Any such assignment without such consent shall, at City’s option, be void.

9.5. Counterparts. Provided that the written approval of the City Manager is first obtained, any Project Document may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document.

9.6. Prior Agreements; Amendments; Consents. The Entitlement, together with this Agreement and other Project Documents contain the entire terms and conditions by and between City and Developer with respect to the Site and Project, including the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, and all prior negotiations, understandings and agreements with respect to such matters, any such agreements being superseded by this Agreement and such other Project Documents (excepting that all conditions of the Entitlement as to the Site, including without limitation the City Covenants, shall remain in full force and effect). No modification of any Project Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original. This Agreement includes pages 1 through 68, inclusive, plus two signature pages, S-1 and S-2, and Attachments 1 through 10, inclusive, which together constitute the entire understanding and agreement of the parties as to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, required under the Entitlement, the DBL, and Inclusionary Housing Program as implemented by this Agreement and the City Covenants.

All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of City (and City, if applicable) and Developer, and all amendments hereto must be in writing by the appropriate authorities of City (and City, if applicable) and Developer.

9.7. Developer’s Payment and Reimbursement of City’s Third Party Costs.

9.7.1. Third Party Costs Defined; Obligation. Developer shall pay for and reimburse City for the following out-of-pocket, third party costs (but not in-house staff time), fees, and expenses reasonably incurred by City for any and all of the following from the period of time commencing upon the Date of Agreement and through the end of the term of the Affordability Period (together, “Third Party Costs”): (a) implementation of this Agreement, (b) processing each stage of the Development Plans, (c) escrow company fees and title company fees incurred in connection with the Project Documents; (d) drafting, negotiation, and execution of implementing agreements and/or amendments after the Date of Agreement; (e) enforcement of this DBAHA, the City Covenants, or any other Project Documents, including the following: (i) commencement of, appearance in, or defense of any action, litigation, or proceeding purporting to affect the rights or obligations of the

67 4930-6338-0083v1/200348-0011
parties to any implementing documents hereunder, (ii) City commences legal action against Developer arising out of Developer’s Default for its failure to timely cause completion of the Affordable Units, and (iii) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City and its Indemnitees are indemnified hereunder, provided as to defense of any action which City (or any Indemnitee) has or have tendered the defense to Developer and Developer fails to defend any such action; and (f) other costs incurred related to requests by Developer to City for or provision of estoppel certificates or comparable creditor and/or intercreditor instruments, subordination agreements, affirmation thereof, plans, or review and approval of any other matters requiring City review, consideration and/or approval (or disapproval) hereunder or under any implementing documents.

9.7.2. Payment of Third Party Costs. Within thirty (30) days of the submittal by City staff of information about Third Party Costs incurred, it is and shall be the obligation of Developer to reimburse and pay to City one hundred percent (100%) of these Third Party Costs.

Developer acknowledges that general information will be provided, but that copies of legal invoices will not be provided as each are protected by attorney-client privilege. (a) This reimbursement obligation shall bear interest from the date occurring forty-five (45) days after City gives written demand to Developer at the rate of ten percent (10%), or the maximum rate then permitted by law.
(b) As to Section 9.7.1 clause (e)(ii) above, this reimbursement obligation shall be on an ongoing basis until such legal action is concluded through the later and last to occur of:
(i) final judgment in favor of the City in such action, (ii) settlement agreement between or among the parties in such action, or (iii) issuance of the final CoO for the Affordable Units and evidence that such Affordable Units are subject to the senior nonsubordinate City Covenants for the 55-year Affordability Period.
(c) This reimbursement obligation shall remain in effect for the Affordability Period.

9.7.3. Exception to Payment of Third Party Costs. Notwithstanding Section

9.7.1, and 9.7.2 above, Developer shall not be responsible to pay and reimburse for Third Party Costs if the costs incurred are attributable to an Event of Default by City or the City’s sole gross negligent acts or willful misconduct under this Agreement.

9.8. Governing Law. All of the Project Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange as well as the Federal District Court for the Central District of the State of California in connection with any legal action or proceeding arising out of or relating to this Agreement or the other Project Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue.

9.9. Severability of Provisions. No provision of any Project Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Project Documents are hereby declared to be severable.

68 4930-6338-0083v1/200348-0011

9.10. Headings. Article and Section headings are included in the Project Documents for convenience of reference only and shall not be used in construing the Project Documents.

9.11. Interpretation. This Agreement shall be construed as if equally prepared by all parties A reference to a Section shall be deemed to include all subsections thereof.

9.12. Conflicts. In the event of any conflict between or among the provisions of the Entitlement, this Agreement, the City Covenants or any other Project Document, the most restrictive provisions and covenants shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed.

9.13. Time of the Essence. Time is of the essence of all of the provisions of this Agreement.

9.14. Conflict of Interest. No member, official or employee of City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law.

9.15. Warranty against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement.

9.16. Nonliability of City Officials, City Officials and Employees. No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement. [Signature blocks begin on next page]

S-1
4930-6338-0083v1/200348-0011
IN WITNESS WHEREOF, the parties hereto have caused this Density Bonus and Affordable Housing Agreement (16300 Euclid, Fountain Valley) to be effective as of the Date of Agreement.

DEVELOPER:

EUCLID & HEIL FV OWNER, LLC, a Delaware
limited liability company
By:

Brian Rupp, Executive Vice President
By:

Its: _________________________
[need updated/complete signature block per the
joint venture LLC agreement with blocks by each
of SOF and Lennar as joint venturers that
comprise the Developer entity. Too, please provide
evidence of authority of the members, corporate
officer(s), of Developer, and of SOF and Lennar, to
sign this DBAHA, related attachments, such as
corporate resolution, etc., plus corporate resolution
from Guarantor for issuance of the Completion
Guaranty]
APPROVED AS TO FORM:
__________________________
Developer Counsel
Date of Developer’s execution:
[__________________]
[Signatures continued on next page]

S-2
4930-6338-0083v1/200348-0011
[Signatures continued from previous page]
CITY
CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By:

Maggie Le, City Manager
or Authorized Designee
Date of execution: [_______]
ATTEST:

Rick Miller, City Clerk Administrator
or Authorized Designee
APPROVED AS TO FORM:

HARPER & BURNS LLP
Colin R. Burns, Esq., City Legal Counsel
or Authorized Designee
and

STRADLING YOCCA CARLSON & RAUTH LLP
Celeste Stahl Brady, Special Counsel
or Authorized Designee

Attachment No. 1
Site Map

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 1

SITE MAP

Attachment No. 2
Legal Description of Site

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 2
Legal Description of Site
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 21, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLAS,

CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT AN UNDIVIDED 1/2 INTEREST OF ALL OIL, GAS, ASPHALTUM AND OTHER

HYDROCARBON OR KINDRED SUBSTANCES IN OR UNDER SAID LAND AS RESERVED BY ROSE A. MORLEY AND WILLIAM H. MORLEY, HUSBAND AND WIFE IN THE DEED RECORDED JUNE 2, 1950 IN BOOK 2021 PAGE 149,
OFFICIAL RECORDS.

APN: 144-111-01

Attachment No. 3
Memorandum of Agreement

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 3

MEMORANDUM OF AGREEMENT
Recording Requested By and
When Recorded Mail To:

City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk Administrator
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from the payment of a recording fee under Government Code Section 27383.)

MEMORANDUM OF AGREEMENT
This MEMORANDUM OF AGREEMENT (“Memorandum”) dated as of _________, 2025 is entered into by and between the CITY OF FOUNTAIN VALLEY, a California municipal corporation (“City”), and EUCLID & HEIL FV OWNER, LLC, a Delaware limited liability company (“Developer”).

1. Density Bonus and Affordable Housing Agreement. City and Developer have executed an unrecorded Density Bonus and Affordable Housing Agreement (16300 Euclid Street, Fountain Valley) (“Agreement”) dated as of October 23, 2025 covering that certain real property located in the City of Fountain Valley, County of Orange, State of California, which is formally described in the legal description attached hereto as Exhibit A. The Agreement is on file as a public record with the City at its offices at 10200 Slater Avenue, Fountain Valley, California 92708. All of the terms, conditions, provisions, and covenants of the Agreement are incorporated in this Memorandum by reference as though written out at length herein, and the Agreement and this Memorandum shall be deemed to constitute a single instrument or document.

2. Purpose of Memorandum. This Memorandum is prepared for recordation purposes only, and in no way modifies the terms, conditions, provisions, and covenants of the Agreement.

In the event of any inconsistency between the terms, conditions, provisions and covenants of this Memorandum and the Agreement, the terms, conditions, provisions, and covenants of the Agreement shall prevail.
[Signature Blocks begin on next page]

Attachment No. 3
Memorandum of Agreement

4930-6338-0083v1/200348-0011
DEVELOPER:

EUCLID & HEIL FV OWNER, LLC, a Delaware
limited liability company
By:

Brian Rupp, Executive Vice President
By:

Its: _________________________
CITY:

CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By:

Maggie Le, City Manager
or Authorized Designee
ATTEST:

Rick Miller, City Clerk Administrator
or Authorized Designee

Exhibit A to Attachment No. 3
Legal Description to Memorandum of Agreement

4930-6338-0083v1/200348-0011
Exhibit A
to Memorandum of Agreement
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 21, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLAS,

CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT AN UNDIVIDED 1/2 INTEREST OF ALL OIL, GAS, ASPHALTUM AND OTHER

HYDROCARBON OR KINDRED SUBSTANCES IN OR UNDER SAID LAND AS RESERVED BY ROSE A. MORLEY AND WILLIAM H. MORLEY, HUSBAND AND WIFE IN THE DEED RECORDED JUNE 2, 1950 IN BOOK 2021 PAGE 149,
OFFICIAL RECORDS.

APN: 144-111-01

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 4

CITY COVENANTS
Recording Requested By and
When Recorded Mail To:

City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk Administrator
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from the payment of a recording fee under Government Code Section 27383.)

CITY COVENANTS AGREEMENT
This CITY COVENANTS AGREEMENT (“City Covenants”) is dated as of [_________,] 2025 and made and entered into by and between EUCLID & HEIL FV OWNER, LLC (“Developer”), and CITY OF FOUNTAIN VALLEY, a California municipal corporation (“City”), each of which is a signatory hereto.

R E C I T A L S
A. Each of Developer and City is a party to these City Covenants and may be referred to as a “Declarant”, and collectively may be referred to as “Declarants”.

B. City and Developer have entered into that certain unrecorded Density Bonus and Affordable Housing Agreement (16300 Euclid Street, Fountain Valley) dated as of October 23, 2025 (“DBAHA”) for the improvement and development of certain real property referred to as the “Site” which is formally described in the attached Legal Description, Exhibit A, incorporated herein.

A copy of the DBAHA is on file with City as a public record. Capitalized terms not defined herein shall have the meaning established and set forth in the DBAHA.

C. Pursuant to the DBAHA and prior to issuance of the Initial City Permit, these City Covenants and the Memorandum of Agreement shall be recorded against the Site in the Official Records, County of Orange, State of California as the senior, nonsubordinate encumbrances running with the land in effect for the Affordability Period. In no event shall these City Covenants or the Memorandum of Agreement be made junior or subordinate to any other encumbrances, including deeds of trust, or other instruments providing financing, whether construction, permanent, equity or other financing, for the construction, ownership, and/or operation of the greater Project. Developer’s obligation to cause completion of the Affordable Units may occur on the duly subdivided separate Affordable Parcel as undertaken by the Affordable Developer pursuant to the Term Sheet and

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
implementing agreement(s). Upon and subject to issuance of a final Certificate of Occupancy by the City’s Building Official for the construction and completion of the eighty-two (82) Affordable Units plus one (1) Manager Unit, the City will prepare and cause recording of a termination instrument affecting these City Covenants, the Agreement and Memorandum of Agreement as to the market-rate residential parcels of the Project; nevertheless, the unrecorded Agreement along with the recorded Memorandum of Agreement and these City Covenants, shall remain in full force and effect as to the Affordable Units whether developed on the Affordable Parcel or otherwise within the overall Project.

Notwithstanding the foregoing, in the event the Affordable Developer does not develop the Senior Apartments project on the Affordable Parcel, Developer acknowledges and agrees that the Affordable Units required by the DBL cannot be satisfied by payment of In-Lieu Fees and must be constructed, completed and operated within the greater Site as Affordable Units available at an Affordable Rent to Low Income Households for the 55-year Affordability Period. In the event such occurs, the Agreement and these City Covenants shall be amended to conform to the facts of how many units of the Project are Affordable Units required by the DBL and how the City’s Inclusionary Housing Program will be satisfied by Developer either via payment of In-Lieu Fees or inclusion of Low Income Affordable Units on the greater Site. In such event, the City Covenants, as amended, shall remain in full force and effect as to the Site and requirements for onsite Affordable Units required by the Entitlement and this Agreement.

D. The Recitals in the DBAHA summarize Developer’s land use approvals that comprise the Entitlement for the Project on the Site and such City actions, both discretionary and ministerial, are available at the City Clerk’s office at City Hall. Any other or additional modifications to the Entitlement, if any, shall be appended to and deemed a part of these City Covenants and the DBAHA. Nothing summarizing the Entitlement therein or herein modifies such City approvals, whether discretionary or ministerial, as set forth in the series of resolutions, ordinances, conditions of approval, and related findings that comprise the Entitlement.

E. The Entitlement requires as a condition of approval the entering into and recordation of these City Covenants (and the Memorandum of Agreement) as senior, nonsubordinate encumbrances against the Site to ensure the Affordable Units are caused to be completed and subject to these City Covenants for the 55-year Affordability Period. These City Covenants affect, touch and concern the Site and its ownership, use, operation, maintenance, and property management for the Affordability Period because these City Covenants are for the intended objective and legal obligation to provide affordable rental housing available to Low Income Households at an Affordable Rent.

F. Under the DBAHA, Developer represents and covenants that, as of the recordation of this City Covenants Agreement, Developer holds fee simple marketable title to the Site.

G. These City Covenants impose certain affordable housing, use, and operational restrictions for a period that will commence on the date of issuance of the final Certificate of Occupancy issued by the Building Official for the Affordable Units and thereafter continue until the fifty-fifth (55th) anniversary of the issuance of such final CoO as further provided in the DBAHA (“Affordability Period”).

H. Declarants wish to adopt these City Covenants to further govern the use of Senior Apartments on the Affordable Parcel as the affordable housing component of the overall Project, in

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conjunction and along with the DBAHA and to ensure that City achieves credit for production and long-term covenanting of affordable housing units in satisfying the City’s Regional Housing Needs Allocation (“RHNA”), Housing Element of the General Plan, and evidences compliance with the Entitlement, including the DBL and Inclusionary Housing Program, and meets other community objectives to provide affordable housing in the Fountain Valley community.

NOW, THEREFORE, City and Developer declare that the Senior Apartments Project developed on a separate Affordable Parcel pursuant to the Term Sheet and implementing agreements, shall be held, transferred, encumbered, used, sold, conveyed, leased, and occupied expressly subject to these City Covenants that are expressly and exclusively for the use and benefit of, and to touch and concern said property, and with the City as holder of beneficial interests therein and hereof. Subject to Recital C. above, each and all of these City Covenants shall run with the land and shall be binding on Declarants, their grantees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owner of all or any part of the Senior Apartments Project and Affordable Parcel for the Affordability Period.

ARTICLE I

DEFINITIONS
Capitalized terms not defined herein shall have the respective meanings established therefor in the DBAHA; such definitions shall be applicable to these City Covenants and also to any amendment or supplement to these City Covenants (unless the context implicitly or explicitly shall prohibit), recorded against the Site pursuant to the provisions of these City Covenants.

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall cause development of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel (if such occurs), in conformity with the Entitlement, DBL, City Inclusionary Housing Program, and the affordable housing restrictions and covenants provided under the DBAHA. Upon completion of development the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, the Affordable Units shall be operated and devoted only to the uses specified herein and in the Entitlement and DBAHA for the periods of time specified therein. All uses conducted on thereon, including, without limitation, all activities undertaken by Developer (inclusive of Affordable Developer) pursuant to the Entitlement shall conform to all applicable provisions of the City Code, the Entitlement, and other applicable federal, state and local laws and regulations.
(a) Ownership of Affordable Units. The Affordable Units, land and improvements, shall be owned, used, maintained, managed, and operated in accordance with these City Covenants and the Entitlement for the Affordability Period. None of the Affordable Units shall at any time be utilized on a transient basis nor shall the Project or any portion thereof ever be used for an emergency shelter, or for short term rental such as AirBnB, VRBO, or HomeAway, or as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer court or park. No part of the Affordable Parcel or any of the Affordable Units shall be or will at any time be owned or used as a cooperative housing corporation or a stock cooperative.

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(b) Permitted Transfers; Transfers. Transfers, both Permitted Transfers and other Transfers of the Site and/or Project, prior to the issuance of the CoO for the Affordable Units, and thereafter as to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, are subject to the provisions of the DBAHA, in particular Section 7.8, and the definition of Permitted Transfer therein.

Section 2. Affordable Housing; Eligible Households.
(a) Number of Units. Throughout the Affordability Period, Developer (and each successor- in-interest) agrees to make available, restrict occupancy to, and lease each and all eighty-two (82) Affordable Units at an Affordable Rent to qualified Low Income Households in conformity with the Prescribed Rent Level and Unit Mix. (b) Duration of Affordability Requirements. The Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, shall be maintained as rental units available at and rented to Low Income Households throughout the 55-year Affordability Period. (c) Prescribed Rent Level and Unit Mix. The Prescribed Rent Level and Unit Mix for the Senior Apartments includes:
• Seventy-one (71) one-bedroom units for Low Income Households at an Affordable Rent; and
• Twelve (12) two-bedroom units for Low Income Households at an Affordable Rent, excepting one of the two-bedroom units (1 of 12) is designated as the Manager Unit that is unrestricted as to rent.
(i) The Affordable Units shall meet the Prescribed Rent Level and Unit Mix (as the term is defined in the DBAHA) as required despite a temporary noncompliance with the defined Affordable Rent, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by Developer to ensure that each and all vacancies of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, are filled in accordance with the DBAHA and these City Covenants until the noncompliance is corrected. (ii) A tenant household that qualified as a Low Income Household, including a Senior Low Income Household at the Senior Apartments at initial occupancy shall be deemed to continue to be so qualified until such time as reverification and certification of the tenant household’s gross income shows that such tenant no longer qualifies as a Low Income Household, or as applicable a Senior Low Income Household. An existing tenant household in occupancy at the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, whose income exceeds the qualifying limit for a Low Income Household may continue to occupy that Affordable Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of (A) thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or (B) the market rent applicable to the Affordable Unit as published by State HCD, so long as such continued tenancy does not exceed six (6) months. Such restrictions and requirements about reverification and recertification of household income to be and remain eligible for occupancy and tenancy at the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, shall

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be expressly stated and separately initialed by each adult member of the tenant household in the lease or other rental agreement for each tenant at the Affordable Units. (d) Income of Tenants. Each prospective and actual tenant household at the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, shall qualify as a Low Income Household (or Senior Low Income Household, as applicable) and shall meet the eligibility requirements established for the corresponding Unit Mix requirements, and Developer shall obtain a certification from each tenant household renting or leasing an Affordable Unit that substantiates such fact. After each tenant’s initial occupancy, annually (or more often as reasonably requested by the City) Developer shall verify and obtain an income certification from each tenant household as a qualifying Low Income Household as set forth herein. (e) Determination of Affordable Rent for the Affordable Units. Excepting the one (1) Manager Unit, all Affordable Units shall be rented to qualified Low Income Households at an “Affordable Rent” as provided below and subject to the following:
(i) “Affordable Rent” means the monthly housing cost (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of the amount that may be charged by Developer for the Affordable Units leased to qualified Low Income Households in conformity with the Prescribed Rent Level and not to exceed HSC Sections 50052.5 and 50053 for Lower Income Households (including as applicable who also qualify as Senior Low Income Households.) This monthly housing cost means the maximum amount to be charged by Developer and paid by the Low Income Households occupying the Affordable Units. Further, the household income for Low Income Households leasing Affordable Units shall not exceed the income standard set forth in HSC Section 50079.5 and Affordable Rent shall not exceed the standard and calculations set forth in HSC Sections 50052.5 and 50053.
(A) In addition, the term Affordable Rent includes the total of monthly payments by the tenants of the Senior Apartments for (a) use and occupancy of an Affordable Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer that are required of all tenants of the Affordable Units, other than security deposits, (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as set annually by the Orange County Housing Authority pursuant to 24 CFR Section 5.609 et seq. and (d) possessory interest, taxes or other fees or charges assessed for the use of the Affordable Units and facilities associated therewith by a public or private entity other than Developer.
(B) In practice, calculation of affordable rent necessitates a two-step process.

Step 1 is qualification of the tenant as a Low Income Household with gross income at or below eighty percent (80%) of AMI based on the actual size of the household per HSC §50052.5(b)(3); and, Step 2 is the calculation of monthly housing cost/rent based on a presumed household size for the number of bedrooms in the unit. Affordable Rent for Lower Income Households renting an Affordable Unit generally equates to the product of thirty percent times sixty percent (30% x 60%) of AMI adjusted for household size appropriate for the unit as set forth in HSC Sections 50052.5 and 50053(b)(1), however, this definition of Affordable Rent is expressly subject to the next paragraph.

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(ii) Notwithstanding HSC Section 50053(b)(1) cited in (e)(i) above, pursuant to State HCD, Housing Accountability Unit, Housing Policy Development (“HAU”) review of the 606-unit greater Project, the City has been directed to, and will apply HSC Section 50053(b)(2), but only in the event that Affordable Developer causes construction of and operates the Affordable Units in the standalone affordable housing Senior Apartments (with one Manager Unit) that (A) ”dedicates 80 percent of units, exclusive of a manager’s unit or units, to lower income households” and (B) is funded through either or both: (1) federal or state Low Income Housing Tax Credits, and/or (2) tax-exempt private activity bonds or general obligation bonds (herein, “Standalone Affordable Project”). In this regard, HAU has provided guidance to City and Developer (and Affordable Developer) to follow the following technical assistance (x) letter dated as of August 4, 2025 to the Christina Bibler, Director of Economic Development, City of San Diego (https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/san-diego-sportsarena-disposition-080425.pdf), which opines, in part, that in order to achieve required DBL affordable units, a master developer that plans to partner, and partners, with an affordable housing developer to build and operate separately financed affordable housing development utilizing Low Income Housing Tax Credits can apply HSC Section 50053(b)(2) (rather than (b)(1)) for calculation and determination of Affordable Rent, and (y) letter dated as of September 25, 2025 to Omar Dadabhoy, Community Development Director, City of Fountain Valley from David Zisser, Assistant Deputy Director, Local Government Relations and Accountability (https://www.hcd.ca.gov/sites/default/files/docs/planning-and-community/HAU/fountain-valley-hau2388-ta-092525.pdf). Therefore, in the event the Affordable Units are completed in such Standalone Affordable Project and such project meets the requirements of HSC Section 50053(b)(2), then the term “Affordable Rent” under the Agreement and these City Covenants will be as defined in HSC Section 50053(b)(2). Provided in the event no Standalone Affordable Project that meets the requirements of HSC Section 50053(b)(2) is undertaken, completed, and operated, thereby Developer’s obligation to cause construction, completion, and operation of covenanted Affordable Units shall occur within the overall 606-unit Project and without funding through (1) federal or state Low Income Housing Tax Credits, or (2) tax exempt private activity bonds or general obligation bonds, then the term Affordable Rent in the Agreement and these City Covenants shall mean and apply HSC Section 50053(b)(1).
(f) Utilization of Affordable Rental Units. Excepting the Manager Unit, all Senior Apartments shall be leased or rented and fully utilized in accordance herewith; notwithstanding any other provision of law to the contrary, no Affordable Unit shall be withdrawn from the market or otherwise held vacant.
(g) No Sublease. A tenant occupying an Affordable Unit may not sublet the unit without the prior written permission of both Developer and City and only for verifiable hardship circumstances. The prospective sublessee household shall qualify as a Senior Low Income Household and pay an Affordable Rent; provided that the City shall not grant permission to lease, rent, or sublet the unit if it determines the prospective sublessee does not so qualify. Any individual(s) who sublease(s) an Affordable Unit in violation of these provisions shall be required to forfeit to City all monetary amounts so obtained.

Section 3. Developer Verification and Compliance; Annual Reports. Developer shall obtain and maintain on file an Income Verification from each tenant household, including all adult members of each such household, for all of the Senior Apartments dated immediately prior to the initial

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occupancy of each Senior Low Income Household becoming a tenant. Commencing on or before the first March 15 after the City issues the final CoO for the Senior Apartments and thereafter on or before March 15 of each Year of the Affordability Period, Developer shall file with City or its designee a Certificate, containing all information required to demonstrate that rents and income levels for the Senior Apartments comply with the requirements of the DBAHA and these City Covenants regarding qualifying as a Senior Low Income Household and paying a monthly Affordable Rent and containing such information as City additionally requires, in a form prescribed by City. Each Certificate shall cover the immediately preceding Year. Developer shall remit the City Monitoring Fee concurrent with each Annual Report, subject to the provisions, if applicable, of Government Code Section 65915.3.
(a) To the extent necessary and based on facts and circumstances as to one or more of the Senior Apartments, tenant reverification and recertification may occur more often than annually as requested by the City or as otherwise determined by Developer or its Property Manager.

Section 4. Household Size Appropriate to an Affordable Unit. The term “household size appropriate to the unit” for the purpose of the calculation of Affordable Rent herein (and without regard to actual occupancy), means the presumed household size (not actual) as such standards are set forth in HSC Sections 50052.5 and 50053.

Section 5. Occupancy Standards and Limits. To the greatest extent allowed by law, including Fair Housing Laws, Developer agrees to comply with the following minimum and maximum occupancy for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel,:
(i) for the one-bedroom units the maximum occupancy is three (3) persons, and (ii) for the twobedroom units the maximum occupancy is five (5) persons and minimum occupancy is two (2) persons. In this regard, maximum occupancy is two persons per bedroom plus one person, and minimum occupancy is one person per bedroom.

Section 6. Rental Agreement. Prior to the rental or lease of each of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, to an eligible, qualified Low Income Household (inclusive of Senior Low Income Households), Developer shall require the tenant to execute a written lease and to complete an Income Verification certifying that the tenant(s) occupying the Affordable Unit is/are a Low Income Household and meet(s) the eligibility requirements established for the Affordable Unit. Developer shall verify the age and income of all adult members of the household. Developer shall accept as tenants on the same basis as all other prospective tenants, including those holding a Portable Voucher. Developer shall not apply selection criteria to Portable Voucher holders that are more burdensome than criteria applied to any other prospective tenants.

Section 7. Verifications.
(a) Income Verification. Developer shall verify the income of each proposed and existing tenants of the Senior Apartments.
(b) Records of Leases. Developer shall maintain on file each tenant’s executed lease and Income Verification and rental records for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. Developer shall maintain complete and accurate records for

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the Affordable Units and will permit any duly authorized representative of City to inspect the books and records of Developer related in any manner to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, and/or pertaining to the DBAHA and this City Covenants Agreement.

Section 8. No Condominium Conversion of Affordable Units. Developer shall not, and shall not allow any other person to, cause all or any portion of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, to be converted to condominiums or to otherwise allow a condominium map or condominium plan to be recorded or filed against all or any portion thereof.

Section 9. Nondiscrimination. Developer shall refrain from restricting the rental, sale or lease of the Site, or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, national origin, or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on 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 premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
In contracts: “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

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of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” The Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, required by the Entitlement shall constructed, completed, and operated as the Affordable Units, and the covenants established in these City Covenants shall, without regard to technical classification and designation, be binding for the benefit and in favor of City and their successors and assigns, and any successor in interest to the Affordable Units (land and improvements), or any part thereof. The covenants against discrimination as set forth in this Section 8 of Article II shall remain in effect in perpetuity.

Section 10. Compliance with Laws. Developer shall carry out the design, development and operation of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in conformity with all applicable federal, state and local laws and regulations, including Uniform Codes, City Code, Uniform Codes, building, plumbing, mechanical and electrical codes, and all other provisions thereof, City zoning and development standards, Fair Housing Laws, including without limitation AFFH, and all applicable disabled and handicapped access requirements, including without limitation the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq.

ARTICLE III

DUTIES OF DEVELOPER RE

MANAGEMENT, MAINTENANCE, AND OPERATIONAL RESPONSIBILITIES Section 1. Management of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel,.
(a) Property Manager. Developer shall, or shall cause, the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, to be managed in a prudent and business-like manner, consistent with good property management standards for other high quality affordable housing developments in Southern California, which by way of example include affordable housing owned and operated by Jamboree Housing Corporation or The Related Companies of California. National Community Renaissance of California or its Affiliate experienced in property management of affordable housing is pre-approved for selection as the Property Manager of the Affordable Units. And, Developer may contract with any other property management company or property manager experienced in management of affordable housing to operate, manage, and maintain the Affordable Units (land and improvements) in accordance with the terms of this Article III (“Property Manager”); provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in her or his discretion. The Property Manager shall manage the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in accordance with the definitions of Affordable Rent, the tenant selection requirements, and the definitions relating to Low Income Households set forth herein and in the DBAHA. Developer shall

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conduct due diligence and background evaluation of any potential third party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager of affordable housing. Any proposed property manager shall have significant and relevant prior experience with affordable housing properties comparable to the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, (including properties with some or all units designated as affordable housing), and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) by Developer prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by City Manager shall not be unreasonably delayed but shall be in her/his sole reasonable discretion, and the City Manager shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Affordable Units. The replacement of a Property Manager by Developer and/or the selection by Developer of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements. (i) The rent rolls prepared maintained by Developer (and/or its Property Manager) shall include the following information:
 Site Map with Unit Number of each Affordable Unit
 Unit type (e.g., 1-bedroom or 2-bedroom unit)
 Tenant Name
 Number of occupants/persons in household
 Tenant household Gross Annual Income (per last income certification with date)
 Low Income maximum income limit per State HCD limits based on actual household size of the Low Income Household
 HSC maximum monthly Affordable Rent
 Actual gross monthly rent charged per tenant lease (inclusive of utility allowance)
 Section 8 portable voucher (yes or no); and, if yes, tenant portion/payment and applicable housing authority portion per applicable fair market rent (“FMR”) for the unit.
(ii) For each proposed replacement of the Property Manager by Developer, in addition to the submittals described above, Developer shall prepare and submit a current rent roll of the Affordable Units evidencing compliance with the DBAHA and these City Covenants.
(b) Compliance with Property Management Plan. The Property Management Plan, and all amendments thereto approved by the City Manager, shall evidence and include a detailed plan and strategy for long term marketing, operation, maintenance, repair and security thereof of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, inclusive of the method of selection of tenants, rules and regulations for tenants, and other rental policies. The ongoing management and operation of the Affordable Units, inclusive of the Senior

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Apartments on the Affordable Parcel, shall be in compliance with the approved Property Management Plan. During the Affordability Period, Developer and its Property Manager may from time to time submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager. (c) Gross Mismanagement. During the Affordability Period, and in the event of Gross Mismanagement of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, and City (through City Manager) shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, and further to direct and require the immediate removal of the Property Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of written Notice from the City Manager.

If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written Notice (with evidence of such submitted to the City Manager, as applicable), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thirty (30) days as reasonably determined by the non-defaulting party), then Developer and its Property Manager shall have an additional 45 days to complete the cure of Gross Mismanagement condition(s). In no event shall any condition of Gross Mismanagement continue uncured for a period exceeding seventy-five (75) days from the date of the initial written Notice of such condition(s), except that the conditions described in subdivisions (d) (iv) and (d)(v) below may exist for up to, but no longer than, ninety (90) days without triggering City’s right to remove the Property Manager as described in the immediately following sentence as long as Developer is diligently working to cure such conditions of Gross Mismanagement. If such condition(s) do persist beyond such period, the City Manager shall have the absolute right to immediately and without further notice to Developer (or to Property Manager or any other person/entity) to remove the Property Manager and replace the Property Manager with a new property manager of City Manager’s selection at the sole cost and expense of Developer.

If Developer takes steps to select a new Property Manager that selection is subject to the requirements set forth above for selection of a Property Manager. (d) For purposes of these City Covenants, the term “Gross Mismanagement” means management of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in a manner that violates the terms and/or intention of the Entitlement, the DBAHA, and these City Covenants for operation of a high quality affordable housing development and shall include, but is not limited to, any one or more of the following:
(i) Leasing Affordable Units to tenants who do not qualify as Low Income Households or as applicable Senior Low Income Households; (ii) Charging rent in excess of Affordable Rent for the Affordable Units; (iii) Allowing tenants of the Affordable Units to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (iv) Under-funding required Capital Replacement Reserve accounts;

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(v) Failing to timely maintain the Affordable Units in accordance with the Property Management Plan and in compliance with the Maintenance Standards; (vi) Failing to submit timely and/or adequate annual reports to City as required herein as to operation of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel;
(vii) Fraud or embezzlement of funds allocable to or otherwise from the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, including without limitation funds in reserve accounts;
(viii) Failing to fully cooperate with the Fountain Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in maintaining a crime-free environment, or in implementing measures recommended by the Fountain Valley Police Department; (ix) Failing to fully cooperate with the Fountain Valley Fire Department or other local public safety agency(ies) with jurisdiction over the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in maintaining a safe and accessible environment, or in implementing measures recommended by the Fountain Valley Fire Department; (x) Failing to fully cooperate with the Fountain Valley Community Development Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in maintaining a decent, safe, and sanitary environment or in implementing measures recommended by the Fountain Valley Community Development Department;
(xi) Failing to conduct, or refer to appropriate third party(ies) to conduct, health, safety and welfare checks as reasonable for residents who are reasonably known to Developer, its Property Manager, onsite resident manager(s), social and supportive services providers, or other onsite workers be infirm, ill, incapacitated, or otherwise in need of close supervision of their living arrangement and ability to conduct their basic activities of daily living; and (xii) Maintaining or allowing the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, to be maintained as a public nuisance or in a manner in conflict with any provision of the City Code; and
(xiii) Spending funds from the Capital Replacement Reserve account for items that are not defined as eligible costs, including eligible capital and/or replacement costs, under the standards imposed by GAAP (and/or, as applicable, generally accepted auditing principles).

Notwithstanding the requirements of the Property Manager to correct any condition of Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time and, if necessary, to replace the Property Manager of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, as provided above. Developer shall include advisement and provisions of the foregoing requirements and requirements of the DBAHA and these City Covenants

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
within any contract between Developer and its Property Manager for the property management of the Affordable Units.
(d) Code Enforcement. Developer acknowledges and agrees the City and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Developer and/or an individual tenant. If such notice is provided by City representative(s) to Developer, then Developer (or its Property Manager) shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Affordable Units to be made available and open for inspection.

Developer shall include express advisement of such inspection rights within the lease/rental agreements for each and all the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in order for each and every tenant and tenant household to be aware of this inspection right.
(e) Capital Reserve Requirements. Commencing upon closing of the permanent financing and TCAC conversion of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, Developer shall annually set aside an amount of not less than Two Hundred Fifty Dollars ($250.00) per unit (83 units times $250 equals $20,750) or such higher/increased amount required by a Lender from the gross rents received from the Affordable Units, into a separate interest bearing trust account defined as the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements, and replacements to the Affordable Units, including fixtures and equipment, which are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Affordable Units in the manner prescribed herein. Not less than once per Year and concurrent and included within the annual report, Developer, at its expense, shall submit to the City Manager an accounting for the Capital Replacement Reserve for the Affordable Units. Capital improvements and repairs to, and replacements for the Affordable Units shall include only those items with a long useful life, including without limitation the following:
carpet and drapery 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 repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting. In connection with each annual report, to the City Manager by Developer, City Manager will evaluate the cumulative amount on deposit in the Capital Replacement Reserve account and exercise his/her sole, reasonable discretion to determine if existing balance(s) in, proposed deposits to, shortfalls, if any, and/or a cumulative unexpended/unencumbered account balance in such Capital Replacement Reserve account are adequate to provide for necessary capital repairs and improvement for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel.

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
Notwithstanding the foregoing portion of this Article III, in the event a Lender prescribes particular amounts to be set aside as a capital replacement reserve that exceeds the requirements herein, compliance therewith shall be deemed compliance herewith.

Section 2. General Maintenance.
(a) Maintenance of Affordable Units. Developer agrees for itself and its successors in interest to the Affordable Units (land and improvements), to maintain the Affordable Units (land and improvements) in conformity with the City Code and the conditions set forth in the DBAHA and these City Covenants, and shall keep the Affordable Units (land and improvements) free from any accumulation of debris or waste materials. During such period, Developer shall also maintain the landscaping planted on the Affordable Parcel in a healthy condition. (b) Maintenance Standards; Program Maintenance. Developer and its maintenance staff, contractors or subcontractors shall comply with the Maintenance Standards and Program Maintenance as set forth in the DBAHA. ):
(i) Notwithstanding the foregoing, if the City Manager reasonably determines that the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, suffer from significant and unexpected wear and tear requiring any of the above items of maintenance to be performed sooner as set forth in the DBAHA. Upon the request of Developer, the City Manager, at his/her sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements.

Section 3. Duty to Prevent Hazardous Material Contamination. During the development and operation the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or thereunder. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. Developer shall notify City, and provide to City a copy or copies, of any notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and Developer shall report to City, as soon as possible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment.
(a) For purposes of this Article III, “Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the County, City, or any other political subdivision in which the Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Developer or the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. (b) For purposes of this Article III the term, “Hazardous Materials” is defined in the DBAHA.

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
Section 4. Parking of Vehicles. Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the parking areas designated for allowable uses in the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, including parking for tenants and visitors to the apartments. Developer shall not permit the parking, storing or keeping of any large commercial-type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger vehicle, upon any portion of the common areas, including parking spaces. For purposes of Article III, a pickup truck with a pickup bed mounted camper shall be considered a private passenger vehicle; provided however, that no such vehicle shall be used for residential purposes while parked on the premises.
(a) No Onsite Major Repairs. Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the common areas the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, including the parking areas, except for emergency repairs thereto and then only to the extent necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall be stored or kept in the common areas of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. Developer shall give the vehicle owner not less than four (4) days, nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or kept in violation of the provisions hereof. Notice shall consist minimally of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any vehicle parked, stored or kept in violation of the provisions of these City Covenants.

Section 5. Signs Required. “No loitering” signs will be posted at each building and enforced by the owner(s). “Illegally parked vehicles will be towed” signs in compliance with California Vehicle Code requirements will be posted and enforced by Developer.

ARTICLE IV

TENANT SELECTION
Section 1. Selection of Tenants. Developer shall be responsible for the selection of tenants for the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, in compliance with the Property Management Plan and criteria set forth herein. (a) Process for Tenant Selection. Developer shall maintain and implement the tenant selection system for the Affordable Units as approved by the City Manager under the Property Management Plan, which establishes a chronological waiting list system for selection of tenants that qualify as Low Income Households (inclusive as appliable Senior Low Income Households) and meet the requirements hereof.
(b) Marketing. Developer shall provide written notice to City at least thirty (30) days prior to Developer commencing its marketing activities for the initial lease-up of the Affordable Units in conformance with the approved Property Management Plan. In addition, this prior notice from Developer to City also shall include a complete copy of the form of the “application” with a

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
description of necessary supporting materials to be completed by applicants for prospective tenancy at the Affordable Units as a Low Income Household (inclusive of Senior Low Income Household, as applicable.)
(i) Developer shall cause posting of notice of vacancy(ies) of the Affordable Units at City Hall and other local public buildings in the City, such as the community center, senior center, public library, and posted on the City’s website.

ARTICLE IV

ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in these City Covenants may be enjoined, abated, or remedied by appropriate legal proceeding by City. These City Covenants do not in any way infringe on the right or duties of the City to enforce any of the provisions of the FVMC including, but not limited to, the abatement of dangerous buildings.

Section 2. Nuisance. The result of every act or omission whereby any of the covenants contained in these City Covenants are violated in whole or in part is hereby declared to be and constitutes a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or private, shall be applicable against every such result and may be exercised by any owner or its successors in interest, without derogation of City’s rights under law.

Section 3. Right of Entry. In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of City, and for maintenance and/or repair of any or all publicly owned utilities. Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, at reasonable hours to enforce compliance with these City Covenants which Developer has failed to perform. In addition, City has the right of entry onto any part of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel, at reasonable hours and upon and after reasonable attempts to contact Developer, to effect emergency repairs or maintenance that Developer has failed to perform.

Section 4. Costs of Repair. The costs borne by City of any such repairs or maintenance emergency and/or non-emergency, shall become a charge for which Developer shall be responsible.

Developer agrees that City’s rights related to charges and collection thereof hereunder include the City’s right to impose a lien against the Affordable Parcel comparable to the process undertaken by public agencies for similar lien collection such as for weed abatement.

Section 5. Cumulative Remedies. The remedies herein provided for breach of the covenants contained in these City Covenants shall be deemed cumulative, and none of such remedies shall be deemed exclusive.

Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in these City Covenants shall not constitute a waiver of the right to enforce the same thereafter.

Attachment No. 4
City Covenants

4930-6338-0083v1/200348-0011
Section 7. Enforcement and Nonliability. The City may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing these City Covenants. However, neither City nor City will be subject to any liability for failure to affirmatively enforce any provision of these City Covenants.

ARTICLE VI

GENERAL PROVISIONS
Section 1. Covenant against Partition. Developer covenants for itself and for its heirs, representatives, successors, and assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its rights and interests in the Affordable Parcel, or the burdens running with the land as a result of these City Covenants.

Section 2. Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in all force and effect.

Section 3. Term. These City Covenants shall run with and bind the interest of Developer in the Affordable Parcel, and shall inure to the owner(s) of any real property subject to these City Covenants, its/their/her/his legal representatives, heirs, successors and assigns, and be enforceable by City, for a term equal to the Affordability Period, provided; however, that the covenants regarding nondiscrimination set forth in Section 8. of Article II of these City Covenants shall remain in effect for perpetuity.

Section 4. Construction. The provisions of these City Covenants shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and operation of the Affordable Units, inclusive of the Senior Apartments on the Affordable Parcel. The article and section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction. Developer shall be obligated by these City Covenants to comply with the provisions hereof.

Section 5. Amendments. These City Covenants may be amended only by the written agreement of Developer and City.

Section 6. Encroachments. None of the rights and obligations of Developer created herein shall be altered in any way by encroachments due to settlement or shifting of structures or any other cause.

There shall be valid easements for the maintenance of said encroachments so long as they shall exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of Developer if said encroachment occurs due to the willful conduct of said Developer.

Section 7. Notices. Any Notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either personally or by certified mail. Notice to City shall be made by certified mail to: City Manager (with copies to both City Clerk Administrator and City Legal Counsel), City Hall 10200 Slater Avenue, Fountain Valley, California 92708 and shall be effective upon receipt. Notice to Developer shall be made by certified mail to Euclid & Heil FV Owner, LLC and shall be effective upon receipt. Such address may be changed from time to time by notice in writing.
[signature blocks begin on next page]

Attachment No. 4
City Covenants
Page S-1
4930-6338-0083v1/200348-0011
IN WITNESS WHEREOF, the parties hereto have caused this City Covenants Agreement to be effective as of the date of recording in the Official Records.

DEVELOPER:

EUCLID & HEIL FV OWNER, LLC
By:________________________________
Brian Rupp, Executive Vice President
By:
[Name and Corporate Title]
APPROVED AS TO FORM:
__________________________
Developer Counsel
[Signatures continued on next page]

Attachment No. 4
City Covenants
Page S-2
4930-6338-0083v1/200348-0011
[Signatures continued from previous page]
CITY:

CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By:

Maggie Le, City Manager
or Authorized Designee
ATTEST:

Rick Miller, City Clerk Administrator
or Authorized Designee
APPROVED AS TO FORM:

HARPER & BURNS LLP
Colin R. Burns, City Legal Counsel
or Authorized Designee
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH LLP
Celeste Stahl Brady, Special Counsel

Exhibit A to Attachment No. 4
City Covenants Legal Description

4930-6338-0083v1/200348-0011
Exhibit A
to City Covenants
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 21, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLAS,

CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT AN UNDIVIDED 1/2 INTEREST OF ALL OIL, GAS, ASPHALTUM AND OTHER

HYDROCARBON OR KINDRED SUBSTANCES IN OR UNDER SAID LAND AS RESERVED BY ROSE A. MORLEY AND WILLIAM H. MORLEY, HUSBAND AND WIFE IN THE DEED RECORDED JUNE 2, 1950 IN BOOK 2021 PAGE 149,
OFFICIAL RECORDS.

APN: 144-111-01

Attachment No. 5
Request for Notice of Default

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 5

REQUEST FOR NOTICE OF DEFAULT
Recording Requested By and
When Recorded Mail To:

City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk Administrator
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from payment of a recording
fee under Gov’t Code Section 27383.)
REQUEST FOR NOTICE UNDER SECTION 2924b CIVIL CODE
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. _____ on _____________, 202_, in Book ______, Page ______, Official Records of Orange County, California, and describing land therein as See Exhibit A attached hereto
executed by ____________________, as Trustor, in which ____________________ is named as Beneficiary, and _________________ as Trustee, be mailed to CITY OF FOUNTAIN VALLEY, at 10200 Slater Avenue, Fountain Valley, California 92708, Attention: City Manager.

NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE

WILL BE SENT ONLY TO THE ADDRESS CONTAINED THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A REQUEST MUST BE
RECORDED.

CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By:

Maggie Le, City Manager
or Authorized Designee
ATTEST:

Rick Miller, City Clerk Administrator
or Authorized Designee

Attachment No. 5
Exhibit A
Legal Description to Request for Notice of Default

4930-6338-0083v1/200348-0011
Exhibit A
Legal Description to Request for Notice
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 21, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLAS,

CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SAID SECTION IS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT AN UNDIVIDED 1/2 INTEREST OF ALL OIL, GAS, ASPHALTUM AND OTHER

HYDROCARBON OR KINDRED SUBSTANCES IN OR UNDER SAID LAND AS RESERVED BY ROSE A. MORLEY AND WILLIAM H. MORLEY, HUSBAND AND WIFE IN THE DEED RECORDED JUNE 2, 1950 IN BOOK 2021 PAGE 149,
OFFICIAL RECORDS.

APN: 144-111-01

Attachment No. 6
Developer Certificate

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 6

DEVELOPER CERTIFICATE
_________________, 20__ (“Date of Certificate”)
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Manager
Density Bonus and Affordable Housing Agreement (16300 Euclid Street, Fountain Valley) by and between CITY OF FOUNTAIN VALLEY (“City”) and EUCLID & HEIL FV OWNER, LLC (“Developer”), dated as of October 23, 2025 (“DBAHA”) Ladies and Gentlemen:

The undersigned as Developer under the DBAHA does hereby state, declare, certify, represent, and warrant to City and their respective officers, agents and employees as follows:

1. Developer has reviewed, executed and is familiar with the terms of the DBAHA.

All capitalized terms herein shall have the meanings established therefor in the DBAHA.

2. The DBAHA is in full force and effect and shall remain in full force and effect.

3. The Memorandum of Agreement and City Covenants have been recorded among the official land records of the County of Orange in conformity with the DBAHA.

4. All of the insurance policies required to obtained and maintained by Developer under the DBAHA are in full force and effect.

5. Upon completion the Senior Apartments on the Affordable Parcel, the Affordable Units shall be occupied in accordance with the DBAHA by qualified Senior Low Income Households at an Affordable Rent.

6. The representations and warranties of Developer contained in the DBAHA are true and correct in all material respects as of date of this Developer Certificate.

7. Developer acknowledges that prior to the issuance of the first CoO by the Building Official for any market-rate unit in the Project, Developer shall have caused the Surety Bond for In-Lieu Fees to be issued to the City as obligee, and delivered to City.

8. Developer has caused the Completion Guaranty to be duly executed by Guarantor and delivered to City.

9. No uncured Event of Default by Developer has occurred under the DBAHA and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an uncured Event of Default by Developer under the DBAHA.

Attachment No. 6
Developer Certificate

4930-6338-0083v1/200348-0011

10. Developer has not, prior to the date of this Developer Certificate transferred the Agreement, the Site, or any rights of Developer therein.

11. Developer affirms that Section 4.5 of the Agreement shall survive for the Affordability Period, including without limitation the provisions thereof under which Developer shall defend, indemnify, and hold harmless City from any claims, losses, liabilities, and damages arising out of Developer as set forth in Section 4.5 and/or in connection with the design and/or construction the Senior Apartments on the Affordable Parcel and/or the effect of liens or stop notices.

12. Developer has received no notice from any governmental agency that there are Hazardous Materials on or about the Site in excess of amounts prescribed by law and is not aware of the presence of Hazardous Materials on or about the Site in excess of amounts permitted by law.

13. Developer is operating and in good standing as a qualified limited liability company under the laws of the State of California and as reflected in the records of the California Secretary of State.

14. Developer executes this Developer Certificate for the benefit and protection of City with full knowledge that City is relying on this Developer Certificate in entering into and performing its obligations under the Agreement.

IN WITNESS WHEREOF, the undersigned, as Developer, has executed this Developer Certificate as of the date first written above.

DEVELOPER:

EUCLID & HEIL FV OWNER, LLC
By:

Its:
[Name and Corporate Title]

Attachment No. 7
Certificate of Continuing Program Compliance

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 7

CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
TO: City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Manager
The undersigned,____________________________, being duly authorized to execute this Certificate of Continuing Program Compliance (“Certificate”) on behalf of Euclid & Heil FV Owner, LLC (“Developer”), hereby represents and warrants that:

1. She/He has read and is thoroughly familiar with the provisions of the Density Bonus and Affordable Housing Agreement (16300 Euclid Street, Fountain Valley) (“DBAHA”) by and among City, City and Developer dated as of October 23, 2025 including without limitation the City Covenants and other attachments thereto. Capitalized terms used herein shall have the same meaning as that set forth in the DBAHA.

2. As of the date of this Certificate, the following number of completed residential units at the Senior Apartments on the Affordable Parcel: (i) [_____] one-bedroom units are currently occupied by [Senior] Low Income Households at Affordable Rent; or (ii) [______] one-bedroom units are currently vacant and being held available for occupancy by [Senior] Low Income Households and have been so held continuously since the date the immediately prior Low Income Household vacated such unit:
 Occupied at an Affordable Rent by:
[Senior] Low Income Households # of Units, Nos.:
 Vacant:
a. Held for occupancy by:
[Senior] Low Income Households # of Units, Nos.:
b. Last occupied by:
[Senior] Low Income Households # of Units, Nos.:

3. At no time since the date of filing of the last Certificate of Continuing Program Compliance have less than one hundred percent (100%) of the Affordable Units been occupied by, or been last occupied, or have been available for tenancy and occupancy by [Senior] Low Income Households at an Affordable Rent.

Attachment No. 7
Certificate of Continuing Program Compliance

4930-6338-0083v1/200348-0011

4. Developer is not in default under the terms of the DBAHA, including without limitation the attachments, in particular the City Covenants.

DEVELOPER:

EUCLID & HEIL FV OWNER, LLC
By:

Its:
[Name and Corporate Title]

Attachment No. 8
[Intentionally Omitted]

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 8
[Intentionally omitted]

Attachment No. 9
Income Verification

4930-6338-0083v1/200348-0011
ATTACHMENT NO. 9

INCOME VERIFICATION
Part I -- General Information

1. Project Location:

2. Landlord’s Name:

Part II -- Unit Information

3. Unit Number of Monthly Number of
Number Bedrooms Rent Occupants
[ ]
Part III -- Affidavit of Tenant
I, ______________, and I, ______________, as applicants for rental of an Apartment Unit at the above-described location, do hereby represent and warrant as follows:
(My/Our) gross income (anticipated total annual income) does not exceed 80% of the Area Median Income for Orange County as defined by California Health and Safety Code Section 50079.5 and the implementing regulations issued by State Housing and Community Development as such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable Median Income is [$ ]. The following computation includes all income (I/we) anticipate receiving for the 12-month period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier.

Tenant(s)’ Initials