Moreno Valley City Council
March 7, 2023

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(acting through the Executive Director) shall have and retain the authority to direct and requir e any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, and further to direct and require the immediate removal of the Phase II Site Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of written Notice from the Executive Director. If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written Notice (with evidence of such submitted to the Executive Director, as applicable), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thir ty (30) days as reasonably determined by the non -defaulting party), then Developer and its Property Manager shall have an additional 10 days to complete the cure of Gross Mismanagement condition(s). In no event shall any condition of Gross Mismanagement c ontinue uncured for a period exceeding forty - five (45) days from the date of the initial written Notice of such condition(s), except that the conditions described in subdivisions (d) and (e) below may exist for up to, but no longer than, sixty (60) days wi thout triggering Authority’s right to remove the Phase II Site Manager as described in the immediately following sentence as long as Developer is diligently working to cure such conditions of Gross Mismanagement. If such condition(s) do persist beyond suc h period, the Executive Director shall have the absolute right to immediately and without further notice to Developer (or to Property Manager or any other person/entity) to remove the Phase II Site Manager and replace the Phase II Site Manager with a new property manager of Executive Director’s selection at the sole cost and expense of Developer. If Developer takes steps to select a new Property Manager that selection is subject to the requirements set forth above for selection of a Property Manager. (a) For p urposes of this Agreement, the term “Gross Mismanagement” means management of the Phase II Project in a manner which violates the terms and/or intention of this Agreement for operation of a High Quality affordable housing projects, and shall include, but i s not limited to, any one or more of the following:
(i) Leasing to tenants who exceed the Prescribed Income Levels (ii) Leasing to tenants at higher than Affordable Rent, unless authorized by the Tax Credit Rules due to a tenant household becoming over-income; (iii) Allowing tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (iv) Under-funding required reserve accounts;
(v) Failing to timely maintain the Phase II Project in accordance with the Phase II Site Management Plan and Maintenance Standards; (vi) Failing to submit timely and/or adequate annual reports to Authority as required herein;
(vii) Fraud or embezzlement of Phase II Project funds, including without limitation funds in the reserve accounts;
(viii) Failing to ful ly cooperate with the Moreno Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the Phase II Project, in A.8.d
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maintaining a crime -free environment within the Phase II Project or in implementing measures recommended by the Moreno Valley Police Department;
(ix) Failing to fully cooperate with the Moreno Valley Fire Department or other local public safety agency(ies) with jurisdiction over the Phase II Project, in maintaining a safe and accessible environment within the Phase II P roject or in implementing measures recommended by the Moreno Valley Fire Department; (x) Failing to fully cooperate with the Moreno Valley Planning and Building Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Phase II Project, in maintaining a decent, safe and sanitary environment within the Phase II Project or in implementing measures recommended by the Moreno Valley Planning and Building Department;
(xi) Maintaining or allowing the Phase II Site to be maintained as a public nuisance or in a manner in conflict with any provision of the City Code; and (xii) Spending funds from the Capital Replacement Reserve account for items that are not defined as eligible costs, including eligible capital and/or replacement costs, under th e standards imposed by GAAP (and/or, as applicable, generally accepted auditing principles).
(b) Notwithstanding the requirements of the Phase II Site Manager to correct any condition of Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time and, if necessary, to replace the Phase II Site Manager as provided above. Developer shall include advisement and provisions of the foregoing requirements and requirements of this Agreement within any contract between Developer and its Property Manager for the Phase II Project.

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

Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Housing Unit in the Phase II Project in order for each and every tenant and tenant household to be aware of this inspection right.

5.6 Nondiscrimination Covenants . Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, A.8.d
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location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.

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

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are de fined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveye d, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons cl aiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivi sion (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, t ransferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
In contracts: “There shall be no discrimination against or segregation of, any person or group o f persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any pr actice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” Developer hereby covenants, by and for itself, its successors and assigns, and all persons claiming under or through them, to comply with the following laws relating to nondiscrimination and equal opportunity: (1) The Fair Housing Act (42 U.S.C. 3601 -19) and implementing regulations at 24 CFR part 100 et seq .; Executive Order 11063, as amended by A.8.d
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Executive Order 12259 (3 CFR, 1959 -1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d -2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 U.S.C. 6101 -6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at part 8 of this title; title II of the Americans with Disabilities Act, 42 U.S.C. 12101 et seq .; 24 CFR part 8; section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations at 24 CFR part 75; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964 -1965 Comp., p. 339; 3 CFR, 1966 -1970 Comp., p. 684; 3 CFR, 1966 -1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 CFR chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CF R, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women’s Business Enterprise).

Developer further covenants, by and for itself, its successors and assigns, and all persons claiming under or through them, not to inquire about the sexual orientation or gender identity of an applicant for, or occupant of, the Phase II Project or any Housing Unit at the Phase II Site, for the purpose of determining eligibility for occupancy of such Housing Units or otherwise making such Housing Units available. This prohib ition on inquiries regarding sexual orientation or gender identity does not prohibit any individual from voluntarily self -identifying sexual orientation or gender identity. Further, determinations of eligibility for occupancy of Housing Units at the Phase II Project shall be made in accordance with the eligibility requirements provided for such program by HUD, and such Housing Units shall be made available without regard to actual or perceived sexual orientation, gender identity, or marital status.

The cov enants established in this Section shall, without regard to technical classification and designation, be binding for the benefit and in favor of Authority and its successors and assigns, and shall remain in effect in perpetuity.

5.7 Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction . Authority is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protect ing the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided, without regard to whether Authority has been, remains or is an owner of any land or interest therein in the Phase II Site or in the Phase II Development. Authority shall have the right, if the Agreement or any covenants in any agreement pursuant to this Agreement, including without limitation the City Covenants, Authority Re gulatory Agreement, Authority Deed of Trust and/or Notice of Affordability Restrictions are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and such covenants may be entitled.

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6. DEVELOPER’S GENERAL REPRESENTATIONS AND WARRANTIES.

As a material inducement to each of City and Authority to enter into this Agreement, Developer represents and warrants to each of City and Authority that:

6.1 Formation, Qualification and Compliance . Developer (a) is a California limited partnership validly existing and in good standing under the laws of the State of California; (b) has all requisite and the authority to conduct its business and own, purchase, improve and sell its properties.

Developer is in compliance in all material respects with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorization s from, and has accomplished all filings, registrations and qualifications with any governmental agency that are necessary for the transaction of its business; (c) Developer has and will in the future duly authorize, execute and deliver this Agreement and any and all other agreements and documents required to be executed and delivered by Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement; (d) Developer does not have any material contingent obligat ions or any material contractual agreements which could materially adversely affect the ability of Developer to carry out its obligations hereunder; (e) there are no material pending or, so far as is known to Developer, threatened, legal proceedings to whi ch Developer is or may be made a party or to which any of its property is or may become subject, which have not been fully disclosed by Developer to Authority and City in this Agreement which could materially adversely affect the ability of Developer to carry out its obligations hereunder; and (f) there is no action or proceeding pending or, to Developer’s best knowledge, threatened, looking toward the dissolution or liquidation of Developer and there is no action or proceeding pending or, to Developer’s be st knowledge, threatened by or against Developer which could affect the validity and enforceability of the terms of this Agreement, or materially and adversely affect the ability of Developer to carry out its obligations hereunder.

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

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

6.3 Covenant Not to Transfer Except in Conformity . Excepting for the rental of individual Housing Units to the tenant households/occupants in the regular course of business (which rental activity shall not be limited by this Section 6.3), or the sale of a partnership interest to generate proceeds in consideration of the Tax Credits, Developer shall not sell, lease, or otherwise transfer or convey all or any part of the Phase II Site, or any interest therein, unless D eveloper has first obtained the prior written consent of the Executive Director, which consent may be granted or refused in the Executive Director’s sole and absolute discretion; except Authority (or City) shall upon receipt of written request therefor consent to a sale by Developer of its interest in the Phase II Site to Kingdom, the manager of the managing general partner of the Developer, or Rancho Belago Developers, Inc., the manager of the administrative general partner of Developer, after the expirati on of the tax credit A.8.d
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compliance period or the buyout by either Kingdom or Rancho Belago Developers, Inc. of the Investor Limited Partner, pursuant to the terms of the Partnership Agreement. In addition, the Investor Limited Partner, and any successor ther eto, may, without the prior consent of Authority or City and except as set forth in the senior permitted liens, sell, transfer, assign, pledge, hypothecate, and encumber some or all of its partnership interests in Developer and the same shall not be a violation of this Agreement. Moreover, Developer’s and any successor thereto, shall have the right, without the prior consent of Authority and except as set for in the senior permitted liens, to remove any or all of Developer’s general partners for cause as permitted under Developer’s limited partnership agreement and replace any or all removed general partners with a person or entity determined in the limited partner’s sole discretion. Any sale, lease, transfer or conveyance without such consent pursuant to this Section 6.3 shall, at Authority’s option, be void. A change in ownership of Developer resulting in the individuals executing this Agreement on behalf of Developer retaining less than fifty-one percent (51%) ownership of all outstanding shares of Dev eloper shall be deemed to violate this Section 6.3. In connection with the foregoing consent requirement, Developer acknowledges that Authority relied upon Developer’s particular expertise in entering into this Agreement and continues to rely on such expe rtise to ensure the satisfactory completion of all of the Phase II Development, and the marketing and rental of the Housing Units to Extremely Low Income Households, Very Low Income Households and Low Income Households to afford the community a long-term, quality affordable housing resource.

7. DEFAULTS, REMEDIES, AND TERMINATION.

7.1 Default Remedies. Subject to the extensions of time set forth in Section 7.12 of this Agreement, failure by any party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a “Default” or “Event of Default” under this Agreement. A party claiming a Default shall give written notice of Default to the other parties specifying the Default. Except as otherwise expressly provided in this Agreement, and without limiting or affecting rights of parties hereto to terminate this Agreement, the claimant shall not institute any proceedings against any other party, and the other parties shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy the specified Default and shall complete such cure, correction or remedy with diligence.

7.2 Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, any party may institute an action at law or equity to seek specific performance of the terms of t his Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement; provided, that Authority shall have no right, in any event, to impose a lien for mone tary damages against the Phase II Site or on any improvements erected from time -to- time on the Phase II Site. Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California.

7.3 Termination by Developer. In the ev ent that as of the time described below (and if no time is described below, the time established therefor in the Schedule of Performance):
(a) by the time set forth therefor in the Schedule of Performance for the Phase II Conveyance, Developer is not in defaul t under this Agreement and Authority does not execute the Authority Grant Deed and attempt to effect the Phase II Conveyance to Developer in the manner and condition and by the date provided in this Agreement; or A.8.d
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(b) in the event of any Default of Authority and/or City prior to the Phase II Conveyance which is not cured within the time set forth in Section 7.1 hereof; and any such failure is not cured within the applicable time period after written demand by Developer (or, with respect to (c), above, by the tim e set forth therein), then this Agreement may, at the option of Developer, be terminated by Notice thereof to Authority and City; provided that Developer shall have delivered to Authority and City the documents required to be delivered to such party(ies) pursuant to Section 4.15 of this Agreement. From the date of the Notice of termination of this Agreement by Developer to Authority and/or City and thereafter, this Agreement shall be deemed terminated as to all parties and there shall be no further rights or obligations among the parties.

7.4 Termination by Authority and/or City . If prior to the time established in the Schedule of Performance for the satisfaction of the Conditions Precedent:
(a) One or more of the Milestones is not satisfied by the time established therefor; or
(b) Developer (or any successor in interest) assigns this Agreement or any rights therein or in the Phase II Site in violation of this Agreement; or (c) Authority or City receives notification from Developer that there are Materially Adverse Conditions at the Phase II Site or that the condition of the Phase II Site will delay or preclude completion of the Phase II Development; or
(d) One of more of the Conditions Precedent is not satisfied; or (e) Developer fails to execute (as lessee/covenantee/bo rrower) the Authority Regulatory Agreement, City Covenants, Authority Grant Deed, Authority Note, Authority Deed of Trust, or Notice of Affordability Restrictions; or (f) Developer is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 7.1 hereof; then this Agreement and any rights of Developer or any assignee or transferee with respect to or arising out of the Agreement or the Phase II Site (including without limitation all attachments to this Agreement), shall, at the option of Authority, be terminated by Authority and/or City by Notice thereof to Developer. From the date of the Notice of termination of this Agreement by Authority and/or City to Developer and thereafter this Agreement (including without limitations all attachments hereto) shall be deemed terminated and there shall be no further rights or obligations among the parties, except that Authority and/or City may pursue any remedies it/they has/have hereunder.

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

7.6 Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by a party of one A.8.d
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or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party.

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

7.8 Applicable Law. The laws of the State of C alifornia shall govern the interpretation and enforcement of this Agreement.

7.9 Covenant Provisions; Certain Amendments . In the event, as a result of the provision of other financing in connection with the Phase II Development, the parties will review and, i f requested by Authority, City, and/or the County to amend the covenants and reporting provisions hereof to evidence more restrictive terms and conditions as may be regulated or required by virtue of such other funding. In the event Developer is required by virtue of such other financing to restrict the affordability of Housing Units in a manner more restrictive than as set forth under the form of City Covenants and/or Authority Regulatory Agreement then, from time to time upon receipt of request therefor from the Executive Director, Developer agrees to consent to modifications to incorporate such greater restrictions into each of the City Covenants and the Authority Regulatory Agreement; such request(s) by the Executive Director can be made at any time(s) during the Affordability Period.

7.10 Enforced Delay; Extension of Times of Performance . In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in Default, and all performance and other dates specifie d in this Agreement shall be extended, where delays or Defaults are due to: war; insurrection; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; state or national emergency or declaration of major disaster; acts or omissions of another party, or acts or failures to act of City or any other public or governmental agency or entity (excepting that acts or failures to act of Authority or City shall not excuse performance by Authority or City). Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause.

Times of performance under this Agreement may also be extended in writing by the mutual agreement of Authority and Developer. This Section 7.10 shall not be deemed applicable to the Authority Deed of Trust unless expressly incorporated by reference therein. The existence of any claim of possessory rights as to the Phase II Site or claims for related benefits or assistance, and the failure to obtain an allocation or reservation of tax credit s or financing commitments adequate to finance the Phase II Development shall not constitute grounds of enforced delay pursuant to this Section 7.10.

In addition to the foregoing (and without regard to the preceding portion of this Section 7.10), the Executive Director shall have the authority, at his discretion, to approve extensions on behalf of Authority to approve extensions of time not to exceed a cumulative total of three hundred sixty-five (365) days.

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7.10.1 COVID-19 Acknowledgement . Each of Developer, Aut hority and City acknowledge that as of the Date of Agreement, each party is aware of the coronavirus pandemic (“COVID-19”); neither party is required to provide a specific notice to the other party of such event pursuant to this Section 7.10, provided howe ver, such acknowledgement shall not, expressly or impliedly, establish force majeure in Developer commencing performance under this Agreement upon the Closing for the Phase II Conveyance; provided, however unforeseen circumstances arising after commencement of performance of this Agreement related to COVID -19 may constitute force majeure so long as such unforeseen circumstances are due to causes beyond the control and without the fault of the party claiming an extension of time to perform. (a) Further, the part ies are aware that the United States, the State of California, the County of Riverside, the City of Moreno Valley have issued a series of executive orders, adopted resolutions, and issued many and various advisements beginning on or about March 17, 2020 an d continuing to the Date of Agreement, and perhaps thereafter, regarding dealing with COVID-19 and pandemic. With regard to public financings of the State of California, the State advised:
“There can be no assurances that the spread of a novel strain of c oronavirus called COVID 19 will not materially impact the state and national economies and, accordingly, materially adversely impact the General Fund. While the effects of COVID-19 on the state may be temporary, it appears to be altering the behavior of businesses and people in a manner that may have negative impacts on global and local economies. In addition, stock markets in the U.S. and globally have seen significant recent declines that have been attributed to coronavirus concerns…” (b) In this regard, too, the City and the Authority, and related entities (together, “MoVal Entities”), inform Developer, and other stakeholders in this transaction, there can be no assurances that the spread of COVID -19 will not materially impact the MoVal Entities, and, accordingly, materially adversely impact local funding and services, such that there have been and may continue to be delays, interruptions, adjustments, even cessations, in the scope of staffing, services, and other functions performed by local government, as we ll as federal, State, regional, County functions, provided that nothing in the foregoing is or shall be construed as anticipatory repudiation by the Authority, or any of the MoVal Entities. (c) Similarly, Developer informs Authority and City there can be no assurances that the spread of COVID 19 will not materially impact Developer and accordingly, materially adversely impact Developer’s performance hereunder, including, without limitation, as a result of the shortage or unavailability of labor, materials and s upplies, including as a result of various governmental orders and business closures, such that there may be delays, interruptions, adjustments, even cessations, in Developer’s performance hereunder; provided however, in the event of shortage(s) and/or limi ted availability of labor to Developer in performance of this Agreement, if any, Developer agrees to use its commercially reasonable efforts to cause the procurement of materials and/or supplies, as applicable, and/or cause hiring of labor, as reasonably n ecessary to cause the shortest feasible and limited shortages, delays, and/or interruptions in performance under this Agreement.
(d) The parties expect this transaction will proceed timely to the Phase II Conveyance; nonetheless, the parties intend, and are re ciprocally entitled to a continuing sense of A.8.d
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security and reliance with regard to the other party’s future and continued performance under this Agreement, which both parties hereby acknowledge.

7.11 Authority and/or City Approvals and Actions . Whenever a refer ence is made herein to an action or approval to be undertaken by the Authority or the City, the Executive Director is authorized to act on behalf of Authority and/or City, unless specifically provided otherwise or the law otherwise requires. Authority may designate City and to act on its behalf for some or all purposes of this Agreement, provided that Notice thereof is provided to Developer; such Notice may be modified from time to time by instrument executed by Authority.

7.12 Transfers of Interest in Agreemen t or of Phase II Site . Except as otherwise set forth in Section 6.3 hereof, this Section 7.12 and all subsections of this Section 7.12, shall apply to transfers occurring or proposed after the Date of Agreement and are subject to the provisions therefor of the City Covenants and the Authority Regulatory Agreement.

7.12.1 Prohibition. The qualifications and identity of Developer are of particular concern to Authority and City. It is because of those qualifications and identity that Authority and City have entered into this Agreement with Developer. For the period commencing upon the date of this Agreement and until the end of the Affordability Period, except as otherwise set forth in Section

6.3 hereof, no voluntary or involuntary successor in interest of Develo per shall acquire any rights or powers under this Agreement, nor shall Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Phase II Site or the Phase II Development t hereon (excepting the rental Lease of Housing Units to tenants at the Prescribed Income Levels at an Affordable Rent) without prior written approval of Authority or City, except as expressly set forth herein.

7.12.2 Permitted Transfers. In the event of a propose d assignment by Developer under subparagraphs 7.12.2 through 7.12.3, inclusive, Developer agrees that at least thirty (30) days prior to such assignment it shall give written notice to Authority and City including a request for approval of such assignment and satisfactory evidence that the assignee has assumed jointly with Developer the obligations of this Agreement. In addition, no consent of Authority or City shall be required in connection with the transfer of the Phase II Site that occurs by foreclosur e or deed in lieu of foreclosure of any Permitted Senior Lien to respective holder thereof or to their nominees or assignees exclusive of Developer and Kingdom. The provisions of this Section 7.12.2 shall be limited by those transfers permitted in Section 6.3.
(a) Any transfers to an entity or entities in which Developer, or either of its general partners, retains a minimum of fifty -one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity or entities or relating to the syndication of Tax Credits or after the Tax Credit period, the removal of the Investor Limited Partner.
(b) The conveyance or dedication of any portion of the Phase II Site to City or other appropriate governmental agency, or the gr anting of easements or permits to facilitate construction of the Phase II Development.

In the event of a proposed assignment by Developer under subparagraphs 7.12.2 through 7.12.3, inclusive, Developer agrees that at least thirty (30) days prior to such assignment it shall give written notice to Authority and City including a request for approval of such assignment A.8.d
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and satisfactory evidence that the assignee has assumed jointly with Developer the obligations of this Agreement. In addition, no consen t of Authority or City shall be required in connection with the transfer of the Phase II Site that occurs by foreclosure or deed in lieu of foreclosure of any Permitted Senior Lien to respective holder thereof or to their nominees or assignees exclusive of Developer and Kingdom.
(c) Notwithstanding Section 7.12.2, in the event Developer desires to effect a Resyndication and refinancing or other transfer of the Phase II Project at a time after the date that is fifteen (15) years from conversion of the Phase II P roject under the Tax Credit Rules, then (i) Developer shall repay in full the Authority Loan Note, or (ii) Developer (and its lender(s)) shall enter into negotiations with Authority and City to amend the terms and conditions of the on terms and conditions materially more favorable to the Authority (and City), including without limitation an increase in the interest rate above one percent (1%), as reasonably determined by the Authority in its sole discretion. Further, no Resyndication shall result in amendment of the unit mix at the Prescribed Income Levels unless either (i) such amendment was to cause more, deeper affordability to same, or (ii) unless the Authority and/or City receives adequate additional consideration to cause less affordability and increase in the levels of same.

7.12.3 Authority and City Consideration of Requested Transfer . Authority and City agree that each will consider in good faith a request made pursuant to this Section 7.12 after the achievement of occupancy of ninety percent (90%) or mor e of the Housing Units in conformity with this Agreement following the issuance by Authority of a Certificate of Completion/Release of Construction Covenants for the Phase II Development, provided Developer delivers written notice to Authority and City req uesting such approval, the City Covenants and the Authority Regulatory Agreement remain in full force and effect. Such notice shall be accompanied by sufficient evidence regarding the proposed assignee’s or purchaser’s development and/or operational quali fications and experience, its financial commitments and resources, and the financial terms of such assignment and assumption (including the consideration proposed to flow to Developer or Related Entity and/or any of the Principals) in sufficient detail to enable Authority and City to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 7.12, and as reasonably determined by Authority and City. Notwithstanding the foregoing, the transfer of limited partnership interests to tax credit investors shall not entitle Authority or City to receive compensation (in connection with such transfer to tax credit investors). Authority and City shall evaluate each proposed transferee or assignee on the basis of its development and/ or qualifications and experience in the operation of affordable housing developments and facilities comparable to the High Quality Phase II Development, and its financial commitments and resources, and may reasonably disapprove any proposed transferee or a ssignee, during the period for which this Section 7.12 applies, which Authority and City reasonably determine does not possess sufficient qualifications. An assignment and assumption agreement in form satisfactory to Authority and City’s counsel shall als o be required for all proposed transfers and/or assignments. Within thirty (30) days after the receipt of Developer’s written notice requesting approval of an assignment or transfer pursuant to this Section 7.12, Authority and City shall either approve or disapprove such proposed transfer and/or assignment or shall respond in writing by stating what further information, if any, Authority and City reasonably require in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, Developer shall promptly furnish to Authority and City such further information as may be reasonably requested. In addition, Authority and City will not unreasonably withhold their approval of a transfer made at the conclusion of the tax credit compliance period to Developer and Affiliates upon the removal of the Investor Limited Partner, so long as (i) there are no defaults under this Agreement, (ii) the proposed transferee has reasonable A.8.d
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qualifications and e xperience in the operation of affordable housing developments in Riverside County that are comparable to the Phase II Development, and (iii) the proposed transferee expressly agrees in an assignment and assumption agreement to be bound by all executory pro visions of this Agreement for the Affordability Period.

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

7.12.5 Assignment by Authority . Each of Authority and/or City may assign or transfer any of their rights or obligations under this Agreement with the approv al of Developer, which approval shall not be unreasonably withheld; provided, however, that Authority may assign or transfer any of its interests hereunder to City at any time without the consent of Developer, and reciprocally City may assign or transfer any of its interest hereunder to the Authority without consent of Developer.

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

7.14 Relationship Among Authority, City and D eveloper. It is hereby acknowledged that the relationship among Authority, City and Developer is not that of a partnership or joint venture and that Authority, City and Developer shall not be deemed or construed for any purpose to be the agent of the othe r. Accordingly, except as expressly provided in this Agreement, including the Attachments hereto, neither Authority nor City shall have any rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Phase II Development.

7.15 Real Estate Brokers . Authority and Developer each represent and warrant to each other that no broker or finder is entitled to any commission or finder’s fee in connection with this transaction, and each agrees to defend and hold harm less the other from any claim to any such commission or fee resulting from any action on its part.

7.16 Non-recourse Liability of Developer . Notwithstanding anything to the contrary in this Agreement or any other Project Document, neither Developer nor any of its partners shall be personally liable for any default, loss, claim, damage, expense or liability to any person and the sole remedy against Developer hereunder shall be limited to its interest in the Phase II Development, excepting that Developer will be responsible for those liabilities of Developer referenced in Sections

4.7. 8. MISCELLANEOUS

8.1 Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of Authority to Developer, or any other claim by Developer against Authority and/or City, in connection with the Phase II Site, Phase II Development, or otherwise, Developer hereby waives any right it might otherwise have (a) to offset any such obligation, liability A.8.d
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or claim against Developer’s obligation s under this Agreement (including without limitation the attachments hereto), or (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under the Phase II Pro ject Documents.

8.2 Notices. All notices, statements, demands, requests, consents, approvals, authorizations, offers, agreements, appointments or designations hereunder by any party to the others shall be in writing and shall be given either by (i) personal s ervice, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified or registered mail, return receipt requested, postage prepaid, and addressed as follows:

If to Developer: COURTYARDS AT COTTONWOOD II, L.P.
27700 Kalmia Avenue
Rancho Belago, CA 92555-5200
Attn: James M. Jernigan
With a copy to: CREA Courtyards at Cottonwood, LP
30 South Meridian Street, Suite 400
Indianapolis, Indiana 46204
Attention: Asset Management
With a copy to: Nixon Peabody LLP
799 9th Street NW, Suite 500
Washington, DC 20001
Attn: Matthew Mullen
If to Authority: Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, CA 92552-0805
Attn: Executive Director
If to City: City of Moreno Valley
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: City Manager
and a copy to: (which copy shall not constitute notice to Authority or City) Office of City Attorney
14177 Frederick Street
Moreno Valley, CA 92552-0805
Attention: City Attorney
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Celeste Stahl Brady
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Addresses for notice may be changed from tim e to time by written notice to all other parties.

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

8.3 Survival of Representations and Warranties. All representations and warranties in the Phase II Project Documents shall survive the Phase II Conveyance and the rental of the Housing Units and have been or will be relied on by Authority and City notwithstanding any investigation made by Authority and/or City.

8.4 No Third Parties Benefited; AB 987. This Agreement is made for the purpose of setting forth rights and obligati ons of Developer, Authority and City and no other person shall have any rights hereunder or by reason hereof. There are no third party beneficiaries of this Agreement.

Developer acknowledges that, notwithstanding the foregoing portion of this Section 8.4 , pursuant to AB 987 and the amendments to Health and Safety Code Section 33334.3 made effective as of January 1, 2008 by that bill, it is possible that violations of the covenants, conditions and restrictions relating to affordable housing contained in th e Authority Regulatory Agreement and/or Notice of Affordability Restrictions may now be enforceable not only by Authority and City, but also by each of the persons and/or entities listed in Section 33334.3(f)(7) of the Health and Safety Code, specifically (1) residents of affordable units subject to covenants recorded pursuant to Health and Safety Code Section 33334.3(f)(1) (each, a “Covenanted Unit”), (2) the most recent former residents of such a Covenanted Unit, (3) applicants that are Low Income Househo lds, Very Low Income Households, or Extremely Low Income Households that are denied occupancy of such a Covenanted Unit, and (4) persons that are Low Income Households, Very Low Income Households, or Extremely Low Income Households and who are on a waiting list for occupancy of such a Covenanted Unit.

The provisions of AB 987 are to be applicable only to the extent required by law. Nothing in this Section 8.4 or this Agreement (including the Attachments hereto) is intended to provide an enforcement right to any person or entity not specifically made an intended third party beneficiary of this Agreement; any such third party shall be limited in their right to enforce affordability restrictions to the extent provided by Health and Safety Code Section 33334.3(f). Neither Authority nor City make any representation concerning the applicability, vel non, of Section 33334.3 as described in the foregoing portion of this Section 8.4.

8.5 Binding Effect; Assignment of Obligations . This Agreement shall bind, and shall inure to the benefit of, City, Developer and Authority and their respective successors and assigns.

Developer shall not assign any of its rights or obligations under any Project Document without the prior written co nsent of the Executive Director, which consent may be withheld in the Executive Director’s sole and absolute discretion; provided that the Executive Director shall reasonably consider an assignment to an entity or entities owned or under majority control b y Developer or the Principals where Developer pays Authority’s and City’s costs to review, estimate, process and document such assignment and no other provisions of this Agreement are amended thereby. Any such assignment without such consent shall, at Aut hority’s and/or City’s option, be void. In connection with the foregoing consent requirement, Developer acknowledges that Authority and City relied upon Developer’s particular expertise in entering this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the Phase II Development and the use of the Housing Units in conformity with this Agreement.

8.6 Counterparts. Any Phase II Project Document may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document.

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8.7 Prior Agreements; Amendments; Consents . This Agreement (together with the other Phase II Project Documents) contains the entire agreement among City, Authority and Developer with respect to the Phase II Site, and all prior negotiations, understandings and agreements with respect to such matters are superseded by this Agreement and such other Phase II Project Documents. No modification of any Phase II Project Document (including waivers of rights and conditions) shall be ef fective unless in writing and signed by the party or parties against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given. This Agreement is executed in three (3) duplicate originals, e ach of which is deemed to be an original. This Agreement includes pages 1 through 78, plus signature pages S -1 to S-3, and Attachments 1 through 15, which constitutes the entire understanding and agreement of the parties.

This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements among the parties or their predecessors in interest with respect to all or any part of the subject matter hereof.

All waivers of the prov isions of this Agreement must be in writing by the appropriate authorities of Authority, City and Developer, and all amendments hereto must be in writing by the appropriate authorities of Authority, City and Developer. Whenever this Agreement provides for action by Authority, the Executive Director of Authority may act on behalf of Authority unless the context or applicable law requires otherwise. Whenever this Agreement provides for action by City, the City Manager may act on behalf of City unless the context or applicable law requires otherwise.

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

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

8.10 Headings. Article and section headings are included in the Phase II Project Documents for convenience of reference only and shall not be used in construing the Phase II Project Documents.

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

8.12 Time of the Essence . Time is of the essence of all of the Phase II Project Documents.

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

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

8.15 Developer’s Payment and Reimbursement of Authority’s Post -Date of Agreement Third Party Costs . Developer shall pay for and reimburse Authority and City, as applicable, for all costs reasonably incurred by Authority and/or City for any and all out of pocket, third party costs, fees, and expenses incurred by Authority and/or City (but not in -house staff time) for attorneys, economic consultants, appraisers, engineers, affordable housing consultants, escrow company fees, title company fees, and other consulting and/or professional services incurred by Authority or City arising from and/or related in any respect to the implementation of this Agreement, the Authority Regulatory Agreement, the City Covenants or any other Project Documents, or the implementation and operation of the Phase II Project from the period of time commencing after the Closing for the Phase II Project through the term of the Affordability Period (together, “Third Party Costs”). The Third Party Costs may include costs incurred in co nnection with (a) drafting, negotiation, and execution of post-Closing agreements and implementing documents, if any, (b) post- Closing enforcement of this Agreement, the Regulatory Agreement, City Covenants, Authority Loan Note, Authority Loan Deed of Trus t, or other Project Documents, including the following: (i) commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Documents, and (ii) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which Authority and/or City are indemnified under this Agreement and/or the other Project Documents, provided as to defense of any action which Authority or City have tendered the defense to Developer and Developer fails to defend any such action; and (c) other reasonable costs incurred related to requests for or provision of estoppel certificates, subordination agreements, affordable housing documents, escrow instructions, advisory assist ance, amendments, implementation agreements, interpretations, modifications, any other agreements, instruments, documentation, legal advice, economic development/affordable housing advice, or other third party contracts for consulting or professional servi ces necessitated by Authority’s, City’s or Developer’s post -Closing and in implementation of this Agreement, and/or requested by Developer, and/or its Primary Lender, Investor Limited Partner, or other independent contractor or consultant to Developer post -Closing arising from or related in any manner to this Agreement.

8.15.1 Payment of Third Party Costs; Survival of Obligation . Within ten (10) calendar days of the submittal by Authority and/or City staff of copies of invoices or billings for Third Party Costs ( defined below) incurred, it is and shall be the obligation of Developer to reimburse and pay to Authority one hundred percent (100%) of these Third Party Costs. This reimbursement obligation shall bear interest from the date occurring ten (10) calendar da ys after Authority gives written demand to Developer at the lesser of the rate of ten percent (10%) per annum, or the maximum rate then permitted by law. This reimbursement obligation shall survive the issuance of the final Noticer of Completion and Relea se of Construction Covenants for the Phase II Project and termination of this Agreement.

8.15.2 Exception to Payment of Post -Effective Date Third Party Costs .

Notwithstanding Sections 8.15 above, Developer shall not be responsible to pay and reimburse for Third Party Costs if the costs incurred are attributable to one or more of the following events:
(a) City Council, Authority Board, Planning Commission, Zoning Administrator, or other City official with discretionary approval and/or disapproval rights over the A.8.d
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Phase II Project or the implementation of this Agreement disapproves, denies, or refuses to take action on an application for a permit or other discretionary application necessary to commence and complete the Phase II Project;
(b) Default by Authority or City under this Agreement; or (c) Any amendment to this Agreement or any other Project Documents that is initiated by Authority and/or City.

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S-1
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the dates hereinafter respectively set forth.

DEVELOPER:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President

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S-2
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AUTHORITY:

MORENO VALLEY HOUSING AUTHORITY,
a public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST:

Jane Halstead, Authority Secretary
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, General Counsel

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S-3
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CITY OF MORENO VALLEY.
a California municipal corporation
By:

Mike Lee, City Manager
ATTEST:

City Clerk
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, City Attorney

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Attachment No. 1
Map of the Phase II Site

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 1

MAP OF PHASE II SITE
[to be inserted]

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Attachment No. 2
Legal Description of the Phase II Site

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ATTACHMENT NO. 2

LEGAL DESCRIPTION OF THE PHASE II SITE
Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS INSTRUMENT NO. 2020-0080445 OF OFFICIAL RECORDS, IN THE

OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PA RCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEASURED ALONG SAI D EAST LINE, FROM THE

CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON -TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FEET; THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUG H A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET; THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment No. 3
Schedule of Performance

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ATTACHMENT NO. 3

SCHEDULE OF PERFORMANCE
For the purposes of this Schedule of Performance, the “Date of Agreement” is March 7, 2023. The Executive Director may extend in one or more extensions, not to exceed cumulatively, of up to three hundred sixty -five (365) days the time under this Schedule of Performance by which any obligation of Developer shall be performed.

1. Submittal of Agreement . Developer shall
execute and submit the Agreement to
Executive Director for consideration and
action by Authority and City Council.

Not less than the date of first publication of HSC
Section 33433 publication of joint public hearing
before the Authority Board and City Council
consideration and action on the Agreement.

2. Consideration and Action on Affordable
Housing Agreement . Authority and City
Council will hold a joint public hearing on
the disposition of Phase II Site and
consider and take action to approve (or
disapprove) the Agreement.

Not later than March 21, 2023.

Disposition of Phase II Site.

1. Open Escrow . Developer and Authority
open Escrow for sale and disposition of
the Phase II Site under the terms of the
Agreement.

Not later than March 31, 2023.

2. Investigation of Phase II Site;
Developer’s Due Diligence . Developer
undertakes and completes due diligence of
the physical and environmental
investigation of the Phase II Site under the
terms of the Agreement.

Not later than March 31, 2023.

3. Satisfaction of Conditions Precedent .

Developer shall satisfy the Conditions
Precedent.

Not later than April 10, 2023.

4. Recording of Documents . The Authority
Grant Deed is recorded; in addition, each
and every document required to be
executed and delivered in connection with
the Phase II Con veyance shall have been
delivered and each and every document
required to be recorded shall have been
recorded, including without limitation the
City Covenants, the Authority Regulatory
Agreement, Authority Deed of Trust,
Notice of Affordability Restrictions.

Within thirty (30) days after the satisfaction of
the Conditions Precedent.

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Attachment No. 3
Schedule of Performance

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5. Commencement of Construction .

Developer shall have commenced
construction of the Phase II Development.

Not later than the earlier to occur of: (i) the
thirtieth (30th) day after Phase II Conveyance, or
(ii) the applicable TCAC deadline.

6. Completion of Construction . Developer
shall complete construction of the Phase II
Development.

Within eighteen (18) months after the earlier of
(i) commencement of construction or (ii) the time
set forth in item #5 for the commencement of
construction of the Phase II Development.

7. Rental Units Occupied. Developer causes
the 32 new Housing Units to be occupied
by Eligible Households at the Prescribed
Income Levels and at an Affordable Rent
in conformity with the Agreement.

Within one hundred twenty (120) days after the
earlier of (i) completion of construction or (ii) the
time established for completion of construction in
this Schedule of Performance.

For the purposes of t his Schedule of Performance (“Schedule”), the Date of Agreement is the commencement date. This Schedule is subject to revision periodically as agreed in writing between Developer and Authority, with the Executive Director hereby authorized on behalf of Au thority to agree to make such revisions as he or she deems reasonably necessary; provided that the Executive Director, in his or her sole discretion, may elect to bring to the Authority Board and City Council for consideration and action any modifications to this Schedule. The parties agree the Schedule is subject to all of the terms and conditions set forth in the text of the Agreement. The summary of the items of performance in the Schedule is not intended to supersede or modify the more complete description in the text; in the event of any inconsistency between the Schedule and the text of Agreement, the text shall govern. In the event the Executive Director deems it necessary to bring to Authority Board and City Council for consideration one or more m odifications to this Schedule, the discretion to do so is expressly reserved to the Executive Director. The time periods in the Schedule for Authority’s approval of plans, drawings and other submittals to Authority by Developer shall only apply and commen ce upon Developer’s complete submittal. In no event shall an incomplete submittal by Developer trigger any of Authority’s and/or City’s obligations of review and/or approval hereunder; provided, however, that Authority and/or City, as applicable, shall no tify Developer of an incomplete submittal as soon as is practicable and in no event later than the applicable time set forth for Authority’s action on the particular item in question.

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Attachment No. 4
Certificate of Completion/Release of Construction Covenants

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 4

FORM OF CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
TO: Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: Executive Director
The undersigned, _______________, being duly authorized to execute this Certificate of Continuing Program Compliance (this “Certificate”) on behalf of COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership (“Developer”), hereby represents and warrants that:

1. She/He has read and is thoroughly familiar with the provisions of that certain unrecorded Disposition, Development and Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) (“DDAHA”) by and among Authority, the City of Moreno Valley (“City”) and Developer dated as of March 7, 2023, including without limitation the City Covenants, Authority Regulatory Agreement, Authority Deed of Trust, and other attachments t hereto. Capitalized terms used herein shall have the same meaning as that set forth in the DDAHA; and

2. As of the date of this Certificate, the following number of completed residential units at the Phase II Site: (i) are currently occupied by Extremely Low Income Households at Affordable Rent; (ii) are currently occupied by a Very Low Income Households at Affordable Rent; (iii) are currently occupied by Low Income Households at Affordable Rent; (iv) are currently vacant and being held available for occu pancy by Eligible Households at the Prescribed Income Levels and an Affordable Rent; (v) are currently vacant and being held available for occupancy at the Prescribed Income Levels and an Affordable Rent and have been so held continuously since the date a tenant at the Prescribed Income Level vacated such unit; (vi) are currently vacant and being held available for occupancy by Eligible Households at the Prescribed Income Levels at an Affordable Rent and have been so held continuously since the date the prior tenant(s) vacated such unit(s):

Occupied at an Affordable Rent by:
i. Extremely Low Income Households (30% AMI) ___ # of Units, Nos.:
ii. Very Low Income Households (40% AMI) ___ # of Units, Nos.:
iii. Very Low Income Households (45% AMI) ___ # of Units, Nos.:
iv. Very Low Income Households (50% AMI) ___ # of Units, Nos.:
v. Low Income Households (60% AMI) ___ # of Units, Nos.:

Vacant:
a. Held for occupancy by:
i. Extremely Low Income Households (30% AMI) ___ # of Units, Nos.:
ii. Very Low Income Households (40% AMI) ___ # of Units, Nos.:
iii. Very Low Income Households (45% AMI) ___ # of Units, Nos.:

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Attachment No. 4
Certificate of Completion/Release of Construction Covenants

4869-7726-2141v6/200382-0006
iv. Very Low Income Households (50% AMI) ___ # of Units, Nos.:
v. Low Income Households (60% AMI) ___ # of Units, Nos.:
b. Last occupied by:
i. Extremely Low Income Households (30% AMI) ___ # of Units, Nos.:
ii. Very Low Income Households (40% AMI) ___ # of Units, Nos.:
iii. Very Low Income Households (45% AMI) ___ # of Units, Nos.:
iv. Very Low Income Households (50% AMI) ___ # of Units, Nos.:
v. Low Income Households (60% AMI) ___ # of Units, Nos.:

3. At no time sinc e the date of filing of the last Certification of Continuing Program Compliance have less than one hundred percent (100%) of the Housing Units in the Phase II Development been occupied by, or been last occupied, or have been available for occupancy by tenants at the Prescribed Income Levels at an Affordable Rent. All of the Housing Units have been occupied only by Eligible Households or have been held for occupancy by Eligible Households.

4. Developer is not in default under the terms of the Agreement, inc luding without limitation the attachments, including the Authority Deed, City Covenants, Authority Regulatory Agreement and Notice of Affordability Restrictions.

DEVELOPER
COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President

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Attachment: Draft Disposition Development and Affordable Housing Agreement (6092 : COURTYARDS AT COTTONWOOD PHASE II)

Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 5

NOTICE OF AFFORDABILITY RESTRICTIONS
Recording Requested By:

When Recorded Return To and
Mail Tax Statements To:

Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: Executive Director

[Space above for recorder.]
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.

NOTICE OF AFFORDABILITY RESTRICTIONS ON

TRANSFER OF PROPERTY
This NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER
OF PROPERTY (or “Notice of Affordability Restrictions”) is executed as of ____________, 2023 and affects that certain property described in Exhibit A hereto (“Site”) . The MORENO VALLEY HOUSING AUTHORITY
(“Authority”), CITY OF MORENO VALLEY (“City”) and COURTYARDS AT COTTONWOOD II, L.P. (“Developer”) have previously entered into that certain Disposition, Development and Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) dated as of March 7, 2023 (“DDAHA”). The DDAHA is on file with Authority as a public record.

1. The DDAHA provides for affordability restrictions and restrictions on the transfer of the Phase II Site, as more particularly set forth in the DDAHA. A copy of the DDAHA is on file with the Authority as a public record and is deemed incorporated herein. Reference is made to the DDAHA with regard to the complete text of the provisions of such agreement which provides for affordability restrictions and restrictions on the transfer of the Phase II Site.

2. The DDAHA provides for the Authority to convey the Phase II Site to Developer and for Developer to (a) construct thirty-two (32) rental dwelling units at the Phase II Site and (b) rent the “Housing Units” to households at the A.8.d
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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
Prescribed Income Levels at an Affordable Rent; such restrictions are set forth at greater length in a series of documents, including that certain Authority Regulatory Agreement as defined and described in the DDAHA entered into by and among Authority, City, and Developer and is recorded substantially concurrently herewith among the off icial land records of the County of Riverside. The Authority Regulatory Agreement and the DDAHA are deemed to be incorporated herein by reference.

2.1 Article II, Section 1 of the Regulatory Agreement provides that used on the Phase II Site and use of the Phase II Development shall comply with the following:
“Uses. The Developer shall develop the Phase II
Development on the Phase II Site in conformity with the DDAHA. Thereafter, the Phase II Site shall be operated as the Phase II Project devoted only to the uses specified in the DDAHA, City Covenants, Authority Regulatory Agreement,
Authority Deed of Trust and Notice of Affordability
Restrictions for the periods of time specified herein. All uses conducted on the Phase II Site, including, without limitat ion, all activities undertaken by the Developer pursuant to the DDAHA, shall conform to all applicable provisions of the City Code and the Entitlement.

The Phase II Site shall be used, operated, managed and
maintained in accordance with the DDAHA, City Cov enants, Authority Regulatory Agreement, Authority Deed of Trust, and this Notice of Affordability Restrictions for the
Affordability Period. None of the units in the Phase II Project shall at any time be utilized on a transient basis nor shall the Phase II Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home, trailer court, trailer park, or vacation or short -term rental such as VRBO, AirBnB. No part of the Phase II Site, from the date the Developer acquired the Phase II Site, has been or will at any time be owned or used as a cooperative housing corporation or a community apartment project or a stock cooperative.

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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006

2.2 Article II, Section 2 of the Regulatory Agreement requires that the Housing Units shall be operated as follows:
“Affordable Housing.

Number of Units. Throughout the Affordability Period, each and all Housing Units in the Phase II Project shall be occupied by Eligible Households and leased at an Affordable Rent based on the Riverside County Area Median Income (“AMI”) applicable to the Housing Unit all in accordance with the following unit mix (with County designation as to units with PBVs during the term of the County Housing Assistance
Payment Contract (“County HAP”):
• Two (2) 2 -bedroom Housing Units for 30% AMI
Extremely Low Income Households (PBV designated PBV
units);
• One (1) 2-bedroom Housing Unit for 40% AMI Very Low
Income Households (PBV designated unit);
• One (1) 2-bedroom Housing Unit for 40% AMI Very Low
Income Households (non-PBV);
• Two (2) 2 -bedroom Housing Units for 45% AMI Very
Low Income Households (non-PBV);
• Four (4) 2-bedroom Housing Unit for 50% AMI Very Low
Income Households (non-PBV);
• Six (6) 2 -bedroom Housing Units for 60% AMI Lower
Income Households (non-PBV);
• Two (2) 3-bedroom Housing Unit for 30% AMI Extremely
Low Income Households (PBV designated units);
• One (1) 3-bedroom Housing Unit for 40% AMI Very Low
Income Households (PBV designated unit);
• One (1) 3-bedroom Housing Unit for 45% AMI Very Low
Income Households (PBV designated unit);
• One (1) 3-bedroom Housing Unit for 50% AMI Very Low
Income Households (PBV designated unit);
• One (1) 3-bedroom Housing Unit for 50% AMI Very Low
Income Households (non-PBV)
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Attachment: Draft Disposition Development and Affordable Housing Agreement (6092 : COURTYARDS AT COTTONWOOD PHASE II)

Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
• Six (6) 3 -bedroom Housing Units for 60% AMI Lower
Income Households (non-PBV);
• One (1) 4-bedroom Housing Unit for 30% Extremely Low
Income Households (non-PBV);
• One (1) 4 -bedroom Housing Unit for 40% Very Low
Income Households (non-PBV);
• One (1) 4 -bedroom Housing Unit for 45% Very Low
Income Households (non-PBV); and
• One (1) 4 -bedroom Housing Unit for 50% Very Low
Income Households (non-PBV).
(b) At such time as a tenant ceases to qualify
at the Prescribed Income Level for the applicable
Housing Unit, such shall cease to qualify at the
applicable Prescribed Income Level. Developer shall
replace each applicable Housing Unit by designating
the next available unit and any necessary u nits
thereafter at the proper Prescribed Income Level. For
purposes of this Agreement, such designated unit will
be considered to comply if it is held vacant and
available for occupancy at the proper Prescribed
Income Level, and, upon occupancy, the prope r income
eligibility is verified and the applicable Housing Unit is rented at an Affordable Rent.

In the event a household’s income initially
complies with the corresponding Prescribed Income
Level but the income of such household increases, such
increase shall not be deemed to result in a violation of the restrictions hereof concerning limitations upon
income of occupants, provided, however, that subject to federal law, including but not limited to the Fair
Housing Laws, as amended, and Section 42 of the
Internal Revenue Code, the occupancy by such
household is for a reasonable time of not to exceed
three hundred sixty -five days (measured from the time
the income of the household ceases to qualify at the
designated affordability level). Subject to the
aforementioned proviso, Developer shall include in its
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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
rental agreements provisions which implement this
requirement and limitation, and Developer shall
expressly inform prospective renters as to this
limitation prior to the commencement of a tenancy.

Duration of Affordability Requirements . The
Housing Units shall be available to and occupied by
tenants at the Prescribed Income Levels at an
Affordable Rent throughout the Affordability Period.

All tenants residing in any Housing Unit during the last two (2) Years of the Affordability Period shall be given notice as applicable pursuant to Government Code
Section 65863.10, 65863.11, and 65863.13 and other
applicable federal, state and local laws and regulations at least once every six (6) months prior to the expiration date of this requirement, that the rent payable on such Housing Unit may be raised to a market rate rent at the end of the Affordability Period.

Selection of Tenants . As specified hereinbelow,
Developer shall demonstrate to Authority that the
proposed tenants of meet the applicable Prescribed
Income Level and Affordable Rent for the Housing
Units.

Developer shall restrict occupancy of all of the
Housing Units at the Prescribed Income Levels and at
an Affordable Rent.

Prior to the rental or lease of a Housing Unit to a
tenant, and as set forth in this Section 2 of Article II of this Regulatory Agreement, Developer shall require the
tenant to execute a written lease and to complete an
Income Verification certifying that the tenant(s)
occupying the Hous ing Unit is/are an Extremely Low
Income Household, Very Low Income Unit Household
or a Low Income Household and meet(s) the eligibility
requirements established for the Housing Unit.

Developer shall verify the income of the tenant(s).

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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
Developer shall accept as tenants on the same
basis as all other prospective tenants, persons who are recipients of federal certificates that are more
burdensome than criteria applied to any other
prospective tenants.

Determination of Affordable Rent for t he
Housing Units . The Housing Units shall be rented or
leased at Affordable Rent as defined in the DDAHA,
City Covenants, and Authority Regulatory Agreement.

The maximum monthly rental for the Housing Unit
shall be adjusted annually as permitted by the T ax
Credit Rules and Section 50053 of the California Health and Safety Code based on the annual adjustment to the
Median Income for the Area established pursuant to the
Tax Credit Rules and Section 50093 of the California
Health and Safety Code.

Relationship to Tax Credit Requirements .

Notwithstanding any other provision of this Regulatory
Agreement, to the extent that requirements associated
with the provision of financing, other than by
Authority, are more restrictive with respect to the
requirements appl icable to tenant selection, tenant
income levels and unit rent levels than as provided in
this Notice of Affordability Restrictions, whichever is more restrictive in each case, shall control and
Developer’s compliance therewith shall not be a default hereunder.

THE DEVELOPER UNDERSTANDS AND

KNOWINGLY AGREES THAT THE MAXIMUM

AFFORDABLE RENT AND MONTHLY RENTAL

AMOUNT FOR THE HOUSING UNITS

ESTABLISHED BY THE DDAHA, THIS NOTICE

OF AFFORDABILTY RESTRICTIONS, THE CITY

COVENANTS, AUTHORITY REGULATORY

AGREEMENT, AND AUTHORITY DEED OF

TRUST IS SUBSTANTIALLY BELOW THE FAIR
MARKET RENT FOR THE HOUSING UNITS.

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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006

3. The restrictions contained in the Authority Regulatory Agreement expire on the fifty-fifth (55th) anniversary of the Completion of Construction. T he Authority Regulatory Agreement is submitted for recordation contemporaneously with this Notice of Affordability Restrictions.

4. The commonly known address for the Phase II Site is the northeast corner of Cottonwood Avenue and Indian Avenue in the City of Moreno Valley.

The Phase II Site is identified as Assessor's Parcel No. 482-161-026 such number is subject to change.

5. The legal description of the Phase II Site is attached as Exhibit A and is incorporated herein by reference.

6. The City Covenants and Authority Regulatory Agreement, which includes the affordability restrictions referenced above, are expected to be submitted for recordation in the Office of the Riverside County Recorder contemporaneously with this Notice of Affordability Restrictions.

7. The DDAHA, City Covenants, and Authority Regulatory Agreement remain in full force and effect and are not amended or altered in any manner whatsoever by this Notice of Affordability Restrictions.

8. Capitalized terms shall have the meaning establishe d under the DDAHA (including all Attachments thereto) excepting only to the extent as otherwise expressly provided under this Notice of Affordability Restrictions. [Notice of Affordability Restrictions continues on following page.] A.8.d
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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006

9. Persons having quest ions regarding this Notice of Affordability Restrictions, the DDAHA or the Attachments thereto should contact the Authority or the City at City Hall, 14177 Frederick Street, Moreno Valley, or such other address as may be designated by the Authority from time to time.

DEVELOPER:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited
liability company, its managing general
partner
By: Kingdom Development, Inc., a
California nonprofit public benefit
corporation, its sole member and
manager
By:__________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general
partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole
member and manager
By:___________________________
James M. Jernigan, President

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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
AUTHORITY:

MORENO VALLEY HOUSING

AUTHORITY,
a public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST:

Jane Halstead, Authority Secretary
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, General Counsel

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Attachment No. 5
Notice of Affordability Restrictions

4869-7726-2141v6/200382-0006
CITY OF MORENO VALLEY.
a California municipal corporation
By:

Mike Lee, City Manager
ATTEST:

City Clerk
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, City Attorney

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Exhibit A to Attachment No. 5

4869-7726-2141v6/200382-0006

EXHIBIT A
TO ATTACHMENT NO. 5

LEGAL DESCRIPTION

Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS
INSTRUMENT NO. 2020-0080445 OF OFFICIAL RECORDS, IN THE OFFICE

OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PAR CEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00

FEET, MEASURED ALONG SAID EAST LINE, FROM THE CENTERLINE

OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON -TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;

THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A
CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE

BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST
AND HAVING A RADIUS OF 45.00 FEET;

THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE

INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT
CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE
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Exhibit A to Attachment No. 5

4869-7726-2141v6/200382-0006
COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET;
THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP;
THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTA NCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET,
PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment: Draft Disposition Development and Affordable Housing Agreement (6092 : COURTYARDS AT COTTONWOOD PHASE II)

Attachment No. 6
Authority Grant Deed

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 6

AUTHORITY GRANT DEED
Recording Requested By:

When Recorded Return To and
Mail Tax Statements To:

APN: 482-161-026 (Space above for Recorder’s Use.)
Document is exempt from the payment of a recording
fee pursuant to Government Code Section 27383.

DOCUMENTARY TRANSFER TAX, IF ANY
$_____* computed on the consideration or value of property conveyed; OR ______ computed on the consideration or value less liens or encumbrances remaining at time of sale.

The undersigned Grantor
Signature of Declarant or Agent determining tax - Firm Name *The value of the property in this conveyance, exclusive of liens and encumbrances is $100.00 or less, and there is no additional consideration received by the Grantor(s), R & T 11911

GRANT DEED
For a valuable consideration receipt of which is hereby acknowledged, The MORENO VALLEY HOUSING AUTHORITY, a public body, corporate and politic, and serving as housing successor to the former and dissolved Community Redevelopment Agency of the City of Moreno Valley pursuant to Health & Safety Code Section 34176 (her ein “Grantor” or “Authority”), hereby grants to COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership, herein called “Grantee” or “Developer,” the real property hereinafter referred to as the “Phase II Site” (or the “Property”), described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants or record described there.

1. Said Property is conveyed in accordance with and subject to that certain Disposition, Development and Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) entered into among Grantor, Grantee, and the City of Moreno Valley, a municipal corporation (“City”) dated as of March 7, 2023 (“DDAHA”), a copy of which is on file with the Grantor at its offices as a public record. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the DDAHA.

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Attachment No. 6
Authority Grant Deed

4869-7726-2141v6/200382-0006

2. The Grantee hereby covenants and agrees, for itself and its successors and assigns, that the Grantee shall restrict t he Phase II Site and the improvements thereon in accordance with this Grant Deed to preserve its value for the benefit of Grantee, its successors and the surrounding neighborhood.

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

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

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, te nure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors , administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or hersel f, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.” A.8.d
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Attachment No. 6
Authority Grant Deed

4869-7726-2141v6/200382-0006
In contracts: “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those b ases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupan cy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” The covenants established in this Section 3 shall, without regard to technical classification and designation, be binding for the benefit and in favor of Authority and its successors and assigns, and shall remain in effect in perpetuity.

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Attachment No. 6
Authority Grant Deed

4869-7726-2141v6/200382-0006
IN WITNESS WHEREOF , the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized, this __ day of _________, 2023.

MORENO VALLEY HOUSING AUTHORITY,
a public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST
_______________________________
Jane Halstead, Authority Secretary

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Attachment No. 6
Authority Grant Deed

4869-7726-2141v6/200382-0006
The Grantee agrees to be bound by the covenants set forth above.

GRANTEE:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President

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Exhibit A to Attachment No. 6

4869-7726-2141v6/200382-0006

EXHIBIT A
TO ATTACHMENT NO. 6

LEGAL DESCRIPTION OF THE PROPERTY

Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS INSTRUMENT NO. 2020-0080445 OF

OFFICIAL RECORDS, IN THE OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PARCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEASURED ALONG SAID EAST

LINE, FROM THE CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON - TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;

THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FEET;

THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET;
THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment No. 7
Request for Notice

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 7

REQUEST FOR NOTICE OF DEFAULT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: Executive Director

SPACE ABOVE THIS LINE FOR RECORDER’S USE ONLY
Exempt from recording fees pursuant to Government Code § 6103.

Request for Notice Under Section 2924b Civil Code
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. _____ on _____________, 2023, in Book ______, Page ______, Official Records of Riverside County, California, and describing land therein as
See Exhibit A attached hereto
executed by ________________________, as Trustor, in which ______________________ is named as Beneficiary, and ____________________________ as Trustee, be mailed to Moreno Valley Housing Authority, at 14177 Frederick Str eet, Moreno Valley, California 92552 -0805, Attention:

Executive Director.

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

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

Mike Lee, Executive Director

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Exhibit A to Attachment No. 7

4869-7726-2141v6/200382-0006

EXHIBIT A
TO ATTACHMENT NO. 7

LEGAL DESCRIPTION OF THE PROPERTY

Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS INSTRUMENT NO. 2020-0080445 OF

OFFICIAL RECORDS, IN THE OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PARCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEAS URED ALONG SAID EAST

LINE, FROM THE CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON - TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;

THENCE WESTERLY ALONG THE ARC OF SAID CUR VE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FEET;

THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET;
THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PA RCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment No. 8
Scope of Development

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ATTACHMENT NO. 8

PHASE II SCOPE OF DEVELOPMENT
I. GENERAL DESCRIPTION
This document sets forth general requirements for the Phase II Developmen t to be constructed on the Phase II Site. Detailed requirements will be addressed in the approval of specific construction plans and documents in accordance with this DDAHA and the City of Moreno Valley’s normal and customary design review and plan check procedures and standards. The Phase II Development shall be consistent with the provisions, standards, and requirements of the approved Entitlement, the City’s General Plan, Housing Element of the General Plan, Moreno Valley Municipal Code, Uniform Codes. No specific land use entitlement is granted by this Scope of Development, nor any modification of the Entitlement is granted hereunder.

Developer shall cooperate and direct its consultants, architects, and/or engineers to cooperate with the City and its representative to ensure the continuity and coordination vitally necessary for the proper and timely completion of the Phase II Development.

The Phase II Site is specifically delineated on the Phase II Site Map and the Legal Description of the Phase II Site. As this Phase II Development is the second phase of a two -phase development with the Phase I Project, in all instances for the Phase II D evelopment the quality of construction, materials used, color palette, architectural style, shall be of High Quality and shall be equal to or exceed the completed improvements that comprise the Phase I Project.

II. PHASE II DEVELOPMENT
Developer shall construct thirty-two (32) Housing Units on the Phase II Site, together with all on-site and off-site features described in this Scope of Development (consistent with the Entitlement and conceptual drawings as presented to the City Council, including without li mitation landscaping, exterior onsite amenities and amenities subject to the Joint Use Agreement. All such improvements, including all conditions of deposit now or hereafter imposed by City (including without limitation and mitigation measures) collectively constitute the “Development” or “Phase II Development” The number of bedrooms for the Housing Units is set forth within the definition, Housing Units. Three - bedroom Housing Units shall be a minimum of one thousand (1,000) square feet, two -bedroom Housing Units shall be a minimum of eight hundred (800) square feet, and one -bedroom Housing Units shall be a minimum of six hundred twenty eight (628) square feet, or as otherwise approved by City’s Planning Authority. All development shall be consistent wit h and implement all conditions of approval, including without limitation mitigation measures, in connection with the Entitlements.

The Phase II Development will be a gated community and residents will have access to all amenities currently available to Pha se I residents, including but not limited to the 4,480 square foot community building with management, leasing, tenant services and maintenance offices, a maintenance garage, computer lab, laundry room, rest rooms, mail kiosk and a full kitchen.

There will also be access to the community pool, tot lot, basketball court, and senior fitness course.

The onsite manager’s unit is located on the second floor of the community building in the Phase I Project.

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Attachment No. 8
Scope of Development

4869-7726-2141v6/200382-0006
The Phase II Development will use drought tolerant landscaping throughout and provide passive areas that will include seating and a BBQ for the tenants. There will be 53 onsite vehicular parking spaces of which 32 will be covered. Vehicle ingress will be provided via the Cottonwood Avenue driveway and there will be two project driveways for egress, one each on Cottonwood Avenue and Indian Avenue. There is no common access to any adjacent parcels from the site.

The quality of construction shall be High Quality. The Phase II Development shall conform to such pl ans as are approved by City and maintained on file with City as supplemented by the Design Development Drawings (“Approved Plans”).

Developer shall commence and complete the Phase II Development by the respective times established therefor in the Schedule of Performance.

III. DEVELOPMENT STANDARDS
All construction and work on the Phase II Site shall be in accordance with the approved Development Plans, City development standards, and all applicable provisions of federal, state and local laws and regulations , including the Moreno Valley Municipal Code, County codes, and all Uniform Codes. The Phase II Development shall be constructed and completed in accordance with the Entitlement, and Developer shall adhere to all conditions of approval. The Phase II Deve lopment shall conform to all applicable state laws and regulations and to local zoning, applicable provisions of the City Code and the following development standards:

A. General Requirements:

1. Vehicular Access. The placement of vehicular driveways shal l be coordinated with the needs of proper street traffic flow as approved by City. In the interest of minimizing traffic congestion, City will control the number and location of curb breaks for access to the Phase II Site for off -street parking and truck loading. All access driveways shall require written approval of City staff.

2. Building Signs. Signs on the Phase II Site shall be limited in size, subdued and otherwise designed to contribute positively to the environment. Signs identifying the buildin g use will be permitted, but their height, size, location, color, lighting and design will be subject to City staff approval, and signs must conform to the City Code.

3. Screening. All outdoor storage of materials or equipment shall be enclosed or screened to the extent and in the manner required by City staff.

4. Landscaping. Developer shall provide and maintain landscaping within the public rights-of-way and within setbacks along all street frontages and conforming with the plans as hereafter approved by City.

Landscaping shall consist of trees, shrubs and installation of an automatic irrigation system adequate to maintain such plant material. The type and size of trees to be planted, together with a landscaping plan, shall be subject to City staff approval prior to planting.

5. Utilities. All utilities on the Phase II Site provided to service the units rehabilitated or reconstructed by Developer shall be underground at Developer’s expense.

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Attachment No. 8
Scope of Development

4869-7726-2141v6/200382-0006

6. Building Design. Buildings shall be constructed such th at the Phase II Development shall be of high architectural quality, and shall be effectively and aesthetically designed and in conformance with City approvals.

7. Mitigation Measures. Mitigation measures approved for the Phase II Development under the California Environmental Quality Act (CEQA).

B. Design Features:

The following design features are considered essential components to the Phase II Development:

Security - The details of security will be reviewed upon submission of the detailed plans.

Overall Design Quality, Materials, Colors, Design Features - Quality of design is important, materials and colors are to be approved by City.

Housing Type - Rental housing for occupancy by thirty -two (32) Housing Units, consisting of sixteen (16) two -bedroom Housing Units, twelve (12) three -bedroom Housing Units, and four (4) four-bedroom Housing Units.

Mobility/Agility - All facilities shall comply, to the e xtent feasible, with “New Horizon Accessible, Adaptable Apartments for the Physically Disabled” published by HCD dated July 1989, and shall comply with those portions of Title 24 of the California Code of Regulations that have been adopted by HCD relating to handicapped units, and the requirements of the federal Department of Housing and Urban Development, Part VI, 24 C.F.R. Ch. 1, Vol. 56, No. 44, as published in the Federal Register March 6, 1991. As and if applicable, each and any Housing Units designat ed as Uniform Federal Accessibility Standards (UFAS) units must conform with all minimum Uniform Federal Accessibility Standards.

IV. DEMOLITION AND SOILS
Developer assumes all responsibility for surface and subsurface conditions at Parcel B, and the suita bility of the Phase II Site for the Phase II Development. Developer will undertake all investigation of the Phase II Site as it shall deem necessary and has not received or relied upon any representations of Authority, City, or their respective officers, agents and employees.

V. SPECIAL AMENITIES
Developer shall undertake all improvements required by City as a condition of development of the Phase II Site, and specifically resident amenities to include features as hereafter designated by the City. In addi tion, Developer shall provide services under a program of services to be approved by City, from time to time, at the City’s reasonable discretion; the program of services shall be periodically updated by Developer and shall be subject to approval by the City.

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Attachment No. 9
Certificate of Completion/Release of Construction Covenants

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 9

CERTIFICATE OF COMPLETION/RELEASE OF CONSTRUCTION COVENANTS

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

APN: 482-161-026

(Space Above for Recorder’s Use Only)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.

CERTIFICATE OF COMPLETION/RELEASE OF CONSTRUCTION COVENANTS This CERTIFICATE OF COMPLETION/RELEASE OF CONSTRUCTION
COVENANTS (“Certificate”) is made by the CITY OF MORENO VALLEY , a California municipal corporation (“City”) and the MORENO VALLEY HOUSING AUTHORITY, a public body, corporate and politic (“Authority”), in favor of COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership (“Developer”), as of the date set forth below.

R E C I T A L S
A. Authority, the City of Moreno Valley, a Charter city duly organized and acting under and by virtue of the Constitution and laws of the State of California (“City”), and Developer have entered into that certain unrecorded Disposition and Development and Aff ordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) (“DDAHA”) dated as of March 7, 2023 concerning the redevelopment of certain real property situated in the City of Moreno Valley, California, as more fully described in Exhibit A attached hereto and made a part hereof (“Site”).

B. As referenced in Section 4.13 of the DDAHA, Authority is required to furnish Developer or its successors with a Certificate of Completion/Release of Construction Covenants upon completion of construction of the Phase II Development (as defined in the DDAHA), which Certificate is required to be in such form as to permit it to be recorded in the Recorder’s Office of Riverside County. This Certificate is conclusive determination of satisfactory completion of the construction and development required by the DDAHA.

C. Authority has conclusively determined that the construction and development of the Phase II Development has been satisfactorily completed.

NOW, THEREFORE, Authority hereby certifies as follows:

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Attachment No. 9
Certificate of Completion/Release of Construction Covenants

4869-7726-2141v6/200382-0006

1. Authority does hereby certify that the Phase II Development to be constructed by Developer has been fully and satisfactorily completed in full conformance with the DDAHA.

2. This Certificate shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance construction work on the Phase II Site, or any part thereof.

3. This Certificate shall not constitute evidence of Developer’s compliance wi th those covenants in the DDAHA that survive the issuance of this Certificate or without certain unrecorded agreement by and among Authority, City, and COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership entitled “Disposition, Development a nd Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units ” dated as of March 7, 2023 (“AHA”), a copy of which is on file with City as a public record.

4. This Certificate is not a Notice of Completion as referred to in California Civil Co de Section 3093.

5. Nothing contained in this instrument shall modify in any other way any other provisions of the DDAHA (including without limitation the attachments thereto).

IN WITNESS WHEREOF , Authority has executed this Certificate of Completion/Relea se of Construction Covenants this ___ day of ________________, 20___.

MORENO VALLEY HOUSING AUTHORITY, a
public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST:

Jane Halstead, Secretary

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Exhibit A to Attachment No. 9

4869-7726-2141v6/200382-0006
EXHIBIT A TO ATTACHMENT NO. 9

LEGAL DESCRIPTION
Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 20 20 AS INSTRUMENT NO. 2020-0080445 OF OFFICIAL RECORDS, IN THE

OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PARCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PA RCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEASURED ALONG SAID EAST LINE, FROM THE

CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON -TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FEET; THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET; THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment No. 10
City Covenants

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 10

CITY COVENANTS
This CITY COVENANTS AGREEMENT (“City Covenants”) is dated as of _________, 2023 and made and entered into by and among COURTYARDS AT COTTONWOOD II, L.P ., a California limited partnership (“Developer”), MORENO VALLEY HOUSING AUTHORITY , a public body, corporate and politic (“Authority”) , and CITY OF MORENO VALLEY , a municipal corporation (“City”), each of which is a signatory hereto.

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

B. Authority, City and Developer have entered into that certain unrecorded Disposition, Development and Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) dated as of March 7, 2023 (“DDAHA”) for the improvement and development of certain real property referred to as the “Phase II Site” and described in the attached and fully incorporated Exhibit A hereto. A copy of the DDAHA is on file with the City Clerk and Authority Secretary as a public record. Capitalized terms not defined herein shall have the meaning established therefor in the DDAHA.

C. These City Covenants also serve as a “density bonus housing agreement” required by City Code and State Density Bonus Law, Government Code Section 65915, et seq. Pursuant to the City Code, the Developer as an owner of real property developing density bonus units, as part of an approved affordable housing development, including this Phase II Development, shall enter into a density bonus housing agreement with the City prior to issuance of any grading or building permits for a rental project. Upon execution of this instrument, the City shall cause recording thereof in the Official Records, County of Riverside, California. The terms of this City Covenants Agreement as the “density bonus housing agreement” required as a condition of approval under the Entitlement shall run with the Phase II Site for the life of the Affordability Period.

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

E. The City reviewed, duly considered and approved and granted to Developer its Entitlement approvals for the Phase II Development on the Phase II Site that comprise the discretionary actions approved by City for the Phase II Site and the Phase II Development, which include certain conditions of approval related thereto and CEQA mitigation measures and monitoring plan related thereto. Pursuant to the Entitlement and the Ci ty’s land use, zoning and development standards for the Phase II Development all require the Phase II Site to be developed and operated as an affordable housing project with joint use of certain access, amenities and appurtenant improvements with the adjac ent Phase I Project. Any other or additional modifications to the Entitlement, if any, shall be appended to and deemed a part of these City Covenants and the DDAHA.

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Attachment No. 10
City Covenants

4869-7726-2141v6/200382-0006
F. The State and City Density Bonus Law and the Entitlement require as a condition of approval the entering into and recordation of these City Covenants as a senior, non -subordinate encumbrance and lien against the Phase II Site to ensure the Phase II Project and Phase II Site ownership, use, operation, maintenance, and property management remain subject hereto for the entire Affordability Period; in particular these City Covenants are applicable to the Phase II Site and Phase II Project for the intended provision of affordable rental housing available to Extremely Low Income Households, Very Low I ncome Households, and Low Income Households each and all at Affordable Rent at the Prescribed Income Levels.

G. It is contemplated under the DDAHA that, concurrent with recordation of this City Covenants Agreement, Developer holds title to the Phase II Site.

H. These City Covenants impose certain affordable housing restrictions for a period that will commence on the date of issuance of the first certificate of occupancy for the Phase II Development and thereafter continue until the fifty -fifth (55 th) anniversary of the issuance of the Certificate of Completion as further provided in the AHA (“Affordability Period”).

I. This City Covenants Agreement shall be recorded concurrent with the recordation of the Authority Grant Deed conveying the Phase II Site by the Authori ty to the Developer and as senior, unsubordinated covenants and an encumbrance running with the land for the full Affordability Period. In no event shall these City Covenants be made junior or subordinate to any deed of trust, monetary lien, or other documents providing financing for the construction or operation of the Phase II Project on the Phase II Site or ownership of the Phase II Site, or any other lien or encumbrance whatsoever against the Phase II Site for the Affordability Period, except as expres sly mandated by California statute or federal law.

J. Declarants wish to adopt these City Covenants to further govern the use of the Phase II Site in conjunction and along with the DD AHA and to ensure that City and Authority achieve credit for production and long-term covenanting of affordable housing units in satisfying the City’s Regional Housing Needs Allocation (“RHNA”), in compliance with the Dissolution Law, the CRL, and to meet other community objectives to provide affordable housing in the City of Moreno Valley.

NOW, THEREFORE, each of Authority, City, and Developer (as owner of the Phase II Site and Phase II Project), declares that the Phase II Site shall be held, transferred, encumbered, used, sold, conveyed, managed, maintained, leased and occupied s ubject to these City Covenants hereinafter set forth expressly and exclusively for the use and benefit of said property, and City and Authority. Each and all of these City Covenants contained herein shall run with the land and be recorded on title to the Phase II Site and shall be binding on Declarants, their grantees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owner of all or any part of the Phase II Site.

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ARTICLE I

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

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the Phase II Project on the Phase II Site in conformity with the Entitlement and the affordable housing restrictions and covenants provided under the DDAHA. Upon completion of development of the Phase II Project, the Phase II Site shall be operated as the Phase II Project and devoted only to the us es specified in the Entitlement and DDAHA for the periods of time specified herein. All uses conducted on the Phase II Site, including, without limitation, all activities undertaken by Developer pursuant to the Entitlement shall conform to all applicable provisions of the City Code and the Entitlement.

The Phase II Site shall be owned, used, maintained, managed and operated in accordance with these City Covenants and the Entitlement for the Affordability Period. None of the Housing Units in the Phase II P roject shall at any time be utilized on a transient basis nor shall the Phase II Project or any portion thereof ever be used for an emergency shelter, or for short term rental such as AirBnB, VRBO, or HomeAway, or as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer court or park. No part of the Phase II Site or any Housing Units, from the date Developer acquired its interest in the Phase II Site, has been or will at any time be owned or used as a cooperative housing corporation or a stock cooperative.

Section 2. Affordable Housing; Eligible Households.
(a) Number of Units. Throughout the Affordability Period each and all thirty -two (32) Housing Units shall be rented to qualified Ex tremely Low, Very Low and Low Income tenants at the Prescribed Income Levels and at an Affordable Rent. Developer agrees to make available, restrict occupancy to, and rent all of the Housing Units at Affordable Rent in conformity with the Prescribed Income Levels.
(b) Duration of Affordability Requirements . The Housing Units shall be maintained as rental units available at and rented to Extremely Low Income Households, Very Low Income Households throughout the Affordability Period.
(c) Prescribed Income Rent Leve ls. Each and all Housing Units in the Phase II Project shall be occupied by Eligible Households and leased at an Affordable Rent based on the Riverside County Area Median Income (“AMI”) applicable to the Housing Unit all in accordance with the following unit mix:
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income Households; • Two (2) 2-bedroom Housing Units for 40% AMI Very Low Income Households; A.8.d
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• Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income Households; • Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income Households; • Six (6) 2-bedroom Housing Units for 60% AMI Lower Income Households; • Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income Households; • One (1) 3-bedroom Housing Units for 45% AMI Very Low Income Households; • Two (2) 3-bedroom Housing Units for 50% AMI Very Low Income Households; • Six (6) 3-bedroom Housing Units for 60% AMI Lower Income Households; • (One (1) 4-bedroom Housing Unit for 30% Extremely Low Income Households; • One (1) 4-bedroom Housing Unit for 40% Very Low Income Households; • One (1) 4-bedroom Housing Unit for 45% Very Low Income Households; and • One (1) 4-bedroom Housing Unit for 50% Very Low Income Households.

For this purpose, a tenant who qualifies at the Prescribed Income Le vel applicable to the Housing Unit at the time he/she/they first occupy(ies) a Housing Unit shall be deemed to continue to be so qualified until such time as a recertification of his/her/their household income in accordance with the DDAHA demonstrates that such household no longer income -qualifies at the Prescribed Income Level for the Housing Unit. Moreover, a Housing Unit previously occupied by a tenant household that qualified at the Prescribed Income Level for the Housing Unit, and then vacated shall be considered occupied by such household until reoccupied, other than for a temporary period, at which time the character of a Housing Unit shall be redetermined in accordance with the unit mix at the Prescribed Income Level for the Housing Unit. In no eve nt shall such temporary period exceed thirty-one (31) days.

In the event a household’s income initially complies with the corresponding income restriction but the income of such household increases, such increase shall not be deemed to result in a violatio n of the restrictions of these City Covenants concerning limitations upon income of occupants.. Developer shall include in its rental agreements provisions that implement this requirement and limitation, and Developer shall expressly inform prospective re nters as to this limitation prior to the commencement of a tenancy.
(d) Income of Tenants . Each tenant of a Housing Unit shall be an Extremely Low Income Household, 40% AMI Very Low Income Household, 45% AMI Very Low Income Household, 50% AMI Very Low Income Household or Low Income Household in accordance with the Prescribed Income Levels and shall meet the eligibility therefor, and Developer shall obtain a certification from each tenant renting or leasing each Housing Unit that substantiates such fact.

Developer shall verify the income certification upon initial tenancy, and thereafter not less than annually during the term of tenancy of each tenant household as set forth herein. (e) Determination of Affordable Rent for the Housing Units . The term “Affordable Rent” means the maximum amount of out -of-pocket housing cost to be charged monthly by Developer and paid by each of the Eligible Household that qualifies as an Extremely Low, 40% AMI Very Low, 45% AMI Very Low, 50% AMI Very Low, or Low Income Households for each of the Housing Units at Phase II Project as determined and calculated pursuant to the affordable rent and the rent limitations according to TCAC, the Tax Credit Rules, and Tax Credit Regulatory Agreement applicable to Phase II in accordance herewith. For purposes of Affordable Rent, the monthly housing payment shall mean the total of monthly payments by each tenant household of a Housing Unit for A.8.d
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use and occupancy of a Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service. (i) Further, the term Affordable Rent includes the total of monthly payments by the tenants of a Housing Unit for (A) use and occupancy for the Housing Unit and facilities associated therewith, (B) any separatel y charged fees or service charges assessed by Developer which are required of all tenants of the Housing Units, other than security deposits, (C) a reasonable allowance for utilities not included in (A) or (B) above, including garbage collection, sewer, wa ter, electricity and gas, as determined by regulation of Housing Authority of the County of Riverside pursuant to 24 C.F.R. Section 5.600, et seq. or by the California Utility Allowance Calculator as permitted by TCAC, and (D) possessory interest, taxes or other fees or charges assessed for the use of the Housing Units and facilities associated therewith by a public or private entity other than Developer; provided that the rent charged to the tenants of any Housing Units shall not exceed Affordable Rent.
(ii) Under these City Covenants and for purposes of Affordable Rent in the operation of the Phase II Project the following Affordable Rents are acceptable for the applicable income category:
(A) To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for 30% AMI Extremely Low Income Households (5 Housing Units) shall not exceed the most restrictive income standard of HSC Section 50106 or Tax Credit Rules. The Affordable Rent for 30% AMI Extremely Low Income Households shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit Rules; (B) To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for 40% AMI Very Low (4 Housing Units), 45% Very Low (4 Housing Units), and 50% AMI Very Low Income Households (7 Housing Units) (for a total of 15 Very Low Income Housing Units) shall not exceed the most restrictive standard of HSC 50105 or Tax Credit Rules as adjusted for the applicable AMI of 40%, 45% or 50%; and (C) To comply wit h HSC Section 34176.1 and LMIHAF requirements, the household income for Low Income Households (12 Housing Units) shall not exceed the most restrictive income standard of HSC Section 50079.5 or Tax Credit Rules. The Affordable Rent shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit rules.
(f) Increases in Tenant Household Income. The Housing Units shall meet the Prescribed Rent Levels and Tenant Mix as required despite a temporary noncompliance with the defined Affordable Rents, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are bei ng taken by Developer to ensure that each and all vacancies at the Phase II Project are filled in accordance with the Prescribed Rent Levels and Tenant Mix until the noncompliance is corrected.
(i) A tenant applicant who qualified as an Extremely Low Income Ho usehold at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income shows such tenant no longer qualifies as an Extremely Low In come Household. If the existing tenant occupying such A.8.d
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Extremely Low Income Housing Unit ceases to qualify as an Extremely Low Income Household, but qualifies either as a Very Low or Low Income Household, such tenant may continue to occupy that Housing Uni t and be charged rent equal to the lesser of thirty percent (30%) of the household's adjusted monthly income, recertified annually, or the Affordable Rent, for the Prescribed Income Level for the Housing Unit, then the designation for the Housing Unit shal l be adjusted to align with the applicable Prescribed Income Level and the next available Housing Unit shall be tenanted by the prior designation for the subject Housing Unit so as to keep the unit mix and allocation among the Housing Units in compliance w ith the Prescribed Income levels. A tenant household occupying a Housing Unit in the Phase II Project whose gross income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.
(ii) A tenant applicant who qualified as a Very Low Income Household (40%, 45%, or 50% AMI, as applicable) at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income s hows such tenant no longer qualifies therefor. If the existing tenant occupying such Very Low Income Housing Unit ceases to income -qualify for the Housing Unit, but qualifies either at the higher Very Low or as a Low Income Household, such tenant may cont inue to occupy that Housing Unit and be charged rent equal to the lesser of thirty percent (30%) of the household's adjusted monthly income, recertified annually, or the Affordable Rent as defined herein for the eligible income level, and the designation f or the Housing Unit shall be adjusted to align with the applicable Prescribed Income Level, and the next available Housing Unit shall be tenanted by the prior designation for the subject Housing Unit so as to keep the unit mix and allocation among the Housing Units in compliance with the Prescribed Income levels. A tenant household occupying a Housing Unit in the Phase II Project whose gross income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.
(iii) A tenant a pplicant who qualified as a Low Income Household at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income shows that such tenant no longer qualifies as a Low Income Household. An existing tenant household occupying a Low Income Housing Unit in the Phase II Project whose income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and b e charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.
(iv) While it is anticipated that the rent standards under the Tax Credit Rules will be less restrictive, i.e., allow for a higher monthly rent, than those otherwise allowable under HSC 50052.5 and 50053; nonetheless, it is the responsibility of Developer to comply with the definition of Affordable Rent and all affordable housing standards herein.

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(v) Notwithstanding (i) to (iii) above, the occupancy by such household is for a reasonable time of not to exceed three hundred sixty -five days (measured from the time the in come of the household ceases to qualify at the designated affordability level, provided however,, that enforcement of the above provision does not violate federal law, including but not limited to Fair Housing Laws, as amended, and Section 42 of the Intern al Revenue Code.) Subject to the aforementioned proviso, Developer shall include in its rental agreements provisions which implement this requirement and limitation, and Developer shall expressly inform prospective renters as to this limitation prior to the commencement of a tenancy.

Section 3. Developer Verification and Compliance . Developer will obtain and maintain on file an Income Verification from each tenant for each Housing Unit dated immediately prior to the initial occupancy of such tenant in the Phase II Project. On the first June 15 following issuance of the Certificate of Completion/Release of Co nstruction Covenants and annually each Year on or before June 15 thereafter, Developer shall file with Authority or its designee a Certificate, containing all information required to demonstrate that rents and income levels for units comply with the requirements hereof regarding the Prescribed Income Levels and Affordable Rent and containing such information as Authority additionally requires, in a form prescribed by Authority. Each annual Certificate shall cover the immediately preceding calendar year.

Section 4. Nondiscrimination. Developer shall refrain from restricting the rental, sale or lease of the Site, or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, national origin or ancestry of any person. All such dee ds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns , and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bas es are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herei n conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, su btenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all pe rsons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, suble asing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or seg regation with reference A.8.d
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to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
In contracts: “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12 955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permi t any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” The covenants established in these City Covenants shall, without regard to technical classification and designation, be binding for the benefit and in favor of City and Authority and their successors and assigns, and any successor in interest t o the Site, together with any property, or any part thereof, acquired by Developer under the AHA. The covenants against discrimination as set forth in this Section 1 of Article II shall remain in effect in perpetuity.

Section 5. Compliance with Laws . Dev eloper shall carry out the design, development and operation of the Phase II Project in conformity with all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City 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.

ARTICLE III

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

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

Section 3. Right of Entry . In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the Phase II Site and/or Phase II Project for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of City, and for maintenance and/or repair of any or all publicly owned utilities.

Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the Phase II Site at reasonable hours t o enforce A.8.d
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compliance with these City Covenants which Developer has failed to perform. In addition, City has the right of entry onto any part of the Phase II Site and Phase II Project at reasonable hours and upon and after reasonable attempts to contact De veloper, to effect emergency repairs or maintenance that Developer has failed to perform.

Section 4. Costs of Repair . The costs borne by City (or Authority) of any such repairs or maintenance emergency and/or non-emergency, shall become a charge for which Developer shall be responsible. Developer agrees that City’s rights related to charges and collection thereof hereunder include the City’s right to impose a lien against the Site comparable to the process undertaken by public agencies for similar lien collection such as for weed abatement.

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

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

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

ARTICLE VI

GENERAL PROVISIONS
Section 1. Covenant against Partition. By acceptance of its interest in the Site, Developer shall be deemed to covenant for itself and for its heirs, representatives, successors and assigns, that it will not institu te legal proceedings or otherwise seek to effect partition of its right and interest in the interest being conveyed to Developer, or the burdens running with the land as a result of these City Covenants.

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

Section 3. Term. These City Covenants shall run with and bind the interest of Developer in the Site, and shall inure to the owner(s) of any property subject to these City Covenants, his legal representatives, heirs, successors and assigns, and be enforceable by City, for a term equal to the Affordability Period as defined in the AHA, provided; however, that t he covenants regarding nondiscrimination set forth in Section 4. of Article II of these City Covenants shall remain in effect for perpetuity.

Section 4. Construction. The provisions of these City Covenants shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and operation of rental housing available at Affordable Rent for Extremely Low, Very Low and Low Income Households as more particularly set forth herein. The article and Section headings have been inser ted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or A.8.d
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construction. Developer shall be obligated by these City Covenants to comply with the provisions hereof.

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

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

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

Section 7. Third Party Costs . Developer acknowledges and agrees to its obligation to pay and reimburse the Authority and City for all Third Party Costs incurred, as such term and provisions therefor are set forth in the DDAHA.

Section 8. Notices. Any Notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either personally or by certified mail. Notice to City and Authority shall be ma de by certified mail to: City Manager and Executive Director (with copies to both City Clerk, Authority Secretary, City Legal Counsel and Authority General Counsel), City Hall 14177 Frederick Street, Moreno Valley, California 92552 -0805, and shall be effective upon receipt. Notice to Developer shall be made by certified mail to Courtyards at Cottonwood II, L.P. , a California limited partnership, 27700 Kalmia Avenue, Rancho Belago, California 92555-5200, Attn: James M. Jernigan, and shall be effective upo n receipt. Such address may be changed from time to time by notice in writing.

DEVELOPER:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President
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AUTHORITY:

MORENO VALLEY HOUSING AUTHORITY,
a public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST:

Jane Halstead, Authority Secretary
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, General Counsel

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CITY:

CITY OF MORENO VALLEY.
a California municipal corporation
By:

Mike Lee, City Manager
ATTEST:

City Clerk
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, City Attorney

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Exhibit A to Attachment No. 10

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EXHIBIT A TO ATTACHMENT NO. 10

LEGAL DESCRIPTION
Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE A DJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS INSTRUMENT NO. 2020-0080445 OF OFFICIAL RECORDS, IN THE

OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE P ORTIONS OF PARCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEASU RED ALONG SAID EAST LINE, FROM THE

CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON -TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DISTANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FE ET; THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET; THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH THAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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ATTACHMENT NO. 11

AUTHORITY REGULATORY AGREEMENT
RECORDING REQUESTED BY:

WHEN RECORDED RETURN TO:

Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: Executive Director

(Space above for Recorder’s Use.)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 6103.

AUTHORITY REGULATORY AGREEMENT
This AUTHORITY REGULATORY AGREEMENT ( “Regulatory Agreement”, “CC&Rs” or “this Agreement”) is mad e as of __________________, 2023 and entered into by and between the MORENO VALLEY HOUSING AUTHORITY , public body corporate and politic (“Authority”), and the CITY OF MORENO VALLEY , a municipal corporation (“City”), and COURTYARDS AT COTTONWOOD II, L.P. , a California limited partnership (“Developer”), which entities are the signatories hereto. Authority, City and Developer are sometimes collectively referred to herein as the “Declarants.” This Authority Regulatory Agreement sets forth certain covenants, conditions affecting, touching and concerning that certain Phase II Site and is made by the signatories hereto.

R E C I T A L S
A. Authority, City and Developer have entered into that certain unrecorded Disposition, Development and Affordable Housing Agreement (Phase II: 9% Tax Credits 32 Housing Units) dated as of March 7, 2023 (“DDAHA”) for the improvement and development of certain real property described in Exhibit A (to which these CC&Rs are attached) as the “Phase II Site” or “Site”, which DDAHA provides for the recordation of this Authority Regulatory Agreement following conveyance of the Phase II Site to Developer by the Authority Grant Deed. The DDAHA is incorporated herein by this reference and capitalized terms not defined herein shall have the mean ing established therefor in the DDAHA.

B. This Regulatory Agreement establishes a plan for the improvement, development and maintenance of the Phase II Site, for the benefit of City and Authority.

C. The DDAHA sets forth certain restrictive covenants applicable to the Phase II Site, particularly the use of the Phase II Site for the provision of rental housing units available to A.8.d
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Extremely Low Income Households, Very Low Income Households and Low Income Households at Affordable Rents as those terms are defined therein.

D. Authority, City, and Developer wish to enter into this Regulatory Agreement to further govern the use of the Phase II Site in conjunction and along with the DDAHA and to ensure that Authority and City achieve credit for production of afford able housing units under the CRL, Dissolution Law, HAL, RHNA, and the City’s Housing Element of the General Plan.

NOW, THEREFORE, each and all of Authority, City, and Developer (as the owner of the Phase II Site), declare that the Phase II Site shall be he ld, transferred, encumbered, used, sold, conveyed, managed, maintained, leased and occupied subject to the covenants, conditions and restrictions set forth herein expressly and exclusively for the use and benefit of said real property and for the benefit of the Authority and the City. Each and all of the restrictions, limitations, conditions, covenants, liens, reservations and charges herein contained shall run with the land and be recorded on the property title and shall be binding on Declarants, their gr antees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owners of all or any part of the Phase II Site.

ARTICLE I

DEFINITIONS
The capitalized terms used in this Authority Regulatory Agreement shall be as defined in the DDAHA unless otherwise defined herein. The terms used therein shall be applicable to these CC&Rs and also to any amendment or supplement hereto (unless the context implicitly or explicitly shall prohibit), recorded against the Phase II Site pursuant to the provision of this Agreement.

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the Phase II Project on the Phase II Site in conformity with the DDAHA. Thereafter, the Phase II Site shall be operated as the Phase I I Project and devoted only to the uses specified in the DDAHA and the Authority Grant Deed for the periods of time specified herein. All uses conducted on the Phase II Site, including, without limitation, all activities undertaken by Developer pursuant to the DDAHA, shall conform to all applicable provisions of the City Code and the City Approvals.

The Phase II Site shall be used, maintained and operated in accordance with the DDAHA, the Authority Grant Deed, the City Covenants, and this Authority Regulato ry Agreement for the Affordability Period. None of the units in the Phase II Project shall at any time be utilized on a transient basis nor shall the Phase II Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home, trailer court, trailer park, or vacation or short -term rental such as VRBO, AirBnB, HomeAway. No part of the Phase II Site, from the date Developer acquired the Phase II Site, has been or will at any time be owned or used as a cooperative housing corporation or a community apartment project or a stock cooperative.

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Section 2. Affordable Housing; Eligible Tenant Households. (a) Number of Units. Throughout the Affordability Period each and a ll thirty-two (32) Housing Units shall be rented to qualified Extremely Low, Very Low and Low Income tenants at the Prescribed Income Levels and at an Affordable Rent. Developer agrees to make available, restrict occupancy to, and rent all of the Housing Units at Affordable Rent in conformity with the Prescribed Income Levels.
(b) Prescribed Income Levels; Affordable Rent. Each and all Housing Units in the Phase II Project shall be occupied by Eligible Households and leased at an Affordable Rent based on the Riverside County Area Median Income (“AMI”) applicable to the Housing Unit all in accordance with the following unit mix:
• Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income Households; • Two (2) 2-bedroom Housing Units for 40% AMI Very Low Income Households; • Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income Households; • Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income Households; • Six (6) 2-bedroom Housing Units for 60% AMI Lower Income Households; • Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income Households; • One (1) 3-bedroom Housing Units for 45% AMI Very Low Income Households; • Two (2) 3-bedroom Housing Units for 50% AMI Very Low Income Households; • Six (6) 3-bedroom Housing Units for 60% AMI Lower Income Households; • (One (1) 4-bedroom Housing Unit for 30% Extremely Low Income Households; • One (1) 4-bedroom Housing Unit for 40% Very Low Income Households; • One (1) 4-bedroom Housing Unit for 45% Very Low Income Households; and • One (1) 4-bedroom Housing Unit for 50% Very Low Income Households.

For this purpose, a tenant who qualifies at the Prescribed Income Level applicable to the Housing Unit at the time he/she/they first occupy(ies) a Housing Unit shall be deemed to continue to be so qualified until such ti me as a recertification of his/her/their household income in accordance with the DDAHA demonstrates that such household no longer income -qualifies at the Prescribed Income Level for the Housing Unit. Moreover, a Housing Unit previously occupied by a tenant household that qualified at the Prescribed Income Level for the Housing Unit, and then vacated shall be considered occupied by such household until reoccupied, other than for a temporary period, at which time the character of a Housing Unit shall be rede termined in accordance with the unit mix at the Prescribed Income Level for the Housing Unit. In no event shall such temporary period exceed thirty-one (31) days.

In the event a household’s income initially complies with the corresponding income restriction but the income of such household increases, such increase shall not be deemed to result in a violation of the restrictions of these City Covenants concerning limitations upon income of occupants.. Developer shall include in its rental agreements provis ions that implement this requirement and limitation, and Developer shall expressly inform prospective renters as to this limitation prior to the commencement of a tenancy.

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(c) Income of Tenants . Each tenant of a Housing Unit shall be an Extremely Low Income H ousehold, 40% AMI Very Low Income Household, 45% AMI Very Low Income Household, 50% AMI Very Low Income Household or Low Income Household in accordance with the Prescribed Income Levels and shall meet the eligibility therefor, and Developer shall obtain a certification from each tenant renting or leasing each Housing Unit that substantiates such fact.

Developer shall verify the income certification upon initial tenancy, and thereafter not less than annually during the term of tenancy of each tenant household as set forth herein. (d) Determination of Affordable Rent for the Housing Units . The term “Affordable Rent” means the maximum amount of out -of-pocket housing cost to be charged monthly by Developer and paid by each of the Eligible Household that qualifies as an Extremely Low, 40% AMI Very Low, 45% AMI Very Low, 50% AMI Very Low, or Low Income Households for each of the Housing Units at Phase II Project as determined and calculated pursuant to the affordable rent and the rent limitations according to TCAC, the Tax Credit Rules, and Tax Credit Regulatory Agreement applicable to Phase II in accordance herewith. For purposes of Affordable Rent, the monthly housing payment shall mean the total of monthly payments by each tenant household of a Housing Unit for use and occupancy of a Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service. (i) Further, the term Affordable Rent includes the total of monthly payments by the tenants of a Housing Uni t for (A) use and occupancy for the Housing Unit and facilities associated therewith, (B) any separately charged fees or service charges assessed by Developer which are required of all tenants of the Housing Units, other than security deposits, (C) a reaso nable allowance for utilities not included in (A) or (B) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of Housing Authority of the County of Riverside pursuant to 24 C.F.R. Section 5.600, et seq. or by the California Utility Allowance Calculator as permitted by TCAC, and (D) possessory interest, taxes or other fees or charges assessed for the use of the Housing Units and facilities associated therewith by a public or private entity other than Developer; provided that the rent to tenants of any Housing Units shall not exceed Affordable Rent. (ii) Under this Authority Regulatory Agreement and for purposes of Affordable Rent in the operation of the Phase II Project the following Affordable Rents are acceptable fo r the applicable income category:
(A) To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for 30% AMI Extremely Low Income Households (5 Housing Units) shall not exceed the most restrictive income standard of HSC Section 50106 or T ax Credit Rules. The Affordable Rent for 30% AMI Extremely Low Income Households shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit Rules; (B) To comply with HSC Section 34176.1 and LMIHAF requ irements, the household income for 40% AMI Very Low (4 Housing Units), 45% Very Low (4 Housing Units), and 50% AMI Very Low Income Households (7 Housing Units) (for a total of 15 Very Low Income Housing Units) shall not exceed the most restrictive standard of HSC 50105 or Tax Credit Rules as adjusted for the applicable AMI of 40%, 45% or 50%; and (C) To comply with HSC Section 34176.1 and LMIHAF requirements, the household income for Low Income Households (12 Housing Units) shall not exceed the most A.8.d
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restrictive income standard of HSC Section 50079.5 or Tax Credit Rules. The Affordable Rent shall not exceed the most restrictive standard of the calculations under HSC Sections 50052.5 and 50053 or Tax Credit rules.
(e) Increases in Tenant Household Income. The Housing Units shall meet the Prescribed Rent Levels and Tenant Mix as required despite a temporary noncompliance with the defined Affordable Rents, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by De veloper to ensure that each and all vacancies at the Phase II Project are filled in accordance with the Prescribed Rent Levels and Tenant Mix until the noncompliance is corrected.
(i) A tenant applicant who qualified as an Extremely Low Income Household at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income shows such tenant no longer qualifies as an Extremely Low Income Household . If the existing tenant occupying such Extremely Low Income Housing Unit ceases to qualify as an Extremely Low Income Household, but qualifies either as a Very Low or Low Income Household, such tenant may continue to occupy that Housing Unit and be charg ed rent equal to the lesser of thirty percent (30%) of the household's adjusted monthly income, recertified annually, or the Affordable Rent as defined herein for the eligible income level, and the designation for the Housing Unit shall be adjusted to alig n with the applicable Prescribed Income Level and the next available Housing Unit shall be tenanted by the prior designation for the subject Housing Unit so as to keep the unit mix and allocation among the Housing Units in compliance with the Prescribed In come levels. A tenant household occupying a Housing Unit in the Phase II Project whose gross income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.
(ii) A tenant applicant who qualified as a Very Low Income Ho usehold (40%, 45%, or 50% AMI, as applicable) at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income shows such tenant no l onger qualifies therefor. If the existing tenant occupying such Very Low Income Housing Unit ceases to income -qualify for the Housing Unit, but qualifies either at the higher Very Low or as a Low Income Household, such tenant may continue to occupy that H ousing Unit and be charged rent equal to the lesser of thirty percent (30%) of the household's adjusted monthly income, recertified annually, or the Affordable Rent as defined herein for the eligible income level, and the designation for the Housing Unit s hall be adjusted to align with the applicable Prescribed Income Level, and the next available Housing Unit shall be tenanted by the prior designation for the subject Housing Unit so as to keep the unit mix and allocation among the Housing Units in complian ce with the Prescribed Income levels. A tenant household occupying a Housing Unit in the Phase II Project whose gross income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.

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(iii) A tenant applicant who qualifie d as a Low Income Household at initial occupancy in the Phase II Project in compliance herewith shall be deemed to continue to be so qualified until such time as reverification of the tenant household’s gross income shows that such tenant no longer qualifi es as a Low Income Household. An existing tenant household occupying a Low Income Housing Unit in the Phase II Project whose income exceeds the qualifying limit for a Low Income Household may continue to occupy that Housing Unit and be charged monthly ren t including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Housing Unit as published by HCD.

In the event a household ’s income initially complies with the corresponding income restriction for an Extremely Low Income Household but the income of such household increases, such increase shall not be deemed to result in a violation of the restrictions of this Regulatory Agreement concerning limitations upon income of occupants; provided, however, that subject to federal law, including but not limited to the Fair Housing Laws, as amended, and Section 42 of the Internal Revenue Code, the occupancy by such household is for a reas onable time of not to exceed three hundred sixty-five days (measured from the time the income of the household ceases to qualify at the designated affordability level). Subject to the aforementioned proviso, Developer shall include in its rental agreement s provisions which implement this requirement and limitation, and Developer shall expressly inform prospective renters as to this limitation prior to the commencement of a tenancy.
(iv) While it is anticipated that the rent standards under the Tax Credit R ules will be less restrictive, i.e., allow for a higher monthly rent, than those otherwise allowable under HSC 50052.5 and 50053; nonetheless, it is the responsibility of Developer to comply with the definition of Affordable Rent and all affordable housing standards herein. (v) Notwithstanding (i) to (iii) above, under federal law, including but not limited to the federal Fair Housing Act, as amended, and Section 42 of the Internal Revenue Code, the occupancy by such household is for a reasonable time of not to exceed three hundr ed sixty-five days (measured from the time the income of the household ceases to qualify at the designated affordability level). Subject to the aforementioned proviso, Developer shall include in its rental agreements provisions which implement this requir ement and limitation, and Developer shall expressly inform prospective renters as to this limitation prior to the commencement of a tenancy. (f) Duration of Affordability Requirements . The Housing Units shall be maintained as rental units available at and ren ted to Extremely Low Income Households, Very Low Income Households at the Prescribed Income Levels and at an Affordable Rent throughout the Affordability Period. All tenants residing in the Housing Units during the last two (2) Years of the Affordability Period shall be given notice by Developer at least once every six (6) months prior to the expiration date of this requirement, that the rent payable on such Unit may be raised to a market rate rent at the end of the Affordability Period. Further, Develope r agrees to comply with the federal, state, and local laws and regulations related to expiration or termination of affordable housing covenants for assisted housing developments, including pursuant to applicable provisions of Government Code Section 65863.10, 65863.11 and 65863.13.
(g) Selection of Tenants . Developer shall be responsible for the selection of tenants for the Housing Units in compliance with the criteria set forth herein and consistent with the Affordable A.8.d
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Rent and the Prescribed Income Levels th erefor. No Housing Unit shall be restricted on the basis of age or any protected category set forth in the Fair Housing Laws. In this regard, tenant selection for the Housing Units shall comply with applicable provisions that are most restrictive and pro tective of tenants under the HAL, the Dissolution Law, the CRL and the Tax Credit Rules, and all lawful and reasonable criteria, as set forth in the Management Plan that is required to be submitted to and approved by Authority and City as a Condition Precedent under the DDAHA. Developer shall use its commercially reasonable efforts to rent vacant Housing Units to Eligible Households on Authority’s and City’s tenant interest list (if one is maintained by Authority and/or City) and Eligible Households under the County’s waiting list as to the PBVs awarded and allocated to Developer.

Developer shall demonstrate to Authority that each and all of the proposed tenants of each and all of the Housing Units meet the Prescribed Income Levels (i.e., Extremely Low, 4 0% AMI Very Low, 45% AMI Very Low, 50% AMI Very Low and Low Income Households), as applicable to the sixteen (16) two -bedroom Housing Units, twelve (12) three -bedroom Housing Units, and four (4) four-bedroom Housing Units and pay the Affordable Rent applicable to Housing Units. (i) Process for Tenant Selection. Developer shall adopt a tenant selection system for the Housing Units that shall be approved by Executive Director in his or her reasonable discretion, which establishes a chronological waiting list system for selection of tenants and meets the requirements hereof.
(ii) Marketing. Developer shall provide written notice to Authority at least thirty (30) days prior to Developer commencing its marketing activities for the initial lease -up of the Phase II Project in conformance with the approved Management Plan. In addition, this prior notice from Developer to Authority also shall include a complete copy of the form of the “application” with a description of necessary supporting materials to be completed by applicants for prospective tenancy at the Phase II Project, in particular so that the displacees of the Former Agency, if any, can be notified in writing and have an adequate time to prepare and submit an application. (A) Posting. Posting advertisements and notices of the vacancy(ies) at the community center, senior center, other public buildings such as post offices located in the City, at City Hall, and on the City’s website.
(B) Applicant Prior Government Displacement. In compliance with HSC Section 34322.2 of the HAL, HSC Section 34311.3 of the CRL, or other state or federal law that requires a reasonable priority to persons displaced by public or private action, in the tenant selection process Developer shall give reasonable preference or pr iority to an Extremely Low, Very Low or Low Income applicant for tenancy, if any, who was displaced by public or private action. (iii) Tenant Lease and/or Rental Agreements.
(A) Prior to the rental or lease of a Housing Unit to a tenant, and as set forth in this Article II, Developer shall require the tenant to execute a written lease on a form approved by the Authority and to complete an Income Verification certifying that the tenant(s) qualifies at the Prescribed Rent Level applicable to the Housing Uni t and meet(s) the eligibility requirements established hereunder.

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(iv) Section 8 Housing Choice Vouchers. Developer shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing program under Section 8 of the United States Housing Act of 1937, or its successor. Developer shall not apply selection criteria to Section 8 certificate holders which are more burdensome than criteria applied to any other prospective tenants. (h) Household Size Appropriate to a Housing Unit. The term “household size appropriate to the unit” for the purpose of the calculation of Affordable Rent herein (and without regard to actual occupancy), means the most restrictive of either: (a) HSC Sections 50052.5 and 50053, or (b) the Tax Credit Rules. Notwithstanding the foregoing portion of this subsection (h), Developer agrees that Affordable Rent shall not exceed Affordable Rent. (i) Occupancy Limits. In consideration for bo th the Acquisition Authority Loan and other benefits of the DDAHA and this Authority Regulatory Agreement, to the greatest extent allowed by law, Developer agrees to comply with the following minimum and maximum occupancy for the Housing Units in the Phase II Project provided however, subject to applicable law, nothing herein shall prohibit the Developer from utilizing or complying with more restrictive occupancy limits imposed with respect to the Phase II Site: (A) for the two -bedroom units the maximum occupancy is five (5) persons and the minimum occupancy is two (2) persons, (B) for the three - bedroom units the maximum occupancy is seven (7) persons and the minimum occupancy is two three (3) persons, and (iii) for the four -bedroom units the maximum occupa ncy is nine persons and the minimum occupancy is four persons; in this regard, maximum occupancy is two persons per bedroom plus one.
(j) Relationship to Tax Credit Requirements . Notwithstanding any other provision of this Regulatory Agreement, to the ext ent that requirements associated with the provision of financing, other than by Authority, are more restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Regulatory Agreement, whichever is more restrictive in each case, shall control and Developer’s compliance therewith shall not be a default hereunder.

DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE

MAXIMUM RENT FOR THE HOUSING UNITS ESTABLISHED BY THE DDAHA,

THIS REGULATORY AGREEMENT, AND THE CITY COVENANTS IS
SUBSTANTIALLY BELOW THE FAIR MARKET RENT THEREFOR.
_______________
Developer Initial
(k) Social or Supportive Services . Developer shall provide social or supportive services to the tenant households of the Phase II Project based on the population, special needs, ages, diversity of the tenant households such as for early care and education, elementary school age children, high school age children, seniors, financial literary, job counseling, and other servi ces appropriate and necessary for the tenant population at the Phase II Project during the Affordability Period. For the Housing Units for which the County awards and allocates to Developer PBVs, then Developer shall provide an enhanced level of social se rvices as required by the County. The specific social services to be provided by Developer at the Phase II Project are subject to reasonable approval by the City Manager and Executive Director and in the event Developer intends to materially modify the so cial A.8.d
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services to be provided at the Phase II Project, Developer must first (1) submit a written explanation of such modification to Authority and City along with any supporting documentation reasonably requested by City Manager and Authority Director and ( 2) obtain his or her reasonable approval of such modified social services to be provided at the Phase II Project. As of the Date of Agreement and based on Developer’s Base Pro Forma and the Authority and City’s evaluation thereof, the estimated per Housin g Unit cost for Developer (and its agents) to provide social services is listed therein.

Section 3. Developer Verification and Program Compliance. (a) Income Verification and Certification. Developer will obtain and maintain on file an Income Verification from each tenant (for every Housing Unit on the Phase II Site), dated immediately prior to the initial occupancy of such tenant in the Phase II Project. (i) On June 15 following the completion of the Phase II Development, Developer shall file with Authority or its designee a Certificate, containing all information referenced under Health and Safety Code Section 33418, in a form prescribed by Authority. Each Certificate shall cover the immediately preceding Year.
(ii) Developer shall maintain on file thro ughout the Affordability Period each tenant’s executed lease and Income Verification and rental records for the Phase II Project and the Housing Units. Developer shall maintain complete and accurate records pertaining to the Extremely Low Income Units, th e 40% AMI Very Low Income Units, 45% AMI Very Low Income Units, 50% AMI Very Low Income Units, the Low Income Units and any other Housing Units, and will permit any duly authorized representative of the Authority and/or City to inspect the books and records of Developer pertaining to the Phase II Project, including those records pertaining to the occupancy of the Extremely Low Income Units, the 40% AMI Very Low Income Units, 45% AMI Very Low Income Units, 50% AMI Very Low Income Units, and Low Income Units, and any other Housing Units. Developer shall prepare and submit to the Authority and City annually commencing the June 15 first following the issuance of the Certificate of Completion/Release of Construction Covenants and continuing throughout the Afford ability Period, a Certificate of Continuing Program Compliance. Such documentation shall state for each Housing Unit in the Phase II Project the unit size, the rental amount, the number of occupants, and the income of the occupants, and any other information that may be used to determined compliance with the terms of this Regulatory Agreement, the City Covenants, and the DDAHA.
(b) Certificate of Continuing Program Compliance; Annual Financial Report .

As part of its annual report, Developer shall include a statement of amounts payable by Developer under this Regulatory Agreement supported by an Audited Financial Statement (prepared by an independent accounting firm reasonably acceptable to Authority) which sets forth information in detail sufficient for adequate review by Authority for the purposes of confirming those amounts payable by Developer to Authority, including without limitation amounts payable under the Authority Note, as well as showing th e general financial performance of the Phase II Project (together, “Annual Financial Report”). Each Annual Financial Report shall include a profit and loss statement showing Gross Revenues, Operating Expenses, Debt Services, Capital Replacement Reserve, Operating Reserve, and Residual Receipts, all certified by the Audited Financial Statement.

In the event the amounts reported or paid deviate by five percent (5%) or more from that amount owing upon review of Developer’s submittal, Developer shall reimburs e Authority for its cost to A.8.d
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review (which may require engagement of auditors) and collect the amounts owing; such amounts shall, until paid, be added to the amount payable under the Authority Loan Note.

In addition, as part of its Annual Financial Report, at Authority or City’s request, Developer shall also provide to Authority and City completed income computation, asset evaluation, and certification forms, for any such tenant or tenants, in substantially the form provided by Authority and City from time -to-time. Developer shall obtain an annual certification from each household of each Housing Unit demonstrating that such household meets the Prescribed Income Level for the Housing Unit as an Extremely Low Income Household, a 40% AMI Very Low Income Household, 45% AMI Very Low Income Household, 50% AMI Very Low Income Household, or a Low Income Household, as applicable, and meets the eligibility requirements established for each such Housing Unit. Developer shall verify the income certification of each ten ant household. In order to comply with this Section 3, Developer shall submit to Authority upon request from Authority any and all tenant income and occupancy certifications and supporting documentation required to be submitted to TCAC pursuant to the Tax Credit Rules and the Tax Credit Regulatory Agreement for the Phase II Project; provided, Authority may request (and Developer shall provide) additional documentation to assist Authority’s evaluation of Developer’s compliance with this Agreement, if determ ined to be necessary in the reasonable discretion of the Executive Director, specifically including (without limitation) any documentation or additional certifications that may be necessary to verify compliance with all requirements from all funding source s, and each tenant’s status as to each Housing Unit as an Extremely Low Income Household, a 40% AMI Very Low Income Household, 45% AMI Very Low Income Household, 50% AMI Very Low Income Household, or a Low Income Household. This requirement is in addition to and does not replace or supersede Developer’s obligation to annually submit the Certificate of Continuing Program Compliance to Authority and City. Further, Authority and City each has the right, but not the obligation to monitor compliance with respe ct to each tenant household at the Phase II Project, and Authority and/or City’s election to monitor some, but not all, of the Housing Units shall not constitute a waiver of Authority’s right to monitor and enforce compliance with respect to all Housing Units in the future.
(c) Verification of Income of New and Continuing Tenants . Gross income calculations for prospective (and continuing) tenants shall be determined in accordance with 25 Cal.

Code Regs. Section 6914. Developer shall retain documentation regarding the eligibility of each new tenant household and retain documentation of the recertification and verification of continuing tenants. Developer shall verify the income and information provided in the income certification of the proposed tenant as set forth below.
(i) Developer shall verify the income of each proposed tenant of the Phase II Project and by at least one of the following methods as appropriate to the proposed tenant:
(A) obtain two (2) paycheck stubs from the person’s two (2) most recent pay periods;
(B) obtain a true copy of an income tax return from the person for the most recent tax year in which a return was filed;
(C) obtain an income verification certification from the employer of the person;
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(D) obtain an income verification cert ification from the Social Security Administration and/or the California Department of Social Services if the person receives assistance from such agencies;
(E) obtain an alternate form of income verification reasonably requested by Authority, if none of the above forms of verification is available to Developer; or (F) as to the Housing Units obtain verification and supporting documentation of the household as an Eligible Household. (d) Reporting Amounts. Authority is required by HSC Section 33418 to requir e Developer to monitor affordability of the Housing Units and submit the Annual Financial Report required by this Section 3 of Article II. Authority relies upon the information contained in such reports to satisfy its own reporting requirements and to pro vide certain information described in the HAL, Dissolution Law, CRL, including without limitation HSC Section 34176.1. In the event Developer fails to submit to Authority or its designee the Certification as required herein; Developer shall be in noncompl iance with this Regulatory Agreement. In the event Developer remains in noncompliance for thirty (30) days following receipt of written notice from Authority of such noncompliance under Article II, then Developer shall, without further notice or opportuni ty to cure, pay to Authority $1600.00 for each Year Developer fails to submit a Certificate covering each and every housing unit on the Phase II Site.

Section 4. Nondiscrimination. Developer shall refrain from restricting the rental, sale or lease of the Phase II Site, or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practi ces of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
(b) In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, sub division (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or A.8.d
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enjoyment of the premises herein leased nor shall the lessee himself or her self, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
(c) In contracts: “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premi ses which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” Developer hereby covenants, by and for itself, its successors and assigns, and all persons claiming under or through them, to comply with the following laws relating to nondiscrimination and equal opportunity: (1) The Fair Housing Act (42 U.S.C. 3601 -19) and implementing regulations at 24 CFR part 100 et seq.; Executive Order 11063, as amended by Executive Or der 12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d -2000d-4) (Nondiscrimination in Feder ally Assisted Programs) and implementing regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 U.S.C. 6101 -6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at part 8 of this title; title II of the Americans with Disabilities Act, 42 U.S.C. 12101 et seq .; 24 CFR part 8; section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations at 24 CFR part 75; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966 -1970 Comp., p. 684; 3 CFR, 1966 -1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 CFR chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971 -1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 1 2432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women’s Business Enterprise).

Developer further covenants , by and for itself, its successors and assigns, and all persons claiming under or through them, not to inquire about the sexual orientation or gender identity of an applicant for, or occupant of, the Phase II Project or any Housing Unit at the Phase II Si te, for the purpose of determining eligibility for occupancy of such Housing Units or otherwise making such Housing Units available. This prohibition on inquiries regarding sexual orientation or gender identity does not prohibit any individual from volunt arily self -identifying sexual orientation or gender identity. Further, determinations of eligibility for occupancy of Housing Units at the Phase II Project shall be made in accordance with the eligibility requirements provided for such program by HUD, and such Housing Units shall be made available without regard to actual or perceived sexual orientation, gender identity, or marital status.

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The covenants established in this Section 4. shall, without regard to technical classification and designation, be bin ding for the benefit and in favor of Authority and its successors and assigns, and shall remain in effect in perpetuity.

The covenants established in this Regulatory Agreement and the deeds of conveyance for the Phase II Site shall, without regard to techn ical classification and designation, be binding for the benefit and in favor of Authority, its successors and assigns, City and any successor in interest to the Phase II Site, together with any property acquired by Developer pursuant to this Agreement, or any part thereof. The covenants against discrimination as set forth in this Section 1 of Article II shall remain in effect in perpetuity.

Section 5. Management of the Phase II Project.
(a) Property Manager. Developer shall manage or cause the Phase II Site a nd Phase II Project in a prudent and business -like manner, consistent with good property management standards for other High Quality affordable housing projects in Riverside County, California. Developer may contract with a property management company or property manager, to operate and maintain the Phase II Project in accordance with the terms hereof (“Property Manager” or “Phase II Site Manager”); provided, however, the selection and hiring of the Phase II Site Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the Executive Director (or designee) in his discretion. The Phase II Site Manager shall manage the Phase II Project in accordance with the definitions of Affordable Rent contained herein and in the DDAHA, the tenant selection requirements contained herein and in the DDAHA, and the definitions relating to income contained in the DDAHA and this Regulatory Agreement. Any fee paid to the Phase II Site Manager for social services prov ided to the tenants shall be exclusive of the fee paid to the Phase II Site Manager relating to the management of the Phase II Project. Developer shall conduct due diligence and background evaluation of any potential third party property manager or proper ty management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager. Any proposed property manager shall have significant and relevant prior experience with affordable housing projects and properti es comparable to the Phase II Project and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) by Developer prior to submitting the name and qualifications of such proposed property manager to the Executive Director for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the Executive Director.

Approval of a Property Manager by Executive Director shall not be unreasonably delayed b ut shall be in his/her sole reasonable discretion, and the Executive Director shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Phase II Project. The replacement of a Property Manager by Developer and/or the selection by Developer of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements.
(b) Budget and Reserve Requirements . Developer shall maintain the Ca pital Replacement and the Operating Reserve throughout the Affordability Period in the amounts designated herein and in the DDAHA.
(i) Capital Reserve Requirements . Commencing upon the closing for the Primary Permanent Loan for the Phase II Project, Developer shall annually set aside an amount of not less than Three Hundred Dollars ($300.00) per Housing Unit (32) Housing Units times $300 A.8.d
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equals $9,600) or such incr eased amount required by TCAC, other governmental agency that is a financing source, the Partnership Agreement or the Primary Lender under the Primary Permanent Loan for the Phase II Project) from the gross rents received from the Phase II Project, into a separate interest bearing trust account defined as the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements and replacements to the Phase II Project, including fixtures and equipment, w hich are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code.

The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Phase II Project in the manner prescribed herein. Not less than once per year, Developer, at its expense, shall submit to the Executive Director an accounting for the Capital Replacement Reserve for the Phase II Project. Capital improvements and repairs to, and replacements at the Phase II Project shall include only those items with a long useful life, including without limi tation the following: carpet and drapery replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air cond itioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting. Pursuant to the procedure for submittal of each Annual Budget for the Phase II Project to the Executive Director by Developer, Executive Director will evaluate the cumulative amount on deposit in the Capital Replacement Reserve account and exercise his/her sole, reasonable discretion to determine if existing balance(s) in, proposed deposits to , shortfalls, if any, and/or a cumulative unexpended/unencumbered account balance in such Capital Replacement Reserve account are adequate to provide for necessary capital repairs and improvement for the Phase II Project.

Notwithstanding the foregoing portion of subsection, in the event TCAC prescribes particular amounts to be set aside as a capital replacement reserve, compliance therewith shall be deemed to comply with this subsection.
(ii) Operating Budget and Operating Reserve . Within twelve (12) month s after commencement of construction of the Phase II Project, but in no event later than ninety (90) days prior to the completion of construction of the Phase II Project, and not less than annually thereafter on or before November 1 of each year following the issuance of the first certificate of occupancy issued by City’s building official therefor and continuing each year throughout the Affordability Period, Developer shall submit to Authority and City on not less than an annual basis an operating budget f or the Phase II Project (“Operating Budget” or “Annual Budget”), which budget shall be subject to the written approval of Executive Director (or designee), which approval shall not be unreasonably withheld. The Executive Director’s discretion in review and approval of each proposed annual Operating Budget shall include, without limitation, authority to review individual categories, line items, and accounts, such as the following: extent, type, and amount for social services at or associated with the Phase II Project; existing balance(s) in and proposed deposits to the Capital Replacement Reserve for the Phase II Project to evaluate shortfalls and/or cumulative unexpended/unencumbered deposits (provided that required annual deposits thereto are not required to exceed $300/per unit); conformity of any annual increases in the Partnership Related Fees for the Phase II Project with only those increases expressly permitted in the definition of “Partnership A.8.d
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Related Fees”; reasonableness and conformity to prevailin g market rates in Riverside County and rates and fees for goods and services to be provided Developer or any of its parent, affiliated, or subsidiary entities, etc. for the Phase II Project.
(A) Operating Reserve. Developer shall, or shall cause the Phase II Site Manager to, set aside an Operating Reserve for the Phase II Project in a separate interest bearing trust account a target amount equal to three (3) months of (1) Debt Service on the Primary Construction Loan or the Primary Permanent Loan and (2) O perating Expenses pursuant to an approved Annual Budget for the Phase II Project (“Target Amount”), which shall be funded by Tax Credit equity (or, if a different amount is identified for such purpose the Primary Construction Lender, the Primary Permanent Lender or TCAC, the amount identified by TCAC (which amount shall take precedence) or, if no such amount is identified by TCAC, the amount identified by the Primary Construction Lender or the Primary Permanent Lender). The Operating Reserve shall thereaft er be replenished from Residual Receipts to maintain the Operating Reserve balance at the Target Amount. The Target Amount shall be retained in the Operating Reserve to cover shortfalls between Annual Project Revenue and actual Operating Expenses, but sha ll in no event be used to pay for capital items or capital costs properly payable from the Capital Replacement Reserve. Developer shall, not less than once per every twelve (12) months, submit to the Executive Director evidence reasonably satisfactory to Authority of compliance herewith. Interest earned on moneys held in the Operating Reserve shall be retained in the Operating Reserve. The Operating Reserve shall be maintained throughout the Affordability Period.

Notwithstanding the foregoing portion of this subsection, in the event TCAC prescribes a particular amount to be set aside as an operating reserve, compliance therewith shall be deemed to comply with that portion of this subsection that sets forth the amount of operating reserve. (c) Maintenance and Repair . Developer agrees to assume full responsibility for the management, operation and maintenance of the Phase II Development and the Phase II Site throughout the Affordability Period without expense to Authority, and to perform all repairs and replacements necessary to maintain and preserve the Phase II Development and the Phase II Site in good repair, in a neat, clean, safe and orderly condition reasonably satisfactory to Authority and in compliance with all applicable laws. Developer agrees that neither the Authority nor City shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Phase II Development and the Phase II Site. Developer hereby waives all rights to make repairs or to cause any work to be performed at the expense of Authority and/or City as provided for in Section 1941 and 1942 of the California Civil Code.
(i) Program Maintenance . In addition to the routine maintenance and repair required pursuant hereto and the requireme nts set forth in this Authority Regulatory Agreement and the City Covenants, Developer shall perform the following minimum programmed maintenance of the Improvements to the Site:
(A) Interior painting, interior carpets in common areas, and window covering replacement at least every seven (7) years;
(B) Exterior painting at least every ten (10) years;
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(C) Repair, resurfacing, and re -striping of parking areas and walkways at least every five (5) years;
(D) Replacement of all deteriorated or worn landscaping a t least every five (5) years; and
(E) Replacement of all deteriorated or worn recreational and play equipment at least every five (5) years.

Notwithstanding the foregoing, if the Executive Director reasonably determines that the Phase II Project suffers fr om significant and unexpected wear and tear requiring any of the above items of maintenance to be performed sooner than as set forth above, Authority may require that such maintenance actions be performed within a reasonable time, even if sooner than the t ime periods set forth above. Upon the request of Developer, the Executive Director, at his/her sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements.
(ii) Maintenance Standards. The following standards shall be complied with by Developer and its maintenance staff, contractors or subcontractors:
(A) Developer shall maintain the Phase II Development, including individual Housing Units, all common areas, all interior and exterior facades, and all exterior project site areas, in a safe and sanitary fashion suitable for a High Quality, rental housing project.

Developer agrees to provide utility services, administrative services, supplies, contract services, maintenance, maintenance reserves, and management for the entire project including interior tenant spaces, common area spaces and exterior common areas. The services provided by Developer shall include, but not be limited to, providing all common area electricity, gas, water, television, cable television, property, fire and liability insurance in the amounts set forth in this Regulatory Agreement, all property taxes and personal property taxes, any and all assessments, maintenance and replacement of all exterior landscaping, and all administration and overhead required for any property manager. Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time. (B) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
(C) Clean-up maintenance shall include, but not be limited to:
maintenance of all private paths, parking areas, driveways and other paved areas in clean and weed - free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers.

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(D) The Phase II Development shall be maintained in conformance and in compliance with the approved constru ction and architectural plans and design scheme, as the same may be amended from time to time with the approval of Authority and City. (E) All maintenance work shall conform to all applicable federal and state Occupation Safety and Health Act standards and regulations for the performance of maintenance. (F) Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied only by persons in strict accordance with all governing regulations.
(G) Parking lots, lighti ng fixtures, trash enclosures, and all areas shall be kept free from any accumulation of debris or waste materials by regularly scheduled maintenance. (iii) Capital Repairs and Replacement . Capital repairs to and replacement of the Phase II De velopment shall include only those items with a long useful life, including without limitation the following:
(A) Appliance replacement;
(B) Hot water heater replacement;
(C) Plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets;
(D) Air conditioning and heating replacement;
(E) Asphalt replacement;
(F) Roofing replacement;
(G) Landscape tree replacement and irrigation pipe and controls replacement;
(H) Gas line pipe replacement;
(I) Lighting fixture replacement; and
(J) Miscellaneous motors and blowers.
(iv) Exterior Building Maintenance . All exterior, painted surfaces shall be maintained at all times in a clean and presentable manner, free from chipping, cracking and defacing marks. Any such defacing marks shall be cleaned or removed within a reasonable period of time as set forth herein.
(A) Front and Side Exteriors . Developer shall at all times maintain the front exterior and yard in a clean, safe and presentable manner, free fro m defacing marks or any disrepair and any visible side exteriors. Developer shall hire maintenance personnel to maintain and/or repair any front exterior or yard or visible side yard and exterior of any lot or building.

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(B) Graffiti Removal. All graffiti , and defacement of any type, including marks, words and pictures must be removed and any necessary painting or repair completed by the later to occur of (i) seventy two (72) hours of their creation or (ii) seventy two (72) hours after notice to Developer.
(C) Driveways. All driveways must be paved and maintained with impervious material in accordance with the City Code. In addition, all water must be made to drain freely to the public part of the waterway without any pooling. (D) Exterior Illumination. Developer shall at all times maintain adequate lighting in all entrance ways and parking areas. Adequate lighting means outdoor, night lighting designed and installed, which provides no less than one (1.0) foot candles in the parking areas and no less than one and one-half (1-1/2) foot candles in the walking areas or common areas and no less than

0.2 foot candles at the point of least illumination.
(E) Front Setbacks . All front setback areas that are not buildings, driveways or walkways shall be adequatel y and appropriately landscaped in accordance with minimum standards established by Authority and shall be maintained by Developer. The landscaping shall meet minimum standards set from time to time by Authority. (F) Trash Bins. All trash shall be collect ed and placed at all times in an enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located so that the bin will, to the extent possible, be readily accessible from the street. (G) Prohibited Signs. No sign of any kind shall be displayed to the public view on or from any portion of the Phase II Site without the approval of Authority and appropriate City departments if any as required by the City Code.
(d) Gross Mismanagement. During the Affordability Period, a nd in the event of “Gross Mismanagement” (as defined below) of the Phase II Development, Executive Director shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of written notice from Executive Director. If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written notice (with evidence of such submitted to the Executive Director), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thirty (30) days as reasonably determined by the non - defaulting party), then Developer shall have an additional thirty (30) days to complete the cure of Gross Mismanagement condition(s).
(i) For purposes of this Agreement, the term “Gross Mismanagement” means management of the Phase II Development in a manner which violates the terms and/or intention of this Agreement to operate a first quality affordable housing complex, and shall include, but is not limited to, any one or more of the following:
(A) Leasing to tenants who exceed the Prescribed Income Levels; A.8.d
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(B) Leasing of a Housing Unit to a household that does not income - qualify as an Eligible Household as an Extremely Low, 40% AMI Very Low, 45% AMI Very Low, 50% AMI Very Low, or Low Income Household;
(C) Subject to Fair Housing Laws, allowing tenants to exceed the prescribed minimum and maximum occupancy levels without taking immediate action to stop such undercrowding or overcrowding, as applicable;
(D) Under-funding required Capital Replacement Reserve and/or Operating Reserve accounts;
(E) Failing to submit timely and/or adequate Annual Financial Report, Certificates, and reporting requirements to Authority and City as required herein; (F) Failing to comply with the City Covenants;
(G) Failing to comply with this Authority Regulatory Agreement; (H) Failing to comply with the County Regulatory Agreement; (I) Failing to comply with the Tax Credit Regulatory Agreement; (J) Fraud or embezzlement of Development funds, including without limitation funds in the reserve accounts;
(K) Failing to fully cooperate with the Moreno Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the Phase II Development, in maintaining a crime-free environment within the Phase II Development; (L) Failing to fully cooperate with the Moreno Valley Fire Department or other local public safety agency(ies) with jurisdiction over the Phase II Development, in maintaining a safe and accessible environment within the Phase II Development; and (M) Failing to fully c ooperate with the Moreno Valley Planning and Building and Safety Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Phase II Development, in maintaining a decent, safe and sanitary environment within the Phase II Development.

Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time. (e) Code Enforcement . Developer acknowledges and agrees that Authority and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Phase II Development and the individual dwelling units at the Phase II Development (and not limited to the Housing Units), both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Developer and/or an individual tenant. If such notice is provided by Authority representative(s) to Developer, then Develope r shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Housing Units at the Phase II A.8.d
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Development to be made available and open for inspection. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Unit in the Phase II Development in order for each and every tenant and tenant household to be aware of this inspection right. The foregoing portion of this Section 5 is without limitation as to the exercise of police powers by City.

Section 6. Keeping of Animals. No animals of any kind shall be raised, bred or kept on the Phase II Site, except that domesticated dogs, cats or other household pets may be kept by the tenants in the Phase II Project at the discretion of Developer and subject to compliance with all laws.

However, no animal shall be kept, bred or maintained for any commercial purpose or for fighting purposes. Nothing permitted herein shall derogate in any way the right o f Developer to further restrict keeping of pets.

Section 7. Parking of Vehicles . Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the parking areas designated for the Housing Units.

Developer shall not permit the parking, storing or keeping of any large commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar vehi cle), boats over twenty (20) feet in length, or any vehicle other than a private passenger vehicle, upon any portion of the Common Areas, including parking spaces. For purposes of this section, a pickup truck with a pickup bed mounted camper shall be cons idered a private passenger vehicle; provided however, that no such vehicle shall be used for residential purposes while parked on the premises. (a) Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Common Area, including the parking areas, except for emergency repairs thereto and then only to the extent necessary to enable movement of the vehicle to a proper repair facility. No inoperable veh icle shall be stored or kept in the Common Area. Developer shall give the vehicle owner not less than four (4) days, nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or kept in violation of the provisions of thi s Regulatory Agreement. Notice shall consist minimally of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any vehicle parked, stored or kept in violation of the provisions of this Regulatory Agreement.

Section 8. Notice re Non -Compliance. Authority agrees to notify Developer in writing (including by email) if the conditions of the Phase II Project does not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Developer to cure the deficiencies. Upon notification of any mainte nance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification relates to a problem that is urgent and relating to the public health and safety as reasonably determined in writing by the police department, fire department, department of public works, building department or other first responder public agency, then Developer shall have forty -eight (48) hours (or any such longer time as may be reasonable under the circumstances) to rectify the problem. In the event Developer does not maintain the Phase II Site in the manner set forth herein and in accordance with the Maintenance Standards, Authority and City shall have, in addition to any other rights and remedies hereunder, the rig ht to maintain the Phase II Site, or to contract for the correction of such A.8.d
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deficiencies, after written Notice to Developer, and Developer shall be responsible for the payment of all such costs incurred by Authority and/or City.

Section 9. Signs Required . “No loitering” signs will be posted at each building and enforced by Developer. “Illegally parked vehicles will be towed” signs in compliance with California Vehicle Code requirements will be posted and enforced by Developer.

Section 10. Fences and Electronic Installations. Developer shall not install or knowingly permit to be installed on the exterior of any improvement or building on any fences or any antenna or other television or radio receiving device, excepting satellite dishes having a diameter of eighteen inches (18”) or less, without prior written consent of City. This prohibition shall not prohibit the installation of cable television or subscription wires or receiving devices.

Section 11. Structural Change. Nothing shall be done on the Phase II Site in, on or to any building which would materially structurally change the exterior or the interior bearing walls of any such building or structure, except as otherwise provided herein. Nothing herein shall affect the rights of Developer to repair, alter or construct improvements on the buildings on the Phase II Site unless such repair, alteration or improvement would impair the structural integrity and/or exterior appearance of said buildings. Nothing herein shall be deemed to prohibit work ordered to be performed by the City building official.

Section 12. Compliance with Laws . Developer shall comply with all applicable laws in connection with the development and use of the Phase II Site, including without limitation the CRL, and Fair Housing Act ( 42 U.S.C. § 3601, et seq., and 24 C.F.R. § 100.300, et seq.). Developer shall also comply with the Tax Regulatory Agreement. Developer is a sophisticated party, with substantial experience in the acquisition, development, financing, obtaining financing f or, marketing, and operation of affordable housing projects, and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the acquisition, development and operation of the Phase II Project and has obtained advice from any advisers of its own choosing in connection with this Agreement.

ARTICLE III

DUTY TO PREVENT HAZARDOUS MATERIAL CONTAMINATION
Section 1. Duty to Prevent Hazardous Material Contamination. During the development and operation of the Phase II Project, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Phase II Site and/or Phase II Project. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. Developer shall notify Authority and City, and provide to Authority and City a copy or copies, of any notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and Developer shall report to Authority and City, as soon as possible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment.

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(a) Governmental Requirements . For purposes of this Article III, “Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the County, City, or any other political subdivision in wh ich the Phase II Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over Authority, City, Developer or the Phase II Project. (b) For purposes of this Article III, the term “Hazardous Materials” means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, including the Riverside County Health Care Authority, the Regional Water Quality Control Board, the State of California (including the Depar tment of Toxic Substances Control), other state, regional or local governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a “hazardous waste,” “extremely hazardous waste,” o r “restricted hazardous waste” under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a “hazardous substance” under Sectio n 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley-Tanner Hazardous Substance Account Act), (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the Californi a Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (ix) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq. (42 U.S.C. §6903) or (x) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S. C. §9601, et seq . Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities below attainment levels identified in one or more of the enactments identified above as Governmental Requirements, including those product and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and residence of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of o ther comparable residential developments, or substances commonly ingested by a significant population living within the Phase II Project, including without limitation alcohol, aspirin, tobacco and saccharine.

ARTICLE IV
DAMAGE, DESTRUCTION; OBLIGATION TO REPAIR AND REBUILD
Section 1. Damage and Destruction Affecting Phase II Project - Developer’s Duty to Rebuild. If all or any portion of the Phase II Site, Phase II Development, and/or improvements thereon is damaged or destroyed by fire or other casualty, it shall be the duty of Developer to rebuild, repair or reconstruct said portion of the Phase II Site and/or the improvements in a timely manner which will restore it to Code compliance condition.
(a) In furtherance of the requirements of this Article IV, Section 1, Developer shall keep the construction on the Phase II Site insured by carriers at all times satisfactory to Authority against loss by fire and such other hazards, casualties, liabilities and contingencies as included within an all risk extended coverage hazard insurance policy, in an amount of the full replacement cost of the A.8.d
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constructions. In the event of loss, Developer shall give prompt notice to the insurance carrier and to Authority and City.
(b) If the Phase II Site is abandoned by Develop er, or if Developer fails to respond to Authority and/or City within thirty (30) days from the date notice is mailed by Authority and/or City to Developer that the insurance carrier offers to settle a claim for insurance benefits, Authority and/or City is authorized to collect and apply the insurance proceeds at Authority’s option either to restoration or repair of the Phase II Site.

Section 2. Variance in Exterior Appearance and Design . In the event the Phase II Project sustains substantial physical damage due to a casualty event, Developer may apply to City for approval to reconstruct, rebuild or repair in a manner which will provide different exterior appearance and lot design from that which existed prior to the date of the casualty.

Section 3. Time Limitation. Upon damage to the Phase II Site or the Phase II Project or other improvements, Developer shall be obligated to proceed with all due diligence hereunder, subject to City approval requirements, and commence reconstruction within two (2) months aft er the damage occurs and complete reconstruction within six (6) months after damage occurs or demolition and vacate within two (2) months, unless prevented by causes beyond their reasonable control, in which event reconstruction shall be commenced and completed at the earliest feasible time.

ARTICLE V

ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in this Regulatory Agreement may be enjoined, abated or remedied by appropriate legal proceeding by Authority or City.

This Declaration does not in any way infringe on the right or duties of City to enforce any of the provisions of the City Code including, but not limited to, the abatement of dangerous buildings.

City shall be deemed to be a third party beneficiary of this Regu latory Agreement. Except for City, there shall be no third party beneficiaries of this Regulatory Agreement.

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

Section 3. Right of Entry . In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the project area for the purpose of enforcing the California Vehicle Code , and the ordinances and other regulat ions of City, and for maintenance and/or repair of any or all publicly owned utilities. In addition, City has the right of entry at reasonable hours and upon and after reasonable attempts to contact Developer, on any lot to effect emergency repairs or mai ntenance which Developer has failed to perform.

Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the Phase II Site at reasonable hours to enforce compliance with this Regulatory Agreement which Developer has failed to perform. Authority shall A.8.d
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additionally have rights of entry as a landlord under the Authority Deed of Trust. This Section 3 is without limitation as to the exercise of police powers of City.

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

Section 5. Cumulative Remedies . The remedies herein provided f or breach of the covenants contained in this Regulatory Agreement shall be deemed cumulative, and none of such remedies shall be deemed exclusive.

Section 6. Failure to Enforce . The failure to enforce any of the covenants contained in this Regulatory Agreement shall not constitute a waiver of the right to enforce the same thereafter.

Section 7. Enforcement and Nonliability. City or Authority may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing th is Regulatory Agreement. However, neither Authority nor City will be subject to any liability for failure to affirmatively enforce any provision of this Regulatory Agreement.

ARTICLE VI

GENERAL PROVISIONS
Section 1. Covenant Against Partition. By acceptance of its interest in the Phase II Site, Developer shall be deemed to covenant for itself and for its heirs, representatives, successors and assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its right and interest in the interest being conveyed to Developer, or the burdens running with the land as a result of this Regulatory Agreement.

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

Section 3. Term. This Declaration shall run with and bind the interest of Developer in the Phase II Site, and shall inure to the owner(s) of any property subject to this Regulatory Agreement, his legal representatives, heirs, successors and assigns, and as provided in Article VI, Sections 2 and 3, be enforceable by City, for a term equal to the Affordability Period as defined in the DDAHA, provided; however, that the covenants regardi ng nondiscrimination set forth in Section 4 of Article II of this Regulatory Agreement shall remain in effect for perpetuity.

Section 4. Construction. The provisions of this Regulatory Agreement shall be liberally construed to effectuate its purpose of cr eating a uniform plan for the development and operation of rental housing available at Affordable Rent for Extremely Low Income Households, Very Low Income Households and, to the extent provided herein, Low Income Households in conformity with the Prescribed Income Levels. The article and section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.

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Developer shall be obligated by this Regulatory Agreement to c omply with the provisions hereof, as well as the Authority Deed. In the event of conflict, Developer shall comply with the most stringent requirements, in each case.

Section 5. Amendments. This Declaration may be amended only by the written agreement of Developer, Authority and City.

Section 6. Encroachments. None of the rights and obligations of Developer created herein shall be altered in any way by encroachments due to settlement or shifting of structures or any other cause. There shall be valid ease ments for the maintenance of said encroachments so long as they shall exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of Developer if said encroachment occurs due to the willful conduct of said Developer.

Section 7. Third Party Costs . Developer acknowledges and agrees to its obligation to pay and reimburse the Authority and City for all Third Party Costs incurred, as such term and provisions therefor are set forth in the DDAHA.

Section 8. Notices. Any notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either personally or by certified mail. Notice to Authority shall be made by certified mail to the Executive Director or his or her desi gnee at 14177 Frederick Street, Moreno Valley, California 92552-0805 (with a copy to Office of the City Attorney, 14177 Frederick Street, Moreno Valley, California 92552 -0805), and shall be effective upon receipt.

Notice to Developer shall be made by cert ified mail to Courtyards at Cottonwood II, L.P., a California limited partnership , 27700 Kalmia Avenue, Riverside, California 92101, and shall be effective upon receipt. Such addresses may be changed from time to time by notice in writing.

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DEVELOPER:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President

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Attachment No. 11
Authority Regulatory Agreement

4869-7726-2141v6/200382-0006
AUTHORITY:

MORENO VALLEY HOUSING AUTHORITY,
a public body, corporate and politic
By:

Mike Lee, Executive Director
ATTEST:

Jane Halstead, Authority Secretary
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, General Counsel

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CITY:

CITY OF MORENO VALLEY.
a California municipal corporation
By:

Mike Lee, City Manager
ATTEST:

City Clerk
APPROVED AS TO FORM:

STRADLING YOCCA CARLSON & RAUTH

Celeste Stahl Brady, Special Counsel
APPROVED AS TO FORM:

LAW OFFICES OF QUINTANILLA & ASSOCIATES

Steve Quintanilla, City Attorney

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Exhibit A to Attachment No. 11

4869-7726-2141v6/200382-0006

EXHIBIT A

LEGAL DESCRIPTION
Real property in the City of Moreno Valley, County of Riverside, State of California, described as follows:

PARCEL A OF THAT CERTAIN LOT LINE ADJUSTMENT NO. 1058, AS EVIDENCED BY A DOCUMENT RECORDED FEBRUARY 21, 2020 AS INSTRUMENT NO. 2020-0080445 OF OFFICIAL RECORDS, IN THE

OFFICE OF THE RECORDER OF THE CITY OF MORENO VALLEY, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS:

THOSE PORTIONS OF PARCEL 1 AND LOT "C" OF PARCEL MAP NO. 8073, IN THE CITY OF MORENO VALLEY, AS RECORDED IN PARCEL MAP BOOK 30, PAGE 20, RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, LYING WITHIN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 3 WEST, SAN BERNARDINO MERIDIAN, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHEAST CORNER OF SAID PARCEL MAP, SAID POINT BEING THE TRUE POINT OF BEGINNING:

THENCE SOUTH 00°00'00" EAST ALONG THE EAST LINE OF SAID PARCEL MAP, A DISTANCE OF 117.50 FEET TO A POINT BEING 25.00 FEET, MEASURED ALONG SAID EAST LINE, FROM THE

CENTERLINE OF SAID LOT C, SAID POINT IS THE BEGINNING OF A NON -TANGENT CURVE, CONCAVE TO THE NORTH, HAVING A RADIUS OF 100.00 FEET, WITH A RADIAL BEARING OF NORTH 00°00'00" WEST;
THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 16°23'22", A DISTANCE OF 28.60 FEET;
THENCE NORTH 73°36'38" WEST, A DIS TANCE OF 50.00 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE TO THE SOUTHEAST AND HAVING A RADIUS OF 45.00 FEET; THENCE WESTERLY ALONG THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 83°27'37", A DISTANCE OF 65.55 FEET;
THENCE NORTH 89°59'10" WEST, A DISTANCE OF 449.76 FEET, TO THE INTERSECTION WITH THE SOUTHERLY PROLONGATION OF THAT CERTAIN COURSE OF PARCEL 1 OF SAID PARCEL MAP, WHOSE COURSE BEARS NORTH 00°00'30" WEST, WITH A DISTANCE OF 100.00 FEET; THENCE NORTHERLY ALONG SAID PROLONGATION NORTH 00°00'30" WEST, A DISTANCE OF 125.00 FEET, TO A NORTHWEST CORNER OF PARCEL 1 OF SAID PARCEL MAP; THENCE SOUTH 89°59'10" EAST ALONG THE NORTH LINE OF SAID PARCEL 1, A DISTANCE OF 580.10 FEET TO THE TRUE POINT OF BEGINNING.

TOGETHER WITH T HAT PORTION OF VACATED MYRNA STREET, PURSUANT TO THAT CERTAIN DOCUMENT RESOLUTION NO. 2020 -73 RECORDED DECEMBER 02, 2020 AS INSTRUMENT NO. 2020-607957 OF OFFICIAL RECORDS.

APN: 482-161-026

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Attachment No. 12
Income Verification

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 12

INCOME VERIFICATION
Part I -- General Information

1. Project Location:

2. Landlord’s Name:

Part II -- Unit Information

3. Unit 4. Number of 5. Monthly 6. Number of
Number Bedrooms Rent Occupants

Part III -- Affidavit of Tenant
I, _______________, and I, _______________, as applicants for rental of an Apartment Un it at the above-described location, do hereby represent and warrant as follows:

A. (My/Our) gross income (anticipated total annual income) does not exceed thirty percent (30%) of the Median Income for the Riverside Primary Metropolitan Statistical Sites su ch income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understa nd that the applicable median income is $ . The following computation includes all income (I/we) anticipate receiving for the 12 -month period beginning on the date (I/we) execute a rental agreement for a Housing Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier. I/we certify that I/we constitute a “Eligible Household” as defined as [_________________].

Tenant(s)’ Initials
B. (My/Our) gross income (anticipated total annual income) does not exceed forty percent (40%) of the Median Income for the Riverside Primary Metropolitan Statistical Sites such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable median income is $_____. The following computation includes all income (I/we) anticipate receiving for the 12 month period beginning on the date (I/we) execute a rental agreement for a Housing Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier. I/we certify that I/we constitute a “Eligible Household” as defined as [_________________].

Tenant(s)’ Initials
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Income Verification

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C. (My/Our) gross income (anticipated total annual income) does not exceed forty-five percent (45%) of the Median Income for the Riverside Primary Metropolitan Statistical Sites such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) unde rstand that the applicable median income is $_____. The following computation includes all income (I/we) anticipate receiving for the 12 month period beginning on the date (I/we) execute a rental agreement for a Housing Unit or the date on which (I/we) wi ll initially occupy such unit, whichever is earlier. I/we certify that I/we constitute a “Eligible Household” as defined as [_________________].

Tenant(s)’ Initials
D. (My/Our) gross income (anticipated total annual income) does not exceed fifty percent (50%) of the Median Income for the Riverside Primary Metropolitan Statistical Sites such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Ho using and Community Development in the California Code of Regulations. (I/We) understand that the applicable median income is $_____. The following computation includes all income (I/we) anticipate receiving for the 12 month period beginning on the date (I/we) execute a rental agreement for a Housing Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier. I/we certify that I/we constitute a “Eligible Household” as defined as [_________________].

Tenant(s)’ Initials
E. (My/Our) gross income (anticipated total annual income) exceeds sixty percent (60%) but does not exceed sixty percent (60%) of the median income for the Riverside Primary Metropolitan Statistical Sites such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable median income is $_______. The following computation includes all income (I/we) anticipate receiving for the 12 -month period beginning on the date (I/we) execute a rental agreement for a Housing Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier. I/ we certify that I/we constitute a “Eligible Household” as defined as [_________________].

Tenant(s)’ Initials
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Income Verification

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1. All tenants must complete the following:

Monthly Gross Income
(All Sources of Income of All Adult Household Members Must be Listed)

Source Head of
Household
Co-Tenants Total
Gross amount, before payroll
deductions of wages, salaries,
overtime pay, commissions, fees,
tips and bonuses

Interest and/or dividends
Net income from business or from
rental property

Social security, annuities, insurance
policies, pension/retirement funds,
disability or death benefits received
periodically

Payment in lieu of earnings, such as
unemployment and disability
compensation, worker’s
compensation and severance pay

Alimony, child support, other
periodic allowances

Public assistance, welfare payments
Regular pay, special pay and
allowances of members of Armed
Forces

Other

Total:

Total x 12 _________________ = Gross Annual Household Income

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Income Verification

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Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; l ump sum payments such as inheritances, insurance payments (including payments under health and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses; educational scholarships paid directly to the studen t or educational institution; government benefits to a veteran for education; special pay to a serviceman head of family away from home and under hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the Eligible Household; Relocation payments under Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received pursuant to participation in the followi ng programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience.

2. This affidavit is made with the knowledge that it will be relied upon by the Landlord to determine maximum income for eligibility and (I/we) warrant that all information set forth in this document is true, correct and complete and based upon in formation (I/we) deem reliable and that the estimate contained in paragraph 1 of this Part III is reasonable and based upon such investigation as the undersigned deemed necessary.

3. (I/We) will assist the Landlord in obtaining any information or documents required to verify the statements made in this Part III and have attached hereto copies of federal income tax return for most recent tax year in which a return was filed (past two years federal income tax returns for self-employed persons).

4. (I/We) acknowledge that (I/we) have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of (my/our) agreement with the Landlord to rent the unit and will additionally enable the Landlord and/or the Moreno Valley Housing Authority to initiate and pursue all applicable legal and equitable remedies with respect to the unit and to me/us.
(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct.

Date Tenant

Date Tenant
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Income Verification

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INCOME VERIFICATION
(for employed persons)
The undersigned employee has applied for a rental unit located in a project financed under a multifamily housing program of the City of Moreno Valley and the Moreno Valley Housing Authority for persons of very low income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee’s current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.

Annual wages
Overtime
Bonuses
Commissions
Total current income
I hereby certify that the statements above are true and complete to the best of my knowledge.

Signature Date Title
I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment located in their project which has been financed under a multifamily housing program of the City of Moreno Valley and the Moreno Valley Housing Authority.

Signature Date
Please send to:

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Income Verification

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INCOME VERIFICATION
(for self-employed persons)
I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge.

Signature Date

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Attachment No. 13
Authority Loan Note

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ATTACHMENT NO. 13

AUTHORITY LOAN NOTE
________________, 2023 (“Date of Promissory Note”) $380,000.00 Moreno Valley, California
FOR VALUE RECEIVED , the undersigned COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership, (“Maker” or “Developer”), having its principal place of business at 27700 Kalmia Avenue, Riverside, California 92101, promises to pay to the order of the MORENO VALLEY HOUSING AUTHORITY , a public body , corporate and politic (“Payee” or “Authority”), at 14177 Frederick Street, Moreno Valley, California 92552 -0805, or at such other place as the holder of this Note from time to time may designate in writing, the principal sum of Three Hundred Eighty Thous and Dollars ($380,000.00) (“Original Principal Amount”), as well as additional amounts described in Section 1 below, together with interest on the unpaid principal amount at a rate equal to the rate of one percent (1%) simple interest per annum in lawful m oney of the United States of America (“Promissory Note”). This Authority Loan Note is delivered pursuant to that certain unrecorded Disposition, Development and Affordable Housing Agreement (Phase II:
9% Tax Credits 32 Housing Units) dated as of March 7, 2023 by and among Authority, the City of Moreno Valley, a municipal corporation (“City”), and Developer (“DDAHA”) in lawful money of the United States of America. The Authority Loan is evidenced by this Authority Loan Note and shall be governed by such p rovisions of the DDAHA (including without limitation the attachments thereto) as shall be applicable. All capitalized terms used herein shall have the meanings set forth therefor in the DDAHA.

1. Additional Amounts . The principal due under this Promissor y Note shall be increased by: (a) any “Reporting Amounts” (as defined in Article II, Section 3 of the Authority Regulatory Agreement; (b) an amount equal to one hundred fifteen percent (115%) of the amounts paid by Authority (and/or City) for insurance pr emiums or costs to repair and maintain the Phase II Development upon the failure by Developer to timely and fully provide insurance at the times and for the amounts provided therefor in the DDAHA; (c) any Cost Savings which become payable to City from time to time under Section 4.17 of the DDAHA; and (d) in the event an Audited Financial Statement shows an underpayment to Authority of five percent (5%) or greater of the amount paid to Authority for the corresponding Year, Developer shall pay to Authority: (i) Authority’s costs (including accountant and consultant fees, attorneys’ fees, and a reasonable estimation of the cost of staff time) incurred in connection with Authority’s audit of Developer, and (ii) an amount equal to ten percent (10%) of the shortfall.

2. Payments.
(a) Payments of Additional Amounts due pursuant to Section 1 hereof shall be due and payable as of the last day of the Year during which an obligation therefor first arises; (b) Excepting to the extent earlier times apply to the payment of Additional Amounts pursuant to paragraph (a) of this Section 2, payments under this Promissory Note shall be due and payable as follows: payments of the Applicable Percentage (ten percent (10%) and if the County PLHA Loan is funded, and fifty percent (50%) if it is not) of A.8.d
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Attachment No. 13
Authority Loan Note

4869-7726-2141v6/200382-0006
Residual Receipts payable on the April 15 following the issuance of the final certificate of occupancy by the City’s building official and each Year on or before April 15 thereafter until this Promissory Note has been satisfied in full. In a ddition, the entire amount of the Authority Loan together with accrued interest and any additional amounts which become owing hereunder shall be paid by maker to Payee as of the fifty sixth (56th) anniversary of the Date of the Promissory Note (which anniversary date constitutes the “Maturity Date”).
(c) Payments to Authority may, at the option of Payee, be accelerated, shall be due, and payable hereunder in the event of the occurrence of any default under the DDAHA, the Authority Deed of Trust, this Promissory Note, the City Covenants, or the Authority Regulatory Agreement, which default continues past such notice or cure period as may be applicable under the DDAHA.

Notwithstanding anything to the contrary contained herein, to the extent not sooner paid hereunder, payment of all amounts accrued as of the Maturity Date shall be due and payable as of the Maturity Date.

3. Other Loan Documents; Limitation Upon Refinancing . Repayment of this Promissory Note is secured by a deed of trust (“Authority Deed of Trust”) of this date executed by Maker for the benefit of Payee encumbering the property described in the Deed of Trust (“Phase II Site”).
(a) Developer may not process a cash out refinancing, withdrawal of equity, during the Affordability Period without the prior consent of the Authority (and City), which transfer is subject to the terms and conditions of the DDAHA, including without limitation whether in the good faith judgment of Payee, adversely affect payments (including without limitation the amount thereof) to Payee during the Affordability Period; any such refinancing without the Authority’s prior approval and consent constitutes a breach hereunder.

4. Prepayment. Maker shall have the right to prepay amounts owing under this Promissory Note at any time.

5. Due on Sale or Encumbrance . In the event of any Transfer (as defined in the DDAHA) of the Phase II Site, or any portion thereof or interest therein, Payee shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. As used herein, the term “Transfer” means and includes the direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or other alienation of the Phase II Site, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contr act, sales agreement or similar instrument affecting all or a portion of the Phase II Site, granting of an option to purchase any portion of or interest in the Phase II Site or any interest therein, or the lease of all or substantially all of the Phase II Site or of all or substantially all of the improvements located thereon. Transfer shall not include the sale, transfer, assignment, pledge, hypothecation or encumbrance by Developer’s Investor Limited Partner of its partnership interest to the extent perm itted by the DDAHA nor shall Transfer include the removal of any general partner of Developer by the Investor Limited Partner for cause and the replacement of such removed general partner by another person or entity in accordance with the terms of Develo per’s partnership agreement to the extent permitted by the DDAHA. “Transfer” shall not include a Transfer permitted in the DDAHA or the leasing of individual Housing Units on A.8.d
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Attachment No. 13
Authority Loan Note

4869-7726-2141v6/200382-0006
the Phase II Site so long as Trustor complies with the provisions of the City Covenants, the Authority Deed and the DDAHA relating to such leasing activity. Failure of Beneficiary to exercise the option to declare all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver of the right to exercise this option in the event of any subsequent Transfer.

6. Subordination to Multifamily Note . Developer and the Payee each makes the following representations and warranties to [name of lender’s agent: to be inserted], as Agent (“Agent”):
[to be revised based on Primary Loan documents]
“The indebtedness evidenced by this Promissory Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a [_______________________] (“Multifamily Note”) of even date herewith in the original principal amount of [approximately $__________] issued by COURTYARDS AT COTTONWOOD II, L.P. and payable to [ full entity name of Citibank t o be inserted] (“Senior Lender”), or order, to the extent and in the manner provided in that certain Subordination Agreement, dated as of _______________, 2023, between the payee of this Promissory Note, and the Senior Lender and the maker of the Promissor y Note (“Subordination Agreement”). The mortgage or deed of trust securing this Promissory Note is and shall be subject and subordinate in all respects to the Assignment of Rents, Security Agreement and Fixture Filing securing the rights and remedies of the payee and each subsequent holder of this Promissory Note under the mortgage or deed of trust securing this Promissory Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Promisso ry Note shall be deemed, by virtue of such holder’s acquisition of the Promissory Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the Subordinate Lender under the Subordination Agreement.”
In the event of an approved Transfer that includes the refinancing of a Primary Loan for an amount not in excess of the outstanding principal balance of the existing Primary Loan, on commercially reasonable terms and conditions available on the market a t such time, and reasonable and customary closing costs, Authority will execute an Intercreditor and Subordination Agreement of the indebtedness evidenced by this Promissory Note to such new, approved Primary Loan.

7. Miscellaneous.
(a) Governing Law . All questions with respect to the construction of this Promissory Note and the rights and liabilities of the parties to this Promissory Note shall be governed by the laws of the State of California.
(b) Binding on Successors . This Promissory Note shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Promissory Note. (c) Attorneys’ Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys’ fees, costs and expenses, incurred by Payee in co nnection with the enforcement of Payee’s rights under this Promissory Note, including, without limitation, reasonable attorneys’ fees, costs and expenses for A.8.d
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trial, appellate proceedings, out -of-court negotiations, workouts and settlements or for enforceme nt of rights under any state or federal statute, including, without limitation, reasonable attorneys’ fees, costs and expenses incurred to protect Payee’s security and attorneys’ fees, costs and expenses incurred in bankruptcy and insolvency proceedings su ch as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Payee in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted by Payee in connection with any such proceeding. (ii) Payee shall also be entitled to its attorneys’ fees, costs and expenses incurred in an y post-judgment proceedings to collect and enforce the judgment. This provision is separate and severable and shall survive the merger of this Promissory Note into any judgment on this Promissory Note.
(d) Entire Agreement. This Promissory Note and the r elevant provisions of the DDAHA constitute the entire agreement and understanding between and among the parties in respect of the subject matter of such agreements and supersede all prior agreements and understandings with respect to such subject matter, whether oral or written. (e) Time of the Essence . Time if of the essence with respect to every provision hereof.
(f) Waivers by Maker. Except as otherwise provided in any agreement executed in connection with this Promissory Note, Maker waives: presentme nt; demand; notice of dishonor; notice of default or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any action to collect any sums arising under this Promissory Note or in any proceeding against any of the rights or interests in or to properties securing payment of this Promissory Note.
(g) Non-waivers. No previous waiver and no failure or delay by Maker in acting with respect to the terms of this Prom issory Note or the Authority Deed of Trust shall constitute a waiver of any breach, default, or failure of condition under this Promissory Note, the Authority Deed of Trust or the obligations secured thereby. A waiver of any term of this Promissory Note, the Authority Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. In the event of any inconsistencies between the terms of this Promissory Note and the terms of any other document related to the loan evidenced by this Promissory Note, the terms of this Promissory Note shall prevail. (h) Non-recourse Liability of Developer . Notwithstanding anything to the contrary of this Promissory Note, neither Developer nor any of its partners shall be personally liable for any default, loss, claim, damage, expense or liability or any person and the sole remedy against Developer hereunder shall be limited to its interest in the Phase II Development. (signatures on following page)

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Attachment No. 13
Authority Loan Note

4869-7726-2141v6/200382-0006
DEVELOPER:

COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Courtyards LLC, a California limited liability
company, its managing general partner
By: Kingdom Development, Inc., a California
nonprofit public benefit corporation, its sole
member and manager
By: __________________________
William Leach, President
By: RBD Cottonwood, LLC, a California limited
liability company, its administrative general partner
By: Rancho Belago Developers, Inc.,
a California corporation, its sole member
and manager
By: ____________________________
James M. Jernigan, President

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Exhibit 14
Authority Loan Deed of Trust

4869-7726-2141v6/200382-0006
ATTACHMENT NO. 14
Recording Requested By and
When Recorded Mail To:

Moreno Valley Housing Authority
14177 Frederick Street
Moreno Valley, California 92552-0805
Attention: Executive Director

(Space above for Recorder’s use.)
(This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.)

AUTHORITY LOAN

DEED OF TRUST AND ASSIGNMENT OF RENTS
This AUTHORITY LOAN DEED OF TRUST AND ASSIGNMENT OF RENTS (“Deed of Trust”), dated as of [________], 2023, is executed by COURTYARDS AT COTTONWOOD II, L.P., a California limited partnership (“Trustor”), as trustor, whose address is 27700 Kalmia Avenue, Riv erside, California 92101 , in favor of FIRST AMERICAN TITLE COMPANY (“Trustee”), as trustee, for the benefit of the MORENO VALLEY HOUSING AUTHORITY, a public body, corporate and politic (“Beneficiary”), as beneficiary, whose address is 14177 Frederick Street, Moreno Valley, CA 92552-0805, Attention: Executive Director. Capitalized terms used herein and not otherwise defined herein shall have the meaning set forth in that certain Disposition, Development and Affordable Housing DDAHA (Phase II: 9% Tax Credi ts 32 Housing Units) as further described in Section 1.1(a) below) (“DDAHA”).

ARTICLE I

GRANT OF SECURITY

1.1 Grant of Security . FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt and a dequacy of which are hereby acknowledged, Trustor hereby irrevocably grants, transfers and assigns to Trustee, IN TRUST, WITH POWER OF SALE, AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Beneficiary, all rights, titles, interests, esta tes, powers and privileges that Trustor now has or may hereafter acquire in or to the following property and interests therein (collectively, the “Phase II Site”).
(a) The Phase II Site is located in the City of Moreno Valley, County of Riverside, State of California and is legally described in Exhibit A attached and fully incorporated.

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Exhibit 14
Authority Loan Deed of Trust