Grover Beach City Council
December 11, 2023

Agenda Item No. 7

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: December 11, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: David Hale, City Attorney
Megan Martin, Community Development Director
Janet Reese, Associate Planner
SUBJECT: Approval of Financing Documents for the Permanent Local Housing Allocation Program (PLHA) Financing for People’s Self-Help Housing (PSHH) Affordable Housing Project and Appropriation of Revenue.

RECOMMENDATION
Approve the financing documents for the Permanent Local Housing Allocation Program (PLHA) financing for People’s Self-Help Housing (PSHH) affordable housing project located at 164 South 13th Street and 1206 West Grand Avenue and appropriate $5,000,000 in grant money for the project received from the California Department of Housing and Community Development.

BACKGROUND
On December 13, 2021, the Council approved a 53-unit affordable housing project proposed by People’s Self-Help Housing (PSHH) and the Housing Authority of San Luis Obispo (HASLO) located at 164 South 13th Street and 1206 West Grand Avenue, commonly known as Cleaver & Clark Commons. The project represents a significant contribution towards the Major City Goal for FY 2021-23 for “Housing and Homelessness” as follows:

Housing and Homelessness. Work with developers and non-profits in efforts to increase housing availability with a focus on affordable housing; continue partnerships with regional agencies and organizations to address homelessness and related sheltering issues in the city and region, including supporting completion and operation of temporary shelter facilities in the City.

The project is in the final stages of completing its financing with a closing scheduled for December 15, 2023. PSHH has been working on financing the project from a number of different sources and preparing the construction drawings. PSHH has formed a Limited Partnership for the purposes of the construction and operation of this project called Cleaver and Clark Commons, Limited Partnership, (LP) which entered into a ground lease with HASLO to lease the property for 55 years.

The City is financing only a portion of the project financing through the State’s Permanent Local Housing Allocation Program (PLHA) for which the Council approved an application on November 14, 2022. The City received $5,000,000 from this grant program to apply towards project financing and staff is now recommending appropriation of these funds through this agenda item. Cleaver and Clark Commons is financing approximately $29,433,846.00 with JPMORGAN Chase Bank through a Development Loan Agreement, $1,100,000.00 through the Housing Trust Fund (HTF Loan) pursuant to a Development Loan Agreement and $1,618,000.00 through HASLO pursuant to a loan agreement. The City’s loan agreement along with the promissory note and deed of trust will be recorded junior to the other above-enumerated financings.

The City’s PLHA loan will include entering into a PLHA Affordable Housing Regulatory Agreement, a Secured Promissory Note, a Loan Agreement and a Real Property Leasehold Deed of Trust which are attached to this staff report (the Loan Documents). The California Department of Housing and Community Development has reviewed these documents and approved them.

There will be other subordination agreements the City will be required to enter into related to each of these financings which are still being developed at the time of posting this staff report. The City will be required to subordinate its security interest to the above-enumerated financings, which is not an unusual request from entities like JPMorgan Chase Bank. A copy of the initial draft of the Chase Bank subordination is attached along with the other documents listed above.

The City, HASLO and Cleaver and Clark Commons LP entered into a Disposition and Development Agreement (DDA) in March 2022. The City further required and entered into a Regulatory Agreement and Declaration of Restrictive Covenants in September 2022 with HASLO and Cleaver and Clark Commons LP. These documents represent restrictive covenants that require this project to construct a 53-unit affordable housing project and will remain in a priority recordation position upon the conclusion of the closing of Cleaver and Clark Commons financing which will require any lender that has a security interest in the property to comply with those restrictive covenants.

Currently, there are still numerous parties related to this financing that are still making changes and comments on the many documents that make up this financing. The closing for this financing is scheduled for December 15, 2024, but it is likely changes and modifications to many of the agreements, including the City documents, may continue up to closing. Staff is therefore recommending Council give direction and delegate authority to the City Manager to review and execute any additional changes to existing agreements or new agreements necessary to close this financing. Staff is also recommending Council appropriate the PLHA grant in the amount of $5,000,000.00 into the City’s budget in a Special Revenue Fund rather than the General Fund.

FISCAL IMPACT
There is no fiscal impact to the City’s General Fund.

ALTERNATIVES
The Council has the following alternatives to consider:

1. Review and approve the PLHA financing Loan Documents, appropriate the $5,000,000.

PLHA grant money and give direction and delegation of authority to the City Manager to review and approve any and all documents necessary to accommodate a timely closing of this financing; or

2. Do not approve the financing Loan Documents; or

3. Provide alternative direction to staff.

PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.

Attachments

1. PLHA Loan Documents
826.061/573160
Recording requested by and when recorded mail
to:

City of Grover Beach
154 South Eighth Street
Grover Beach, CA 93433

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
(PLHA Loan)

THIS LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is made as of December 1, 2023, by CLEAVER & CLARK COMMONS, L.P., a California limited partnership (“Trustor”) to ______________________ (“Trustee”), for the benefit of the CITY OF GROVER BEACH, a California municipal corporation (“Beneficiary”). The HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO, a public body, corporate and politic (“HASLO”) joins in this Deed of Trust for the limited purpose of authorizing recordation against the fee interest in the Land (as such term is defined herein).

RECITALS
A. HASLO owns a Fee interest in the land described in Exhibit A attached hereto and incorporated herein by this reference (the “Land”). Pursuant to the Terms of a Ground Lease (as such term is defined at Section 1(a) hereto), Trustor owns a leasehold interest in the Land. Trustor intends to construct a 53-unit multifamily residential development on the Land and related improvements (the “Project”).

B. Beneficiary and Trustor have entered into a Loan Agreement dated of or about even date herewith (the “Loan Agreement”) pursuant to which Beneficiary will provide a loan to Trustor in the amount of up to Four Million Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000) (“Loan”) for the purpose of partially financing the Project. Trustor has issued to Beneficiary a secured promissory note dated as of or about even date herewith (the “Note”) to evidence Trustor’s obligation to repay the Loan. This Deed of Trust, the Loan Agreement, the Note and the Regulatory Agreement (defined below) are collectively referred to herein as the “City Documents.”
C. As a condition precedent to the making of the Loan, Beneficiary has required that HASLO and Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien and security interest in the Project, Trustor’s leasehold interest in the Land, and HASLO’s fee interest in the Land to secure repayment of the Note and performance of Trustor’s obligations under the Loan Agreement and the other City Documents.

Attachment 1
826.061/573160
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows.

1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment and performance of the Secured Obligations defined and described in Section 2, HASLO and Trustor hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title and interest which HASLO and Trustor now have or may later acquire in and to the Land, and all of the following, whether presently owned or hereafter acquired:
a. The fee estate (“Fee Estate”) and the leasehold estate (“Leasehold Estate”) in the land created by that certain Ground Lease between Trustor, as Lessee, and Housing Authority of the City of San Luis Obispo, as Lessor, dated substantially concurrently herewith, a memorandum of which will be recorded in the Official Records of San Luis Obispo County, California (“Ground Lease”);
b. All buildings, structures, and improvements, now or hereafter located or constructed on the Land (“Improvements”);
c. All appurtenances, easements, rights of way, pipes, transmission lines or wires and other rights used in connection with the Land or the Improvements or as a means of access thereto, whether now or hereafter owned or constructed or placed upon or in the Land or Improvements and all existing and future privileges, rights, franchises and tenements of the Land, including all minerals, oils, gas and other commercially valuable substances which may be in, under or produced from any part of the Land, and all water rights, rights of way, gores or strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or adjoining the Land and Improvements (collectively, “Appurtenances”);
d. All machinery, equipment, fixtures, goods and other personal property of the Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or hereafter located at or used in connection with the Land, the Improvements or Appurtenances, and all improvements, restorations, replacements, repairs, additions or substitutions thereto (collectively, “Equipment”);
e. All existing and future leases, subleases, licenses, and other agreements relating to the use or occupancy of all or any portion of the Fee Estate, Leasehold Estate, Land or Improvements (collectively, “Leases”), all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other payments which may now or hereafter accrue or otherwise become payable thereunder to or for the benefit of Trustor, including but not limited to security deposits (collectively, “Rents”);
f. All insurance proceeds and any other proceeds from the Fee Estate, Leasehold Estate, Land, Improvements, Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made with or other security deposits given to utility companies, all claims or demands relating to insurance awards which the Trustor now has or may hereafter acquire, 826.061/573160
including all advance payments of insurance premiums made by Trustor, and all condemnation awards or payments now or later made in connection with any condemnation or eminent domain proceeding (“Proceeds”);
g. All revenues, income, rents, royalties, payments and profits produced by the Fee Estate, Leasehold Estate, Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”); h. All architectural, structural and mechanical plans, specifications, design documents and studies produced in connection with development of the Land and construction of the Improvements (collectively, “Plans”); and
i. All interests and rights in any private or governmental grants, subsidies, loans or other financing provided in connection with development of the Leasehold Estate, Land and construction of the Improvements (collectively, “Financing”).

All of the above-referenced interests of Trustor in the Leasehold Estate, Land, Improvements, Appurtenances, Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed to Trustee or made subject to the security interest herein described are collectively referred to herein as the “Property.”

2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of the following (collectively, the “Secured Obligations”): (i) all present and future indebtedness evidenced by the Note and any amendment thereof, including principal, interest and all other amounts payable under the terms of the Note; (ii) all present and future obligations of Trustor to Beneficiary under the Loan Agreement, the Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof, executed by and between City and Trustor and recorded substantially concurrently herewith (the “Regulatory Agreement”) or the other City Documents; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this Deed of Trust or any other City Document as such may be modified, supplemented, amended, renewed or extended.

3. Assignment of Rents, Issues, and Profits. HASLO and Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Beneficiary hereby confers upon HASLO and Trustor a license to collect and retain such Rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon HASLO or Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon 826.061/573160
and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements, Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for performing any obligation of HASLO or Trustor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be responsible for any waste committed by HASLO or Trustor, lessees or any third parties, or for dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. Absent Beneficiary’s written consent and not including the Ground Lease, HASLO or Trustor shall not accept prepayment of Rents for any rental period exceeding one month.

4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary, subject to the rights of any beneficiaries under deeds of trust senior in priority to this Deed of Trust permitted under the Loan Agreement and Ground Lease (“Senior Deeds of Trust”). The parties acknowledge that some of the Property may be determined under applicable law to be personal property or fixtures. To the extent that any Property may be or be determined to be personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security interest in all such Property to secure payment and performance of the Secured Obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, as amended or recodified from time to time (the “UCC”), covering all such Property. To the extent such Property is not real property encumbered by the lien granted above, and is not absolutely assigned by the assignment set forth above, it is the intention of the parties that such Property shall constitute “proceeds, products, offspring, rents, or profits” (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements.

5. Financing Statements. Pursuant to the UCC, HASLO and Trustor, as debtor, hereby authorizes Beneficiary, as secured party, to file such financing statements and amendments thereof and such continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and preserve Beneficiary’s security interest in the Property and Rents, without requiring any signature or further authorization by HASLO or Trustor. If requested by Beneficiary, Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. If any financing 826.061/573160
statement or other document is filed in the records normally pertaining to personal property, that filing shall not be construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it. Everything used in connection with the Property and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as part of the estate encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of value, or (3) HASLO or Trustor’s interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the property conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary’s lien granted hereby or by any other recorded document. Such mention in any financing statement is declared to be solely for the protection of Beneficiary in the event any court or judge shall at any time hold, with respect to the matters set forth in the foregoing clauses (1), (2), and (3), that notice of Beneficiary’s priority of interest is required in order to be effective against a particular class of persons, including but not limited to the federal government and any subdivisions or entity of the federal government.

6. Fixture Filing. Subject to the rights of beneficiaries under Senior Deeds of Trust, this Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. HASLO or Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of San Luis Obispo County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. HASLO or Trustor shall be deemed to be the “debtor” and Beneficiary shall be deemed to be the “secured party” for all purposes under the UCC.

7. Representations, Warranties and Covenants; Rights and Duties of the Parties.

7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor lawfully possesses and holds the Leasehold Estate in the Land and title to the Improvements, (ii) Trustor has good and marketable title to all of the Property; (iii) Trustor has the full and unlimited power, right and authority to encumber the Property and assign the Rents; (iv) subject only to encumbrances of record and senior liens permitted pursuant to the City Documents or otherwise approved in writing by Beneficiary (“Permitted Encumbrances”), this Deed of Trust creates a valid lien on Trustor’s entire interest in the Property; (v) except with respect to Permitted Encumbrances, Trustor owns the Property free and clear of any deeds of trust, mortgages, security agreements, reservations of title or conditional sales contracts, (vi) there is no financing statement affecting the Property on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the 826.061/573160
correct address of Trustor’s chief executive office is specified in Section 10.2.

Trustor further represents and warrants that this Deed of Trust and all other documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do not violate the provisions of any agreement to which Trustor is a party or which affects the Property. Trustor further represents and warrants that there are no pending, or to Trustor’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect Trustor’s ownership of the Property.

HASLO represents and warrants that: (i) HASLO lawfully possesses and holds the Fee Estate in the Land, (ii) HASLO has good and marketable title to all of the Fee Estate, which includes the lessor interest in the Ground Lease; (iii) HASLO has the full and unlimited power, right and authority to encumber the Fee Estate; (iv) subject only to encumbrances of record and senior liens permitted pursuant to the Permitted Encumbrances and the Ground Lease, this Deed of Trust creates a valid lien on the Fee Estate; (v) except with respect to Permitted Encumbrances and the Ground Lease, HASLO owns the Fee Estate free and clear of any deeds of trust, mortgages, security agreements, reservations of title or conditional sales contracts, (vi) there is no financing statement affecting the Fee Estate on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the correct address of HASLO is specified in Section 10.2.

HASLO further represents and warrants that this Deed of Trust and all other documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by HASLO; (b) are binding obligations of HASLO; and (c) do not violate the provisions of any agreement to which HASLO is a party or which affects the Property. HASLO further represents and warrants that there are no pending, or to HASLO’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect HASLO’s ownership of the Property.

7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay when due the principal and any interest due on the indebtedness evidenced by the Note, and shall promptly pay and perform all other obligations of Trustor arising in connection with the Secured Obligations or the City Documents in accordance with the respective terms thereof.

7.3 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance with Laws. Trustor covenants that it shall use the proceeds of the Loan (the “Loan Proceeds”) solely for purposes authorized by the City Documents. Trustor shall keep the Land and Improvements in good repair and condition, and from time to time shall make necessary repairs, renewals and replacements thereto so that the Property shall be preserved and maintained. Trustor covenants to comply with all federal, state and local laws, regulations, ordinances and rules applicable to the Property and the Project, including without limitation all applicable requirements of state and local building codes and regulations, and all applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not remove, demolish or materially alter any Improvement without Beneficiary’s consent, shall complete or restore promptly and in good and workmanlike manner any building, fixture or other improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due all claims for labor performed and materials furnished therefor. 826.061/573160
Trustor shall use the Land and Improvements solely for purposes authorized by the City Documents, shall not commit or allow waste of the Property, and shall not commit or allow any act upon or use of the Property which would violate any applicable law or order of any governmental authority, nor shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist thereon which could invalidate or which would be prohibited by any insurance coverage required to be maintained on the Property pursuant to the City Documents.

7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event of Default hereunder if any Transfer (as defined in the Loan Agreement) of the Property (excluding a Permitted Transfer or Permitted Refinancing, as defined in the Loan Agreement), any part thereof or any interest therein occurs in violation of the requirements of the City Documents. If any such Transfer occurs in violation of such requirements, without limiting the provisions of Section 8 hereof, all obligations secured by this Deed of Trust, irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and without demand, immediately become due and payable, subject to any applicable cure period.

7.5 Inspections; Books and Records. Beneficiary and its agents and representatives shall have the right at any reasonable time upon reasonable notice to enter upon the Land and inspect the Property to ensure compliance with the City Documents. Trustor shall maintain complete and accurate books of account and other records (including copies of supporting bills and invoices) adequate to document the use of the Loan Proceeds and the operation of the Property, together with copies of all written contracts, Leases and other instruments which affect the Property. The books, records, contracts, Leases and other instruments shall be subject to examination and inspection at any reasonable time by Beneficiary following two business days’ prior notice.

7.6 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all taxes, levies, assessments and other charges affecting the Property that are (or if not paid may become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the validity or application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably be required from time to time by Beneficiary; and provided further that Trustor shall timely make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.

7.7 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances, whether released of record or not, which are discharged in whole or in part by Beneficiary in accordance with this Deed of Trust.

7.8 Hazard, Liability and Workers’ Compensation Insurance. At all times during the term hereof, Trustor shall at Trustor’s expense, maintain insurance policies in accordance with the requirements set forth in the City Documents. Trustor shall file with Beneficiary prior to the commencement of the term hereof, certificates (or such other proof as Beneficiary may reasonably require, including without limitation copies of the required insurance policies) evidencing each of 826.061/573160
the insurance policies and endorsements thereto as required pursuant to the City Documents, and such certificates (or policies) shall provide that at least thirty (30) days’ prior written notice shall be provided to Beneficiary prior to the expiration, cancellation or change in coverage under each such policy. If any insurance policy required pursuant to the City Documents is canceled or the coverage provided thereunder is reduced, Trustor shall, within ten (10) days after receipt of written notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Beneficiary a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, Beneficiary may, without further notice and at its option (and without any obligation to do so), procure such insurance coverage at Trustor’s expense, and Trustor shall promptly reimburse Beneficiary for such expense upon receipt of billing from Beneficiary.

7.9 Condition of Property. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof: (i) Trustor has not received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code violation or violation of other governmental regulations concerning the Land that has not previously been corrected, and no condition on the Land violates any health, safety, fire, environmental, sewage, building, or other federal, state or local law, ordinance or regulation; (ii) no contracts, licenses, leases or commitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force; (iii) there are no threatened or pending actions, suits, or administrative proceedings against or affecting the Property or any portion thereof or the interest of Trustor in the Property; (iv) there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Land or any portion thereof; (v) Trustor has not received any notice from any insurer of defects of the Property which have not been corrected; (vi) there are no natural or artificial conditions upon the Land or any part thereof that could result in a material and adverse change in the condition of the Land; (vii) all information that Trustor has delivered to Beneficiary, either directly or through Trustor’s agents, is accurate and complete; and (viii) Trustor or Trustor’s agents have disclosed to Beneficiary all material facts concerning the Property.

7.10 Hazardous Materials. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is free and has always been free of Hazardous Materials (as defined below) and is not and has never been in violation of any Environmental Law (as defined below); (ii) there are no buried or partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the Land are or have ever been in violation of any Environmental Law or informing Trustor that the Land is subject to investigation or inquiry regarding Hazardous Materials on the Land or the potential violation of any Environmental Law; (iv) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land, whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has disclosed to Beneficiary all information, records, and studies in Trustor’s possession or reasonably available to Trustor relating to the Land concerning Hazardous Materials.
826.061/573160
Trustor shall not cause or permit any Hazardous Material (as defined in Section 9.3 of the Loan Agreement) to be brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents, employees, contractors or invitees except for incidental supplies ordinarily used in the construction and operation of residential developments in compliance with all applicable laws, and shall not cause any release of Hazardous Materials into, onto, under or through the Land.

If any Hazardous Material is discharged, released, dumped, or spilled in, on, under, or about the Land and results in any contamination of the Land or adjacent property, or otherwise results in the release or discharge of Hazardous Materials in, on, under or from the Land, Trustor shall promptly take all actions at its sole expense as are necessary to comply with all Environmental Laws (as defined below).

Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold Beneficiary and its elected and appointed officials, officers, agents and employees (collectively, “Indemnitees”) harmless from and against any and all loss, claim, liability, damage, demand, judgment, order, penalty, fine, injunctive or other relief, cost, expense (including reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually “Claim” and collectively “Claims”) arising in connection with the breach of Trustor’s covenants and obligations set forth in this Section 7.10 or otherwise arising in connection with the presence or release of Hazardous Materials in, on, under, or from the Property; provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee’s gross negligence or willful misconduct. The foregoing indemnity includes, without limitation, all costs of investigation, assessment, containment, removal, remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether the Land is in compliance with Environmental Laws, all costs associated with bringing the Land into compliance with all applicable Environmental Laws, and all costs associated with claims for damages or injury to persons, property, or natural resources.

Without limiting the generality of the foregoing, Trustor shall, at Trustor’s own cost and expense, do all of the following:
a. pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; b. reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and c. reimburse Indemnitees for any and all expenses, including without limitation outof-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring and participating in any legal or administrative proceeding.

Trustor’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of Trustor to receive notice of or consideration for any of the following: (i) any amendment or modification of any City Document; (ii) any extensions of time 826.061/573160
for performance required by any City Document; (iii) any provision in any of the City Documents limiting Beneficiary’s recourse to property securing the Secured Obligations, or limiting the personal liability of Trustor, or any other party for payment of all or any part of the Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by Trustor under this Deed of Trust or by Trustor or any other party under any City Document, (v) the release of Trustor or any other person, by Beneficiary or by operation of law, from performance of any obligation under any City Document; (vi) the release or substitution in whole or in part of any security for the Secured Obligations; and (vii) Beneficiary’s failure to properly perfect any lien or security interest given as security for the Secured Obligations.

The provisions of this Section 7.10 shall be in addition to any and all other obligations and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled to indemnification under this Section without regard to whether Beneficiary or that Indemnitee has exercised any rights against the Property or any other security, pursued any rights against any guarantor or other party, or pursued any other rights available under the City Documents or applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Deed of Trust.

Without limiting any of the remedies provided in this Deed of Trust, Trustor acknowledges and agrees that each of the provisions in this Section 7.10 is an environmental provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by Trustor relating to real property security (the “Environmental Provisions”), and that Trustor’s failure to comply with any of the Environmental Provisions will be a breach of contract that will entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of Civil Procedure (“Section 736”) for the recovery of damages and for the enforcement of the Environmental Provisions. Pursuant to Section 736, Beneficiary’s action for recovery of damages or enforcement of the Environmental Provisions shall not constitute an action within the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure.
“Environmental Law” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to any Hazardous Material (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 826.061/573160
2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder.

7.11 Notice of Claims; Defense of Security; Reimbursement of Costs. a. Notice of Claims. Promptly upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney in fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary’s expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary’s option, as attorney in fact for Trustor, to commence, appear in and prosecute, in Beneficiary’s or Trustor’s name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary’s expenses incurred in the collection of such amounts, at Beneficiary’s option, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums secured by this Deed of Trust.

Beneficiary shall be under no obligation to question the amount of any compensation, awards, proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require. Trustor’s obligations and Beneficiary’s rights under this Section are subject to the requirements of the Senior Deeds of Trust (if any). b. Defense of Security. At Trustor’s sole expense, Trustor shall protect, preserve and 826.061/573160
defend the Property and title to and right of possession of the Property, the security of this Deed of Trust and the rights and powers of Beneficiary and Trustee created under it, against all adverse claims.
c. Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or Trustee may render in connection with this Deed of Trust, including without limitation, fees and expenses related to provision of a statement of obligations or related to a reconveyance. Trustor further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or Trustee or both of them under Sections 7.17 and 8.2, whether or not any lawsuit is filed, or in defending any action or proceeding arising under or relating to this Deed of Trust, including reasonable attorneys’ fees and other legal costs, costs of any disposition of the Property under the power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title. d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any change in the address of Trustor and the location of any Property, including books and records pertaining to the Property.

7.12 Indemnification. Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold harmless the Indemnitees (as defined in Section 7.10) from and against all Claims arising directly or indirectly in any manner in connection with or as a result of (a) any breach of Trustor’s covenants under any City Document, (b) any representation by Trustor in any City Document which proves to be false or misleading in any material respect when made, (c) injury or death to persons or damage to property or other loss occurring on the Land or in any improvement located thereon, whether caused by the negligence or any other act or omission of Trustor or any other person or by negligent, faulty, inadequate or defective design, building, construction or maintenance or any other condition or otherwise, (d) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises out of the Property, or any City Document or any transaction contemplated thereby, or any failure of Trustor to comply with all applicable state, federal and local laws and regulations applicable to the Property, provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee’s gross negligence or willful misconduct. The obligations of Trustor under this Section shall survive the repayment of the Loan and shall be secured by this Deed of Trust. Notwithstanding any contrary provision contained herein, the obligations of Trustor under this Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust.

7.13. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to Trustor or any other person as a consequence of any of the following: (i) Beneficiary’s exercise of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) Beneficiary’s failure or refusal to perform or discharge any obligation or liability of Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste committed by Trustor, the lessees of the Property or any third parties, or any dangerous or defective condition 826.061/573160
of the Property; or (iv) any loss sustained by Trustor or any third party resulting from any act or omission of Beneficiary in managing the Property after an Event of Default, unless the loss is caused by the willful misconduct, gross negligence, or bad faith of Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in this Section 7.13, and agrees that Trustor shall assert no claim related to any of the foregoing against Beneficiary.

7.14 Insurance and Condemnation Proceeds. Subject to the rights of any senior lienholders, and notwithstanding anything contained in any of the City Documents, unless Beneficiary and Trustor otherwise agree in writing, any award of damages in connection with any condemnation for public use of, or injury to the Property or any part thereof shall be applied to restoration or repair of the Property, provided Trustor determines that such restoration or repair is economically feasible and there is no default under any City Document that is continuing beyond the expiration of all applicable cure periods. If Trustor determines that such restoration or repair is not economically feasible or if a default exists after expiration of all applicable cure periods, the insurance proceeds shall be applied to the sums secured by this Deed of Trust, with the excess, if any, paid to Trustor. In the event funds for such work are insufficient, Beneficiary may, in its sole discretion and subject to the approval of Beneficiary’s governing board, advance such additional funds as may be necessary to allow the Property to be repaired or restored, and may add the amount thereof to the principal balance of the Note. If the Property is abandoned by Trustor, or if Trustor fails to respond to Beneficiary within 30 days from the date notice is mailed by Beneficiary to Trustor that the insurance carrier offers to settle a claim for insurance benefits, Beneficiary is authorized to collect and apply the insurance proceeds at Beneficiary’s option either to restoration or repair of the Property or to the sums secured by this Deed of Trust.

7.15 Release, Extension, Modification. At any time and from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of the Property, consent to the making of any map or plat of the Land or part thereof, join in granting any easement or creating any restriction affecting the Property, or join in any extension agreement or other agreement affecting the lien or charge hereof. At any time and from time to time, without liability therefor and without notice, and after receipt of approval by the California Department of Housing and Community Development, such approval not to be unreasonably withheld, Beneficiary may: (i) release any person liable for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the terms of payment of any Secured Obligation; (iii) accept additional real or personal property of any kind as security for any Secured Obligation, or (iv) substitute or release any property securing the Secured Obligations.

7.16 Reconveyance. Upon written request of Beneficiary stating that all of the Secured Obligations have been satisfied in full, and upon surrender of this Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of Trustee and all recordation fees related to such reconveyance.

7.17 Cure; Protection of Security. Beneficiary may cure any breach or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary may also enter the Property 826.061/573160
and/or do any and all other things which it may in its reasonable discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: appearing in and/or defending any action or proceeding which purports to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of Trust; paying, purchasing, contesting or compromising any encumbrance, charge, lien or claim of lien which in Beneficiary’s sole judgment is or may be senior in priority to this Deed of Trust, such judgment of Beneficiary to be conclusive as among Beneficiary, Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance required to be carried hereunder; otherwise caring for and protecting any and all of the Property; and/or employing counsel, accountants, contractors and other appropriate persons to assist Beneficiary. Beneficiary may take any of the actions permitted under this Section 7.17 either with or without giving notice, except for notices required under applicable law. Any amounts disbursed by Beneficiary pursuant to this paragraph shall become additional indebtedness secured by this Deed of Trust. Beneficiary shall have no obligation to take any action described in this Section.

8. Default and Remedies.

8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default shall occur under this Deed of Trust upon the occurrence of any one or more of the following events:
a. Beneficiary’s declaration of an Event of Default under any City Document, subject to the expiration of any applicable cure period set forth in such document; b. Trustor fails to perform any monetary obligation which arises under this Deed of Trust, and does not cure that failure within ten (10) days following written notice from Beneficiary or Trustee;
c. If Trustor’s interest in the Property or any part thereof is voluntarily or involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of Section 7.4 hereof or if any other Transfer occurs in violation of the Loan Agreement; d. Trustor fails to maintain the insurance coverage required under the City Documents or otherwise fails to comply with the requirements of Section 7.8 hereof and Trustor fails to cure such default within the time specified in Section 7.8;
e. Subject to Trustor’s right to contest such charges as provided herein, Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure such default within ten (10) days.
f. Any representation or warranty of Trustor contained in or made in connection with the execution and delivery of this Deed of Trust or in any certificate or statement furnished pursuant hereto or in any other City Document proves to have been false or misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy Code or any 826.061/573160
other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Trustor or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. h. If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance. i. The holder of any other debt instrument secured by a mortgage or deed of trust on the Property or part thereof declares an event of default thereunder and exercises a right to declare all amounts due under that debt instrument immediately due and payable, subject to the expiration of any applicable cure period set forth in such holder’s documents; or j. Trustor fails to perform any obligation arising under this Deed of Trust other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nonmonetary default, provided that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such cure to completion with due diligence and in good faith and in no event later than ninety (90) days, or such longer period as the City may approve, following receipt of notice of default.

8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all of the rights and remedies described below, and may exercise any one or more or all, of the remedies set forth in any City Document, and any other remedy existing at law or in equity or by statute, subject to the nonrecourse provisions set forth in the Note. All of Beneficiary’s rights and remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to collect all expenses incurred in pursuing the remedies provided hereunder, including without limitation reasonable attorneys’ fees and costs. a. Acceleration. Beneficiary may declare any or all of the Secured Obligations, including without limitation all sums payable under the Note and this Deed of Trust, to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Property.
826.061/573160
c. Entry. Beneficiary, in person, by agent or by court-appointed receiver, may enter, take possession of, manage and operate all or any part of the Property, and may also do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: taking and possessing copies of all of Trustor’s or the then owner’s books and records concerning the Property; entering into, enforcing, modifying, or canceling Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to Trustor; completing any unfinished construction; and/or contracting for and making repairs and alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor hereby irrevocably constitutes and appoints Beneficiary as Trustor’s attorney-in-fact to perform such acts and execute such documents as Beneficiary in its sole discretion may consider to be appropriate in connection with taking these measures, including endorsement of Trustor’s name on any instruments. d. UCC Remedies. Beneficiary may exercise any or all of the remedies granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or otherwise disposed of in any combination and in any manner permitted by applicable law.

Trustor’s limited partners (the “Limited Partners”) shall have the right to cure any default of Trustor hereunder and any of the Loan Documents upon the same terms and conditions afforded to Trustor. Provided that Beneficiary has been given written notice of the address for delivery of notices to the Limited Partners, Beneficiary shall provide any notice of default hereunder to the Limited Partners concurrently with the provision of such notice to Trustor, and as to the Limited Partners, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Section 10.2.

8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted, Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such notice to be recorded in the office of the Recorder of each County wherein the Property or some part thereof is situated as required by law and this Deed of Trust.

Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of Trust and the Note or other evidence of indebtedness which is secured hereby, together with a written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions of law and this Deed of Trust.
826.061/573160
Notice of sale having been given as then required by law, and not less than the time then required by law having elapsed after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may, and at Beneficiary’s request shall, postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale.

After deducting all costs, fees, and expenses of Trustee and of the trust hereby created, including reasonable attorneys’ fees in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto.

Without limiting the generality of the foregoing, Trustor acknowledges and agrees that regardless of whether or not a default has occurred hereunder, if an Event of Default has occurred under the City Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including without limitation, the outstanding principal balance and all other amounts due under the Note.

At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid for and acquire the Property or any part of it to the extent permitted by then applicable law. Instead of paying cash for such property, Beneficiary may settle for the purchase price by crediting the sales price of the property against the following obligations:
a. First, the portion of the Secured Obligations attributable to the expenses of sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse Beneficiary or Trustee under Section 7.11(c); and
b. Second, the remaining balance of all other Secured Obligations in any order and proportions as Beneficiary in its sole discretion may choose.

8.4 Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums which would be then due under the Loan Documents if the Secured Obligations had no acceleration 826.061/573160
provision; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, and in enforcing Beneficiary’s and Trustee’s remedies as provided herein, including, but not limited to, reasonable attorney’s fees; and (d) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred.

Nothing contained in Sections 8.3 and 8.4 is intended to expand upon or limit the rights of Trustor and Beneficiary under California law regarding Beneficiary’s exercise of the power of sale or Trustor’s reinstatement rights.

9. Trustor’s Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary; (b) the benefit of all laws now existing or which may hereafter be enacted providing for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling in the event of foreclosure; and (d) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind.

10. Miscellaneous Provisions.

10.1 Additional Provisions. The City Documents grant further rights to Beneficiary and contain further agreements and affirmative and negative covenants by Trustor which apply to this Deed of Trust and the Property.

10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be mailed to Trustor at the address set forth below. That address is also the mailing address of Trustor as debtor under the UCC. Beneficiary’s address set forth below is the address for Beneficiary as secured party under the UCC. Except for any notice required under applicable law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be made in writing, and sent to the parties at their respective addresses specified below or to such other address as a party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice shall be deemed delivered upon receipt; b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail; c. nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or 826.061/573160
d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof.

Trustor: Cleaver & Clark Commons, L.P.
c/o People’s Self-Help Housing Corporation
1060 Kendall Road
San Luis Obispo, CA 93401
Attention: CEO and President
With a copy to Trustor’s
Limited Partner: RSEP Holdings, LLC
90 Park Avenue, 28th Floor
New York, NY 10016
HASLO: Housing Authority of the City of San Luis Obispo 1150 Laurel Lane, Suite 190
San Luis Obispo, CA 93401
Attention: Director of Housing Management
Beneficiary: City of Grover Beach
154 South Eighth Street
Grover Beach, California 93433
Attention: ______________________

10.3 Binding on Successors. The terms, covenants and conditions of this Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided however this Section 10.3 does not waive the provisions of Section 7.4.

10.4 Substitution of Trustee. Beneficiary may from time to time or at any time substitute a trustee or trustees to execute the trust hereby created, and when any such substitution has been filed for record in the office of the Recorder of San Luis Obispo County, it shall be conclusive evidence of the appointment of such trustee or trustees, and such new trustee or trustees shall succeed to all of the powers and duties of the Trustee named herein.

10.5 Attorneys’ Fees and Costs. In any action or proceeding to foreclose this Deed of Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and Trustee all costs of such action or proceeding, including reasonable attorneys’ fees.

10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated exclusively in the jurisdiction where the Land is located (the “Property Jurisdiction”). The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the City Documents. 826.061/573160
Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held unenforceable or void, that provision shall be deemed severable from the remaining provisions, and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions contained herein.

In this Deed of Trust, whenever the context so requires, the singular number includes the plural.

10.7 Waiver, Modification and Amendment. Any waiver by Beneficiary of any obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to any act or omission by Trustor shall not be construed as a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary’s or Trustee’s consent to be obtained in any future or other instance. No amendment to or modification of this Deed of Trust shall be effective unless and until such amendment or modification is in writing, executed by Trustor and Beneficiary. Without limiting the generality of the foregoing, Beneficiary’s acceptance of payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary of its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay.

10.8 Action By Beneficiary. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by Beneficiary’s Executive Director or by any person who shall have been designated by Beneficiary’s Executive Director, without further approval by the governing board of Beneficiary.

Beneficiary shall use reasonable best efforts to respond to requests for any such approval, notice, direction, or consent in a timely manner. In any approval, consent, or other determination by Beneficiary required hereunder, Beneficiary shall act reasonably and in good faith.

10.9 Joint and Several Liability. If Trustor consists of more than one person or entity, in the case of a limited partnership, each general partner shall be jointly and severally liable for the faithful performance of all of Trustor’s obligations under this Deed of Trust.

10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of Trust.

10.11 Partial Subordination to Extended Use Agreement. Lender acknowledges that Borrower (with respect to the Leasehold Estate), HASLO (with respect to the Fee Estate) and the California Tax Credit Allocation Committee have or intend to enter into, or concurrently with the execution and delivery of the Loan Documents are entering into, a Regulatory Agreement (the “TCAC Regulatory Agreement”), which constitutes the extended low-income housing commitment described in Section 42(h)(6)(B) of the Internal Revenue Code, as amended (the “Code”). Lender acknowledges and agrees that, in the event of a foreclosure of its interest under the Deed of Trust or delivery by the Partnership of a deed in lieu thereof (collectively, a “Foreclosure”), the following rule contained in Section 42(h)(6)(E)(ii) of the Code shall apply:
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For a period of three (3) years from the date of Foreclosure, with respect to any unit that had been regulated by the TCAC Regulatory Agreement, (i) none of the eligible tenants occupying those units at the time of Foreclosure may be evicted or their tenancy terminated (other than for good cause, including but not limited to, the tenants’ ineligibility pursuant to Section 42 of the Code), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code.
[Signature Pages Follow]
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IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.

TRUSTOR:

CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
By: Cleaver & Clark Commons LLC,
a California limited liability company,
its managing general partner
By: People’s Self-Help Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Kenneth Trigueiro,
Chief Executive Officer and President
By: San Luis Obispo Nonprofit Housing Corporation,
a California nonprofit public benefit corporation,
its administrative general partner
By: __________________________
Ken Litzinger,
Chief Financial Officer
HASLO:

HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO,
a public body, corporate and politic
By: __________________________
Michelle Pedigo,
Interim Director of Housing Management
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EXHIBIT A

LAND LEGAL DESCRIPTION
Real property in the City of Grover Beach, County of San Luis Obispo, State of California, described as follows:

PARCEL A OF PARCEL MAP NO. G-72-199, IN THE CITY OF GROVER BEACH, COUNTY

OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED JULY 25, 1972 IN BOOK 9 OF PARCEL MAPS, AT PAGE 19, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, PARCEL 3 OF PARCEL MAP NO. G-71-183, IN

THE CITY OF GROVER BEACH, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED SEPTEMBER 30, 1971 IN BOOK 6 OF PARCEL MAPS, AT PAGE 93, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY AND THAT PORTION OF THE BLOCK DESIGNATED AS "WASHINGTON PARK” ON THE MAP OF THE TOWN OF GROVER, IN THE CITY OF GROVER BEACH, AS SHOWN ON MAP RECORDED IN BOOK A, PAGE 6 OF MAPS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEASTERLY CORNER OF SAID BLOCK; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID BLOCK A DISTANCE OF 200 FEET TO THE TRUE POINT OF BEGINNING; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID BLOCK, A DISTANCE OF 300 FEET; THENCE SOUTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID BLOCK, A DISTANCE OF 122.5 FEET

TO THE NORTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO WARNT HUNT AND WIFE, RECORDED AUGUST 19, 1932 IN BOOK 128, PAGE 90 OF OFFICIAL RECORDS; THENCE EASTERLY ALONG SAID NORTHERLY LINE 300 FEET TO THE EASTERLY LINE OF SAID BLOCK; THENCE NORTHERLY ALONG SAID EASTERLY LINE, 122.5 FEET TO THE TRUE POINT OF BEGINNING. “THE ABOVE LEGAL

DESCRIPTION IS PURSUANT TO THAT NOTICE OF MERGER RECORDED SEPTEMBER 12, 2023 AS INSTRUMENT NO. 2023-26868 OF OFFICIAL RECORDS”.

APN: 060-242-057, 060-242-044 AND 060-242-045
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of San Luis Obispo )
On_____________ before me, _____________________________, Notary Public, , personally appeared, ___________________________________, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
826.061/573160

ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of San Luis Obispo )
On_____________ before me, _____________________________, Notary Public, , personally appeared, ___________________________________, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________

LOAN AGREEMENT
by and between

THE CITY OF GROVER BEACH,
a California municipal corporation
and
CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
December 1, 2023
THIS LOAN AGREEMENT (this “Agreement”) is entered into effective as of December 1, 2023 (“Effective Date”) by and between the CITY OF GROVER BEACH, a California municipal corporation (“City”) and CLEAVER & CLARK COMMONS, L.P., a California limited partnership (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.”

RECITALS
A. Developer owns a leasehold interest in that real property located in in the City of Grover Beach, County of San Luis Obispo, State of California (the “Property”), as more particularly described on Exhibit A attached hereto and incorporated herein by this reference.

B. Developer is developing a fifty-three (53) unit multifamily residential apartment building rented at an affordable housing cost to low, very-low, and extremely-low income households (the “Project”).

C. The City has received grant funding from the California Department of Housing and Community Development (“HCD”) under the Permanent Local Housing Allocation (“PLHA”) program pursuant to a Standard Agreement between the City and HCD dated [________, 2023] (Contract No. 22-PLHA-17821) (the “PLHA Grant”).

D. Developer has requested, and City has agreed, to provide a loan to Developer in the amount of Four Million Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000). from the City’s receipt of the PLHA Grant (the “Loan”) to assist in the development of the Project pursuant to the terms and conditions set forth herein.

E. A material inducement to City to enter into this Agreement is the agreement by Developer to develop the Property within the time periods specified herein and in accordance with the provisions hereof, and the City would be unwilling to enter into this Agreement in the absence of an enforceable commitment by Developer to complete the Project in accordance with such provisions and within such time periods.

F. Concurrently herewith: (i) Developer shall execute a secured promissory note (the “Note”) in the amount of the Loan and a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “Deed of Trust”), which shall provide City with a security interest in the Property and the Project, and (ii) Developer and City shall execute an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (the “Regulatory Agreement”), which shall be recorded against the Property and which shall require Project rents to be affordable to low, very- low, and extremely-low income households for a term of not less than 55 years. This Agreement, the Note, the Regulatory Agreement and the Deed of Trust are collectively hereinafter referred to as the “City Documents.” NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.

ARTICLE I

DEFINITIONS

1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and any Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement.

1.1 “City Documents” is defined in Recital F.

1.2 Reserved.

1.3 “Environmental Laws” is defined in Section 9.4.

1.4 “Hazardous Materials” is defined in Section 9.3.

1.5 “Improvements” is defined in Section 3.7.

1.6 “Indemnitees” is defined in Section 9.2.

1.7 “Loan” is defined in Recital D and Article 4.

1.8 “Note” is defined in Article 4.

1.9 “Project” is defined in Recital B.

1.10 “Regulatory Agreement” is defined in Recital F.

ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE AND TERM

2.1 Developer’s Representations. Developer represents and warrants as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. (i) Authority. Developer is a California limited partnership duly organized and in good standing under the laws of the State of California. Developer has the full right, power and authority to undertake all obligations of Developer as provided herein, and Developer’s execution, performance and delivery of this Agreement, the Regulatory Agreement, and the other City Documents have been duly authorized by all requisite actions. (ii) No Conflict. 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. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement. (iv) No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding.

2.2 City Representations. City represents and warrants to Developer and covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.2 not to be true, City shall immediately give written notice of such fact or condition to Developer. City acknowledges that Developer shall rely upon City’s representations made herein notwithstanding any investigation made by or on behalf of Developer.
(i) Authority. City is a California municipal corporation, duly organized and in good standing under the laws of the State of California. City has the full right, power and authority to undertake all of the respective obligations as provided herein, and the execution, performance and delivery of this Agreement by City has been duly authorized by all requisite actions on the part of each such entity. The persons executing this Agreement on behalf of City has been duly authorized to do so. This Agreement constitutes a valid and binding obligation of City. (ii) No Conflict. City’s execution, delivery and performance of their respective obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which either is bound. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of City to perform their obligations under this Agreement. (iv) No Bankruptcy. City is not the subject of a bankruptcy or insolvency proceeding.

2.3 Effective Date. The obligations of Developer and City hereunder shall be effective as of the Effective Date.

ARTICLE III

DEVELOPMENT OF THE PROJECT

3.1 The Property. Developer represents and warrants that as of the Effective Date: (i) Developer holds leasehold title to the Property, and (ii) to the best knowledge of Developer after reasonable inquiry, the Property is subject to no covenant, condition, restriction or agreement that would hinder or prevent Developer’s performance of its obligations under this Agreement, the Regulatory Agreement, and the other City Documents. If at any time the foregoing statements become untrue, the City shall have the right to terminate this Agreement upon written notice to Developer.

3.2 Affordable Housing. Developer covenants and agrees for itself, its successors and assigns that the residential units developed within the Project shall be rented in accordance with the terms of the Regulatory Agreement which the Parties shall execute concurrently with the execution of this Agreement, and which shall be recorded in the Official Records of San Luis Obispo County (“Official Records”) on the date of closing on the Loan.

3.3 Project Approvals. Developer covenants that it shall: (i) obtain all necessary permits and approvals which may be required by City and any other governmental agency having jurisdiction over the construction of the Project or the development of the Property, (ii) comply with all mitigation measures, if any, imposed in connection with any environmental review of the Property or the Project, and (iii) not commence construction of the Project prior to issuance of building permits.

3.4 Fees. Developer shall be solely responsible for, and shall promptly pay when due, all customary and usual fees and charges of City in connection with obtaining building permits and other approvals for the Project, including without limitation, those related to the processing and consideration of amendments, if any, to the current entitlements, any related approvals and permits, environmental review, architectural review, historic review, and any subsequent approvals for the Project or the development of the Property.

3.5 Cost of Acquisition and Construction. Except as expressly set forth herein, Developer shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the acquisition of the Property, the design, development and construction of the Project and compliance with any conditions of approval of the City, including without limitation the installation and construction of all off-site or on-site improvements required by City in connection therewith, and none of such costs and expenses shall be the obligation of the City.

3.6 Rights of Access; Books and Records. For the purpose of ensuring that the Project is developed in compliance with this Agreement, Developer shall permit representatives of the City to enter upon the Property to inspect the Project following 48-hours’ written notice (except in the case of emergency in which case such notice as may be practical under the circumstances shall be provided). Upon request, Developer shall permit the City to inspect at reasonable times and on a confidential basis those books, records and all other documents of Developer necessary to determine Developer’s compliance with the terms of this Agreement.

3.7 City Disclaimer. Developer acknowledges that the City is under no obligation, and City does not undertake or assume any responsibility or duty to Developer or to any third party, to in any manner review, supervise, or inspect the progress of construction or the operation of the Project. Developer and all third parties shall rely entirely upon its or their own supervision and inspection in determining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by the City is solely for the purpose of determining whether Developer is properly discharging its obligations under this Agreement, and shall not be relied upon by Developer or any third party as a warranty or representation by the City as to the quality of the design or construction of the Project and other improvements constructed on the Property (collectively, the “Improvements”) or otherwise.

3.8 Intentionally Omitted.

3.9 Equal Opportunity. During the construction of the Project, there shall be no discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in construction of the Project, and Developer shall direct its contractors and subcontractors to refrain from discrimination on such basis.

3.10 Prevailing Wage Requirements. To the extent, and only if required by applicable federal and state laws, rules and regulations, Developer and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and applicable federal labor laws and standards, and the regulations adopted pursuant thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions.

3.11 Compliance with Laws. Developer shall carry out and shall cause its contractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, applicable provisions of the California Public Contracts Code, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City’s Municipal Code, 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., and the Unruh Civil Rights Act, Civil Code Section 51, et seq..

3.12 Liens and Stop Notices. Until the expiration of the term of the Regulatory Agreement and full repayment of the Loan, Developer shall not allow to be placed on the Property or any part thereof any lien or stop notice on account of materials supplied to or labor performed on behalf of Developer. 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: (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety bond in sufficient form and amount or provide other assurance satisfactory to City that the claim of lien or stop notice will be paid or discharged.

3.13 Right of City to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to Section 3.12 above, the City shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense and without further notice to Developer. In such event Developer shall be liable for and shall immediately reimburse City for such paid lien or stop notice. Alternatively, the City may require Developer to immediately deposit with City the amount necessary to satisfy such lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against Developer. Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Improvements for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Improvements. The City may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Property and the Improvements.

ARTICLE IV

CITY FINANCIAL ASSISTANCE

4.1 Loan. Using the PLHA Grant funds, the City shall provide a loan to Developer in the amount of Four Million Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000) (the “Loan”) upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by a promissory note (the “Note”) secured by the Deed of Trust executed by Developer as Trustor and recorded against the Property subordinate only to such liens as City shall approve in writing. The outstanding principal balance of the Note will accrue two percent (2%) simple annual interest commencing upon the date of disbursement.

Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.5, the proceeds of the Loan (“Loan Proceeds”) shall be disbursed in accordance with Section 4.4 hereof. The Parties agree that City shall disburse Loan Proceeds only for the purposes set forth in Section 4.4.

4.2 Payment Dates; Maturity Date. All payments on the loan shall be made in accordance with the terms of the Note, and shall be due on the Maturity Date as defined in the Note.

4.3 Security. As security for repayment of the Note, Developer shall execute the Deed of Trust pursuant to which City shall be provided a lien against the Property and the Improvements.

The Deed of Trust shall be recorded in the Official Records on the date of closing on the Loan.

The Deed of Trust may be subordinated only to such liens and subject only to such title exceptions as City may approve in writing. The City acknowledges that Developer’s construction and permanent lender(s) may require the subordination of the Deed of Trust and the City shall subordinate the Deed of Trust to deeds of trust or other security instruments approved by the City.

4.4 Use and Disbursement of Proceeds. The Loan Proceeds shall be used solely to fund acquisition of the Property and/or construction of the Project, and closing, escrow and other costs approved by the City.

4.5 Conditions to Disbursement of Loan Proceeds. City’s obligation to fund the Loan and disburse the proceeds thereof is conditioned upon the satisfaction of all of the following conditions:
(a) Developer’s delivery to City of each of the following: (i) certificate of good standing, certified by the Secretary of State indicating that Developer is properly organized, in good standing, and authorized to do business in the State of California, and (ii) a certified resolution indicating that Developer has authorized this transaction and that the persons executing this Agreement, the Regulatory Agreement, and the City Documents on Developer’s behalf have been duly authorized to do so.
(b) Developer’s delivery to the City of evidence of insurance coverage in accordance with the requirements set forth in Section 11.2.
(c) Developer’s delivery of the Regulatory Agreement and each of the City Documents, each fully-executed and acknowledged as applicable. (d) Recordation of the Regulatory Agreement and the Deed of Trust, in the Official Records.
(e) The issuance by an insurer satisfactory to City of an A.L.T.A. lender’s policy of title insurance (“Title Policy”) for the benefit of City in the amount of the Loan, insuring that the lien of the Deed of Trust is subject only to such defects, liens, conditions, encumbrances, restrictions, easements and exceptions as City may approve in writing and containing such endorsements as City may reasonably require, with the cost of the Title Policy to be paid by Developer.
(f) The City’s receipt of a written requisition for disbursement of funds from Developer specifying the amount and use of the requested funds, accompanied by the title company’s estimated settlement statement showing the acquisition price, closing costs and all other amounts due in escrow for Developer’s acquisition of the Property.

4.6 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any other provision of this Agreement, the City shall have no obligation to disburse or authorize the disbursement of any portion of the Loan Proceeds following:
(i) the failure of any of Developer’s representations and warranties made in this Agreement or in connection with the Loan to be true and correct in all material respects; (ii) the termination of this Agreement by mutual agreement of the Parties; (iii) the conditions to disbursement of the Loan set forth in Section 4.5 have not been satisfied within the time frame set forth in Section 3.1, unless an extension of such date is approved by City in writing; or
(iv) the occurrence of an Event of Default under this Agreement, the Regulatory Agreement or any of the City Documents which remains uncured beyond any applicable cure period.

4.7 Prepayment; Acceleration.
(a) Prepayment. Developer shall have the right to prepay the Loan at any time and from time to time, without penalty or premium, provided that any prepayment of principal must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal. Any such prepayment shall have no effect upon Developer’s obligations under the Regulatory Agreement which shall survive for the full term of the Regulatory Agreement.
(b) Due On Sale or Encumbrance. Unless City agrees otherwise in writing, such agreement not to be unreasonably withheld, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer (as defined in Section 7.2) absent the prior written consent of City of all or any part of or interest in the Property except for a Transfer permitted under Section 7.3 of this Agreement or as otherwise permitted pursuant to this Agreement.

4.8 Nonrecourse. Except as expressly provided in this Section 4.8, Developer and its partners shall have no personal liability for payment of the principal of, or interest on the Note, and the sole recourse of City with respect to the payment of the principal of, and interest on the Note shall be to the Property and the Improvements and any other collateral held by City as security for the Note; provided however, nothing contained in the foregoing limitation of liability shall: (i) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; (ii) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; or (iii) be deemed in any way to limit the rights of the City to obtain specific performance by the Developer of its covenants under the City Documents, other than the covenants to pay the City principal and interest due under the Note.

The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve the Developer of its obligation to indemnify the City under this Agreement, or liability for: (i) fraud or willful misrepresentation by the Developer; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by the Developer other than in accordance with the Deed of Trust; and/or (iv) the misappropriation of any proceeds by the Developer under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development

4.9 PLHA Grant Matters. In addition to all of its other commitments in the City Documents, and whether or not Developer directly signs the PLHA Grant, Developer:
(a) shall comply with all applicable obligations in the PLHA Grant; (c) shall timely provide the City with all documents and information (to the extent in the possession of or reasonably obtainable by Developer) to permit the City to comply with the applicable City’s obligations under the PLHA Grant;
(d) agrees that a Developer default under the PLHA Grant is an event of default under this Agreement; and
(e) acknowledges that the City is executing the PLHA Grant and entering into the City Loan Documents in reliance on Developer’s commitments in this Section 4.9, and would not do so in the absence of this Section 4.9.

ARTICLE V

INTENTIONALLY OMITTED

ARTICLE VI

USE OF THE PROPERTY

6.1 Use; Affordable Housing. Developer covenants and agrees for itself and its successors and assigns that the Property shall be used for the development and operation of the Project in accordance with the terms and conditions of this Agreement and the Regulatory Agreement.

6.2 Maintenance. Developer shall at its own expense, maintain the Property, the Improvements and related landscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Developer shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the Improvements in good condition and repair.

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

Developer shall have the right to apply for all applicable tax exemptions, including, without limitation, the welfare exemption from property tax for low-income housing.

6.4 Obligation to Refrain from Discrimination. Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Developer shall include such provision in all deeds, leases, contracts and other instruments executed by Developer, and shall enforce the same diligently and in good faith.

ARTICLE VII

LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT

AND CONTROL OF DEVELOPER

7.1 Change Pursuant to this Agreement. Developer has represented that it possesses the necessary expertise, skill and ability to carry out the development of the Project on the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer is of particular concern to the City. It is because of these qualifications, experience, financial capacity and expertise that the City has entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.

7.2 Prohibition on Transfer. Prior to the expiration of the term of the Regulatory Agreement, Developer shall not, except as expressly permitted by this Agreement, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Project, the Improvements, or this Agreement, without the prior written approval of City and HCD. Any such attempt to assign this Agreement without the City and HCD’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee.

In addition to the foregoing, prior to the expiration of the term of the Regulatory Agreement, except as expressly permitted by this Agreement, Developer shall not undergo any significant change of ownership without the prior written approval of City and HCD. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than forty-nine percent (49%) in aggregate of the present ownership and /or control of Developer, taking all transfers into account on a cumulative basis; provided however, neither the admission of an investor limited partner(s), nor the transfer by the investor limited partner(s) to subsequent limited partner(s) shall be restricted by this provision.

7.3 Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of utility easements or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to this Agreement; (iii) the lease of individual units to tenants for occupancy as their principal residence in accordance with the Regulatory Agreement; (iv) assignments creating security interests for the purpose of financing the acquisition, construction or permanent financing of the Project or the Property subject to the requirements of Article VIII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to entity which is under the direct control or under common control with either People’s Self-Help Housing Corporation, a California nonprofit public benefit corporation, or San Luis Obispo Nonprofit Housing Corporation, a California nonprofit public benefit corporation (each individually and/or collectively, a “Controlled Affiliate”); (vi) any permitted transfer or assignment of Developer’s leasehold interest in the Property or any portion thereof under the Ground Lease for the Property; and (vii) a Permitted Refinancing. Notwithstanding the foregoing or anything to the contrary in this Agreement, the removal and replacement of Developer’s general partner in accordance with the terms of the Developer’s partnership agreement shall not be prohibited or require the City’s consent and shall not constitute a default under any of the Loan Documents or accelerate the maturity of the Loan. Notwithstanding any provision of this Section 7.3, no permitted transaction under this Section 7.3 will alter any obligation under the Regulatory Agreement.

7.4 Requirements for Proposed Transfers. The City may, after receipt of approval by HCD, such approval not to be unreasonably withheld, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 7.4 shall not apply to permitted Transfers described in Section 7.3 or the last sentence of Section 7.2) (“Permitted Transfers”):
(i) The proposed transferee demonstrates to the City and HCD’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City and HCD to competently complete construction of the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement. (ii) The Developer and the proposed transferee shall submit for City and HCD review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Property or interest therein together with such documentation of the proposed transferee’s qualifications and development capacity as the City and HCD may reasonably request. (iii) The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement, the Regulatory Agreement, the City Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations pursuant to any conditions of approval of the City and all other conditions, and restrictions set forth in this Agreement and the Regulatory Agreement.
(iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City and HCD in form recordable in the Official Records.

Consent to any proposed Transfer may be given by the City Manager unless the City Manager, in his or her discretion, refers the matter of approval to the City Council. If the City rejects a proposed Transfer, the City, as applicable, shall provide the reasons for such rejection in writing within thirty (30) days following receipt of written request by Developer, and representatives of the City shall meet with Developer and the proposed transferee to discuss in good faith the reasons for the rejection and Developer’s and transferee’s responses thereto.

7.5 Effect of Transfer without City Consent. In the absence of specific written agreement by the City, no Transfer by Developer (excluding Permitted Transfers) shall be deemed to relieve the Developer or any other party from any obligation under this Agreement or the Regulatory Agreement.

7.6 Recovery of City Costs. Developer shall reimburse City for all costs, including but not limited to attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to affect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten days following City’s delivery to Developer of an invoice detailing such costs. This Section 7.6 shall not apply to Transfers described in Section 7.3.

ARTICLE VIII

SECURITY FINANCING AND RIGHTS OF MORTGAGEES

8.1 Mortgages and Deeds of Trust for Development. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property only for the purpose of securing loans approved by City for the purpose of financing the acquisition of the Property, the design and construction of the Improvements, other expenditures reasonably necessary for development of the Property pursuant to this Agreement, and the rehabilitation and/or refinancing of the Project. Developer shall not enter into any conveyance for such financing without the prior written approval of the City Manager or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development. Notwithstanding the foregoing, Borrower may refinance that certain senior loan made by JPMorgan Chase Bank, N.A. to Borrower on or about the date hereof (the “Senior Indebtedness”) without the prior consent of the City (the “Refinanced Indebtedness”), and the City hereby agrees to subordinate the Loan and all documents securing or evidencing the Loan, including, but not limited to, this Agreement, the Deed of Trust, the Note, the Regulatory Agreement, to the Refinanced Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Indebtedness, provided that the principal balance of the Refinanced Indebtedness does not exceed the then outstanding principal balance of the Senior Indebtedness plus the costs of refinancing the Senior Indebtedness (a “Permitted Refinancing”).

8.1.1 Regulatory Agreement to be Subordinate to Mortgages. City agree that if required by construction and/or permanent lenders, this Agreement, the Deed of Trust, and the Regulatory Agreement may be subordinated to deeds of trust or other security instruments approved by the City and HCD pursuant to a written instrument including without limitation, the provisions set forth in Section 8.4 below.

8.2 Holder Not Obligated to Construct. The holder of any mortgage, deed of trust authorized by this Agreement shall not be obligated to construct or complete the Improvements or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.

8.3 Notice of Default and Right to Cure. Whenever City delivers any notice of default hereunder, City shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property and to the Borrower’s limited partner provided that City has been provided with the address for delivery of such notice. City shall have no liability to any such holder for any failure by the City to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, to cure or remedy any such default or breach.

8.4 City Right to Cure Defaults. In the event of a breach or default by Developer under a mortgage or deed of trust secured by the Property, City may (but has no obligation to) cure the default, without acceleration of the subject loan, following prior notice thereof to the holder of such instrument and Developer. In such event, Developer shall be liable for, and City shall be entitled to reimbursement from Developer for all costs and expenses incurred by City associated with and attributable to the curing of the default or breach and such sum shall constitute a part of the indebtedness secured by the Deed of Trust.

8.5 Holder to be Notified. Developer, for itself, its successors and assigns hereby warrants and agrees that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by the holder prior to its creating any security right or interest in the Property.

8.6 Modifications to Agreement. Neither City nor HCD shall unreasonably withhold their consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter City’s substantive rights and obligations under this Agreement.

8.7 Estoppel Certificates. Any Party shall, at any time, and from time to time, within thirty (30) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults.

ARTICLE IX

ENVIRONMENTAL MATTERS

9.1 No City Liability; Developer’s Covenants. City shall not be responsible for the cost of any soil, groundwater or other environmental remediation or other response activities for any Hazardous Materials, if any, existing or occurring on the Property or any portion thereof, and Developer shall be solely responsible for all actions and costs associated with any such activities required by any regulatory agency with jurisdiction over the Property and/or required for the development of the Project, the Property, or any portion thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous Materials in, on or under the Property, or any portion thereof, Developer (as long as Developer owns the property which is the subject of such notice) agrees to timely initiate and diligently pursue and complete all appropriate response, remediation and removal actions for the presence, release or discharge of such Hazardous Materials within such deadlines as specified by applicable Environmental Laws. Developer hereby covenants and agrees that:
(1) Developer shall not knowingly permit the Project or the Property or any portion of either to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials in, on, under, about or from the Project or the Property with the exception of any previously disclosed existing conditions on the Property and cleaning supplies and other materials customarily used in construction, rehabilitation, use or maintenance of residential property and used, stored and disposed of in compliance with Hazardous Materials Laws, and (2) Developer shall keep and maintain the Project and the Property and each portion thereof in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Hazardous Materials Laws.

9.2 Environmental Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold the City and its employees (the “Indemnitees”) harmless from and against any and all claims including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 9.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. Developer’s indemnification obligation under this Section 9.2 shall not apply to acts described in clause (i) above caused by the gross negligence or willful misconduct of an Indemnitee.

9.2.1 No Limitation. Developer hereby acknowledges and agrees that Developer’s duties, obligations and liabilities under this Agreement, including, without limitation, under Section 9.2 above, are in no way limited or otherwise affected by any information the City may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Materials, whether the City obtained such information from the Developer or from its own investigations. It is further agreed that City do not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

9.3 Hazardous Materials. As used herein, the term “Hazardous Materials” means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.

9.4 Environmental Laws. As used herein, the term “Environmental Laws” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together with any regulations promulgated thereunder.

ARTICLE X

DEFAULTS, REMEDIES AND TERMINATION

10.1 Event of Developer Default. The following events shall constitute an event of default on the part of Developer (“Event of Developer Default”):
(a) Developer fails to commence construction within 60 days of closing on the Loan, or Developer fails to complete construction of the Project within 36 months of closing on the Loan, or subject to force majeure, abandons or suspends construction of the Project prior to completion for a period of sixty (60) days or more;
(b) Developer fails to pay when due the principal and interest (if any) payable under the Note and such failure continues for thirty (30) days after City notifies Developer thereof in writing;
(c) A Transfer (excluding a Permitted Transfer) occurs, either voluntarily or involuntarily, in violation of Article VII;
(d) Developer fails to maintain insurance on the Property and the Project as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days; (e) Subject to Developer’s right to contest the following charges pursuant to Section 6.3, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within 30 days of date of delinquency, but in all events upon the imposition of any such tax or other lien; (f) A default is declared in writing under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(g) Any representation or warranty contained in this Agreement or in any financial statement, certificate or report submitted to the City in connection with this Agreement or Developer’s request for the Loan proves to have been false in any material and adverse respect when made and continues to be materially adverse to the City; (h) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; (i) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor’s relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer;
(j) Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution;
(k) The Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated;
(l) An event of default arises under this Agreement, the Regulatory Agreement, or any City Document and remains uncured beyond any applicable cure period; or (m) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 10.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within 30 days, a Developer Event of Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than ninety (90) days after receipt of notice of the default or such longer period as the City may allow.

Developer’s limited partners (the “Limited Partners”) shall have the right to cure any default of Developer hereunder and any of the Loan Documents upon the same terms and conditions afforded to Developer. Provided that City has been given written notice of the address for delivery of notices to the Limited Partners, City shall provide any notice of default hereunder to the Limited Partners concurrently with the provision of such notice to Developer, and as to the Limited Partners, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Section 12.3.

10.2 City Default. An event of default on the part of City (“Event of City Default”) shall arise hereunder if City fails to keep, observe, or perform any of its covenants, duties, or obligations under this Agreement, and the default continues for a period of thirty (30) days after written notice thereof from Developer to City, or in the case of a default which cannot with due diligence be cured within thirty (30) days, City fails to commence to cure the default within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with due diligence and in good faith to completion.

10.3 City’s Right to Terminate Agreement. If an Event of Developer Default shall occur and be continuing beyond any applicable cure period, then City shall, in addition to other rights available to it under law or this Agreement, have the right to terminate this Agreement. If City makes such election, City shall give written notice to Developer and to any mortgagee entitled to such notice specifying the nature of the default and stating that this Agreement shall expire and terminate on the date specified in such notice, and upon the date specified in the notice, this Agreement and all rights of Developer under this Agreement, shall expire and terminate.

10.4 City’s Remedies and Rights Upon an Event of Developer Default. Upon the occurrence of an Event of Developer Default and the expiration of any applicable cure period, City shall have all remedies available to them under law or equity, including, but not limited to the following, City may, at its election, without notice to or demand upon Developer, except for notices or demands required by law or expressly required pursuant to this Agreement, the Regulatory Agreement, or the City Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the Note and interest accrued thereon immediately due and payable;
(b) Seek specific performance to enforce the terms of the Regulatory Agreement; (c) Foreclose on the Property pursuant to the Deed of Trust; (d) Pursue any and all other remedies available under law to enforce the terms of the this Agreement, the Regulatory Agreement, and the City Documents and City’s rights thereunder.

10.5 Developer’s Remedies Upon an Event of City Default. Upon the occurrence of an City Event of Default, in addition to pursuing any other remedy allowed at law or in equity or otherwise provided in this Agreement, Developer may bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement.

10.6 Remedies Cumulative; No Consequential Damages. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth herein, a party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages.

10.7 Inaction Not a Waiver of Default. No failure or delay by any Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive any Party of its rights to institute and maintain any action or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default.

ARTICLE XI
INDEMNITY AND INSURANCE.

11.1 Indemnity. Developer shall indemnify, defend (with counsel approved by City) and hold Indemnitees harmless from and against any and all claims, including without limitation, claims arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s or Developer’s contractors, subcontractors, agents or employees development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof or otherwise arising out of or in connection with Developer’s performance under this Agreement. Developer’s indemnification obligations under this Section 11.1 shall not extend to claims resulting from the gross negligence or willful misconduct of Indemnitees. It is further agreed that City do not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

11.2 Liability and Workers Compensation Insurance.
(a) Developer and all contractors working on behalf of Developer on the Project shall maintain a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit, Four Million Dollars ($4,000,000) annual aggregate, or such other policy limit as City may require in their reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds.
(b) Developer and all contractors working on behalf of Developer shall maintain a comprehensive automobile liability coverage in the amount of One Million Dollars ($1,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds. (c) Upon commencement of construction and continuing until issuance of a Certificate of Occupancy, Developer and all contractors working on behalf of Developer shall maintain a policy of builder’s all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as a loss payee. (d) Developer shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to City, naming City as a loss payee. (e) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M.

Best’s rating of no less than A-VIII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds.

Builder’s Risk and property insurance shall name City as a loss payee. (f) Prior to closing of the Loan, Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. (g) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within fifteen (15) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City. (h) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City.

Developer shall furnish the required certificates and endorsements to City prior to the commencement of construction of the Project, and shall provide City with certified copies of the required insurance policies upon request of City.

ARTICLE XII

MISCELLANEOUS PROVISIONS

12.1 No Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder’s fee, or other compensation with respect to the transactions contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the expiration or earlier termination of this Agreement.

12.2 Enforced Delay; Extension of Times of Performance. Subject to the limitations set forth below, performance by any Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Parties, acts or failures to act of any other public or governmental agency or entity (other than the acts or failures to act of City which shall not excuse performance by City), or any other cause beyond the affected Party’s reasonable control. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Parties within thirty (30) days of the commencement of the cause and such extension is not rejected in writing by the other Parties within ten (10) days of receipt of the notice. None of the Parties shall unreasonably withhold consent to an extension of time pursuant to this Section.

Times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer and City (acting in the discretion of its City Manager unless he or she determine in his or her discretion to refer such matter to the City Council). City and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability to obtain financing to complete the work of Improvements shall not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date.

12.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
City: City of Grover Beach
154 South Eighth Street
Grover Beach, California 93433
Attention: ______________________
Developer: Cleaver & Clark Commons, L.P.
c/o People’s Self-Help Housing Corporation
1060 Kendall Road
San Luis Obispo, CA 93401
Attention: CEO and President
With a copy to Developer’s
Limited Partner: RSEP Holding, LLC
90 Park Avenue, 28th Floor
New York, NY 10016

12.4 Attorneys’ Fees. If any Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements.

12.5 Waivers; Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the waiving party. This Agreement may be amended or modified only by a written instrument executed by the Parties.

12.6 Binding on Successors. Subject to the restrictions on Transfers set forth in Article VII, this Agreement shall bind and inure to the benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named party shall be deemed to apply to any permitted successor and assign of such party who has acquired an interest in compliance with this Agreement or under law.

12.7 Construction. The Section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all of the Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.

12.8 Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to the City Council for consideration.

12.9 Entire Agreement. This Agreement, including any exhibits listed below, which are attached hereto and incorporated herein by this reference, together with the Regulatory Agreement, and the other City Documents contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof.

12.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages executed by the other Parties. Any executed counterpart of this Amendment may be delivered to the other Parties by facsimile and shall be deemed as binding as if an originally signed counterpart was delivered.

12.11 Severability. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability.

12.12 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

12.13 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.

12.14 Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors 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 in interest pursuant to this Agreement.

12.15 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of California.

12.16 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws.

Any action to enforce or interpret this Agreement shall be filed in the Superior Court of San Luis Obispo County, California or in the Federal District Court for the Northern District of California.

12.17 Financial and Governmental Capacities. Developer agrees that the capacity of the City in this Agreement, the Regulatory Agreement, and the other City Documents shall be only as a lender (“Financial Capacity”), and that nothing herein or therein shall waive, supersede, condition, limit, modify or affect the City’s rights to take (or not take) any action in a governmental capacity, including without limitation enacting laws, inspecting structures, reviewing and issuing permits, and all other legislative, administrative, or enforcement functions pursuant to federal,state or local law (“Governmental Capacity”). In addition, nothing in this Agreement, the Regulatory Agreement, and the other City Documents shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law. [Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

CITY:

CITY OF GROVER BEACH,
a California municipal corporation
By:

Name:

Its:

DEVELOPER:

CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
By: Cleaver & Clark Commons LLC,
a California limited liability company,
its managing general partner
By: People’s Self-Help Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Kenneth Trigueiro,
Chief Executive Officer and President
By: San Luis Obispo Nonprofit Housing Corporation,
a California nonprofit public benefit corporation,
its administrative general partner
By: __________________________
Ken Litzinger,
Chief Financial Officer

EXHIBIT A

LEGAL DESCRIPTION
[To be inserted here]
826.061/573159

SECURED PROMISSORY NOTE
(PLHA Loan)
$4,750,000 Grover Beach, California
December ___, 2023
FOR VALUE RECEIVED, CLEAVER & CLARK COMMONS, L.P., a California limited partnership (“Borrower”), promises to pay to the CITY OF GROVER BEACH, a California municipal corporation (“City”), in lawful money of the United States of America, the principal sum of Four Million Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000) so much thereof as may be advanced by City pursuant to the Loan Agreement referred to below, together with interest on the outstanding principal balance in accordance with the terms and conditions described herein. Interest shall accrue on the outstanding principal balance at a rate equal to two percent (2%) simple interest per annum, commencing upon the date of disbursement thereof. Interest shall be calculated on the basis of a year of 365 days, and charged for the actual number of days elapsed.

This Secured Promissory Note (this “Note”) has been executed and delivered pursuant to and in accordance with a Loan Agreement executed by and between Borrower and City, dated of or about even date herewith (the “Loan Agreement”), and is subject to the terms and conditions of the Loan Agreement, which is by this reference incorporated herein and made a part hereof. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.

This Note is secured by a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date hereof, executed by Borrower for the benefit of City and encumbering the property described therein. City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein, in the Regulatory Agreement, and the Loan Agreement. The Regulatory Agreement shall remain effective for the full term thereof and shall survive the repayment of this Note.

1. PAYMENTS.

1.1 PAYMENT DATES; MATURITY DATE. All payments on this Note shall be deferred until the Maturity Date. The entire outstanding principal balance of this Note, together with interest accrued thereon and any other sums accrued hereunder shall be payable in full on the fifty-fifth (55th) anniversary of the date upon which the Senior Indebtedness (as such term is defined in the Loan Agreement) converts from the construction to permanent phase (“Maturity Date”).

1.2 DUE ON SALE. The entire unpaid principal balance and all interest and other sums accrued hereunder shall be due and payable upon the Transfer (as defined in Section 7.2 of the Loan Agreement) absent City consent, of all or any part of the Project or the Property or any interest therein other than a Transfer permitted without City consent pursuant to the Loan Agreement. Without limiting the generality of the foregoing, this Note shall not be assumable without City’s prior written consent, which consent may be granted or denied in City’s sole discretion; provided however, this Note may be assumed in connection with a permitted transfer as described in Section 7.3 of the Loan Agreement. 826.061/573159

1.3 PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note, provided that each such prepayment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal.

1.4 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made to City at 154 South Eighth Street, Grover Beach, CA 93433 or such other place as City shall designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by City in writing.

2. DEFAULTS AND REMEDIES.

2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder (“Event of Default”):
(A) Borrower fails to pay when due the principal and interest payable hereunder and such failure continues for thirty (30) days after City notifies Borrower thereof in writing, provided no notice shall be required for any payment otherwise due on final maturity of this Note.
(B) Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Borrower or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
(C) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Borrower or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Borrower or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 90 days after its issuance.
(D) The occurrence of a Transfer in violation of Article VII of the Loan Agreement. (E) A default is declared under any debt instrument secured by a mortgage or deed of trust on the Project or the Property and remains uncured beyond any applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder. (F) Borrower fails to maintain insurance on the Property and the Project as required pursuant to the City Documents and Borrower fails to cure such default within 20 days. (G) Subject to Borrower’s right to contest the following charges pursuant to the City Documents, if Borrower fails to pay taxes or assessments due on the Property or the Project or 826.061/573159
fails to pay any other charge that may result in a lien on the Property or the Project, and Borrower fails to cure such default within 10 days.
(H) If any representation or warranty contained in any City Document, or any certificate furnished in connection therewith, or in connection with any request for disbursement of the proceeds of the Loan (the “Loan Proceeds”) proves to have been false or misleading in any material adverse respect when made and continues to be materially adverse to the City.
(I) An Event of Default shall have been declared under the Regulatory Agreement or any City Document, and remains uncured beyond the expiration of any applicable cure period.

2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under applicable law, and (iii) exercise any and all rights and remedies available to City under this Note and the other City Documents, including without limitation the right to pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys’ fees, incurred in connection with City’s enforcement of this Note and the exercise of any or all of its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not alternative.

2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall automatically be increased without notice to the rate of ten percent (10%) per annum (the “Default Rate”); provided however, if any payment due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date for such payment. When Borrower is no longer in default, the Default Rate shall no longer apply, and the interest rate shall once again be the rate specified in the first paragraph of this Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent City from exercising any of its other rights or remedies.

3. MISCELLANEOUS

3.1 WAIVERS; BORROWER’S WAIVERS. No waiver by City of any right or remedy under this Note shall be effective unless in a writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver that may be given by City will be applicable except in the specific instance for which it is given. No notice to or demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right of City to take further action without notice or demand as provided in this Note.

To the maximum extent permitted by applicable law Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on 826.061/573159
the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice.

3.2 NOTICES. Any notice required or permitted to be given hereunder shall be given in accordance with Section 12.3 of the Loan Agreement.

3.3 SEVERABILITY. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

3.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Any legal action filed in connection with this Note shall be filed in the Superior Court of San Luis Obispo County, California, or in the Federal District Court for the Northern District of California.

3.5 PARTIES IN INTEREST. This Note shall bind Borrower and its successors and assigns and shall accrue to the benefit of City and its successors and assigns.

3.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation.

3.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City under this Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the Deed of Trust will in no manner make City the partner or joint venturer of Borrower.

3.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of this Note.

3.9 NONRECOURSE. Except as expressly provided in this Section 3.9, neither Borrower nor its partners shall have personal liability for payment of the principal of, or interest on, this Note, and the sole recourse of City with respect to the payment of the principal of, and interest on, this Note shall be to the Project, the Property and any other collateral held by City as security for this Note; provided however, nothing contained in the foregoing limitation of liability shall: (i) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; (ii) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; or (iii) be deemed in any way to limit the rights of the City to obtain specific performance by the Borrower of its covenants under the City Documents, other than the covenants to pay the City principal and interest due under the Note.

The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve the Borrower of its obligation to indemnify the City under this Agreement, or liability for: (i) fraud or willful misrepresentation by the Borrower; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by the Borrower other than in accordance with the Deed of Trust; 826.061/573159
and/or (iv) the misappropriation of any proceeds by the Borrower under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development [Signature Page Follows]
826.061/573159
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first written above.

BORROWER:

CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
By: Cleaver & Clark Commons LLC,
a California limited liability company,
its managing general partner
By: People’s Self-Help Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Kenneth Trigueiro,
Chief Executive Officer and President
By: San Luis Obispo Nonprofit Housing Corporation,
a California nonprofit public benefit corporation,
its administrative general partner
By: __________________________
Ken Litzinger,
Chief Financial Officer
826.061/573157
Recording requested by and when recorded mail to:

City of Grover Beach
154 South Eighth Street
Grover Beach, CA 93433

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

AFFORDABLE HOUSING REGULATORY AGREEMENT
(PLHA Loan)
This Affordable Housing Regulatory Agreement (this “Agreement”) is made as of December 1, 2023, by and between the CITY OF GROVER BEACH, a California municipal corporation (“City”), and CLEAVER & CLARK COMMONS, L.P., a California limited partnership (“Developer”). The HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO, a public body, corporate and politic (“HASLO”) joins in this Agreement for the limited purpose of authorizing recordation against the fee interest in the Land (as such term is defined herein).

RECITALS
A. HASLO owns a Fee interest in the land described in Exhibit A attached hereto and incorporated herein by this reference (the “Land”). Pursuant to the Terms of a Ground Lease (as such term is defined at Section A hereto), Developer owns a leasehold interest in the Land. Trustor intends to construct a 53-unit multifamily residential development on the Land and related improvements (the “Project”).

B. This Agreement is the “Regulatory Agreement” and one of the “City Documents” as described in that certain Loan Agreement, dated of or about even date herewith between the City and Developer (“Loan Agreement”), which provides for a Four Million Seven Hundred Fifty Thousand and 00/100 Dollars ($4,750,000) loan from the City to the Developer (“City Loan”).

This Agreement is, in part, to comply with the City’s obligations to the California Department of Housing and Community Development (“HCD”) under the PLHA Grant (as defined in the Loan Agreement).

C. As required by the PLHA Grant, as further consideration for the City Loan, and to further the interests of City, HASLO and Developer have agreed to enter into and record this Agreement. The purpose of this Agreement is to regulate and restrict the occupancy, rents, operation, ownership, and management of the Land and the Project for affordable housing and related uses. The covenants in this Agreement are intended to run with the Land and be binding on HASLO and Developer and their successors and assigns, notwithstanding payoff of the Loan.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Developer and City hereby agree as follow:
826.061/573157
A. Definitions.

The following terms have the meanings and content set forth in this section wherever used in this Agreement or attached exhibits.
“Affordable Rent” means the total charges for rent and utilities to each Qualifying Household as allowed based on household size, income level and unit size pursuant to HCD’s rules, regulations, and published annual income limits. “Area Median Income” or “AMI” means the area median income as determined for the City of Grover Beach periodically by HCD and adjusted for household size. In the event that such income determinations are no longer published by HCD, or are not updated for a period of at least eighteen (18) months, City shall provide Developer with other income determinations which are reasonably similar with respect to method of calculation to these previously published by HCD. “City Documents” is defined in Recital C.
“City Loan” is defined in Recital C.
“County” is the County of San Luis Obispo, California.
“Developer” means Cleaver & Clark Commons, L.P., a California limited partnership, and its officers, officials, directors, employees, agents and authorized representatives. “Ground Lease” means that certain Ground Lease between the Housing Authority of San Luis Obispo (“Landlord”) and Developer (as Lessee), dated substantially concurrently herewith, a memorandum of which will be recorded in the Official Records of the County. “HASLO” means the Housing Authority of The City of San Luis Obispo, a public body, corporate and politic
“HCD” means the California Department of Housing and Community Development. “Land” is defined in Recital A.
“Loan Agreement” is defined in Recital C.
“PLHA Grant” is defined in Recital C.
“Project” is defined in Recital B.
“Qualifying Household” has the meaning set forth in Section C. 1, below. ,. “Restricted Units” is defined in Section C.1.
“TCAC” means the California Tax Credit Allocation Committee. “Term” means the term of this Agreement described herein. 826.061/573157
“Unit” means any one of the residential units in the Project.

B. DEVELOPER’S OBLIGATIONS.

1. Compliance with Loan Agreement and PLHA Grant. Developer’s actions with respect to the Land shall at all times be in full conformity with all of the requirements of the Loan Agreement and PLHA Grant, including but not limited to the insurance requirements contained therein.

2. Use For Affordable Housing. Developer agrees, at all times during the Term of this Agreement, to rent the units in accordance with the Restricted Units definition at Section C.1 hereto.

3. Term of Agreement. This Agreement shall commence upon completion of the construction of the Project, as evidenced by issuance of a final certificate of occupancy for the Project (the “Completion Date”), and shall remain in full force and effect for fifty-five (55) years from the date on which the Senior Indebtedness (as such term is defined in the Loan Agreement) converts from the construction to permanent phase, or such other time as may be required to comply with the PLHA Grant, whichever is less.

C. OCCUPANCY AND RENTS.

1. Occupancy of Units. During the term of this Agreement, twenty-six (26) units (the “Restricted Units”) shall be rented to households whose annual income does not exceed sixtypercent (60%) of the Area Median Income (“Qualifying Households”).

2. Tenant Selection. Developer shall adopt written tenant selection policies for the Restricted Units that: (i) are reasonably related to program eligibility and the applicant’s ability to perform the obligations of the applicable lease; (ii) are consistent with the purpose of providing housing for Qualifying Households; and (iii) give prompt written notification to any rejected applicant of the grounds for rejection.

3. Nondiscrimination. Developer shall not discriminate or segregate in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of any units in the Project on the basis of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Developer shall include a statement in all advertisements, notices and signs for the availability of Units for rent to the effect that Developer is an Equal Housing Opportunity Provider.

4. Income Certification and Increases In Tenant Income. Developer shall certify the incomes of all prospective tenants in the Restricted Units prior to their initial occupancy of a Unit and shall recertify their incomes annually. If upon recertification, a tenant’s income exceeds the maximum designated for Qualifying Households, Developer may increase the rent for such tenants to no more than 30% of the tenant’s income and the tenant may be permitted to continue to occupy a Unit in the Project. Developer shall provide City an annual report on the income recertification evidencing that Project occupants meet the requirements of Qualifying Households. 826.061/573157

5. Rental Charges. Total charges for rent, utilities and related services for each Unit in the Project shall not exceed the Affordable Rent for that Unit. If upon recertification, a tenant’s income exceeds the Qualifying Household limit for the applicable Unit type, Developer may increase the rent for such tenants to no more than 30% of the Tenant’s monthly income less utility and other mandatory charges.

6. Conflicts With Other Regulatory Requirements. If any other regulatory agreement executed by Developer enforces the requirements of any loan program or low income housing tax credits as a means of providing financing or equity for the Land or Project are more restrictive than the rent and income restrictions contained in this Agreement, compliance with the rent and income restrictions of any such regulatory agreements shall be deemed compliance with this Agreement.

7. Loss of Operating Subsidy. In the event the operating subsidies (the “Operating Subsidy”) provided to the Project are not renewed and/or are terminated or reduced, and the Developer, after diligent effort, has been unable to obtain a substitute subsidy in a comparable amount, the rent restrictions for any rent-restricted units losing such Operating Subsidy shall be increased to the extent reasonably necessary to make the Project financially feasible, not to exceed 30% of 60% of Area Median Income, and the maximum incomes for residents of such units shall be increased to the extent reasonably necessary to make the Project financially feasible, not to exceed 60% of Area Median Income, subject to the written consent of HCD. The City shall meet and confer in good faith with the owner of the Property regarding such proposed change in maximum rents and incomes, and the parties shall execute and record such changes to this Agreement as may be necessary to implement such changes.

D. PROPERTY MANAGEMENT.

1. Management Responsibilities. Developer is responsible for all management functions with respect to the Project, including without limitation the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility over management of the Land or the Project.

2. Review of Management Policies. Developer shall submit its written management policies with respect to the Project and Program to City for its review, and shall amend such policies in any way necessary to insure that such policies comply with the provisions of this Agreement and the requirements of all parties providing financing for the Land and/or the Project.

3. Inspection and Records. Developer shall maintain records that clearly document Developer’s performance of its obligations to operate the Project under the terms of this Agreement. Developer shall submit any records to City within ten (10) business days of City’s request. Developer shall permit City to enter and inspect the Project for compliance with obligations under this Agreement upon seventy-two (72) hours advance notice of such visit by City to Developer or Developer’s management agent and to tenants of any Units.

4. Annual Report. Developer shall submit to City each year, on or prior to the date such report is required to be submitted to TCAC, a report for the preceding calendar year showing the necessary information to allow City to determine Developer’s compliance with this Agreement, and within thirty (30) days after receipt of a written request, any other information or completed 826.061/573157
forms requested by City in order to comply with City reporting requirements.

E. GENERAL PROVISIONS.

1. Default and Remedies. In the event of any Developer breach of any agreement or obligation under this Agreement, City shall provide written notice to Developer and Developer’s limited partner(s) of such breach. Developer shall have an opportunity to cure the breach within thirty (30) days from Developer’s receipt of such written notice or such longer period of time as City determines is necessary to cure the breach if Developer diligently undertakes to cure. If Developer fails to perform a timely cure, City may proceed with any remedy provided under the City Documents (subject to any subordination agreement) allowed by law to enforce the terms and conditions of this Agreement. A cure by any other Project lender or Developer’s limited partner(s) shall be accepted or rejected on the same basis as if made or tendered by Developer.

2. Binding Upon Successors. All provisions of this Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferee, and assigns of Developer and City, and shall run with the land for the full term of this Agreement, regardless of any subordination, cancellation, surrender, amendment or modification of the Ground Lease, assignment or any conveyance or transfer of the Land or Project or portion thereof, or any payment, prepayment, modification or expiration of any other City Documents.

3. Non-Liability of Officials, Employees and Agents. No officers, directors, employees and agents of City shall be personally liable to Developer for any obligation created under the terms of this Agreement.

4. Indemnity. Developer shall indemnify and hold City free and harmless against any losses, damages, liabilities, claims, demands, judgments, actions, court costs, and legal or other expenses (including reasonable attorneys’ fees) which City may incur as a direct or indirect consequence of Developer’s failure to perform any obligations as and when required by this Agreement. This indemnity obligation shall not extend to any claim arising solely from the gross negligence or willful acts of City, its agents, and its employees. Developer’s duty to indemnify City shall survive the term of this Agreement. Notwithstanding the foregoing or anything else to the contrary contained herein, no foreclosing lender or its successors and/or assigns shall be responsible or liable for any indemnity obligations that accrue hereunder prior to the completion of foreclosure (or acceptance of a deed in lieu thereof).

5. Primacy of PLHA Grant. This Agreement is subject to all applicable requirements of the PLHA Grant. In the event that any provisions of this Agreement and PLHA Grant conflict, the terms of the PLHA Grant shall control.

6. Governing Law. This Agreement shall be interpreted under and be governed by the laws of the State of California applicable to contracts executed and wholly performed in that State, except for those provisions preempted by federal law.

7. Agreement Controls. Notwithstanding any provisions of the Loan Agreement, in the event that any provisions of this Agreement and Loan Agreement conflict, the terms of this Agreement shall control.

8. Consents and Approvals. Any consent or approval of City required under this 826.061/573157
Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of City.

9. Notices, Demands and Communication. Formal notices, demands and communications between Developer and City shall be sufficiently given and shall not be deemed given unless dispatched by (i) delivered personally or by courier, (ii) sent by overnight express delivery, or (iii) mailed by registered or certified mail (return receipt requested), postage prepaid, to the principal offices of Developer and City as follows:

City: City of Grover Beach
154 South Eighth Street
Grover Beach, California 93433
Attention: ______________________
Developer: Cleaver & Clark Commons, L.P.
c/o People’s Self-Help Housing Corporation
1060 Kendall Road
San Luis Obispo, CA 93401
Attention: CEO and President
With a copy to Developer’s
Limited Partner: RSEP Holdings, LLC
90 Park Avenue, 28th Floor
New York, NY 10016
HASLO: Housing Authority of the City of San Luis Obispo 1150 Laurel Lane, Suite 190
San Luis Obispo, CA 93401
Attention: Director of Housing Management

10. Relationship of Parties. The relationship of Developer and City during the term of this Agreement is solely that of borrower and lender and shall not be construed as a joint venture, equity venture, or partnership.

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

12. Amendments and Modifications. Any amendments or modifications to this Agreement must be in writing, and shall be made only if executed by both Developer and City.

13. Severability. Every provision of this Agreement is intended to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any 826.061/573157
way be affected or impaired.
[Signature Pages Follow]
826.061/573157
IN WITNESS WHEREOF, City and Developer have caused this Regulatory Agreement to be executed by their duly authorized representatives.

CITY:

CITY OF GROVER BEACH,
a California municipal corporation
By:

Name:

Its:

DEVELOPER:

CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
By: Cleaver & Clark Commons LLC,
a California limited liability company,
its managing general partner
By: People’s Self-Help Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Kenneth Trigueiro,
Chief Executive Officer and President
By: San Luis Obispo Nonprofit Housing Corporation,
a California nonprofit public benefit corporation,
its administrative general partner
By: __________________________
Ken Litzinger,
Chief Financial Officer
HASLO:

HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO,
a public body, corporate and politic
By: __________________________
Michelle Pedigo,
Interim Director of Housing Management
826.061/573157
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of __________________)
On_____________ before me, __________________, Notary Public, personally appeared, ______, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature (s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
826.061/573157
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of __________________)
On_____________ before me, __________________, Notary Public, personally appeared, ______, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature (s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
826.061/573157
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of __________________)
On_____________ before me, __________________, Notary Public, personally appeared, ______, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature (s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
826.061/573157

EXHIBIT A

LEGAL DESCRIPTION
Real property in the City of Grover Beach, County of San Luis Obispo, State of California, described as follows:

PARCEL A OF PARCEL MAP NO. G-72-199, IN THE CITY OF GROVER BEACH, COUNTY

OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED JULY 25, 1972 IN BOOK 9 OF PARCEL MAPS, AT PAGE 19, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, PARCEL 3 OF PARCEL MAP NO. G-71-183, IN

THE CITY OF GROVER BEACH, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED SEPTEMBER 30, 1971 IN BOOK 6 OF PARCEL MAPS, AT PAGE 93, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY AND THAT PORTION OF THE BLOCK DESIGNATED AS "WASHINGTON PARK” ON THE MAP OF THE TOWN OF GROVER, IN THE CITY OF GROVER BEACH, AS SHOWN ON MAP RECORDED IN BOOK A, PAGE 6 OF MAPS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEASTERLY CORNER OF SAID BLOCK; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID BLOCK A DISTANCE OF 200 FEET TO THE TRUE POINT OF BEGINNING; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID BLOCK, A DISTANCE OF 300 FEET; THENCE SOUTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID BLOCK, A DISTANCE OF 122.5 FEET

TO THE NORTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO WARNT HUNT AND WIFE, RECORDED AUGUST 19, 1932 IN BOOK 128, PAGE 90 OF OFFICIAL RECORDS; THENCE EASTERLY ALONG SAID NORTHERLY LINE 300 FEET TO THE EASTERLY LINE OF SAID BLOCK; THENCE NORTHERLY ALONG SAID EASTERLY LINE, 122.5 FEET TO THE TRUE POINT OF BEGINNING. “THE ABOVE LEGAL

DESCRIPTION IS PURSUANT TO THAT NOTICE OF MERGER RECORDED SEPTEMBER 12, 2023 AS INSTRUMENT NO. 2023-26868 OF OFFICIAL RECORDS”.

APN: 060-242-057, 060-242-044 AND 060-242-045
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RECORDING REQUESTED BY:

WHEN RECORDED MAIL TO:

KMO Partners, LLP
3777 Long Beach Blvd., Suite 280
Long Beach, CA 90807
Attention: Caroline Woolsey
THIS SPACE FOR RECORDER’S USE ONLY

SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE

PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER INSTRUMENT.

THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) dated as of [December 1, 2023], is made by and between the CITY OF GROVER BEACH, a municipal corporation (“City”), the SAN LUIS OBISPO COUNTY HOUSING TRUST FUND, a California nonprofit public benefit corporation (the “Housing Trust Fund”) and the HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO, a public body, corporate and politic (“HASLO” and, together with the City and the Housing Trust Fund, collectively, the “Junior Lender”) and JPMORGAN CHASE BANK, N.A., a national banking association (“Chase” or “Senior Lender”) and acknowledged by CLEAVER & CLARK COMMONS, L.P., a California limited partnership (“Borrower”). The date of this Agreement as set forth above is for reference purposes only, and this Agreement will not be effective and binding until the Closing Date (as defined in the Construction and Permanent Loan Agreement of even date herewith between Chase and Borrower). The parties to this Agreement are referred to as the “Parties.” Chase and Junior Lender are referred to as the “Lenders.”

RECITALS
A. Borrower has executed or is about to execute a Construction and Permanent Leasehold Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing (the “Chase Deed of Trust”) for the benefit of Chase, to secure a promissory note the maximum principal amount of $[29,433,846] (“Senior Loan”). The Chase Deed of Trust encumbers, among other things, the real property more particularly described in Exhibit A attached to this Agreement (the “Land”) and is to be recorded concurrently herewith in the Official Records of San Luis Obispo County, California (“Official Records”).

The Land, together with all improvements now or hereafter located on the Land and all fixtures and personal property located on the Land and encumbered by any of the Recorded Items (as defined below) are referred to, collectively, as the “Property.” In connection with the Chase Deed of Trust, Chase shall record a UCC1 Financing Statement reflecting Borrower as debtor and Chase as secured party (the “UCC-1 Financing Statement”), which UCC-1 Financing Statement shall be recorded concurrently herewith.

B. In connection with the development of the Property, the City has:
a. Entered into a Disposition and Development Agreement with Borrower and HASLO dated as of March 16, 2022 and recorded in the Official Records on March 17, 2022 as Document No. 2022012077 (the “DDA”) pursuant to which the City agreed to transfer title to a portion of the Property by grant deed to the Housing Authority of the City of San Luis Obispo for 2 Subordination Agreement
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the purpose of development of the Project. In connection with the DDA, Borrower, HASLO and City entered into a Regulatory Agreement and Declaration of Restrictive Covenants (Cleaver Property Affordable Housing Project) dated as of July 26, 2022 and recorded in the Official Records on September 27, 2022 as Document No. 2022038152 (the “DDA Regulatory Agreement” and, together with the DDA, the “DDA Documents”). b. Entered into a Density Bonus Regulatory Agreement and Declaration of Restrictive Covenants (Cleaver & Clark Commons Project) by and among the City, HASLO and Borrower (the “Density Bonus Agreement”) dated as of [December ___, 2023] and recorded in the Official Records on [_________, 2023] as Document No. [_____________]. c. Agreed to make a loan to Borrower in the maximum principal amount of $4,750,000 (the “City PLHA Loan”) pursuant to that certain Loan Agreement (“City PLHA Loan Agreement”) from funds received from a Permanent Loan Housing Allocation grant (“PHLA Grant” from the California Department of Housing and Community Development, evidenced by that certain Secured Promissory Note (PLHA Loan) (“City PLHA Promissory Note”) and secured by that certain Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (PLHA Loan) dated as of [December _____] to be recorded in the Official Records substantially concurrently herewith (“City PLHA Deed of Trust”). In connection with the City PLHA Loan, City and Borrower also executed that certain Affordable Housing Regulatory Agreement (PLHA Loan) (“City PLHA Regulatory Agreement,” and together with the City PLHA Loan Agreement, PHLA Grant, City PLHA Promissory Note, City PLHA Deed of Trust, and any other documents executed in connection with the City PLHA Loan, the “City PLHA Loan Documents”) dated as of [December ___, 2023] to be recorded substantially concurrently herewith. d. Entered into a Deferred Development Impact Fee Agreement with Borrower (the “Deferred Impact Fee Agreement”) to be recorded in the Official Records substantially concurrently herewith.

C. The Housing Trust Fund is making a loan to Borrower in the maximum principal amount of $1,100,000 (the “HTF Loan”) pursuant to that certain Development Loan Agreement dated as of [December ___, 2023] by and between Borrower and the Housing Trust Fund (“HTF Loan Agreement”), evidenced by Promissory Note Secured by Deed of Trust dated as of [December ____, 2023] (“HTF Promissory Note”) and secured by that certain Leasehold Deed of Trust with Assignment of Rents executed by Borrower for the benefit of the Housing Trust Fund dated as of [December __, 2023] to be recorded in the Official Records substantially concurrently herewith (“HTF Deed of Trust”). In connection with the HTF Loan, the Housing Trust Fund and Borrower also executed that certain Affordable Housing Regulatory Agreement (“HTF Regulatory Agreement,” and together with the HTF Loan Agreement, HTF Promissory Note, HTF Deed of Trust, and any other documents executed in connection with the HTF Loan, the “HTF Loan Documents”) dated as of [December ___, 2023] to be recorded substantially concurrently herewith.

D. HASLO is making a loan to Borrower in the maximum principal amount of $1,618,000 (the “HASLO PFL Loan”) pursuant to that certain Loan Agreement (HASLO Loan) dated as of [December _____, 2023] by and between Borrower and HASLO (“HASLO PFL Loan Agreement”), evidenced by that certain Promissory Note (HASLO Loan) dated as of [December _____, 2023] (“HASLO PFL Promissory Note”) and secured by that certain Leasehold Deed of Trust and Assignment of Rents (HASLO Loan) executed by Borrower for the benefit of HASLO dated as of December ____, 2023] to be recorded in the Official Records substantially concurrently herewith (“HASLO PFL Deed of Trust”). In connection with the HASLO PFL Loan, HASLO and Borrower also executed that certain Below Market Rate Rental Housing Regulatory Agreement and Declaration of Restrictive Covenants (HASLO Loan) (“HASLO PFL Regulatory 3 Subordination Agreement
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Agreement,” and together with the HASLO PFL Loan Agreement, HASLO PFL Promissory Note, HASLO PFL Deed of Trust, and any other documents executed in connection with the HASLO PFL Loan, the “HASLO PFL Loan Documents”) dated as of [December ____, 2023] to be recorded substantially concurrently herewith
E. The City PLHA Deed of Trust, HTF Deed of Trust and HASLO PFL Deed of Trust are collectively referred to herein as the “Junior Deed of Trust.” The City PLHA Promissory Note, HTF Promissory Note and HASLO PFL Promissory Note are collectively referred to herein as the “Junior Note.” The HTF Regulatory Agreement, the City PHLA Regulatory Agreement, the HASLO PFL Regulatory Agreement and the Deferred Impact Fee Agreement are collectively referred to herein as the “Junior Restrictions.” The Junior Deed of Trust, Junior Note and the Junior Restriction are collectively referred to herein as the “Junior Loan Documents.” The DDA, the DDA Regulatory Agreement and Density Bonus Agreement are collectively referred to herein as the “Senior Restrictions.” F. It is the intent of the Parties that the order of priority of the documents to be recorded (collectively, the “Recorded Items”) as liens on or charges against the Property be as follows:

1. DDA Regulatory Agreement

2. DDA

3. Density Bonus Agreement

4. Chase Deed of Trust

5. UCC-1 Financing Statement

6. HTF Regulatory Agreement

7. HTF Deed of Trust

8. City PHLA Regulatory Agreement

9. City PHLA Deed of Trust

10. HASLO PFL Regulatory Agreement

11. HASLO PFL Deed of Trust

12. Deferred Impact Fee Agreement
G. It is a condition precedent to the respective obligations of each Party under the Recorded Items to which it is a party that such Recorded Item unconditionally be and remain at all times a lien or charge on the Property, having priority with respect to the other Recorded Items in the order set forth above, and that each Party specifically and unconditionally subordinate the lien or charge of each of the Recorded Items to which it is a party as necessary in order that the Recorded Items have the relative priority set forth above.

In consideration of the mutual benefits accruing to the Parties and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce each Party to enter the Recorded Items to which it is a party, the Parties agree as follows:

AGREEMENT

1. Priority and Subordination.
(a) Each Recorded Item, and any and all renewals and extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property, having the relative priority with respect to the other Recorded Items as set forth above. Each Party intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Recorded Items to which it is a party in favor of the lien or charge upon the Property of the other Recorded Items to the extent necessary so that the Recorded Items shall have the relative priority set forth above. 4 Subordination Agreement
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(b) Each Party acknowledges that it has been offered a satisfactory opportunity to review each of the Recorded Items and related documents to the extent that it wishes to review them. (c) Each Party will enter into a subordination agreement substantially similar to this Agreement with any lender which refinances the loan secured by the Chase Deed of Trust or the loan secured by the HTF Deed of Trust.
(d) Each Party acknowledges that its payment interests pursuant to the Recorded Items and any related documents shall have the relative priority with respect to payment interests pursuant to the other Recorded Items as set forth above. In addition, Junior Lender agrees that repayment of the indebtedness secured by the Junior Deed of Trust is and shall be subordinated to repayment in full of the indebtedness secured by the Chase Deed of Trust; provided, however, that Junior Lender may accept regularly scheduled payments due under the Junior Loan Documents so long as no default has occurred and is continuing under Chase’s Loan Documents. Junior Lender agrees that from and after such time as it has received from either Chase or Borrower written notice that a default then exists under the Chase Loan Documents (as defined hereinbelow) (which has not been expressly waived in writing by Chase) or otherwise has actual knowledge of such a default, Junior Lender shall not receive or accept any payments under the Junior Loan Documents. If (i) Junior Lender receives any payment, property, or asset of any kind or in any form on account of the Junior Loan Documents after a default under the Chase Loan Documents of which Junior Lender has actual knowledge or has been given notice of, or (ii) Junior Lender receives, voluntarily or involuntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any bankruptcy proceeding, such payment, property, or asset will be received and held in trust for Chase. Junior Lender will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to Chase. Chase shall apply any payment, asset, or property so received from Chase to the outstanding indebtedness under the Chase Loan in such order, amount (with respect to any asset or property other than immediately available funds), and manner as Chase shall determine in its sole and absolute discretion.
(e) Without the prior written consent of Chase, Junior Lender shall not pursue any remedy including, without limitation, the acceleration and/or demand of all or any part of the obligations secured by the Junior Deed of Trust, any foreclosure proceeding, exercise of power of sale, exercise of any rights as a secured party under the Uniform Commercial Code, any other public or private sale, acceptance of a tender of title to all or any portion of the Property in full or partial satisfaction of the Junior Deed of Trust, obtaining of a receiver, obtaining of a restraining order, protective order or injunction, seeking of default interest, taking possession or control of all or any portion of the Property, applying any funds pledged to Junior Lender or to any other obligation, exercising of any right of setoff against Borrower, initiating or voluntarily participating in any action or proceeding against Borrower or any of Borrower’s assets, to enforce collection or payment of all or any portion of the obligations to Junior Lender or to enforce rights against all or any portion of the Property. Notwithstanding the foregoing, the Parties acknowledge and agree that this Section 1(e) shall not prohibit the Junior Lender from bringing a suit for specific performance, injunctive relief, or other action against Borrower to enforce the affordability restrictions set forth in Junior Restrictions or Senior Restrictions.
(f) Chase shall have all approval, consent and oversight rights in connection with any insurance claims relating to the Property, any decisions regarding the use of insurance proceeds after a casualty loss or condemnation awards, the hiring or firing of property managers, or otherwise related in any way to the Property, and Junior Lender shall have no right to object to any such action or approval taken by Chase and shall consent thereto and be bound thereby. 5 Subordination Agreement
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2. Reliance. The Parties would not enter into the Recorded Items to which they are parties without this Agreement.

3. Recording. Each Party consents to the recording of each of the Recorded Items and this Agreement.

4. No Obligation. No Lender is under any obligation to any other Lender to, nor has any Lender represented that it will, see to the application of any proceeds of any loan secured by any of the Recorded Items except as may otherwise be set forth in a written agreement (other than this Agreement) executed by the Lender sought to be charged with such an obligation.

5. Notice of Default; Opportunity to Cure.
(a) Each Party shall give each of the other Parties notice of default under each Recorded Item in favor of such Party prior to enforcing remedies for such default against Borrower or the Property and each of the other Parties shall have the right to cure such default at any time that Borrower would have a right to cure it.
(b) If, prior to a foreclosure sale under a Recorded Item, a Lender or an entity wholly owned by a Lender takes title to the Property and cures the default on that Recorded Item, the beneficiary of that Recorded Item will not exercise any right it may have to accelerate the indebtedness secured by that Recorded Item solely by reason of that transfer (or will accept reinstatement if acceleration has already occurred).
(c) In the event a Lender acquires title to the Property, that Lender shall succeed to Borrower's obligations under the Senior Restrictions and have the right to assume and succeed to Borrower’s obligations under that Recorded Item and the documents secured by that Recorded Item, under the terms and conditions existing prior to the default, upon compliance with the reasonable requirements of the Lender which is the beneficiary of that Recorded Item as to assumptions.

6. Actions by Chase; Certain Waivers. Chase, without the consent of or notice to any other Lender, may enter into amendments of the Chase Deed of Trust and the documents and obligations secured thereby (collectively, the “Chase Loan Documents”) in any manner, may release any or all persons or entities liable for any obligation secured by the Chase Loan Documents, and may release any or all security for the obligations secured by the Chase Loan Documents, all without affecting the subordination under this Agreement, provided that the consent of the Junior Lender shall be required for any amendments or modifications of the Chase Loan Documents which (i) increase the amount of the Loan (other than permitted protective advances), (ii) increase the interest rate (except as set forth in the Chase Loan Documents), or (ii) decrease the term of the Loan, which consent shall not be unreasonably withheld, delayed or conditioned. Any Lender may release any or all persons or entities liable for any obligation secured by the deed of trust in its favor and the documents secured thereby (collectively, with respect to each respective Lender, that Lender’s “Loan Documents”), without the consent of or notice to any other Lender, all without affecting the subordination under this Agreement. Each Party waives any right to require marshaling of assets or to require a Lender to proceed against or exhaust any specific security for the obligations secured by any of the Loan Documents, and waives any and all defenses arising out of the loss or impairment of any right of subrogation to the lien of any of the Loan Documents

7. TCAC Regulatory Agreement. The Parties acknowledge that Borrower will be required to enter into a regulatory agreement (the “TCAC Regulatory Agreement”) with the California Tax Credit Allocation Committee (“TCAC”), which TCAC Regulatory Agreement will be on TCAC’s standard form. If requested to do so, each Lender will consent to, and subordinate the lien or charge of the Recorded Items 6 Subordination Agreement
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in its favor to the TCAC Regulatory Agreement, on the condition that the TCAC Regulatory Agreement includes provisions for termination thereof not later than three (3) years after foreclosure (or deed in lieu of foreclosure) with respect to any Recorded Item which encumbers the Property, and it otherwise reasonably acceptable to each Lender.

8. Conflicts Between Junior Restrictions. It is the intention of the Parties that Borrower shall comply with the affordable housing covenants and agreements which impose the greatest restriction on the Property to the extent such covenants and agreements remain an encumbrance on the Property.

Therefore, if there is a conflict now or in the future between any of the Junior Restrictions, Senior Restrictions or any other regulatory agreement or affordable housing covenant or agreement binding on the Property, the more restrictive provisions in such agreements shall be followed by Borrower and Borrower shall not be in default of its obligations under such covenants and agreements if Borrower follows the more restrictive covenants or agreements.

9. DDA Estoppel Provisions.
(a) To City’s knowledge, the DDA Documents are in full force and effect. (b) To City’s knowledge, no default, or any event or conditions which with the passage of time or the giving of notice, or both, would constitute a default on the part of City or Borrower or HASLO exists under the DDA Documents.
(c) To City’s knowledge, City, Borrower and HASLO have satisfied all obligations in the performance of the terms, covenants and conditions of the DDA Documents required to be performed or satisfied on the part of City, Borrower or HASLO as of the closing of the transactions contemplated in this Agreement.

(d) To City’s knowledge, City has received no written notice of any prior assignment or pledge of Borrower’s interest under the DDA Documents with respect to the Property. City has not assigned or pledged its interest under the DDA to any other party. (e) City hereby acknowledges and agrees that only the reversionary rights included in the DDA Documents are terminated and of no force and effect by their terms as of the date of this Agreement.

10. Miscellaneous.
(a) Transfers. Notwithstanding any transfer restrictions in the Junior Loan Documents or Senior Restrictions, the parties hereto hereby agree that (1) a transfer resulting from a foreclosure, deed in lieu of foreclosure, the exercise of a power of sale contained within the Chase Deed of Trust, or similar proceeding, and the subsequent sale following such action (collectively, a “Foreclosure Event”), shall not require any Junior Lender’s consent; (2) no Junior Lender shall withhold, condition or delay its consent to any refinancing of the Senior Loan so long as the proceeds of such refinance are used only to repay the Senior Loan and associated fees, closing costs and fees of the refinance loan, and there is no additional or substitute real property for the refinance loan; and (4) no Junior Lender shall unreasonably withhold, condition or delay its consent to a resyndication or securitization of the Senior Loan. (b) Entire Agreement. This Agreement constitutes the entire agreement among the Parties with respect to the priority of the lien and charge of the Recorded Items against the Property and all prior understandings and agreements on that subject, if any, are superseded and replaced by this Agreement.
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(c) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the state where the Land is located. (d) Successors; Assignment. This Agreement is for the benefit of the Lenders and their respective successors and assigns, and any provision hereof may be waived or modified by agreement of Lenders without the consent of Borrower, and without affecting the priority of the liens and charges of the Recorded Items as provided in this Agreement. The heirs, administrators, assigns and successors-ininterest of the Parties shall be bound by this Agreement. This Agreement may be assigned by a Party only as a part of an assignment of such Party’s interest in the Property. (e) Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand-delivered, or two business days after deposit in the U.S. mail, postage prepaid, to the Parties at the addresses set forth below, or to such other place as a Party may from time to time designate for itself by notice to the other Parties. No successor or assign of a Party shall be entitled to notices or opportunity to cure defaults hereunder unless notice of the transfer is given in accordance with this subsection.
(f) Amendment. This Agreement may be amended only by a writing signed by the Parties, but this clause shall not impair the validity of any further agreements among fewer than all of the Parties as among themselves.
(g) Legal Costs. In the event of any litigation, arbitration or other legal proceeding in which any Party seeks to enforce its rights under this Agreement or to recover damages for the breach thereof, the prevailing Party or Parties shall be entitled to recover its legal costs and expenses, including but not limited to attorneys’ fees, from the non-prevailing Party or Parties, whether such costs and expenses are incurred in connection with trial court proceedings, on appeal, in bankruptcy or other insolvency proceedings, in post-judgment collection proceedings, or otherwise. (h) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and whether or not all Parties execute each counterpart.
(i) Completion of Recording Information. If this Agreement is signed without completion of certain recording information called for above, any Party or any escrow agent or title insurance company acting on the instructions of any Party is hereby authorized to insert such information prior to recording this Agreement.
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NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY

BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT.

BORROWER:

CLEAVER & CLARK COMMONS, L.P.,
a California limited partnership
By: Cleaver & Clark Commons LLC,
a California limited liability company,
its managing general partner
By: People’s Self-Help Housing Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: ________________________
Kenneth Trigueiro
Chief Executive Officer and President
By: San Luis Obispo Nonprofit Housing Corporation,
a California nonprofit public benefit corporation,
its administrative general partner
By: __________________
Ken Litzinger
Chief Financial Officer
Address:

Cleaver & Clark Commons, L.P.
c/o People’s Self-Help Housing Corporation
1060 Kendall Road
San Luis Obispo, CA 93401
San Luis Obispo Nonprofit Housing Corporation
487 Leff Street
San Luis Obispo, CA 93401
with copies to:

Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94104
RSEP Holding, LLC
c/o Red Stone Equity Partners, LLC
90 Park Avenue, 28th Floor
New York, NY 10016
Attn: General Counsel
Bocarsly Emden Cowan Esmail & Arndt LLP
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633 W. Fifth Street, Suite 5880
Los Angeles, CA 90071
Attn: Kyle B. Arndt
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NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY

BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT.

CHASE:

JPMORGAN CHASE BANK, N.A.
a national banking association
By: _____________________________
Name: Rosalind L. Ross
Title: Authorized Officer
Address:

JPMorgan Chase Bank, N.A.

Community Development Banking
4250 Executive Square, Suite 825
La Jolla, CA 92037
Attention: Rosalind Ross
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NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR INTEREST IN THE PROPERTY

BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OR CHARGE OF SOME OTHER OR LATER INSTRUMENT.

JUNIOR LENDER:

CITY OF GROVER BEACH
By: ______________________________________
Name: Matthew Bronson
Title: City Manager
APPROVED AS TO FORM:
_________________________
Name: David P. Hale
Title: City Attorney
Address:

City of Grover Beach
154 S. Eight Street
Grover Beach, CA 93433
Subordination Agreement
Cleaver & Clark Commons
4867-3933-0193, v. 2

SAN LUIS OBISPO COUNTY HOUSING TRUST FUND,
a California nonprofit public benefit corporation
By: ______________________________________
Name: Kathy McClenathen
Title: Deputy Director
Address:

San Luis Obispo County Housing Trust Fund
71 Zaca Lane, Suite 130
San Luis Obispo, CA 93401
Attention: Deputy Director of Lending
Subordination Agreement
Cleaver & Clark Commons
4867-3933-0193, v. 2

HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO,
a California nonprofit public benefit corporation
By: ______________________________________
Name: Michelle Pedigo
Title: Interim Director of Housing Management
Address:

Housing Authority of the City of San Luis Obispo
487 Leff Street
San Luis Obispo, CA 93401
Attention: Executive Director
Subordination Agreement
Cleaver & Clark Commons
4867-3933-0193, v. 2

CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document

STATE OF )
)SS.:

COUNTY OF )
On __________________ before me, ________________________________(here insert name and title of officer), personally appeared ____________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
_________________________________
Notary Public
Print Name: _______________________
My commission expires:
____________________
Subordination Agreement
Cleaver & Clark Commons
4867-3933-0193, v. 2

EXHIBIT A

LEGAL DESCRIPTION
Real Property in the City of Grover Beach, County of San Luis Obispo, State of California, described as follows:

PARCEL A OF PARCEL MAP NO. G-72-199, IN THE CITY OF GROVER BEACH, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED JULY 25, 1972 IN BOOK 9 OF PARCEL MAPS, AT PAGE 19, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, PARCEL 3 OF PARCEL MAP NO. G-71-183, IN THE CITY OF GROVER BEACH, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP RECORDED SEPTEMBER 30, 1971 IN BOOK 6 OF PARCEL MAPS, AT PAGE 93, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY AND THAT PORTION OF THE BLOCK DESIGNATED AS "WASHINGTON PARK” ON THE MAP OF THE TOWN OF GROVER, IN THE CITY OF GROVER BEACH, AS SHOWN ON MAP RECORDED IN BOOK A, PAGE 6 OF MAPS, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEASTERLY CORNER OF SAID BLOCK; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID BLOCK A DISTANCE OF 200 FEET TO THE TRUE POINT OF BEGINNING; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID BLOCK, A DISTANCE OF 300 FEET; THENCE SOUTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID BLOCK, A DISTANCE OF 122.5 FEET

TO THE NORTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO WARNT HUNT AND WIFE, RECORDED AUGUST 19, 1932 IN BOOK 128, PAGE 90 OF OFFICIAL RECORDS; THENCE EASTERLY ALONG SAID NORTHERLY LINE 300 FEET TO THE EASTERLY LINE OF SAID BLOCK; THENCE NORTHERLY ALONG SAID EASTERLY LINE, 122.5 FEET TO THE TRUE POINT OF BEGINNING. “THE ABOVE LEGAL DESCRIPTION IS PURSUANT TO THAT NOTICE OF MERGER RECORDED SEPTEMBER 12, 2023 AS INSTRUMENT NO. 2023-26868 OF OFFICIAL RECORDS”.

APN: 060-242-59