Agenda packet — National City City Council, February 6, 2024 (part 2 of 2)

24 administrative requirements contained in 24 C.F.R. Section 92.505 be amended and/or changed from time to time by HUD, that Borrower will comply with the terms and conditions of such changed and/or amended administrative requirements. The HOME and HOME -ARP funds shall be closed out in accordance with 2 C.F.R. Part 200, Subpart D, as required by 24 C.F.R. Section

92.507.

(h) Records and Reports. Borrower shall supply the Lender, annually, no later than June 30 th, of each year during the term of this Agreement, for the calendar year ending the immediately previous December 31 st, with such records and reports as are required and are requested by the Lender to aid in complying with the reports and record keeping provisions, terms and conditions of 24 C.F.R. §§92.508 and 92.509, as amended from time to time, and any and all other requirements of this Agreement. The records and reports include (to the extent applicable), but are not limited to the following:

(1) Amount of funds expended pursuant to this Agreement;

(2) Eligible tenant information, including yearly income verifications;

(3) Housing payments charged to resident tenants, to the extent applicable;

(4) On-site inspection results;

(5) Affirmative marketing records;

(6) Insurance policies and notices;

(7) Equal Employment Opportunity and Fair Housing records;

(8) Labor costs and records;

(9) An audited income and expense statement and balance sheet for Borrower;

(10) An audited income and expense statement , balance sheet and statement of cash flows for the Project;

(11) A management plan for the calendar year in which the report is prepared showing anticipated rental income, other income, expenses, anticipated repairs and replacements to the Project , timing of such repairs and replacements, insurance maintained on behalf of the Project, and such other matters as the Lender shall require, in the Lender’s sole discretion;

(12) Federal and State income tax returns for the calendar year, ending on the preceding December 31st;

(13) Annual budget of reserves for repair and replacement;

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25 (14) Annual certification and representation regarding status of al l loans, encumbrances and taxes;

(15) Annual statement regarding condition of the Property and Project and disclosing any known defects;

(16) A financial audit in accordance with section 2 C.F.R. Part 200 Subpart F if required by HUD pursuant to 24 C.F.R. Section 92.506;

(17) Residual receipts computation on the approved Lender form;

(18) A report or reports, certifying compliance with the terms and provisions of the Section 3 requirements, as set forth in this Agreement and certifying compliance with the provisions of federal law as it relates to Section 3, whether or not specifically set forth in this Agreement;

(19) Information on rents and occupancy of HOME and HOME-ARP Affordable Units to demonstrate compliance with 24 C.F.R. §92.252, including information regarding floating HOME and HOME -ARP Affordable Unit substitutions and filling vacancies so that the Project remains in compliance with HOME and HOME-ARP rental occupancy requirements; and

(20) Such other and further information and records as the Lender shall request in writing from Borrower.

NOTE: As to items ( 9), (1 0), and (12), drafts may be initially submitted if the final documents are not available at the stated deadline(s). However, final documents must be submitted when available.

Time is of the essence in supplying each and every report required to be supplied to the Lender. The parties agree that a fee of $25.00 per day shall be paid by Borrower to the Lender for each day that each report is delinquent. The parties agree that multiple fees may be charged at any one time, depending upon the number of reports and/or information that is delinquent.

The parties agree that a fee of $25.00 per day, per report and/or information is a reasonable estimation of the damages that will accrue to the Lender as a result of the failure of Borrower to timely submit the required information and/or reports and that said fees shall be treated as liquidated damages by the parties, in anticipation of the damages that will be incurred by the Lender as a result of a breach by Borrower. The parties further agree that it would be difficult, if not impossible, to determine the exact actual amount of damages suffered by the Lender in the event of a breach by Borrower in the reporting requirements of this Agreement. Notwithstanding the foregoing or anything to the contrary contained herein, the Lender shall give Borrower prior written notice of any report and/or information that Borrower has failed to provide the Lender

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26 pursuant to this Section and Borrower shall have thirty (30) days to provide such report and/or information to the Lender prior to the assessment of any liquidated damages.

(i) Monitoring of Project Activities. Borrower agrees to allow the Lender upon prior written notice and during regular business hours, such reasonable access to review and inspect Borrower’s activities under this Agreement as the Lender shall require to perform its monitoring duties under the Regulatory Agreement. The Lender shall monitor Borrower’s activities without liability for said inspection and review.

(j) Federal and State Requirements. The Borrower and the Project shall comply with all applicable portions of 24 C.F.R. Part 24, Subpart F. Borrower represents, warrants and agrees that, unless otherwise approved by the Lender, Borrower will fully comply, during the term of this Agreement, with any and all applicable HOME and HOME-ARP requirements including, but not limited to the requirements of 24 C.F.R. Part 92, 24 C.F.R. §§92.351 (Affirmative Marketing),

92.352 (Environmental Review), 92.353 (Displacement, Relocation and Acquisition Residential, Antidisplacement and Relocation Plan ), 92.354 (Labor), and 92.356 (Conflict of Interest).

Borrower further warrants, represents and agrees that should said Program requirements be changed by HUD, from time to time, that Borrower will comply with said changed and amended regulations if and t o the extent applicable. Notwithstanding the foregoing, the Lender has not imposed, and nothing in this agreement shall be construed as imposing, any independent prevailing wage requirements that are different from those imposed by applicable Federal or State law.

(k) Affirmative Marketing. Borrower shall, at all times during the term of this Agreement, comply with all of the provisions of 24 C.F.R. §92.351 and the affirmative marketing procedures adopted by the Lender, including, but not limited to, all requirements and procedures referenced in said 24 C.F.R. §92.351(b), amended from time to time. Borrower shall maintain records to verify compliance with the applicable affirmative marketing procedures and compliance. Such records are subject to inspection by th e Lender during regular business hours upon five (5) days written notice.

(l) Nondiscrimination, Equal Opportunity and Fair Housing Programs. Borrower shall comply with all applicable Federal requirements set forth in 24 C.F.R. part 5, subpart A. During the term of this Agreement, Borrower agrees as follows:

(1) Nondiscrimination and Equal Opportunity. Borrower shall comply with all applicable requirements of: The Fair Housing Act (42 U.S.C. §§3601- 19) and implementing regulations at 24 C.F.R. part 100 et seq.; Executive Order 11063, as amended by Executive Order 12259 (3 C.F.R., 1959-1963 Comp., p. 652 and 3 C.F.R., 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 C.F.R. part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. §§2000d- 2000d-4) (Nondiscriminat ion in Federally Assisted Programs) and implementing regulations at 24 C.F.R. part 1; the Age Discrimination Act of 1975 (42 U.S.C. §§6101-6107) and implementing regulations at 24 C.F.R. 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 C.F.R. part 8; section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. §1701u) and implementing

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27 regulations at 24 C.F.R. part 135; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 C.F.R., 1964- 1965 Comp., p. 339; 3 C.F.R., 1966- 1970 Comp., p. 684; 3 C.F.R., 1966-1970 Comp., p. 803; 3 C.F.R., 1978 Comp., p. 230; and 3 C.F.R., 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 C.F.R. chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 C.F.R., 1971-1975 Comp., p. 616 and 3 C.F.R., 1977 C omp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 C.F.R., 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 C.F.R., 1977 Comp., p. 393 and 3 C.F.R., 1987 Comp., p. 245) (Women’s Business Enterprise).

(2) Borrower will not discriminate against any employee, person, or applicant for employment and/or housing because of race, sexual orientation, gender identity, marital status, color, religion, sex, handicap, or national origin. Borrower will take affirmative action to ensure that applicants are employed and/or are housed, and that employees or applicants are treated during employment and/or housing, without regard to their race, sexual orientation, gender identity, marital status, color, religion, sex, handicap, or national origin. Such action shall include, but is not limited to the following: employment, upgrading, demotion, or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Borrower agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause.

(3) Borrower will, in all solicitations or advertisements for employees and housing placed by on or behalf of Borrower, state that all qualified applicants will receive consideration for employment without regard to race, sexual orientation, gender identity, marital status, color, religion, sex, handicap, or national origin.

(4) Borrower will cause the foregoing provisions to be inserted in all subcontracts for any work covered by this Agreement so that such provisions will be binding upon each subcontractor, provided that the foregoing provision shall not apply to contracts or subcontracts for standard commercial supplies of raw materials.

(5) Borrower hereby agrees to comply with the Title VII of the Civil Rights Act of 1964, as amended, the California Fair Employment Practices Act, and any other applicable Federal and State laws and regulations . The Lender will provide technical assistance and copies of the referenced programs upon request. 24 C.F.R. §92.350.

(6) All activities carried out by Borrower and/or agents of Borrower shall be in accordance with the requirements of the Federal Fair Housing Act. The Fair Housing Amendments Act of 1988 became effective on March 12, 1989. The Fair Housing Amendments Act of 1988 and Title VIII of the Civil Rights Act of 1968, taken together, constitute The Fair Housing Act.

The Act provides protection against the following discriminatory housing practices if they are based on race, sex, religion, color, handicap, familial status, or national origin: denying or refusing to rent housing, denying or refusing to sell housing, treating differently applicants for housing, treating residents differently in connection with terms and conditions, advertising a discriminatory housing preference or limitation, providing false information about the availability of housing,

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28 harassing, coercing or intimidating people from enjoying or exercising their rights under the Act, blockbusting for profit, persuading owner to sell or rent housing by telling them that people of a particular race, religion, etc. are moving into the neighborhood, imposing different terms for loans for purchasing, constructing, improving, repairing, or maintaining a home, or loans secured by housing; denying use or participation in real estate services, e.g., brokers’ organizations, multiple listing services, etc. The Fair Housing Act gives HUD the authority to hold administrative hearings unless one of the parties elects to have the case heard in U.S. District Court and to issue subpoenas.

Both civil and criminal penalties are provided. The Act also provides prot ection for people with disabilities. The following State of California Laws also govern housing discrimination: Fair Employment and Housing Act, Unruh Civil Rights Act of 1959, Ralph Civil Rights Act of 1976, and Civil Code Section 54.1.

(7) Equal Access. All of the eleven (11 ) floating HOME and HOME -ARP Affordable Units shall be made available without regard to actual or perceived sexual orientation, gender identity, or marital status. Borrower shall not inquire about the sexual orientation or gender identity of an applicant for or occupant of any of the eleven (11) floating HOME and HOME-ARP Affordable Units, for the purpose of determining eligibility for the housing or otherwise making such housing available. This prohibition on inquiries regarding sexual orientation or gender identity does not prohibit any individual from voluntarily self -identifying sexual orientation or gender identity.

(8) Disclosure Requirements . Borrower shall comply with the disclosure requirements and prohibitions of 31 U.S.C. §1352 and implementing regulations at 24 C.F.R. part 87; and the requirements for funding competitions established by the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3531 et seq.).

(m) Labor Requirements. Borrower represents and warrants that during the term of this Agreement that Borrower will comply with each and every provision and requirement contained within 24 CFR §92.354, as amended from time to time, to the extent applicable, and will pay not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. §§276a-276a-5), to all laborers and mechanics employed in the development of any part of the Project i n accordance with the terms and provisions of 24 CFR §92.354 and will comply with the overtime provisions, as applicable, of the Contract Work Hours and Safety Standards Act (40 U.S.C. §§327- 332). Prevailing wages need not be paid to “Volunteers” or for “Sweat Equity” as defined in 24 CFR §92.354(b) and (c). Furthermore, Borrower, the general contractor, and any and all subcontractors, shall pay prevailing wages for all work done with respect to the Project as required by Federal and California law.

(n) Lead Based Paint . Borrower represents and warrants that during the term of the Agreement that Borrower will comply with each and every provision and requirement contained within 24 C.F.R. §92.355, as amended from time to time, to the extent applicable.

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29 (o) Certification Concerning Debarment and Suspension. Borrower shall comply with the prohibitions at 2 C.F.R. Part 2424 on the use of debarred, suspended, or ineligible contractors and participants. Borrower represents, warrants and hereby certifies, pursuant to 24 C.F.R. §92.357, that Borrower will not use a contractor that has been debarred and or suspended, nor that is proposed for debarment, declared ineligible or voluntarily excluded from partici pation in the Project, which is the subject matter of this Agreement. Borrower agrees to execute such further certification(s) required by the Lender and/or HUD including, if necessary, that certification included as Appendix B of C.F.R. Part 24, to verify the certification made in this Section 2.1(p).

(p) Flood Insurance. Borrower represents, warrants, and certifies, pursuant to 24 C.F.R. Part 55, that no real property which is the subject of this Agreement, is located within a Flood Plain or Flood Hazard Zone or Area, as indicated on a FEMA Map; or that the Property is located within a community participating in the National Flood Insurance Program and Borrower agrees to purchase and maintain flood insurance for the duration of the term of this Agreement.

(q) Fire Protection and Safety . Borrower represents and warrants that Borrower will comply with all requirements and regulations of the Fire Administration Act of 1992 and the Federal Fire and Prevention Control Act. Borrower will use and install all fire and safety related equipment pursuant to the National Fire Protection Association standards.

(r) Accessibility Standards. The Project and the HOME and HOME-ARP Affordable Units shall meet the accessibility requirements of 24 C.F.R. part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. §794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. §§12131- 12189) impleme nted at 28 C.F.R. parts 35 and 36, as applicable. The Project shall also meet the design and construction requirements of 24 C.F.R.

Section 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). Borrower agrees to comply with all of the provisions of 24 C.F.R. Section 92.251, whether or not contained in this Section. Borrower represents and warrants that Borrower will comply with all federal, state and local requirements and regulations that are applicable to the Project concerning access to the units by the disabled and handicapped persons, including, but not limited to, Section 504 of the Rehabilitation Act of 1973 and those requirements of the HOME and HOME -ARP Programs which require that 5% of the units ( five (5 ) of the Affordable Units) shall be fully handicap accessible and 2% of the units (two (2) of the Affordable Units) shall incorporate features for the visually and hearing impaired, which units may be designed to serve both accessibility and visual and hearing requirements in one unit.

(s) Section 3 Requirements . Borrower agrees to comply with and effectuate the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ( “Section 3”), implemented at 24 C.F.R. Part 75. The purpose of Section 3 is to ensure that economic opportunities, most importantly employment, generated by HUD financial assistance shall be directed to low - and very low -income persons, particularly those who are recipients of government assistance for housing or residents of the community in which Federal assistance is spent. Consistent with existing federal, state and local laws and regulations, Borrower and its subcontractor shall ensure that training and employment opportunities generated by HUD financial assistance or arising in connection with housing

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30 rehabilitation, housing construction, or other public construction projects are provided to Section 3 workers, and provided in the order of priority set forth at 24 C.F.R. Part 75.9 and Part 75.19.

(t) Drug Free Workplace. Borrower shall comply with all applicable State and Federal rules, laws and regulations to ensure a drug free workplace at all times during the term of this Agreement, including the Drug-Free Workplace Act of 1988 (41 U.S.C. 701, et seq.) and HUD’s implementing regulations at 2 C.F.R. Part 2429. Further, Borrower shall incorporate such federal provisions as are required in each contract or subcontract that Borrower enters into in connection with the Project.

(u) Lobbying Prohibition. Borrower hereby certifies to the Lender, under penalty of perjury, under the terms of applicable federal law, that at all applicable times before, during and after the term of the Agreement, that:

(i) No Federal appropriated funds have been paid or will be paid, by or on behalf of Borrower, to any person for influencing or attempting to influence an officer or employee of Congress, or an employee of a Member of Congress in connection with the awar ding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan or cooperative agreement;

(ii) If any funds other than Federal appropriated funds have been paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan or cooperative agreement, Borrower will complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions;

(iii) Borrower will require that the above stated language be included in the award documents for all subawards at all tiers, including subcontracts, subgrants, loans, contracts, and cooperative agreements concerning the subject matter of this Agreement; and

(iv) Further, Borrower and all subrecipients, at all times, shall certify compliance with the provisions of 31 U.S.C. §1352 and any and all terms and conditions of the Byrd Anti-Lobbying Amendment, as amended from time to time.

Section 2.2 - Commencement of Construction and Compliance with Plans and Specifications. Not later than thirty (30) days following the Closing, Borrower shall commence construction of the Project and shall continue such construction diligently and without substantial delay in a good and workmanlike manner. Borrower will complete the Project substantially in accordance with the plans and specifications approved by Lender , including any additional specifications prescribed by Lender at or before Closing, and in compliance with all requirements of governmental authorities having or asserting jurisdiction. Completion of Construction of the Project shall be achieved on or before December 31 , 2026. No material change shall be made in the plans and specifications approved by Lender, including any additional specifications prescribed by Lender ,

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31 without the Lender’s prior written consent. For purposes of this Section, “material change” means changes which, in aggregate, increase or decrease the construction costs by One Hundred Thousand Dollars ($100,000.00) or more.

Section 2.3 - No Purchase Under Conditional Sales Agreements, Etc . Except for leased laundry equipment, solar power equipment and cable television or satellite dish equipment or telecommunications equipment and except in connection with the lease for commercial space, no supplies, materials, equipment, fixtures, carpets, appliances, or any part of the Project shall be purchased or installed under any conditional sales agreement, lease or under any other arrangement wherein the right is reserved or accrues to anyone to remove or to repossess any such items. It is expressly agreed that all such items shall be part of the Project.

Section 2.4 - Stoppage of Work by Lender. Lender or the Lender’s agents shall have the right at all times to enter upon the Project during the period of construction. If the work of construction is not in material conformance with the plans and specifications , the Lender shall have the right to stop the work and order the replacement of any unsatisfactory work theretofore incorporated into the Project, and to instruct fund control to withhold all disbursements from the accounts until the Lender is satisfied with the work. If the work is not made satisfactory to Lender , in the Lender’s reasonable discretion, within thirty (30) calendar days from the date o f stoppage by Lender , the same shall constitute a default hereunder. If any unsatisfactory work is such that it is not capable of being cured within thirty (30) calendar days and Borrower , in Lender’s reasonable discretion, (i) initiates corrective action within said period, and (ii) diligently and in good faith works to correct the unsatisfactory work as soon as possible, then Borrower shall have such additional time as Lender determines, in the Lender’s reasonable discretion, is necessary to cure the unsatisfactory work prior to exercise of any remedies by Lender.

Section 2.5 - Cessation of Work, Completion by Lender. Subject to force majeure delays, should the work of constructing the Project cease for a period of sixty (60) consecutive days, specifically including stoppage by Lender in accordance with Section 2.3 hereof, or should said work for any reason whatsoever not progress continuously in a manner satisfactory to Lender, then Lender may, at the Lender’s option and without notice declare Borrower to be in default hereunder, and Lender may thereupon, should the Lender so elect, take possession of the Project and let contracts for the completion of the Project and pay the cost thereof, plus a fee of fifteen percent (15%) of the cost to complete the Project for supervision of construction, disbursing all or any parts of the Housing Authority Loan and HOME and HOME -ARP Loan for such purposes; and should the cost of completing the Project plus such fee, exceed the undisbursed aggregate original principal amount of the Housing Authority Loan and HOME and HOME-ARP Loan, then the amount of such excess may be expended by Lender , in which event such amount shall be considered an additional loan to Borrower, and the repayment thereof, together with interest thereon at the rate provided in the Housing Authority Note, shall be secured by the Lender Deed of Trust and shall be repaid within thirty (30) days after the completion of the Project , and Borrower agrees to pay the same In addition to the specific rights and remedies hereinabove mentioned, the Lender shall have the right to avail itself of any other rights or remedies to which the Lender may be entitled under any existing law or laws.

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32 Section 2.6 - Mechanic’s Liens and Notices to Withhold. In the event of the serving upon the Lender of a notice to withhold or the recording of a mechanic ’s lien pursuant to Division 3, Part 4, Title 15 of the Civil Code of the State of California for which Borrower has not provided Lender with a bond or other security, the Lender may summarily refuse to honor any requests for payment pursuant to this Agreement. In the event Borrower fails to furnish Lender with a bond or other security causing such notice or lien to b e released within twenty (20) days after the service upon or recording thereof, such failure shall at the option of Lender constitute a default under the terms of this Agreement.

Section 2.7 - Involvement of Lender in Legal Proceedings . Lender shall have the right to commence, to appear in, or to defend any action or proceeding purporting to affect the rights or duties of the parties hereunder or the payment of any funds in connection with the Housing Authority Loan or HOME and HOME -ARP Loan and to pay out of funds not yet disbursed, necessary expenses, employ counsel and pay its fees, all of which the undersigned, jointly and severally, agree to repay to Lender upon demand. Provided, however, such costs and expenses shall not be due and owing to Lender, if they are incurred as a result of the breach of the Agreement by Lender or the Lender’s negligence or willful misconduct.

Section 2.8 - Books and Records . Borrower shall require that the general contractor maintain complete and accurate books and records showing all of the income and disbursements made in connection with the Project, and such books and records shall be available for inspection and copy by Lender upon request and during regular business hours.

ARTICLE III

Miscellaneous Provisions

Section 3.1 - Governmental Requirements Superior. All provisions of this Agreement and all the other documents relating to the Housing Authority Loan or HOME and HOME-ARP Loan shall be subject and subordinate to any and all applicable federal, state and local statutes, regulations and ordinances and shall be subject to modification to comply therewith.

Section 3.2 - Notices. All notices under this Agreement shall be in writing and sent (a) by certified or registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be effective upon receipt (or refusal to accept delivery). All notices shall be delivered to the following addresses or such other addresses as changed by any party from time to time by written notice to the other parties hereto:

Lender: Housing Authority of the City of National City
1243 National City Blvd.

National City, CA 91950
Attn: Executive Director

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33 Borrower: Union Tower One LP
c/o Wakeland Housing and Development Corporation
1230 Columbia Street, Suite 950
San Diego, CA 92101
Attn. CEO and President

With copies to: NCPA Union Tower One, LLC
2323 D Avenue
National City, CA 91950
Attn: CEO

Borrower’s limited partners: Hudson Union Tower LP
Hudson-FM SLP LLC
c/o Hudson Housing Capital LLC
New York, NY 10111
Attention: General Counsel

with a copy to: Holland & Knight LLP
10 St. James Avenue, 12th Floor
Boston, MA 02116
Attn: Dayna M. Hutchins, Esq.

Section 3.3 - Severability. If any provision of this Agreement is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this Agreement and the remaining provisions shall continue in full force and effect.

Section 3.4 - Nonwaiver of Lender ’s Rights . No right, remedy, or power of Lender in this Agreement shall be deemed to have been waived by any act or conduct on the part of Lender or by any failure to exercise or delay in exercising such right, remedy, or power. Every such right, remedy or power of Lender shall continue in full force and effect until specifically waived or released by an instrument in writing executed by Lender.

Section 3.5 - Entire Agreement. This Agreement and the other loan documents contain the entire understanding between the parties concerning the subject matter contained herein . There are no representations, agreements, arrangements or understandings, oral or written, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed and/or referred to herein.

Section 3.6 - Recitals Incorporated. The Recitals to this Agreement are hereby incorporated in this Agreement by this reference.

Section 3.7 - Construction of the Agreement . The provisions contained in this Agreement shall not be construed in favor of or against either party but shall be construed as if both parties contributed equally to its preparation. This Agreement shall be construed in accordance with the laws of the State of California.

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34 Section 3.8 - Lender Not Liable for Acts of Omissions of Borrower or Others. Lender shall in no way be liable for any acts or omissions of Borrower, any agent or contractor employed by Borrower, or any person furnishing labor and/or materials used in or related to the construction of the Project.

Section 3.9 - Time of the Essence. Time is of the essence of this Agreement and of each and every provision hereof. The waiver by Lender of any breach or breaches hereof shall not be deemed, nor shall the same constitute, a waiver of any subsequent breach or breaches.

Section 3.10 - Assignment. Borrower shall not assign Borrower’s rights nor delegate Borrower’s duties under this Agreement without the prior written consent of Lender (except in connection with Permitted Transfers). Any attempt at the assignment or delegation in violation of this section shall be void. Lender shall have full right and authority to assign all or a part of the Lender’s rights and delegate all or a part of the Lender’s duties under this Agreement.

Section 3.11 - Approvals, Consents and Other Determinations. Unless otherwise provided, in any approval, consent, or other determination by Lender or Borrower required under this Agreement or any of the other loan documents evidencing and/or securing the Housing Authority Loan or HOME and HOME-ARP Loan, Lender and Borrower shall act in good faith and without delay.

Section 3.12 - Participation. Borrower shall cause the fact that the Lender and the U.S. Department of Housing and Urban Development have provided funds to the Project to be referenced in all project designation placards placed on the Project site or other sites, as approved in advance, by the Lender. The design, content and format of the project placards are subject to the written approval of the Lender and shall provide that “This project is funded in part with HOME Investment Partnerships Grant ( HOME) funds and HOME American Rescue Plan Program (HOME-ARP) funds provided to the City of National City by the U.S. Department of Housing and Urban Development (HUD) and administered by the Community Development Commission- Housing Authority of the City of National City.” The Lender, at the Lender’s sole option, reserves the right to request, in writing, that the references to the participation of the Lender in the Project not be included in any, or all, advertisements, press releases, brochures, information sheets, and/or project designation placards.

Section 3.13 - Counterparts. This Agreement may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same Agreement. The parties agree that each such counterpart is an original and shall be binding upon all the parties, even though all of the parties are not signatories to the same counterpart.

Section 3.14 - Waiver and Amendment . No provision of this Agreement , or breach of any provision, can be waived except in writing. Waiver of any provision or breach shall not be deemed to be a waiver of any other provision, or of any subsequent breach of the same or other provision.

Except as otherwise provided herein, this Agreement may be amended, modified or rescinded only in writing signed by Borrower and the City Manager of National City.

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36 HOUSING AUTHORITY:

Community Development Commission-Housing Authority of the City of National City

By:______________________________________ Dated: February __, 2024 Benjamin A. Martinez, Executive Director

CITY:

City of National City

By:______________________________________ Dated: February __, 2024 Benjamin A. Martinez, City Manager

Approved as to form:

By:______________________________________
Barry J. Schultz, City Attorney

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Exhibit “A”

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1 No Fees per Government Code 6103 ]
RECORDING REQUESTED BY: ]
National City Housing Authority ]
]
]
]
WHEN RECORDED MAIL TO: ]
National City Housing Authority ]
Attention: Executive Director ]
1243 National City Boulevard ]
National City, CA 91950 ]

AFFORDABLE HOUSING DENSITY BONUS AGREEMENT
(Union Tower)

THIS AFFORDABLE HOUSING DENSITY BONUS AGREEMENT (“Agreement”) is dated as of the __ day of February, 2024, by and among the City of National City (“City”), Union Tower One LP, a California limited partnership (“Developer”), and SDBTC Family Housing Corp.

Three, a California corporation (“Fee Owner”).

WHEREAS, the Fee Owner is the owner of that certain real property generally located at 2313 F Street, in the City of National City, County of San Diego, more particularly described in Exhibit “A” attached hereto (“Property”); and

WHEREAS, concurrently herewith, Developer is acquiring a leasehold interest in the Property from the Fee Owner by entering into that that certain Ground Lease between Fee Owner and the Developer, a memorandum of which is being recorded concurrently herewith in the Official Records of San Diego County (“Ground Lease”); and

WHEREAS, the General Plan and Zoning Ordinance of National City permits construction of the ninety-four (94) housing units on the Property (“Development”); and

WHEREAS, pursuant to Government Code section 65915, and Sections 18.48.030, et seq. of the National City Municipal Code, the Developer has proposed to construct and restrict the rent and occupancy of ninety-four (94) residential dwelling unit, ninety-three (93) of which will be referred to in this Agreement as “Affordable Units” and the remaining unit is the manager’s unit.

The Affordable Units will be affordable to low-income and moderate -income households in exchange for four (4) incentives and concessions as follows:

1. Five foot side exterior setback from new lot line;

2. Relief from private open space provisions-No private open space;

3. Relief from balcony provisions - No balconies; and

4. Relief from unit storage requirement

(the “Incentives and Concessions”)

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2 WHEREAS, This Agreement will serve to memorialize Developer’s obligation to provide the ninety-three (93)Affordable Units, the time frame for the construction and occupancy of the Affordable Units and the restriction of the Affordable Units by the recordation of this Agreement assuring affordability for a total of fifty -five (55) years measured from the issuance of final inspection approval for the Development.

NOW, THEREFORE, in consideration of the foregoing and of the mutual terms and covenants hereinafter set forth and other good and valuable consideration, the City , Fee Owner and Developer agree as follows:

1. Acknowledgement of Incentives. Developer acknowledges and agrees that Developer is receiving the Incentives and Concessions pursuant to and in accordance with the requirements of Government Code 65915 and is not receiving an increase in density beyond what is permitted by the City’s development and zoning code.

2. Developer Covenants. Pursuant to and in consideration of the Incentives and Concessions, Developer hereby agrees and covenants on behalf of itself and its successors and assigns, and each successor in interest to the Property, that at all times during the term of this Agreement thirty-six (36) one-bedroom, twenty (20) two -bedroom and nineteen (19) three -bedroom residential dwelling units on the Property shall be rented and occupied as the Low Income Units, (as defined in Section 3(b), below), and nine (9) one -bedroom, four (4) two- bedroom, and five (5) three - bedroom residential dw elling units on the Property shall be rented and occupied as Moderate Income Units (as defined in Section 3(b), below) as set forth in this Agreement . As used herein the term “Affordable Units” shall refer to the residential dwelling units on the Property which are held available strictly in accordance with the terms and conditions set forth in this Agreement.

3. Affordability Restrictions.

(a) Area Median Income. As used herein, “Area Median Income” shall mean the area median income, as adjusted for family size, for San Diego County, established periodically by the California Department of Hous ing and Community Development (“ HCD”) and published in the California Code of Regulations. In the event HCD ceases to publish an established Area Median Income as aforesaid, the City may, in its sole discretion, use any other reasonably comparable method of computing Area Median Income.

(b) Occupancy Restrictions. During the term of this Agreement, the Affordable Units shall be occupied by Low Income and Moderate Income households. Low Income household means a household whose income does not exceed the low income limits applicable to San Diego County, adjusted for household size, as published annually by HCD , earning at or below eighty percent (80%) of the Area Median Income. Moderate Income household means a household whose income does not exceed the median income limits applicable to San Diego County, adjusted for household size, as published annually by HCD, earning at or below one hundred twenty percent (120%) of the Area Median Income.

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3 (c) Rent Amount. During the term of this Agreement : (i) the monthly rental rate for each Low Income Unit (which shall include a utility allowance based on the utility allowance schedules published annually by the Community Development Commission-Housing Authority of the City of National City) shall be set consistent with the rents as determined by the California Tax Credit Allocation Committee. The imputed household size for the Affordable Unit shall be equal to the number of bedrooms in the unit plus one. For example, the rent for a one- bedroom Affordable Unit shall be calculated using fifty percent (50%) of the Area Median Income for a 2- person household.

4. Restrictions. The following restrictions shall also be applicable to the Affordable Units:

(a) No Relationship With Developer . No Affordable Unit shall be occupied or leased to Developer or any relative (by blood or marriage) of Developer or any person employed by Developer or of any individuals who are members, principals, executives, directors, partners or shareholders of Developer or in any entity having an ownership in Developer or in the Property.

(b) No Full-Time Students. Subject to provisions of applicable federal, state, and local law (including without limitation fair housing laws), no Affordable Unit shall be occupied or leased to any household comprised exclusively of persons who are full-time students, unless such persons are eligible to file a joint federal income tax return and all such persons reside in the Affordable Unit. The term “full -time student” shall be defined as any person who will be or has been a full -time student during five calendar months of the calendar year in question at an educational institution (other than a correspondence school) with regular faculty and students.

(c) No Student Dependents . Notwithstanding the provisions of section 4(b), and subject to applicable federal, state, and local laws (including without limitation fair housing laws), no Affordable Unit shall be occupied or leased to any student dependent as defined in the U.S.

Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the same unit.

(d) No Owners of Real Property . No Affordable Unit shall be occupied or leased to any person or any household comprised of one or more persons who own real property.

(e) Liquid Asset Limitation . No Affordable Unit shall be occupied or leased to any person or household holding, directly or indirectly, liquid assets whose aggregate value exceeds, at the time of determination of eligibility, one hundred ten percent (110%) of the then -current annual Area Median Income for Low Income households and one hundred fifty percent (150%) Area Median Income for Moderate Income households . As used herein, the term “liquid assets” refers to cash and assets which are readily convertible to cash within a reasonable period, including but not limited to savings and checking accounts, certificates of deposit of any term, marketable securities, money market and similar accounts, mutual fund shares, and insurance policy cash values. The term “liquid assets” shall not include retirement funds which are not readily accessible or which cannot be accessed by the tenant without the tenant incurring a penalty.

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4 (f) Income of Co -Tenants. The income of all co -tenants and/or occupants shall be taken into account in determining whether a tenant or prospective tenant meets the requirements of this Agreement.

(g) Eligible Tenants - Increased Income. If as a result of the annual recertification procedure described in Section 7 below any household which was previously determined to be eligible to occupy an Affordable Unit is determined to be ineligible as a result of increased income or assets, the City will provide written notification thereof, and Developer shall have one hundred eighty days (180) from the date of notification to take all reasonable steps to pursue eviction of the ineligible household. If Developer fails to act within the one hundred eighty day (180) period, the City shall require payment of a fee by Developer, provided that no fee shall be payable so long as Developer is diligently pursuing eviction of the ineligible household by appropriate proceedings.

Under this fee requirement, the ineligible tenant residing in the Affordable Unit shall pay the full market rate rent, and Developer shall pay the difference between the affordable rent and the full market rate rent, as determined by the City , to the City. The period of fee payment shall in no event exceed a period of six (6) months, at which time Developer’s failure to provide the Affordable Unit to a household eligible hereunder shall constitute a material default under this Agreement. Notwithstanding the foregoing, w hen a household occupies a unit subject to a regulatory agreement (“TCAC Regulatory Agreement”) by and between Developer and the California Tax Credit Allocation Committee pursuant to Section 42 of the Internal Revenue Code, such household shall have its rent increased or shall be evicted as a result of such tenant being over income only as and when allowed by such TCAC Regulatory Agreement or by Federal law, including 26 U.S.C. §42. In the event of a conflict between the over income regulations of this Agreement and the TCAC Regulatory Agreement, the TCAC Regulatory Agreement provision shall apply.

5. Term. Pursuant to Government Code Section 65915, this Agreement shall be effective on the date of its recordation and shall remain in force until the date that is fifty -five (55) years from the date of issuance of the certificate of occupancy for the Development.

6. Deed of Trust.

(a) Execution and Recordation. Developer shall, concurrently with the execution of this Agreement, execute, acknowledge and record a deed of trust on the Property ensuring timely performance of the obligations set forth in this Agreement (“Deed of Trust”). The Deed of Trust shall be subordinated to the construction deed(s) of trust and/or permanent financing in favor of institutional lenders, as approved by the City Manager. The subordination shall be upon such terms and conditions and for such periods of time as the City Manager may approve to protect the provision of affordable housing as required by this Agreement. The City shall reconvey the Deed of Trust following the expiration of the term of this Agreement.

(b) Foreclosure on the Property. In the event of a foreclosure on the Property which eliminates the Deed of Trust, the new owner, upon five (5) days written notice from the City, shall:
(i) execute, acknowledge and deliver to the City an assignment and assumption of this Agreement in a form as approved by the City, in its reasonable discretion, for recordation; (ii) execute, acknowledge and deliver to the City a deed of trust, in a form as approved by the City, in its

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5 reasonable discretion, to be recorded against the Property, in a lien priority immediately junior to the assignment and assumption of this Agreement which will secure the performance of this Agreement; and (iii) reimburse the City for all of its attorneys’ fees and costs in connection with the foregoing, including all costs, attorneys’ fees, and expert witnesses fees incurred by the City in obtaining compliance by the new owner, including those incurred in litigation, if any.

7. Verification of Eligibility. No Affordable Unit shall be rented to a prospective tenant or occupied by any person unless and until the City, through its designated staff, has verified that the prospective tenant or occupant is eligible and that affordable rents will be charged in accordance with the criteria set forth in this Agreement. Developer and/or its successor in interest shall ensure that all eligibility and rent criteria are met during the term of the Agreement. Annually, on the anniversary of the initial certification of compliance, as determined by the City, during the term of this Agreement, Developer or its successor in interest shall certify to the City that the Affordable Units are being occupied by eligible tenants. Said certification shall be on forms acceptable to the City.

8. Maintenance Standards. During the term of this Agreement, Developer shall maintain the Affordable Unit s and the Property in a condition that satisfies the more stringent of (a) the requirements of the applicable local codes or (b) the United States Department of Housing and Urban Development’s Uniform Physical Conditions Standards . The City shall have the right to inspect the Affordable Unit s and the Property prior to initial occupancy and periodically during the term of this Agreement, upon three busi ness days’ notice to Developer. The City shall have the right to disclose results of those inspections to the appropriate enforcement authorit ies. Any deficiencies in the physical condition of the Affordable Unit s shall be corrected by Developer at Developer’s expense within thirty (30) days of the identification of such deficiency by the City and delivery of written notice of the same to Developer . Failure to maintain the unit(s) and the Property in compliance with this section shall constitute a breach of this Agreement and subject the Developer to damages as set forth in Section 12 of this Agreement.

9. Interpretation and Construction. If any provision of this Agreement or the application thereof to any person or circumstance is found to be invalid, the remainder of the provisions of this Agreement and the application of such provisions to persons or circumstances, other than those as to which it is found to be invalid, shall not be affected thereby. Nothing contained herein shall be deemed compliance with or waiver of any provision of law or conditions of approval except as expressly stated herein.

10. Indemnity. Developer agrees to indemnify, defend and hold harmless the City, the Community Development Commission-Housing Authority of the City of National City, and any and all of their respective councilmembers, commissioners, members, officers, agents, servants and employees (the “Indemnitees”) from and against all claims, liens, claims of lien, losses, damages, costs, and expenses, whether direct or indirect, arising in any way from this Agreement, including the construction, sale, rental or operation of the Development, the Property and/or any of the units, or from the default by Developer in the performance of its obligations under this Agreement; provided, however, that Developer shall not be required to indemnify, defend or hold harmless any of the Indemnitees from claims, losses, damages, costs and expenses related to the sole negligence or willful misconduct of the Indemnitees.

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6 12. Agreement Binding on Successors. The terms, covenants and conditions of this Agreement shall apply to, and shall bind the parties hereto and any successors or assignees . Developer shall not sell, transfer or otherwise dispose of the Property, any portion thereof, or any interest therein unless the proposed transferee shall have executed and delivered to the City an express written assumption of all of Developer’s obliga tions under this Agreement, on a form reasonably acceptable to the City. Upon assignment and assumption by a successor entity, as approved by the City, Developer shall be released from all prospective liability and responsibility under the terms of this Agreement. Fee Owner and Developer each agrees that all of its obligations hereunder shall constitute covenants, which shall run with the land and shall be binding upon the Property and upon every person having any interest therein at any time and from time to time during the term of this Agreement. Further, Fee Owner and Developer each agrees that, if a court of competent jurisdiction determines that the obligations set forth herein do not qualify as covenants running with the land, they shall be enforced as equitable servitudes . Any sale or conveyance of the Property shall be made subject to this Agreement.

13. Damages; Enforcement; Remedies; Security.

(a) Standing; Equitable Remedies; Remedies Cumulative. Developer expressly agrees and declares that the City shall be the proper party to, and shall have standing to, initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the provisions hereof and/or to recover damages for any event that is expressly stated to be a material default hereunder and which event remains uncured following sixty (60) days’ written notice to Developer from the City (or up to one hundred twenty (120) days after notice, if actions to correct the material default have been timely initiated and are, in the reasonable opinion of the City, being diligently pursued), notwithstanding the fact that such damages or the detriment arising from such a material default that remains uncured as aforesaid may have actually been suffered by some other person or by the public at large. Further, Developer expressly agrees that injunctive relief and specific performance are proper pre-trial and/or post-trial remedies hereunder to assure compliance with this Agreement.

Nothing in this Section and no recovery by the City shall restrict or limit the rights or remedies of persons or entities other than the City, against Developer in connection with the same or related acts by Developer, provided that Developer shall not be subject to duplicate awards or recoveries.

The remedies set forth in this Section are cumulative and not mutually exclusive, except to the extent that their award is specifically determined to be duplicat ive by final order of a court of competent jurisdiction. Further, the award of damages hereunder shall not bar the exercise of police power or other governmental powers, or the pursuit of criminal, civil or administrative penalties by the City in connecti on with any material default under this Agreement that remains uncured as aforesaid. Developer acknowledges that a material default under this Agreement that remains uncured may constitute a violation of state law.

(b) Remedies At Law For Breach Of Rental Restrictions. In the event of any material default under the provisions hereof that remains uncured following thirty (30) days written notice to Developer from the City (or up to one hundred sixty (60) days after notice, if actions to correct the material default have been timely initiated and are, in the reasonable opinion of the City, being diligently pursued) regarding restrictions on rental of the Affordable Unit s, at the sole option of the City, the City shall be entitled to the following remedies at law to the extent they are not

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7 duplicative, the election of which shall not be required and may be revoked and/or modified until immediately prior to entry of judgment:

(1) Damages For Specific Breach . The City shall be entitled to recover compensatory damages, at its sole option in the event of a material uncured default under the terms of this Agreement. If the material uncured default in question involves the violation of Section 13(b) above, the amount of such compensatory damages shall be the product of multiplying (A) the number of months that the material uncured default in question has continued until the time of trial or cure, whichever occurs first, by (B) the result of subtracting (i) the rents properly chargeable hereunder for the Affordable Unit s at (ii) the rents actually collected by Developer for the Affordable Units for the months in question, as reasonably determined by the City. Developer and the City agree that it would be extremely difficult or impracticable to ascertain the precise amount of actual damages accruing to the City as a result of such a material uncu red default and that the foregoing formula is a fair and reasonable method of approximating such damages. The City shall be entitled to seek and to recover damages in separate actions for successive, separate breaches, which may occur during the term of this Agreement. Further, interest shall accrue on the amount of such damages from the date of the expiration of Developer’s cure period for the material uncured breach in question at the rate of ten percent (10%) per annum or the maximum rate then allowed by law, whichever is less. Nothing in this section shall preclude the award of exemplary damages as allowed by law.

(2) Acceleration and Liquidation of Future Performance. At the sole option of the City, if any material default by Developer in the performance of its obligations under this Agreement remains uncured for more than ninety (90) days after written notice to Developer by the City specifying such breach in reasonable detail (or such longer period of time, not to exceed six (6) months, as may reasonably be required for Developer to cure such breach exercising reasonable diligence), Developer’s obligation to perform hereunder may be accelerated by the City and declared immediately due through the payment of a liquidated sum. Developer and the City agree that it would be extremely difficult and impractical to predict the precise cost to the City of (i) locating a rental unit equivalent to the Affordable Unit s, (ii) procuring such unit (through purchase, lease or subsidies) at the rent discounts contemplated herein, (iii) performing the substantial administrative activities associated with replacing the Affordable U nits, and (iv) inflation. Therefore, Developer and the City agree that, in the event of a material default hereunder by Developer that remains uncured as aforesaid, and upon written notice from the City to Developer that the City has elected to exercise its o ption to accelerate and liquidate Developer’s performance hereunder in accordance with the provisions of this Section 13(b)(2), Developer shall pay, and the City shall be entitled to receive, within thirty (30) days of the City’s delivery of such written notice, in complete liquidation of the City’s future monetary damages and Developer’s future obligations under this Agreement, a lump sum payment equal to: (A) the aggregate of the mathematical differences between the monthly rent for a “Comparable Market Rate Unit” (as determined by the City, using statistical data for units of the same size and location at the time of the breach) and the monthly rent allowable hereunder for the Affordable Unit s, at the date of delivery of the aforesaid written notice of election to accelerate, multiplied by (B) the number of months remaining in the term of this Agreement, from and after the date of delivery of the aforesaid written notice of election to accelerate. Developer and the City agree that acceleration is a fair and reasonable remedy for non-compliance hereunder, and that the foregoing formula represents a fair

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8 and reasonable method of approximating and liquidating the future monetary obligations of Developer to the City hereunder for purposes of any such optional acceleration by the City.

Further, such liquidated amount shall automatically commence to bear inte rest at the rate of ten percent (10%) per annum or the maximum rate then allowed by law, whichever is less, from and after the date that the City delivers to Developer the aforesaid written notice of the City’s election to accelerate Developer’s performance hereunder, until paid. Further, if Developer breaches this Section 13(b)(2), the City shall be entitled to receive all reasonable attorneys’ fees, costs of suit, title insurance charges, foreclosure costs and other out-of-pocket expenses reasonably incurred in recovering such liquidated amount.

14. Monitoring Fees . Developer shall pay to the City, each year during the term of this Agreement, commencing upon completion of construction, an annual occupancy monitoring fee, as determined by the City in schedules promulgated by the City from time to time (which amount is $215.00 per unit per year at the time of recordation of this Agreement), said fee shall be subject to revision annually. Concurrently herewith, the Developer and the Community Development Commission-Housing Authority of the City of National City are entering into a Regulatory Agreement of even date herewith. The Regulatory Agreement also require s payment of annual occupancy monitoring fee. The annual occupancy monitoring fee shall be payable under either this Agreement or the Regulatory Agreement, i.e., if the Developer pays the annual occupancy monitoring fee to the City pursuant to this Section 14, then the annual occupancy monitoring fee under the Regulatory Agreement shall be deemed satisfied for such year. Failure to timely pay such fees shall constitute a material default under this Agreement.

15. Obligations of Fee Owner. The City agrees and acknowledges that for so long as the Ground Lease remains in force, the Fee Owner shall have no obligation under this Agreement and the City shall look solely to the Developer (and any successor or assign thereto) to enforce the covenants and obligations set forth hereunder. In the event the Ground Lease is terminated prior to the expiration of its term and is not replaced with a new ground l ease, the Fee Owner shall, on a going forward basis, operate the Project in accordance with the terms and conditions set forth herein.

16. General Provisions.

(a) Waiver. No provision of this Agreement, or breach of any provision, can be waived except in writing. The waiver by any party of any breach or violation of any term, covenant or condition of this Agreement or of any provisions, ordinance or law , shall not be deemed to be a waiver of any other term, covenant, condition, ordinance or law or any subsequent breach or violation of the same or of any other term, covenant, condition, ordinance or law.

(b) Costs and Attorneys’ Fees. The prevailing party in any action brought to enforce the terms of this Agreement or arising out of this Agreement may recover its reasonable costs and witness, expert and attorney’s fees expended in connection with such an action from the other party.

(c) Recordation. This Agreement shall be recorded in the Office of the County Recorder of the County of San Diego senior to all monetary liens . City shall not be obligated to issues permits prior to such delivery and recordation of this Agreement.

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9 (d) Integration. The undersigned, and each of them, acknowledge and represent that no promise or inducement not expressed in this Agreement has been made in connection with this Agreement. This Agreement contains the entire agreement and understanding between the parties as to its subject matter.

(e) Ownership of the Property. Developer represents and warrants that it has obtained a Ground Lease of the Property and has full authority to execute this Agreement.

(f) Counterparts. This Agreement may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same Agreement. The parties agree that each such counterpart is an original and shall be binding upon all the parties, even though all of the parties are not signatories to the same counterpart.

(g) Notices. All notices given pursuant to this Agreement shall be in writing and sent to the party at its address appearing below (a) by certified or registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be effective upon receipt (or refusal to accept delivery). These addresses may be changed by any party by written notice to all other parties.

If to City: City of National City
Attention: City Manager
1243 National City Boulevard
National City, CA 91950

If to Fee Owner: SDBTC Family Housing Corp. Three
2323 D Avenue
National City, CA 91950
Attn: CEO

If to Developer: Union Tower One LP
c/o Wakeland Housing and Development Corporation
1230 Columbia Street, Suite 950
San Diego, CA 92101
Attn: President and CEO
With copies to:

Borrower’s limited partners: Hudson Union Tower LP
Hudson-FM SLP LLC
c/o Hudson Housing Capital LLC
New York, NY 10111
Attention: General Counsel

with a copy to: Holland & Knight LLP
10 St. James Avenue, 12th Floor
Boston, MA 02116
Attn: Dayna M. Hutchins, Esq.

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10 (h) Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated in this Agreement by this reference.

(i) Further Assurances. If Developer does not receive all of the necessary permits and approvals to construct the Development, Developer and the City agree that this Agreement and the density bonus granted herein shall be null and void and of no further force and effect and Developer and the City agree to take all reasonable steps and to execute and cause to be recorded all documents reasonably necessary to remove this Agreement and the Deed of Trust from the record chain of title to the Property.

16. Risk of Market Conditions . Developer shall bear sole responsibility for developing, constructing and marketing the units covered by this Agreement, pursuant to the approvals that the City has issued for the Development and the requirements contained in this Agreement. The City shall have no obligation to amend this Agreement, and the Developer shall reimburse the City for administrative costs associated with any modification of this Agreement that shall require the approval of the City Council of National City.

17. Signature Authority. All individuals signing this Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the other party hereto that he or she has the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf he or she is signing.

CITY:

CITY OF NATIONAL CITY

By: ______________________________
Benjamin A. Martinez, City Manager

APPROVED AS TO FORM:

By:________________________________
__________, Deputy City Attorney

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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11 DEVELOPER:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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12 FEE OWNER:

SDBTC Family Housing Corp. Three, a California corporation

By:______________________________
Jodi Barthold, Chief Financial Officer

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13 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

On ____________________, 2024, before me, _________________________________, notary public, personally appeared __________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature _________________________________ (Seal)

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

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14 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature _________________________________ (Seal)

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15 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature _________________________________ (Seal)

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16 EXHIBIT “A”

Legal Description of the Property

That certain real property located in the City of National City, County of San Diego, State of California more particularly described as follows:

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Exhibit “B”

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1 RECORDING REQUESTED BY:

COMMUNITY DEVELOPMENT

COMMISSION OF THE CITY OF

NATIONAL HOUSING AUTHORITY

AND WHEN RECORDED RETURN TO:

COMMUNITY DEVELOPMENT

COMMISSION OF THE CITY OF

NATIONAL HOUSING AUTHORITY
Records Management Department
1243 National Housing Authority Blvd.

National Housing Authority, California 91950

REGULATORY AGREEMENT
(Union Tower)

THIS REGULATORY AGREEMENT (“Regulatory Agreement”) is dated as of the __ day of February, 2024, by and between Union Tower One LP, a California limited partnership (“Developer”) and the City of National City (“City”) and the Community Development Commission-Housing Authority of the City of National City (“Housing Authority”) in connection with that certain real property ( “Property”) located in the City of National City , County of San Diego, California, described in Exhibit “A” attached hereto and incorporated herein by reference.

The City and Housing Authority may be referred to collectively herein as the (“Lender”).

RECITALS

A. The Lender has agreed to make : (i) a loan to Developer in the original principal amount of up to of Eight Million and No/100 Dollars ($8,000,000.00) (“Housing Fund Loan”) pursuant to that certain Construction and Permanent Financing Loan Agreement (Union Tower) (“Loan Agreement”) between the Developer and Lender of even date herewith ; (ii) a loan to Developer in the original principal amount of up to of One Million Five Hundred Thousand and No/100 Dollars ($1,500 ,000.00) (“HOME and HOME -ARP Loan”) pursuant to the Loan Agreement.

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2 B. The Housing Fund Loan and HOME and HOME-ARP Loan are conditioned by the Lender in part upon the recordation of this Regulatory Agreement setting forth certain restrictions upon the use and sale of the Property. Developer shall construct two (2) new multifamily affordable housing towers (of which one will be a four -story building, and the other will be a seven-story building), which shall include an aggregate of ninety-three (93) Affordable Units, as defined below, and one (1) unrestricted manager’s unit , office space, and 45 parking spaces (collectively the “Project”). The office space will consist of the entire seventh floor of the Project’s seven story building (collectively the “Commercial Space”). The Housing Fund Loan is being funded entirely with funds from the Housing Authority Housing Fund. The HOME and HOME - ARP Loan is being funded with One Million Two Hundred Five Thousand Nine Hundred One and 27/100 Dollars ($1,205,901.27) in United States Department of Housing and Urban Development HOME Investment Partnerships Program (HOME) funds and Two Hundred Ninety Four Thousand Ninety Eight and 73/100 Dollars ($294,098.73) in HOME American Rescue Plan Program (HOME-ARP) funds. This Regulatory Agreement is intended to and does restr ict the Affordable Units in accordance with all requirements of the foregoing funding programs . To the extent any law, ordinance, statute, regulation or rule applicable to the Property as a result of funding the Housing Fund Loan or HOME and HOME-ARP Loan with proceeds from any of the forgoing programs is not explicitly set forth in this Regulatory Agreement , the Developer shall nonetheless comply with such requirements . The Commercial Space shall be funded by sources that shall not include the proceeds of the HOME and HOME-ARP Loan.

NOW, THEREFORE, in furtherance of the recitals stated above, the mutual covenants set forth below, the parties agree, promise and declare as follows:

1. Restrictive Covenants . Developer agrees and covenants on behalf of itself and its successors and assigns, and each successor in interest to the Property, that at all times during the term of this Regulatory Agreement ninety-three (93) residential units at the Project shall be set aside and reserved as “Affordable Units.” As used herein the term “Affordable Units” shall refer to the ninety-three (93) residential units in the Project which are owned or held available strictly in accordance with the terms and conditions set forth below.

(a) Affordable Unit Restrictions. The following restrictions shall apply to the ninety- three (93) Affordable Units , including the nine (9) floating HOME Units (“HOME Units”) and two (2) floating HOME -ARP units (“HOME -ARP Units”) which are subject to the applicable HOME Program regulations (24 CFR Part 92) and ARPA Regulations (31 C.F.R. Part 35) . The restrictions set forth in the Table below shall establish the maximum rental rate, which shall be adjusted for household size appropriate for the unit. Rents shall also be adjusted to reflect a utility allowance.

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3 TABLE OF RENT AND INCOME RESTRICTION CRITERIA
1 2 3 4 5 6

NUMBER OF

AFFORDABLE
UNITS
UNIT
TYPE

MAXIMUM

MONTHLY
RENTS

MAXIMUM

INCOME OF

ELIGIBLE

TENANTS

NUMBER OF
HOME

AFFORDABLE
UNITS*

NUMBER OF

HOME-ARP

AFFORDABLE
UNITS*
9 1- BR 1/12th of 30% of
30% of AMI
30% of AMI 1*
18 1- BR 1/12th of 30% of
40% of AMI
40% of AMI
18 1- BR 1/12th of 30% of
60% of AMI
60% of AMI 2*
5 2- BR 1/12th of 30% of
30% of AMI
30% of AMI 1*
9 2- BR 1/12th of 30% of
40% of AMI
40% of AMI
1 2- BR 1/12th of 30% of
50% of AMI
50% of AMI 1*
9 2- BR 1/12th of 30% of
60% of AMI
60% of AMI 2*
5 3- BR 1/12th of 30% of
30% of AMI
30% of AMI
10 3- BR 1/12th of 30% of
50% of AMI
50% of AMI 2*
9 3- BR 1/12th of 30% of
60% of AMI
60% of AMI 2*
TOTAL - 93

*Note: Notwithstanding the foregoing table, the HOME and HOME -ARP Affordable Units are only required to be restricted at 30%, 50% and 60% of the area median income. Provided, however, other programs applicable to the Project require deeper affordability tha n the United States Department of Housing and Urban Development HOME and HOME -ARP programs require. Therefore, the rent and occupancy restrictions applicable to the nine (9) HOME Units and two (2) HOME-ARP Units shall be as set forth in the foregoing table. The nine (9) floating HOME Units and two (2) floating HOME -ARP Units will be restricted for twenty (20) years under the HOME and HOME-ARP Programs commencing on the date all relevant Project completion data is entered into the Department of Housing and Urban Development ’s ( “HUD”) Integrated Disbursement and Information System ( “IDIS”). Beginning twenty (20) years after all relevant Project completion data is entered into IDIS, and for the remainder of the term of this Regulatory Agreement, the Affordable Units that were previously restricted as HOME Units and HOME-ARP Units will be subject to the restrictions applicable to the non-HOME Units and HOME-ARP Units set forth in this Regulatory Agreement.

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4 (b) Maximum Rent To Be Collected by Developer . Except as otherwise set forth herein, in no event shall the “Total Rent,” including the portion paid by the Eligible Tenant and any other person or entity, collected by Developer for any Affordable Unit exceed the amount of rent set forth in the Table set forth in Section 1(a). The Total Rent will not include income received by Developer from the Project Based Section 8 or VASH Vouchers under a Housing Assistance Payment Contract, Tenant Based Housing Choice Vouchers, or similar rental housing subsidies from a public agency or nonprofit agency. Acceptance by Developer or its successors-in-interest, of Total Rent in excess of the maximum rent set forth in the Table and failure to reimburse Eligible Tenant or the Lender for the excess shall constitute a material breach of this Regulatory Agreement and Loan Agreement.

(c) Eligible Tenants. “Eligible Tenants” are those residential tenants whose aggregate gross annual income does not exceed the respective percentages set forth in the Table of Rent and Income Restriction Criteria set forth in Section 1(a), above, as adjusted for family size. For purposes of this Regulatory Agreement , the current annual area median income shall be the area median income defined by HUD as the then current area median income for the San Diego - Carlsbad Metropolitan Statistical Area, as adjusted for family size. When determining income eligibility, Developer shall use actual household size. When determining rents, Developer shall use the household size appropriate for the Unit as determined by the HUD. In the event HUD ceases to publish an established area median income as aforesaid, Lender may, in its sole discretion, use any other reasonably comparable method of computing adjustments in area median income. Notwithstanding anything to the contrary set forth herein, except for the Home Units when a tenant occupies a unit subject to a regulatory agreement (“TCAC Regulatory Agreement”) by and between the Developer and the California Tax Credit Allocation Committee (“TCAC”) pursuant to Section 42 of the Internal Revenue Code, the TCAC rent setting regulations shall control. There will be five (5) Very Low Home Units, which are floating units and will have rents set at the lesser of the applicable TCAC rents or the Very Low Home Rent. There will be six ( 6) Low HOME units, which are floating units and which will have rents set at the lesser of the applicable TCAC rent for the unit or the Low Home Rent.

(d) Section 504 Requirements . In order to comply with Section 504 of the Rehabilitation Act of 1973, not less than five (5 ) of the Affordable Units shall be fully handicap accessible and two (2) of the Affordable Units shall incorporate features for the visually and hearing impaired. Notwithstanding the foregoing, other requirements applicable to the Project require more handicap accessible and visually and hearing impaired units and therefore ten (10) of the Affordable Units shall be fully handicap acce ssible and four (4) of the Affordable Units shall incorporate features for the visually and hearing impaired, which units may be designed to serve both accessibility and visual and hearing requirements in one unit. The Project shall meet the accessibility requirements of 24 C.F.R. part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. §794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. §§12131-12189) implemented at 28 C.F.R. parts 35 and 36, as applicable. The Project shall also meet the design and construction requirements of 24 C.F.R. Section 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). Developer agrees to comply with all of the provisions of 24 C.F.R. Section 92.251, whether or not contained in this Section.

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5 (e) Approval of Eligible Tenants Prior to Occupancy. The eligibility of each prospective tenant under the restrictions set forth in this Regulatory Agreement shall be certified by Developer which shall submit such certification and all supporting documentation on forms provided to Developer by the Lender for a determination of tenant eligibility, prior to tenant occupancy. No Affordable Unit may be rented to a prospective tenant or occupied by any person unless and until the Lender has determined that the prospective tenant or occupant is an Eligible Tenant.

(f) Annual Requalification. Further, residential tenants shall be requalified as Eligible Tenants annually in conformance with the process described in Section 1(d), above . Upon completion of construction of the Project (the occurrence of which shall be evidenced by the placement of the Project “in service” (as such term is used in 26 U.S.C. §42) ) and annually each year during of the term of this Regulatory Agreement , Developer shall certify to Lender that Developer is in compliance with this Regulatory A greement under penalty of perjury, utilizing such forms and providing such backup documentation as
requested by the Lender . Failure by
Developer to timely comply with the tenant qualification and annual certification /requalification process described in this Section 1(f) shall constitute a material default under the Loan Agreement.

The Lender may resort to the remedies set forth hereinbelow upon such material default, as well as any and all other remedies available at law or in equity and/or contained in the Loan Agreement (subject to the notice and cure provisions thereof, if any).

2. Affordable Marketing Plan Compliance . Eligible Tenants shall be any tenant otherwise eligible hereunder, provided that Developer has and continues to comply with the terms of its approved affirmative marketing plan and rents to those person(s) referenced in said approved plan, as such plan may be amended from time to time. Developer shall, at all times during the 20-year term of the HOME Units and HOME-ARP Units, comply with all of the provisions of 24 C.F.R.

Section 92.351 and the affirmative marketing procedures adopted by the Lender , including, but not limited to, all requirements and procedures referenced in said 24 C.F.R. Section 92.351(b), as amended from tim e to time. Developer shall maintain records to verify compliance with the applicable affirmative marketing procedures and compliance. Such records are subject to inspection by the Lender during regular business hours upon five (5) days written notice.

3. Relationship with Developer. The term “Eligible Tenant” shall not include Developer, or any individuals who are partners of Developer, or in any entity having an interest in Developer, or the Property, or any officer, employee, agent or consultant of the Developer , or any relative (by blood or marriage) of any officer, employee, agent or consultant of the Developer. This restriction shall not preclude occupancy by resident managers in the manager’s unit.

4. No Student Dependents . Subject to provisions of applicable law (including, without limitation, fair housing laws), the term “Eligible Tenant” shall not include any student dependent as defined in the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the same dwelling unit.

5. Income of Co-Tenants, Etc. The income of all co-tenants and/or non-dependent occupants, shall be taken into account in determining whether a household is an Eligible Tenant hereunder.

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6 6. Eviction/Termination of Tenancy. Subject to provisions of applicable law (including, without limitation, fair housing laws) and other restrictions applicable to the Project, in the event that a tenant who was properly certified as an Eligible Tenant at the commencement of such tenant’s occupancy ceases to be eligible, for any reason other than the tenant being over income, Developer shall have the right, but not the obligation, to either ( i) give thirty (30) days written notice, or such longer period as prescribed by law, to such tenant to vacate the Affordable Unit, or (ii) refuse to renew such tenant’s lease. Any vacated Affordable Unit shall thereafter be rented to an Eligible Tenant. In the event that a tenant who was properly certified as an Eligible Tenant at the commencement of such tenant’s occupancy ceases to be eligible, as a result of being over income, the over-income tenant shall continue to be considered an Eligible Tenant and may have such tenant’s lease renewed until such time as the Eligible Tenant’s tenancy has terminated, provided this continued occupancy otherwise complies with the applicable regulations as referenced below, depending upon the sources of the restrictions involved:

(a) HOME and HOME -ARP Program Restrictions. Notwithstanding Section 6(b ), below, when the gross income of a tenant who occupies a HOME Unit or HOME-ARP Unit exceeds the amount allowed by the Table of Rent and Income Restriction Criteria set forth in Section 1(a), above, if and to the extent required by 24 CFR 92.252(i), that tenant shall commence paying rent equivalent to thirty percent (30%) of the tenant ’s adjusted income, subject to the fair market rent ceiling as set forth in 24 CFR 92.252(i). In the event the gross income of a tenant who occupies a HOME Affordable Unit exceeds 50% or 60% of AMI, the next available comparable sized and configured unit shall be designated as a HOME Unit or HOME-ARP Unit to replace the HOME or HOME-ARP Unit of the occupant in question. Notwithstanding anything to the contrary set forth in this Regulatory Agreement , the tenant shall continue to be considered an Eligible Tenant, provided this continued occupancy otherwise complies with all applicable HOME and HOME-ARP Program requirements, and the tenant shall not be evicted as a result of having income in excess of the income limits set forth herein, except as provided for in Section 92.252 of the Code of Federal Regulations, as amended from time to time. Notwithstanding anything to the contrary set forth in this Regulatory Agreement , in order to comply with 24 C.F.R. Section

92.252(i), tenants of HOME Units or HOME-ARP Units subject to the TCAC Regulatory Agreement, as defined in Section 8(c), below, shall only be evicted and must pay rent as set forth in the TCAC Regulatory Agreement and 26 U.S.C. Section 42. In the event of a conflict between the over income regulations of this Agreement and the TCAC Regulatory Agreement, the TCAC Regulatory Agreement provision shall apply.

(b) Lender Restrictions. Except as otherwise provided in Section 6(b), below, a tenant who occupies an Affordable Unit and whose income increases to an amount at or above one hundred twenty percent (120%) of the area median income as then determined by HUD at the time of recertification, shall be given one hundred eighty (180) days ’ notice to vacate the Affordable Unit, effective from and after the date of such failure to requalify (i.e., the recertification date, provided the tenant was properly certified originally). During the time the over -income tenant resides in the Affordable Unit, the tenant shall continue to pay the restricted rent. The tenant shall continue to be considered an “Eligible Tenant” until the tenant moves, the tenant’s lease is not renewed, or the tenant is evicted, provided this continued occupancy complies with all other applicable requirements of this Regulatory Agreement.

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7 (c) Tax Credit Funds. Notwithstanding Sections 6(a) or (b), above, or anything else to the contrary set forth in this Regulatory Agreement , when a tenant occupies a unit subject to a regulatory agreement ( “TCAC Regulatory Agreement ”) by and between the Developer and the California Tax Credit Allocation Committee pursuant to Section 42 of the Internal Revenue Code, such tenant shall have its rent increased or shall be evicted as a result of such tenant being over income only as and when allowed by such TCAC Regula tory Agreement or by Federal law, including 26 U.S.C. §42. In the event of conflict between the over income regulations of this Regulatory Agreement and the TCAC Regulatory Agr eement, the TCAC Regulatory Agreement provisions shall apply.

7. Physical Condition of Affordable Units . After completion of construction of the Project, Developer shall continually maintain the Affordable Units in a decent, safe and sanitary condition, and in good repair as described in 24 CFR §5.703, and in a manner which satisfies the Uniform Physical Conditions Standards promulgated by the Department of Housing and Urban Development (24 CFR §5.705) , as such standards are interpreted and enforced by Lender under its normal policies and procedures. Lender shall have the right to inspect the Affordable Units from time to time upon reasonable advance notice to Developer, in order to verify compliance with the foregoing maintenance covenant . Developer hereby consents to periodic inspection by Lender’s designated inspectors and/or designees during regular business hours, including the Code Enforcement Agents of the City of National City, to ensure compliance with all applicable zoning, building codes, regulations, and property standards . Developer agrees to comply with the provisions of 24 CFR 92.251, whether or not contained in this Section. Further, each Affordable Unit shall be requalified annually, as to the foregoing maintenance covenant, as part of the annual tenant requalification process described in , and to the extent applicable under, Section 4 above.

Any deficiencies in the physical condition of an Affordable Unit shall be corrected by Developer at Developer’s expense within sixty (60) days of the identification of such deficiency by Lender and delivery of written notice of the same to Developer , provided if the deficiency is of a nature that it cannot be cured within such sixty (60) day period, the Developer shall have such additional time to cure as is reasonably determined by the Lender.

8. Covenants to Run With the Land. The covenants contained herein shall constitute “covenants running with the land,” and shall bind the Property and every person having an interest therein during the term of this Regulatory Agreement . Developer agrees for itself and its successors that, in the event that, for any reason whatsoever, a court of competent jurisdiction determines that the foregoing covenants do not run with the land, such covenants shall be enforced as equitable servitudes against the Property. It is expressly acknowledged that: (i) the obligations of Developer hereunder shall be deemed independent of Developer ’s obligations under the Housing Fund Loan and the HOME and HOME-ARP Loan; and (ii) the covenants and restrictions set forth herein shall survive any repayment of the Housing Fund Loan or the HOME and HOME- ARP Loan.

9. Loan Payments. Annual payments as referenced in the Loan Agreement shall be made to Lender as provided therein.

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8 10. Term. This Regulatory Agreement and the covenants and restrictions contained herein shall be effective commencing on the date this Regulatory Agreement is recorded and shall remain in full force and effect until 12:00 midnight on December 31, 2081.

11. Covenant Against Discrimination . Developer covenants on behalf of itself and its successors and assigns, and each successor in interest to the Property, not to discriminate against any tenant or prospective tenant of any Affordable Unit on the basis of their race, age, sexual orientation, gender identity, marital status, color, religion, sex, handicap, or national origin, as referenced in all applicable state, local and federal law. During the 20 -year term of the HOME Units and HOME-ARP Units, the Developer shall comply with all applicable Federal requirements set forth in 24 C.F.R. part 5, subpart A, as set forth in more detail in the Loan Agreement.

12. Enforcement. Developer expressly agrees and declares that Lender or any successor public agency is a proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity to enforce the provisions hereof and/or to recover damages for any default hereunder, notwithstanding the fact that such damages or the detriment arising from such default may have actually been suffered by some other person or the public at large. Further, Lender or any successor public agency shall be the proper party to waive, relinquish, release or modify the rights, covenants, obligations or restrictions contained in or arising under this Regulatory Agreement. Any cure made or tendered by a partner of Developer shall be accepted or rejected by the Lender on the same basis as if made or tendered directly by Developer.

13. Attorneys’ Fees. In the event that any litigation for the enforcement or interpretation of this Regulatory Agreement, whether an action at law or arbitration or any manner of non- judicial dispute resolution to this Regulatory Agreement by reason of the breach of any condition or covenant, representation or warranty in this Regulatory Agreement, or otherwise arising out of this Regulatory Agreement, the prevailing party in such action shall be entitled to recover from the other reasonable attorneys’ fees and out of pocket expenses (including expert witness fees) to be fixed by the court which shall render a judgment, as well as the costs of suit.

14. Severability. In the event that any provision or covenant of this Regulatory Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, then it shall be severed from the remaining portions of this Regulatory Agreement which shall remain in full force and effect.

15. Recordation; Waiver and Amendment . This Regulatory Agreement shall be recorded in the Office of County Recorder of San Diego, California. No provision of this Regulatory Agreement, or breach of any provision, can be waived except in writing. Waiver of any provision or breach shall not be deemed to be a waiver of any other provision, or of any subsequent breach of the same or other provision. This Regulatory Agreement may be amended, modified or rescinded only in writing signed by Developer , the City Manager and the Executive Director of the Lender.

16. Remedies.

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9 (a) Contract Governed by Laws of State of California. This Regulatory Agreement, its performance, and all suits and special proceedings under this Regulatory Agreement , shall be constituted in accordance with the laws of the State of California and Federal law, to the extent applicable. In any action, special proceeding, or other proceeding that may be brought arising out of, under or because of this Regulatory Agreement , the laws of the State of California and the United States, to the extent applicable, shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which the action or special proceeding may be instituted.

(b) Standing, Equitable Remedies; Cumulative Remedies. Developer expressly agrees and declares that Lender or any successor or public agency shall be the proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the provisions hereof and/or to recover damages for any default hereunder, notwit hstanding the fact that such damages or the detriment arising from such a default may have actually been suffered by some other person or by the public at large. Further, Developer expressly agrees that receivership, injunctive relief and specific perform ance are proper pre -trial and/or post -trial remedies hereunder, and that, upon any default, and to assure compliance with this Regulatory Agreement. Nothing in this Section 16(b), and no recovery to Lender , shall restrict or limit the rights or remedies of persons or entities other than Lender , against Developer in connection with the same or related acts by Developer . The remedies set forth in this Section are cumulative and not mutually exclusive, except the extent that their award is specifically deter mined to be duplicative by final order of a court of competent jurisdiction.

(c) Remedies at Law for Breach of Tenant Restrictions. In the event of any material default hereunder regarding restrictions on the operation and the transfer of the Property (excluding Permitted Transfers) and the expiration of any applicable cure period provided under the Loan Agreement, Lender shall be entitled to, in addition to any and all other remedies available at law or in equity: (i) declare all of the Housing Fund Loan and HOME and HOME-ARP Loan to be all due and payable; and (ii) recover compensatory damages. The amount of such compensatory damages shall be the product of multiplying: (A) the number of months that the default in question has continued until the time of trial by (B ) the result of subtracting the rents properly chargeable hereunder for the Affordable Units in question from the amount actually charged for those Affordable Units. Developer and Lender agree that it would be extremely difficult or impracticable to ascertain the precise amount of actual damages accruing to Lender as a result of such a default and that t he foregoing formula is a fair and reasonable method of approximating such damages. Lender shall be entitled to seek and to recover damages in separate actions for successive and separate breaches which may occur. Further, interest shall accrue on the amount of such damages from the date of the breach in question at the rate of ten percent (10%) per annum or the maximum rate then allowed by law, whichever is less.

17. Lender’s Approval of Property Manager. At all times that this Regulatory Agreement is in force and effect, and Lender has served a thirty (30 ) day written notice of deficiencies in the property management for the Project , which deficiencies have not been rectified by Developer within the thirty (30) day period (unless such deficiency is not reasonably capable of being cured within such thirty (30) day period, then such reasonable amount of time as is needed not to exceed one hundred twenty (120) days, provided Developer commences cure within such thirty (30) day period and continues to diligently pursue cure), then, Lender shall have the right, in its reasonable

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10 discretion upon thirty (30) days written notice: (i) to require the retention of a professional property management firm to manage the Project ; (ii) to approve, in advance and in writing, the retention of any such property management firm, including the terms of the contract governing such retention; and (iii) to require Developer to terminate any such property management firm, provided that such termination shall comply with the termination provisions of the management contract in question, and to require that Developer retain a replacement professional property management firm, acceptable to the Developer, in its reasonable discretion . Developer shall cooperate with Lender to effectuate Lender ’s rights . The Lender approves Hyder & Company as the initial property management firm for the residential portion of the Project.

18. Lease Provisions. Developer shall not include any of the provisions described in 24 C.F.R. §92.253(b) in any lease for any part of the Property.

(a) All Affordable Units. Developer agrees that it will include in all of its leases and cause its successors in interest to include in all of their leases the following provision:

Additional Lease Provisions/Annual Income Verification. Lessee/Tenant agrees, upon written request from the Landlord or the City of National City (“City”), to certify under penalty of perjury the accuracy of all information provided in connection with the examination or reexamination of annual income of the tenant’s household. Further, tenant agrees that the annual income and other eligibility requirements are substantial and material obligations of the tenancy and that the tenant will comply promptly with all requests for information with respect to the tenancy from the landlord and/or City. Further, tenant acknowledges that tenant’s failure to provide accurate information regarding such requirements (regardless of whether such inaccuracy is intentional or unintentional) or the refusal to comply with the request for information with respect thereto, shall be deemed a violation of this lease provision, and a material breach of the tenancy and shall constitute cause for immediate termination of the tenancy.

(b) HOME and HOME-ARP Affordable Units. Developer agrees that it will include the following provision in all of its leases of HOME Units and HOME-ARP Units:

Term of Lease for HOME and HOME-ARP Program Restricted Units. Tenant has been made aware by Landlord that the unit being leased was assisted with HOME or HOME-ARP funds. Under the provisions of 24 C.F.R. §92.253, a lease must be for a period of not less than one (1) year unless the parties agree by mutual agreement that the term of the lease be less. The Tenant acknowledges by initialing in the space below that i t has been made aware of the provisions of 24 C.F.R. §92.253.

19. Section 42 of the Internal Revenue Code.

(a) Section 42(h)(6)(E)(ii) of the Internal Revenue Code does not permit the eviction or termination of tenancy (other than for good cause) of an existing tenant of any low-income unit

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11 or any increase in the gross rent with respect to such unit not permitted under Section 42 for three (3) years after the date the Property is acquired by foreclosure or deed in lieu of foreclosure.

(b) Notwithstanding anything to the contrary contained herein or in the Agreement or any of the Loan Documents, the Lender acknowledges that pursuant to Section 42 of the Internal Revenue Code, the Project will be subject to a regulatory agreement by and between Developer and the California Tax Credit Allocation Committee (“TCAC Regulatory Agreement”). The Lender further acknowledges and agrees that the terms and conditions of the TCAC Regulatory Agreement may impose rental restrictions that are more strict than the restrictions set forth herein, and compliance by Developer of any such stricter rental restrictions set forth in the TCAC Regulatory Agreement shall not constitute a default hereunder or under the Loan Agreement.

20. Notices. Notices under this Regulatory Agreement shall be in writing and sent (a) by certified or registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be effective upon re ceipt (or refusal to accept delivery). All notices shall be delivered to the following addresses (which addresses may be changed by written notice):

Lender: Housing Authority of the City of National City
1243 National City Blvd.

National City, CA 91950
Attn: Executive Director

Developer: Union Tower One LP
c/o Wakeland Housing and Development Corporation
1230 Columbia Street, Suite 950
San Diego, CA 92101
Attn: President and CEO

With copies to: NCPA Union Tower One, LLC
2323 D Avenue
National City California 91950
Attn. CEO

Borrower’s limited partners:

Hudson Union Tower LP
Hudson-FM SLP LLC
630 Fifth Avenue, 28th Floor
New York, NY 10111
Attn: General Counsel

20. Monitoring Fees. Commencing upon completion of construction, the Developer shall pay to Lender an annual occupancy monitoring fee (“Annual Loan Monitoring Fee ”), as determined by Lender schedules printed by Lender from time to time (which amount is $215.00 per unit per year at the time of recordation of this Agreement) , said fee shall be subject to revision annually.

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12 The schedule of monitoring fees may be requested from Lender . Annual Loan Monitoring Fees shall be paid to Lender annually within thirty (30) days after Lender provides a written invoice for the same. Concurrently herewith, the Developer and the City of National City are entering into an Affordable Housing Density Bonus Agreement (“Density Bonus Agreement”) of even date herewith. The Density Bonus Agreement also requires payment of annual occupancy monitoring fee. The annual occupancy monitoring fee sha ll be payable under either this Agreement or the Density Bonus Agreement, i.e., if the Developer pays the annual occupancy monitoring fee to the Lender pursuant to this Section 20, then the annual occupancy monitoring fee under the Density Bonus Agreement shall be deemed satisfied for such year. Failure to timely pay the Annual Loan Monitoring Fee shall constitute a material default under the terms and conditions of the Agreement and this Agreement. The Annual Loan Monitoring Fee shall be paid to Lender as a consideration for the lending of funds by Lender to Developer.

21. Signature Authority. All individuals signing this Regulatory Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity , covenant to the Lender that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

22. Agreements Concerning the Commercial Space. The Developer will hold its interest in the Property as a ground lessee under a ground lease (“Ground Lease”). The Developer agrees that the Commercial Space shall be built without application of any of the Housing Fund Loan proceeds to the Commercial Spa ce or its construction. The Lender acknowledges that the source of funds for the construction of the Commercial Space shall be from the ground lessor or its affiliate, who will also be a tenant of Developer under a master lease for the Commercial Space. The Lender agrees that Developer shall have the right to lease the Commercial Space, to be the ground lessor (or its affiliate, and their successors, collectively the “Master Tenant”) and that Master Tenant can sublease it to a commercial user. The master lease shall provide to Master Tenant the right, subsequent to the completion of the construction of the Project, to: (1) with Developer’s cooperation, pursue and achieve the conversion of the project to a condominium project, so that the Commercial Space can be conveyed to the Master Tenant, and owned separately in fee from the Affordable Units in the project, with reasonable rights to use all areas of the project other than the Affordable Units, to use the remainder of the project to support the Commercial Space, and to use the common areas of the project for ordinary common area uses including ingress and egress; and (2) be conveyed the fee interest in the Commercial Space without being subject to this Agreement. The Lender agrees to release the Commercial Space from this Agreement and terminate this Agreement as an encumbrance affecting the Commercial Space, provided that the conveyance of the Commercial Space is made subject to a declaration of covenants conditions and restrictions, or a recorded agreement serving a similar function (collectively “CC&RS”) which CC&Rs shall, among other things, require the grantee of the Commercial Space: (i) not interfere with the operation of the remainder of the Project as an affordable housing project, (ii) pay a fair share of the costs of the maintenance and operation of (a) the project’s common areas and (b) the building in which the Commercial Space is located; and (iii) pay for all operation, maintenance repair and reconstruction costs associated with the Commercial Space. The parties hereto further agree that the CC&Rs to be recorded against the fee interest in the Property shall be subject to the reasonable consent of the Lender not to be unreasonably withheld or delayed. The Lender agrees

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13 that should it foreclose and acquire Developer’s interest in the Property, that it will continue to be bound by the terms and provisions of this Section 22 and that the provision of this section 22 shall survive any foreclosure on the Property or any termi nation of this Agreement, and that the provision of this section 22 are provided for the purpose of giving the person who has caused the funding for the construction of the Commercial Space the benefit of funding the construction of the Commercial Space. During the term of the master lease for the Commercial Space, or until its earlier termination, provided that the Master Tenant under the master lease attorns to Lender if it becomes the landlord under the master lease, such foreclosure shall not terminate the master lease and Lender shall not disturb the Master Tenant or its subtenant(s) unless after the time of foreclosure, the Master Tenant is in default under the master lease and Lender notifies the Master Tenant, in writing, that there is a breach of the master lease and it will be terminated by Lender if such default is not cured within the time applicable to curing such a default, as provided for under the master lease.

DEVELOPER:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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14 HOUSING AUTHORITY:

Community Development Commission-Housing Authority of the City of National City

By:______________________________________
Benjamin A. Martinez, Executive Director

CITY:

City of National City

By:______________________________________
Benjamin A. Martinez, City Manager

Approved as to form:

By:______________________________________
Barry J. Schultz, City Attorney

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15 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature _______________________ (Seal)

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

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16 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature _______________________ (Seal)

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

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17 Exhibit “A”

Property Legal Description

That certain real property situated in the City of National City , County of San Diego, State of California, described as follows:

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Exhibit “C”

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1 DO NOT DESTROY THIS NOTE: WHEN PAID, THIS NOTE AND THE DEED OF TRUST

SECURING IT MUST BE SURRENDERED TO TRUSTEE FOR CANCELLATION BEFORE RECONVEYANCE WILL BE MADE.
----------------------------------------------------------------------------------------------------------------

PROMISSORY NOTE
(Union Tower-Housing Authority Housing Fund)
(“Note”)
National City, California February __, 2024

1. Principal and Interest . For value received, Union Tower One LP , a California limited partnership (“Maker”), in consideration of that certain Construction and Permanent Financing Loan Agreement (Union Tower ) (“Loan Agreement”) of even date herewith between the Maker and the Community Development Commission-Housing Authority of the City of National City (“ Housing Authority”), Maker promises to pay to the Housing Authority, or order, at 140 East 12th Street, National City, California 91950 -3312, or such other place as the holder may from time to time designate by written notice to Maker, the principal sum of Eight Million and No/100 Dollars ($8,000,000.00), or so much as is advanced, together with accrued interest from the date disbursed at the rate of three percent (3%) simple interest per annum, except in the event of a default under this Note or any of the Loan Documents, as defined below, past any applicable not ice and cure period, in which event ten percent (10%) simple interest shall be deemed to have accrued from the date of such default . This Note is made pursuant to the Loan Agreement and the Deed of Trust (“Deed of Trust ”), being executed concurrently herewith, to be recorded in the office of the County Recorder of San Diego County. The Loan Agreement, this Note, the Deed of Trust and Regulatory Agreement (as defined in the Loan Agreement), together with any and all other documents executed in connection therewith, are sometimes collectively referred to herein as the “Loan Documents .” All capitalized terms which are not defined herein shall have the meaning ascribed to them in the Loan Agreement.

2. Term of Loan, Due Date and Right of Prepayment . Payments shall be due and payable as follows:

(a) On May 31, 2027 (for calendar 2026), and annually on May 31 of each year thereafter through the end of the term described in (b) below, Maker shall make annual payments to the Housing Authority under this Note in an amount equal to 17.37% of the Residual Receipts, as defined herein, for the immediately previous calendar year (on a form acceptable to the Housing Authority in its sole discretion). Concurrently herewith the Housing Authority is making a loan to Maker in the original principal amount of up to of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) (“HOME and HOME-ARP Loan”). The HOME and HOME-ARP Loan shall also be repayable out of Residual Receipts. Residual Receipts shall be allocated first to this Note until paid in full, then to the HOME and HOME-ARP Loan until paid in full.

(b) All principal and unpaid interest shall be due and payable by the Maker to the Housing Authority on December 31, 2081.

(c) Except as otherwise set forth in the Loan Agreement, all principal and unpaid interest shall be due and payable concurrently with the refinancing of any loan or other obligation secured all or in part by the Property, as defined in the Deed of Trust.

(d) All principal and accrued interest shall be due and payable by the Maker to the Housing Authority upon acceleration of this Note pursuant to Section 4, below.

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2 (e) Except as otherwise permitted by the Loan Agreement, all principal and accrued interest shall be due and payable by the Maker to the Housing Authority upon any sale, transfer, conveyance or further encumbrance of all or any part of the Property, as defined in the Deed of Trust, which is not consented to by the Housing Authority in writing.

“Residual Receipts” shall mean Gross Income less Operating Expenses, calculated on a calendar year basis , as provided herein. All calculations of Residual Receipts shall be subject to verification and approval by the Housing Authority.

“Gross Income” shall mean all gross income of Maker from all residential and non-residential components of the Project, as such term is defined in the Loan Agreement, and any other income to Maker derived from the Property, and the proceeds of any sale, financing or refinancing of all or any portion of Property or the sale, transfer or conveyance of Maker. Provided, however, that Gross Income shall not include (i) insurance proceeds or condemnation proceeds; (ii) security deposits or other tenant deposits; (iii) equity contributions to Maker made by the partners of Maker; (iv) disbursements from operating or replacement reserves; or (v) interest earned on project reserves. Interest earned (if any) on project reserves shall accrue to the applicable project reserve account and shall only be used for the purposes for which the reserve was established.

“Operating Expenses” shall mean actual, reasonable and customary costs, taxes, fees and expenses directly attributable to the operation, maintenance and management of the Project, to the extent approved by Housing Authority in Maker’s annual operating budget, expressly including, but not limited to, the following: (i) required non-contingent debt service payments (including issuer fees, bond fees, trustee fees and similar fees) on any loans permitted to be secured by the Property that is senor to the Deed of Trust, which have been approved by the Housing Authority; (ii) the annual deposit to the replacement reserve which shall be $ 47,000.00, and any other scheduled deposits and/or replenishments to reserves; (iii) all current and unpaid general and limited partner partnership fees (all fees payable to all general partner s and limited partners of the Maker), which s hall not exceed $36,500.00 (escalating at 3% annually on a cumulative basis if not paid in prior years) per year in the aggregate; (iv) water, sewer, electrical, gas, and other utility-type charges for the Project; (v) costs to operate and maintain the Project; (vi) insurance premiums; (vii) expenses incurred in connection with the management and operation of the Project (including property management fees which are approved by the Housing Authority); (viii) capital expenditures to the Project to comply with applicable laws or otherwise to improve the operation or management of the Project to the extent such capital expenditures are not made from reserves and are approved by the Housing Authority in writing or by approval of the applicable budget setting forth such capital expenditures prior to Maker undertaking such capital expenditures; (ix) payment of any unpaid tax credit adjusters owed to Maker’s limited partner; (x) payments to Deferred Developer Fee, as defined in the Loan Agreement; and (xi) the City of National City’s and the Housing Authority’s annual monitoring fees as required pursuant to the Regulatory Agreement and that certain Density Bonus Agreement between the Housing Authority and Maker, among others and the County of San Diego Health and Human Services Agency’s annual monitoring fees as required in connection with its loan to Maker.

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3 Authority, or the then holder of this Note, which consent shall be granted or withheld in the reasonable discretion of the Housing Authority, then all obligations secured by this Note may be declared due and payable, at the option of Housing Authority, or the then holder of this Note . The Housing Authority reserves the right to approve all sales, transfers, conveyances, additional encumbrances, or dispositions of the Property, unless otherwise provided in the Loan Agreement. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions.

3. Security for Note. This Note is secured by the Deed of Trust of even date herewith executed by Maker, which creates a lien on the Property described therein , and by the Loan Documents, including the Security Agreement.

4. Acceleration Upon Default. In the event of any default under the terms of the Loan Documents, or acceleration of any prior or subsequent loans, notes and/or deeds of trust, at the option of the holder of this Note , beyond any applicable notice and cure periods set forth therein (including notice to Maker’s limited partner), all principal and interest under this Note shall immediately become due and payable, without further notice . Failure to exercise such remedy shall not constitute a waiver of the right to exercise it in the event of any subsequent default. Without limiting any other events of default contained herein, or in any of the Loan Documents, the failure to complete construction of the Project substantially in accordance with the plans and specifications and place the Project “in service” (as such term is used in 26 U.S.C. §42) on or before December 31, 2026, shall be considered an event of default entitling the Housing Authority to accelerate the payment of principal and interest hereunder, as provided in this Section 4. Time is of the essence.

5. Payment and Interest Calculation. Principal and interest shall be payable in lawful money of the United States of America. Interest shall be computed based on a 360-day year and 30-day month.

Payments shall be applied to interest first and then to any unpaid principal balance.

6. Incorporation of the Loan Agreement . The provisions of the Loan Agreement are expressly incorporated into this Note by this reference.

7. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note , and expressly agrees that, without in any way affecting the liability of Maker hereunder, the Housing Authority may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note . Maker further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any Deed of Trust , security agreement, guaranty or other agreement now or hereafter securing this Note.

8. Recourse During Construction and Non-Recourse After Completion.

(a) Prior to the timely placement of the Project “in service” (as such term is used in 26 U.S.C. §42) (i.e., on or before December 31, 2026), in any action brought to enforce the obligations of Maker under this Note or the Loan Documents, the judgment or decree shall be enforceable against Maker, in addition to any collateral security for the payment of this Note, and Housing Authority may seek any deficiency judgment against Maker.

(b) Following the timely placement of the Project “in service” (as such term is used in 26 U.S.C. §42) (i.e., on or before December 31, 2026), nothing contained herein shall be deemed to cause

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4 Maker (or any of its partners) to be personally liable for any of the obligations evidenced hereby, and the Housing Authority shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of the Housing Authority with respect to repayment of the loan evidenced by this Note shall be against the Property.

(c) Notwithstanding Section 8(b), above, Maker shall indemnify, defend, protect and hold the Housing Authority harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense incurred by the Housing Authority as a result of any (i) fraud or material misrepresentation by Maker under or in connection with the loan evidenced by this Note or any Loan Document; (ii) intentional bad faith waste of the Property ; (iii) losses resulting from Maker’s failure to maintain insurance as required under the Deed of Trust or the Loan Documents ; and (iv) misapplication of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security in a manner prohibited by the Loan Documents. The Housing Authority shall promptly provide Maker with written notice of any event for which Maker has an indemnification obligation as provided in this Section 8(c).

(d) Notwithstanding anything to the contrary contained herein, Maker’s obligation to indemnify the Housing Authority as set forth in Section 8(c), above, shall be personal, recourse obligations of the Maker and in the event of any breach of such obligations, the Housing Authority shall have the right to proceed directly against the Maker to recover any and all losses, damages, liabilities, actions, causes of action, costs and expenses resulting from such breach and the right to bring any action and to institute any proceedings to obtain a deficiency judgment in or following after foreclosure for any and all losses, damages, liabilities, actions, caus es of action, costs and expenses resulting from such breach.

9. Late Charge. In addition to the foregoing, if any installment due hereunder is not paid within fifteen (15) days from the date due, Maker promises to pay a “late charge” of five percent (5%) of the installment so overdue to defray the expense incident to handling any s uch delinquent payment or payments.

10. Severability. If any provision of this Note is determined to be void by court of competent jurisdiction, such determination shall not affect any other provision of this Note , and such other provisions shall remain in full force and effect.

11. Non-Waiver. No delay in demanding or failure to demand performance hereunder shall constitute a waiver by the Housing Authority of its right to subsequently demand such performance or to exercise any remedies for any default hereunder. Further, in order to be effective, any waiver of any of the Housing Authority’s rights and remedies hereunder shall be expressed in a writing signed by the Housing Authority. Further waiver by the Housing Authority of any right hereunder shall not constitute a waiver of any other right, including but not limited to the right to exercise any and all remedies for a different or subsequent event of default hereunder.

12. Replacement Note. The undersigned agrees that, in the event that this Note shall become lost or stolen, upon request of the Housing Authority, the undersigned shall exec ute a replacement n ote incorporating the terms hereof, provided that the Housing Authority shall furnish a written agreement to indemnify the undersigned against all losses, costs, and damages arising from a duplicative demand for payment under this Note.

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5 13. Interpretation. This Note shall be governed and interpreted in accordance with applicable California law.

14. Signature Authority. All individuals signing this Note for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the Housing Authority that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

MAKER:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

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Exhibit “D”

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1 RECORDING REQUESTED BY:

COMMUNITY DEVELOPMENT

COMMISSION OF THE CITY OF

NATIONAL CITY

AND WHEN RECORDED RETURN TO:

COMMUNITY DEVELOPMENT

COMMISSION OF THE CITY OF

NATIONAL CITY

Records Management Department
1243 National City Blvd.

National City, California 91950

DEED OF TRUST
(Union Tower)

THIS DEED OF TRUST (“Deed of Trust”) is dated as of the __ day of February, 2024, by and among Union Tower One LP, a California limited partnership (“Trustor”), whose address is c/o Wakeland Housing and Development Corporation, 1230 Columbia Street, Suite 950, San Diego, California 92101, Commonwealth Land Title Company (“Trustee”) and the City of National City and Community Development Commission -Housing Authority of the City of National City (“collectively, the Beneficiary”), whose address is 140 East 12 th Street, National City, California
91950-3312.

TRUSTOR HEREBY irrevocably grants, transfers, and assigns to Trustee, in trust, with power of sale, a leasehold interest in that certain real property (“Property”) in the City of National City, County of San Diego, State of California, described as:

(See Legal Description - Exhibit “A”)

FOR THE PURPOSE OF SECURING:

(a) Payment of the indebtedness evidenced by that certain Promissory Note (Union Tower- Housing Authority Housing Fund) of even date herewith executed by Trustor, in the principal sum of Eight Million and No/100 Dollars ($8,000,000.00), and any renewal, extension, or modification of the promissory note (“Housing Authority Note”);

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2 (b) Payment of the indebtedness evidenced by that certain Promissory Note (Union Tower - HOME and HOME-ARP Funds) of even date herewith executed by Trustor, in the principal sum of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), and any renewal, extension, or modification of the promissory note (“HOME and HOME-ARP Note”);

(c) Any additional sums and interest that may hereafter be loaned to the then record owner of the Property by Beneficiary, when evidenced by another note or notes reciting that it or they are so secured;

(d) The performance of each agreement contained in this Deed of Trust;

(e) The performance of each agreement of Trustor under that certain Construction and Permanent Financing Loan Agreement ( Union Tower ) of even date herewith , by and between Trustor and Beneficiary on file in the Office of Beneficiary (“Loan Agreement”); and

(f) The performance of each agreement and covenant of Trustor under that certain Regulatory Agreement (Union Tower) of even date herewith and recorded concurrently herewith affecting the Property (“Regulatory Agreement”); and

(g) The performance of each agreement and covenant of Trustor under that certain Affordable Housing Density Bonus Agreement ( Union Tower ) of even date herewith and recorded concurrently herewith affecting the Property (“Density Bonus Agreement”).

A. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:

1. Maintenance and Repair. To keep the Property in good condition and repair, ordinary wear and tear excepted; not to remove or demolish any buildings on the Property (other than any planned demolition contemplated in the plans and specifications) ; to complete or restore promptly and in good and workmanlike manner any building that may be constructed, damaged, or destroyed on the Property; to pay when due all claims for labor performed and materials furnished for the Property unless such claims are being contested by Borrower in good faith and such claims have been bonded over or otherwise secured against to Beneficiary’s satisfaction; to comply with all laws affecting the Property or requiring any alterations or improve ments to be made on the Property; not to commit or permit waste of the Property; not to commit, suffer, or permit any act upon the Property in violation of law; and to cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the Property may be reasonably necessary.

2. Fire Insurance. To provide, maintain, and (subject to the rights of senior lenders) deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary as its interest may appear. Subject to the rights of any senior lenders, the amount collected under any fire or other property insurance policy may be applied by Beneficiary to any amounts secured by this Deed of Trust and in any order determined by Beneficiary, or at the option of Beneficiary the entire amount so collected or any part of that amount may be released to Trustor. This application or release shall not cure or waive any default or notice of default under this Deed of Trust or invalidate any

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3 act done pursuant to such a notice. Notwithstanding the foregoing, but subject to the rights of senior lenders, in the event of any fire or other casualty to the Property, Trustor shall have the right to rebuild the Property, and to use all available insurance proceeds therefor, provided that (a) such proceeds are sufficient to rebuild the Property in a manner that provides adequate security to Beneficiary for repayment of the indebtedness secured hereby or if such proceeds are insufficient then Trustor shall have funded any deficiency, (b) Beneficiary shall have the right to approve (which shall not be unreasonably withheld, conditioned or delayed) plans and specifications for any major rebuilding and the right to approve (which shall not be unreasonably withheld, conditioned or delayed) disbursements of insurance proceeds for rebuilding under a construction escrow or similar arrangement, and (c) no material default by Trustor then exists hereunder or under the Loan Agreement, Density Bonus Agreement, Regulatory Agreement, Housing Authority Note or HOME and HOME-ARP Note which would not be cured by rebuilding. If the casualty affects only part of the Property and total rebuilding is not feasible, then, subject to the rights of senior lenders, proceeds may be used for partial rebuilding and partial repayment of the indebtedness secured hereby in a manner that provides adequate security to Beneficiary for repayment of the remaining indebtedness secured hereby.

3. Defense of Security. To appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or the rights or powers of Beneficiary, or Trustee; and to pay all costs and expenses in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.

4. Payment of Liens and Taxes. To pay all taxes and assessments affecting the Property prior to such payments becoming due , including assessments on appurtenant water stock, all encumbrances, charges, and liens, with interest, on the Property or any part of the Property, which appear to be prior or superior to this Deed of Trust ; and all costs, fees, and expenses of this Deed of Trust. If Trustor fails to make any payment or to do any act as provided in this Deed of Trust , then Beneficiary or Trustee may (but is not obligated to) make the payment or do the act in the required manner and to the extent deemed necessary by Beneficiary or Trustee to protect the security of this Deed of Trust. The performance by Beneficiary or Trustee of such an act shall not require notice to or demand upon Trustor and shall not release Trustor from any obligation under this Deed of Trust. Beneficiary or Trustee shall also have the following related rights and powers:
to enter upon the Property for the foregoing purposes; to appear in and defend any action or proceeding purporting to affect the security of t his Deed of Trust or the rights or powers of Beneficiary or Trustee; to pay, purchase, contest, or compromise any encumbrance, charge, or lien that in the judgment of either appears to be prior or superior to this Deed of Trust.

5. Reimbursement of Costs. To pay immediately and without demand all sums expended by Beneficiary or Trustee pursuant to this Deed of Trust, with interest from date of expenditure at the amount allowed by law in effect at the date of this Deed of Trust, and to pay any amount demanded by Beneficiary (up to the maximum allowed by law at the time of the demand) for any statement regarding the obligation secured by this Deed of Trust.

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4 6. Use. That Trustor will not permit or suffer the use of any of the Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed.

The Beneficiary hereby acknowledges that a portion of the Property shall be office space consisting of the entire seventh floor of one building will be subleased by the Trustor to SDBTC Family Housing Corp Three, a California corporation.

7. Incorporation of Agreements . The Housing Authority Note , HOME and HOME -ARP Note, Loan Agreement, Density Bonus Agreement and Regulatory Agreement are incorporated herein by reference and made a part of this Deed of Trust , although not attached. Copies are on file in the office of the Beneficiary.

8. Performance of Other Obligations . To perform, in a timely manner, each agreement and covenant by and between Trustor on any and all notes, loans and deeds of trust that are senior and/or junior to this Deed of Trust . A default in any of these obligations after the expiration of any applicable notice or cure period shall constitute a default under this Deed of Trust.

B. THE PARTIES AGREE THAT:

9. Condemnation Award. Any award of damages in connection with any taking or condemnation, or for injury to the Property by reason of public use, or for damages for private trespass or injury to the Property, is hereby assigned and shall be paid to Beneficiary (subject to the rights of any senior lenders), as its interest may appear as further security for all obligations secured by this Deed of Trust . Upon receipt of such proceeds, Beneficiary shall apply or release them in the same manner and with the same effect as provided in Section 2 of this Deed of Trust for the disposition of proceeds of fire or other insurance.

10. Waiver of Late Payments. By accepting payment of any sum secured by this Deed of Trust after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure to pay any amounts secured by this Deed of Trust.

11. Trustee’s Powers. Upon written request of Beneficiary, Trustee may (a) reconvey all or any part of the Property; (b) consent to the making and recording, or either, of any map or plat of all or any part of the Property; (c) join in granting any easement on the Property; or (d) join in or consent to any extension agreement or any agreement subordinating the lien, encumbrance, or charge of this Deed of Trust . Trustee need not provide Trustor with notice before taking any of the foregoing actions, and shall not be liable for the proper performance of the act. The exercise by Trustee of any of the foregoing powers shall not affect the personal liability of any person with respect to the obligations secured by this Deed of Trust , or the lien of this Deed of Trust on the remaining property as security for the repayment of the full amount secured by this Deed of Trust.

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5 12. Full Reconveyance. Upon written request of Beneficiary stating that all obligations secured by this Deed of Trust have been performed in full , surrender of this Deed of Trust , the Housing Authority Note and HOME and HOME-ARP Note, and any other notes secured by this Deed of Trust to Trustee for cancellation and retention, and payment of Trustee’s fees and charges, Trustee shall reconvey, without warranty, the Property then subject to this Deed of Trust . The recitals in the reconveyance shall be conclusive proof of the truthfulness of the recitals. The grantee in the reconveyance may be described as “the person or persons legally entitled thereto.”

13. Assignment of Rents . As additional security, Trustor hereby gives to and confers upon Beneficiary the right, power, and authority during the continuance of this Deed of Trust, to collect the rents, issues, and profits of the Property, but reserves the right, prior to any default , which continues beyond any applicable notice and cure periods, by Trustor in payment of any amounts secured by this Deed of Trust or in the performance of any agreement under this Deed of Trust, to collect and retain these rents, issues, and profits as they become due and payable. Upon any such uncured default, Beneficiary may, without notice and without regard to the adequacy of the security for the amounts secured by this Deed of Trust , either per sonally or by agent or court - appointed receiver, do the following: enter upon and take possession of the Property or any part of the Property; sue for or otherwise collect all rents, issues, and profits, including those past due and unpaid; and apply these rents, issues, and profits, less costs and expenses of operation and collection, upon any amounts secured by this Deed of Trust , in any order determined by Beneficiary. The exercise of the foregoing rights by Beneficiary shall not cure or waive any default or notice of default under this Deed of Trust or invalidate any act done pursuant to such a notice.

14. Default; Foreclosure. Upon material default by Trustor in the payment of any amounts secured by this Deed of Trust or in the performance of any obligation under the Housing Authority Note, HOME and HOME -ARP Note, Loan Agreement, Density Bonus Agreement , Regulatory Agreement or this Deed of Trust , after the expiration of any and all applicable notice or cure periods, Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustee a written declaration of default and demand for sale and a written notice of default and election to sell the Property. Trustee shall cause the notice of default and election to sell to be recorded. After the required time period has lapsed following the recordation of the notice of default, and after notice of sale has been given as required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place specified in the notice of sale, either as a whole or in separate parcels, and in any order determined by Trustee, at public auction to the highest bidder for cash in lawful money of the United Stat es, payable at the time of sale.

Trustee may postpone sale of all or any portion of the Property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the p receding postponement. Trustee shall deliver to the purchaser at the auction its deed conveying the Property sold, but without any covenant or warranty, express or implied. The recital in the deed of any matter or fact shall be conclusive proof of the truthfulness of the recital. Any person, including Trustor, Trus tee, or Beneficiary, may purchase at the sale.

After deducting all costs, fees, and expenses of Trustee and Beneficiary under this section , including costs of procuring evidence of title incu rred in connection with the sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms of this Deed of Trust, not then repaid, with accrued interest at the amount allowed by law in effect at the date of this

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6 Deed of Trust; all other sums then secured by this Deed of Trust; and the remainder, if any, to the person or persons legally ent itled to the remaining proceeds . Notwithstanding anything to the contrary contained herein, Beneficiary hereby agrees that Trustor’s limited partners shall each have the right, but not the obligation, to cure any defaults of Trustor hereunder, and the Beneficiary agrees to accept cures tendered by Trustor’s limited partner s on the same basis as if made or tendered by Trustor.

15. Due on Sale or Further Encumbrance . Except for Permitted Transfers or as otherwise provided in the Loan Agreement, should Trustor agree to or actually sell, convey, transfer, or dispose of, or further encumber the Property , or any part of it, or any interest in it, without first obtaining the written consent of the Beneficiary, then all obligations secured by this Deed of Trust may be declared due and payable, at the option of the Beneficiary. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions.

16. General Provisions. This Deed of Trust applies to, inures to the benefit of, and binds all parties to this Deed of Trust and their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Benefici ary” shall mean the holder and owner, including pledgee, of the Housing Authority Note or HOME and HOME-ARP Note, whether or not named as a beneficiary in this Deed of Trust, and the heirs, legatees, devisees, administrators, executors, and assigns of any such person. In this Deed of Trust , whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.

17. Acceptance by Trustee. Trustee accepts this Deed of Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party to this Deed of Trust of pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.

18. Substitution of Trustees . B eneficiary, or any successor in ownership of any obligations secured by this Deed of Trust, may from time to time, by written instrument, substitute a successor or successors to any Trustee named in or acting under this Deed of Trust . The substitution instrument shall contain the name of the original Trustor, Trustee, and Beneficiary under this Deed of Trust, the book and page where this Deed of Trust is recorded, and the name and address of the new Trustee. When executed by Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, the substitution instrument shall be conclusive proof of proper substitution of the succes sor Trustee or Trust ees. Any successor Trustee or Trustees shall, without conveyance from the predecessor Trustee, succeed to all its title, estate, rights, powers, and duties.

19. Cumulative Powers and Remedies . The powers and remedies conferred in this Deed of Trust are concurrent and cumulative to all other rights and remedies provided in this Deed of Trust or given by law. These powers and remedies may be exercised singly, successively, or together, and as often as deemed necessary.

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7 20. Conclusiveness of Recitals. The recitals contained in any reconveyance, trustee’s deed, or any other instrument executed by Trustee from time to time under the authority of this Deed of Trust or in the exercise of its powers or the performance of its duties under this Deed of Trust , shall be conclusive evidence of their truth, whether stated as specific and particular facts, or in general statements or conclusions. Further, the recitals shall be binding and conclusive upon Trustor, its heirs, executors, administrators, successors, and assigns, and all other persons.

21. Co-Trustees. If two or more persons are designated as Trustee in this Deed of Trust , any, or all, power granted in this Deed of Trust to Trustee may be exercised by any of those persons, if the other person or persons are unable, for any reason, to act. Any recital of this inability in any instrument executed by any of those persons shall be conclusive against Trustor and Trustor’s heirs and assigns.

22. Request for Notices of Default and Sale. In accordance with Section 2924b of the California Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under any deeds of trust executed by Trustor concerning the Property be mailed to:

Housing Authority of the City of National City
140 East 12th Street
National City, CA 91950-3312
Attn: Executive Director

The Trustor requests that a copy of any notice of default and of any notice of sale under this Deed of Trust be mailed to Trustor at the address of Trustor set forth above.

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 new request must be recorded.

23. Inspections. Trustor shall permit Beneficiary and its agents or representatives, to inspect the Property at any and all reasonable times upon reasonable advance notice and subject to the rights of tenants. Inspections shall be conducted so as not to interfere with the tenants’ use and enjoyment of the Property or the general operation of the Property.

24. Hazardous Materials Defined. For purposes of this Deed of Trust, “Hazardous Materials” mean and include any hazardous, toxic or dangerous waste, substance or material including, without limitation, flammable explosives, radioactive materials, asbestos, hazardous wastes, toxic substances and any materials or substances defined as hazardous materials, hazardous substances or toxic substan ces in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCL A”), as amended (42 U.S.C. §9601, et seq .), the Hazardous Materials Transportation Act (49 U.S.C. §1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901, et seq.), and those substances defined as hazardous wastes in §25117 of the California Health and Safety Code or as hazardous substances in §25316 of the California Health and Safety Code or in any regulations promulgated under either such law, any so-called “Su perfund” or “Superlien” law, or any other federal, state or local statute, law,

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8 ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in effect.

25. Trustor’s Hazardous Materials Representations and Warranties and Indemnity. In addition to the general and specific representations, covenants and warranties set forth in this Deed of Trust or otherwise, Trustor represents, covenants and warrants, with respect to Hazardous Materials, as follows:

(a) Except as may otherwise be set forth in the Phase 1 and Phase 2, neither Trustor nor, to the best knowledge of Trustor, any other person, has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located or disposed of on, under or at the Property or any part thereof, and neither the Property nor any part thereof, or any property adjacent thereto, has ever been used (whether by Trustor or, to the best knowledge of Trustor, by any other person) as a manufacturing site, dump site or storage site (whether permanent or temporary) for any Hazardous Materials. “Hazardous Materials” for purposes of this Section 25 shall not include substances typically used in the ordinary course of developing, operating and maintaining apartment complexes in California or small amounts of chemicals, cleaning agents and the like commonly employed in routine household uses in a manner typical of occupants in other similar residential properties, provided that such substances are used in accordance with all applicable laws.

(b) Trustor hereby agrees to indemnify Beneficiary, its officers, employees, contractors and agents, and hold Beneficiary, its officers, employees, contractors and agents harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against Beneficiary, its officers, employees, contractors or agents for, with respect to, or as a direct or indirect result of, the presence or use, generatio n, storage, release, threatened release or disposal of Hazardous Materials on or under the Property or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials from the Property (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under CERCLA, any so- called “Superfund” or “Superlien” law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Materials) regardless of whether or not caused by or within the control of Trustor. The foregoing indemnification shall not apply to any liability resulting from (i) an event that occurs after a transfer of the Property due to any foreclosure sale (judicial or nonjudicial) or a deed in lieu of foreclosure, or (ii) acts or omissions of Beneficiary or its agents.

(c) Except as may otherwise be set forth in the Phase 1 and Phase 2, Trustor has not received any notice of (i) the happening of any event involving the use, spillage, discharge, or cleanup of any Hazardous Materials (“Hazardous Discharge”) affecting Trustor or the Property or (ii) any complaint, order, citation or notice with regard to air emissions, water discharges, noise emissions or any other environmental, health or safety matter affecting Trustor or the Property (“Environmental Complaint”) from any person or entity, including, without limitation, the United States Environmental Protection Agency (“EPA”). If Trustor receives any such notice after the

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9 date hereof, then Trustor will give, within seven (7 ) business days thereafter, oral and written notice of same to Beneficiary.

(d) Without limitation of Beneficiary’s rights under this Deed of Trust , Beneficiary shall have the right, but not the obligation, at any and all reasonable times and upon reasonable advance notice to enter onto the Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise deal with, any such Hazardous Materials or Environmental Complaint upon its receipt of any notice from any person or entity, including without limitation, the EPA, asserting the existence of any Hazardous Materials in violation of applicable law or an Environmental Complaint on or pertaining to the Property which, if true, could result in an order, suit or other action against Trustor affecting any part of the Property by any governmental agency or otherwise which, in the sole opinion of Beneficiary, could jeopardize its security under this Deed of Trust . All reasonable costs and expenses incurred by Beneficiary in the exercise of any such rights shall be secured by this Deed of Trust and shall be payable by Trustor upon demand together with interest thereon at a rate equal to the highest rate payable under the Housing Authority Note and HOME and HOME-ARP Note.

(e) The foregoing representation, covenants, indemnities and warranties shall be continuing and shall be true and correct for the period from the date hereof to the release of this Deed of Trust (whether by satisfaction of the obligations secured hereby or foreclosure or action in lieu thereof), and these representations, covenants, indemnities and warranties shall survive such release.

26. Choice of Law. This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California.

27. Authority to Sign. All individuals signing this Deed of Trust for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the Beneficiary that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

28. Notices to Trustor and Trustor’s Limited Partner . Any notices delivered to Trustor pursuant to this Deed of Trust shall be sent to Trustor, with a copy to Trustor’s limited partner, at the addresses set forth in the Loan Agreement.

29. Permitted Refinancings. Trustor shall be permitted to refinance the Permanent Loan and any other loan senior to this Deed of Trust at or before its maturity date on commercially reasonable terms in an amount equal to or less than the then-outstanding principal balance of such loan (the “Refinanced Loan”), and Beneficiary and Trustee agree that this Deed of Trust and the other documents evidencing and/or securing the obligations hereunder shall remain subordinate to any such Refinanced Loan.

30. Subordination to Tax Credit Regulatory Agreement. Beneficiary agrees that this Deed of Trust is and shall be subordinate to the “extended low-income housing commitment” (as such term is defined in Section 42(h)(6)(B) of the Internal Revenue Code of 1986, as amended) recorded

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10 against the Property in favor of the California Tax Credit Allocation Committee (the “Tax Credit Extended Use Agreement”) provided that such Tax Credit Extended Use Agreement, by its terms, terminates upon foreclosure or a transfer of the property by instrument in lieu of foreclosure subject to the restrictions on tenant evictions and rent increases set forth in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986, as amended.

TRUSTOR:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

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11 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature (Seal)

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

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12 ACKNOWLEDGMENT

State of California )
)
County of San Diego )

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

WITNESS my hand and official seal.

Signature (Seal)

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

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13 Exhibit “A”

Property Description

That certain real property situated in the City of National City , County of San Diego, State of California, described as follows:

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Exhibit “E”

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1 SECURITY AGREEMENT
(Union Tower)

THIS SECURITY AGREEMENT (“Agreement”) is dated as of the __ day of February, 2024, by and between Union Tower One LP, a California limited partnership (“Borrower”) and the City of National City and the Community Development Commission-Housing Authority of the City of National City (collectively, the “Lender”).

RECITALS

A. Lender has agreed to make: (i) a loan in the original principal amount of up to Eight Million and No/100 Dollars ($8,000,000.00) (“Housing Authority Loan”) to Borrower as described in that certain Construction and Permanent Financing Loan Agreement (Union Tower - Housing Authority Housing Fund) (“Loan Agreement”) of even date herewith by and between the Borrower and Lender, which Housing Authority Loan is evidenced by that certain Eight Million and No/100 Dollars ($8,000,000.00) Promissory Note (Union Tower-Housing Authority Housing Fund) (“Housing Authority Note”) of even date herewith made by Borrower in favor of the Lender; and (ii) a loan in the original principal amount of up to One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) (“ HOME and HOME-ARP Loan”) to Borrower as described in the Loan Agreement , which HOME and HOME -ARP Loan is evidenced by that certain One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) Promissory Note (Union Tower-HOME and HOME-ARP Funds) (“HOME and HOME-ARP Note”) of even date herewith made by Borrower in favor of the Lender. The Housing Authority Loan and HOME and HOME- ARP Loan are secured by secured by that certain Deed of Trust (Union Tower) (“Deed of Trust”) of even date herewith recorded against the Borrower’s ground lease interest in that certain real property (“Property”) more particularly described in the Deed of Trust . The Loan Agreement, Housing Authority Note, HOME and HOME -ARP Note, Deed of Trust and this Agreement may be referred to collectively herein as the “Loan Documents.”

B. Borrower and the Lender desire that the Housing Authority Loan, HOME and HOME-ARP Loan, Housing Authority Note and HOME and HOME-ARP Note should be further secured by certain personal property owned by Borrower and the Property.

AGREEMENT

NOW, THEREFORE, for valid consideration, Borrower and the Lender agree, pledge and covenant as follows:

1. Grant of Security Interest. Borrower hereby grants to the Lender a security interest, in the following described personal property (“Collateral”):

SEE EXHIBIT “1” ATTACHED HERETO FOR DESCRIPTION OF COLLATERAL

2. Attachment of Security Interest. The security interest hereby created shall attach immediately upon execution of this Agreement by Borrower and shall secure the payment of the

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2 Housing Authority Loan, HOME and HOME-ARP Loan, Housing Authority Note and HOME and HOME-ARP Note according to the terms of the Loan Agreement.

3. Proceeds Included. Borrower also hereby grants to the Lender a security interest in and to any and all additions and modifications to, replacements and substitutions for, and products, proceeds, and interest from the Collateral on any sale, transfer, exchange or other disposition thereof. However, nothing in this Section 3 shall be deemed to constitute a grant of authority to Borrower to sell, transfer, exchange or otherwise dispose of the Collateral without the prior written consent of the Lender other than in the ordinary course of Borrower’s business.

4. Warranties of Borrower. Borrower represents and warrants to Lender that:

(a) Borrower is or will be the full legal owner of the Collateral and except for any senior or subordinate lenders, no other person or entity has or will have any right, title, interest or claim in or to the Collateral or any part thereof, except for the security interest created herein, or created pursuant to those certain deeds of trust and security agreements securing loans to borrower that are senior or junior to the Deed of Trust and that were duly approved by the Lender , and/or security interests in the Collateral granted by Borrower with the knowledge and approval of Lender, in its reasonable discretion.

(b) Some or all of the Collateral is or will be located at the Property , and once so located, it will not, dur ing the continuance of this Agreement, be removed from the Property without the prior written consent of Lender, except obsolete items other than in the ordinary course of Borrower’s business. If the Collateral is moved or upon any default, which continues beyond any applicable notice and cure periods, of this Agreement by Borrower, at Lender ’s written request, at its own cost and expense, shall assemble the Collateral wherever in San Diego County the Lender requests the Collateral to be assembled.

5. Duty to Maintain. Borrower shall maintain the Collateral, and each part or item thereof, in good order and repair, ordinary wear and tear excepted, at Borrower’s own cost and expense, and shall not use the Collateral or allow the Collateral to be used in a manner which is likely to result in deterioration of the Collateral to a degree beyond that associated with normal usage and ordinary “wear and tear.”

6. Insurance. Borrower shall keep the Collateral, and all parts and items thereof, insured, at Borrower’s own cost and expense, in an amount equal to the full replacement cost value of the Collateral. Such insurance policy shall cover all insurable risks to which the Collateral might foreseeably be exposed, and shall be issued by an insurance carrier acceptable to Lender, and shall provide that the loss payable thereunder shall be paid to Borrower, Lender and to any senior secured party, as their respective interests may appear. Notwithstanding the foregoing, this Section 6 shall not be deemed to require a separate insurance policy covering the Collateral, if equiva lent coverage first satisfactory to Lender is provided as part of the insurance maintained by Borrower with respect to the Project (as defined in the Loan Agreement).

7. Taxes. Borrower shall be solely liable for any taxes or assessments which are levied or assessed against the Collateral and shall ensure the prompt payment of same.

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3 8. Disposition of Collateral. Except for personal property in the ordinary course of business or as otherwise allowed by the Loan Agreement, the Borrower shall not (without the prior written consent of Lender ), sell, transfer, encumber, hypothecate, exchange or otherwise dispose of the Collateral until the Housing Authority Loan and HOME and HOME -ARP Loan are fully and finally paid, except Borrower may replace items of col lateral in the ordinary course of business with items of equal or greater value.

9. Right to Inspect. Lender, through its agents or employees, shall have the right to enter the Project at normal business hours upon reasonable advance notice (of not less than 48 hours) and intervals to inspect and take inventory of the Collateral, provided the same does not unnecessarily infringe upon the operation of the Project or the rights of the tenants.

10. Right to Make Payments. Lender shall be entitled, but not obligated, to pay, on behalf of Borrower, after giving written notice to Borrower and ten (10) days from receipt of the notice in which to make payment, any costs or expenses reasonably necessary to keep the Collateral fully insured, properly repaired or maintained, and lien free, which costs or expenses Borrower should have paid pursuant to this Agreement but failed to do so. The Lender shall have the right to enter the Project, subject to the rights of the tenants, at normal business hours upon reasonable advance notice (of not less than 48 hours) and intervals, to perform such acts as it may deem necessary for the maintenance or protection of the Collateral. Any monies expended or expenses incurred under this Section 10 shall be secured by the security interest created by this Agreement, and shall be due and payable to Lender by Borrower, together with interest thereon at the lesser of ten percent (10%) per annum or the maximum rate permitted by law, on demand.

11. Assignment by Lender. With prior notice to the Borrower, the Lender may assign its rights hereunder and its security interest created herein to another public agency. In the event of such an assignment, Lender’s assignee shall be entitled, upon written notice to Borrower of such assign- ment, to all performance required of Borrower under this Agreement, and to all payments and monies secured by this Agreement.

12. Default. If Borrower fails to perform any obligation provided for in this Agreement or to pay any obligation secured by this Agreement as such obligation comes due, after any notice or cure periods provided herein or in any unexpired Loan Documents, then Borrower shall be in default of this Agreement, and Lender shall be entitled to all of the rights and remedies afforded secured parties under applicable provisions of Division 9 of the California Commercial Code on the date of this Agreement, excluding the right to any deficiency judgment against Borrower.

Further, Lender may also:

(a) Enter the Project to take possession of the Collateral, provided that the Collateral shall not be removed from the Project unless such removal is reasonably necessary to protect the Collateral from destruction or unauthorized removal by Borrower or some third party; or

(b) Enter the Project and dispose of the Collateral, in the manner provided by the California Commercial Code; and

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4 Before exercising any of the foregoing rights, Lender shall first give written notice of such default to Borrower and its limited partners and Borrower shall have thirty (30) days from receipt of the notice to cure any such default before Lender exercises its rights (unless such deficiency is not capable of being cured within such thirty (30) day period, then Borrower shall have such amount of time as Lender determines is needed, not to exceed one hundred twenty (120) days) .

Notwithstanding anything to the contrary contained herein, the Lender hereby agrees that any cure of any default made or tender by any of the Borrower’s limited partner s shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower.

13. Financing Statement. Borrower authorizes the Lender to file any Financing Statement(s) necessary to perfect the security interest created by this Agreement. Such Financing Statement(s) shall be on a form or forms approved by the California Secretary of State, and Lender shall pay the fees associated with filing such documents.

14. No Waiver. Neither the acceptance of any partial or delinquent payment by Lender nor Lender’s failure to exercise any of its rights or remedies upon the occurrence of a default by Borrower shall constitute a waiver of such default, a modification of this Agreement or of Borrower’s obligations under this Agreement, or a waiver of any subsequent default by Borrower.

15. Term. This Agreement shall continue in effect until each and every obligation of Borrower under the Loan Agreement has been satisfied (except any obligations that survive repayment of the Housing Authority Loan or HOME and HOME -ARP Loan, foreclosure of the Property or termination of the Loan Agreement), or until the Loan Agreement has terminated by virtue of a foreclosure of a senior lienholder.

16. Time of Essence. Time is hereby expressly declared to be of the essence of this Agreement.

17. Notices. All notices under this Agreement shall be in writing and sent (a) by certified or registered U.S. mail, return receipt requested, (b) overnight by a nationally recognized overnight courier such as UPS Overnight or FedEx, or (c) by personal delivery. All notices shall be effective upon re ceipt (or refusal to accept delivery). All notices shall be delivered to the following addresses (which addresses may be changed by written notice):

Lender: Housing Authority of the City of National City
1243 National City Blvd.

National City, CA 91950
Attn: Executive Director

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5 Borrower: Union Tower One LP
c/o Wakeland Housing and Development Corporation
1230 Columbia Street, Suite 950
San Diego, CA 92101
Attn. President & CEO

with a copy to: NCPA Union Tower One, LLC
2323 D Avenue
National City, CA 91950
Attn: CEO
With copies to:

Borrower’s limited partners: Hudson Union Tower LP
Hudson-FM SLP LLC
c/o Hudson Housing Capital LLC
New York, NY 10111
Attention: General Counsel

with a copy to: Holland & Knight LLP
10 St. James Avenue, 12th Floor
Boston, MA 02116
Attn: Dayna M. Hutchins, Esq.

18. Certain Requirements Superior . All provisions of this Agreement shall be subject and subordinate to:

(a) The rights of lenders under the documents evidencing the Construction Loan and Permanent Loan and the rights of the California Department of Housing and Community Development under its financing for the Project.

(b) Any and all federal, state and local statutes and regulations applicable to the Project, the Collateral, Housing Authority Loan or HOME and HOME-ARP Loan; and

(c) The provisions of the Loan Agreement secured by this Agreement, to the extent of any inconsistency between it and this Agreement.

19. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision shall be severed from the rest of this Agreement and the remaining provisions shall remain in full force and effect.

20. Construction of Agreement . The provisions contained in this Agreement shall not be construed in favor of or against either Borrower or the Lender , but shall be construed as if both parties prepared this Agreement. This Agreement shall be construed in accordance with the laws of the State of California.

21. Counterparts. This Agreement may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same Agreement. Borrower and the Lender

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6 agree that each such counterpart is an original and shall be binding upon all of the parties, even though all of the parties are not signatories to the same counterpart.

22. Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits are actually attached to this Agreement. The Recitals to this Agreement are hereby incorporated in this Agreement by this reference.

23. Signature Authority. All individuals signing this Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity , covenant to one another that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

BORROWER:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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7 HOUSING AUTHORITY:

Community Development Commission-Housing Authority of the City of National City

By:______________________________________
Benjamin A. Martinez, Executive Director

CITY:

City of National City

By:______________________________________
Benjamin A. Martinez, City Manager

Approved as to form:

By:______________________________________
Barry J. Schultz, City Attorney

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8 EXHIBIT “1”

TO SECURITY AGREEMENT

BORROWER: Union Tower One LP

LENDER: Community Development Commission-
Housing Authority of the City of National City and
City of National City

The following described property and any and all proceeds thereof, whether Borrower now or hereafter has any right, title or interest in, on, about or concerning the real property (the “Property”) described in the Security Agreement.

(a) Tangible Property. All existing and future goods and tangible personal property located on the Property or whenever located and used or useable in connection with the use, operation or occupancy of the Property or in construction of any improvements now or hereafter located on the Property (“Improvements”), including, but not limited to, all appliances, furniture and furnishings, fittings, materials, supplies, equipment and fixtures, and all building material, supplies, and equipment now or hereafter delivered to the Property and installed or used or intended to be installed or used therein whether stored on the Property or elsewhere; and all renewals or replacements thereof or articles in substitution thereof, but excluding equipment owner by third parties and located on the property, such as cable television equipment, laundry equipment and solar power equipment.

(b) General Intangibles . All general intangibles relating to design, development, operation, management and use of the Property and construction of the improvements, including, but not limited to, (i) all names under which or by which the Property of the improvements may at any time be operated or known, all rights to carry on business under any such names or any variant thereof, and all goodwill in any way relating to the Property, (ii) all permits, licenses, authorizations, variances, land use entitlemen t, approvals and consents issued or obtained in connection with the construction of the Improvements, (iii) all permits, licenses, approvals, consents, authorizations, franchises and agreements issued or obtained in connection with the use, occupancy or operation of the Property, (iv) all rights as a declarant (or its equivalent) under any covenants, conditions and restrictions or other matters now or hereafter of record affecting the Property, (v) all materials prepared for filing or filed with any governmental agency, (vi) all rights under any contract in connection with the development, design, use, operation, management and construction of the Property, and (vii) all books and records prepared and kept in connection with the acquisition, construction, operation and occupancy of the Property and the Improvements.

(c) Contracts. All construction, service, engineering, consulting, leasing, architectural, design and other similar contracts of any nature (including, without limitation, those of any general contractors, subcontractors and materialmen), as such may be modified, amended or supplemented from time to time, concerning the design, construction, management, operation, occupancy, use, and/or disposition of any portion of or all of the Property.

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9 (d) Plans and Reports . All architectural, design and engineering drawings, plans, specifications, working drawings, shop drawings, general conditions, addenda, soil tests and reports feasibility studies, appraisals, engineering reports, building permits, grading permits, and other permits to construct the Project, as defined in the Loan Agreement, environmental reports and similar materials relating to any portion of or all of the Property and all modifications, supplements and amendments thereto, includin g without limitation, those more specifically described in the Loan Agreement between the Borrower and the Lender.

(e) Sureties. All payment and performance bonds or guarantees and any and all modifications and extensions thereof relating to the Property.

(f) Payments. All reserves, deferred payments, deposits, refunds, cost savings, letters of credit and payments of any kind relating to the construction, design, development, operation, occupancy, use and disposition of all or any portion of the Property, including, without limitation, any property tax rebates now owing or hereafter payable to Borrower , or reimbursement or other payments now or hereafter payable to Borrower on account of prepayments or overpayments of fees or payment of costs of infrastructure improvem ents that benefit real p roperty other than the Property.

(g) Financing Commitments. All proceeds of the loan made by the Lender to the Borrower and any commitment by any lender to extend permanent or additional construction financing to the Borrower relating to the Property and all tax credits for the Project.

(h) Claims. All proceeds and claims arising on account of any damage to or taking of the Property or any part thereof, and all causes of action and recoveries for any loss of diminution in the value of the Property.

(i) Insurance. All policies of, and proceeds resulting from, insurance relating to the Property or any of the above collateral, and any and all riders, amendments, extensions, renewals, supplements, or extensions thereof, and all proceeds thereof, whether or not the proceeds are from policies of insurance required by the Lender.

(j) Deposits. All deposits made with or other security given to utility companies by Borrower with respect to the Property and the improvements, and all advance payments of insurance premiums made by Borrower with respect thereto and claims or demands relating to insurance and all deposit accounts whenever located.

(k) Stock. All shares of stock or other evidence of ownership of any part of the Property that is owned by Borrower in common with others, including all water stock relating to the Property, if any, and all documents or rights of membership in any owners’ or members’ association or similar group having responsibility for managing or operating any part of the Property, and all the general partnership interests in Borrower.

(l) Proceeds. All proceeds, whether cash, promissory notes, contract rights or otherwise, of the sale or other disposition of all or any part of the estate of Borrower in the Property now or hereafter existing thereon.

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10 (m) Sale Contracts. All sales contracts, escrow agreements and broker’s agreements concerning the sale of any or all of the Property, and all amendments thereto and all amounts deposited into escrow for payment to Borrower.

(n) Leases and Rents. All the leases, income, rents, issues, deposits, receipts, profits and proceeds, and accounts receivable generated from the leasing, use and operation, of the Property and the Collateral to which Borrower may be entitled, whether now due, past due, or to become due.

(o) Other. Without limiting the above items, all Goods, Accounts, Documents, Instruments, Money, Financial Assets, Investment Properties, Chattel Paper and General Intangibles, as those terms are defined in the Uniform Commercial Code from time to time in effect in the State of California.

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Exhibit “F”

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1 UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT
(Union Tower)

THIS UNSECURED ENVIRONMENTAL INDEM NITY AGREEMENT (“Indemnity”) is dated as of the ___ day of February, 2024, by and between Union Tower One LP, a California limited partnership (“Indemnitor”), to and for the benefit of the City of National City and the Community Development Commission-Housing Authority of the City of National City (collectively, the “Lender”), its successors and assigns and, to the extent not otherwise referenced, the Indemnified Parties (as hereinafter defined).

RECITALS

A. Lender has agreed to make: (i) a loan in the original principal amount of up to Eight Million and No/100 Dollars ($8,000,000.00) (“Housing Authority Loan”) to Indemnitor as described in that certain Construction and Permanent Financing Loan Agreement (Union Tower-Housing Authority Housing Fund) (“Loan Agreement”) of even date herewith by and between the Indemnitor and Lender, which Housing Authority Loan is evidenced by that certain Eight Million and No/100 Dollars ($8,000,000.00) Promissory Note (Union Tower-Housing Authority Housing Fund) of even date herewith made by Indemnitor in favor of the Lender; and (ii) a loan in the original principal amount of up to One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) (“ HOME and HOME-ARP Loan”) to Indemnitor as described in the Loan Agreement , which HOME and HOME - ARP Loan is evidenced by that certain that certain One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) Promissory Note (Union Tower-HOME and HOME-ARP Funds) of even date herewith made by Indemnitor in favor of the Lender. All capitalized terms used but not defined herein have the definitions set forth in the Loan Agreement. The Housing Authority Loan and HOME and HOME-ARP Loan are secured by, among other things, a Deed of Trust and a Security Agreement executed by Indemnitor in favor of Lender. The Deed of Trust encumbers the Indemnitor’s ground lease interest that certain real property described on Exhibit A attached hereto (such property along with any other property encumbered by the Deed of Trust, now or at any time in the future, shall be referred to herein as the “Property”).

B. The execution and delivery of this Indemnity by the Indemnitor to the Lender i s a condition to Lender’s entry into the Loan Agreement. Lender is making the Housing Authority Loan and HOME and HOME-ARP Loan in reliance upon this Indemnity.

C. This Indemnity is unsecured and is separate from the security and other collateral being delivered by Indem nitor in connection with the making of the Housing Authority Loan and HOME and HOME-ARP Loan.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of Lender making the Housing Authority Loan and HOME and HOME-ARP Loan, and other valuable consideration, the receipt of which is hereby acknowledged, Indemnitor agrees as follows:

1. Indemnity.

(a) Subject to Sections 2, 3 and 4 below, Indemnitor hereby agrees to defend, protect, indemnify and hold harmless Lender, Lender’s affiliates, directors, officers, shareholders, agents and

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2 employees, and Lender’s participants, successors and assigns specified in Section 4 hereof (hereinafter, collectively, the “Indemnified Parties”), from and against, and shall reimburse the Indemnified Parties for, any and all actual out-of-pocket costs, expenses or losses arising from any claim, liability, damage, injunctive relief, injury to person, property or natural resources, fine , penalty, action, and cause of action (collectively, “Costs and Liabilities”), incurred by or asserted against any Indemnified Party and arising directly or indirectly, in whole or in part, out of the release, discharge, deposit or presence, or alleged or suspected release, discharge, deposit or presence, of any Hazardous Materials at, on, within, under, about or from the Property, or in or adjacent to any part of the Property, or in the soil, groundwater or soil vapor on or under the Property, or elsewhere in connection with the transportation of Hazardous Materials to or from the Property in violation of any Hazardous Materials Laws, whether or not known to Indem nitor or Indemnified Parties, whether foreseeable or unforesee able, regardless of the source of such release, discharge, deposit or presence or, except as expressly provided to the contrary in Sections 2 and 4 hereof, regardless of when such release, discharge, deposit or presence occurred or is discovered. Without limiting the generality of the foregoing indemnity, such Costs and Liabilities shall include, without limitation, all actual out-of-pocket costs incurred by Indem nified Parties in connection with (i) determining whether the Property is in compliance with this Indemnity and with all applicable Hazardous Materials Laws or the amount of money required to remediate any environmental contamination, and causing the Property to be or become in compliance, with all applicable Hazardous Materials Laws, (ii) any removal or remediation of any kind and disposal of any Hazardous Materials present at, on, under or within the Property or released from the Property to the extent required by applicable Hazardous Materials Laws in effect at the time of such removal, remediation or disposal, and (iii) repair of any damage to the Property or any other property caused by any removal, remediation or disposal . The foregoing indemnification shall not apply to any liability resulting from (i) an event that occurs after a transfer of the Property due to any foreclosure sale (judicial or nonjudicial) or a deed in lieu of foreclosure or following repayment of the Loan, or (ii) acts or omissions of any Indemnified Party. If an Indemnified Party does not acquire title to the Property by foreclosure or a deed in lieu of foreclosure, this Agreement will terminate on the date that is ten (10) years after the repayment, forgiveness or other termination or cancellation of the Loan.

(b) Upon demand by any Indemnified Party, Indemnitor shall defend any investigation, action or proceeding in connection with any claim or liability, or alleged claim or liability, that would, if determined adversely to such Indemnified Party, be covered by the foregoing indemnification provisions, such defense to be at Indemnitor’s sole cost and expense and by counsel reasonably approved by such Indemnified Party, which counsel may, without limiting the rights of an Indemnified Party pursuant to the next succeeding sentence of this Section 1(b), also represent Indemnitor in such investigation, action or proceeding. If any Indemnified Party determines reasonably and in good faith that its defense by Indemnitor is being conducted in a manner which is prejudicial to its interests, such Indemnified Party may elect to conduct its own defense through counsel of its own choosing and at the expense of Indemnitor.

(c) As used herein, the term “Hazardous Materials” means and includes any flammable, explosive, or radioactive materials or hazardous, toxic or dangerous wastes, substances or related materials or any other chemicals, materials or substances, exposure to which is prohibited, limited or regulated by any federal, stat e, county, regional or local authority or which, even if not so regulated, may or could pose a hazard to the health and safety of the occupants of the Property or of property adjacent to the Property, including, but not limited to, asbestos, PCBs, petroleum products and byproducts, substances defined or listed as “hazardous substances” or “toxic substances” or similarly identified in, pursuant to, or for purposes of, the California Solid Waste Management, Resource Recovery and Recycling Act (California Gov ernment Code §66700 et seq.), the Comprehensive

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3 Environmental Response, Compensation, and Liability Act, as amended (42 U.S.C. §9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §1801, et seq.), the Resource Conservation and Recovery act (42 U.S.C. §6901, et seq.), Section 25117 or Section 25316 of the California Health & Safety Code; and any so- called “Superfund” or “Superlien” law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or im posing liability or st andards of conduct concerning any hazardous, toxic or dangerous waste, substance or material; or any substances or mixture regulated under the Toxic Substance Control Act of 1976, as now or hereafter amended (15 U.S.C. §2601 et seq.); and any “toxic pollutant” under the Clean Water Act, as now or hereafter amended (33 U.S.C. §1251 et seq.); and any hazardous air pollutant under the Clean Air Act, as now or hereafter amended (42 U.S.C. §7901 et seq.). Notwithstanding the above, the term “Hazardous Materials” shall not include small amounts of chemicals, cleaning agents and the like commonly employed in routine residential apartment uses in a manner typical of occupants or owners in other similar residential properties , provided that such substances are used in compliance with applicable laws. The term “Hazardous Materials Laws” means any federal, state or local law, code, statute, or dinance, rule, regulation, rule of common law or guideline relating to Hazardous Materials now or hereafter enacted or promulgated (collectively, and including, without limitation, any such laws which require notice of the use, presence, storage, generation, disposal or release of any Hazardous Materials to be provided to any party).

2. Time Limits on Claims. Notwithstanding the foregoing provisions:

(a) No claim shall be made hereunder by any Indemnified Party unless and until any one of the following events shall have occurred: (i) repayment in full of both the Housing Authority Loan and HOME and HOME -ARP Loan (as evidenced by the release and reconveyance of the Deed of Trust); or (ii) vesting of title to the Property in Lender or any Indem nified Party through judicial or non-judicial foreclosure or acceptance of a deed in lieu thereof.

(b) Indemnitor shall not have any obligation under this Indemnity to an Indemnified Party with respect to any Costs and Liabilities that, prior to the first to occur of the events described in Section 2(a)(i) or (ii) above: (i) were actually known to Lender; (ii) were liquidated in amount, or were otherwise readily determinable in amount without undue delay; and (iii) would have been lawfully and properly includable as part of the secured indebtedness under the Deed of Trust in an action for a deficiency judgment following a judicial foreclosure sale of the Property.

(c) If any Indemnified Party or any affiliate of any Indemnified Party has acquired ownership of the Property through foreclosure or deed in lieu of foreclosure, the obliga tions of Indemnitor hereunder shall apply, without limitation, to all Costs and Liabilities that arise out of or are attributable to, whether directly or indirectly, ownership of the Property or any part thereof by any Indemnified Party or any such affiliate, or to the position of such Indemnified Party or such affiliate as an owner in the chain of title to the Property or any part thereof.

(d) If the Housing Authority Loan and HOME and HOME -ARP Loan have both been repaid in full, whether by voluntary payment or by foreclosure or deed in lieu of fore closure, the obligations of Indemnitor hereunder shall continue to apply, without limitation, to all Costs and Liabilities that arise out of or are attributable to, whether directly or indirectly, any claim or allegation against an Indemnified Party relating to any act or omission of such Indemnified Party in respect of the Housing Authority Loan, HOME and HOME-ARP Loan or the Property, or in connection with any exercise of such Indemnified Party’s rights under any of the Loan Documents, as defined below.

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4 3. Acts of Indemnified Parties.

(a) Notwithstanding anything to the contrary herein, Indemnitor shall not be liable hereunder to an Indemnified Party to the extent of that portion of any Costs and Liabil ities which Indemnitor establishes is attributable to other property owned by an Indemnified Party or the gross negligence or affirmative act of such Indemnified Party, its agent or any successor in interest of an Indemnified Party at the Property which causes (i) the release, discharge, deposit or presence, or alleged or suspected release, discharge, deposit or presence of a Hazardous Material at the Property, or (ii) material aggravation of a then existing Hazardous Material condition or occurrence at the Property, if and only if, in either such case referred to in (i) or (ii) above, such act was in viola tion of any Hazardous Materials Laws or was carried out without reasonable care under the circumstances.

(b) In addition, Indemnitor shall not be liable hereunder for that portion of any Costs and Liabilities which Indemnitor establishes is attributable to the introduction and initial release, discharge or deposit, or alleged or suspected introduction, initia l release, discharge or deposit of a Hazardous Material at the Property by any party, other than Indemnitor or an affiliate of Indemnitor, at any time after Indemnitor’s ownership interest in the Property terminates. Notwithstanding the foregoing, but subject to Sections 2 and 3(a) above and Section 4 below, the liability of Indemnitor hereunder shall otherwise remain in full force and effect after Lender or such affiliate of Lender so acquires title to the Property, including without limitation with respe ct to any Hazardous Materials which are discovered at the Property after the date Lender or such affiliate of Lender acquires title but which were actually introduced to the Property prior to the date of such acquisition.

4. Indemnified Parties. This Indemnity and Indemnitor’s obligations hereunder shall inure to the benefit of and be enforceable only by (a) Lender, Lender’s directors, officers, agents and employees, (b) any person or entities to which any Lender participates, assigns or sells all or any portion of its interest in the Housing Authority Loan, HOME and HOME-ARP Loan, or which otherwise succeeds to the interest of Lender under the Deed of Trust, whether by purchase or otherwise, and (c) any affiliate of Lender which acquires title to the Property at a foreclosure sale or by deed in lieu of foreclosure.

5. Unsecured Obligations. The obligations of Indem nitor hereunder are unsecured. This Indemnity is not intended to be, nor shall it be, secured by the Deed of Trust or any other instrument or agreement executed by Indemnitor or any other entity or person in favor of Lender or any Indem - nified Party relating to the Housing Authority Loan or HOME and HOME-ARP Loan (except for any guaranty) (such documents together with the Deed of Trust being referred to collectively herein as the “Loan Documents”). The obliga tions of Indemnitor under this Indemnity are independent of any indemnification or other obligations of Indemnit or under the Loan Documents with respect to any Hazardous Materials. The rights and remedies of the Indemnified Parties under this Indemnity shall be in addition to any other rights and remedies of such Indemnified Parties under the Loan Documents.

In no event shall any provision of this Indemnity be deemed to be waiver of or to be in lieu of any right or claim, including without limitation any right of contribution or other right of recovery, that any person entitled to enforce this Indemnity might ot herwise have against Indemnitor under any Hazardous Materials Laws. Any sums payable hereunder shall not be deemed to be based upon any diminution in or other impairment of the value of any collateral held by Lender to secure the Housing Authority Loan or HOME and HOME-ARP Loan.

6. Interest on Unpaid Amounts. Any amount claimed hereunder by an Indemnified Party not paid by Indemnitor within sixty (60) days after written demand made by such Indemnified Party and

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5 accompanied by a reasonable summary of the amounts claimed, shall bear interest at the rate of ten percent (10%) per annum.

7. Limitations on Liability. The liability of Indemnitor under this Indemnity shall in no way be limited or impaired by (a) any amendment or modification of the provisions of any of the Loan Documents; (b) except as set forth in Sections 2, 3 and 4, any participation in or sale or assignment of the Loan Documents or any sale or transfer of all or part of the Property; (c) the release of Indemnitor or any person or entity from performance or observance of any of the agreements, covenants, terms, or conditions contained in any of the Loan Documents by operation of law; and, in any such case, whether with or without notice to Indemnitor and with or without consideration. Except as provided in Sections 2, 3 and 4, Indemnitor’s obligations hereunder shall in no way be impaired, reduced or released by reason of (i) an Indemnified Party’s omission or delay in exercising any right des cribed herein or (ii) any act or omission of an Indemnified Party in connection with any notice, demand, warning, or claim regarding violations of codes, laws or ordinances governing the Property.

8. Recourse Obligations. Notwithstanding anything to the contrary in the Loan Documents, Indemnitor shall be personally liable on a recourse basis for the obligations of Indemnitor set forth herein.

9. Successors and Assigns. This Indemnity shall be continuing, irrevocable and binding upon each of the per sons and entities comprising Indemnitor and their respective heirs, successors, and assigns.

10. Inconsistencies. In the event of any inconsisten cies or conflicts between the terms of this Indemnity and the terms of the other Loan Documents (including any exculpatory language contained therein), the terms of this Indemnity shall control.

11. Separate Causes of Action. A separate right of action hereunder shall arise each time an Indemnified Party acquires knowledge of any matter described herein. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from tim e to time.

No action hereunder shall preclude any subsequent action.

12. Severability. If any provision of this Indemnity shall be determined to be unenforceable in any circumstances by a court of com petent jurisdiction, then the balance of this Indemnity nevertheless shall be enforceable, and the subject provision shall be enforceable in all other circumstances.

13. Notices. All notices under this Indemnity shall be in writing and sent by (a) certified or registered mail, return receipt requested, (b) by a nationally recognized overnight courier such as UPS or FedEx, or (c) by personal delivery. All notices shall be delivered to the following addresses (which addresses may be changed by written notice):

Lender: Community Development Commission-
Housing Authority of the City of National City
140 East 12th Street
National City, California 91950-3312
Attn: Executive Director

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6 Indemnitor: Union Tower One LP
c/o Wakeland Housing and Development Corporation
1230 Columbia Street, Suite 950
San Diego, CA 91950-3312
Attn. President & CEO

With copies to: NCPA Union Tower One, LLC
2323 D Avenue
National City, CA 91950
Attn: CEO

Indemnitor’s limited partners: Hudson Union Tower LP
Hudson-FM SLP LLC
c/o Hudson Housing Capital LLC
New York, NY 10111
Attention: General Counsel

with a copy to: Holland & Knight LLP
10 St. James Avenue, 12th Floor
Boston, MA 02116
Attn: Dayna M. Hutchins, Esq

14. Governing Law. This Indemnity shall be governed by and construed in accordance with the laws of the State of California.

15. Counterparts. This Indemnity may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same agreement. The parties agree that each such counterpart is an original and shall be binding upon all the parties, even though all of the parties are not signatories to the same counterpart.

16. Exhibits and Recitals Incorporated. All exhibits referred to in this Indemnity, if any, are hereby incorporated in this Indemnity by this reference, regardless of whether or not the exhibits are actually attached to this Indemnity. The Recitals to this Indemnity are hereby incorporated i n this Agreement by this reference.

17. Signature Authority. All individuals signing this Indemnity for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the Lender that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

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7 18. Cure by Limited Partner s. Notwithstanding anything to the contrary contained in this Indemnity, Lender hereby agrees that Indemnitor’s limited partners shall each have the right, but not the obligation, to cure any defaults of Indemnitor hereunder and Lender hereby agrees to accept cures tendered by Indemnitor’s limited partner on the same basis as if made or tendered by Indemnitor.

IN WITNESS WHEREOF, this Indemnity is executed as of the day and year above written.

INDEMNITOR:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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8 LENDER:

HOUSING AUTHORITY:

Community Development Commission-Housing Authority of the City of National City

By:______________________________________
Benjamin A. Martinez, Executive Director

CITY:

City of National City

By:______________________________________
Benjamin A. Martinez, City Manager

Approved as to form:

By:______________________________________
Barry J. Schultz, City Attorney

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9 Exhibit “A”

Property Description

That certain real property situated in the City of National City , County of San Diego, State of California, described as follows:

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Exhibit “G”

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1 DO NOT DESTROY THIS NOTE: WHEN PAID, THIS NOTE AND THE DEED OF

TRUST SECURING IT MUST BE SURRENDERED TO TRUSTEE FOR
CANCELLATION BEFORE RECONVEYANCE WILL BE MADE.
----------------------------------------------------------------------------------------------------------------

PROMISSORY NOTE
(Union Tower-HOME and HOME-ARP Funds)
(“Note”)
National City, California February __, 2024

1. Principal and Interest . For value received, Union Tower One LP,, a California limited partnership (“Maker”), in consideration of that certain Construction and Permanent Financing Loan Agreement (Union Tower) (“Loan Agreement”) of even date herewith between the Maker and the City of National City (“ City”), Maker promises to pay to the City, or order, at 140 East 12th Street, National City, California 91950-3312, or such other place as the holder may from time to time designate by written no tice to Maker , the principal sum of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), or so much as is advanced, together with accrued interest from the date disbursed at the rate of three percent (3%) simple interest per annum, except in the event of a default under this Note or any of the Loan Documents, as defined below, past any applicable notice and cure period, in which event ten percent (10%) simple interest shall be deemed to have accrued from the date of such default. This Note is made pursuant to the Loan Agreement and the Deed of Trust (“Deed of Trust”), being executed concurrently herewith, to be recorded in the office of the County Recorder of San Diego County. The Loan Agreement, this Note, the Deed of Trust and Regulatory Agreement (as defined in the Loan Agreement), together with any and all other documents executed in connection therewith, are sometimes collectively referred to herein as the “Loan Documents .” All capitalized terms which are not defined herein shall have the meaning ascribed to them in the Loan Agreement.

2. Term of Loan, Due Date and Right of Prepayment. Payments shall be due and payable as follows:

(a) On May 31, 2027 (for calendar 2026), and annually on May 31 of each year thereafter through the end of the term described in (b) below, Maker shall make annual payments to the City under this Note in an amount equal to 17.37% of the Residual Receipts, as defined herein, for the immediately previous calendar year (on a form acceptable to the City in its sole discretion). Concurrently herewith the Community Development Commission-Housing Authority of the City of National City is making a loan to Maker in the original principal amount of up to of Eight Million and No/100 Dollars ($8,000,000.00) (“Housing Authority Loan”). The Housing Authority Loan shall also be repayable out of R esidual Receipts. Residual R eceipts shall be allocated first to the Housing Authority Loan until paid in full, then to this Note until paid in full.

(b) All principal and unpaid interest shall be due and payable by the Maker to the City on December 31, 2081.

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2 (d) All principal and accrued interest shall be due and payable by the Maker to the Cityupon acceleration of this Note pursuant to Section 4, below.

(e) Except as otherwise permitted by the Loan Agreement, a ll principal and accrued interest shall be due and payable by the Maker to the City upon any sale, transfer, conveyance or further encumbrance of all or any part of the Property , as defined in the Deed of Trust , which is not consented to by the City in writing.

“Residual Receipts” shall mean Gross Income less Operating Expenses, calculated on a calendar year basis, as provided herein. All calculations of Residual Receipts shall be subject to verification and approval by the City.

“Gross Income” shall mean all gross income of Maker from all residential and non - residential components of the Project, as such term is defined in the Loan Agreement, and any other income to Maker derived from the Property, and the proceeds of any sale, financing or refinancing of all or any portion of Property or the sale, transfer or conveyance of Maker. Provided, however, that Gross Income shall not include (i) insurance proceeds or condemnation proceeds; (ii) security deposits or other tenant deposits; (iii) equity contributions to Maker made by the partners of Maker; (iv) disbursements from operating or replacement reserves; or (v) interest earned on project reserves. Interest earned (if any) on project reserves shall accrue to the applicable project reserve account and shall only be used for the purposes for which the reserve was established.

“Operating Expenses” shall mean actual, reasonable and customary costs, taxes, fees and expenses directly attributable to the operation, maintenance and management of the Project, to the extent approved by City in Maker’s annual operating budget, expressly including, but not limited to, the following: (i) required non-contingent debt service payments (including issuer fees, bond fees, trustee fees and similar fees) on any loans permitted to be secured by the Property that is senor to the Deed of Trust, which have been approved by the City ; (ii) the annual deposit to the replacement reserve which shall be $ 47,000.00, and any other scheduled deposits and/or replenishments to reserves; (iii) all current and unpaid general and limited partner partnership fees (all fees payable to all general partners and limited partners of the Maker), which shall not exceed $36,500.00 (escalating at 3% annually on a cumulative basis if not paid in prior years) per year in the aggregate; (iv) water, sewer, electrical, gas, and other utility -type charges for the Project; (v) costs to operate and maintain the Project; (vi) insurance premiums; ( vii) expenses incurred in connection with the management and operation of the Project (including property management fees which are approved by the City ); (viii) capital expenditures to the Project to comply with applicable laws or otherwise to improve the operation or management of the Project to the extent such capital expenditures are not made from reserves and are approved by the City in writing or by approval of the applicable budget setting forth such capital expenditures prior to Maker undertaking such capital expenditures ; (ix) payment of any unpaid tax credit adjusters owed to Maker’s limited partner; (x) payments to Deferred Developer Fee, as defined in the Loan Agreement; and (xi) the City of National City’s and the City’s annual monitoring fees as required pursuant to the Regulatory Agreement and that certain Density Bonus Agreement between the City

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3 and Maker, among others and the County of San Diego Health and Human Services Agency’s annual monitoring fees as required in connection with its loan to Maker.

This Note may be prepaid in whole or in part at any time and, from time to time, without notice, premium or penalty. Any payment, including any prepayment, shall be allocated first to unpaid interest and then to principal. Except as permitted by the Loan Agreement, should the undersigned sell, convey, transfer, further encumber, or dispose of the Property described in the Deed of Trust securing this Note, or any part of it, or any interest in it, without first obtaining the written consent of City, or the then holder of this Note, which consent shall be granted or withheld in the reasonable discretion of the City, then all obligations secured by this Note may be declared due and payable, at the option of City, or the then holder of this Note. The City reserves the right to approve all sales, transfers, conveyances, additional encumbrances, or dispositions of the Property, unless otherwise provided in the Loan Agreement. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions.

3. Security for Note . This Note is secured by the Deed of Trust of even date herewith executed by Maker, which creates a lien on the Property described therein , and by the Loan Documents, including the Security Agreement.

Without limiting any other events of default contained herein, or in any of the Loan Documents, the failure to complete construction of the Project substantially in accordance with the plans and specifications and place the Project “in service” (as such term is used in 26 U.S.C. §42) on or before December 31, 2026, shall be considered an event of default entitling the City to accelerate the payment of principal and interest hereunder, as provided in this Section 4. Time is of the essence.

5. Payment and Interest Calculation. Principal and interest shall be payable in lawful money of the United States of America. Interest shall be computed based on a 360- day year and 30-day month. Payments shall be applied to interest first and then to any unpaid principal balance.

6. Incorporation of the Loan Agreement. The provisions of the Loan Agreement are expressly incorporated into this Note by this reference.

7. Waiver. Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note , and expressly agrees that, without in any way affecting the liability of Maker hereunder, the City may extend any maturity date or the time for payment of any installment due hereunder, accept additional security, release any party liable hereunder and release any security now or hereafter securing this Note. Maker further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense

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4 to any demand on this Note, or on any Deed of Trust , security agreement, guaranty or other agreement now or hereafter securing this Note.

8. Recourse During Construction and Non-Recourse After Completion.

(a) Prior to the timely placement of the Project “in service” (as such term is used in 26 U.S.C. §42) (i.e., on or before December 31, 2026), in any action brought to enforce the obligations of Maker under this Note or the Loan Documents, the judgment or decree shall be enforceable against Maker, in addition to any collateral security for the payment of this Note, and City may seek any deficiency judgment against Maker.

(b) Following the timely placement of the Project “in service” (as such term is used in 26 U.S.C. §42) (i.e., on or before December 31, 2026), nothing contained herein shall be deemed to cause Maker (or any of its partners) to be personally liable for any of the obligations evidenced hereby, and the City shall not seek any personal or deficiency judgment on such obligations, and the sole remedy of the City with respect to repayment of the loan evidenced by this Note shall be against the Property.

(c) Notwithstanding Section 8(b), above, Maker shall indemnify, defend, protect and hold the City harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense incurred by the City as a result of any (i) fraud or material misrepresentation by Maker under or in connection with the loan evidenced by this Note or any Loan Document; (ii) intentional bad faith waste of the Property ; (iii) losses resulting from Maker’s failure to maintain insurance as required under the Deed of Trust or the Loan Documents; and (iv) misapplication of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security in a manner prohibited by the Loan Documents. The City shall promptly provide Maker with written notice of any event for which Maker has an indemnification obligation as provided in this Section 8(c).

(d) Notwithstanding anything to the contrary contained herein, Maker’s obligation to indemnify the City as set forth in Section 8(c), above, shall be personal, recourse obligations of the Maker and in the event of any breach of such obligations, the City shall have the right to proceed directly against the Maker to recover any and all losses, damages, liabilities, actions, causes of action, costs and expenses resulting from such breach and the right to bring any action and to institute any proceedings to obtain a deficiency judgment in or following after for eclosure for any and all losses, damages, liabilities, actions, causes of action, costs and expenses resulting from such breach.

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5 11. Non-Waiver. No delay in demanding or failure to demand performance hereunder shall constitute a waiver by the City of its right to subsequently demand such performance or to exercise any remedies for any default hereunder. Further, in order to be effective, any waiver of any of the City’s rights and remedies hereunder shall be expressed in a writing signed by the City. Further waiver by the City of any right hereunder shall not constitute a waiver of any other right, including but not limited to the right to exercise any and all remedies for a different or subsequent event of default hereunder.

12. Replacement Note. The undersigned agrees that, in the event that this Note shall become lost or stolen, upon request of the City, the undersigned shall exec ute a replacement n ote incorporating the terms hereof, provided that the City shall furnish a written agreement to indemnify the undersigned against all losses, costs, and damages arising from a duplicative demand for payment under this Note.

13. Interpretation. This Note shall be governed and interpreted in accordance with applicable California law.

14. Signature Authority. All individuals signing this Note for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the City that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing.

MAKER:

Union Tower One LP, a California limited partnership

By: Union Tower LLC
a California limited liability company
Its: Managing General Partner

By: Wakeland Housing and Development Corporation,
a California nonprofit public benefit corporation
Its: Manager

By:___________________________
Rebecca Louie, President and CEO

By: NCPA Union Tower One, LLC
a California limited liability company
Its: Co-General Partner

By: SDBTC Family Housing Corp. One, a California nonprofit public benefit corporation Its: Manager

By: __________________________
Jodi Barthold, Chief Financial Officer

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RESOLUTION NO. 2024 -

RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION-HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY , CALIFORNIA, (1) APPROVING THE C ONSTRUCTION

AND PERMANENT FINANCING LOAN AGREEMENT FOR THE UNION TOWER PROJECT (“PROJECT”), LOCATED AT 2312 F AVENUE IN NATIONAL CITY, WITH THE BORROWER, UNION TOWER ONE LP, A CALIFORNIA LIMITED PARTNERSHIP; AND (2) AUTHORIZE THE EXECUTIVE DIRECTOR TO EXECUTE PROJECT RELATED DOCUMENTS.

WHEREAS, a Notice of Funding Availability (NOFA) for up to $10,000,000 for the funding of affordable housing in National City was included in the Housing Authority’s Strategic Plan that was approved by the Community Development Commission -Housing Authority of the City of National City, California (“Housing Authority”) on August 3, 2021; and

WHEREAS, the NOFA made approximately $10 million in total funds available for all capital requests for new construction, acquis ition with rehabilitation, or rehabilitation of affordable housing serving households earning up to 60% of the Area Median Income (AMI) for rental projects and households earning up to 80% -120% of the AMI for homeownership projects. Capital funds are from the Housing Authority’s Housing Fund and are subject only to the conditions set forth in the NOFA; and

WHEREAS, after the release of the NOFA on October 14, 2021, a total of two (2) applications were received by the November 19, 2021 deadline.

WHEREAS, a request for $8,000,000 was made by Wakeland Housing and Development Corporation for the Union Tower Project for 94 affordable housing units to be developed at 2312 F Avenue in National City, California.

WHEREAS, the Housing Authority issued Addendum No. 1 to the NOFA on April 7, 2022 to include a financial feasibility and gap analysis of the two applications to help determine the funding recommendations; and

WHEREAS, the Housing Authority conditionally awarded a loan to the Union Tower Project in the amount of $8,000,000, per Resolution 2022-85, based on standard underwriting criteria and loan processing, including executing the loan documents at the construction loan closing; and

WHEREAS, the Union Tower Project has secured its financing , including remaining gap funding sources; and

WHEREAS, Housing Authority staff and its financial consultants completed an underwriting of the final loan amounts; and

WHEREAS, the General Counsel of the Housing Authority has drafted the Construction and Permanent Financing Loan Agreement and “Exhibits A-G.”

NOW, THEREFORE, COMMUNITY DEVELOPMENT COMMISSION -HOUSING

AUTHORITY OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

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2 Section 1: Community Development Commission-Housing Authority of the City of National City authorizes the Construction and Permanent Financing Loan Agreement and “Exhibits A-F” for funding requested through the Affordable Housing Notice of Funding Availability (“NOFA”) released on October 14, 2021, in the amount of Eight Million Dollars ($8,000,000) per Resolution 2022-85 to the Union Tower Affordable Housing Project.

Section 2: Community Development Commission-Housing Authority of the City of National City authorizes the Executive Director of the Housing Authority or his designee to execute the Construction and Permanent Financing Loan Agreement and “Exhibits A- F.”

Section 3: City of National City City Council previously authorized by a Resolution dated February 6, 2024, the City Manager or his designee to execute the HUD HOME and HOME-ARP Agreement from the Substantial Amendment to the 2023 -2024 Annual Action Plan, to fully implement the activities funded under said Plan, as part of the Construction and Permanent Financing Loan Agreement Exhibit “A” and Promissory Note Exhibit “G.”

Section 4: The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of the original Resolution.

PASSED and ADOPTED this 6th day of February, 2024.

Ron Morrison, Mayor

ATTEST:

Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

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AGENDA REPORT

Department: Housing Authority
Prepared by: Angelita Palma, Housing Programs Manager Meeting Date: Tuesday, February 6, 2024
Approved by: Benjamin A. Martinez, City Manager

SUBJECT:

Proposed Amendment to the Local Preference for CDC-HA Assisted Affordable Housing Projects.

RECOMMENDATION:

Adopt the Resolution Entitled, “Resolution of the Community Development Commission-Housing Authority (CDC-HA) of the City of National City, California, Amending Its Local Preference Policy to Require Any CDC-HA Assisted Housing Projects to Follow the Local Preference Policy and to Further Align With Federal and State Regulations.”

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

Existing Policy | On June 7, 2016, the Community Development Commission-Housing Authority of the City of National City adopted a Local Preference P olicy per Resolution 2016-38 (“Existing Policy”). The Resolution was adopted to meet local housing needs to ensure that current residents of National City are provided the opportunity to rent new affordable housing within the City limits.

The Existing Policy gives preference to applicant households that are currently residents of the City of National City to rent new affordable housing development projects in the City of National City with units restricted at or below 80% of Area Median Income (AMI) and subject to a 55-year ground lease with the Community Development Commission-Housing Authority.

Purpose | The Local Preference Policy aims to establish a meaningful way to meet local needs for affordable housing in the City of National City and prevent displacement often caused by new developments. The Community Housing Commission -Housing Authority of the City of National City (CDC -HA) aims to ensure that residents of the City of National City are provided every opportunity to rent any CDC -HA assisted new affordable housing units. Amending the Existing Policy will open up more opportunities to require local preference for CDC-HA assisted affordable units.

Proposed Policy | The proposed amendment to the Existing Policy includes removing and adding requirements for a new affordable housing project in the City of National City . Related Policy references include California Government Code §7061 and §8899.50 and the Code of Federal Regulations (CFR) Housing and Urban Development Title 24 § 200.610. In compliance with Assembly Bill 686, the proposed amendment to the Existing Policy will be a meaningful action to affirmatively further fair housing by addressing the disparity in housing needs and expanding access to affordable housing opportunities for National City residents. Through this, it will

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transform racially and ethnically concentrated areas of poverty into ar eas of opportunity, and it will foster and maintain compliance with civil rights and fair housing laws.

The amendment to the Existing Policy would remove:
1) The Ground Lease requirement;
2) Units available for eligible tenants on a first-come, first-served basis; and 3) The definition and determination of current residents.1

The amendment to the Existing Policy would additionally require:
1) That it apply to Any CDC-HA assisted new affordable housing project in the City of National City;
2) Eligible tenants be randomly selected for a unit to have an equal chance of being chosen; 3) An Affirmative Fair Housing Marketing Plan per 24 CFR 200.610; and 4) A project be subject to all FHA and related laws.

Staff Recommendation: Staff recommends the Community Development Commission-Housing Authority Board adopt the Proposed Local Preference Policy.

FINANCIAL STATEMENT:

No financial impact.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Housing and Community Development

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review.CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

Agenda Report posted within 72 hours of meeting date and time in accordance with Brown Act.

ORDINANCE:

Not Applicable

EXHIBITS:

Exhibit A - Existing Local Preference Policy
Exhibit B - Proposed Local Preference Policy – Markup
Exhibit C - Proposed Local Preference Policy – Clean
Exhibit D - Resolution and Exhibit

1 The definitions of a City of National City resident and how to qualify eligible applicants can be found in the National City Housing Authority Administrative Manual.

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Community Development Commission-Housing Authority of the City of National City TITLE: Local Preference Policy
ADOPTED: June 7, 2016 AMENDED: February 6, 2024

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Community Development Commission-Housing Authority of the City of National City First Amendment to the Local Preference PolicyCommunity Development Commission-Housing Authority of the City of National City

Purpose: Local Preference Policy for New Affordable Housing in the City of National City Targeting Households at-or-below 80% of Area Median Income and Subject to a Ground Lease with a Term of at Least 55 Years.

It is the purpose of the Local Preference PolicyIn trying to establish a meaningful way to meet local needs for housingaffordable housing in nthe City of National City (“City”) and prevent displacement often caused by new developments. It is the eeds, it is an objective of the Community Housing Commission- Housing Authority of the City of National City (CDC-HA) to ensure that current residents of the City of National City are provided an the opportunity to rent any CDC-HA assistedCDC-HA assisted new affordable housing in the National City. The Policy explains the CDC-HA assisted new affordable housing project requirements.

Policy:

The Local Preference Policy (“Policy”) requirements apply to (1) any CDC-HA assisted new affordable housing project (“Project”) in the City of National City; (2) with that have Rrestricted uUnits at or below 80% of area median income, and; (3) isare subject to a Ground Lease with the CDC-HA with a term of at least 55 years.:
 Applicable The Projects will give preference to applicant households that are currently residents of the National City to the maximum extent allowed by law.

The Policy applies to the Current Rresidents are defined as an individual or family currently or previously having primary residency in National City for at least six months . This which can be further determined by the Project Owner (“Owner”) by through, but not limited to, home visits and request for written verification from landlords , utility bills, and federal, state, and local benefit documentation.
 The local preference will only apply to the initial lease-up of all ofall the Rrestricted Uunits in the Project.

Eligible tenants should be randomly selected for a unit to have an equal chance of being chosen.  The Project shall include an Affirmative Fair Housing Marketing Plan per 24 CFR 200.610. 
 Once all initial units have leases have been executed on all Restricted Units under 80% of area median income for the Project, the local preference shall no longer apply.

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Community Development Commission-Housing Authority of the City of National City TITLE: Local Preference Policy
ADOPTED: June 7, 2016 AMENDED: February 6, 2024

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 Projects subject to this Policy may also be subject to other preferences that take precedence, such as Low-Income Housing Tax Credits rules, tax -exempt bond rules, and any other funding -driven restrictions.
 This Policy is subject to all FHA and related laws. Modifications shall be made as required by law.  shall not be enforced.
wner shall maintain a list of Applicants who have filed a complete application with Owner to rent a Restricted Unit in the Project and who have incomes which would qualify them as an Eligible Tenant, and Owner shall offer to rent appropriately-sized units on the above-referenced priority basis to the maximum extent allowed by law. Should multiple tenants be equally eligible and qualified to rent a unit, the Owner shall rent available Restricted Uunits to eEligible tTenants on a first-come, first-served basis.
 Projects subject to this Policy may also be subject to other preferences that may take precedent precedence over the local residency preference addressed in this Policy.  Other preference preferences taking may take precedent precedence as may be required by certain agreements with the CDC-HA or by State or Federal Law.

The Policy is effective as of the date of the CDC-HA adoption ofBoard the Resolution adopting the same.

Appointing Authority:

Community Housing Commission- Housing Authority of the City of National City Related Policy References
California Government Code §7061
California Government Code §8899.50
Code of Federal Regulations Title 24 § 200
California Assembly Bill 686
Prior Policy Amendments:

June 7, 2016 (Resolution No. 2016-38)
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Community Development Commission-Housing Authority of the City of National City TITLE: Local Preference Policy
ADOPTED: June 7, 2016 AMENDED: February 6, 2024

Purpose:

It is the purpose of the Local Preference Policy to establish a meaningful way to meet local needs for affordable housing in the City of National City (“City”) and prevent displacement often caused by new developments. It is the objective of the Community Housing Commission-Housing Authority of the City of National City (CDC-HA) to ensure that residents of the City of National City are provided an opportunity to rent any CDC-HA assisted new affordable housing in the City. The Policy explains the CDC-HA assisted new affordable housing project requirements.

Policy:

The Local Preference Policy (“Policy”) requirements apply to (1) any CDC-HA assisted new affordable housing project (“Project”) in the City of National City; (2) with restricted units at or below 80% of area median income, and; (3) is subject to a term of at least 55 years.  Applicable Projects will give preference to applicant households that are residents of the National City to the maximum extent allowed by law.
 The Policy applies to the initial lease-up of all the restricted units in the Project.

Eligible tenants should be randomly selected for a unit to have an equal chance of being chosen.  The Project shall include an Affirmative Fair Housing Marketing Plan per 24 CFR 200.610.  Once all initial units have been executed for the Project, the local preference shall no longer apply.  Projects subject to this Policy may also be subject to other preferences that take precedence, such as Low-Income Housing Tax Credits rules, tax -exempt bond rules, and any other funding -driven restrictions.
 This Policy is subject to all FHA and related laws. Modifications shall be made as required by law.

The Policy is effective as of the date of the CDC-HA Board Resolution adopting the same.

Appointing Authority:

June 7, 2016 (Resolution No. 2016-38)

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RESOLUTION NO. 2024 -

RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION-HOUSING AUTHORITY (CDC-HA) OF THE CITY OF NATIONAL CITY, CALIFORNIA AMENDING ITS LOCAL

PREFERENCE POLICY TO REQUIRE ANY CDC -HA ASSISTED HOUSING PROJECTS TO

FOLLOW THE LOCAL PREFERENCE POLICY AND TO FURTHER ALIGN WITH FEDERAL AND STATE REGULATIONS.

WHEREAS, in trying to meet local housing needs, it is an objective of the Community Housing Commission- Housing Authority (CDC-HA) of the City of National City to ensure that current residents of the City of National City are provided the opportunity to rent new affordable housing in National City; and
WHEREAS, the CDC-HA established a Local Preference Policy (“Policy”) per Resolution 2016-38; and

WHEREAS, the CDC-HA staff proposed an amendment to the existing Policy to remove 1) the Ground Lease requirement; 2) units available for eligible tenants on a first -come, first- served basis; and 3) the definition and determination of current residents; and

WHEREAS, the CDC-HA staff proposed the amendment to the existing Policy that would additionally require 1) that it apply to any CDC-HA assisted new affordable housing project in the City of National City; 2) eligible tenants be randomly selected for a unit to have an equal chance of being chosen; 3) an Affirmative Fair Housing Marketing Plan per 24 CFR 200.610; and 4) a project be subject to all FHA and related laws.

NOW, THEREFORE, COMMUNITY DEVELOPMENT COMMISSION -HOUSING

AUTHORITY OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: Community Development Commission-Housing Authority hereby approves the amendment to the “Local Preference Policy,” attached hereto.

Section 2: The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of the original Resolution.

PASSED and ADOPTED this 6th day of February, 2024.

Ron Morrison, Mayor
ATTEST:

Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

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Community Development Commission-Housing Authority of the City of National City TITLE: Local Preference Policy
ADOPTED: June 7, 2016 AMENDED: February 6, 2024

Purpose:

Policy:

Eligible tenants should be randomly selected for a unit to have an equal chance of being chosen.  The Project shall include an Affirmative Fair Housing Marketing Plan per 24 CFR 200.610.  Once all initial units have been executed for the Project, the local preference shall no longer apply.  Projects subject to this Policy may also be subject to other preferences that take precedence, such as Low-Income Housing Tax Credits rules, tax -exempt bond rules, and any other funding -driven restrictions.
 This Policy is subject to all FHA and related laws. Modifications shall be made as required by law.

The Policy is effective as of the date of the CDC-HA Board Resolution adopting the same.

Appointing Authority:

June 7, 2016 (Resolution No. 2016-38)

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AGENDA REPORT

Department: Finance
Prepared by: Paul Valadez, Budget Manager
Meeting Date: Tuesday, February 6, 2024
Approved by: Benjamin A. Martinez, City Manager

SUBJECT:

Fiscal Year 2023 Budget Review

RECOMMENDATION:

Accept and file this report, and adopt the resolution ratifying budget adjustments as detailed in Exhibit A of this report.

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

BACKGROUND

As part of the City of National City’s Strategic Plan objective to provide consistent financial reports, this staff report to City Council presents an update on the City’s financial operations for the fiscal year ending June 30, 2023.

DISCUSSION

Budgets are projections based on known and anticipated future revenues and expenditures.

Throughout the year, staff monitor and analyze revenues and expenditures, develop projections, and provide periodic financial reports to the City Council, City Manager, and department directors.

The totals presented herein for f iscal year 2023 are a summary of the actual revenues and expenditures, and their impact on fund balance compared to the corresponding budgeted amounts for the year. The amounts in this report are unaudited and subject to change upon completion of the City’s Annual Comprehensive Financial Report.

Fiscal Year 2023

The fiscal year 2023 adopted budget projected an increase of $364,000 to the Genera l Fund unassigned fund balance. Through a combination of overall cost savings and unanticipated increases in revenues, however, the unassigned fund balance grew by $3.5 million. The variances between budgeted and actual revenues and expenditures and the impacts on fund balance are summarized below.

Revenues

The City receives revenues from various sources, some of which, such as taxes and fees, provide unrestricted cash that may be used at the City’s discretion. Other revenues are reserved for

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specified purposes, for example, grant funds received for capital projects. Actual General F und revenues, including transfers from other funds, for fiscal year 2023, listed by source in the table below, were more than their combined budgeted total by approximately $4 million.

Fiscal Year-End Revenue Totals

Revenue Source
FY23 Adjusted
Budget1 FY23 Actual3 Variance
Sales & Use Tax $23,905,000 $22,979,943 $(925,057)
District Transactions & Use Tax 14,951,000 15,470,285 519,285 Property Tax2 2,497,353 2,565,499 68,146
Property Tax in Lieu of VLF 8,223,000 8,265,143 42,143
Other Revenues 15,871,750 20,176,931 4,305,181
Transfers In 2,005,500 2,005,500 -
Total $67,453,603 $71,463,301 $4,009,698
1 adopted budget, plus budget adjustments
2 reflects reduction for property tax allocation to the Library and Parks Maintenance funds 3 actual amounts are unaudited

The budgeted amounts for Sales & Use tax and District Transactions Tax were based on projections provided by the City’s sales tax consultant. Retail sales activity in Sales & Use Tax fell short of the budgeted amount by $900,000 due to several industry groups experiencing lower than expected receipts. The autos-transportation group experienced lower returns as high interest rates lowered sales volume, general consumer goods saw weak collections as consumer confidence waned, and the City’s share of s tate and county pools saw a drop in returns when compared to the previous year.

This shortfall was partially mitigated by the District Transactions & Use Tax, which finished the year at $500,000 above the budgeted level. Combined, sales related revenue came in $400,000 below budget.

Property Tax and Property tax in lieu of VLF (vehicle license fee) saw a combined 1.0% increase above the budgeted amount, with a net impact of $110,000 between the two revenue sources.

Both Property Tax and Property tax in lieu of VLF have grown year over year and are projected to continue to steadily grow into the future as property values continue to rise.

Revenues in the “Other Revenues” category ended the year above budget by $4.3 million, which is attributable to a combination of projected positive and negative variances in the various individual accounts. The primary contributor to the variance in this category was $1.0 million in deferred revenue posted from the State of California Health Care Services for the Las Palmas Pool and Wellness Center. Other accounts that significantly exceeded budgeted amounts include the transient lodging tax ($900,000), the various franchise fees ($500,000), rental payments for City owned land ($300,000), school district contract reimbursements ($200,000) and residual balance payments from the Successor Agency ($200,000). These increases were tempered by a decrease in overtime reimbursements (-$500,000) and utility company permits (-$300,000).

Expenditures

As of June 30, 2023, General Fund expenditures, including transfers to other funds, totaled $66.3 million, $7.9 million less than the adjusted budget of $74.2 million. Expenditure variances are summarized by category in the table below.

FY 2023 Year-End Expenditure Totals

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Expenditure Type
FY23 Adjusted
Budget1 FY23 Actuals2 Variance
Personnel Services $ 44,839,890 $44,595,219 $244,671
Maintenance & Operations 10,279,441 8,076,736 2,202,706 Capital Outlay 338,743 330,406 8,337
Capital Improvement Projects 7,667,649 2,396,265 5,271,384 Internal Service Charges 8,506,822 8,381,822 125,000
Transfers Out 2,561,032 2,561,032 -
Total $74,193,578 $66,341,479 $7,852,098

1 adopted budget total, plus budget amendments, encumbrances, & capital projects appropriations carried forward from previous fiscal year(s) 2 actuals are unaudited

Personnel costs make up approximately 61 % of the General Fund’s budget. They ended the fiscal year under budget by $200,000. While vacant authorized positions contributed to salary and benefit savings of $2.7 million, costs related to overtime requirements, primarily in the Police and Fire departments, exceeded budgeted amounts by $2.0 million. In addition, the costs for worker’s compensation insurance was $400,000 greater than the budget.

Maintenance & Operations (“M&O”) savings of $2.2 million were realized across various accounts, but particularly in Contract Services ($1.2 million), Professional Services ($500,000), and Emergency Animal Treatment ($100,000).

The capital projects category had a variance of $5.3 million between the budget and actuals. This $5.3 million does not represent savings. Rather, it is unspent monies on specifically authorized capital improvement projects that are still ongoing. The unspent appropriations were carried over to the fiscal year 2024 budget and are reflected in the assigned fund balance component of the fund balance table included in this report.

Net Impact on Overall Fund Balance

The table below combines the above revenue and expenditure tables to compare the adjusted budget’s impact on fund balance to the actual impact on fund balance. Actual fiscal year 2023 revenues, expenditures, and transfers resulted in an estimated increase of $5.1 million in the overall fund balance of the General Fund, as compared to the adjusted budgeted usage of $6.7 million (primarily a combination of carry -overs from fiscal year 2022, and budget adjustments authorized during the year). This variance is due to the unspent capit al projects appropriations and operational savings discussed above. As discussed further below, fund balance is divided into five categories, non-spendable, restricted, committed, assigned, and unassigned.

Fund Balance Change – Actual vs Budget (Estimated)

Adjusted
Budget Actual Variance
Revenues $65,448,103 $69,457,801 $4,009,698
Transfers In 2,005,500 2,005,500 -
Total Revenues & Transfers In $67,453,603 $71,463,301 $4,009,698

Expenditures $71,632,546 $63,780,447 $(7,852,098)

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Transfers Out 2,561,032 2,561,032 -
Total Expenditures & Transfers Out $74,193,578 $66,341,479 $(7,852,099)

Fund Balance Gain/(Usage) $(6,739,975) $5,121,822 $11,861,797

Beginning Fund Balance $57,063,602 $57,063,602 -

Ending Fund Balance $50,323,627 $62,185,424 -

In accordance with Governmental Accounting Standards Board (“GASB”) Statement Number 54, fund balance is classified into the aforementioned categories based primarily on the extent to which its use of resources is constrained. The table below reflects the estimated changes in each category of fund balance within the General Fund from June 30, 2022 to June 30, 2023. The balances are dependent not only upon the results of operations, i.e., revenues and expenditures, but also upon changes i n such things as liabilities accrued for employee benefits and unspent appropriations carried over to the succeeding fiscal year.

Components of Fund Balance (Estimated)

FY 22 FY 23 Change
Non-spendable $3,966,629 $3,982,518 $15,899
Restricted 9,546,733 9,956,428 409,695
Committed 15,680,000 15,680,000 -
Assigned 8,400,717 9,604,056 1,203,339
Unassigned 19,469,523 22,962,422 3,492,899
Total $57,063,602 $62,185,424 $5,121,822

Summary of fund balance changes by category:

Non-spendable – fund balance representing assets which are not in spendable form. This is primarily land held for resale ($3.9 million), but also includes inventories and prepaid expenses ($0.073 million). The latter category is up approximately $16,000.

Restricted – category with spending constraints stipulated either “externally” by the provider of the assets or by law. For the City, the primary components of this category are the Section 115 trusts for pension and other post-employment benefit obligations (OPEB). There is a $0.4 million increase in the amount of restricted fund balance as a result of investment gains in the two 115 trusts during FY 2023.

Committed – total of resources which have internally imposed restrictions mandated by formal action of the City Council. This category comprises the City’s Economic Contingency Reserve ($12,800,000) and the Facilities Maintenance Reserve ($2,880,000) . The amount is unchanged from FY 2022.

Assigned – assets constrained by the City’s intent that they be used for specific purposes but not meeting the more strict criteria for classification as restricted or committed. The total amount is up by $1.2 million over FY 2022. The primary components are amounts set aside for compensated absen ces and those carried over for capital projects and open purchase orders. The compensated absences total for FY 2023 is $4.3 million, up $0.4 million from FY 2023. The amount of carry -overs can vary from year to year depending upon the projects underway. Carry-overs total $5.3 million for FY 2023, up $0.8 million from FY 2022.

Unassigned – total of spendable amounts not allocated to the other fund balance categories and which is available for use at the City Council’s discretion. Unassigned fund balance

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shows an increase of $ 3.5 million over FY 2022 to $23.0 million. City Council Policy #201 specifies maintaining the unassigned fund balance at a target level of 10% of budgeted operating expenditures. With a General Fund operating budget for FY 2024 of $67 .5 million, the FY 2023 unassigned fund balance exceeds the target level by $16.25 million. It should be noted that the FY 2024 adopted General Fund budget anticipates a use of unassigned fund balance in the amount of $1.05 million for one-time items, still leaving a significant cushion in the unassigned fund balance category.

Ratification of Budget Adjustments

Normally, staff requests budget adjustments in advance based on known or projected funding requirements that require additional appropriations. In some instances, the need isn’t known until the end of the fiscal year. For fiscal year 2023, expenditure requirements exceeded appropriations as summarized below and detailed in Exhibit A. Budget adjustments have been made by staff to correct the shortfalls and staff seeks ratification by the City Council of these adjustments.

Library Fund - $68,461
EMT – D Revolving Fund - $54,460
Security and Alarm Regulation Fund - $14,856
Pension Obligation Bonds - $2,750
Library Bonds Debt Service Fund - $1,560

The funding for these appropriations is from the available fund balance of the respective funds with the exception of the Pension Obligation fund, which will be made whole with a $2,750 transfer from the General Fund in fiscal year 2024.

FINANCIAL STATEMENT:

The City’s General Fund experienced a $3.5 million increase in fund balance in fiscal year 2023 that will allow the City to maintain or exceed targets for key reserves. The greatest contributors to the increase in fund balance were better than budgeted revenues, coupled with operational savings. Per City Council Policy #201, the status of these reserves will be reviewed and presented to the City Council as part of the budget development process for fiscal year 2025.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Balanced Budget and Economic Development

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review.CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

Agenda Report posted within 72 hours of meeting date and time in accordance with Brown Act.

ORDINANCE:

Not Applicable

EXHIBITS:

Exhibit A – Budget Adjustment Detail
Exhibit B – Resolution

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Exhibit A
Fund/Explanation Expenditure
Library Fund
Personnel Services appropriation to cover additional hourly wages in Library 68,461$ EMT - D Revolving Fund
Peronnel Services appropriation for additional paramedic differential pay 54,460$ Security and Alarm Regulation Fund
Appropriation for professional services offset by unanticpated false alarm fine revenue 14,856$
Pension Obligation Bond fund
Appropriation for continuing bond disclosure services 2,750$ Library Bonds Debt Service Fund
Appropriation for continuing bond disclosure services 1,560$ Budget Adjustment Ratification Request
Fiscal Year 2023

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RESOLUTION NO. 2024 -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY , CALIFORNIA, RATIFYING VARIOUS FISCAL YEAR 2023 BUDGET ADJUSTMENTS

WHEREAS, on June 7, 2022, the City Council of the City of National City adopted Resolution No. 2022-97, adopting the budget for fiscal year 2023; and WHEREAS, as part of the 4th quarter review process, certain fund’s expenditures exceeded budget through the end of fiscal year 2023; and WHEREAS, the 4th quarter budget review was presented to the City Council and members of the public on February 6, 2024; and
WHEREAS, the City Manager has requested ratification of the Fiscal Year 2023 Budget Adjustments (“Exhibit ‘A”).

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: That the City Council ratifies the budget adjustments to the Fiscal Year 2023 Budget as shown in Exhibit A.

Section 2: That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.

PASSED and ADOPTED this 6th day of February, 2024.

Ron Morrison, Mayor

ATTEST:

Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

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AGENDA REPORT

Department: City Manager's Office
Prepared by: Benjamin A. Martinez, City Manager
Meeting Date: Tuesday, February 6, 2024
Approved by: Benjamin A. Martinez, City Manager

SUBJECT:

Reorganization of the City Manager’s Office, Departments, and Divisions

RECOMMENDATION:

For the purpose of reorganizing the City Manager’s Office, Departments, and Divisions, the City Manager requests authorization to add the following staff positions:

 Deputy City Manager (2)
 Assistant Community Development Director
 Finance Director
 City Librarian
 Executive Assistant III (Council Offices of Molina and Bush)

Furthermore, the City Manager requests authorization to vacate the following staff positions:

 Assistant City Manager
 Director of Administrative Services
 Housing Director
 Human Resources Director
 Library & Community Services Director
 Planning Manager

It is anticipated these actions will create a more efficient organization more adept to meet the needs of the community while achieving significant cost savings.

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

The FY 2023 -24 City Budget authorized the Assistant City Manager and Library & Community Services Director positions. Since the beginning of the fiscal year, the Assistant City Manager and Library & Community Services Director positions have become vacant. Freezing both the Library & Community Services Director and Assistant City Manager positions, and authorizing two (2) Deputy City Manager positions will reorganize the responsibilities of the City Manager’s Office and place broader operational authority to the Deputy City Managers.

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The creation of two (2) Deputy City Manager positions would benefit the City Manager’s Office, the entire organizational structure, and the citizens we serve, in the following ways:

(1) Division of Responsibilities: With two (2) Deputy City Managers, responsibilities would be divided based on expertise or functional areas. This allows for a more focused approach to managing various aspects of municipal operations, i.e., one (1) Deputy City Manager could be responsible for administrative functions like Human Resources and F inance, while the other would oversee Community Development and Public Works.

(2) Increased Efficiency: The workload of a City Manager can be overwhelming, especially in larger or a busy municipality like National City. Having two (2) Deputies allows for a more efficient distribution of tasks.

(3) Redundancy and Continuity: In the absence of the City Manager, having two (2) Deputy City Managers provides redundancy and continuity. This is important for maintaining stable leadership during vacation, illness, or other temporary absences. It ensures that crucial decision-making and operations continue smoothly without disruption.

(4) Diverse Skill Sets: Different Deputy City Managers bring diverse skill sets and perspectives. This diversity is valuable in addressing complex issues and finding innovative solutions. For instance, one (1) Deputy excels in financial management while the other has a strong community engagement and development background.

(5) Succession Planning: Having multiple Deputy City Managers allows for better succession planning. If one (2) Deputy is groomed to eventually take over as the City Manager, the organization can ensure a smooth transition in leadership. This is crucial for maintaining stability and continuity in municipal governance.

(6) Enhanced Communications: The presence of multiple Deputy City Managers will improve communication channels within the organization. Each Deputy would serve as a point of contact for specific departments or functions, streamlining communication and fostering collaboration.

(7) Flexibility an d Adaptability : Different situations may require different leadership approaches. The organization gains flexibility and adaptability in responding to diverse challenges with two (2) Deputies. The City Manager can delegate responsibilities based on the specific needs and priorities of the municipality.

(8) Strategic Planning: Two (2) Deputy City Managers can contribute to more comprehensive strategic planning. They can work collaboratively with the City Manager to develop and implement strategic initiatives, ensuring a well -rounded approach considering various facets of municipal governance.

The departmental reorganization represented in Exhibit A , complements and serves the two (2) Deputy City Manager strategies, and will open the door to greater opportunities for our employees as well. In addition, the reorganization represents an organizational alignment that is more efficient and will increase our level of customer service.

The City Manager is committed to providing the community the highest level of customer service possible while being fiscally responsible. The restructuring of the City Manager’s Office with two (2) Deputy City Managers, the positions requested, and the departmental reorganization is critical to meeting those goals and vision.

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FINANCIAL STATEMENT:

The projected savings from his reorganization will be approximately $170,000.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Balanced Budget and Economic Development

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review.CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

The Agenda Report was posted within 72 hours of the meeting date and time in accordance with the Ralph M. Brown Act.

ORDINANCE:

Not Applicable

EXHIBIT:

Exhibit A – 2024 Organizational Chart

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Mayor | City Council
Executive Assistant
City Manager
Ben Martinez
Fire Department
Operations
Community Development
Engineering | Public
Works
Building
Fire Department
Prevention

Housing Authority
Neighborhood Services
Planning
Engineering
Streets and
Wastewater
City Clerk
Finance
Information
Technology
Library
Facilities Maintenance
Equipment Maintenance
Parks Maintenance
REVISED 01/31/24
Recreation
Nutrition
Services
Human Resources
Administrative Staff
City Attorney
Police Department
Deputy City Manager
Deputy City Manager
Community Services

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CITY COUNCIL ITEM REQUEST
The City Council Item Request Form is for members of the City Council to submit written requests to the City Manager’s Office for inclusion of an item on a future City Council Meeting Agenda. At the meeting where the initial written request is heard, discussion should be limited to whether the item should be added to an agenda and a date, not the merit of the item. A majority vote of the City Council is required for the item to be added to a future City Council Meeting Agenda for action.

Requesting Member of City Council: Council Member Rodriguez Today’s Date: Tuesday, January 30th 2024
Is this matter considered Time-Sensitive by another entity deadline? Yes

WRITTEN REQUEST
I, Council Member Rodriguez hereby request that the following item be placed on the National City Council meeting agenda for consideration on Tuesday, February 6th. Ordinance attached as part of the request.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY,EXERCISING THE CITY’S POLICE POWER TO PROHIBIT RESIDENTIAL EVICTIONS WITHOUT JUST

CAUSE, RIGHT OF RETURN AND TEMPORARY RELOCATION IN RESPONSE TO

WEATHER CREATED STATE OF EMERGENCY

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National City City CouncilFebruary 6, 2024

National City City Council
February 6, 2024