Richmond City Council
December 17, 2024

PLEASE NOTE: HYBRID MEETING FORMAT

- SPECIAL MEETING OF THE RICHMOND HOUSING AUTHORITY
- JOINT REGULAR MEETING OF THE SUCCESSOR AGENCY TO THE RICHMOND COMMUNITY

REDEVELOPMENT AGENCY/RICHMOND CITY COUNCIL

Tuesday, December 17, 2024, 4:30 p.m.

Community Services Building
440 Civic Center Plaza
Richmond, CA 94804
Members:

Eduardo Martinez, Mayor at Large
Melvin Willis, Councilmember District 1
Cesar Zepeda, Councilmember District 2
Doria Robinson, Councilmember District 3
Soheila Bana, Councilmember District 4
Gayle McLaughlin, Councilmember District 5
Claudia Jimenez, Vice Mayor, District 6
Jaycine Scott, Housing Authority Tenant Commissioner

NOTICE: MASKS ARE STRONGLY ENCOURAGED!!

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Livestream online at http://www.ci.richmond.ca.us/3178/KCRT-Live2.

HOW TO SUBMIT PUBLIC COMMENTS:

In Person: Anyone who desires to address the City Council on items appearing on the agenda, including Open Forum, must complete and file a pink speaker’s card with the City Clerk prior to the City Council’s consideration of the item. Once the City Clerk has announced the item, no person shall be permitted to speak on the item other than those persons who have submitted their names to the City Clerk. Each speaker will be allowed up to TWO (2) MINUTES to address the City Council on NON-PUBLIC HEARING items listed on the agenda. Speakers are allowed up to THREE (3) minutes on PUBLIC HEARING items.

Via Zoom: Anyone who desires to address the City Council on items appearing on the agenda, including Open Forum, must raise their hand once public comment is open. The public speakers attending in person will be called first, followed by Zoom participants. Only those public speakers that have their hand raised once the speakers are called will be recognized.

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https://support.zoom.us/hc/en-us/articles/201362663 -Joining-a-meeting-by-phone. ** 2 **The mayor will announce the agenda item number and open public comment when appropriate.

Via mail: received by 1:00 p.m. the day of the meeting, sent to 450 Civic Center Plaza, 3rd Floor, Office of the Clerk, Richmond, CA 94804.

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Properly labeled public comments will be considered a public record, put into the official meeting record, available after the meeting as supplemental materials, and will be posted as an attachment to the meeting minutes when the minutes are posted: http://www.ci.richmond.ca.us/Archive.aspx?AMID=31

The City cannot guarantee that its network and/or the site will be uninterrupted. To ensure that the City Council receives your comments, you are strongly encouraged to submit your comments in writing in advance of the meeting.

Procedures for Removing Items from the Consent Calendar: Members of the public who request to remove an item from the consent calendar must first discuss the item with a staff member by phone or a back-and- forth email discussion, and state the name of the staff member when requesting removal of the item from the consent calendar (by 2 p.m. the day of the meeting).

Any member of the City Council who would like to remove an item from the consent calendar must notify the appropriate staff person and the City Clerk’s Office prior to the meeting. Although members of the City Council are encouraged to ask questions and share concerns with staff ahead of the meeting, they are not required to do so.

The Clerk’s Office must be informed of any requests to remove items from the Consent Calendar. Items removed from the Consent Calendar shall be placed at the end of the agenda for consideration.

CONDUCT AT MEETINGS: Richmond City Council meetings are limited public forums during which the City strives to provide an open, safe atmosphere and promote robust public debate. Members of the public, however, must comply with state law, as well as the City’s laws and procedures and may not actually disrupt the orderly conduct of these meetings. The public, for example, may not shout or use amplifying devices, must submit comment cards and speak during their allotted time, may not create a physical disturbance, may not speak on matters unrelated to issues within the jurisdiction of the City Council or the agenda item at hand, and may not cause immediate threats to public safety.

Click here for City Harassment Policy
3 Accessibility for Individuals with Disabilities: Upon request, the City will provide for written agenda materials in appropriate alternative formats, or disability-related modification or accommodation, including auxiliary aids or services and sign language interpreters, to enable individuals with disabilities to participate in and provide comments at/related to public meetings. Please submit a request, including your name, phone number and/or email address, and a description of the modification, accommodation, auxiliary aid, service or alternative format requested at least two days before the meeting. Requests should be emailed to [email protected] or submitted by phone at 510-620-6513, ext. 9, or 510-620-6509.

Requests made by mail to City Clerk’s Office, City Council meeting, 450 Civic Center Plaza, Richmond, CA 94804 must be received at least two days before the meeting. Requests will be granted whenever possible and resolved in favor of accessibility.

Unless otherwise noted in an agenda description, all actions taken by the Council include a determination that CEQA does not apply (i.e., the action is not a project and therefore exempt from CEQA).

Disclaimer: The City Clerk's Office translates agendas to enhance public access. Translated agendas are provided as a courtesy and do not constitute legal notice of the meeting or items to be discussed. In case of discrepancy, the English agenda will prevail.

Pages
4 A. OPEN SESSION TO HEAR PUBLIC COMMENT BEFORE CLOSED SESSION 4:30 p.m.

B. ROLL CALL
C. CLOSED SESSION
C.1 CONFERENCE WITH LABOR NEGOTIATORS (Government Code Section 54957.6)
Agency Representatives: Sharrone Taylor and Jack Hughes• Employee organizations:

1. SEIU Local 1021 Full Time Unit and Part Time Unit

2. IFPTE Local 21 Mid-Level Management Unit and Executive Management Units

3. Richmond Police Officers Association RPOA

4. Richmond Police Management Association RPMA

5. IAFF Local 188

6. Richmond Fire Management Association RFMA
C.2 CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (paragraph (1) of Subdivision [d] of Government Code Section 54956.9) Winehaven v. City of Richmond•
D. PUBLIC COMMENT BEFORE CLOSED SESSION (limited to items on the Closed Session agenda only)
E. ADJOURN TO CLOSED SESSION
________________________________________________________ 5 F. SPECIAL MEETING OF THE RICHMOND HOUSING AUTHORITY
6:15 p.m.

G. PLEDGE OF ALLEGIANCE
H. ROLL CALL
I. STATEMENT OF CONFLICT OF INTEREST
J. AGENDA REVIEW
K. HOUSING AUTHORITY CONSENT CALENDAR
K.1 Nevin Plaza II Lease Disposition and Development Agreement (LDDA) 18 ADOPT a resolution authorizing the Executive Director to enter into a Lease Disposition and Development Agreement (LDDA) and to negotiate and execute any and all related documents and agreements, including the Ground Lease and Regulatory Agreement between the Richmond Housing Authority and EAH Housing for the development of the Nevin Plaza II affordable housing project (APN 515-261-014-2) - Richmond Housing Authority (Antoinette Terrell 510- 620-6784/Nannette Beacham 510-621-1306).

L. HOUSING AUTHORITY NEW BUSINESS
L.1 Nystrom Village Request for Qualifications (RFQ) Presentations, Potential Selection and Exclusive Rights to Negotiate Agreement (ERNA) 181
RECEIVE a presentation from the top two respondents for the redevelopment of Nystrom Village Request for Qualifications (RFQ); PROVIDE DIRECTION to staff, which may include the identification of a preferred developer; and if a preferred developer is identified, and ADOPT a resolution authorizing the Executive Director of the Richmond Housing Authority (RHA) to negotiate and execute an Exclusive Right to Negotiate Agreement (ERNA) with the selected affordable housing developer with a term not to exceed ninety (90) days with an option for one mutually approved extension of not more than thirty days – Richmond Housing Authority (Antoinette Terrell 510-620-6784/Nannette Beacham 621-1306).

M. ADJOURNMENT
_______________________________________________________ 6 N. JOINT REGULAR MEETING OF THE SUCCESSOR AGENCY TO THE RICHMOND

COMMUNITY REDEVELOPMENT AGENCY/RICHMOND CITY COUNCIL
6:30 p.m.

O. ROLL CALL
P. STATEMENT OF CONFLICT OF INTEREST
Q. AGENDA REVIEW
R. REPORT FROM THE CITY ATTORNEY OF FINAL DECISIONS MADE DURING

CLOSED SESSION
S. REPORT FROM THE CITY MANAGER (public comment allowed under Open Forum) T. OPEN FORUM FOR PUBLIC COMMENT
(public comment on items that remain on the Consent Calendar or items not on the agenda - limited to 2 minutes unless otherwise specified - Back and forth dialogue with the Council is prohibited)
U. SUCCESSOR AGENCY TO THE RICHMOND COMMUNITY REDEVELOPMENT

AGENCY CONSENT CALENDAR
U.1 Approval of the Recognized Obligation Payment Schedule (ROPS 25-26) and the Administrative Budget for the period July 1, 2025 through June 30, 2026 215
ADOPT a resolution approving the Recognized Obligation Payment Schedule (ROPS 25-26) and the Administrative Budget for the period of July 1, 2025, through June 30, 2026 – Community Development Department (Lina Velasco 510-620-6706).

V. CITY COUNCIL CONSENT CALENDAR
(All items placed under the Consent Calendar are considered to be routine and noncontroversial. These items will be enacted upon together with a motion and second, without discussion, of any member of the City Council, and each item shall be deemed to have received the action recommended.)
V.1 City Attorney's Office
V.1.a Ordinance Creating New Business Activity Classification, “Class Q – Automobile Dealerships” and the Corresponding Rates
230
INTRODUCE an ordinance (first reading) amending Chapter

7.04.103 of the Richmond Municipal Code by creating a new Business Activity Classification, Class Q – Automobile Dealerships, and the corresponding rates – City Attorney’s Office (Dave Aleshire 510-620-5454/Andrea Miller 510-620-6790).
7 V.1.b First Amendments to the Legal Services Agreements with Nevers, Palazzo, Packard, Wildermuth & Wynner, P.C., and Bertrand, Fox, Elliot, Osman, & Wenzel for Winehaven
249
APPROVE first amendments to the legal services agreements with:
1) Nevers, Palazzo, Packard, Wildermuth & Wynner, PC, to add $200,000 for an amount not to exceed $375,000 with term ending June 30, 2025; and 2) Bertrand, Fox, Elliot, Osman, & Wenzel to add $200,000 for an amount not to exceed $300,000 with term ending June 30, 2026 and APPROPRIATE $400,000 from the General Fund to cover these fees – City Attorney’s Office (Shannon Moore 510- 620-6505).

V.1.c Appropriation of funds and first amendment to Legal Services Agreement for City Attorney with Aleshire & Wynder, LLP 303
APPROPRIATE $154,626.48 from the General Fund to the City Attorney Department’s Fiscal Year 24-25 budget and APPROVE a first amendment to the legal services agreement with Aleshire & Wynder, LLP, to increase the compensation by $154,626.48, for an amount not to exceed $1,079,626.48, for City Attorney services - City Attorney’s Office (Shannon Moore 510-620-6509/Andrea Miller 510- 620-6790).

V.2 City Clerk's Office
V.2.a Canvass of Returns, November 5, 2024, General Election 333 ADOPT a resolution Declaring the Canvass of Returns and Results of the General Municipal Election held on November 5, 2024 – City Clerk’s Office (Pamela Christian 510-620-6513).

V.2.b Amendments and Updates to the Boards and Commissions Handbook
345
APPROVE amendments to the Boards and Commissions Handbook to address members reapplying to the same board, commission, or committee after a waiting period and the process for members to obtain a Gmail account for City of Richmond business only – City Clerk’s Office (Pamela Christian 510-620-6513).

V.3 City Council
V.3.a Amending the Richmond Municipal Code to Include Wildfire Hardening in Real Property Transfer Tax Exceptions
414
DIRECT the City Attorney’s Office to draft an ordinance to amend the Richmond Municipal Code, Real Property Transfer Tax Exceptions, to include a rebate for "wildfire hardening" expenses, encouraging property owners to implement proven fire prevention measures - Councilmembers Soheila Bana (510-672-3490) and Gayle
McLaughlin (510-620-6636).
8 V.3.b Authorize emergency financial support to sustain unhoused services at Richmond’s family shelter -GRIP (Greater Richmond Interfaith Program)
446
AUTHORIZE the city manager to negotiate and execute an
emergency, short-term, no-interest loan agreement for $500,000 with GRIP to ensure uninterrupted family homeless shelter and emergency warming center for Richmond’s unhoused residents - Vice Mayor Claudia Jimenez (510-620-6565), Councilmembers Doria Robinson (510-620-6568), and Gayle McLaughlin (510-620-6636).

V.3.c Create a plan to offer simultaneous Spanish-English translation during all Richmond City Council Meetings starting in FY 25-26 448
DIRECT city staff to: 1) research solutions other jurisdictions are using to offer simultaneous translation services during Council meetings; 2) create a plan to offer, at minimum, simultaneous Spanish-English translation in person, and on zoom at every council meeting; 3) set up a clear system for those who speak languages other than Spanish and want to participate in a City council meeting to request FREE translation support in advance of a City Council meeting. Translation service requests should offer an online, telephone and in person option through the clerk’s office; 4) to make available by request translation of meeting agendas, within a reasonable time frame, into languages other than English; 5) to, at minimum, make sure that starting January 1, 2026, Spanish subtitles are available for all KCRT City Council meeting recordings; 6) to research, draft and include in the Fiscal Year 25 -26 budget the funding necessary to support this plan; and 7) to complete the execution of this plan by December 31, 2025, so that new language access services could start as soon as, or sooner than, January 1, 2026 - Vice Mayor Claudia Jimenez (510-620-6565),
Councilmembers Doria Robinson (510-620-6568), and Gayle McLaughlin (510-620-6636).
9 V.3.d Railroad Crossings Grant Writer -a multi district effort that prioritizes neighborhoods with limited emergency access
452
DIRECT staff to utilize a grant writer from the 18 pre-approved vendor list to provide on-call grant writing, grant seeking, or other grant-related services to pursue railroad crossing elimination program funding, federal funding, state funding, and funding from the Federal Railroad Administration, on an as needed basis, for a three-year term expiring September 30, 2027, with two one-year options to extend, and a not to exceed total expenditure of $100,000 per firm annually and to come back to City Council with a selected grant writer by February 2025. DIRECT the city manager to designate a project manager to help manage the grant writer and manage funding for the projects at the various identified locations and to have grant writer identified and applied for grant by June 2025 - Councilmember Cesar Zepeda (510-620-6593).

V.3.e Development of Parchester Area Infrastructure Plan and Interim Drainage Measures
471
DIRECT City staff to collaborate with Veolia to implement short-term measures addressing drainage challenges in Parchester Village during the upcoming rainy season and DIRECT City staff to prepare the scope, timeline, and cost estimate for a comprehensive Parchester Area Infrastructure Plan to identify long-term solutions and present planning details and a timeline to the Water Recovery Ad Hoc Committee in Quarter 1 of 2025 and return to the City Council during the spring 2025 budget cycle for consideration as part of the Capital Improvement Program (CIP) - Councilmember Cesar Zepeda (510-620-6593).

V.3.f Resolution Declaring the City of Richmond a Sanctuary City for Transgender People
474
ADOPT a resolution to declare the City of Richmond a sanctuary city for transgender individuals seeking gender-affirming care and to extend protections to providers who offer gender-affirming care and that no city resources - including staff time - would be used to detain individuals seeking or providing care, or otherwise to cooperate with jurisdictions seeking to enforce laws criminalizing gender-affirming care in other jurisdictions - Councilmember Cesar Zepeda (510-620- 6593).
10 V.4 Community Development
V.4.a Encampment Resolution Funding Round 3 Award Acceptance and Appropriation
479
ADOPT a resolution accepting and appropriating a $9,336,746 Encampment Resolution Funding Round 3 (ERF-3-R) award to provide services and support for people living in Citywide encampments onto paths to safe and stable housing, and
employment opportunities – Community Development Department (Lina Velasco/Jesus Morales 510-620-6649).

V.4.b Acceptance and Appropriation of Hellman Foundation Grants 508 ADOPT a resolution accepting and appropriating two $250,000 Hellman Foundation grants received by the City to support the development of an asset management system for parks and recreation centers, and supporting the design development of the Martin Luther King Jr. Recreation Center – Community Development Department (Lina Velasco 510-620-6841/LaShonda White 510-620- 6828).

V.4.c Ocean Protection Council (OPC) SB 1 Grant 519
ADOPT a resolution accepting and appropriating a $1.5 million SB 1 grant from the California Ocean Protection Council and AUTHORIZE the city manager to negotiate and execute a contract amendment No. 1 with Mithun, Inc. to modify the contract scope and increase the budget by $1,010,000, for a not to exceed total amount of $1,410,000, through June 30, 2027, to prepare the City’s SB272- compliant Sub-regional Shoreline Adaption Plan – Community Development Department (Lina Velasco/Avery Stark 510-620-6714).

V.4.d Partnership for the Bay’s Future (PBF) Memorandum of Understanding
594
ADOPT a resolution authorizing the city manager to execute a Memorandum of Understanding (MOU) with the San Francisco Foundation and Coro Northern California for a Partnership for the Bay’s Future Housing Fellow to work on housing Preservation, Production, and Protection policies – Community Development Department (Lina Velasco/Jesus Morales 510-620-6649).

V.4.e Exempt Surplus Land Resolution for Homekey Ground Lease 614 ADOPT a resolution determining and declaring land to be acquired by the City and subsequently ground leased to 425 Civic Center LP to be Exempt Surplus Land pursuant to Government Code Section 54221(f)(1)(A) regarding the Homekey Project to convert an existing motel located at 425 24th Street (APN 515-200-003) to a 48-unit permanent supportive housing development for formerly homeless households – Community Development Department (Lina Velasco 510-620-6841/Nannette Beacham 510-621-1306).
11 V.4.f CSW/ST2 Contract Amendment No. 2 for Miraflores 621 APPROVE a contract amendment No. 2 with CSW/ST2 to modify the scope and budget related to the board up and securing of the historic structures at the Miraflores site, for a not to exceed amount of $55,698.50, which further allows a contingency amount equal to 10 percent of the quoted price, for a term ending June 30, 2026 – Community Development Department (Lina Velasco 510-620-6841).

V.4.g Residential Rental Inspection Program Ordinance Amendments 788 INTRODUCE an ordinance (first reading) amending Richmond Municipal Code Chapter 6.40 Residential Rental Dwelling Unit Inspection and Maintenance to eliminate the self-certification process, expand units covered, including certain affordable housing units, and add other amendments to enhance the program – Community Development Department (Lina Velasco 510-620- 6841/George Kabaivanov 510-620-6649).

V.5 Economic Development
V.5.a Port Performance Audit Management Update 820
RECEIVE management updates on the findings from the
Government Performance & Policy (GPP) Analytics Port
Management and Performance Audit; and ACCEPT the City’s plan to implement auditor recommendations – Port/Finance Department (Nickie Mastay 510-620-6565/Andrea Miller 510-620-6790/Nannette Beacham 510-621-1306/Charles Gerard 510-829-2253).

V.5.b Annual Solid Waste Rate Adjustment 913
ADOPT a resolution to update the 2025 solid waste collection rates for January 1, 2025, until the end of the current contract on June 30, 2025 – Economic Development Department (Samantha Carr 510- 620-5407/ Nannette Beacham 510-620-1306).

V.6 Finance Department
V.6.a Investment and Cash Balance Report, Monthly Overtime Reports, and Documentary Transfer Tax Report for the Month of October 2024 930
RECEIVE the City’s Investment and Cash Balance Report, Monthly Overtime Reports, and Documentary Transfer Tax Report for the month of October 2024 – Finance Department (Andrea Miller 510- 620-6740).
12 V.7 Human Resources
V.7.a City Holiday Closure from December 24, 2024, through January 1, 2025
955
ADOPT a resolution approving the Side Letters between the City of Richmond and Service Employees International Union (SEIU) Local 1021 (Full-Time and Part-Time Units) and International Federation of Professional and Technical Engineers (IFPTE) Local 21 (Mid- Management and Executive Management Units) regarding the holiday closure for December 2024 – Human Resources Department (Sharrone Taylor/Nickie Mastay 510-620-6602).

V.7.b Allocate $48,325 for the Race Forward Equity Training Contract and four CPS Human Resources Consulting DEI training courses held in Oct. 2024
965
APPROPRIATE $48,325 for Race Equity training courses and DIRECT staff to return to City Council with a update of the Race Equity Program by March 2025 - Human Resources Department/City Council Administration (Sharrone Taylor/Trina Jackson Lincoln 510- 620-6581).

V.8 Internal Services
V.8.a Draft Amendments to City Council Rules of Procedure and Order 989 DIRECT staff to prepare amendments the City Council Rules of Procedure and Order to: 1) hold two City Council meetings each month; 2) require Councilmembers to submit agenda items by noon two Fridays before the Thursday publication of the agenda; 3) commence the Council recess in July to better align with the school district’s time off; and, 4) develop minor procedural changes to comport with how the meetings are currently conducted - City Manager’s Office/City Clerk’s Office/City Attorney’s Office (Shasa Curl/Pamela Christian/Shannon Moore 510-620-6512).

V.9 Library and Community Services
V.9.a Second Amended Contract between the City of Richmond and Trans Metro Inc. for On-Call Paratransit Services
997
APPROVE the second amended contract with Trans Metro Inc. (TMI), to support paratransit van services for seniors and individuals with disabilities residing in Richmond and in municipalities in West County, in an amount not to exceed $140,000, for a total contract amount not to exceed $400,000, extending the term through December 31, 2025 - Community Services Department (LaShonda White 510-620-6828/ Lori Reese 510-620-6869).
13 V.9.b Contract with Bonterra Tech for Apricot 360 Case Management and Data Management Software Services
1030
APPROVE a contract with Bonterra Tech for the Apricot 360 case management software for the Community Crisis Response Program for an amount not to exceed $87,260, for a contract term from December 17, 2024, through December 16, 2027 - Community Services Department (Sam Vaughn 510-620-5404/Michael Romero 510-620-6791).

V.9.c FY 2025-2026 Environmental Community and Investment Agreement (ECIA) Competitive Grant Program
1061
ACKNOWLEDGE the release of the Request for Application and Guidelines for the Fiscal Year 2025-2026 Environmental and Community Investment Agreement (ECIA) Competitive Grant Program for Categories 1-4, with an annual allocation of $650,000 – City Manager’s Office (Patrick Seals/Nicholas Delgado/Guadlupe Morales 510-620-6512).

V.9.d Contract With All Seasons Ice Company To Provide Ice For Snow Day
1099
APPROVE a three-year contract with All Seasons Ice Company in a not to exceed amount of $21,000, to provide 10 tons of ice for a fee of $7,000 annually, and a donation of 20 tons of ice during the Winter Break Camp in December of 2024, 2025, and 2026, with a contract term from December 17, 2024, through December 31, 2026 – Community Services Department (Tetteh Kisseh 510-620-
6919/Ranjana Maharaj 510-620-6792/LaShonda White 510-620- 6828).

V.9.e Acceptance of Five Grants Totaling $1,743,360 in Grant Funds from Various Sources to Provide Occupational Skills Training, in High- Growth, High Wage Industries, for Richmond Youth and Adults 1126
ACCEPT and APPROPRIATE $1,743,360 in grant funds received from the U.S. Department of Labor YouthBuild, Office of Economic and Workforce Development, Construction Training Workforce Initiative, James Irvine Foundation, and the California Employment Training Panel; and AUTHORIZE the city manager or her designee to execute grant-related documents – Community Services Department (Tamara Walker 510-307-8006/LaShonda White 510-620-6828).

V.9.f Purchase of Library Delivery Van 1163
APPROVE the purchase of a 2024 Ford Transit T-250 cargo van from National Auto Fleet Group in an aggregate amount not to exceed $60,000 – Community Services Department (Christopher Larsen 510-620-5524/ Kate Eppler 510-620-5452).
14 V.10 Mayor's Office
V.10.a Appointment of Whitney Tipton to the Richmond Rent Board 1208 APPOINT Whitney Tipton to the Richmond Rent Board with a term that expires on March 21, 2025 – Mayor’s Office (Mayor Eduardo Martinez 510-620-6503).

V.10.b Appointment of Xiomara Casias to the Human Rights and Human Relations Commission
1212
APPOINT Xiomara Casias to the Human Rights and Human
Relations Commission with a term that expires on March 30, 2025 – Mayor’s Office (Mayor Eduardo Martinez 510-620-6503).

V.11 Police Department
V.11.a AB 481 “Military Equipment Use” Annual Report 1215 ADOPT a resolution accepting the 2023 annual military equipment report, determining that the military equipment in 2023 complied with Richmond Police Department Policy 707 and determining that policy 707 will be accepted with recommended amendments; and RECEIVE staff recommendations for additional resources - Police Department (Bisa French 510-621-1802).

V.11.b Sanctuary City Compliance Exception for software applications by LexisNexis
1281
APPROVE a request for LexisNexis to waive the requirement to sign and comply with the Sanctuary City Compliance form, in order for LexisNexis to provide software application services to Richmond Police Department staff – Police Department (Chief Bisa French 510- 621-1802).

V.11.c Second Contract Amendment with Axon Enterprise 1285 APPROVE a five-year contract amendment with Axon Enterprise in an amount not to exceed $5,000,000, which includes a 7.4 percent contingency, extend the contract term for five years for a total contract term October 1, 2016, to September 30, 2031, providing a cost savings of $1,886,504.54 if the amendment is executed before December 31, 2024 - Police Department (Chief Bisa French 621- 1802).

V.12 Public Works
V.12.a November 2024 Abatement Presentation 1334
RECEIVE a presentation on the November 2024 Abatement activities – Public Works Department (Hugo Mendoza 510-231-3030/Tawfic Halaby 510-620-5482/Daniel Chavarria 510-620-5478)
15 V.12.b Resolution to Appropriate Funds in the Engineering Grant Fund and Approve a Contract with Kimley-Horn and Associates, Inc. 1354
ADOPT a resolution to APPROPRIATE funds in the amount of $292,000 from the Engineering Grant Fund 1054, and APPROVE a contract agreement with Kimley Horn and Associates, Inc. for the South Cutting Boulevard at-grade crossing at Carlson Boulevard Improvement Project in an amount not to exceed $550,841; and AUTHORIZE the director of public works to approve change orders, if necessary, for a contingency amount of up to $82,630 which is 15 percent of the contract amount, for a potential total not to exceed contract amount of $633,471, with a contract term from December 18, 2024, through June 30, 2027 – Public Works Department (Hillal Hamdan 510-621-1612/Robert Armijo 510-620-5477/Daniel
Chavarria 510-620-5478).

V.12.c Resolution to terminate West County Agency Joint Powers Agreement (JPA) and approve operating agreements between City of Richmond and West County Wastewater.
1383
ADOPT a resolution agreeing to terminate the West County Agency Joint Powers Agreement and APPROVE the operating agreements between the City of Richmond and West County Wastewater for the operation and maintenance of assets owned by each agency - Public Works Department (Daniel Chavarria 510-620-5478/Robert Armijo 510-620-5477).

V.12.d Resolution to Approve Three As-Needed Contracts for Vehicle Body Repairs
1437
ADOPT a resolution approving three-year as-needed contracts with three vendors, Andy’s Auto Body, Falcon Collision Repairs, Inc., and Ron DuPratt Ford, for vehicle body repairs in an amount not to exceed $50,000, per year per vendor, beginning January 1, 2025, through December 31, 2027, with two optional one-year extensions in the amount not to exceed $50,000, per year per vendor – Public Works Department (Tawfic Halaby 510-620-5482/Daniel Chavarria 510-620-5478).

W. STATE OF THE CITY
W.1 State of the City Address by Mayor Eduardo Martinez 1549 RECEIVE the Annual State of the City Address from Mayor Eduardo Martinez – Mayor Eduardo Martinez (510-620-6503).

X. NEW BUSINESS
X.1 BART presentation
RECEIVE a presentation from Bay Area Rapid Transit (BART) regarding The Role in the Region Report - Mayor's Office (Mayor Eduardo Martinez 510-620- 6503).
16 X.2 Presentation on The Concept of Villages For The Unhoused 1551 RECEIVE a presentation from Richmond’s Village Development Team on the benefit of villages for the unhoused – Councilmember Gayle McLaughlin (510- 620-6636).

X.3 Police Officer Retention and Lateral Police Officer Recruitment Program 1560 RECEIVE an update on police recruitment and retention promising practices to increase staffing beyond 121 sworn officers; and PROVIDE direction to staff – Police Department (Chief Bisa French 510-621-1802).

Y. REPORTS OF OFFICERS: REFERRALS TO STAFF, AND GENERAL REPORTS (INCLUDING AB 1234 REPORTS)(limited to two minutes per Councilmember)(public comments allowed under Open Forum)
Z. ADJOURNMENT
________________________
17

December 17, 2024

Richmond Housing Authority (RHA)

Economic Development

DATE: December 17, 2024
TO: Chair Martinez and Members of the Richmond Housing
Authority Board of Commissioners
FROM:

Nannette Beacham, Director of Economic Development
Antoinette Terrell, RHA Executive Director
Gabino Arredondo, Project Manager

Subject:

Nevin Plaza II Lease Disposition and Development
Agreement (LDDA)
FINANCIAL IMPACT: The developer will be obligated to pay a share of residual receipts as ground lease rent in an aggregate amount
equal to the land value. RHA will share 50 percent of total residual receipts with other subordinate lenders as
payment toward ground rent. The developer (EAH
Housing) will retain the remaining 50 percent. RHA will provide a ground lease to the Developer for a nominal
annual payment of $1 per year plus RHA’s pro rata share of 50% of annual residual receipts in the aggregate
amount equal to the land value. The Developer will work diligently to pursue all additional sources of financing necessary to provide full funding of Phase II. All
development costs of the development of the Nevin
Plaza Phase II Project will be paid by EAH Housing.

PREVIOUS COUNCIL
ACTION:

December 15, 2020.

AGENDA
REPORT
18

December 17, 2024

STATEMENT OF THE
ISSUE:

EAH Housing notified and began negotiations with RHA
to move forward on the Nevin Plaza II affordable housing development project. The LDDA has been negotiated
between RHA (Lessor of the land) and the Developer,
EAH Housing (Lessee of the land) and is ready for Board consideration and approval. Once approved the
developer will begin the entitlement process and seek
additional funding for the project. The LDDA sets forth the mutually agreed upon terms for the Developer’s
construction of new units on the vacant site.

RECOMMENDED ACTION:

ADOPT a resolution authorizing the Executive Director to enter into a Lease Disposition and Development
Agreement (LDDA) and to negotiate and execute any
and all related documents and agreements, including the Ground Lease and Regulatory Agreement between the
Richmond Housing Authority and EAH Housing for the
development of the Nevin Plaza II affordable housing
project (APN 515-261-014-2) - Richmond Housing
Authority (Antoinette Terrell 510-620-6784/Nannette
Beacham 510-621-1306).

DISCUSSION:

Nevin Plaza II

Richmond Housing Authority (RHA) and EAH Housing entered into a Master Development Agreement dated December 15, 2020, for the rehabilitation (Nevin Plaza I) and new construction (Nevin Plaza II) of affordable housing units to serve the senior population. The Nevin Plaza II development is the new construction component of the two-phased senior affordable housing development, behind the existing Nevin Plaza Phase I rehabilitation development set to be completed in February 2025 (2400 Nevin Ave, 7 Story, 142 Units).

Nevin Plaza II will be located on the vacant lot immediately adjacent to Nevin Plaza Phase I. The selected development team, EAH Housing, over the last 3 months has advanced their engagement with the RHA team to draft and finalize all the agreements to proceed with the second phase. The execution of the agreements will facilitate the development team to proceed in the entitlements process and prepare to respond to funding opportunities.

For the Nevin Plaza II project, the EAH Housing team has proposed changes to the unit mix to maximize the number of affordable units while minimizing overall project development costs. The new program and design for Nevin Plaza II is a 76-unit, 5-story building, containing nineteen (19) studios, fifty-six (56) one-bedroom units, and one (1) two-bedroom manager’s unit. The reason for increasing the number of studio and one- 19

December 17, 2024
bedroom units and not including any two-bedroom units is to maximize the number of affordable units within a building height that minimizes the overall development cost that financing needs to be secured for. Nevin Plaza II will provide permanent affordable housing, with a range of affordability including eight (8) low income (60% AMI and below), thirty-one (31) very low income (50% AMI and below), and thirty-six (36) extremely low-income units (30% AMI and below).

Nevin Plaza Phase II - LDDA

The Nevin Plaza Phase II Lease Disposition and Development Agreement (LDDA) has been negotiated between RHA (Lessor of the land) and the Developer (Lessee of the land). The LDDA sets forth the mutually agreed upon terms for the Developer’s construction of new units on the vacant site. RHA will share 50 percent of annual residual receipts with other subordinate lenders as payment toward rent due under the ground lease in an aggregate amount equal to the value of the land, and the Developer will retain the remaining 50 percent. The Developer will work diligently to pursue all additional sources of financing necessary to provide full funding of Phase II. All predevelopment costs of the development of the Nevin Plaza Phase II Project will be paid by EAH Housing.

The development of this new construction is vital to the surrounding neighborhood, add services and provide additional affordable housing to those in need. Furthermore, this action is consistent with the deliverables in the 2019 Public Housing Authority Recovery and Sustainability (PHARS) agreement between HUD, RHA, and the City of Richmond.

DOCUMENTS ATTACHED:

Attachment 1 - Resolution
Attachment 2 - Draft Nevin Plaza II LDDA
Attachment 3 - Ground Lease
Attachment 4 - Regulatory Agreement

20 Reso. No. ____

RESOLUTION NO. ____

A RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE HOUSING

AUTHORITY OF THE CITY OF RICHMOND, CALIFORNIA, ADOPTING A

RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR TO ENTER INTO A

LEASE DISPOSITION AND DEVELOPMENT AGREEMENT (LDDA) AND TO

NEGOTIATE AND EXECUTE ANY AND ALL RELATED DOCUMENTS AND

AGREEMENTS, INCLUDING THE GROUND LEASE AND REGULATORY

AGREEMENT BETWEEN THE RICHMOND HOUSING AUTHORITY AND EAH

HOUSING FOR THE DEVELOPMENT OF THE NEVIN PLAZA II AFFORDABLE HOUSING PROJECT (APN 515-261-014-2)

WHEREAS, Richmond Housing Authority (“RHA”) owns and manages 100 units of rental housing; and

WHEREAS, RHA entered into a Public Housing Authority Recovery and Sustainability (PHARS) agreement with the U.S. Department of Housing and Urban Development (HUD); and

WHEREAS, RHA remains obligated and committed to performing all HUD required functions, and providing quality service to local program participants; and

WHEREAS, RHA is the owner of that certain real property located within the City of Richmond, California, known as Contra Costa County Assessors Parcel No. 515-261-014-2, and more particularly described in Exhibit A attached hereto (the “Property”); and

WHEREAS, on June 26, 2019, RHA issued a Request for Qualifications/Request for Proposals for the lease and development of the Property as an affordable residential development (the “Project”); and

WHEREAS, on April 7, 2020, the RHA Board of Commissioners (“Commission”) selected EAH, Inc., a California nonprofit public benefit corporation (“EAH”) as the preferred developer, and authorized the negotiation of an Exclusive Right to Negotiate Agreement (“ERN”); and

WHEREAS, on July 1, 2020, RHA and EAH entered into an ERN addressing development of the Project; and

WHEREAS, RHA and EAH entered into a Master Development Agreement dated December 15, 2020, addressing the lease of the Property and development of the Project; and

WHEREAS, RHA and EAH have negotiated a Lease Disposition and Development Agreement (the “LDDA”) that will govern the disposition and development of the Property and the Project; and

WHEREAS, pursuant to and subject to the terms and conditions set forth in the LDDA, RHA will lease the Property to a partnership affiliated with and controlled by EAH pursuant to a ground lease (the “ Ground Lease ”) that will restrict development of the Property for the construction of an affordable multifamily residential development consisting of approximately seventy-nine (76) units in which all units except the manager’s unit (the “ Restricted Units”) will be restricted for occupancy by lower income households at affordable rents (the “Project”); and

WHEREAS, pursuant to the LDDA and the Ground Lease, an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (“ Regulatory Agreement”) will be recorded against the Property; and

WHEREAS, both the Ground Lease and the Regulatory Agreement will require that for a term of ninety-nine (99) years, the Restricted Units must be occupied by, or if vacant, available for occupancy at affordable rents by households whose income does not exceed sixty percent (60%) of Area Median Income (“AMI”); and

21 Reso. No. ____

WHEREAS, upon disposition of the Property, the Regulatory Agreement and a memorandum of the Ground Lease will be recorded against the Property substantially in the form attached as exhibits to the LDDA, and such documents will be binding upon successors in interest to the developer and will be enforceable by RHA.

NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSIONERS OF THE

HOUSING AUTHORITY OF THE CITY OF RICHMOND, COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA THAT the Executive Director is hereby authorized to enter into a Lease Disposition and Development Agreement (LDDA) and to negotiate and execute any and all related documents and agreements, including the Ground Lease and Regulatory Agreement between the Richmond Housing Authority and EAH Housing for the development of the Nevin Plaza II affordable housing project (APN 515-261-014-2).

BE IT FURTHER RESOLVED that the Executive Director is hereby authorized to take all actions necessary to implement this resolution.

*****************
The foregoing resolution was passed and adopted by the Commissioners of the Housing Authority of the City of Richmond at a special meeting thereof held on December 17, 2024, by the following vote:

AYES:

NOES:

ABSTENTIONS:

ABSENT:

Chairperson

[SEAL]
Attest:

Secretary

Approved as to form:

City Attorney

State of California }
County of Contra Costa : ss.

City of Richmond }

I certify that the foregoing is a true copy of Resolution No. _____ finally passed and adopted at a Special Housing Authority Meeting held on December 17, 2024.

____________________________________

CLERK OF THE HOUSING AUTHORITY
22 Reso. No. ____

Exhibit A

PROPERTY

Legal Description: NICH MAC CIV CNTR LOTS 9,10,19,20 BLK 2

County: CONTRA COSTA
Parcel # (APN): 515-261-014-2
Owner Name: RICHMOND HOUSING AUTHORITY
Mailing Address: 450 CIVIC CENTER PLZ 2ND FL RICHMOND CA 94804-1630

23 4892-0329-9990 v6

LEASE DISPOSITION AND DEVELOPMENT AGREEMENT

by and between

THE HOUSING AUTHORITY OF THE CITY OF RICHMOND

and

NEVIN PLAZA II, L.P.

(Nevin Plaza – Phase II)

_______________, 2024

24 4892-0329-9990 v6 2
THIS LEASE DISPOSITION AND DEVELOPMENT AGREEMENT (this
“Agreement”) is entered into effective as of _______________, 2024 (“Effective Date”) by and between the Housing Authority of the City of Richmond, a public body corporate and politic (“RHA”) and Nevin Plaza II, L.P., a California limited partnership (“Developer”). RHA and the Developer are collectively referred to herein as the “Parties.”

RECITALS
A. RHA is the owner of the real property consisting of approximately 21,579 square feet of unimproved land in the City of Richmond, California, known as Contra Costa County Assessor’s Parcel Nos. 515-261-010, 515-261-003, 515-261-002 and 515-261-001 (ptn), and more particularly described in Exhibit A attached hereto (the “Property”).

B. Following RHA’s solicitation and evaluation of development proposals for the Property, RHA entered into an Exclusive Right to Negotiate Agreement with EAH Inc., a California nonprofit public benefit corporation (“EAH”) dated as of July 1, 2020 (the “ERNA”).

C. Authority and EAH entered into that certain unrecorded Master Development Agreement dated as of December 15, 2020 (“Original Master Development Agreement”) and amended by that certain unrecorded First Amendment to Master Development Agreement dated as of March 1, 2023 and executed by and between Authority and EAH (as so amended, the “Master Development Agreement”).

D. Authority and Nevin Plaza I, L.P., a California limited partnership (“Phase I Partnership”) entered into that certain License Agreement dated as of March 1, 2023 and recorded in the Official Records on March 20, 2023 as Instrument No. 2023-0025657 (the “License Agreement”).

E. Developer has proposed the development of a multifamily rental housing development on the Property that will be affordable to low-, extremely-low, and very low- income households (as more particularly described herein, the “Project”).

F. Among other approvals for the Project, if applicable, the City will consider Developer’s application for a density bonus for the Project pursuant to the State Density Bonus Law, and Developer’s application for streamlined review of the Project pursuant to SB 35. The proposed Project may be exempt from California Environmental Quality Act (“CEQA”) review if it qualifies for streamlined review under SB 35.

G. Upon satisfaction of the conditions precedent set forth in this Agreement and subject to the terms and conditions set forth herein, RHA will lease the Property to Developer pursuant to a Ground Lease substantially in the form attached hereto as Exhibit E (“Ground Lease”) for development and operation of the Project.

H. Substantially concurrently with the Closing, among other documents, Developer will execute and deliver to RHA the Ground Lease and an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants that will require rents for the residential 25 4892-0329-9990 v6 3
units to be affordable to low-, extremely-low, and very low-income households for the term of the Ground Lease.

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

NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.

ARTICLE I
DEFINITIONS; EXHIBITS

1.1 Incorporation of Recitals. The Parties acknowledge the truth of the foregoing recitals which are hereby incorporated into this Agreement by this reference.

1.2 Definitions. The following terms shall have the meanings set forth below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement.
“Affordable Rent” is defined in the Regulatory Agreement.

“Applicable Laws” is defined in Section 5.15.

“Area Median Income” is defined in Section 5.22.1.
“Assignment Agreement” is defined in Recital H.
“Authorized Representative” means RHA’s Executive Director or his or her designee.
“Building Permit Application” means the complete application for Project building permits, including all Construction Plans and other documentation required by RHA or the City.
“CDLAC” means the California Debt Limit Allocation Committee. “Certificate of Completion” is defined in Section 5.12. “City” means the City of Richmond, a California municipal corporation. “Claims” is defined in Section 5.11.
26 4892-0329-9990 v6 4
“Closing,” “Closing Date” and “Close of Escrow” shall be the date that escrow closes for Project construction financing, and shall be the date upon which the term of the Ground Lease commences and the Memorandum of Lease is recorded.
“Commencement Date” means the date that the term of the Ground Lease commences, and shall be Closing Date.
“Conditions of Approval” is defined in Section 5.4.
“Construction Plans” is defined in Section 5.6.

“Conversion Date” means the date that the Project’s conventional construction loan converts to a permanent loan.
“County” means the County of Contra Costa.
“CTCAC” means the California Tax Credit Allocation Committee. “Developer” means Nevin Plaza II, L.P., a California limited partnership. “Developer Parties” means Developer and Developer’s agents, employees, consultants, contractors, and subcontractors, and any person acting on behalf of, or as the invitee of, any of the foregoing.

“Developer’s Permitted Exceptions” is defined in Section 3.1.

“EAH” is defined in Recital B.

“Effective Date” is the date specified in the preamble to this Agreement.

“ERNA” is defined in Recital B.

“Environmental Laws” is defined in Section 6.10.2.
“Escrow Agent” is defined in Section 3.4.
“Fifteen Year Compliance Period” means the fifteen (15) year compliance period described in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended.
“Force Majeure” is defined in Section 11.2.
“Gross Income” is defined in the Regulatory Agreement.
“Ground Lease” is defined in Recital F.
“Hazardous Material” is defined in Section 6.10.1.
27 4892-0329-9990 v6 5
“HCD” means the California Department of Housing and Community Development.
“HUD” means the U.S. Department of Housing and Urban Development. “HUD Documents” means collectively, a Release of Declaration of Trust and a Use Agreement in form approved by HUD.
“Improvements” means the improvements to be developed on the Property pursuant to this Agreement and the Ground Lease. “Indemnitees” is defined in Section 5.11.
“Investor Limited Partner” means the entity to be admitted as a limited partner pursuant to the Partnership Agreement, and that will provide equity contributions to fund development of the Project.
“License Agreement” is defined in Recital D.
“Master Development Agreement” is defined in Recital C.

“Memorandum of Lease” is defined in Section 3.7.

“Original Master Development Agreement” is defined in Recital C.

“Official Records” means the Official Records of Contra Costa County.

“Partnership Agreement” means Developer’s agreement of limited partnership as such may from time to time be amended or amended and restated. “Phase I Partnership” is defined in Recital D.
“Phase I Project” means the 140 unit multifamily project owned by the Phase I Partnership and located adjacent to the Property on land leased from RHA.
“Project” is defined in Recital E and more particularly described in Section 2.3.
“Property” is defined in Recital A and described in Exhibit A. “Reciprocal Easement Agreement” is defined in Section 2.3. “Regulatory Agreement” is defined in Section 3.7.
“Restricted Unit” means a dwelling unit that is reserved for occupancy at an Affordable Rent by eligible households of specified household income levels as set forth in this Agreement and the Regulatory Agreement. 28 4892-0329-9990 v6 6
“RHA” means the Housing Authority of the City of Richmond, a public body corporate and politic.
“RHA Documents” means collectively, this Agreement, the Regulatory Agreement, the Ground Lease, and the Memorandum of Lease. “SB 35” means California Government Code Section 65913.4 (Chapter 366, Statutes of 2017).
“State Density Bonus Law” means California Government Code Section 65915 et. seq.
“Term” is defined in Section 3.3.
“Title Company” is defined in Section 3.4.
“Title Report” is defined in Section 3.1.

“Transfer” is defined in Section 7.2.
“Updated Financing Plan” is defined in Section 2.5.2.

1.3 Exhibits. The following Exhibits are attached hereto and incorporated into this Agreement by this reference:

A Legal Description of the Property
B Project Schedule
C Form of Certificate of Completion
D Form of Regulatory Agreement
E Form of Ground Lease
F-1 Preliminary Financing Plan
F-2 Final Financing Plan

ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE; PROJECT SCOPE; FINANCING PLAN

2.1 Representations. Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 to be untrue, Developer shall immediately give written notice of such fact or condition to RHA. Developer acknowledges that RHA shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of RHA. Developer hereby represents, warrants, and covenants that the following are true and correct as of the Effective Date, and shall be true and correct as of the Closing Date.

(a) Organization. Developer is a limited partnership, duly organized and in good standing under the laws of the State of California. Developer’s Managing General Partner is Nevin Plaza II EAH, LLC, a California limited liability company duly organized and in good 29 4892-0329-9990 v6 7
standing under the laws of the State of California, whose sole member and manager is EAH Inc., a California nonprofit public benefit corporation, duly organized and in good standing under the laws of the State of California, and tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
(b) Authority of Developer. Developer has full power and authority to execute and deliver the RHA Documents and all other documents or instruments that have been or that will be executed and delivered by Developer pursuant to or in connection with this Agreement, and to perform and observe the terms and provisions of all of the foregoing. (c) Authority of Persons Executing Documents. This Agreement, the other RHA Documents, and all other documents or instruments that have been or that will be executed and delivered by Developer pursuant to or in connection with to this Agreement, have been executed and delivered, or will be executed and delivered, by persons who are duly authorized to execute and deliver the same for and on behalf of Developer, and all actions required under Developer’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement, the other RHA Documents, and all other documents or instruments that have been or that will be executed and delivered by Developer pursuant to or in connection with this Agreement, have been duly taken or will have been duly taken (to the extent such actions are required) as of the date of execution and delivery of such documents.
(d) Valid and Binding Agreements. This Agreement, the other RHA documents, and all other documents or instruments that have been or that will be executed and delivered by Developer pursuant to or in connection with this Agreement constitute, or if not yet executed or delivered, will when so executed and delivered, constitute, legal, valid and binding obligations of Developer, enforceable in accordance with their respective terms, subject to laws affecting creditors’ rights and principles of equity.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement, the other RHA Documents, or any other documents or instruments that have been or that will be executed and delivered by Developer pursuant to or in connection with this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency binding on Developer, or any provision of the organizational documents of Developer, or will conflict with or constitute a breach of or a default under any agreement to which Developer is a party, or will result in the creation or imposition of any lien upon any assets or property of Developer, other than liens established pursuant hereto.
(f) Pending Proceedings. Except as disclosed in writing to RHA prior to execution of this Agreement, Developer is not in default under or in violation of any law or regulation or under any order of any court, board, commission or agency whatsoever, and, to the best knowledge of the principals of Developer’s general partners, there are no claims, actions, suits or proceedings pending or threatened against or affecting Developer, at law or in equity, before or by any court, board, commission or agency. Neither Developer nor any of its general partners are the subject of a bankruptcy or insolvency proceeding, and no general assignment or 30 4892-0329-9990 v6 8
general arrangement for the benefit of creditors or the appointment of a trustee or receiver to take possession of all or substantially all of Developer’s or any general partner’s assets has been made.

2.2 Effective Date; Master Development Agreement and License Agreement. The obligations of Developer and RHA hereunder shall be effective as of the Effective Date which date is set forth in the preamble to this Agreement. Effective as of the Commencement Date, the Master Development Agreement and the License Agreement shall each terminate with the exception of any provisions that expressly survive termination, and the provisions of the Ground Lease and the RHA Documents will prevail over any inconsistent provisions of the Master Development Agreement or the License Agreement. The Parties acknowledge that this Section is consistent with the intent of Section 6.1 of the Original Master Development Agreement and Section 2 of the License Agreement.

2.3 Project Scope; Parking. The Project will include the construction of approximately 76 units of multi-family rental housing, of which 75 will be subject to affordability and occupancy restrictions. One of the residential units will be a manager’s unit that is not subject to affordability and occupancy restrictions. The Project will include at least thirty-eight (38) parking spaces in a structured garage (“Garage”). Concurrently with the commencement of the term of the Ground Lease: (i) the License Agreement will terminate in accordance with its terms, and (ii) Developer and Phase I Partnership will execute and record a reciprocal easement agreement that addresses Garage operation and maintenance obligations and provides that residents of the Project and residents of the Phase I Project will be permitted to park in the Garage (“Reciprocal Easement Agreement”).

2.4 Design Review; Environmental Review. Developer will submit design documents for the Project including a site plan, elevations, and schematic drawings for review and approval by RHA and the City.

The Parties acknowledge that Developer may submit an application for streamlined review of the Project pursuant to SB 35. In its capacity as the owner of the Property, RHA hereby consents to the submittal of such application. The Parties acknowledge that the proposed Project would be exempt from CEQA review if it qualifies for streamlined review under SB 35.

In the event that the proposed Project is modified or other circumstances arise that would affect the Project’s eligibility for exemption from CEQA review, prior to submitting an application for land use approvals for the Project, RHA and City shall cause to be performed any additional environmental studies required in connection with environmental review of the Project in accordance with CEQA. If additional environmental review is required under CEQA, Developer acknowledges that such review may involve preparation and consideration of additional information, as well as consideration of input from interested organizations and individuals, and Developer acknowledges that nothing in this Agreement is intended to, or shall be interpreted as a commitment to approve a project or program prior to completion of any required CEQA review. In addition, Developer acknowledges that any required approvals by any other local, state or federal agency may require additional environmental review, and that any approval by RHA shall not bind any other local, state or federal agency to approve the 31 4892-0329-9990 v6 9
Project or to impose mitigation measures that are consistent with the terms of this Agreement or with the terms of any mitigation measures required pursuant to environmental review. Prior to the Close of Escrow, Developer shall have the right to terminate this Agreement by delivery of written notice to RHA if Developer determines that implementation of any required environmental mitigation measures would cause development of the Project to become economically infeasible.

2.5 Financing Plan; Project Schedule.

2.5.1 Preliminary Financing Plan and Project Schedule. As set forth in the preliminary financing plan attached as Exhibit F-1 (“Preliminary Financing Plan”), Developer has proposed financing the Project with a combination of a conventional construction loan that will convert to a permanent loan upon completion of construction, equity contributions from federal low-income housing tax credit investors, tax-exempt bond financing, and loans and/or grants from state and federal agencies. By the time specified in Exhibit B, Developer shall submit to RHA projected development and operating pro formas for the Project. Exhibit B attached hereto sets forth the anticipated schedule for financing and development of the Project (“Project Schedule”), including target dates for submittal of financing applications and submittal of the Building Permit Application.

2.5.2 Updated Financing Plan. Developer shall submit for RHA review and approval Developer’s updated plans for construction and permanent financing of the Project (the “Updated Financing Plan”) in accordance with the schedule set forth in Exhibit B. The Updated Financing Plan shall indicate all sources of funds necessary to pay, when due, the estimated costs of the Project, including without limitation Ground Lease rent, and hard and soft construction costs, and shall be accompanied by evidence that all such funds are subject to binding commitments, in form acceptable to RHA, from Developer, equity investors, and lenders, subject only to commercially reasonable conditions. The Updated Financing Plan shall include updated development and operating pro formas that set out in detail Developer’s plan for financing the costs of leasing the Property, and constructing and operating the Project. In addition, if applicable, the Updated Financing Plan shall be accompanied by an updated Project Schedule.

2.5.3 RHA Review of Updated Financing Plan. RHA staff shall review the proposed Updated Financing Plan, and shall use reasonable efforts to review it within thirty (30) days following receipt (“Financing Plan Review Period”). If RHA does not approve the Updated Financing Plan, RHA shall set forth its objections in writing and notify Developer of the reasons for its disapproval. If RHA does not approve the Updated Financing Plan or provide written objections to Developer within the Financing Plan Review Period, then upon the expiration of the Financing Plan Review Period, Developer may provide written notice to RHA that the Financing Plan Review Period has expired (“Notice of Expiration of Financing Plan Review Period”), and if RHA does not respond within ten (10) business days following the date that RHA receives such Notice of Expiration of Financing Plan Review Period, then RHA shall be deemed to have approved the Updated Financing Plan. If RHA disapproves the Updated Financing Plan, Developer shall submit revisions that addresses the reasons for disapproval, and RHA shall grant Developer a reasonable extension of the time deadlines set forth in this Agreement as required to restructure the Updated Financing Plan, subject to the outside time 32 4892-0329-9990 v6 10
limit for completion set forth in Section 5.1 below. RHA’s approval of the Updated Financing Plan shall be a condition precedent to RHA’s obligation to lease the Property. The approved final Updated Financing Plan shall be attached to this Agreement as Exhibit F-2 or shall be set forth in an addendum to this Agreement. Unless expressly stated otherwise in a written instrument executed by the Parties, the terms set forth in the body of this Agreement shall prevail in the event of a conflict between the information set forth in the Updated Financing Plan and the terms set forth in the body of this Agreement.

If Developer proposes to modify the Updated Financing Plan after it has been approved by RHA, Developer shall submit proposed modifications to RHA for review and approval. The same review and notice provisions set forth in the preceding paragraph shall apply to RHA’s review of proposed modifications.

2.5.4 Tax Credit Funds and Other Financing Sources. Developer will submit applications to HCD, CDLAC, CTCAC, and other funding sources in accordance with the timeframe set forth in Exhibit B in order to secure allocations of tax-exempt bonds, federal low- income housing tax credits, and if applicable, state tax credits, and other financing for the Project to enable construction to commence by the deadline specified in Section 5.1. Subject to the deadline for start of Project construction specified in Section 5.1, Developer will submit applications to CDLAC and CTCAC in subsequent rounds if necessary to secure tax credit and tax-exempt bond allocations. Upon award of a preliminary reservation from CTCAC, Developer shall exercise diligent good faith efforts to obtain a funding commitment from a reputable equity investor. Developer’s procurement of CTCAC and CDLAC allocations and receipt of commitments from an equity investor and construction and permanent lenders sufficient to fully finance development of the Project are conditions precedent to RHA’s obligation to lease the Property to Developer and Developer’s obligation to develop the Project. Developer shall provide RHA with copies of all applications for Project financing submitted to CTCAC, CDLAC, HCD, and the Contra Costa County Housing Authority.

Consistent with the schedule set forth in Exhibit B, as such deadlines may be extended pursuant to Sections 5.1 and 11.2, Developer shall provide to RHA satisfactory evidence that all sources of construction and permanent financing for the Project are committed by investors, lenders, public agencies, or grantors, and that all such funds will be available in time to enable Project construction to commence and be completed within the times specified in Section 5.1. If Developer does not provide evidence of the commitment of all such funds by the time set forth in Exhibit B, as such deadline may be extended pursuant to Sections 5.1 and 11.2, RHA shall have the right, by delivery of written notice to Developer, to terminate this Agreement and upon such termination, except as expressly set forth herein, all rights and obligations of the Parties under this Agreement shall terminate, including without limitation, any obligation that may be construed to have arisen under this Agreement relating to the leasing of the Property or financing of the Project.

2.5.5 Loan and Grant Documents; Partnership Agreement. Developer shall submit to RHA for its review and approval, copies of all loan and/or grant documents for all Project financing sources, and a copy of the Partnership Agreement, all amendments thereto, all exhibits thereto, and all related documents.

33 4892-0329-9990 v6 11

ARTICLE III

LEASE OF THE PROPERTY; CONDITIONS

PRECEDENT TO CLOSING

3.1 Lease of Property; Review of Title. Developer acknowledges receipt of a preliminary title report for the Property issued by Title Company and dated ___________, 20__ (the “Title Report”). Provided that all conditions precedent set forth in this Agreement have been satisfied or waived, RHA shall lease to Developer, and Developer shall lease from RHA, the Property in accordance with and subject to the terms, covenants and conditions of this Agreement and the Ground Lease, subject to: (a) the provisions and effects of the RHA Documents and the HUD Documents, (b) applicable building and zoning laws and regulations, (c) any lien for current taxes and assessments or taxes and assessments accruing for periods subsequent to recordation of the Memorandum of Lease, (d) the exceptions shown on the Title Report, (e) liens and encumbrances created or permitted by Developer or Developer’s affiliates, employees or agents, and (f) such other conditions, liens, encumbrances, restrictions, easements and exceptions as Developer may approve in writing, which approval shall not be unreasonably withheld. All of the foregoing are collectively hereinafter referred to as “Developer’s Permitted Exceptions.”

3.1.1 Supplemental Title Review. If any new or additional items appear of record after the date of the Title Report, Developer shall obtain from the Title Company an updated preliminary title report ("Supplemental Report"). Following receipt of the Supplemental Report and documents pertaining to new exceptions appearing on the Supplemental Report, Developer shall have ten (10) business days to provide to RHA Developer’s written objections to the Supplemental Report. If Developer fails to provide written objections within such period, Developer shall be deemed to have accepted the Supplemental Report and all new exceptions listed therein. If Developer provides written notice of objections to new exceptions listed in the Supplemental Report, RHA shall have five (5) business days to notify Developer of whether RHA will undertake to remove the exceptions to which Developer has objected. If RHA fails to respond, RHA shall be deemed to have elected not to cure any of the exceptions, and in such case, Developer may elect to proceed to Close of Escrow or terminate this Agreement by written notice to RHA. Notwithstanding anything to the contrary in this Section 3.1.1: (a) Developer shall be deemed to have accepted any new exceptions that pertain to liens and encumbrances created or permitted by Developer or Developer’s affiliates, employees or agents, and (b) RHA shall take action to remove any new monetary liens affecting title to the Property that are created or permitted by RHA.

3.2 Reserved.

3.3 Ground Lease Terms. As more particularly set forth therein, the Ground Lease will include, without limitation, the following terms:
(i) The term of the Ground Lease shall commence on the Closing Date. (ii) The term of the Ground Lease (“Term”) will be for a period of ninety- nine (99) years.
34 4892-0329-9990 v6 12
(iii) Base Rent shall be payable annually on a residual receipts basis as described in Section 4.1.
(iv) During the term of the Ground Lease as it may be extended, Developer shall own the Improvements. Upon termination of the Ground Lease, ownership of the Improvements shall revert to RHA.
(v) RHA consent shall be required for material modifications to the Improvements.
(vi) Developer shall be obligated to pay all applicable property taxes and assessments, including without limitation, possessory interest taxes. Developer shall be permitted to apply for a “welfare” exemption from property taxes. (vii) Regulatory agreements, mortgages, and other encumbrances may be recorded only against the Improvements and Developer’s leasehold interest in the Property. No such agreements or encumbrances may be recorded against RHA’s fee interest in the Property with the exception of documents required to be recorded against the fee interest by HUD or by State of California program regulations applicable to Project financing sources.

3.4 Escrow. RHA and Developer shall open escrow at the office of Old Republic Title Company or such other title company as the Parties may agree upon (“Escrow Agent” or “Title Company”) in order to consummate the lease of the Property to Developer and the closing of escrow for the transactions contemplated hereby.

3.5 Costs of Closing and Escrow; Legal and Financial Consultant Fees. Developer shall pay all title insurance premiums for policies Developer elects to purchase in connection with the lease of the Property and the financing of the Project, and Developer shall pay all recording fees, transfer taxes, escrow fees and closing costs incurred in connection with the lease of the Property and the financing of the Project. If applicable, Developer shall pay for the cost of any lender’s policy of title insurance that RHA or City elect to acquire in connection with the transactions contemplated hereby. Property taxes and assessments shall be prorated as of the Closing Date. RHA and Developer shall provide Escrow Agent with a copy of this Agreement, which together with such supplemental instructions as RHA or Developer may provide and that are consistent with this Agreement or that are otherwise mutually agreed upon by RHA and Developer, shall serve as escrow instructions for the Close of Escrow. At Close of Escrow, Developer shall pay RHA’s legal fees and financial consultant fees incurred in connection with the transactions contemplated by this Agreement, including without limitation, the negotiation and preparation of this Agreement, the Ground Lease and RHA Documents, review of the Partnership Agreement and loan documents, and review of other documents required in connection with the lease of the Property, the financing of the Project, and the Close of Escrow.

3.6 Closing; Recorded Documents. The Closing Date shall be a date that is mutually acceptable to the Parties consistent with Section 5.1, and which shall occur within thirty (30) days following the Developer’s satisfaction or RHA’s waiver of all conditions precedent to the lease of the Property as set forth in Section 3.8 . Prior to the Close of Escrow, Developer shall deposit into escrow the Reciprocal Easement Agreement and the RHA Documents and HUD 35 4892-0329-9990 v6 13
Documents to which Developer is a party, executed and acknowledged as applicable, Developer’s share of closing costs and all other costs and expenses payable by Developer pursuant to this Agreement and the RHA Documents. Provided that all conditions precedent to Close of Escrow have been satisfied or waived, RHA shall deposit into escrow executed copies of the HUD Documents and the RHA Documents to which RHA is a party. On the Closing Date, the Escrow Agent shall cause the HUD Documents, the Memorandum of Lease, the Regulatory Agreement, the Reciprocal Easement Agreement, and a termination of the License Agreement to be recorded in the Official Records.

3.7 RHA’s Conditions to Closing. RHA’s obligations to lease the Property to Developer is conditioned upon the satisfaction of all of the terms and conditions set forth in this Section 3.7 prior to the Commencement Date, unless any such condition is waived in writing by RHA acting in the discretion of its Authorized Representative.

(a) No Default. There shall exist no condition, event or act which would constitute a breach or default by Developer under this Agreement or any other RHA Document, or which, upon the giving of notice or the passage of time, or both, would constitute such a breach or default.

(b) Representations. All representations and warranties of Developer contained herein or in any other RHA Document or certificate delivered in connection with the transactions contemplated by this Agreement shall be true and correct in all respects as of the Close of Escrow.

(c) Due Authorization and Good Standing; Organizational Documents.

Developer shall have delivered to RHA copies of all of the following, including updated versions of any of the following that have been amended or modified since the date of any prior delivery of such documents to RHA: (i) Developer’s Partnership Agreement as proposed to be amended and restated upon admission of the Investor Limited Partner; (ii) an executed copy of the amended and restated Partnership Agreement in form approved by RHA; (iii) copies of Developer’s LP-1, LP-2, and good standing certificate, each certified by the Secretary of State; (iv) for each general partner and for the manager/sole member of each general partner (a) a good standing certificate and articles of incorporation/LLC-1, each certified by the Secretary of State, and (b) the entity’s bylaws/operating agreement, and resolutions authorizing Developer’s execution of and performance under this Agreement and the other RHA Documents, each certified by an officer or other authorized party as accurate, complete, and in full force and effect.
(d) Execution, Delivery and Recordation of Documents. Developer shall have executed, acknowledged as applicable, and delivered to RHA this Agreement, and all other documents required in connection with the transactions contemplated hereby, including without limitation an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants substantially in the form attached hereto as Exhibit D (the “Regulatory Agreement”), the Ground Lease, and a Memorandum of Lease substantially in the form attached as an exhibit to the Ground Lease (“Memorandum of Lease”). Concurrently with the Close of Escrow, the Memorandum of Lease and the Regulatory Agreement shall be recorded in the Official Records against Developer’s leasehold interest in the Property. 36 4892-0329-9990 v6 14
(e) Reserved.

(f) Financing Plan. RHA shall have approved the final Financing Plan, including without limitation, the sources of construction and permanent financing, and the construction and operating budgets for the Project.

(g) Approval of Partnership Agreement and Financing Documents; Evidence of Availability of Funds. RHA shall have approved the Partnership Agreement as amended, and shall have approved the loan and grant documents for all financing sources for the Project. All sources of construction financing for the Project shall have closed or shall close concurrently with the closing for the lease of the Property, and Developer shall have provided evidence reasonably satisfactory to RHA that (i) all conditions to the release and expenditure of the initial draw of funds from each source described in the approved final Financing Plan as a source of construction financing for the Project have been met and that such funds will be available, and (ii) all construction financing (including draws subsequent to the initial draw of funds) will be available upon the satisfaction of the conditions set forth in the applicable documents. (h) Construction Contract, Plans, Budget and Schedule. RHA shall have approved the general contractor, the construction budget and schedule, and the construction contract for the Project, and RHA and City shall have approved the final Construction Plans and specifications for the Project. Developer shall have delivered an executed copy of the construction contract for the Project to RHA.

(i) Permits and Land Use Approvals. Developer shall have delivered evidence satisfactory to RHA that Developer has obtained all land use approvals and all permits (including without limitation building and off-site improvement permits) required to construct the Project, or that the receipt of such permits is subject only to such conditions as RHA may reasonably approve. A “permit ready” letter indicating that building permits for the Project shall be issued upon payment of applicable fees may serve as satisfactory evidence regarding issuance of the building permit. All applicable CEQA and NEPA review shall have been completed. (j) Payment of Fees. Developer shall have paid when due all fees and charges in connection with the processing of all applicable City permits and approvals. Building permit fees may be paid concurrently with Closing.
(k) Insurance; Payment and Performance Bonds. Developer shall have provided evidence satisfactory to RHA that Developer has obtained insurance coverage meeting the requirements set forth in Article X, and shall have provided to RHA copies of payment bonds and performance bonds in form approved by RHA pursuant to Section 5.18.

(l) Reserved.
(m) Other Documents. Developer’s delivery to RHA, and RHA approval of such other documents related to the development and financing of the Project as RHA may reasonably request.
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(n) Settlement Statement. RHA shall have approved the final settlement statement for the Close of Escrow;
(o) Concurrent Closing; Commencement of Ground Lease. The term of the Ground Lease shall commence on the Closing Date upon recordation of the Memorandum of Lease. Closing for the Project construction financing shall close concurrently with the commencement of the term of the Ground Lease.

3.8 Developer’s Conditions to Closing. Developer’s obligation to proceed with the leasing of the Property is subject to the satisfaction or Developer’s waiver of the following conditions:

(a) No Default. RHA shall not be in default under the terms of this Agreement, and all representations and warranties of RHA contained herein shall be true and correct;

(b) Execution of Documents. RHA shall have executed and acknowledged the Memorandum of Lease, the Regulatory Agreement, and all other RHA Documents and HUD Documents to which RHA is a party, and shall have delivered such documents into escrow; and

(c) Owner’s Title Policy. The Title Company shall, upon payment of the premium therefor, be ready to issue an Owner's Title Insurance Policy for the benefit and protection of Developer showing a leasehold interest in the Property vested in Developer, subject only to Developer’s Permitted Exceptions and containing such endorsements as Developer may reasonably require, with the cost of such title policy to be paid by Developer.

(d) Permits and Land Use Approvals. Developer shall have obtained all land use approvals and all permits (or permit ready letters) required to construct the Project, or the receipt of such permits shall be subject only to such conditions as Developer may reasonably approve.
(e) Financing Plan. Developer shall have approved the final Financing Plan, including without limitation, the sources of construction and permanent financing, and the construction and operating budgets for the Project.

ARTICLE IV

GROUND LEASE RENT

4.1 Annual Residual Receipts Payments; Financial Reports and Operating Budgets.

Subject to the provisions of the Ground Lease, annual payments of Base Rent shall be due and payable based upon the appraised value of the Property determined as of the Commencement Date. Fifty percent (50%) of Project annual residual receipts shall be paid toward Base Rent during each year of the term of the Ground Lease; provided however, such percentage share may be reduced on a pro rata basis if other public agencies provide Project financing payable on a residual receipts basis. Any unpaid portion of Base Rent payable shall accrue and shall bear interest at the Applicable Federal Rate in effect as of the Commencement Date. 38 4892-0329-9990 v6 16
As set forth in the Ground Lease, Developer shall be obligated to provide for RHA review and approval, an annual operating budget for the Project, and shall be obligated to provide annual financial reports including an income and expense statement and report on the status of Project reserves.

4.2 Treatment of Certain Expenses for Calculation of Residual Receipts. As more particularly set forth in the Ground Lease, for the purpose of calculating residual receipts, the following expenses are subject to the following limitations: (i) the annual partnership management fee payable prior to the calculation of residual receipts shall be limited to Twenty- Five Thousand Dollars ($25,000), increasing at three percent (3%) per year, (ii) the cash portion of the developer fee shall be limited to Two Million, Five Hundred Thousand Dollars ($2,500,000) or such greater amount that CTCAC permits to be paid as an upfront developer fee paid from construction sources (“Cash Developer Fee”), (iii) any deferred portion of the developer fee shall not bear interest, and shall be payable only from Developer’s share of residual receipts unless definitive Project financial projections clearly demonstrate that an adjustment is necessary (e.g. to satisfy the “true debt” test for federal income tax purposes); provided however, any portion of the Cash Developer Fee that is not paid from construction financing sources may be paid prior to the calculation of residual receipts, (iv) the property management fee payable prior to the calculation of residual receipts shall be capped at $531 per unit per year increasing at the CPI for All Urban Consumers (“CPI-U”) for the San Francisco Area commencing in 2021, (v) the annual asset management fee payable to the Investor Limited Partner prior to the calculation of residual receipts shall be limited to Seven Thousand Five Hundred Dollars ($7,500), increasing at three percent (3%) per year, shall be payable only during the Fifteen Year Compliance Period, and any accrued but unpaid portion of the asset management fee shall be payable only from Developer’s share of residual receipts, (vi) replacement reserve deposits made prior to the calculation of residual receipts shall be limited to $500 per unit per year, and (vii) operating/debt service reserve deposits made prior to the calculation of residual receipts shall be limited to the amount necessary to replenish such reserve to the amount equal to three (3) months’ anticipated operating expenses and debt service.

As more particularly set forth in the Ground Lease, among others, the following expenses will be payable from Developer’s share of residual receipts: (i) any incentive management fee, (ii) any amount in excess of the permitted partnership management fee, asset management fee, or property management fee, including any unpaid and accrued portion of such fees, (iii) deferred developer fees and interest on any deferred developer fee (except as otherwise payable pursuant to clause (iii) of Section 4.2 above), (iv) contributions to reserve accounts in excess of the amounts specified in the Ground Lease, (v) expenses paid with withdrawals from reserve accounts, (vi) distributions to partners, (vii) debt service or repayment of sponsor or general partner construction loans, and (viii) depreciation, amortization, depletion, and other non-cash expenses.

In the event of any inconsistency between the Partnership Agreement and the Ground Lease with respect to the payment of Base Rent, including without limitation, provisions pertaining to regarding the calculation of residual receipts or distribution of Project net cash flow, the Ground Lease shall control.

39 4892-0329-9990 v6 17

4.3 Reserved.

4.4 Reserved.

4.5 Refinancing/Resyndication. As more particularly set forth in the Ground Lease, fifty percent (50%) of Net Proceeds of Project refinancing or resyndication shall be used to make a payment toward any accrued and unpaid Base Rent in accordance with this paragraph and any additional provisions set forth in the Ground Lease. For purposes of this paragraph “Net Proceeds” means all proceeds of refinancing or resyndication less: (a) the amount used to repay the refinanced debt, (b) the reasonable out-of-pocket expenses Developer is required to pay to third parties in connection with the refinancing or resyndication, (c) the reasonable costs paid by Developer to rehabilitate, construct and install capital improvements to the Project as approved by RHA’s advance written consent (including without limitation reasonable architects’ and engineers’ fees incurred in connection with such capital improvements), (d) any reasonable increase in Project reserves that Developer is required to fund as a condition to such refinancing or resyndication, provided that Developer actually funds such reserves and such reserves are held for Developer’s benefit by a third-party financial institution, (e) if applicable, the reasonable amount required to be paid to purchase the Investor Limited Partner’s interest in Developer provided that such amount does not exceed the fair market value of such interest as reasonably and customarily determined for such interests in partnerships that own and operate affordable housing developments financed with low-income housing tax credits and located in the greater San Francisco Bay Area, and (f) payment for such other purposes as RHA may approve in writing in the exercise of RHA’s sole discretion. If other public agency lenders require payment of Net Proceeds, then Net Proceeds shall be allocated among RHA and such lenders pro rata in proportion to each lender’s financial contribution to the Project.

ARTICLE V

DEVELOPMENT AND USE OF THE PROPERTY

5.1 Development Schedule. Construction of the Project shall commence within thirty (30) days following Closing, and subject to Force Majeure and any extension permitted pursuant to this Section or Section 11.2: (i) the Closing shall occur by not later than the fourth (4th) anniversary of the Effective Date, and (ii) Developer shall diligently prosecute to completion the construction of the Project to enable the City to issue final certificates of occupancy for all residential units and all non-residential components of the Project within twenty-eight (28) months following commencement of construction. Notwithstanding the foregoing, nothing in this Agreement is intended to extend the term of validity of Project entitlements beyond the maximum term specified in applicable California statutes. Developer shall use diligent and commercially reasonable efforts to perform Developer’s obligations under this Agreement within the times periods set forth herein, and if no such time is provided, within a reasonable time, designed to permit issuance of final certificates of occupancy for all residential units in the Project by the date specified in this Section 5.1. Subject to Force Majeure, the City’s issuance of permits and approvals, and any extension permitted pursuant to this Section or Section 11.2, Developer’s failure to commence or complete construction of the Project in accordance with the time periods specified in this Section 5.1 shall be an Event of Developer Default hereunder. Two one-year extensions of the deadline for commencement of construction 40 4892-0329-9990 v6 18
of the Project set forth in this Section may be granted by RHA’s Authorized representative if Developer has met all performance milestones set forth in Exhibit B, but despite Developer’s good faith and diligent efforts, Developer has been unable to secure adequate financing for development of the Project. Any extension of the deadline for commencement of construction to a date later than the sixth (6th) anniversary of the Effective Date, including any extension requested due to Force Majeure delay, shall require approval of the RHA governing board.

5.2 Cost of Leasing and Construction. Except as expressly set forth herein, Developer shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the leasing of the Property, including without limitation appraisal fees, title reports and any environmental assessments Developer elects to undertake. Except as expressly set forth herein, all costs of designing, developing and constructing the Project and compliance with the Conditions of Approval, including without limitation all off-site and on-site improvements required by the City in connection therewith, shall be borne solely by Developer.

5.3 Permits and Approvals; Payment of Fees; Cooperation. Developer acknowledges that the execution of this Agreement by RHA does not constitute City approval for the purpose of the issuance of building permits, does not limit in any manner the discretion of the City in such approval process, and does not relieve Developer from the obligation to apply for and to obtain from the City and all other agencies with jurisdiction over the Property, all necessary approvals, entitlements, and permits for the construction of the Project (including without limitation the approval of architectural plans, the issuance of any certificates regarding historic resources required in connection with the development of the Property (if any), and the approval of the Project in compliance with CEQA if applicable, and if applicable, NEPA, nor does it limit in any manner the discretion of the City or any other agency in the approval process. Prior to the Close of Escrow, Developer shall have obtained all entitlements, permits, licenses and approvals required for the construction of the Project, including without limitation, fire department permits, building permits, and use permits or shall provide evidence satisfactory to RHA that receipt of such permits and approvals is subject only to such conditions as RHA may reasonably approve.

Developer shall pay when due all customary and usual fees and charges in connection with the processing of all applicable permits and approvals. Developer shall not commence construction work on the Project prior to issuance of building permits required for such work. RHA staff shall work cooperatively with Developer to assist in coordinating the expeditious processing and consideration of all permits, entitlements and approvals necessary for the development and operation of the Project as contemplated by this Agreement.

5.4 Conditions of Approval. Developer shall develop the Property and all off-site improvements necessary to develop and operate the Project in accordance with the terms and conditions of this Agreement and the Ground Lease, and in compliance with the terms and conditions of all approvals, entitlements and permits that the City or any other governmental body or agency with jurisdiction over the Project or the Property has granted or issued as of the date hereof or may hereafter grant or issue in connection with development of the Project, including without limitation, all mitigation measures imposed in connection with environmental review of the Project and all conditions of approval imposed in connection with any entitlements, approvals or permits (all of the foregoing approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter collectively referred to as the “Conditions of Approval”).
41 4892-0329-9990 v6 19

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

5.6 Construction Plans. In accordance with the timeframe set forth in Exhibit B, Developer shall submit to the City Building Department a complete Building Permit Application, including detailed construction plans for the Project (the “Construction Plans”). As used herein “Construction Plans” means all construction documents upon which Developer and Developer’s contractors shall rely in constructing the Project (including but not limited to, the landscaping, parking, and common areas) and shall include, without limitation, the on-site development plan, the construction management plan, final architectural drawings, landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, building plans and specifications, plans for all off-site improvements necessary to develop and operate the Project as required by the Conditions of Approval, including, without limitation, utilities, curbs, gutters, sidewalks, and driveways along the Project frontages, and all items City requires to be submitted in connection with applications for building permits. The Construction Plans shall be based upon the scope of development and development standards set forth herein and upon the approvals issued by the City for the Project, and shall not materially deviate therefrom without the express written consent of RHA and the City.

5.7 Construction Pursuant to Plans. Developer shall develop each component of the Project in accordance with the approved Construction Plans, the Conditions of Approval, and all other permits and approvals granted by the City pertaining to the Project. Developer shall comply with all directions, rules and regulations of any fire marshal, health officer, Public Works Department, Building Division, and fire inspector or other officer of every governmental agency having jurisdiction over the Property or the Project. Each element of the work shall proceed only after procurement of each permit, license or other authorization that may be required for such element by any governmental agency having jurisdiction. All design and construction work on the Project shall be performed by licensed contractors, engineers or architects, as applicable.

5.8 Change in Construction Plans; Review and Approval of Change Orders. RHA shall have the right to approve changes to the Construction Plans that (i) would change the value or quality of the building materials or equipment, or the architecture, design, function, use, or amenities of the Project as shown on the latest approved Construction Plans, or (ii) where the individual change exceeds One Hundred Thousand Dollars ($100,000) in cost, or on a cumulative basis, changes in the Construction Plans will exceed in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000) in cost. If RHA has not approved or disapproved a requested change within ten (10) business days after Developer’s written request, such change shall be deemed to have been approved by RHA.

RHA will not unreasonably withhold approval of a requested change if the Construction Plans, as modified by the proposed change: (i) meet all applicable federal, California, and local 42 4892-0329-9990 v6 20
codes and regulations, (ii) conform to the requirements of this Agreement and any approvals issued by RHA or the City after the Effective Date, and (iii) do not substantially nor materially and adversely change the building materials or equipment, the architecture, design, function, use, or amenities of the Project, or the structural or architectural design or appearance of the Project as shown on the latest approved Construction Plans.

Nothing in this Section 5.8 is intended to or shall be deemed to modify Developer’s obligation to submit proposed changes in the approved Construction Plans to City departments, including but not limited to the Community Development Department, Public Works Department, Building Department and Fire Department, as applicable, as may be required by City’s standard plan review procedures for proposed development. Changes that require review for code or permit conformance will be reviewed by the relevant City departments in accordance with their standard procedures, and nothing in this Section is intended to or shall be deemed to modify or limit City’s discretion under City’s standard plan review procedures.

5.9 Rights of Access. For the purpose of ensuring that the construction of the Project is completed in compliance with this Agreement, Developer shall permit representatives of RHA and the City to enter upon the Property during normal business hours following at least 48 hours’ prior written notice (except in the case of emergency in which case such notice as may be practical under the circumstances shall be provided).

5.10 RHA Disclaimer. Developer acknowledges that neither RHA nor the City are under any obligation, and neither RHA nor City undertakes or assumes any responsibility or duty to Developer or to any third party, to in any manner review, supervise, or inspect the progress of construction or the operation of the Project. Developer and all third parties shall rely entirely upon its or their own supervision and inspection in determining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by RHA or City is solely for the purpose of determining whether Developer is properly discharging its obligations under this Agreement, and shall not be relied upon by Developer or any third party as a warranty or representation by RHA or City as to the quality of the design or construction of the Project or otherwise.

5.11 Defects in Plans. Neither RHA nor City shall be responsible to Developer or to any third party for any defect in the Construction Plans or for any structural or other defect in any work done pursuant to the Construction Plans. To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel approved by RHA) and hold harmless RHA and the City and their respective elected and appointed officers, officials, employees, agents, consultants, and contractors (all of the foregoing, collectively, the “Indemnitees”) from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) arising out of, or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects in any work done on the Project pursuant to the Construction Plans or otherwise. Developer’s indemnification obligation set forth in this Section shall survive the expiration or earlier termination of this Agreement and the recordation of a Certificate of Completion, and is subject to the provisions of Section 10.2 below. Developer’s indemnification obligation pursuant to this Section shall not 43 4892-0329-9990 v6 21
extend to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees.

5.12 Certificate of Completion for Project. Promptly after completion of construction of the Project, City’s issuance of a final certificate of occupancy or equivalent for all residential units in the Project and all other Improvements, and the written request of Developer, RHA will provide a certificate substantially in the form attached hereto as Exhibit C (“Certificate of Completion”), provided that at the time such certificate is requested all applicable work has been completed for the Project. The Certificate of Completion shall be conclusive evidence that Developer has satisfied its obligations regarding the construction of the Project. At Developer’s option the Certificate of Completion shall be recorded in the Official Records. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a deed of trust or mortgage securing money loaned to finance the Project or any part thereof and shall not be deemed a notice of completion under the California Civil Code, nor shall such Certificate provide evidence that Developer has satisfied any obligation that survives the expiration of this Agreement.

5.13 Equal Opportunity; Section 3; First Source Hiring.

5.13.1 Nondiscrimination. There shall be no discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in construction work on the Property, and Developer shall direct its contractors and subcontractors to refrain from discrimination on such basis.

5.13.2 Section 3. To the extent applicable, Developer shall comply with Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (“Section 3”) and implementing regulations at 24 CFR Part 135. The responsibilities outlined in 24 CFR Subpart B, § 135.32 include: (i) implementing procedures designed to notify Section 3 residents about training and employment opportunities generated by Section 3 covered assistance and Section 3 business concerns about contracting opportunities generated by Section 3 covered assistance, (ii) notifying potential contractors for Section 3 covered projects of the requirements of Section 3 and incorporating the Section 3 clause set forth in 24 CFR Section 135.38 in all solicitations and contracts in excess of $100,000, (iii) facilitating the training and employment of Section 3 residents and the award of contracts to Section 3 business concerns by undertaking activities to reach the goals set forth in 24 CFR Section 135.30, (iv) assisting and actively cooperating with RHA and HUD in obtaining the compliance of contractors and subcontractors with the requirements of Section 3, and refraining from entering into any contract with any contractor where the recipient has notice or knowledge that the contractor has been found in violation of the regulations in 24 CFR Part 135, and (v) documenting actions taken to comply with the requirements of Section 3, the results of those actions taken and impediments, if any.

5.13.3 First Source Hiring. The Improvements shall be subject to compliance with the Richmond Municipal Code (“RMC”) including without limitation, the local business and local hire requirements set forth therein, including the City’s Business Opportunity Ordinance (RMC, Chapter 2.50) and Local Employment Program Ordinance (RMC, Chapter

2.56) (the “Local Business and Local Hire Requirements”). Pursuant to RMC Chapter 2.56, 44 4892-0329-9990 v6 22
and prior to the Commencement Date, Developer shall also enter into a First Source Hiring Agreement with the City in form approved by City. Developer shall provide RHA with written acknowledgement by its general contractor of the requirements of RMC Section 2.56.030(c), which code section shall be reproduced in full within the written acknowledgement. The written acknowledgement shall also include an express commitment by the general contractor to use its best efforts to see that all of its subcontractors comply with all Local Business and Local Hire Requirements.

5.14 Prevailing Wage Requirements. Developer shall comply and shall cause its contractors, subcontractors and agents to comply with California Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto, the federal Davis Bacon Act and implementing regulations (if applicable), and the City’s Living Wage Ordinance (Richmond Municipal Code

2.60) (“RMC Chapter 2.60”) (all of the foregoing, collectively, “Prevailing Wage Laws”), including without limitation, the requirement to pay prevailing wages and living wages, as applicable, in the development of the Project as those wages are determined pursuant to Prevailing Wage Laws and RMC Chapter 2.60, and shall be responsible for carrying out the requirements of such provisions. Developer shall submit to RHA a plan for monitoring payment of prevailing wages and at Developer’s expense shall implement such plan and comply with all applicable reporting and recordkeeping requirements. In addition, if applicable, Developer shall comply with all applicable requirements set forth in California Government Code Section 65913.4(a)(8).

Without limiting the generality of the preceding paragraph, to the extent required by applicable law Developer shall:
(i) pay, and shall cause all contractors and subcontractors to pay, prevailing wages in the construction of the Improvements as those wages are determined pursuant to California Labor Code Section 1720 et seq. and RMC Chapter 2.60; (ii) cause all contractors and subcontractors to employ apprentices as required by California Labor Code Section 1777.5 et seq., and the implementing regulations of the Department of Industrial Relations (“DIR”), and to comply with the other applicable provisions of Prevailing Wage Laws;
(iii) keep and retain, and shall cause all contractors and subcontractors to keep and retain, such records as are necessary to determine if such prevailing wages have been paid as required pursuant to California Labor Code Section 1720 et seq. and RMC Chapter 2.60, and apprentices have been employed as required by California Labor Code Section 1777.5 et seq.;
(iv) post at the Property, or cause the contractor to post at the Property, the applicable prevailing rates of per diem wages. Copies of the currently applicable current per diem prevailing wages are available from DIR;
(v) cause contractors and subcontractors constructing the Improvements to be registered as set forth in California Labor Code Section 1725.5; 45 4892-0329-9990 v6 23
(vi) cause its contractors and subcontractors, in all calls for bids, bidding materials and the construction contract documents for the construction of the Improvements to specify that:
(a) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the construction of the Improvements unless registered with the DIR pursuant to California Labor Code Section 1725.5; and (b) the construction of the Improvements is subject to compliance monitoring and enforcement by the DIR.
(vii) provide RHA all information required by California Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within 2 days of the award of any contract (https://www.dir.ca.gov/pwc100ext/);
(viii) cause its contractors to post job site notices, as prescribed by regulation by the DIR; and
(ix) cause its contractors to furnish payroll records required by California Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner.

To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel approved by RHA) and hold harmless the Indemnitees from and against all Claims arising directly or indirectly, in whole or in part, from the failure or alleged failure by Developer, or any other person, including without limitation, Developer’s contractor and subcontractors to comply with all applicable provisions of Prevailing Wage Laws in connection with construction of the Project, including without limitation, all Claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781, all Claims relating to any failure to pay prevailing wages, employ apprentices, or comply with all applicable State or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws. The provisions of this Section 5.14 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project and are subject to the provisions of Section 10.2 below. Developer’s indemnification obligations set forth in this Section shall not apply to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees.

5.15 Compliance with Laws; Indemnity. Developer shall carry out and shall cause its contractors and subcontractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations (“Applicable Laws”), including without limitation, all applicable Environmental Laws, all applicable federal and state labor laws and standards, Section 3 of the Housing and Community Development Act of 1974, as amended (if applicable pursuant to financing sources used for the Project), applicable provisions of the California Public Contracts Code, City’s zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the Richmond Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq.; 46 4892-0329-9990 v6 24
Government Code Section 4450, et seq.; Government Code Section 11135, et seq.; the Unruh Civil Rights Act, Civil Code Section 51, et seq.; the California Fair Employment and Housing Act; Section 504 of the Rehabilitation Act of 1973; the United States Fair Housing Act, as amended; and Chapters 11A and 11B of Title 24 of the California Code of Regulations relating to accessibility.

To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel approved by RHA) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Developer’s obligations set forth in this Section.

Developer’s indemnification obligations set forth in this Section shall not apply to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees. Developer’s defense and indemnification obligations set forth in this Section 5.15 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project, and are subject to the provisions of Section 10.2 below.

5.16 Liens and Stop Notices. Until the expiration of the term of the Ground Lease and any extension thereof, Developer shall not allow to be placed on the Property, the Project, or any part thereof any lien or stop notice on account of materials supplied to or labor performed on behalf of Developer. If a claim of a lien or stop notice is given or recorded affecting the Project or the Property or any part thereof, Developer shall within twenty (20) days of such recording or service: (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety bond in sufficient form and amount; or (c) provide other assurance satisfactory to RHA that the claim of lien or stop notice will be paid or discharged.

5.17 Right of RHA to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property or any part thereof pursuant to and within the time period set forth in Section 5.16 above, RHA shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense and without further notice to Developer, and all sums advanced by RHA for such purpose shall be considered indebtedness payable by Developer to RHA. In such event Developer shall be liable for and shall immediately reimburse RHA for such paid lien or stop notice. Alternatively, RHA may require Developer to immediately deposit with RHA the amount necessary to satisfy such lien or claim pending resolution thereof. RHA may use such deposit to satisfy any claim or lien that is adversely determined against Developer. Developer shall file a valid notice of cessation or notice of completion upon cessation of construction work on the Property for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property. RHA may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that RHA deems necessary or desirable to protect its interest in the Property.

5.18 Performance and Payment Bonds. Prior to Closing, Developer shall cause its general contractor to deliver to RHA copies of payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to do business in California, each in a penal sum of not less than one hundred percent (100%) of the scheduled cost of construction of the Project.

RHA may require separate payment and performance bonds to ensure completion of any public 47 4892-0329-9990 v6 25
improvements required pursuant to the Conditions of Approval. All bonds shall name RHA as co-obligee.

5.19 Insurance Requirements. Developer shall maintain and shall cause its contractors to maintain all applicable insurance coverage specified in Article X.

5.20 Quarterly Performance Reporting. During construction of the Project, Developer shall submit to RHA a Quarterly Performance Report within 30 days following the end of each calendar quarter. The report shall be in the form of a narrative description of all activities performed in relation to the Project including all development activities. The report shall include a Project timeline, including a schedule for completing milestones and/or tasks, and indicate the status of the Project in relation to this timeline. Developer shall provide the quarterly reports described in this Section until construction of the Project is complete, even if all of the Loan Proceeds have been disbursed.

5.21 Project Completion Reporting. Within sixty (60) days following completion of construction of the Project, Developer shall provide to RHA a Project Financial Completion audit or similar audit required under tax credit requirements, performed by an independent certified public accountant, that identifies all sources and uses of all Project funds. Developer shall provide to RHA a copy of any Project Cost Audit concurrently with Developer’s provision of such audits to other regulatory or financing agencies. By not later than ninety (90) days after the Project placed-in-service date, Developer shall provide to RHA an audited financial report showing the sources and uses of all funds utilized for development of the Project. Developer may satisfy this requirement may be satisfied by providing RHA with a copy of the Final Cost Certification Sources and Uses of Funds that Developer submits to CTCAC and prepared in accordance with generally accepted accounting principles.

5.22 Affordable Housing.

5.22.1 Rent and Occupancy Restrictions. The Property will be restricted for development and operation of an affordable rental residential development with ancillary uses consistent with the Project scope approved by RHA, and in accordance with RHA Documents. Throughout the term of the Ground Lease, all of the residential units in the Project (except the manager’s unit) shall be occupied or available for occupancy at Affordable Rent by households whose household Gross Income is not greater than sixty percent (60%) of Area Median Income. In addition, all of the following conditions shall apply: (A) RHA, City and Developer will make best good faith efforts (including without limitation, seeking funds from the City, the County, other public agencies, and private sources) to secure rent subsidies and social services funding sufficient to enable Developer to set aside of eight (8) residential units for formerly unhoused residents with the tenant-paid portion of the rent payable for such units not greater than 30% of the tenant’s monthly household Gross Income; and (B) if applicable, to satisfy the requirements applicable to State Density Bonus Law and SB 35 (including, without limitation, Government Code Sections 65915(c)(1)(A) and 65913.4(k)) the following shall apply:

(i) For a total of not less than ____________ (___) of the Restricted Units, Affordable Rent shall be determined in accordance with Health and Safety Code 48 4892-0329-9990 v6 26
Section 50053, and maximum household Gross Income shall be determined in accordance with Health and Safety Code Sections 50093, 50105, and 50196, as applicable; and

(ii) For the remaining _____________ (___) Restricted Units, Affordable Rent and maximum household Gross Income shall be determined using applicable CTCAC rules and regulations.

“Area Median Income” means the following: (i) in accordance with the rules and regulations applicable to State Density Bonus Law and SB 35, for _______ (__) of the Restricted Units, the median income for Contra Costa County, California, adjusted for actual household size, as determined by HUD pursuant to Section 8 of the United States Housing Act of 1937 and as published from time to time by HCD in Section 6932 of Title 25 of the California Code of Regulations or successor provision, and (ii) for the remainder of the Restricted Units, the median income for Contra Costa County, California, adjusted for actual household size, as determined by CTCAC regulations.

Developer shall comply with the rent and occupancy restrictions imposed by all applicable financing sources and regulatory agencies. If such agencies impose requirements on the Project that are more stringent than those set forth in this Agreement and the other RHA Documents, the more restrictive requirements shall prevail during such time that they are effective.

5.23 Management, Marketing; Local Preference Policy. As more particularly set forth in the Ground Lease and the Regulatory Agreement, by not later than sixty (60) days prior to Closing, Developer shall deliver to RHA for RHA’s review and approval (i) a proposed property management plan, a (ii) proposed property management agreement, (iii) a proposed social services plan, (iv) a proposed social services agreement, (v) the proposed form of residential lease, and (vi) a proposed marketing plan. The marketing plan shall include Developer’s plan for affirmatively furthering fair housing in the marketing and operation of the Project.

Developer has proposed that EAH will serve as property manager, and that EAH or another qualified provider will be the social services provider.

5.24 Monitoring Fee. As more particularly set forth in the Ground Lease and the Regulatory Agreement, Developer shall be obligated to pay to RHA an annual Affordable Housing Monitoring Fee in the amount of Fifteen Thousand Dollars ($15,000). Following completion of construction of the Project, the Affordable Housing Monitoring Fee shall be payable annually on each April 30 during the term of the Ground Lease. The annual Affordable Housing Monitoring Fee will increase annually by three percent (3%).

5.25 Reserved.

5.26 Maintenance. Commencing upon the Closing Date, Developer shall at its own expense, maintain the Property and the Improvements, including the landscaping and common areas, in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all Applicable Laws. Without limiting the foregoing, Developer agrees to maintain the Property and the Improvements (including without 49 4892-0329-9990 v6 27
limitation, landscaping, driveways, parking areas, and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property. Developer shall prevent and/or rectify any physical deterioration of the Improvements and shall make all repairs, renewals and replacements necessary to keep the Property and the Improvements in good condition and repair.

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

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

ARTICLE VI

CONDITION OF THE SITE; ENVIRONMENTAL MATTERS

6.1 Access to Site; Inspections. Prior to the Close of Escrow, Developer and Developer’s authorized representatives may enter upon and conduct reviews and assessments of the physical and environmental condition of the Property and the condition of any existing improvements. RHA may require Developer to execute a right of entry agreement satisfactory to RHA prior to entry onto the Property for such purpose and shall require Developer to provide proof of liability insurance acceptable to RHA. Developer’s inspection, examination, survey and review of the Property shall be at Developer's sole expense. Developer shall provide RHA, 50 4892-0329-9990 v6 28
without representation or warranty, copies of all reports and test results promptly following completion of such reports and testing. Developer hereby agrees to notify RHA twenty-four (24) hours in advance of its intention to enter the Property and will provide workplans, drawings, and descriptions of any intrusive sampling it intends to do. Developer must keep the Property in a safe condition during its entry. Developer shall repair, restore and return the Property to its condition immediately preceding Developer’s entry thereon at Developer’s sole expense Developer will not permit any mechanics liens, stop notices, or other liens or encumbrances to be placed against the Property prior to Close of Escrow. Without limiting any other indemnity provisions set forth in this Agreement, to the greatest extent permitted by law, Developer shall indemnify, defend (with counsel approved by RHA) and hold the Indemnitees harmless from and against all Claims resulting from or arising in connection with entry upon the Property by any Developer Parties pursuant to this Section 6.1 except to the extent arising from the gross negligence or willful misconduct of the Indemnitees. Developer’s indemnification obligations set forth in this Section 6.1 shall not apply to Claims relating to the diminution in value of the Property solely resulting from Developer’s mere discovery of Hazardous Materials or other conditions of the Property that existed prior to Developer’s entry onto the Property, provided that no such condition is exacerbated due to the activities of any Developer Parties. Developer’s indemnification obligations set forth in this Section 6.1 shall survive the Close of Escrow and the termination of this Agreement and shall be subject to the provisions of Section 10.2.

6.2 Environmental Disclosure. To the extent RHA has copies of investigation reports concerning the Property, it will provide copies to Developer upon request; but the Parties acknowledge that RHA will not be conducting a public records search of any regulatory agency files—although RHA urges Developer to do so to satisfy itself regarding the environmental condition of the Property. By execution of this Agreement, Developer: (i) acknowledges its receipt of the foregoing notice respecting the environmental condition of the Property; (ii) acknowledges that it will have an opportunity to conduct its own independent review and investigation of the Property prior to the Close of Escrow; (iii) agrees to rely solely on its own experts in assessing the environmental condition of the Property and its sufficiency for its intended use; and (iv) waives any and all rights Developer may have to assert that RHA failed to disclose information about the environmental condition of the Property. This Section is intended as a written request for information and response concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5(d)(2).

6.3 Property Leased “AS IS”. Developer specifically acknowledges that RHA will lease the Property to Developer on an "AS IS”, “WHERE IS” and “WITH ALL FAULTS" basis and that Developer is not relying on any representations or warranties of any kind whatsoever, express or implied, from RHA, its employees, board members, agents, or brokers as to any matters concerning the Property. RHA makes no representations or warranties as to any matters concerning the Property, including without limitation: (i) the quality, nature, adequacy and physical condition of the Property, including, but not limited to, the appurtenances, access, landscaping, parking facilities, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Property, (iv) the development potential of the Property, and the Property's use, habitability, merchantability, or fitness, suitability, value or adequacy of the Property for any particular purpose, (v) the zoning or other legal status of the property or any 51 4892-0329-9990 v6 29
other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any Environmental Laws, covenants, conditions and restrictions of any governmental or quasi-governmental entity or of any other person or entity, (vii) the presence or removal of Hazardous Material, substances or wastes on, under or about the Property or the adjoining or neighboring property; (viii) the condition of title to the Property, or (x) the service contracts, or other agreements affecting the Property.

6.4 Developer to Rely on Own Experts. Developer understands that notwithstanding the delivery by RHA to Developer of any materials, including, without limitation, third party reports, Developer will rely entirely on Developer’s own experts and consultants and its own independent investigation in proceeding with the leasing of the Property.

6.5 Release by Developer. Developer hereby WAIVES, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES the Indemnitees and any person acting on behalf of RHA, from any and all Claims, direct or indirect, known or unknown, foreseen or unforeseen, which Developer now has or which may arise in the future on account of or in any way arising out of or in connection with the physical condition of the Property, the presence of Hazardous Material in, on, under or about the Property, or any law or regulation applicable thereto including, without limiting the generality of the foregoing, all Environmental Laws.

DEVELOPER ACKNOWLEDGES THAT DEVELOPER IS FAMILIAR WITH SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR OR RELEASING PARTY DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT

THE TIME OF EXECUTING THE RELEASE AND THAT, IF

KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.

BY INITIALING BELOW, DEVELOPER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH RESPECT TO THE FOREGOING RELEASE.

Developer’s initials: _____________

52 4892-0329-9990 v6 30

6.6 Developer’s Post-Closing Obligations. Developer hereby covenants and agrees that:

(1) Developer shall not permit the Property or the Project or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Material nor shall Developer otherwise permit the presence or release of Hazardous Material in, on, under, about or from the Property with the exception of limited amounts of cleaning supplies and other materials customarily used in construction, use or maintenance of residential properties similar in nature to the Project, and used, stored and disposed of in compliance with Environmental Laws. (2) From and after the Closing Date, Developer shall keep and maintain the Property and the Project in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Environmental Laws. (3) Developer shall immediately advise RHA in writing of: (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Developer or the Property pursuant to any applicable Environmental Laws; (ii) any and all claims made or threatened by any third party against the Developer or the Property relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Material; (iii) the presence or release of any Hazardous Material in, on, under, about or from the Property; or (iv) Developer’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Project that may in any way affect the Property pursuant to any Environmental Laws. The matters set forth in the foregoing clauses (i) through (iv) are hereinafter referred to as "Hazardous Materials Claims"). RHA shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claim.

(4) Without RHA’s prior written consent, which shall not be unreasonably withheld or delayed, Developer shall not take any remedial action in response to the presence of any Hazardous Material in, on, under, or about the Property (other than in emergency situations or as required by governmental agencies having jurisdiction in which case RHA agrees to provide its consent), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claim. RHA shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys’ fees in connection therewith paid by Developer.

6.7 Environmental Indemnity. To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel approved by RHA) and hold Indemnitees harmless from and against all Claims, including without limitation, Hazardous Materials Claims resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Property, or the transportation of any such Hazardous Material to or from, the Property, or (ii) the failure of Developer Parties to comply with Environmental Laws, except to the extent caused by RHA’s gross negligence or willful misconduct. The foregoing indemnity shall further apply to any 53 4892-0329-9990 v6 31
residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Material, and irrespective of whether any of such activities were or will be undertaken in accordance with Environmental Laws. Developer’s indemnity obligations set forth in this Section 6.7 shall not apply to Claims solely relating to the presence of Hazardous Materials in, on, or under the Property prior to the Closing Date.

The provisions of this Section 6.7 shall be in addition to any and all other obligations and liabilities that Developer may have under applicable law, and each Indemnitee shall be entitled to indemnification under this Section without regard to whether RHA or that Indemnitee has exercised any rights against the Property or any other security, pursued any rights against any guarantor or other party, or pursued any other rights available under RHA Documents or applicable law. The obligations of Developer to indemnify the Indemnitees under this Section shall survive the expiration or earlier termination of this Agreement or the Ground Lease, any foreclosure proceeding, any foreclosure sale, and any delivery of any deed in lieu of foreclosure.

The Parties acknowledge and agree that the provisions of this Section 6.7 are intended to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736.

Developer’s indemnification obligations set forth in this Section 6.7 shall survive the Close of Escrow and shall be subject to the provisions of Section 10.2. Developer’s indemnification obligations set forth in this Section 6.7 shall not apply to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees.

6.8 Reserved.

6.9 No Limitation. Developer hereby acknowledges and agrees that Developer's duties, obligations and liabilities under this Agreement are in no way limited or otherwise affected by any information RHA may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Material, whether RHA obtained such information from the Developer or from its own investigations.

6.10 Definitions.

6.10.1 “Hazardous Material” means any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, infectious waste”, toxic substance”, toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity. The term “hazardous material” shall also include asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable as fuel, perchlorate, and methyl-tert butyl ether, whether or not defined as a hazardous waste or hazardous substance in the Environmental Laws.
54 4892-0329-9990 v6 32

6.10.2 "Environmental Laws" means any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations or directives, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Material, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601), 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.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code § 13000 et seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code § 26100, et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25249.5 et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code § 25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal.

Health and Safety Code, Section 25300 et seq.).

ARTICLE VII

LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT

AND CONTROL OF DEVELOPER

7.1 Identity of Developer; Changes Only Pursuant to this Agreement. Developer and its principals have represented that they possess the necessary expertise, skill and ability to carry out the development of the Project pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer and its principals are of particular concern to RHA.

It is because of these qualifications, experience, financial capacity and expertise that RHA has entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.

7.2 Prohibition on Transfer. Prior to the expiration of the term of the Ground Lease as such may be extended, Developer shall not, except as expressly permitted by this Agreement or the Ground Lease, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment, or lease (collectively, “Transfer”) of the whole or any part of the Project, the Improvements, this Agreement, or Developer’s interest in the Property without the prior written approval of RHA which approval shall not be unreasonably withheld. Any such attempt to assign this Agreement without RHA’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee. In addition to the foregoing, prior to the expiration of the term of the Ground Lease as such may be extended, except as expressly permitted by this Agreement or the Ground Lease, Developer shall not undergo any significant change of ownership without the prior written 55 4892-0329-9990 v6 33
approval of RHA. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than twenty-five percent (25%) in aggregate of the present ownership and /or control of Developer, taking all transfers into account on a cumulative basis, or a change in any general partner of Developer; provided however, neither the admission of an Investor Limited Partner, nor the transfer by the Investor Limited Partner to subsequent limited partners shall be restricted by this provision.

7.3 Conditionally Permitted Transfers. Subject to the conditions set forth in this Section 7.3 and if applicable, Section 7.4, the prohibitions and other requirements set forth in this Article shall not be deemed to prevent: (i) the granting of temporary easements or permits to facilitate development of the Property, subject to RHA’s approval as owner of the Property; (ii) the lease of individual residences to tenants for occupancy as their principal residence in accordance with this Agreement, the Ground Lease, and the Regulatory Agreement; (iii) the lease of retail/commercial space (if any) in accordance with this Agreement and the Ground Lease; (iv) encumbrances, liens, and assignments creating security interests in connection with loans obtained by Developer for the purpose of financing the leasing of the Property or the construction or permanent financing of the Project in accordance with the approved Financing Plan as it may be updated with RHA approval and subject to the requirements of Article VIII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) the admission of limited partners and any transfer of limited partner interests in accordance with the Partnership Agreement; (vi) the removal of Developer’s general partner by the Investor Limited Partner for a default under the Partnership Agreement, provided that the replacement general partner is an entity reasonably satisfactory to RHA or is an affiliate of the Investor Limited Partner that will serve as general partner for an interim period of no more than 180 days during which time a permanent replacement general partner reasonably satisfactory to RHA shall be identified and admitted; (vii) the transfer of the general partner’s interest to a nonprofit entity that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended, provided such replacement general partner is reasonably satisfactory to RHA; or (viii) the transfer of the Property or the Investor Limited Partner’s interest in Developer to EAH or an affiliate of EAH pursuant to the exercise of a purchase option or right of first refusal agreement included as an element of, or an exhibit to, the Partnership Agreement.

7.4 Requirements for Proposed Transfers. RHA may, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Improvements, or the leasehold interest in the Property, or part thereof if all of the following requirements are met (provided however, the requirements of this Section 7.4 shall not apply to Transfers described in clause (ii), clause (iii), or clause (iv) of Section 7.3, or clause (v) of Section 7.3 (except if the proposed transfer of limited partner interests is to EAH or an affiliate of EAH), and solely with respect to the removal of the general partner by the Investor Limited Partner for a default under the Partnership Agreement and the replacement of the general partner with an affiliate of the Investor Limited Partner for an interim period of not more than 180 days, clause (vi) of Section

7.3, provided that the provisions of this Section 7.4 shall apply to the selection of a replacement general partner after such interim period):
(i) The proposed transferee demonstrates to RHA’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably 56 4892-0329-9990 v6 34
determined by RHA to competently complete and manage the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement and the other RHA Documents. (ii) The Developer and the proposed transferee shall submit for RHA review and approval all instruments and other legal documents proposed to effect any Transfer of all or any part of or interest in the Property, the Improvements, or this Agreement together with such documentation of the proposed transferee’s qualifications and development capacity as RHA may reasonably request.
(iii) The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement and the other RHA Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations), and shall agree to be subject to, and assume all of, Developer’s obligations pursuant to the Conditions of Approval and all other conditions, and restrictions set forth in this Agreement and the other RHA Documents. The assumption of such obligations shall be documented in an assignment and assumption agreement in form approved by RHA. (iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to RHA in form recordable in the Official Records. (v) The final form of the Partnership Agreement, operating agreement, and other organizational documents of the proposed transferee and its general partner(s)/managing member, and any subsequent amendments that affect RHA's economic interests under this Agreement or RHA Documents shall be subject to RHA’s review and approval.

Consent to any proposed Transfer may be given by RHA’s Authorized Representative unless the Authorized Representative, in his or her discretion, refers the matter of approval to the RHA governing board. If RHA has not rejected a proposed Transfer or requested additional information regarding a proposed Transfer in writing within forty-five (45) days following RHA’s receipt of written request by Developer, the proposed Transfer shall be deemed approved.

7.5 Effect of Transfer without RHA Consent.

7.5.1 In the absence of specific written agreement by RHA, no Transfer shall be deemed to relieve the Developer or any other party from any obligation under this Agreement.

7.5.2 It shall be an Event of Developer Default hereunder entitling RHA to pursue remedies including without limitation, termination of this Agreement and the remedies provided under the Ground Lease and the other RHA Documents, if without the prior written approval of RHA, Developer assigns or Transfers this Agreement, the Improvements, or Developer’s interest in the Property, or any part thereof or interest therein, or undergoes any other Transfer in violation of Article VII. This Section 7.5.2 shall not apply to Transfers described in clauses (ii), (iii), (iv), and (vi) of Section 7.3).

7.6 Recovery of RHA Costs. Within ten (10) days following RHA’s delivery to Developer of an invoice detailing such costs, Developer shall reimburse RHA for all reasonable 57 4892-0329-9990 v6 35
RHA costs, including but not limited to reasonable attorneys’ and financial consultant fees, incurred in reviewing instruments and other legal documents proposed to effect a Transfer of this Agreement, the Improvements, or Developer’s interest in the Property, or part thereof, and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee.

7.7 Treatment of Reserves. Notwithstanding any language to the contrary in the Partnership Agreement, for the full term of the Ground Lease, unless RHA agrees otherwise in writing, all funds in all Project reserve accounts shall remain with the Project to be used for the benefit of the Project and/or its residents.

ARTICLE VIII

SECURITY FINANCING AND RIGHTS OF MORTGAGEES

8.1 Mortgages and Deeds of Trust for Development. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Improvements and Developer’s leasehold interest in the Property only for the purpose of securing loans for the purpose of financing the leasing of the Property, the design and construction of the Improvements, and other expenditures reasonably necessary for the development of the Project pursuant to this Agreement. No such instruments shall be recorded against RHA’s fee interest in the Property. Developer shall not enter into any conveyance for such financing that is not described in the Financing Plan as it may be updated with RHA approval without the prior written approval of the Authorized Representative or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction or land development. Developer shall use best efforts to ensure that RHA and City have the right to receive notices of any default under mortgages or other security instruments recorded against the Improvements and Developer’s leasehold interest in the Property concurrently with the lender’s provision of notice to Developer, and the right, but not the obligation to cure such defaults.

8.2 Subordination. The affordability restrictions set forth in the Ground Lease and the Regulatory Agreement shall not be subordinated to any deed of trust or other security instrument.

8.3 Holder Not Obligated to Construct. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated to complete construction of the Project (unless such holder succeeds to the lessee’s interest under the Ground Lease), or to guarantee such completion. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.

8.4 Notice of Default and Lender Right to Cure. Whenever RHA delivers any notice of default hereunder, RHA shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Improvements or Developer’s interest in the Property, provided that RHA has been provided with the address for delivery of such notice.

RHA shall have no liability to any such holder for any failure by RHA to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, to cure or 58 4892-0329-9990 v6 36
remedy any such default or breach within the cure period provided to Developer. In the event that possession of a leasehold interest in the Property or the Improvements (or any portion thereof) is required to effectuate such cure or remedy, the holder shall be deemed to have timely cured or remedied the default if it commences the proceedings necessary to obtain possession of such leasehold interest or Improvements, as applicable, within the applicable cure period, diligently pursues such proceedings to completion, and after obtaining possession, diligently completes such cure or remedy. A holder who chooses to exercise its right to cure or remedy a default or breach shall first notify RHA of its intent to exercise such right prior to commencing to cure or remedy such default or breach. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction of the Project (beyond the extent necessary to conserve or protect the same) without first having expressly assumed in writing Developer’s obligations to RHA under this Agreement. The holder in that event must agree to complete the Project in the manner provided in this Agreement and the Ground Lease, and submit evidence reasonably satisfactory to RHA that it has the development capability on staff or retainer and the financial capacity necessary to perform such obligations.

Any such holder properly completing the Project pursuant to this Section shall assume all rights and obligations of Developer under this Agreement.

8.5 Failure of Holder to Complete Improvements. In any case where, six (6) months after default by Developer in completion of construction of the Project, the holder of record of any mortgage or deed of trust has not exercised its option to complete construction of the Project, or having first exercised such option, has not proceeded diligently with such work, RHA shall be afforded those rights against such holder that it would otherwise have against Developer under this Agreement.

8.6 Modifications to Agreement. RHA shall not unreasonably withhold its consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter RHA’s substantive rights and obligations under this Agreement.

8.7 Estoppel Certificates. Either Party shall, at any time, and from time to time, within fifteen (15) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults.

ARTICLE IX

DEFAULTS, REMEDIES AND TERMINATION

9.1 Event of Developer Default. The following events shall constitute an event of default on the part of Developer hereunder (“Event of Developer Default”):
(a) Developer fails to commence or complete construction of the Project within the time period set forth in Section 5.1, or subject to Force Majeure, abandons or suspends construction of the Project prior to completion for a period of thirty (30) days or more; 59 4892-0329-9990 v6 37
(b) Developer fails to pay when due the rent payable under the Ground Lease and such failure continues for ten (10) days after RHA notifies Developer thereof in writing; (c) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VII;
(d) Developer fails to maintain insurance as required pursuant to this Agreement, and Developer fails to cure such default within five (5) days; (e) Following the Closing, Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Improvements or fails to pay when due any other charge that may result in a lien on the Property or the Improvements, and Developer fails to cure such default within twenty (20) days of the date of delinquency, but in all events prior to the date upon which the holder of any such lien has the right to foreclose thereon; (f) A default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(g) Any representation or warranty contained in this Agreement or the other RHA Documents, or in any application, financial statement, certificate or report submitted to RHA in connection with this Agreement proves to have been incorrect in any material adverse respect;
(h) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer or any general partner thereof : (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due;
(i) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer or any general partners thereof to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or any general partner thereof, or seeking any arrangement for Developer or any general partners thereof under bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of Developer or nay general partner thereof in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer or any general partner thereof, in each case if such decree, order, petition, or appointment is not removed or rescinded within sixty (60) days;
(j) Developer or any general partner thereof shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so 60 4892-0329-9990 v6 38
assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure pursuant to paragraphs (h) or (i) above or pursuant to any other mortgage on the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; (k) Developer or any general partner thereof shall have voluntarily suspended its business or Developer or any general partner thereof shall have been dissolved or terminated; (l) An event of default arises under any RHA Document and remains uncured beyond any applicable cure period; or
(m) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 9.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which RHA shall have given written notice of the default to Developer; provided however, if such default is of a nature that it cannot be cured within thirty (30) days, an Event of Developer Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion.

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

9.3 RHA’s Remedies and Rights Upon an Event of Developer Default. Upon the occurrence of an Event of Developer Default and the expiration of the applicable cure period, RHA shall have all remedies available to it under this Agreement or under law or equity, including, but not limited to the following, and RHA may, at its election, without notice to or demand upon Developer, except for notices or demands required by law or expressly required pursuant to RHA Documents, exercise one or more of the following remedies:
(a) Accelerate and declare any outstanding balance payable under the Ground Lease and interest accrued thereon immediately due and payable; (b) Seek specific performance to enforce the terms of RHA Documents; (c) Terminate this Agreement pursuant to Section 9.2; and (d) Pursue any and all other remedies available under this Agreement or under law or equity to enforce the terms of RHA Documents and RHA’s rights thereunder. 61 4892-0329-9990 v6 39
The foregoing rights and remedies are cumulative, and RHA’s exercise of one or more of such rights or remedies shall not preclude its exercise, at the same or different time, of any other rights or remedies for the same or any other default by Developer.

9.4 Developer’s Remedies Upon an Event of RHA Default. Upon the occurrence of a default hereunder by RHA, as its sole remedy, Developer may bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions.

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

9.6 Construction Plans. If this Agreement is terminated by mutual agreement of the Parties or by RHA as a result of an Event of Developer Default, Developer, at no cost to RHA, shall deliver to RHA copies of all construction plans and studies in the Developer's possession or in the possession of the Developer' s consultants related to development of the Project, including without limitation, the Construction Plans, subject only to the rights of senior lenders identified in the Financing Plan as it may be updated with RHA approval. If RHA utilizes the Construction Plans or studies, RHA shall indemnify the Developer for any claims arising from such use. If requested by RHA, Developer shall execute and deliver to RHA an assignment agreement in form approved by RHA to implement this Section 9.6.

9.7 Rights of Limited Partners. Whenever RHA delivers any notice of default hereunder, RHA shall concurrently deliver a copy of such notice to the Investor Limited Partner in accordance with Section 11.3. The Investor Limited Partner shall have the same right as Developer to cure or remedy any default hereunder within the cure period provided to Developer; provided however, if the default is of such nature that the Investor Limited Partner reasonably determines that it is necessary to replace the general partner of Developer in order to cure such default, then the cure period shall be extended by an additional sixty (60) days after the removal and replacement of such general partner, provided that the Investor Limited Partner has promptly commenced and diligently proceeded with all requisite actions to effect such removal and replacement.

ARTICLE X

INDEMNITY AND INSURANCE

10.1 Indemnity. To the greatest extent allowed by law, Developer shall indemnify, defend (with counsel reasonably approved by RHA) and hold the Indemnitees harmless from and against any and all Claims (including without limitation, Claims arising from any injury, death, illness, property damage, or loss of property) arising directly or indirectly, in whole or in part, as a result of or in connection with the development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof by any Developer Parties, or otherwise arising out of or in connection with Developer’s performance or failure to 62 4892-0329-9990 v6 40
perform under this Agreement, including without limitation, Claims arising or alleged to have arisen in connection with any violation of Applicable Laws in connection with the development, operation or management of the Project, or relating to approval of the Project or approval of this Agreement. Developer’s indemnification obligations under this Section 10.1 shall not extend to Claims to the extent arising from the gross negligence or willful misconduct of Indemnitees.

Developer’s obligations under this Section 10.1 shall survive the expiration or earlier termination of this Agreement and are subject to the provisions of Section 10.2.

10.2 Terms Applicable to Indemnity Provisions. The terms set forth in this Section

10.2 shall apply to all provisions of this Agreement that pertain to Developer’s obligations to indemnify RHA and the other Indemnitees, including without limitation, Sections 5.11, 5.14,

5.15, 6.1, 6.7, 10.1, 10.2, and 11.1. In connection with each such provision, all of the following shall apply:
(a) RHA does not and shall not waive any rights against Developer that it may have by reason of any indemnity and hold harmless provision set forth in this Agreement because of the acceptance by RHA, or the deposit with RHA by Developer, of any of the insurance policies described in this Agreement.
(b) Developer’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following: (i) any amendment or modification of any RHA Document; (ii) any extensions of time for performance required by any RHA Document; (iii) any provision in any of RHA Documents limiting the personal liability of Developer; (iv) the accuracy or inaccuracy of any representation and warranty made by Developer under this Agreement or by Developer or any other party under any RHA Document, and (v) the release of Developer or any other person, by RHA or by operation of law, from performance of any obligation under any RHA Document.
(c) The obligation of Developer to indemnify the Indemnitees shall survive the expiration or earlier termination of this Agreement and the Ground Lease.

10.3 Insurance Requirements.
(a) Commercial General Liability. Developer (and until issuance of the final certificate of occupancy or equivalent for the Project all contractors and subcontractors working on behalf of Developer on the Project) shall maintain a commercial general liability policy including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage with coverage limits in an amount equal to the greater of : (a) the amounts required by the construction and permanent lenders for the Project, and (b) Five Million Dollars ($5,000,000) each occurrence or such other policy limits as RHA may require in its reasonable discretion; provided however, the coverage requirements for subcontractors shall be Two Million Dollars ($2,000,000) per occurrence, Four Million ($4,000,000) annual aggregate.

Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds. RHA’s Risk Manager may consider requests for lower limits for subcontractors that will provide a limited scope of services for the Project. 63 4892-0329-9990 v6 41
(b) Automobile. Developer (and until issuance of the final certificate of occupancy or equivalent for the Project, all contractors and subcontractors working on behalf of Developer on the Project) shall maintain a comprehensive automobile liability coverage in the amount of Three Million Dollars ($3,000,000), combined single limit including coverage for owned, hired, and non-owned vehicles. Automobile liability policies shall name the Indemnitees as additional named insureds.
(c) Worker’s Compensation; Employer’s Liability. Developer shall furnish to RHA evidence satisfactory to RHA that Developer and any contractor or subcontractor with whom Developer or the general contractor has contracted for the performance of work on the Property or otherwise pursuant to this Agreement, carries statutory Workers’ Compensation insurance and Employer’s Liability insurance in a minimum amount of Three Million Dollars ($3,000,000) per accident.
(d) Builder’s Risk. Upon commencement of construction work and continuing until RHA’s issuance of the final certificate of occupancy or equivalent for the Project, Developer and all contractors working on behalf of Developer shall maintain a policy of builder's all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis with a lender’s loss payable endorsement for the benefit of RHA. (e) Professional Liability/Errors and Omissions. Developer shall require the Project architect, engineer, and general contractor to maintain Professional Liability/Errors and Omissions (“E&O”) insurance with limits not less than Five Million Dollars ($5,000,000) each claim. RHA’s Risk Manager may consider requests for lower limits for professionals that will provide a limited scope of services for the Project. Certificates evidencing this coverage must reference both the Developer and the Indemnitees. If the professional liability/errors and omissions insurance is written on a claims made form: (i) the retroactive date must be shown and must be before the Effective Date, (ii) insurance must be maintained and evidence of insurance must be provided for at least three (3) years after completion of Project construction, and (iii) if coverage is cancelled or non-renewed and not replaced with another claims made policy form with a retroactive date prior to the Effective Date, Developer must purchase, or require the provision of, extended period coverage for a minimum of three (3) years after completion of construction.
(f) Pollution Legal Liability. Developer shall require the general contractor to carry pollution liability insurance to provide third-party coverage for bodily injury, property damage, cleanup, and related defense costs, with limits not less than Two Million ($2,000,000) per occurrence or claim and Four Million ($4,000,000) policy aggregate. If the policy provides coverage on a claims-made basis, the retroactive date must be shown and must be before the Closing Date.
(g) Property. Developer shall maintain property insurance covering all risks of loss (including earthquake and flood (if required)) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to RHA, with a lender’s loss payable endorsement for the benefit of RHA.
64 4892-0329-9990 v6 42
(h) Insurance Providers. Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best's rating of no less than A: VII. (i) Evidence of Insurance; Endorsements; Policies. Prior to the Effective Date of this Agreement, Developer shall furnish RHA with certificates of insurance in form acceptable to RHA evidencing the required insurance coverage required under paragraphs (a), (b), (c) and (e) above, duly executed endorsements evidencing the Indemnitees status as additional insured (except for E&O and Workers’ Compensation policies), and all other endorsements and coverage required hereunder pertaining to such coverage. Not less than twenty (20) days prior to Closing, Developer shall furnish RHA with certificates of insurance in form acceptable to RHA evidencing the insurance coverage required under paragraphs (d) and (f) above together with duly executed endorsements evidencing RHA’s status as lender’s loss payee.

Prior to RHA’s issuance of a final certificate of occupancy or equivalent for the Project, Developer shall furnish RHA with certificates of insurance in form acceptable to RHA evidencing the insurance coverage required under paragraph (g) above with a duly executed endorsement evidencing RHA’s status as lender’s loss payee. All insurance certificates shall contain a statement of obligation on the part of the carrier to notify RHA of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. Upon RHA’s request, Developer shall, within thirty (30) days of the request, provide or arrange for the insurer to provide to RHA, complete certified copies of all insurance policies required under this Agreement. RHA’s failure to make such request shall not constitute a waiver of the right to require delivery of the policies in the future.

(j) Additional Insured Endorsements. The additional insured endorsements for the general liability coverage shall provide coverage at least as broad as Insurance Services Office (ISO) Form No. CG 20 09 11 85 or CG 20 10 11 85, or (if used together) at least as broad as CG 2010 10 01 and CG 2037 10 01; but shall not be provided using the following forms: CG 20 10 10 93 or 03 94. Upon RHA’s request, Developer shall provide or arrange for the insurer to provide certified copies of the actual insurance policies within thirty (30) days of the request.

(k) Reinstatement. If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within five (5) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with RHA a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, RHA may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse RHA for such expense upon receipt of billing from RHA. Developer shall require all persons and entities that are required to provide professional liability/E&O coverage pursuant to paragraph (e) above to use best efforts to reinstate the required coverage limits in the event coverage under such policies is reduced.

(l) Primary Coverage; Waiver of Subrogation; Annual Aggregate Limits. All coverage shall be primary insurance and shall not be contributing with any insurance, or self- insurance maintained by RHA or City, and the policies shall so provide. Each insurance policy shall contain a waiver of subrogation for the benefit of RHA and City. Developer agrees to waive 65 4892-0329-9990 v6 43
subrogation rights for commercial general liability, automobile liability, and worker’s compensation against Indemnitees regardless of the applicability of insurance proceeds, and agrees to require all contractors and subcontractors to do likewise. With the exception of E&O policies, if any of the required insurance is provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs are included in such annual aggregate limit, such annual aggregate limit shall be three times the applicable occurrence limits specified above.
(m) Deductibles/Retentions. Any deductibles or self-insured retentions shall be declared to, and shall be subject to approval by RHA’s Risk Manager. Payment of all deductibles and self-insured retentions shall be the responsibility of Developer. At the option of and upon request by RHA’s Risk Manager if the Risk Manager determines that such deductibles or retentions are unreasonably high, either the insurer shall reduce or eliminate such deductibles or self-insurance retentions as respects the Indemnitees or Developer shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. Policies shall not contain any self-insurance provision that limits the satisfaction of the self-insured retention or deductible to the named insured, and shall provide, or be endorsed to provide that the self-insured retention/deductible may be satisfied by either the named insured or in the exercise of their sole discretion, by the City or RHA. Developer shall promptly reimburse the City and RHA for any advances the City or RHA make to fund a self-insured retention or deductible.
(n) Adjustments. The limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not less than every five (5) years after the Effective Date nor more than once in every three (3) year period following completion of Project construction) to address changes in circumstances, including, but not limited to, changes in inflation and the litigation climate in California, provided that such adjustments are consistent with generally prevailing requirements for residential multi-family developments similar to the Project and located in the Contra Costa County area. Within thirty (30) days following RHA’s delivery of written notice of any such adjustments, Developer shall provide RHA with amended or new insurance certificates and endorsements evidencing compliance with such adjustments.

(o) Additional Insured Coverage; Liability Limits. For all liability insurance required by this Agreement, except E&O and Workers’ Compensation policies, Developer (and Developer’s contractors, as applicable) shall obtain endorsements that name the Indemnitees as additional insured in the full amount of all applicable policies, notwithstanding any lesser minimum limits specified in this Agreement. This Agreement requires Developer (and Developer’s contractors) to obtain and provide for the benefit of the Indemnitees, additional insured coverage in the same amount of insurance carried by Developer (or Developer’s contractors, as applicable), but in no event less than the minimum amounts specified in this Agreement. In the event that Developer (or Developer’s contractors as applicable) obtains insurance policies that provide liability coverage in excess of the amounts specified in this Agreement, the actual limits provided by such policies shall be deemed to be the amounts required under this Agreement. Without limiting the foregoing, the limits of liability coverage specified in this Agreement are not intended, nor shall they operate, to limit RHA’s or City’s ability to recover amounts in excess of the minimum amounts specified in this Agreement. 66 4892-0329-9990 v6 44

ARTICLE XI

MISCELLANEOUS PROVISIONS

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

11.2 Enforced Delay; Extension of Times of Performance. The time for performance of provisions of this Agreement by either Party shall be extended for a period equal to the period of any delay directly affecting the Project or this Agreement which is caused by war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of a public enemy, epidemics, pandemics, quarantine restrictions, freight embargoes, lack of transportation, suits filed by unrelated third parties concerning or arising out of this Agreement or unseasonable weather conditions (“Force Majeure”). An extension of time for any of the above-specified causes will be deemed granted only if written notice by the Party claiming such extension is sent to the other Party within ten (10) calendar days from the commencement of the cause. RHA and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability to obtain financing to complete the Project shall not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date.

Subject to the limitations set forth in Section 5.1, times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer and RHA (acting in the reasonable discretion of the Authorized Representative unless he or she determines in his or her discretion to refer such matter to the RHA governing board).

11.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement or any other RHA Document shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service. 67 4892-0329-9990 v6 45
RHA: City of Richmond
450 Civic Center Plaza, 2nd Floor
Richmond, CA 94804
Attention: Executive Director

Developer: Nevin Plaza II, L.P.
c/o EAH Inc.
22 Pelican Way
San Rafael, CA 94901
Attention: Chief Real Estate Development Officer

11.4 Attorneys’ Fees. If either Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing Party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements, and attorneys’ fees attributable to RHA in-house counsel based upon comparable fees of private attorneys practicing in Contra Costa County. .

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

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

11.7 Survival. All representations made by Developer hereunder, Developer’s obligations pursuant to Sections 5.11, 5.14, 5.15, 6.1, 6.5, 6.7, 10.1, 10.2 and 11.1, and all other provisions that expressly so state, shall survive the expiration or termination of this Agreement.

11.8 Headings; Interpretation; Statutory References. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement.

The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it. All references in RHA Documents to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Richmond shall be deemed 68 4892-0329-9990 v6 46
to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.

11.9 Action or Approval. Whenever action and/or approval by RHA is required under this Agreement, RHA’s Authorized Representative or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the Authorized Representative determines in his or her discretion that such action or approval requires referral to the RHA governing board for consideration.

11.10 Entire Agreement. This Agreement, including Exhibits A through F-2 attached hereto and incorporated herein by this reference, together with the other RHA Documents, contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof. If the Exhibits to this Agreement are inconsistent with this Agreement, the more restrictive requirements shall control, as determined by RHA’s Authorized Representative. In the event of a conflict between this Agreement and the other RHA Documents, the more restrictive requirements shall control, as determined by the Authorized Representative.

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

11.12 No Third-Party Beneficiaries. Except as expressly set forth herein, nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

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

Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of Developer and RHA shall not be construed as a joint venture, equity venture, partnership or any other relationship. RHA neither undertakes nor assumes any responsibility or duty to Developer (except as expressly provided in this Agreement) or to any third party with respect to the Project. Developer and its employees are not employees of RHA but rather are, and shall always be, considered independent contractors. Furthermore, Developer and its employees shall at no time hold themselves out as employees or agents of RHA. Except as RHA may specify in writing, Developer shall not have any authority to act as an agent of RHA or to bind RHA to any obligation.

11.14 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a 69 4892-0329-9990 v6 47
“business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of the State of California.

11.15 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Contra Costa County, California or in the Federal District Court for the Northern District of California.

11.16 Maintenance and Inspection of Books and Records. Developer shall keep and maintain at the Project or elsewhere with RHA’s consent, full, complete, and accurate books, records, and accounts relating to the Project, including such books, records, and accounts necessary to document Developer’s compliance with this Agreement and RHA Documents, including without limitation, the records required to substantiate compliance with Prevailing Wage Laws, the calculation of payments required under the Ground Lease, and the records required to substantiate compliance with the Ground Lease and the Regulatory Agreement. Upon request, Developer shall permit RHA to inspect at reasonable times and on a confidential basis those books, records and all other documents of Developer necessary to determine Developer’s compliance with the terms of this Agreement and RHA Documents.

11.17 Political Activity. None of the funds, materials, property or services contributed by RHA to Developer under this Agreement shall be used for any partisan political activity or the election or defeat of any candidate for public office.

11.18 Non-Liability of RHA Officials, Employees and Agents. No member, official, employee or agent of RHA shall be personally liable to the Developer in the event of any default or breach by RHA or for any amount which may become due to the Developer or its successor or on any obligation under the terms of this Agreement.

11.19 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person described in subsection (b) below who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this Agreement or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, or at any time after, such person’s tenure. The Developer shall exercise due diligence to ensure that the prohibition in this Section is followed.
(b) In accordance with Government Code Section 1090 and the Political Reform Act, Government Code Section 87100 et seq., no person who is a director, officer, partner, trustee or employee or consultant of the Developer, or immediate family member of any of the preceding, shall make or participate in a decision, made by RHA or a RHA board, commission or committee, if it is reasonably foreseeable that the decision will have a material effect on any source of income, investment or interest in real property of that person or the Developer. 70 4892-0329-9990 v6 48
Interpretation of this Section shall be governed by the definitions and provisions used in the Political Reform Act, Government Code Section 87100 et seq., its implementing regulations manual and codes, and Government Code Section 1090.

11.20 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument.

SIGNATURES ON FOLLOWING PAGES.
71 4892-0329-9990 v6 49
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

RHA:

HOUSING AUTHORITY OF THE CITY OF
RICHMOND, a public body corporate and
politic

By:

Print Name:__________________________

Title:_______________________________

DEVELOPER:

Nevin Plaza II, L.P., a California limited partnership

By: _________________, a ___________

Its: Managing General Partner

By: EAH Inc, a California nonprofit public
benefit corporation, its sole member/manager

By:____________________
Print Name:___________________
Title:________________________

72 4892-0329-9990 v6 50
Exhibit A

LEGAL DESCRIPTION OF THE PROPERTY

The land situated in the County of Contra Costa, City of Richmond, State of California described as follows:

Lots 7 through 10, inclusive and 19 through 22, inclusive and a portion of Lot 6 and Lot 23, Block 2, as shown on the map of "Nicholl MacDonald Avenue Civic Center, Richmond, California", which map was filed on October 29, 1912 in Map Book 8, Page 190, Contra Costa County Records, more particularly described as follows:

Beginning at the intersection of the southerly line of Nevin Avenue and the easterly line of 24th Street (formerly Grand Blvd.) as said Nevin Avenue and Grand Blvd. are shown on said map; thence along said easterly line of said 24th Street, South 10°12’53” West, 141.90 feet to the point of beginning; thence South 79°45’00” East, 199.81 feet to the westerly line of 25th Street (formerly Elmer Ave) as shown on said map; thence along last said line, South 10°13’28” West, 108.00 feet to the most southerly corner of said Lot 19; thence along the southerly lines of said Lots 19 and 10, North 79°45’00” West, 199.79 feet to said easterly line of said 24th Street; thence along last said line, North 10°12’53” East, 108.00 feet to the point of beginning.

APN’s: 515-261-010, 515-261-003, 515-261-002 and portion 515-261-001

73 4892-0329-9990 v6 51
Exhibit B

PROJECT SCHEDULE [to be revised]

Item Ref. Action

Target Date for Completion

§2.5.1 Developer submits preliminary Financing Plan and schedule of target dates for submittal of financing
applications and Project development
Prior to Effective Date. These are
attached as Exhibit B and Exhibit
F-1.
§10.3 Developer submits evidence of CGL, auto, workers
comp, employer liability, and E&O insurance to
RHA
Prior to Effective Date
§§2.3,

2.4 If applicable, Developer submits SB 35 and Density
Bonus applications
Within ____ days following
Effective Date
§§2.5.2,

2.5.3 Developer submits Updated Financing Plan
including updated schedule for submittal of
Project financing applications and the Project
Building Permit Application
_____ days following Effective
Date, and to be updated prior to
Closing. To be attached as Exhibit
F-2 or addendum.
§2.5.4 Developer submits funding applications to HCD Initial application for any HCD funding to be submitted in 20__.
§2.5.4 Developer submits CTCAC and CDLAC applications

Initial applications to be
submitted in 20__ in the earliest
possible round.
§3.8(j) Developer identifies proposed General Contractor Within 45 days following receipt of preliminary tax credit
reservation
§5.6 Developer submits complete Building Permit
Application, including all necessary Construction
Plans, to City Building Department for review
Within ____ days following
Effective Date
§§2.5.3,

2.54 Developer submits updated Financing Plan to RHA
with sources and uses, development and
operating pro formas
Within 60 days following receipt
of preliminary tax credit
reservation. To be attached as
Exhibit F-2 or addendum
§3.2 Developer obtains appraisal of Property

Six (6) months prior to Closing.
§5.23 Developer submits drafts of Marketing Plan,
proposed resident lease, Property Management
Plan, Property Management Agreement, Social
Services Plan, and Social Services Agreement for
RHA review and approval
Not later than 60 days prior to
Closing
§3.8(i) Developer submits draft Construction Contract to RHA
Not later than 30 days prior to
Closing
74 4892-0329-9990 v6 52
§5.18 Developer submits draft payment and
performance bonds, evidence of all required
insurance to RHA
Not later than 10 business days
prior to Closing
§5.1 Construction commences Not later than 4th anniversary of Effective Date, unless extended
§5.1 Construction completed

28 months after commencement.
§5.21 Developer submits Project completion audit to
RHA
Within 60 days following
completion of construction
75 4892-0329-9990 v6 53
Exhibit C

FORM OF CERTIFICATE OF COMPLETION

Recording requested by
and when recorded mail to:

Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attention: Executive Director

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383

Space above this line for Recorder’s use.

CERTIFICATE OF COMPLETION

This Certificate of Completion (this “Certificate”) is made by the Housing Authority of the City of Richmond, a public body corporate and politic (“RHA”) effective as of __________, 20___.

RECITALS

A. RHA and Nevin Plaza II, L.P., a California limited partnership (“Developer”) entered into that certain unrecorded Lease Disposition and Development Agreement dated as of _____________, 2024 (the “LDDA”) concerning the development of certain real property located in the City of Richmond, Contra Costa County, California and more particularly described in Exhibit A attached hereto (the “Property”). Capitalized terms used herein without definition shall have the meaning ascribed to such terms in the LDDA.

B. Pursuant to Section 5.12 of the LDDA, RHA is required to furnish the Developer or its successors with a Certificate of Completion upon completion of development of the Project in accordance with the LDDA.

C. RHA has determined that the development of the Project has been satisfactorily completed in accordance with the LDDA.

NOW, THEREFORE, RHA hereby certifies as follows:

1. Development of the Project has been satisfactorily completed in conformance with the LDDA.

2. All indemnity, use, maintenance, and nondiscrimination covenants contained in the LDDA shall remain in effect and enforceable in accordance with the LDDA. This Certificate does not constitute evidence of Developer’s compliance with those covenants in the LDDA that survive the issuance of this Certificate, including 76 4892-0329-9990 v6 54
without limitation, Developer’s indemnity obligations, compliance with the Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants entered into pursuant to the LDDA and recorded in the Official Records of Contra Costa County (“Official Records”) on _______, 20__ as Instrument No. ___ Book___, Page___, and compliance with the Ground Lease executed by and between RHA and Developer, a memorandum of which was recorded in the Official Records on ________, 20__ as Instrument no._________.

3. This Certificate does not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a deed of trust securing money loaned to finance the improvements located on the Property, and does not constitute a notice of completion under California Civil Code Section 3093.

4. Nothing contained in this instrument shall modify any provisions of the LDDA or any other document executed in connection therewith.

IN WITNESS WHEREOF, RHA has executed and issued this Certificate of Completion as of the date first written above.

HOUSING AUTHORITY OF THE CITY OF RICHMOND, a municipal corporation

By: _____FORM-DO NOT SIGN _____

Name: _______________________________
Authorized Signatory

ATTEST:

By: _FORM-DO NOT SIGN _____

APPROVED AS TO FORM:

By: _____FORM-DO NOT SIGN __________
RHA Attorney

77 4892-0329-9990 v6 55
Exhibit A to Certificate of Completion

PROPERTY

(Attach legal description.)

78 4892-0329-9990 v6 56

Exhibit D

FORM OF REGULATORY AGREEMENT
(Attach form of Regulatory Agreement.)

Exhibit E

FORM OF GROUND LEASE
(Attach form of Ground Lease.)

Exhibit F-1

PRELIMINARY FINANCING PLAN
(Attach preliminary Financing Plan.)

Exhibit F-2

UPDATED FINANCING PLAN
(Attach final Updated Financing Plan when approved.)

79 4866-6691-0105 v7

GROUND LEASE AGREEMENT
by and between

HOUSING AUTHORITY OF THE CITY OF RICHMOND
and
NEVIN PLAZA II, L.P.

Nevin Plaza - Phase II

80 TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS ..............................................................................................................1 Section 1.1 Definitions. ..............................................................................................1 Section 1.2 Exhibits ....................................................................................................8 ARTICLE 2. LEASE OF THE LEASED PREMISES .......................................................................9 Section 2.1 Leased Premises. .....................................................................................9 Section 2.2 Term; Commencement Date; Indemnity; Closing Date ..........................9 Section 2.3 Conditions Precedent ...............................................................................9 Section 2.4 Use and Affordability Restrictions ........................................................11 Section 2.5 Covenants Regarding Encumbrances ....................................................12 Section 2.6 Possession ..............................................................................................12 Section 2.7 Memorandum of Lease ..........................................................................12 Section 2.8 Parking; Reciprocal Easement Agreement. ...........................................12 ARTICLE 3. DEVELOPMENT OF THE IMPROVEMENTS ........................................................13 Section 3.1 Development of the Improvements .......................................................13 Section 3.2 Submittal and Approval of Plans and Specifications ............................15 Section 3.3 No Liens ................................................................................................16 Section 3.4 Permits, Licenses and Easements ..........................................................17 Section 3.5 Equal Opportunity .................................................................................17 Section 3.6 Construction Contracts. .........................................................................17 Section 3.7 Certificate of Completion. .....................................................................18 ARTICLE 4. PREDEVELOPMENT COSTS; APPROVED FINANCING; DEVELOPER FEE .......................................................................................................................................19 Section 4.1 Predevelopment Costs. ..........................................................................19 Section 4.2 Approved Financing. .............................................................................19 Section 4.3 Modifications to Approved Financing ..................................................19 Section 4.4 Developer Fee. .......................................................................................20 ARTICLE 5. OWNERSHIP AND OPERATIONS OF IMPROVEMENTS ...................................20 Section 5.1 During the Term ....................................................................................20 Section 5.2 After the Term .......................................................................................20 Section 5.3 Benefits of Improvements During Term ...............................................20 Section 5.4 Reserved. ...............................................................................................21 Section 5.5 Marketing of Units. ...............................................................................21 Section 5.6 Leasing of Units; Tenant Protections for all Units; Additional Requirements ............................................................................................................21 Section 5.7 Property Management ...........................................................................22 Section 5.8 Annual Operating Budget; Monitoring Fee ...........................................24 Section 5.9 Reserve Requirements ...........................................................................24 Section 5.10 Reserved. ...............................................................................................25 ARTICLE 6. RENTS; PAYMENTS ................................................................................................25 Section 6.1 Rent .......................................................................................................25 81 TABLE OF CONTENTS
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Section 6.2 Additional Rent .....................................................................................26 Section 6.3 Payments ...............................................................................................27 Section 6.4 Audit; Inspection of Books and Records ...............................................27 ARTICLE 7. TAXES AND OTHER IMPOSITIONS; UTILITIES ................................................27 Section 7.1 Payment of Impositions; Possessory Interest Tax .................................27 Section 7.2 Contested Taxes and Other Impositions ................................................27 Section 7.3 Valuation Assessment; Property Tax Exemption ..................................28 Section 7.4 Failure to Pay Impositions .....................................................................28 Section 7.5 Utilities ..................................................................................................28 ARTICLE 8. INSURANCE ..............................................................................................................28 Section 8.1 Lessee's Insurance .................................................................................28 Section 8.2 General Requirements ...........................................................................30 Section 8.3 Adjustments ...........................................................................................30 Section 8.4 Additional Insured Coverage; Liability Limits .....................................30 Section 8.5 Evidence of Insurance ...........................................................................30 Section 8.6 Failure to Maintain ................................................................................31 Section 8.7 Acceptability of Insurers .......................................................................31 Section 8.8 Payment and Performance Bonds. .........................................................31 ARTICLE 9. MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS .............31 Section 9.1 Maintenance of Leased Premises ..........................................................31 Section 9.2 Alterations to Leased Premises .............................................................31 Section 9.3 Indemnification .....................................................................................34 ARTICLE 10. PERMITTED MORTGAGES ..................................................................................34 Section 10.1 Right to Encumber .................................................................................34 Section 10.2 Notice to Leasehold Mortgagees and Limited Partner ..........................35 Section 10.3 Cure Rights of Leasehold Mortgagees and Limited Partner .................35 Section 10.4 Limitation on Liability of Leasehold Mortgagees .................................37 Section 10.5 Estoppel Certificates ..............................................................................37 Section 10.6 Registration of Leasehold Mortgagees ..................................................38 Section 10.7 Approval of Lessor ................................................................................38 Section 10.8 No Modification or Termination Without Consent of Leasehold Mortgagees and Limited Partner ...............................................................................38 Section 10.9 New Lease .............................................................................................38 Section 10.10 Rights on Foreclosure ............................................................................38 Section 10.11 Lessee's Personal Property ....................................................................39 Section 10.12 Two or More Leasehold Mortgagees ....................................................39 Section 10.13 Taking and Casualty ..............................................................................39 Section 10.14 No Encumbrance or Subordination of Lessor’s Fee Interest ................40 Section 10.15 Limited Third Party Beneficiary ...........................................................41 Section 10.16 Lessee Delivery of Notices of Default to Lessor ..................................41 ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS ..............................41 Section 11.1 Representations, Warranties and Covenants of Lessee .........................41 82 TABLE OF CONTENTS
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Section 11.2 Representations, Warranties and Covenants of Lessor .........................42 Section 11.3 Hazardous Materials ..............................................................................43 Section 11.4 Condition of the Leased Premises .........................................................44 Section 11.5 Environmental Work and Lessee Indemnity .........................................47 ARTICLE 12. EMINENT DOMAIN ...............................................................................................47 Section 12.1 Termination of Lease .............................................................................47 Section 12.2 Continuation of Lease and Presumption of Restoration ........................47 Section 12.3 Temporary Taking .................................................................................48 Section 12.4 Award ....................................................................................................48 Section 12.5 Joinder ...................................................................................................50 ARTICLE 13. DAMAGE OR DESTRUCTION ..............................................................................50 Section 13.1 Damage or Destruction to Leased Premises ..........................................50 Section 13.2 Damage or Destruction Near End of Term ...........................................50 Section 13.3 Distribution of Insurance Proceeds .......................................................51 Section 13.4 HUD Provisions ....................................................................................51 ARTICLE 14. EVENTS OF DEFAULT ..........................................................................................51 Section 14.1 Events of Default ...................................................................................51 Section 14.2 Rights and Remedies .............................................................................53 Section 14.3 Default by Lessor ..................................................................................54 Section 14.4 Notices ...................................................................................................54 Section 14.5 Limited Damages ..................................................................................54 ARTICLE 15. QUIET ENJOYMENT AND POSSESSION; INSPECTIONS ................................54 Section 15.1 Quiet Enjoyment ....................................................................................54 Section 15.2 Lessor's Right of Inspection ..................................................................54 ARTICLE 16. VACATION OF LEASED PREMISES ...................................................................55 Section 16.1 Vacation .................................................................................................55 ARTICLE 17. NON-MERGER ........................................................................................................55 Section 17.1 Non-Merger ...........................................................................................55 ARTICLE 18. ASSIGNMENTS AND TRANSFERS .....................................................................55 Section 18.1 Consent Required ..................................................................................55 Section 18.2 Prohibited Transfers ..............................................................................56 Section 18.3 Lessor Pre-Approval of Certain Transfers ............................................56 Section 18.4 Subsequent Assignment ........................................................................56 Section 18.5 Request for Consent ..............................................................................57 Section 18.6 General Partner’s Purchase Option; Limited Partner’s Put Option ....................................................................................................57 ARTICLE 19. MISCELLANEOUS PROVISIONS .........................................................................57 Section 19.1 Lenders' Requirements ..........................................................................57 Section 19.2 Entire Agreement; Modifications ..........................................................57 Section 19.3 Governing Law ......................................................................................57 83 TABLE OF CONTENTS
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Section 19.4 Binding Effect .......................................................................................57 Section 19.5 Severability ............................................................................................57 Section 19.6 Further Assurances ................................................................................58 Section 19.7 Captions .................................................................................................58 Section 19.8 Gender ...................................................................................................58 Section 19.9 Exhibits ..................................................................................................58 Section 19.10 References .............................................................................................58 Section 19.11 Rights and Remedies Cumulative .........................................................58 Section 19.12 Notices ...................................................................................................58 Section 19.13 Counterparts ..........................................................................................59 Section 19.14 Time of Essence ....................................................................................59 Section 19.15 Delay .....................................................................................................59 Section 19.16 Relationship of Parties ...........................................................................60 Section 19.17 Non-Liability of Lessor .........................................................................60 ARTICLE 20. PARTICULAR COVENANTS ................................................................................60 Section 20.1 Non-Discrimination ...............................................................................60 Section 20.2 Section 3 Requirements .........................................................................60 Section 20.3 Covenants Binding Upon Successors ....................................................61 Section 20.4 Disclaimer of Partnership Status ...........................................................61 Section 20.5 HUD Restrictions ..................................................................................61 Section 20.6 Form of Nondiscrimination and Nonsegregation Clauses ....................62 Section 20.7 Reserved ................................................................................................63 Section 20.8 Asbestos Notification for Commercial Property. ..................................63 Section 20.9 Lead Warning Statement .......................................................................63 Section 20.10 Reserved ................................................................................................63 Section 20.11 Public Art. .............................................................................................63

84 4866-6691-0105 v7

EXHIBITS:

Exhibit A Legal Description of Leased Premises
Exhibit C Form of Memorandum of Lease
Exhibit D Schedule of Performance
Exhibit F Resident Selection Plan
Exhibit G Annual Operating Budget
Exhibit H Approved Financing
Exhibit I First Source Hiring Agreement
Exhibit J Regulatory Agreement
Exhibit L Form of Certificate of Completion

85 4866-6691-0105 v7 1

GROUND LEASE AGREEMENT
(Nevin Plaza Phase I)
THIS GROUND LEASE AGREEMENT (this “Lease”), dated for reference purposes only as of __________,20__ executed by and between the Housing Authority of the City of Richmond, a public body corporate and politic (the “Lessor”), and Nevin Plaza II, L.P., a California limited partnership (the “Lessee”).

RECITALS
A. Capitalized terms used, but not defined in these Recitals, shall have the meaning set forth in Section 1.1.

B. Lessor owns in fee that certain unimproved real property located in the City of Richmond, California, and more particularly described in Exhibit A attached hereto (the “Land”).

C. Lessee has agreed to construct a 76-unit multifamily rental housing development on the Land that will include 75 apartments that will be affordable to low-, extremely-low, and very low-income households (as more particularly described herein, the “Development”) in accordance with the requirements of this Lease. The Development will include a structured parking garage consisting of at least 38 parking spaces (the “Garage”).

D. Among other financing sources to be utilized for the development and operation of the Development, the Development shall be funded pursuant to, and operated in accordance with, the HUD Requirements. Lessee has also secured other public and private funding sources for the development and operation of the Development.

E. Lessor desires to lease the Leased Premises to Lessee pursuant to the terms of this Lease for a period of ninety-nine (99) years commencing upon the date of the recordation of the Memorandum of Lease.

F. Prior to the date set forth above, the City and other applicable agencies, completed all the necessary environmental review of the Development under the California Environmental Quality Act, as amended (“CEQA”), and the National Environment Policy Act, as amended (“NEPA”).

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

ARTICLE 1.

DEFINITIONS
Section 1.1 Definitions. As used in this Lease, the following terms shall have the meanings set forth in this Section 1.1.
86 4866-6691-0105 v7 2

(a) Act. The United States Housing Act of 1937 (42 U.S.C. Section 1437, et seq.), as amended from time to time, or any successor legislation, and all implementing regulations issued thereunder or in furtherance thereof. (b) Alterations. As defined in Section 9.2 hereof.
(c) Annual Operating Budget. As defined in Section 5.8 hereof. (d) Appraiser. As defined in Section 12.4 hereof.
(e) Approved Final Plans. The plans for development of the Improvements, as set forth in that certain ___________, prepared by _____________, and approved by the City of Richmond Building Department, as such plans may be revised pursuant to the terms of the Lease.
(f) Approved Financing. The financing approved by Lessor that Lessee will use in connection with the development and operation of the Development. A description of the Approved Financing as of the Commencement Date is set forth in Exhibit H.
(g) Approved Lenders. Any lender or other entity providing a loan, grant, or other financial accommodations to the Lessee in connection with the Approved Financing.
(h) Authority Documents. The LDDA, this Lease, and the Regulatory Agreement.
(i) Bond Regulatory Agreement. The Regulatory Agreement and Declaration of Restrictive Covenants executed by and between the [California Municipal Finance Authority] and the Lessee in connection with the Approved Financing. (j) Casualty. As defined in Article 13 hereof.
(k) Certificate of Completion. The certificate issued by Lessor to Lessee, after completion of the construction of the Improvements. (l) City. The City of Richmond, California, a municipal corporation. (m) Claims. As defined in Section 9.3 hereof.
(n) Closing or Closing Date means the date that the Memorandum of Lease is recorded in the Official Records, and shall be the date that closing for Lessee’s construction financing occurs.
(o) Code. The Internal Revenue Code of 1986, as amended from time to time, or any corresponding provision or provisions of succeeding law. 87 4866-6691-0105 v7 3

(p) Commencement Date. Means the date that the Term commences, and shall be the date that the Memorandum of Lease is recorded in the Official Records. (q) Compliance Period. The period specified in Section 42(i)(1) of the Code, as applicable to the Development.
(r) Conditions to Closing. As defined in Section 2.3 hereof. (s) Construction Period Operating Reserve. Defined in Section 5.9 hereof.
(t) Controlling Interest. As defined in Section 18.1 hereof. (u) County. The County of Contra Costa, a political subdivision of the State of California.
(v) Development. Defined in Recital C.
(w) Disposition Agreement. If required by HUD, the Disposition Agreement executed by and between HUD and Lessor pertaining to the disposition of the Property.
(x) EAH. EAH Inc., a California nonprofit public benefit corporation. (y) Event of Default. As described in Article 14 hereof. (z) Full Replacement Value. As defined in Section 8.1 hereof. (aa) Garage. As defined in Recital C.
(bb) General Partner. Nevin Plaza II EAH, LLC, a California limited liability company, or a successor limited liability company of which EAH or an affiliate is the sole member.
(cc) Governmental Authorities. Any applicable federal, state or local governmental or quasi-governmental entities, subdivisions, agencies, authorities or instrumentalities having jurisdiction over the Leased Premises, the Improvements, Lessor or Lessee.
(dd) HACCC. The Housing Authority of the County of Contra Costa, a public body, corporate and politic.
(ee) Hazardous Materials Claim. As defined in Section 11.3 hereof. (ff) Hazardous Materials Law. Any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations or directives, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, 88 4866-6691-0105 v7 4

transportation or disposal of Hazardous Material, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §9601), 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.), the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. §2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. §11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code §13000 et seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code §26100, et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code §25249.5 et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code §25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal. Health and Safety Code, Section 25300 et seq.). (gg) Hazardous Materials or Hazardous Substances. Any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Hazardous Materials Law as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, infectious waste”, toxic substance”, toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity. The terms “hazardous material” and “hazardous substance” shall also include asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable as fuel, perchlorate, and methyl-tert butyl ether, whether or not defined as a hazardous waste or hazardous substance in Hazardous Materials Laws.
(hh) HQS is defined in Section 3.1(b).
(ii) HUD. United States Department of Housing and Urban Development.
(jj) HUD Documents. The Disposition Agreement (if required by HUD), the Use Agreement, and any other agreements evidencing the HUD Requirements applicable to the Development.
(kk) HUD Requirements. The Use Agreement requirements and any other HUD requirements applicable to the Development.
(ll) Impositions. All taxes, including without limitation, property and possessory interest taxes, assessments, water and sewer charges, charges for public utilities, excises, levies, license and permit fees and other charges that shall or may be assessed, levied or imposed during the Term by any Governmental Authorities upon the 89 4866-6691-0105 v7 5

Leased Premises or the Improvements, or any part thereof, including the buildings or improvements now or hereafter located on the Land; provided, however, that the term “Impositions” shall not include any income tax, capital levy, estate, succession, inheritance, transfer or similar taxes imposed on Lessor, or any franchise tax imposed upon any owner of the fee interest in the Leased Premises, or any income, profits or revenue tax, assessment or charge imposed upon the rent or other benefit received by Lessor under this Lease. Notwithstanding the foregoing, Lessee shall be responsible for payment of all transfer and similar taxes imposed in connection with the ground lease of the Land to Lessee pursuant to this Lease.
(mm) Improvements. The improvements now or hereafter located on the Leased Premises, including without limitation, the Development. (nn) Indemnitees means, collectively, Lessor, City, and their respective elected and appointed officers, officials, commissioners, employees, agents, consultants, contractors, and volunteers.
(oo) Insolvency Proceeding(s). The commencement of any case under the Bankruptcy Code, Title 11 of the United State Code (the “Bankruptcy Code”), or commencement of any other bankruptcy, arrangement, reorganization, receivership, custodianship or similar proceeding under any federal, state or foreign law. (pp) Insurance Requirements. The requirements, whether now or hereafter in force, of any insurer or insurance carrier, any board of fire underwriters or any other company, bureau, organization or entity performing the same or similar functions, applicable to the Leased Premises and/or the Improvements, or any portion thereof, to the extent so applicable.
(qq) Land. Defined in Recital B.
(rr) LDDA. The Lease Disposition and Development Agreement dated as of ______, 2024 and executed by and between Lessor and Lessee. (ss) Lease. This Ground Lease Agreement, as it may be amended from time to time.
(tt) Lease Year. Each calendar year during the Term.
(uu) Leased Premises. That certain real property located in the City of Richmond, County of Contra Costa, California, as more particularly described in Exhibit A, together with all easements and appurtenances attaching thereto. (vv) Leasehold Mortgage. Any mortgage, deed of trust, security agreement or collateral assignment securing a loan approved as Approved Financing and encumbering Lessee's Estate.
(ww) Leasehold Mortgagee. The holder, mortgagee, grantee or secured party under any Leasehold Mortgage, and their successors and assigns. 90 4866-6691-0105 v7 6

(xx) Legal Requirements. All laws, statutes, codes, ordinances, orders, rules, regulations and requirements of all Governmental Authorities and the agencies, officers, departments, boards and commissions thereof, whether now or hereafter in force, applicable to Lessor, Lessee, the Leased Premises, the Improvements, or any portion thereof, to the extent so applicable.
(yy) Lessee. Nevin Plaza II, L.P., a California limited partnership, and its permitted successors and assigns.
(zz) Lessee's Estate. Lessee's leasehold interest in the Leased Premises acquired pursuant to this Lease and Lessee’s fee interest in the Improvements from the Closing Date through the expiration or termination of this Lease. (aaa) Lessor's Estate. Lessor's fee interest in the Land and reversionary interest in the Improvements following the expiration or termination of this Lease. (bbb) License Agreement. That certain License Agreement dated as of March 1, 2023, and recorded in the Official Records on March 20, 2023 as Instrument No. 2023-0025657.
(ccc) License Termination. As defined in Section 2.6 hereof. (ddd) Limited Partner. ______________________, a ______________ and its successors and/or assigns.
(eee) Major Alterations. As defined in Section 9.2, hereof. (fff) Management Agent. EAH or any successor management agent retained in accordance with this Lease.
(ggg) Master Development Agreement. That certain Master Development Agreement dated as of December 15, 2020, executed by Lessor and EAH, as amended by that certain First Amendment to Master Development Agreement dated as of March 1, 2023 and executed by and between Authority and EAH.
(hhh) Memorandum of Lease. The Memorandum of Ground Lease evidencing this Lease to be recorded in the Official Records substantially in the form attached hereto as Exhibit C.
(iii) Net Condemnation Award. The net amounts owed or paid to the Parties or to which either of the Parties may be or become entitled by reason of any Taking or pursuant to any agreement with any condemning authority which has been made in settlement of any proceeding relating to a Taking, less any costs and expenses incurred by the Parties in collecting such award or payment.
(jjj) Net Proceeds. As defined in Section 10.13 hereof. 91 4866-6691-0105 v7 7

(kkk) Official Records. The Official Records of Contra Costa County, California.
(lll) Option. The purchase options and right of first refusal described in the Partnership Agreement.
(mmm) Partnership Agreement. The Amended and Restated Agreement of Limited Partnership of Nevin Plaza II, L.P. dated on or about the Closing Date, as it may be amended, modified or supplemented from time to time. (nnn) Party. Lessor or Lessee, as applicable. Lessor and Lessee shall be referred to collectively as the “Parties.”
(ooo) Person. An individual, partnership, corporation, limited liability company, trust, unincorporated association, or other entity or association. (ppp) Permitted Encumbrances. As defined in Section 2.5. (qqq) Phase I Partnership. Nevin Plaza I, L.P., a California limited partnership.
(rrr) Phase I Project. The 100 unit multifamily project owned by the Phase I Partnership and located adjacent to the Land on property leased from Lessor. (sss) Prime Construction Contract is defined in Section 3.6. (ttt) Prevailing Wage Laws is defined in Section 3.1 d. (uuu) Regulatory Agreement. The Regulatory Agreement and Declaration of Restrictive Covenants to be executed by and between Lessor and Lessee substantially in the form attached hereto as Exhibit J and recorded against Lessee’s Estate on the Closing Date.
(vvv) Reciprocal Easement Agreement. As defined in Section 2.8. (www) Base Rent. As defined in Section 6.1.
(xxx) Restricted Units. The 75 Units in the Development that are not manager’s units and that are subject to the rent and occupancy restrictions set forth herein and in the Regulatory Agreement.
(yyy) RMC means the City of Richmond Municipal Code.
(zzz) RMC Chapter 2.60 means the City of Richmond’s Living Wage Ordinance (Richmond Municipal Code 2.60).
(aaaa) Schedule of Performance. The schedule of performance milestones set forth in Exhibit D attached hereto.
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(bbbb) Special Form. As defined in Section 8.1 hereof. (cccc) Subsequent Owner. Subsequent Owner shall mean (a) any party (including, without limitation, any Leasehold Mortgagee or assignee of a Leasehold Mortgagee, as applicable) acquiring the Lessee's rights and interests in the Leased Premises, this Lease, and the Improvements, which acquisition is a result of a foreclosure or other transfer in lieu of foreclosure under a Leasehold Mortgage, and (b) any successor or assignee of any party described in (a).
(dddd) Taking. A taking during the Term of all or any part of the Leased Premises and/or the Improvements, or any interest therein or right accruing thereto, as a result of the exercise of the right of condemnation or eminent domain materially affecting the Leased Premises or the Improvements or any part thereof. A conveyance in lieu of, or in anticipation of, the exercise of any such right of condemnation or eminent domain shall be considered a Taking. Any such Taking shall be deemed to have occurred upon the earlier to occur of (a) the date on which the property, right or interest so taken must be surrendered to the condemning authority, or (b) the date title vests in a condemning authority or other party pursuant to any Taking.
(eeee) Tax Credit Restrictive Covenant. The agreement with TCAC to be executed by Lessee and recorded against Lessee’s Estate, setting forth certain terms and conditions under which the Improvements will be operated. (ffff) TCAC. The California Tax Credit Allocation Committee. (gggg) TCAC Requirements. The Tax Credit Restrictive Covenant and all TCAC regulations applicable to the Development.
(hhhh) Tenant(s). The residents of the Units.
(iiii) Tenant Lease(s). Any lease or rental agreement entered into by Lessee with a Tenant.
(jjjj) Term. As defined in Section 2.2 hereof.
(kkkk) Transfer. As defined in Article 18 hereof.
(llll) Units. All of the residential units in the Development. The Units will include one (1) unrestricted management unit and 75 Restricted Units. (mmmm) Use Agreement. The Use Agreement to be executed by and among Lessor, Lessee, and HUD, which provides for affordability and use restrictions on the Development, and which will be recorded prior to the liens of all Leasehold Mortgages, as such agreement may be amended from time to time.

Section 1.2 Exhibits.

The following exhibits are attached to this Lease and incorporated herein:
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Exhibit A Leased Premises
Exhibit C Form of Memorandum of Lease
Exhibit D Schedule of Performance
Exhibit F Resident Selection Plan
Exhibit G Annual Operating Budget
Exhibit H Approved Financing
Exhibit I First Source Hiring Agreement
Exhibit J Form of Regulatory Agreement
Exhibit L Form of Certificate of Completion
ARTICLE 2.

LEASE OF THE LEASED PREMISES
Section 2.1 Leased Premises. Subject to the terms hereof and in consideration of the covenants of payment and performance stipulated herein, effective as of the date the Memorandum of Lease is recorded in the Official Records, Lessor will lease, demise and let the Leased Premises to Lessee, and Lessee will lease and take the Leased Premises from Lessor.

Section 2.2 Term; Commencement Date; Indemnity; Closing Date. Unless sooner terminated pursuant to the provisions hereof, this Lease shall continue in full force and effect for the term commencing on the Commencement Date and expiring on the day immediately preceding the ninety-ninth (99th) anniversary of the Commencement Date (the “Term”). The Commencement Date shall mean the date upon which the Use Agreement, the Memorandum of Lease, and the Regulatory Agreement are recorded in the Official Records following Lessee’s satisfaction or Lessor’s waiver of all of the Conditions to Closing set forth below.

Without limiting any other provision of this Lease pertaining to Lessee’s obligation to indemnify Lessor and the other Indemnitees, Lessee hereby agrees that it shall, jointly and severally together with EAH, indemnify, defend with counsel approved by Lessor, and hold the Indemnitees harmless from and against any and all Claims of any nature whatsoever arising in connection with the Leased Premises or the Improvements between the Commencement Date and the Closing Date, and such obligation shall survive the expiration or termination of this Lease.

Section 2.3 Conditions Precedent. Notwithstanding anything to the contrary contained herein, the Closing shall not occur until all of the conditions precedent set forth in this Section

2.3 have been satisfied (or waived by Lessor) (the “Conditions to Closing”). Lessor’s consent to the recordation of the Memorandum of Lease shall serve as evidence that all Conditions to Closing have been satisfied or waived as of the Closing Date. (a) Lessee shall have submitted a schedule of performance, which shall be approved by Lessor and attached hereto as Exhibit D, as such schedule may be amended from time to time by mutual agreement of the Parties (the “Schedule of Performance”). Lessor may, at its sole discretion, provide Lessee with extensions for particular dates in the Schedule of Performance.
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(b) Lessee shall have obtained a commitment for the tax credit equity and all other construction financing necessary for the development of the Improvements, as approved by Lessor, and to the extent necessary, HUD, and shall have provided evidence that (i) all conditions to the release and expenditure of the initial draw of funds from each source of construction financing for the Development have been met and that such funds will be available, and (ii) all construction financing (including draws subsequent to the initial draw of funds) will be available upon the satisfaction of the conditions set forth in the applicable documents.
(c) Lessor shall have approved the Partnership Agreement. (d) Lessor shall have approved all documents related to the Approved Financing.
(e) Lessor shall have approved the Prime Construction Contract. (f) Lessee shall have obtained a building permit or permit-ready letter, allowing for the construction of the Improvements in accordance with the Approved Final Plans, and shall have obtained all other permits necessary to construct the Improvements. (g) There shall be no uncured default on the part of Lessee under this Lease or the Authority Documents, nor shall there have been an event that with notice or the passage of time or both could constitute a material default, under any of the foregoing. (h) Lessee shall have paid, or concurrently with the Closing, shall pay to Lessor all sums payable by Lessee to Lessor in connection with the lease of the Land, and the transactions described in this Lease, including without limitation, payment of the expenses described in Section 4.1 below.
(i) If not previously delivered, Lessee shall have delivered to Lessor, or if instructed, deposited into escrow, the following documents:
(1) Two (2) duly executed originals of this Lease.
(j) If not previously delivered, Lessee shall have deposited into escrow the following documents:
(1) One (1) original duly executed and acknowledged
counterpart of the Memorandum of Lease.
(2) One (1) original duly executed and acknowledged
counterpart of the Regulatory Agreement.
(3) One (1) original duly executed and acknowledged
counterpart of the Use Agreement.
(4) One (1) original duly executed and acknowledged
counterpart of the License Termination.
95 4866-6691-0105 v7 11

(5) One (1) original duly executed and acknowledged
counterpart of the Reciprocal Easement Agreement.
(k) To the extent required, HUD shall have approved this Lease, the Use Agreement, and any other documents that require HUD approval. (l) Lessee shall have provided copies of payment and performance bonds and evidence of all insurance required by this Lease as set forth in Article 8.

Section 2.4 Use and Affordability Restrictions. Subject to the provisions hereof, Lessee shall use the Leased Premises for the development, operation and maintenance of the Improvements in accordance with the restrictions and requirements set forth in Article 5 hereof, and throughout the Term, shall continuously use and operate the Development only for the following uses, and such other uses as are reasonably and customarily attendant to such uses:
development, marketing for lease, and leasing of the Units in a manner that strictly satisfies the requirements of this Lease, and throughout their respective terms, the Use Agreement and the Regulatory Agreement. Further, Lessee agrees:
(a) Not to use the Leased Premises or the Improvements for any disorderly or unlawful purpose;
(b) To use reasonable efforts to prevent, abate, or terminate any actions by Tenants that constitute a nuisance or unlawful conduct in, on, or about, the Leased Premises or Improvements;
(c) To use reasonable efforts to prevent, abate, or terminate any action by any Tenant that would cause Lessee to violate any of the covenants and conditions of this Lease with respect to the Improvements;
(d) Upon notice from Lessor, to take reasonable action, as necessary to abate any action by any Tenant that would cause Lessee to violate this Lease; and (e) Subject to the rights of Tenants, to permit Lessor and its agents upon not less than forty-eight (48) hours' written notice to inspect the Leased Premises and the Improvements or any part thereof at any reasonable time during the Term. (f) To use the Leased Premises and Improvements only as affordable rental multi-family housing and approved ancillary uses with occupancy and rents restricted as follows:
(i) The Restricted Units shall be restricted for occupancy by households whose gross household income at initial occupancy is not greater than sixty percent (60%) of area median income adjusted for household size as determined by TCAC; and
(ii) The monthly rent for the Restricted Units minus a utility allowance as published by HACCC shall be limited to one-twelfth (1/12th) of thirty percent (30%) of the household income limit established pursuant to the 96 4866-6691-0105 v7 12

preceding clause (f)(i), adjusted for household size appropriate for the Unit, or if greater, the rent established pursuant to TCAC Requirements. (iii) The monthly rent for Restricted Units that are reserved for occupancy by formerly homeless households will be restricted as set forth in the Regulatory Agreement.

Notwithstanding any contrary provision hereof, during any such time that the Tax Credit Restrictive Covenant applies to the Development, if the occupancy restrictions and/or rent limitations set forth in the Tax Credit Restrictive Covenant are stricter than those set forth in this Lease, the occupancy restrictions and rent limitations set forth in the Tax Credit Restrictive Covenant shall prevail over any inconsistent provision set forth in this Lease or the Regulatory Agreement.

Section 2.5 Covenants Regarding Encumbrances. Lessee agrees that, with the exception of: (i) Leasehold Mortgages and other recorded documents held by the Approved Lenders; (ii) the Use Agreement; (iii) the Tax Credit Restrictive Covenant, and TCAC’s standard ground lease rider (following recordation in the Official Records); (iv) Tenant Leases; (v) utility easements and other customary easements necessary and incidental to the development and maintenance of the Improvements (which easements are subject to the approval of Lessor, which shall not be unreasonably withheld or delayed), (vi) the Regulatory Agreement and the Bond Regulatory Agreement, and (vi) such other encumbrances (if any) approved by Lessor (all of the foregoing, collectively, the “Permitted Encumbrances”), neither the Leased Premises nor the Improvements, nor any portion thereof, shall be encumbered in any way, nor shall the assets of the Development be pledged as collateral for a loan, without the prior written approval of Lessor and HUD.

Section 2.6 Possession. On the Commencement Date, Lessor will deliver to Lessee exclusive possession and occupancy of the Leased Premises, subject only to the Permitted Encumbrances. Prior to the Commencement Date, Lessor shall retain possession of the Leased Premises and Lessee shall have no rights to the Leased Premises except as specifically set forth in the License Agreement. On the Commencement Date, the parties will record a termination of the License Agreement (“License Termination”).

Section 2.7 Memorandum of Lease. The Parties shall execute and acknowledge the Memorandum of Lease, substantially in the form attached hereto as Exhibit C, which shall be recorded in the Official Records on the Commencement Date.

Section 2.8 Parking; Reciprocal Easement Agreement. The Development shall include the construction of the Garage. On the Closing Date, Lessee and Phase I Partnership will execute and record in the Official Records a reciprocal easement agreement that addresses Garage operation and maintenance obligations and provides that residents of the Development and residents of the Phase I Project will be permitted to park in the Garage (“Reciprocal Easement Agreement”).
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ARTICLE 3.

DEVELOPMENT OF THE IMPROVEMENTS
Section 3.1 Development of the Improvements. As more particularly described in Section 5.1 below, commencing upon the Closing Date and continuing throughout the Term, the Improvements and all alterations, additions, equipment and fixtures built, made or installed by Lessee in, on, under or to the Leased Premises or Improvements shall be the sole property of Lessee unless otherwise provided in this Lease.
(a) Subject to Section 19.15 hereof, Lessee shall commence and complete the development of the Improvements by the times set forth in the Schedule of Performance, as such schedule may be amended from time to time. (b) Lessee shall cause the Improvements to be constructed in compliance with the Approved Final Plans, and shall ensure that the Improvements are maintained in conformity with Housing Quality Standards (“HQS”) as required by HUD. Any and all Improvements constructed or rehabilitated by or on behalf of Lessee shall be constructed and rehabilitated in compliance with all applicable Legal Requirements, including, without limitation, the local business and local hire requirements as set forth in Section 3.1 (c), below, the labor standards applicable to the development of the Development (including, but not limited to, wage rates under the Davis-Bacon Act (40 U.S.C.A. 276a-1 through 40 U.S.C.A. 276a-5)), and the Prevailing Wage Laws set forth in Section 3.1(d), below, all applicable requirements of the Act, and in accordance with the requirements of the Approved Financing. Lessee shall provide Lessor with copies of all documentation relating to contractor bids for the Development, and agrees to comply with Lessor’s construction hiring goals set forth below.
(c) The Improvements shall be subject to compliance with the Richmond Municipal Code (“RMC”) including without limitation, the local business and local hire requirements set forth therein, including the City’s Business Opportunity Ordinance (RMC, Chapter 2.50) and Local Employment Program Ordinance (RMC, Chapter 2.56) (the “Local Business and Local Hire Requirements”). Pursuant to RMC Chapter 2.56, and prior to the Commencement Date, Lessee shall also enter into a First Source Hiring Agreement with the City, substantially in the form of Exhibit I attached hereto and otherwise satisfactory to City (the “First Source Hiring Agreement”). Lessee shall provide Lessor with written acknowledgement by the Prime Contractor (as defined in Section 3.6) of the requirements of RMC Section 2.56.030(c), which code section shall be reproduced in full within the written acknowledgement. The written acknowledgement shall also include an express commitment by the Prime Contractor to use its best efforts to see that all of its subcontractors comply with all Local Business and Local Hire Requirements.
(d) Lessee shall comply, and shall cause the Prime Contractor and each other contractor and subcontractor to comply, with all applicable requirements of California Labor Code Sections 1720 et seq. and the implementing regulations of the California Department of Industrial Relations (collectively, “Prevailing Wage Laws”) and the City of Richmond’s Living Wage Ordinance (Richmond Municipal Code 2.60) 98 4866-6691-0105 v7 14

(“RMC Chapter 2.60”), including without limitation, the requirement to pay prevailing wages and living wages, as applicable, in the development of the Development as those wages are determined pursuant to Prevailing Wage Laws and RMC Chapter 2.60. Lessee shall, and shall cause the Prime Contractor and each other contractor and subcontractor to, keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to Prevailing Wage Laws and RMC Chapter 2.60. Copies of the currently applicable current per diem prevailing wages are available from the California Department of Industrial Relations website, www.dir.ca.gov. During the construction of the Development, Lessee shall, or shall cause the Prime Contractor to, post at the Leased Premises the applicable prevailing rates of per diem wages. Lessee shall indemnify, defend (with counsel reasonably acceptable to Lessor and City) and hold harmless the Indemnitees from and against any and all Claims arising out of the failure of Lessee, the Prime Contractor or any other contractor or subcontractor to pay living wages pursuant to the RMC Chapter 2.60 and prevailing wages as determined pursuant to Prevailing Wage Laws or to comply with the other applicable provisions of Prevailing Wage Laws or RMC Chapter 2.60 in connection with construction or any other work undertaken in connection with the Development. Lessee’s indemnity obligations under this paragraph shall survive the expiration or earlier termination of this Lease. (e) Maintenance of Payroll Records. Lessee shall and shall cause the Prime Contractor and each other contractor and subcontractor to maintain accurate payroll records showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker and others employed on the Development. Each payroll record shall contain or be verified by a written declaration made under penalty of perjury, stating both of the following: (1) the information contained in the payroll record is true and correct, and (2) the employer has complied with the requirements of Labor Code Section 1771 (prevailing wage provisions), Section 1811 (eight-hour day, forty-hour week provisions), and Section 1815 (overtime compensation) for any work performed by his or her employees on the Development. Lessee shall and shall require the Prime Contractor and each other contractor and subcontractor to provide certified payroll records to City each week, no later than ten (10) days after the end of a weekly pay period. Payroll records shall be maintained and made available in accordance with Labor Code Section 1776. In addition, Lessee shall and shall require the Prime Contractor and each other contractor and subcontractor promptly to deliver to Lessor, upon request, documents verifying compliance with RMC Chapter 2.60, including documents that evidence that each affected employee has been notified regarding the wages required to be paid pursuant to the RMC Chapter 2.60. Notice of living wages shall also be posted at the Development site.
(f) Senate Bill 854 Requirements.
(1) Contractor Registration. If and to the extent applicable, Lessee shall abide by SB 854 providing: (a) no contactor or subcontractor may be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the California Public Contract Code, or engage in the performance of any contract for public work, unless currently registered with 99 4866-6691-0105 v7 15

DIR and qualified to perform public work pursuant to California Labor Code Section 1725.5 (California Labor Code Section 1771.1(a)); (b) no contractor or subcontractor may be awarded a public works contract unless registered with the DIR to perform public work pursuant to Labor Code Section 1725.5 (Labor Code Section 1771.1(b)); and (c) work performed on the project is subject to compliance monitoring and enforcement by DIR (Labor Code Section 1771.4). (2) Job Site Notices. Lessee shall or shall cause the Prime Contractor to post at the job site notices in compliance with Title 8 California Code of Regulations, Section 16451(d).
(g) Changes. Lessee shall construct the Improvements in conformance with the Approved Final Plans. Lessee shall notify the Lessor in a timely manner of any proposed changes in the work required to be performed under this Lease, including any proposed additions, changes, or deletions to the Approved Final Plans. Written authorization from the Lessor must be obtained before any of the following changes, additions, or deletions in work for the Improvements may be performed: (i) any change in the work the cost of which exceeds Three Hundred Thousand Dollars ($300,000); (ii) any set of changes in the work the cost of which cumulatively equals Five Hundred Thousand Dollars ($500,000); (iii) any material change in building materials or equipment, specifications, or the structural or architectural design or appearance of the Improvements as provided for in the Approved Final Plans; (iv) any change in Unit count; or (v) any material change to common areas or spaces designated for tenant services. Any change described in this paragraph shall require Lessor’s prior written consent. Lessor's consent to any additions, changes, or deletions to the work shall not relieve or release Lessee from any other obligations under this Lease, or relieve or release Lessee or its surety from any surety bond.

Section 3.2 Submittal and Approval of Plans and Specifications. (a) Lessee shall submit to City for its approval in its regulatory capacity the proposed construction plans for development of the Development as well as plans for the demolition of any existing improvements located on the Land (collectively, the “Proposed Plans”) within the time necessary for the City to review and approve the Proposed Plans in accordance with the Schedule of Performance. The Proposed Plans shall include plans for the undergrounding of all utilities used, rendered or supplied upon or in connection with the Development.
(b) Concurrently with its submittal of the Proposed Plans to City, Lessee shall submit copies thereof to Lessor for Lessor’s review and approval. Lessor shall approve or disapprove, in its reasonable discretion, the Proposed Plans within ten (10) business days following receipt. Any disapproval of the Proposed Plans shall state in writing the specific and detailed reasons for the disapproval and the changes Lessor reasonably requests in order to obtain Lessor approval. Lessor’s disapproval of the Proposed Plans shall be based on one or more of the following: (a) the Proposed Plans are incomplete; (b) the Proposed Plans do not conform with the existing CEQA and NEPA approvals or do not incorporate mitigation measures required per such approvals; (c) the 100

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Proposed Plans do not comply with the requirements of this Lease; and/or (d) the Proposed Plans do not conform with all other Legal Requirements. (c) If the Proposed Plans are disapproved by Lessor in whole or in part, Lessee shall have ten (10) business days following receipt of Lessor’s disapproval notice to submit to Lessor new or revised Proposed Plans. Lessor shall approve or disapprove, in its reasonable discretion, any such resubmitted Proposed Plans and the same timelines and procedures for approval or disapproval shall apply to the resubmitted Proposed Plans as set forth above for the original submission.
(d) The Parties further agree and understand that notwithstanding the time requirements set forth in this Section 3.2 for submissions to Lessor by Lessee and review and approval of such items by Lessor, Lessee shall be responsible for assuring that all items are submitted to Lessor in approvable form in a timely manner such that Lessor may have the time permitted by this Section 3.2 to review and approve plans and documents no later than the dates set forth above. Any approval by Lessor pursuant to this Section 3.2 shall not constitute, substitute for, or guaranty approval of any building permit or other Development approvals.
(e) If Lessee submits, and as applicable resubmits, the Proposed Plans in an approvable form to Lessor, and Lessor neither approves or disapproves the submittals within the time periods established in this Section 3.2, the approval shall be deemed denied. Lessee may then provide written notice to Lessor indicating that if Lessor fails to act on the Proposed Plans as so submitted or resubmitted within five (5) business days following Lessor’s receipt of such notice, then such Proposed Plans shall be deemed approved by Lessor pursuant to the provisions of this Section 3.2. For purposes of this Section 3.2, Lessee shall deliver such notice by certified mail to Lessor’s Executive Director with a copy to the City Attorney’s Office. If Lessor fails to act on such Proposed Plans within five (5) business days following its receipt of such notice, then such Proposed Plans as so submitted or resubmitted shall be deemed approved by Lessor. Lessor acknowledges that Lessor has approved the Proposed Plans that Lessee has submitted to Lessor and the City.
(f) The Proposed Plans approved by City and approved, or deemed approved, by Lessor pursuant to this Section 3.2 shall be referred to herein as the “Approved Final Plans.” A copy of the Approved Final Plans shall be maintained on file with Lessor. Lessee shall not make material changes to the Approved Final Plans without the prior written approval of Lessor at its sole discretion. For purposes of this Section 3.2, a “material change” shall mean any change that requires the approval of the Limited Partner or senior lender, any change to the exterior appearance of the Improvements, and any change described in Section 3.1 (g).

Section 3.3 No Liens. Lessee shall not have any right, authority or power to bind Lessor, Lessor's fee interest in the Property, or any other interest of Lessor in the Leased Premises, for any claim for labor or material or for any other charge or expense, lien or security interest incurred in connection with the development or operation of the Improvements or any change, alteration or addition thereto. Lessee shall promptly pay all sums legally due and 101

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payable by Lessee on account of any labor performed or materials supplied for the Development for which any lien is, or can be legally, asserted against Lessor’s Estate and/or Lessee's Estate.

In the event any mechanics' or material supplier's lien or stop notice is filed against the Development, Lessee at its expense shall promptly cause such lien or stop notice to be removed by bonding or otherwise, and Lessee shall hold the Lessor harmless from any and all such asserted claims or liens. If Lessee fails to discharge such lien or stop notice within twenty (20) days after such lien or stop notice is filed, or fails to furnish such security within such time, then, in addition to all other rights or remedies, Lessor may, but shall not be obligated to, discharge the same: (i) by paying the amount claimed to be due; (ii) by procuring the discharge of such lien by deposit in court; (iii) by giving security; or (iv) in such other manner as is, or may be prescribed by law. All expenses incurred by Lessor for any of the aforesaid purposes, including all reasonable attorneys' fees, shall be repaid by Lessee to Lessor on demand with interest thereon at the maximum rate permitted by law from the date of payment, and, if unpaid, may at Lessor's election, be treated as Additional Rent. Lessor shall have the right to post and keep posted on the Leased Premises any notices which the Lessor may deem necessary for the protection of Lessor and Lessor’s interest in the Land and reversionary interest in the Improvements from mechanics’ liens or other claims.

Section 3.4 Permits, Licenses and Easements. Lessee shall obtain any and all permits, licenses, easements and other authorizations required by any Governmental Authority with respect to any construction or other work to be performed on the Leased Premises or the Improvements. Lessor will cooperate with Lessee in the submittal of applications for all such required permits, licenses, applications for utility services and easements. Lessor will cooperate with Lessee in connection with the obtaining or granting, as applicable, of permits, licenses, easements and other authorizations for electric, telephone, gas, cable television, water, sewer, drainage, access and such other public or private utilities or facilities as may be reasonably necessary or desirable in connection with the development or operation of the Improvements.

Section 3.5 Equal Opportunity. During the construction of the Improvements, Lessee shall: (i) comply with all applicable HUD Requirements, including, but not limited to, Section 3 of the Housing and Urban Development Act of 1968; and (ii) comply with all applicable provisions of the City’s Nondiscrimination Clauses in City Contracts Ordinance (RMC Chapter

2.28), including RMC Section 2.28.030, obligating every contractor or subcontractor under a contract or subcontract with City for public work or for goods or for services to refrain from discriminatory employment or subcontracting practices on the basis of race, color, sex, sexual orientation, gender identity, religious creed, national origin, ancestry or disability of any employee, any applicant for employment or any potential subcontractor. Said Section 2.28.030 is by this reference, incorporated into this Lease.

Section 3.6 Construction Contracts.
(a) Lessee shall enter into one or more construction contracts with a reputable prime general contractor (the “Prime Contractor”) for construction of the Improvements in accordance with the Approved Final Plans and this Lease (collectively, the “Prime Construction Contract”). The Prime Construction Contract shall provide for the work to be performed for fixed and specified maximum amounts or allowances, pursuant to the Approved Final Plans and the Approved Financing. 102

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(b) Not later than the applicable date set forth in the Schedule of Performance, Lessee shall submit a copy of the Prime Construction Contract to Lessor’s Executive Director, or her designee, for purpose of determining: (a) that the amount of the costs of work has been reasonably estimated and is consistent with the amount set forth in the Approved Financing; (b) that the covenants regarding equal opportunity, prevailing wages, living wages, first source hiring, non-discrimination, and conformity with HQS requirements set forth in this Lease are included as requirements in the Prime Construction Contract, (c) that the release of any retainage shall be contingent upon Lessor’s confirmation that all HQS requirements have been satisfied, and (d) that no changes to the provisions of the Prime Construction Contract relating to covenants regarding equal opportunity, prevailing wages, living wages, first source hiring, nondiscrimination, conformity with HQS requirements, or the aspects of the scope of work described in Section 3.1(g) shall be made without the prior consent of Lessor’s Executive Director, or her designee. A representative of Lessor shall be permitted to attend draw meetings with the Prime Contractor. Unless the Lessor Executive Director or her designee notifies Lessee in writing within ten (10) days of submitting the Prime Construction Contract that the Prime Construction Contract has been disapproved, it shall be deemed approved. (c) Lessee shall enter into the Prime Construction Contract and any other contracts as may be necessary and appropriate for development of the Development only with licensed contractors having the reputation, experience, skill, and financial capability and qualification for serving as a contractor on first-class construction projects of similar magnitude in Northern California.
(d) The Parties agree that notwithstanding the time requirements set forth in this Section 3.6 for submission to Lessor by Lessee of the proposed Prime Construction Contract and review and approval of the Prime Construction Contract by Lessor, Lessee is responsible for assuring that the Prime Construction Contract in approvable form is submitted to Lessor in a timely manner such that Lessor may have the time permitted by this Section 3.6 to review and approve the Prime Construction Contract not later than the applicable date set forth in the Schedule of Performance. Lessor’s consent to the recordation of the Memorandum of Lease shall serve as evidence that Lessor has approved the Prime Construction Contract.

Section 3.7 Certificate of Completion.
(a) Purpose of Certificate. Upon Lessee’s request, promptly after completion of the construction of the Improvements as evidenced by the City Building Department sign off following its final inspection of the Development, Lessor shall deliver the Certificate of Completion substantially in the form attached hereto as Exhibit L. The Certificate of Completion shall constitute a conclusive determination that the covenants in this Lease solely with respect to the obligations of Lessee to timely construct the Improvements (including the dates for the beginning and completing construction of the Improvements) have been met. The Certificate of Completion is not a certificate of occupancy, and shall not constitute evidence of compliance with, or satisfaction of any obligation of Lessee to any holder of a deed of trust securing money loaned to finance the Improvements or any part thereof, and shall not be deemed a notice of completion under 103

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the California Civil Code. In addition, the Certificate of Completion shall not constitute evidence of compliance with any of the requirements regarding the payment of prevailing wages as set forth in this Lease, or Lessee's compliance with any applicable Legal Requirement, and in no way shall limit Lessee's indemnification obligations set forth in this Lease.
(b) Process for Delivery of Certificate. Lessor shall issue the Certificate of Completion within ten (10) days after the delivery by Lessee to Lessor of a written request for the issuance of the Certificate of Completion, which request shall include a copy of the City Building Department sign off following the final inspection of the Improvements. In the event Lessor fails to issue the Certificate of Completion within such period, or fails to deliver, within such time period, a written notice to Lessee setting forth, in reasonable detail, the reasons Lessor disputes the documentation delivered by Lessee, then the Certificate of Completion shall be deemed denied by Lessor.

ARTICLE 4.

PREDEVELOPMENT COSTS; APPROVED FINANCING; DEVELOPER FEE Section 4.1 Predevelopment Costs. Except pursuant to Lessor’s written agreement exercised in Lessor’s sole discretion, all predevelopment costs, including without limitation, all environmental and other due diligence costs, and legal fees and costs relating to the Development will be payable by Lessee. In addition, at Closing, Lessor and City shall be reimbursed the total amount incurred by Lessor and City for legal and consulting fees and other eligible predevelopment expenses agreed to by the Parties. Closing costs, including the cost of Lessee’s owner’s policy of title insurance, and, if applicable, Lessor’s lenders’ policy of title insurance, transfer taxes, escrow charges and recording fees shall be paid by Lessee at Closing.

Section 4.2 Approved Financing. Lessee agrees to solicit proposals from multiple lenders and tax credit investors to obtain the most competitive pricing, terms and conditions for the Development financing. Lessee shall provide copies of all solicitation documents and a list of lenders and tax credit investors who will receive the request for proposals to Lessor and Lessor’s financial advisor for review and comment at least five (5) business days prior to issuing the request for proposals. In addition, Lessee shall provide Lessor and its financial advisor copies of all proposals received by any lenders and tax credit investors, together with Lessee’s analysis of such proposals, for Lessor’s and its financial advisor’s review and comment at least three (3) business days prior to accepting any proposal. Notwithstanding anything to the contrary set forth herein, Lessee shall have the right to accept or reject any lender or tax credit investor proposal in its sole discretion. The Parties acknowledge that Lessee has satisfied the conditions of this Section 4.2, that Lessor has approved the loans described as Approved Financing in Exhibit H, and Lessor has approved _________________ as the Limited Partner and tax credit investor.

Section 4.3 Modifications to Approved Financing. Prior to the Commencement Date, Lessee shall provide Lessor and its financial advisor with updated financial projections and financing plan, reflecting any and all changes from prior versions submitted to Lessor. Lessor and Lessee shall mutually approve any changes in the financing plan prior to the Commencement Date. In the event a funding gap occurs prior to the Commencement Date as a result of 104

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Development cost increases, Lessor and Lessee shall meet and confer to determine a plan for obtaining additional financing.

Section 4.4 Developer Fee. Notwithstanding any contrary provision of the Master Development Agreement, subject to limitations imposed by any Approved Lender, EAH shall be permitted to receive a developer fee in the amount permitted by TCAC for the Development), of which the amount exceeding Two Million, Five Hundred Thousand Dollars ($2,500,000) or such greater amount that CTCAC permits to be paid upfront using construction sources (the “Cash Developer Fee”) shall be deferred. Any deferred portion of the developer fee shall not bear interest, and any portion of the developer fee exceeding the Cash Developer Fee amount shall be payable only from Lessee’s share of residual receipts unless definitive Project financial projections clearly demonstrate that an adjustment is necessary (e.g. to satisfy the “true debt” test for federal income tax purposes). Any portion of the Cash Developer Fee that is not paid from construction financing sources may be paid prior to the calculation of residual receipts.

ARTICLE 5.

OWNERSHIP AND OPERATIONS OF IMPROVEMENTS
Section 5.1 During the Term. Commencing on the Closing Date, Lessor shall grant to Lessee, without warranty express or implied, any right, title, or interest that Lessor has or may have in the Improvements now or hereafter located on the Leased Premises, which Improvements are and shall at all times during the Term be deemed real property.

Notwithstanding any provision in this Lease to the contrary, the fee title to the Improvements and all alterations, additions, equipment and fixtures built, made or installed by Lessee in, on, under or to the Leased Premises or Improvements shall be vested in and be the sole property of Lessee from the Closing Date until the expiration of the Term or other termination of this Lease; provided, however, that Lessee shall have no right to destroy, demolish or remove the Improvements except as specifically provided for in the Approved Final Plans or as approved in writing by Lessor. It is the intent of the Parties that this Lease shall create a constructive notice of severance of the Improvements from the Leased Premises without the necessity of a deed from Lessor.

Section 5.2 After the Term. Upon the expiration of the Term or other termination of the Lease, the Improvements and all alterations, additions, equipment and fixtures shall be deemed to be, and shall automatically become, the property of Lessor, without cost or charge to Lessor. Lessor agrees that Lessee, at any time prior to the sixtieth (60th) day after the expiration or other termination of this Lease, may remove from the Leased Premises any and all equipment which Lessee has furnished for maintenance purposes or for the use of the Management Agent, provided that Lessee shall repair any physical damage to the Leased Premises caused by the removal of such equipment and property. At the end of the Term or earlier termination of the Lease, Lessee agrees to execute and deliver to Lessor a quitclaim deed of the Improvements for the benefit of Lessor and all other documents that may be reasonably required by Lessor or Lessor's title company to clear from Lessor’s title to the Leased Premises and the Improvements all monetary liens and monetary encumbrances not caused or agreed to by Lessor.

Section 5.3 Benefits of Improvements During Term. Lessor acknowledges and agrees that any and all depreciation, amortization, tax credits and other tax benefits for federal or state 105

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tax purposes relating to the Improvements and any and all additions thereto, substitutions therefor, fixtures therein and other property relating thereto shall be deducted or credited exclusively to Lessee during the Term and for the tax years during which the Term begins and ends.

Section 5.4 Reserved.

Section 5.5 Marketing of Units. Except as otherwise set forth in Section 5.6 below, Lessee shall market all Units and select Tenants for ongoing renting of the Units in compliance with the income and rent restrictions set forth in Section 2.4(f) of this Lease. Lessee acknowledges that Lessor may maintain a waiting list and may refer potential tenants from that list to Lessee pursuant to a plan mutually developed by, and acceptable to, Lessor and Lessee, as may be amended during the Term by mutual written agreement of Lessor and Lessee (the “Resident Selection Plan”). Subject to the requirements of applicable law and funding programs applicable to the Development, the Resident Selection Plan shall provide for first priority to persons who reside or work in the City of Richmond, provided in each case that such prospective tenants meet the income and, if applicable, age or other restrictions applicable to the Development. A copy of the form Resident Selection Plan, the terms of which are incorporated herein, is attached hereto as Exhibit F. An amendment to the Resident Selection Plan, if any, shall not be an amendment to this Lease. In the event that Lessor fails to refer potential tenants to Lessee pursuant to the Resident Selection Plan for a vacant Unit, then Lessee may lease such vacant Unit to any income-eligible household selected by the Lessee; provided that such household is also an eligible household under the HUD Requirements and the income and age or other restrictions applicable to the Development, and provided that Lessee complies with the priorities set forth in this Section, subject to the requirements of applicable law and funding programs applicable to the Development. Lessee has final decision-making authority regarding Tenant selection, but such selections must be in accordance with the Resident Selection Plan and this Section 5.5, including but not limited to any applicable appeal process provided in the Resident Selection Plan.

No later than six (6) months before the completion of the construction of the Improvements, Lessee must complete the form Resident Selection Plan establishing the Tenant selection criteria and procedure that will apply specifically to the Development, and deliver said completed form to the Lessor for review and approval. The completed submission shall, at a minimum, be developed pursuant to, and in conformance with, the form Resident Selection Plan and this Section 5.5.

Section 5.6 Leasing of Units; Tenant Protections for all Units; Additional Requirements.
(a) Leasing of Units; Tenant Protections for all Units. Upon the Closing Date, Lessee shall at all times during the Term use or cause the Units to be operated and maintained in accordance with Section 2.4. For all Units, for so long as the HUD Documents are in effect, Lessee shall comply with the Tenant protection requirements set forth below and in the HUD Requirements, including but not limited to the following:
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(1) Lessee shall renew all Tenant Leases upon lease expiration, unless good cause for refusing renewal exists. This provision must be incorporated into each Tenant Lease;
(2) Lessee shall comply with any additional requirements regarding notice of termination of a Tenant Lease and regarding grievance process hearings, as may be further set forth in a Tenant Lease rider to be provided by HUD prior to, or in conjunction with, the Closing. (3) Lessee shall comply with all TCAC Requirements as well as all federal laws, rules and regulations for units benefitting from federal low- income housing tax credits under Section 42 of the Internal Revenue Code of 1986, as amended.

Section 5.7 Property Management.
(a) Approval of Initial Management Agent. Lessor has approved of the initial Management Agent. During the Term, Lessee's selection of any other management agent, and the terms of any new management agreement or management plan, will be subject to Lessor's and HUD's (if required pursuant to the HUD Requirements) review and approval.
(b) Management Agent Fees. During the Term, property management fees will not exceed industry norms for comparable services involving subsidized properties in the San Francisco Bay Area market and (if applicable) HUD Requirements.

Lessor and Lessee acknowledge that the initial management fees satisfy such standards.

The Management Agent will be subject to removal based upon reasonable performance- based standards. Such standards shall be consistent with industry norms and any applicable HUD Requirements. Lessor and Lessee acknowledge that the initial management agreement with the Management Agent satisfies such standards.

Notwithstanding anything herein to the contrary, all property management fees set forth in the management agreement approved by Lessor, and any changes thereto shall be subject to Lessor’s prior review and approval which shall not be unreasonably conditioned, withheld, or delayed.
(c) Process for Lessor Approval of New Management Agent. In the event Lessee desires to retain any replacement management agent, then Lessee shall submit for Lessor's approval the identity of any replacement management agent. Lessee shall also submit such additional information about the background, experience and financial condition of any proposed management agent as is reasonably necessary for Lessor to determine whether the proposed management agent meets the standard for a qualified management agent set forth in this Lease. If the proposed management agent meets the standard for a qualified management agent set forth above and has at least five (5) years’ of successful experience managing affordable multi-family developments financed with low-income housing tax credits, then, subject to any approval required by HUD, Lessor shall approve the proposed management agent by notifying Lessee in writing. Unless the proposed management agent is disapproved by Lessor within thirty (30) days, which 107

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disapproval shall state with reasonable specificity the basis for disapproval, or is otherwise disapproved by HUD, it shall be deemed approved by Lessor. If the proposed management agent is disapproved by Lessor for failing to meet the standard for a qualified management agent or requirements set forth above, Lessee shall submit for Lessor's approval a new proposed management agent within thirty (30) days following Lessor's disapproval. Lessee shall continue to submit proposed management agents for Lessor approval until the Lessor (and, to the extent applicable, HUD) approves a proposed management agent. Lessor acknowledges that the Limited Partner has the right under the Partnership Agreement to direct the General Partner to remove the management agent.

Lessee agrees to give Lessor notice of the proposed replacement management agent, and Lessor agrees that it will not unreasonably withhold consent to same if the replacement management agent has the qualifications set forth in this Section and is acceptable to Limited Partner and, if applicable, HUD.
(d) Periodic Performance Review. Lessor reserves the right to conduct an annual (or more frequent, if deemed reasonably necessary by Lessor) review of the management practices and financial status of the Development (including, but not limited to, a review of Management Agent's performance) with reasonable notice. The purpose of each periodic review will be to enable Lessor to determine if the Development is being operated and managed in accordance with the requirements and standards of this Lease.

Lessee shall cooperate with Lessor in such reviews.
(e) Replacement of Management Agent. If, as a result of a periodic review, Lessor determines, in its reasonable judgment, that: (i) the Management Agent has materially failed to operate the Development in accordance with the HUD Requirements, or (ii) the Development is not being operated and managed in accordance with any of the other material requirements and standards of this Lease as a result of acts or omissions of Management Agent (each, a “Material Management Violation”), Lessor shall deliver notice to Lessee and the Limited Partner of its intention to cause replacement of Management Agent, including the reasons therefor specified in reasonable detail. After receipt by Lessee of such written notice, Lessor and Lessee shall meet in good faith to consider methods for remedying the Material Management Violation. If after a reasonable period not to exceed thirty (30) days from the date of Lessor's initial notice, Lessor determines that Lessee and Management Agent have not remedied the Material Management Violation, then subject to any required approval of the Limited Partner and Leasehold Mortgagees, Lessor may require replacement of Management Agent. If, after the above procedure, Lessor delivers a written notice to Lessee and the Limited Partner requiring the replacement of Management Agent, then subject to applicable notice and cure provisions provided in the Management Agreement, Lessee shall promptly dismiss Management Agent and shall appoint as the replacement management agent a Person meeting the standards and requirements for a management agent set forth above and approved by Lessor and HUD (if required pursuant to the HUD Requirements) in accordance with this Lease. To the extent applicable, such replacement management agent shall also be subject to approval by Leasehold Mortgagees and the Limited Partner, and Lessor shall cooperate with such entities in connection with the selection of a new management agent. Lessee's failure to remove the Management Agent in accordance with the provisions of this Section shall constitute an Event of Default by Lessee under this 108

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Lease. Notwithstanding the foregoing, Lessor shall have no direct, or indirect, responsibility over management of the Development.
(f) Property Management Agreement. Any contract for the operation or management of the Development entered into by Lessee shall provide that such contract can be terminated as set forth above. Lessee shall not rely on Lessor's approval (if any) of such contract as a representation regarding the enforceability or business advantage of such contract(s). Lessor approval shall merely constitute satisfaction of the condition set forth in this Section.

Section 5.8 Annual Operating Budget; Monitoring Fee. The initial approved annual operating budget for the Development (“Annual Operating Budget”) is attached hereto as Exhibit G. By not later than sixty (60) days prior to the beginning of each fiscal year of Lessee during the Term, Lessee shall provide a proposed Annual Operating Budget that includes, without limitation, projected revenue, expenses, debt service, and reserve deposits and withdrawals, to Lessor for Lessor’s review and approval. Lessee may not make material changes to the Annual Operating Budget without the Lessor's prior written approval, which shall not be unreasonably conditioned, withheld or delayed. For the purpose of this Section 5.8, a “material change” shall mean a change in any particular line item exceeding 10% in value, and aggregate changes to the budget equaling 10% or more of the total annual budget. Each year during the Term, by not later than the date that Lessee is obligated to submit the Annual Operating Budget, Lessee shall pay to Lessor a fee in the amount of Fifteen Thousand Dollars ($15,000), increasing at the rate of three percent (3%) per year (“Monitoring Fee”), to defray Lessor’s costs to review the Annual Operating Budget, Lessee’s calculation of Lessee’s Base Rent payment obligation under this Lease, and Lessee’s compliance with the occupancy, affordability, and other restrictions set forth in the Authority Documents.

Section 5.9 Reserve Requirements. Lessee shall establish and maintain such reserve(s), and shall utilize such reserve(s), in accordance with the Partnership Agreement and this Lease, subject to any applicable HUD Requirements, TCAC Requirements, and requirements of Approved Financing. Any withdrawals from the operating and replacement reserves for the Development shall be in accordance with the requirements of the Approved Financing and shall require Lessor's prior written approval, which shall not be unreasonably withheld or delayed; provided, however, that Lessor’s approval shall not be required for replacement reserve withdrawals (i) equal to or less than $5,000 individually or $25,000 in the aggregate per annum, (ii) identified as line-item withdrawals in the Annual Operating Budget approved by Lessor, or (iii) necessary to pay for required emergency repairs; provided, however, the total aggregate amount of replacement reserve withdrawals per annum that may be used for emergency repairs without Lessor consent shall not exceed $25,000. Lessor shall approve or disapprove of any request for a withdrawal from a reserve within three (3) business days.

Notwithstanding any contrary provision of this Lease or the Partnership Agreement: (i) annual deposits to the replacement reserve shall be equal to at least $500 per unit, (ii) for the purpose of determining Lessee’s Base Rent payment obligations under this Lease, the Project operating expense and debt service reserve may be replenished to equal an amount not to exceed three (3) months’ projected operating expenses and debt service, (iii) there shall be no capitalized replacement, operating expense or debt service reserve, lease-up or transition reserve, and (iv) 109

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absent Lessor’s prior written consent, the balance in the replacement reserve, the operating reserves, and all other reserves established for the Development shall remain with the Development upon any Transfer, sale, assignment, conveyance, or other transfer of the Development, this Lease, or any ownership interest in Lessee.

Section 5.10 Reserved.

ARTICLE 6.

RENTS; PAYMENTS
Section 6.1 Base Rent. Lessee shall pay annual rent (“Base Rent”) to Lessor in the amount equal to the greater of One Dollar ($1) per year or the amount set forth in this Section commencing upon the Commencement Date and on January 1 of each succeeding Lease Year until the expiration of the Term or the termination of this Lease. Commencing upon completion of Project construction as evidenced by the City’s issuance of a final certificate of occupancy or equivalent for the Project, the amount of annual Base Rent payable hereunder shall be the amount equal to Lessor’s share of Residual Receipts as determined pursuant to the terms set forth in subsections 6.1.1, 6.1.2 and 6.1.3; provided however, the aggregate Base Rent payable pursuant to this Lease shall not exceed the sum equal to [___________________ Dollars ($_________) increased by ____%] per year for each year during the Term, commencing on the Commencement Date (the “Rent Cap”). Once the aggregate Base Rent paid by Lessee during the Term equals the Rent Cap, no additional Base Rent will be payable hereunder; provided however, Lessee shall remain obligated to pay all Additional Rent, including without limitation, all Impositions, throughout the Term. The aggregate Base Rent payable pursuant to this Section shall be established by an appraisal of the value of the Land as of the Commencement Date.

6.1.1 Annual Payments from Residual Receipts. Annual payments of Base Rent shall be due and payable in the amount equal to [____________ Dollars ($_____)] which is equal to ten percent (10%) of the appraised value of the Property determined as of the Commencement Date. Fifty percent (50%) of Project annual residual receipts shall be paid toward Base Rent during each Lease Year; provided however, such percentage share may be reduced on a pro rata basis if other public agencies provide Project financing payable on a residual receipts basis. Any unpaid portion of Base Rent payable shall accrue, and shall bear interest at [ percent (___%)] per annum which is the Applicable Federal Rate in effect as of the Commencement Date.

6.1.2 Treatment of Certain Expenses for Calculation of Residual Receipts. For the purpose of calculating residual receipts, the following expenses are subject to the following limitations: (i) the annual partnership management fee payable prior to the calculation of residual receipts shall be limited to Twenty-Five Thousand Dollars ($25,000), increasing at three percent (3%) per year, (ii) the cash portion of the developer fee shall be limited to Two Million, Five Hundred Thousand Dollars ($2,500,000) or such greater amount that CTCAC permits to be paid as an upfront developer fee paid from construction sources, (iii) any deferred portion of the developer fee shall be payable only from Lessee’s share of residual receipts except as provided in Section 4.4, (iv) the property management fee payable prior to the calculation of residual receipts shall be capped at $531 per unit per year increasing at the CPI for All Urban Consumers (“CPI-U”) for the San Francisco Area commencing in 2021, (v) the annual asset management fee 110

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payable to the Investor Limited Partner prior to the calculation of residual receipts shall be limited to Seven Thousand Five Hundred Dollars ($7,500), increasing at three percent (3%) per year, shall be payable only during the Fifteen Year Compliance Period, and any accrued but unpaid portion of the asset management fee shall be payable only from Lessee’s share of residual receipts, (vi) replacement reserve deposits made prior to the calculation of residual receipts shall be limited to $500 per unit per year, and (vii) operating/debt service reserve deposits made prior to the calculation of residual receipts shall be limited to the amount necessary to replenish such reserve to the amount equal to three (3) months’ anticipated operating expenses and debt service.

The following expenses will be payable from Lessee’s share of residual receipts: (i) any incentive management fee, (ii) any amount in excess of the permitted partnership management fee, asset management fee, or property management fee, including any unpaid and accrued portion of such fees, (iii) deferred developer fees and interest on any deferred developer fee (except as provided in Section 4.4), (iv) contributions to reserve accounts in excess of the amounts specified in this Lease, (v) expenses paid with withdrawals from reserve accounts, (vi) distributions to partners, (vii) debt service or repayment of sponsor or general partner construction loans, and (viii) depreciation, amortization, depletion, and other non-cash expenses.

In the event of any inconsistency between the Partnership Agreement, the LDDA, and this Lease with respect to the payment of Base Rent, including without limitation, provisions pertaining to the calculation of residual receipts or distribution of Project net cash flow, this Lease shall control.

6.1.3 Refinancing/Resyndication. Fifty percent (50%) of Net Proceeds of Project refinancing or resyndication shall be used to make a payment toward any accrued and unpaid Base Rent in accordance with this paragraph and any additional provisions set forth in the this Lease. For purposes of this paragraph “Net Proceeds” means all proceeds of refinancing or resyndication less: (a) the amount used to repay the refinanced debt, (b) the reasonable out-of- pocket expenses Lessee is required to pay to third parties in connection with the refinancing or resyndication, (c) the reasonable costs paid by Lessee to rehabilitate, construct and install capital improvements to the Project as approved by Lessor’s advance written consent (including without limitation reasonable architects’ and engineers’ fees incurred in connection with such capital improvements), (d) any reasonable increase in Project reserves that Lessee is required to fund as a condition to such refinancing or resyndication, provided that Lessee actually funds such reserves and such reserves are held for Lessee’s benefit by a third-party financial institution, (e) if applicable, the reasonable amount required to be paid to purchase the Investor Limited Partner’s interest in Lessee provided that such amount does not exceed the fair market value of such interest as reasonably and customarily determined for such interests in partnerships that own and operate affordable housing developments financed with low-income housing tax credits and located in the greater San Francisco Bay Area, and (f) payment for such other purposes as Lessor may approve in writing in the exercise of Lessor’s sole discretion. If other public agency lenders require payment of Net Proceeds, then Net Proceeds shall be allocated among Lessor and such lenders pro rata in proportion to each lender’s financial contribution to the Project.

Section 6.2 Additional Rent. In addition to the Base Rent specified in Section 6.1, any and all of the payments that Lessee is required to make hereunder to or for the benefit of Lessor 111

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shall be deemed to be “Additional Rent.” All such Additional Rent shall be payable in accordance with the provisions of this Lease pertaining to such Additional Rent.

Section 6.3 Payments. All Base Rent and other sums, if any, due Lessor hereunder shall be paid by Lessee to Lessor at the address of Lessor set forth hereinafter for notices, or to such other person and/or at such other address as Lessor may direct by written notice to Lessee, without notice or demand, and without abatement, deduction or set off.

Section 6.4 Audit; Inspection of Books and Records. By not later than 120 days after the end of each fiscal year of Lessee, Lessee shall deliver to Lessor financial statements for the prior fiscal year, including without limitation, an income and expense statement for the Development and an accounting of deposits to and withdrawals from the Development reserves, accompanied by an independent audit prepared by a certified public accountant in accordance with generally accepted accounting principles. Lessor shall have the right to inspect and audit Borrower's books and records concerning the Development.

ARTICLE 7.

TAXES AND OTHER IMPOSITIONS; UTILITIES
Section 7.1 Payment of Impositions; Possessory Interest Tax. Lessee shall pay all Impositions prior to delinquency, including without limitation, all applicable possessory interest taxes; provided that if installment payments are permitted by law for any Imposition, Lessee may pay or cause to be paid such installments prior to the applicable delinquency date. Upon Lessor’s written request, Lessee shall deliver to Lessor evidence satisfactory to Lessor of payment of all Impositions. During the first and last years of the Term, all Impositions that become payable during such year shall be ratably adjusted between Lessor and Lessee on a per diem basis in accordance with the respective portions of the applicable calendar year or assessment period.

Section 7.2 Contested Taxes and Other Impositions.
(a) Lessee, at its sole cost and expense, in its own name or in the name of Lessor, may contest the validity or amount of any Imposition relating to all or any portion of the Leased Premises or the Improvements, in which event the payment thereof may be deferred during the pendency of such contest, if diligently prosecuted. (b) As may be necessary or desirable, Lessor or Lessee, as applicable, upon the request of the other party, shall use reasonable efforts to assist in any such proceeding to contest the validity or amount of any Imposition. (c) Nothing contained in this Section 7.2 shall be construed to allow any contested Imposition to remain unpaid for such time that will permit the Leased Premises or the Improvements, or any part thereof, to be sold by any Governmental Authorities for the non-payment of such Imposition. Lessee shall promptly furnish Lessor copies of all notices, appeals, pleadings, motions and orders in any proceedings commenced with respect to any contested Imposition. During such contest, Lessee shall (by the payment of such disputed taxes, assessments, or charges, if necessary) prevent any advertisement of 112

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tax sale, any foreclosure of, or any divesting thereby of any interest of Lessor or Lessee in the Leased Premises or the Improvements.

Section 7.3 Valuation Assessment; Property Tax Exemption. If applicable, Lessee, at its expense, may submit applications for reduction to the assessed valuation of the Leased Premises or the Improvements for any year for the purpose of reducing taxes thereon. Lessee shall be permitted to apply for and utilize any applicable exemption from property taxes applicable to the Leased Premises or the Improvements.

Section 7.4 Failure to Pay Impositions. If Lessee fails to pay any Impositions before the same become delinquent, or as otherwise required pursuant to Section 7.2 hereof, Lessor, at its election, may pay such Impositions (but shall not be obligated to pay same), together with any interest and penalties due thereon, and the amount so paid by Lessor shall be repayable to Lessor by Lessee as Additional Rent within thirty (30) days after written notice given by Lessor to Lessee.

Section 7.5 Utilities. Lessee shall pay or cause to be paid all charges for all utilities used, rendered or supplied upon or in connection with the Leased Premises or the Improvements and the development and operation thereof, including, but not limited to, all charges for gas, electricity, light, heat or power, all telephone, wireless and other communications services, all water rents and sewer service charges, all recycling and composting charges, and all solid waste fees or charges levied or charged against the Leased Premises or the Improvements during the Term; including utilities supplied directly to Tenants for use in connection with the occupancy of their respective residential units. Lessor shall have no responsibility for the payment of utility costs.

ARTICLE 8.

INSURANCE
Section 8.1 Lessee's Insurance. Throughout the Term, Lessee shall keep and maintain in force, at no cost or expense to Lessor, the following insurance:
(a) Leased Premises Insurance. Property insurance covering all risks of physical loss or damage to the Leased Premises and the Improvements, with limits of not less than 100% of the “full replacement value” thereof. Such policies shall be provided with the perils insured under the standard “Causes of Loss--Special Form”(the “Special Form”) and shall include, but shall not be limited to, coverage for fire, extended coverage, vandalism, malicious mischief and windstorm. Perils customarily excluded from the Special Form, e.g., earthquake and flood, may be excluded. The amount of such insurance shall be adjusted by reappraisal of the Development by the insurer or its designee not more than once every five (5) years following completion of construction of the Improvements, if requested in writing by Lessor. Lessee’s property insurance shall be endorsed to provide coverage to Lessor as lender’s loss payee as its interests may appear. (b) General Liability Insurance. Commercial general liability and automobile liability insurance, covering loss or damage resulting from accidents or occurrences in, on, about, or in connection with the Leased Premises or the Improvements 113

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or any work, matters or operations under, or in connection with, or related to this Lease, with bodily injury, death and property damage combined single limit liability of not less than Five Million Dollars ($5,000,000) per occurrence and Ten Million Dollars (10,000,000) annual aggregate, for general liability, and Five Million Dollars ($5,000,000) combined single limit including coverage for owned, hired, and non-owned and any other vehicle used in connection with the development, operation, or management of the Improvements for automobile liability. Coverage under such policies shall be written on an occurrence basis, shall name the Indemnitees as additional insureds, and shall include, but shall not be limited to, coverage for bodily injury, property damage, products, completed operations and contractual liability, and shall not exclude coverage for XCU perils (explosions, collapse, or damage to underground property). (c) Workers' Compensation Insurance. Lessee shall carry or cause to be carried Workers' Compensation insurance with limits as required by the State of California and Employer's Liability insurance with limits of Three Million Dollars ($3,000,000) per accident per person for bodily injury or disease.
(d) Builders' Risk Insurance. During the course of the construction of the Improvements, or any Alterations or Major Alterations, Lessee shall provide builders' risk insurance for not less than the value of the construction contract, insuring the interests of Lessor, Lessee and any contractors and subcontractors. Coverage shall be for the same perils required in subsection (a) above. Lessor shall be named as Loss Payee as its interests may appear.
(e) Professional Liability/Errors and Omissions. Lessee shall require the Project architect, engineer, and general contractor to maintain Professional Liability/Errors and Omissions (“E&O”) insurance with limits not less than Two Million Dollars ($2,000,000) each claim. Lessor’s Risk Manager may approve lower limits for specialty engineering firms and other professionals that will provide a limited scope of services for the Project. Certificates evidencing this coverage must reference both the Lessee and the Indemnitees. If the professional liability/errors and omissions insurance is written on a claims made form: (i) the retroactive date must be shown and must be before the Effective Date, (ii) insurance must be maintained and evidence of insurance must be provided for at least three (3) years after completion of Project construction, and (iii) if coverage is cancelled or non-renewed and not replaced with another claims made policy form with a retroactive date prior to the Effective Date, Lessee must purchase, or require the provision of, extended period coverage for a minimum of three (3) years after completion of construction.
(f) Pollution Legal Liability Insurance. Lessee shall require the contractor to carry pollution liability insurance to provide third-party coverage for bodily injury, property damage, cleanup, and related defense costs with limits no less than $2,000,000 per occurrence or claim and $4,000,000 policy aggregate. If the policy provides coverage on a claims made basis, the retroactive date must be shown and must be before the date of the Agreement or the beginning of the contract work. 114

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Section 8.2 General Requirements. All policies described in Section 8.1 above shall include Lessee as named insured, and shall name the Indemnitees as additional insureds. All policies described in Section 8.1 above shall contain: (a) the agreement of the insurer to notify Lessor of any material change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of such material change, cancellation, termination or nonrenewal; (b) an agreement that such policies are primary and non-contributing with any insurance that may be carried by Lessor or any Indemnitee; (c) a provision that no act or omission of Lessee shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (d) a waiver by the insurer of all rights of subrogation against the Indemnitees in connection with any loss or damage thereby insured against.

Section 8.3 Adjustments. The limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not more than once in every five (5) year period following completion of construction of the Improvements) to address changes in circumstances, including, but not limited to, changes in inflation and the litigation climate in California, provided that such adjustments are consistent with generally prevailing requirements for residential multi-family developments similar to the Development and located in the Alameda-Contra Costa County area. Within thirty (30) days following Lessor’s delivery of written notice of any such adjustments, Lessee shall provide Lessor with amended or new insurance certificates and endorsements evidencing compliance with such adjustments. Notwithstanding the foregoing, Lessee shall not be required to provide such adjusted coverage unless approved by the Limited Partner and by all holders of Approved Financing if such consent is required.

Section 8.4 Additional Insured Coverage; Liability Limits. For all liability insurance required by this Lease, except E&O and Workers’ Compensation policies, Lessee (and Lessee’s contractors, as applicable) shall obtain endorsements that name the Indemnitees as additional insured in the full amount of all applicable policies, notwithstanding any lesser minimum limits specified in this Lease. The additional insured endorsements for the general liability coverage shall provide coverage at least as broad as Insurance Services Office (ISO) Form No. CG 20 09 11 85 or CG 20 10 11 85, or if used together, at least as broad as CG 2010 10 01 and CG 2037 10 01; but shall not be provided using the following forms: CG 20 10 10 93 or 03 94. This Lease requires Lessee (and Lessee’s contractors) to obtain and provide for the benefit of the Indemnitees, additional insured coverage, as applicable, in the same amount of insurance carried by Lessee (or Lessee’s contractors, as applicable), but in no event less than the minimum amounts specified in this Lease. In the event that Lessee (or Lessee’s contractors as applicable) obtains insurance policies that provide liability coverage in excess of the amounts specified in this Lease, the actual limits provided by such policies shall be deemed to be the amounts required under this Lease. Without limiting the foregoing, the limits of liability coverage specified in this Lease are not intended, nor shall they operate, to limit Lessor’s or the Indemnitees’ ability to recover amounts in excess of the minimum amounts specified in this Lease.

Section 8.5 Evidence of Insurance. Proposed certificates of insurance and endorsements for all insurance required to be maintained by Lessee under this Article 8 shall be furnished by Lessee to Lessor not less than twenty (20) days prior to the Commencement Date to enable Lessor to review and approve the same. Lessee shall provide final certificates and 115

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endorsements for all required insurance policies prior to the Commencement Date. Upon Lessor’s request, Lessee shall, within thirty (30) days of the request, provide or arrange for the insurer to provide to Lessor, complete certified copies of all insurance policies required under this Agreement. Lessor’s failure to make such request shall not constitute a waiver of the right to require delivery of the policies in the future, and Lessor reserves the right to require complete, certified copies of all required insurance policies, including endorsements demonstrating the coverage required by this Lease at any time.

Section 8.6 Failure to Maintain. If Lessee fails to maintain any insurance required under this Lease, Lessor, at its election, may procure such insurance as may be necessary to comply with the above requirements (but shall not be obligated to procure same), and Lessee agrees to repay to Lessor as Additional Rent the cost of such insurance.

Section 8.7 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A: VII, and must be with insurers admitted in the State of California.

Section 8.8 Payment and Performance Bonds. Prior to the Commencement Date, Lessee shall provide evidence that its contractor has obtained payment and performance bonds naming Lessor as co-obligee and meeting the requirements set forth in Section 9.2(b)(2) below.

ARTICLE 9.

MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS
Section 9.1 Maintenance of Leased Premises. During the Term, at Lessee's sole cost and expense, Lessee shall keep and maintain the Leased Premises, the Improvements and all appurtenances thereto, and all adjacent sidewalks, entrances, walkways, and driveways to the Leased Premises and the Improvements, in good and safe order, condition and repair. All such maintenance and repair shall conform to and comply with all applicable Legal Requirements, as any of such requirements may otherwise be amended from time to time.

Section 9.2 Alterations to Leased Premises.
(a) Following construction of the Improvements, Lessee may make any additions, alterations or changes (“Alterations”) in or to the Improvements without Lessor's consent subject, however, to the following conditions:
(1) No Alterations shall be made that are likely to impair the structural soundness of the Improvements;
(2) No Alterations shall be undertaken that are prohibited by, or would cause the Leased Premises, the Improvements, Lessee or Lessor to be in breach or violation of Section 5.4 of this Lease or any Legal Requirements; (3) No Alterations shall be undertaken until Lessee shall have procured all permits and authorizations of all applicable Governmental Authorities and all required consents of any Leasehold Mortgagee and the Limited Partner, and the consent of Lessor if required pursuant to subsection (b) below. If requested by Lessee, Lessor shall join in the application for such 116

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permits or authorizations, and shall use reasonable efforts to assist Lessee to obtain such permits or authorizations;
(4) All Alterations shall be performed in good and workman- like manner and in compliance with Sections 3.1, 3.3 and 3.5 of this Lease, all applicable Legal Requirements and all applicable Insurance Requirements. (5) Major Alterations. In addition to the requirements set forth above, once construction of the Development is completed, Lessee shall not make any Alteration to the Leased Premises or the Improvements that (i) has a cost greater than One Hundred Thousand Dollars ($100,000), (ii) involves the demolition of any portion of the Improvements, (iii) involves a change to the exterior appearance of the Improvements, (iv) involves any change to the Unit count; or (v) involves any material change to common areas or spaces designated for tenant services (each referred to as “Major Alterations”), without first presenting to Lessor complete plans and specifications therefor and obtaining Lessor's written consent thereto (which consent shall not unreasonably be conditioned, withheld or delayed). All Major Alterations shall be made only in good and workmanlike manner using new materials of the same quality as the original improvements, and in compliance with Sections

3.1, 3.3 and 3.5 of this Lease, all applicable Legal Requirements, all applicable Insurance Requirements, and all applicable building codes. In addition, prior to commencing construction of any Major Alterations, Lessee shall satisfy all of the following conditions:
(i) Plans and Specifications. Lessee shall submit to Lessor for Lessor's approval plans and specifications for the Major Alterations. Lessor shall approve or disapprove (in Lessor's reasonable discretion) such plans and specifications in writing within sixty (60) days after submission. Any disapproval shall state with specificity the reasons for such disapproval. If rejected by Lessor in whole or in part, Lessee shall submit new or corrected construction plans within thirty (30) days after notification of Lessor's disapproval. Lessor shall then have thirty (30) days to review and approve Lessee's new or corrected construction plans. Lessor's failure to either approve or disapprove the construction plans within such thirty (30) day period shall be deemed denied. The provisions of this Section relating to time periods for approval, rejection, or resubmission of new or corrected construction plans shall continue to apply until construction plans have been approved by Lessor in writing. Only upon approval of the construction plans shall this condition be met. In addition, in the event that prior to, or during the course of, construction, Lessee desires to make any material change in the Major Alterations from the approved plans and specifications, Lessee shall, prior to making such change, submit to Lessor such plans or other information which document the desired change. Lessor shall approve or disapprove such change within thirty (30) days of its submission to Lessor. Any disapproval shall state with reasonable specificity the basis for such disapproval. Unless such change is approved, the previously approved plans and specifications shall remain in 117

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effect. Nothing in this paragraph is intended to modify any approval of construction plans required to be issued by the City.
(ii) Performance and Payment Bonds. Prior to commencing construction of any Major Alterations, Lessee shall obtain and provide to Lessor evidence of payment and performance bonds issued by a reputable insurance company licensed to do business in California, and named in the current list of “Surety Companies Acceptable on Federal Bonds” as published in the Federal Register by the Audit Staff Bureau of Accounts, U.S. Treasury Department, and reasonably acceptable to Lessor, each in a penal sum of not less than one hundred percent (100%) of the scheduled cost of the applicable scope of work. Lessor shall be named as a dual obligee under such bonds.

Within ten (10) days after receipt, Lessor shall review and approve or disapprove the bonds, providing the bonds meet the requirements of Lessor as to form, content, and issuer, and shall notify Lessee of any deficiency. If the bonds are not approved, Lessee shall resubmit updated bonds within five (5) days after receipt of notice. The review and submittal periods shall continue to apply until the bonds are approved by Lessor. Only upon final approval shall this condition be met.
(iii) Contractor(s). Any Major Alterations shall be performed by a general contractor (a “General Contractor”) reasonably satisfactory to Lessor, having the reputation, experience, financial capability and qualification for serving as general contractor for similar developments in the California.

Lessee shall submit for Lessor's approval the identity of any proposed General Contractor and such additional information about the background, experience, and financial condition of any proposed General Contractor as is reasonably necessary for Lessor to determine whether the proposed General Contractor meets the standard for a qualified General Contractor set forth above. If the proposed General Contractor meets such standard, Lessor shall approve or disapprove the proposed General Contractor by notifying Lessee in writing within thirty (30) days of the submission. Any disapproval shall state with reasonable specificity the basis for disapproval
(iv) Construction Contracts. Lessee shall enter into contracts for the construction of the Major Alterations with the General Contractor as set forth above. Those contracts shall provide for the work to be performed for fixed and specified maximum amounts or allowances pursuant to the approved plans and specifications. Within ten (10) days following the issuance of a building permit for construction of any Major Alterations, Lessee shall submit a copy of all construction contracts for such construction to Lessor, for the purpose of determining: (a) that the amount of the costs of work has been clearly fixed and determined and is consistent with Lessee's available funds for such construction; (b) that no changes to the provisions of the contract which, pursuant to this Lease require the approval of Lessor shall be made without the prior consent of Lessor; (c) that the covenants regarding equal opportunity, prevailing wages, living wages, first source hiring, nondiscrimination, and 118

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conformity with HQS requirements set forth in this Lease are included as requirements in the contract and may not be modified without Lessor consent; and (d) that Lessor is named as a specified third-party beneficiary with a direct right of enforcement under such contract. Unless Lessor notifies Lessee in writing within ten (10) days following the submittal of the contract(s) that the contract has been disapproved, it shall be deemed approved. Lessor's approval of the construction contract shall in no way be deemed to constitute approval of, or concurrence with, any other term or condition of the construction contract. Lessor's approval shall merely constitute satisfaction of the conditions set forth in this Section. Lessee shall not rely on Lessor's approval of the construction contract(s) as a representation regarding the enforceability or business advantage of the construction contract(s).
(v) Building Permit. Lessee shall deliver a copy of the building permit issued by the City for the Major Alterations.

Section 9.3 Indemnification. Notwithstanding any other provision of this Lease to the contrary (except that Hazardous Materials Claims shall be governed by Section 11.3), Lessee shall indemnify, defend (by counsel reasonably satisfactory to Lessor), and hold harmless the Indemnitees from and against any and all claims, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorneys' fees and expenses (collectively “Claims”), arising from or relating to Lessee's obligations under this Lease, the development or operation of the Improvements, or the violation of any Legal Requirements, except to the extent caused by the gross negligence or willful misconduct of the Indemnitees. Notwithstanding the foregoing or any other indemnity provision of this Lease, in no event shall any Leasehold Mortgagee or any Subsequent Owner have any obligation to indemnify the Indemnitees for any Claims that arise in connection with any acts or omissions of Lessee prior to the date that such Leasehold Mortgagee or Subsequent Owner acquires Lessee's interest in this Lease, and Lessee shall remain fully liable for any such indemnification obligation. The provisions of this Section

9.3 shall survive the expiration or sooner termination of this Lease.

ARTICLE 10.

PERMITTED MORTGAGES
Section 10.1 Right to Encumber. During the Term, Lessee shall have the right to encumber Lessee’s Estate with Leasehold Mortgages executed pursuant to the Approved Financing; provided, however, all Leasehold Mortgages shall remain subordinate and inferior to Lessor's right, title, and interest in the Leased Premises and, except as otherwise provided in this Lease, upon acquisition of the Leased Premises, any foreclosing Leasehold Mortgagee's rights to the Leased Premises shall be subject to the terms and provisions of this Lease. Lessor and Lessee agree that, so long as any Leasehold Mortgage encumbers the Improvements or Lessee’s leasehold interest in the Land, the prior written consent of the Leasehold Mortgagee(s) shall be required (to the extent required by such Leasehold Mortgagee's Leasehold Mortgage): (a) in connection with any agreement by Lessor and Lessee (or their respective successors and assignees) to cancel, waive, terminate, surrender, amend or modify this Lease, (b) with respect to 119

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any acceptance by Lessor of any attempted cancellation, termination, or surrender of this Lease or the Leased Premises on the part of Lessee, and/or (c) with respect to any termination or cancellation of the Lease by Lessee and/or Lessor pursuant to Articles 12 and 13 of the Lease, or any other provision of the Lease which gives Lessee and/or Lessor an express right to terminate or cancel the Lease. Any proposed or attempted amendment, waiver, cancellation, surrender, or termination of this Lease without the prior written consent of any Leasehold Mortgagee whose consent is required pursuant to the terms of such Leasehold Mortgagee’s Leasehold Mortgage shall be void and of no force or effect.

Section 10.2 Notice to Leasehold Mortgagees and Limited Partner. Lessor shall provide a copy of all notices of default or other notices that Lessor may give to or serve in writing upon Lessee pursuant to this Lease to the Limited Partner, and during any period in which a Leasehold Mortgage is in place, to any Leasehold Mortgagee of which Lessor has received notice from Lessee. The address of the Leasehold Mortgagee originally designated in the Leasehold Mortgage may be changed upon written notice delivered to Lessor in the manner specified in Section 19.12 below. The address of the Limited Partner is set forth in Section 19.12. Lessor's failure to give any such notice to any such Leasehold Mortgagee or Limited Partner shall not constitute an Event of Default hereunder; provided, however, that the Leasehold Mortgagee cure period shall not commence until such notice is received by Leasehold Mortgagee and the Limited Partner’s cure period shall not commence until such notice is received by the Limited Partner.

Section 10.3 Cure Rights of Leasehold Mortgagees and Limited Partner. (a) General Right to Cure. Each Leasehold Mortgagee and the Limited Partner shall have the right, but not the obligation, at any time prior to termination of this Lease and without payment of any penalty other than the interest on unpaid rent, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments, to make any repairs and improvements, to do any other act or thing required of Lessee hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent a termination of this Lease as the same would have been if made, done and performed by Lessee instead of by a Leasehold Mortgagee or the Limited Partner, as applicable.
(b) Delegation of Lessee's Rights. Lessee may delegate to a Leasehold Mortgagee the authority to exercise any or all of Lessee's rights hereunder, including, but not limited to, the right of a Leasehold Mortgagee to participate (in conjunction with or to the exclusion of Lessee) in any proceeding, arbitration or settlement involving condemnation or eminent domain affecting Lessee's interest in the Leased Premises and the Improvements, but no such delegation shall be binding upon Lessor unless and until either Lessee or the applicable Leasehold Mortgagee provides to Lessor a true copy of a written instrument effecting such delegation, in recordable form. Any delegation of authority to a Leasehold Mortgagee pursuant to this paragraph shall not diminish or be diminished by any right that Leasehold Mortgagees have pursuant to this Lease to exercise particular rights of Lessee under this Lease if Lessee has failed to exercise such rights. 120

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(c) Limitation on Lessor's Right to Terminate. All rights of the Lessor to terminate this Lease as the result of the occurrence of any event of default shall be subject to, and conditioned upon (i) Lessor having first given the Leasehold Mortgagees and the Limited Partner notice of such event of default as provided in Section 10.2 above, and (ii) the Leasehold Mortgagees and the Limited Partner, as applicable, having failed to remedy such default, or to have acquired Lessee’s interest in the Leased Premises and the Improvements, or to have commenced foreclosure or other appropriate proceedings in the nature thereof within the time and manner set forth in Section 10.3(d) or 10.3(e) below, as applicable. Notwithstanding any contrary provision of this Lease, Lessor agrees that during the period between the Commencement Date and the expiration of the Compliance Period, Lessor shall not terminate this Lease without providing Limited Partner with the notice and cure rights set forth herein.
(d) Leasehold Mortgagees' and Limited Partner’s Options Upon Curable Default. If any event of default under this Lease occurs that is of a curable nature, and is not cured by Lessee within the applicable cure period provided in this Lease, Lessor shall not terminate this Lease, appoint a receiver, or institute a collection or enforcement action unless it first gives written notice of such event of default to the Leasehold Mortgagees and the Limited Partner, and thereafter, the Leasehold Mortgagees and the Limited Partner, as applicable, have failed to (i) remedy any such monetary default within 30 days of delivery of such written notice; or (ii) remedy any such nonmonetary default within 30 days of delivery of such written notice, provided that if the nature of such nonmonetary default is such that it cannot be cured within 30 days, the Leasehold Mortgagees and Limited Partner shall have an additional 60 days to cure such default provided that a cure has been initiated and is being diligently pursued, and provided further that (a) if the Limited Partner determines that the cure of such default requires the removal and replacement of the General Partner, then the Limited Partner shall have 90 days to cure the default from the effective date of such removal, and (b) if a holder of a Leasehold Mortgage determines that the cure of such default requires possession of the Improvements, then the Leasehold Mortgagee shall have 90 days to commence foreclosure or other appropriate proceedings in the nature thereof and thereafter diligently prosecute such proceedings to completion.
(e) Leasehold Mortgagees' and Limited Partner’s Options Upon Non- Curable Default. Any event of default under this Lease which in the nature thereof cannot be remedied by Lessee, Leasehold Mortgagee or the Limited Partner shall be deemed to be remedied if, within 90 days of receipt of Lessor's written notice setting forth the nature of such event of default, either (a) the Leasehold Mortgagee obtains title to Lessee's interest in the Leased Premises and the Improvements in lieu of foreclosure; (b) the Limited Partner commences the removal of one or more of Lessee's general partners in accordance with the terms of the Partnership Agreement, or (c) the Leasehold Mortgagee commences foreclosure or other appropriate proceedings in the nature thereof and thereafter diligently prosecutes such proceedings to completion.
(f) No Obligation to Cure Rent or Monetary Default. Notwithstanding any provision of this Lease to the contrary, upon an event of default by Lessee, a Leasehold Mortgagee, as a condition to preventing a default termination of this Lease or to 121

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exercising foreclosure rights, shall not be required to pay any accrued or defaulted Base Rent or to pay any other accrued or defaulted monetary obligations under this Lease, whether such rents or obligations are in default or have otherwise become due and payable during pendency of any foreclosure.
(g) Prior Rent or Monetary Obligations. In addition, notwithstanding Section 6.1 to the contrary, in the event that the Leased Premises are transferred pursuant to foreclosure or other transfer in lieu of or in connection with a foreclosure of any Leasehold Mortgage, then any Leasehold Mortgagee or Subsequent Owner shall have no obligation to pay any Base Rent or other monetary obligations that are due and payable with respect to any period prior to the date of such transfer, nor shall the Leased Premises be further encumbered in any way by the obligation to pay any such previously due Base Rent or other monetary obligation.
(h) Injunction or Bankruptcy. If any Leasehold Mortgagee or Limited Partner is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, by any process or injunction or other action by any court having jurisdiction of any Insolvency Proceeding involving Lessor or Lessee, the times specified in Sections 10.3(d) and 10.3(e) above for effecting any remedy or for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of such prohibition provided that any Leasehold Mortgagee or the Limited Partner has paid any monetary obligations of Lessee under this Lease, including without limitation any monetary obligations to third parties which have become, or threaten to become, liens agains the Leased Premises or the Improvements.
(i) No Prior Hazardous Materials Claims. Notwithstanding Section 11.3 below or any other provision of this Lease to the contrary, any indemnities or other covenants of Lessee with respect to Hazardous Materials matters shall not bind or apply to any Leasehold Mortgagee or Subsequent Owner. Furthermore, any Leasehold Mortgagee or Subsequent Owner shall only be subject to the covenants of Section 11.3 of this Lease for those Claims arising out of events or conditions first occurring during the period that such Leasehold Mortgagee or Subsequent Owner holds title to the Leased Premises and the Improvements.

Section 10.4 Limitation on Liability of Leasehold Mortgagees. No Leasehold Mortgagee shall be or become liable to Lessor as an assignee of this Lease or otherwise unless it expressly assumes by written instrument executed by Lessor and Leasehold Mortgagee such liability (in which event the Leasehold Mortgagee's liability shall be limited to the period of time during which it is the owner of the leasehold estate created hereby, and no assumption shall be inferred from or result from foreclosure or other appropriate proceedings in the nature thereof or as the result of any other action or remedy provided for by such Leasehold Mortgage or other instrument or from a conveyance from Lessee pursuant to which the purchaser at foreclosure or grantee shall acquire the rights and interest of Lessee under the terms of this Lease.

Section 10.5 Estoppel Certificates. Lessor and Lessee agree that at any time and from time to time upon not less than twenty (20) days' prior written notice by the other Party, or upon request from any Leasehold Mortgagee or Limited Partner or a permitted assignee or other 122

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interested party, Lessor or Lessee will execute, acknowledge and deliver to the other Party or to such Leasehold Mortgagee or Limited Partner a statement in writing certifying (a) that this Lease is unmodified and in full force and effect, or if modified, the nature and date of such modification; (b) the date through which the Base Rents have been paid; and (c) that to the knowledge of the certifier (if such be the case), there is no default, set-off, defense or other claim against Lessor or Lessee, as applicable, other than those, if any, so specified under the provisions of this Lease. It is intended that any such statement may be relied upon by any persons proposing to acquire the interest of Lessor, Lessee or any Leasehold Mortgagee or Limited Partner, as the case may be, in this Lease or by any prospective Leasehold Mortgagee or Limited Partner or permitted assignee of any Leasehold Mortgage or Limited Partner.

Section 10.6 Registration of Leasehold Mortgagees. Lessee shall provide written notice to Lessor of the name and address of each Leasehold Mortgagee under this Lease.

Section 10.7 Approval of Lessor. Lessor's approval of a Leasehold Mortgage proposed by Lessee in connection with a refinancing plan approved by Lessor to encumber the Leased Premises will not be unreasonably withheld or delayed and will be deemed granted if not denied with specific reasons for denial within fifteen (15) days after receipt by Lessor of request for such approval by Lessee.

Section 10.8 No Modification or Termination Without Consent of Leasehold Mortgagees and Limited Partner. Lessor agrees that, without the prior written consent of each Leasehold Mortgagee and the Limited Partner (which consent shall not be unreasonably withheld, conditioned or delayed), Lessor shall have no right to (a) enter into any agreement amending, modifying, or waiving any material provision of, or terminating this Lease (except as otherwise provided herein), or (b) cancel or terminate or agree to or accept a cancellation, termination or surrender of this Lease (except in the event of default by Lessee and provided Leasehold Mortgagee and Limited Partner shall have been provided with written notice and opportunity to cure such default as set forth in Section 10.3 above, and subject to the cure periods provided in Section 10.3.

Section 10.9 New Lease. In the event of the termination of this Lease prior to the expiration of the Term due to a default of Lessee or operation of law (except by eminent domain), merger of title, or for any other reason, Lessor, upon written request from the holder of a Leasehold Mortgage, shall enter into a new lease with such holder or its designee in accordance with and upon the same terms and conditions as set forth herein, with a term equal to the then remaining balance of the Term, and with the same priority against any subleases or other interests in the Leased Premises; provided, however, upon entering into any new lease pursuant to this Section 10.9, the provisions of Section 10.3(e) through 10.3(i), and 10.4 shall apply to the new lease as if the new lease were a transfer of the leasehold pursuant to a foreclosure, or other transfer in lieu of or in connection with a foreclosure, of the Leasehold Mortgage securing the construction loan and the permanent loan. If more than one Leasehold Mortgagee is entitled to a new lease pursuant to this Section 10.9, Lessor shall enter into such new lease with the Leasehold Mortgagee with the highest lien priority.

Section 10.10 Rights on Foreclosure. Subject to the provisions of Section 18.3 below, Lessor's consent shall not be required for the exercise or enforcement by a Leasehold Mortgagee 123

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of any of its rights or remedies under a Leasehold Mortgage, including, without limitation, any foreclosure or similar proceeding or action against Lessee’s interest in the Leased Premises and the Improvements or for a subsequent transfer of the Leased Premises and the Improvements.

Any Leasehold Mortgagee or a third party nominee or designee may acquire Lessee's interest in this Lease, the Leased Premises, and the Improvements by foreclosure, deed in lieu of foreclosure or other appropriate proceedings in the nature thereof, or as a result of any other action or remedy provided for by the Leasehold Mortgage or by conveyance from Lessee, and any purchaser at foreclosure of a Leasehold Mortgage may also acquire Lessee's interest in this Lease, the Leasehold Premises and the Improvements. Upon acquisition of Lessee’s interest in the Leased Premises and Improvements by a Leasehold Mortgagee or such third party, then:
(a) Except as may otherwise expressly be provided herein, Leasehold Mortgagee or such third party shall take Lessee's interest in the Leased Premises and the Improvements subject to all of the provisions of this Lease and shall, so long as, and only so long as it shall be the owner and in possession of the leasehold estate, assume the obligations of Lessee under this Lease.
(b) Unless otherwise expressly agreed to by Lessor in a written instrument, no foreclosure, deed in lieu of foreclosure, assignment, sale, assumption of obligation, subleasing or subletting of the Leased Premises or the Improvements, or the acceptance of rent by Lessor from any assignee, sublessee, subtenant, or any other person, shall relieve, release or in any manner affect the liability of Lessee under this Lease.

Section 10.11 Lessee's Personal Property. In the event of any default by Lessee under the Lease or any loan documents, Lessor will allow Leasehold Mortgagee to enforce its lien and security interest in Lessee's personal property located at the Leased Premises and Lessor will allow Leasehold Mortgagee to assemble and remove all of Lessee's personal property located on the Leased Premises. Lessor hereby waives any landlord's lien it might hold, statutory, constitutional, contractual or otherwise, in any personal property owned or leased by Lessee and now or hereafter located on the Leased Premises. If so requested by Lessee, Lessor shall execute a waiver of any right, title or interest or right to seize any of Lessee's personal property on the Leased Premises that may be subject to a lien or security interest in favor of Leasehold Mortgagee or a seller of Lessee's personal property or creditor holding a security interest in such personal property.

Section 10.12 Two or More Leasehold Mortgagees. In the event that more than one Approved Lender exercises its rights under this Lease and there is a conflict that renders it impossible to comply with all requests of Approved Lenders, the Approved Lender whose Leasehold Mortgage would have senior priority in the event of a foreclosure shall prevail.

Section 10.13 Taking and Casualty.
(a) Lessee may not terminate this Lease pursuant to Section 12.1 or Section 13.1 as a result of a Taking or Casualty without the prior written approval of the Leasehold Mortgagees and the Limited Partner. In the event that this Lease is not terminated in accordance with Section 12.1 or Section 13.1, the Lease shall continue in full force and effect and unmodified as to the remainder of the Leased Premises, and 124

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Lessee shall have the right, but not the obligation, to rebuild and/or restore the improvements on the Leased Premises. Lessor shall have no right to terminate this Lease as a result of any Taking or Casualty or any full, partial or temporary Taking of the Leased Premises without the approval of the Leasehold Mortgagees and Limited Partner. (b) Upon receiving actual knowledge of any Taking or Casualty, Lessee shall promptly advise each Leasehold Mortgagee and the Limited Partner in writing of the facts known to Lessee regarding such Taking or Casualty. Lessor and Lessee agree that, in the event of a Taking or Casualty that does not result in the termination of this Lease, this Lease shall continue in effect as to the remainder of the Leased Premises, and the award or net proceeds from the Taking or the proceeds of insurance in connection with a Casualty (“Net Proceeds”) will be disbursed in accordance with the Lease; provided, however, that all Net Proceeds payable to Lessee or to which Lessee is otherwise entitled shall be paid to a Leasehold Mortgagee and applied in accordance with the requirements of the applicable Leasehold Mortgage.
(c) In the event of a Taking, subject to the requirements of the Leasehold Mortgages and the provisions of the following paragraph (d), the total amount to which Lessee is entitled shall be no less than the Net Condemnation Proceeds reduced by the value of Lessor’s interest in the Land and reversionary interest in the Improvements, and Lessor and Lessee shall be entitled to receive and retain such separate condemnation awards and portions of lump sum awards as may be allocated to their respective interests in any proceedings relating to a Taking (subject to the requirements of the Leasehold Mortgagees), or as may be otherwise agreed.

Section 10.14 No Encumbrance or Subordination of Lessor’s Fee Interest. (a) Lessor represents and warrants that there are no existing mortgages, deeds of trust, easements, liens, security interests, encumbrances and/or restrictions encumbering Lessor's fee interest in the Leased Premises other than those recorded as of the date of this Lease. Other than the Use Agreement, the Regulatory Agreement, and if applicable, the TCAC Restrictive Covenant, Lessor's fee interest shall not hereafter be subordinated to, or made subject to, any mortgage, deed of trust, easement, lien, security interest, encumbrance and/or restriction except for an encumbrance that expressly provides that it is and shall remain subject and subordinate at all times in lien, operation and otherwise to this Lease and to all renewals, modifications, amendments, consolidations and replacements hereof (including new leases entered into pursuant to Section 10.8 and extensions); provided that Lessor shall ensure that, as a condition to the Lessor's agreement to such encumbrance, the holder shall enter into a non-disturbance agreement with any Leasehold Mortgagee that requests such agreement, which non- disturbance agreement shall be in form and substance acceptable to such Leasehold Mortgagee.
(b) Lessee covenants and agrees that it will not subordinate its leasehold interest in the Leased Premises to any mortgage, deed of trust, easement, lien, security interest, encumbrance and/or restriction without the prior written consent of each Leasehold Mortgagee and Lessor.
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Section 10.15 Limited Third Party Beneficiary. Each Leasehold Mortgagee and the Limited Partner shall be a third party beneficiary solely with respect to the rights and benefits granted to Leasehold Mortgagees and the Limited Partner under this Lease, but for no other purposes. Neither the Lessee nor the Lessor shall be deemed to be a third party beneficiary of the rights granted hereunder to the Leasehold Mortgagees and the Limited Partner, and no Leasehold Mortgagee nor the Limited Partner shall have any obligation to the Lessee or the Lessor to account for any decision, action or election it may take or the exercise of its rights hereunder, nor shall any Leasehold Mortgagee or the Limited Partner have any duty to the Lessee or the Lessor to exercise any right hereunder in any particular manner or order, other than that which such Leasehold Mortgagee or the Limited Partner, in its sole discretion (but in any event subject to the terms of this Lease) shall deem appropriate and in its own best interests.

Nothing in this Section is intended to or shall operate to affect Lessor’s rights and obligations in its capacity as a Leasehold Mortgagee.

Section 10.16 Lessee Delivery of Notices of Default to Lessor. Lessee shall deliver to Lessor a copy of any notice of default Lessee receives from the Limited Partner or any Leasehold Mortgagee within two (2) business days following Lessee’s receipt thereof.

ARTICLE 11.

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.1 Representations, Warranties and Covenants of Lessee. As an inducement to Lessor to enter into and to proceed under this Lease, Lessee warrants and represents to Lessor as follows, which warranties, representations and covenants will be true and correct as of the Commencement Date:
(a) Organization. Lessee is a duly organized, validly existing California limited partnership, is in good standing under the laws of the State of California, and has the power and authority to own its property and carry on its business as now being conducted.
(b) Authority of Lessee. Lessee has full power and authority to execute, deliver, and perform its obligations under this Lease, the Authority Documents, and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease, and to perform and observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Lease, the Authority Documents, and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease have been executed and delivered by Persons who are duly authorized to execute and deliver the same for and on behalf of Lessee, and all actions required under Lessee's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Lease, the Authority Documents, and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease, have been duly taken. 126

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(d) Valid Binding Agreements. This Lease, the Authority Documents, and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Lease constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Lessee enforceable against it in accordance with their respective terms. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Lease, the Authority Documents, or any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Lease, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on Lessee, or any provision of the organizational documents of Lessee, or will conflict with or constitute a breach of or a default under any agreement to which Lessee is a party, or will result in the creation or imposition of any lien upon any assets or property of Lessee, other than liens established pursuant hereto.
(f) Compliance With Laws; Consents and Approvals. The development of the Improvements, and any other construction work (including any Material Alterations), will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies, including Hazardous Materials Laws, and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency. (g) Pending Proceedings. Lessee is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Lessee, threatened against or affecting Lessee, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Lessee, materially affect Lessee's ability to develop the Improvements and fulfill its obligations under this Lease and the Authority Documents.

Section 11.2 Representations, Warranties and Covenants of Lessor. As an inducement to Lessee to enter into and to proceed under this Lease, Lessor warrants and represents to Lessee as follows, which warranties, representations and covenants will be true and correct as of the date of Commencement Date:
(a) Authority of Lessor. Lessor has the right, power and authority to enter into and perform all of its obligations under this Lease. (b) Compliance with Agreements. Lessor's execution of this Lease and the performance of its obligations hereunder, do not violate any agreement to which Lessor is a party.
(c) Pending Proceedings. There are no claims, actions, suits or proceedings pending or, to the knowledge of Lessor, threatened against or affecting Lessor, at law or in equity, before or by any court, board, commission or agency 127

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whatsoever which might, if determined adversely to Lessor, materially affect Lessor's ability to enter into this Lease or impair Lessee’s rights to develop, and operate the Development pursuant to this Lease.
(d) Valid and Binding Agreements. This Lease and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Lease constitute or, if not executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Lessor enforceable against it in accordance with their respective terms.

Section 11.3 Hazardous Materials.
(a) Certain Covenants and Agreements. The Lessee hereby covenants and agrees that:
(1) Lessee (i) shall not cause or knowingly permit any
Hazardous Materials to be placed, stored, located or disposed of in, on, under, about, or at the Leased Premises or the Improvements, or any part thereof, except in commercially reasonable amounts used in the development and operation of the Improvements and in accordance with all applicable Legal Requirements, including without limitation, Hazardous Materials Laws, and (ii) shall not cause or knowingly permit any Hazardous Materials contamination of the Leased Premises or the Improvements, or any part thereof.
(2) Lessee shall not knowingly permit the Leased Premises or the Improvements, or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence of Hazardous Materials in, on or under the Improvements or the Leased Premises in violation of any applicable law; provided however, the foregoing shall not preclude the use of limited amounts of cleaning supplies and other materials customarily used in construction, rehabilitation, use or maintenance of residential properties similar in nature to the Development, provided they are used, stored, and disposed of in compliance with Hazardous Materials Laws.
(3) Lessee shall keep and maintain the Improvements and the Leased Premises, and each portion thereof in compliance with, and shall not cause or permit the Improvements or the Leased Premises, or any portion thereof to be in violation of, any Hazardous Materials Laws; (b) Upon receiving actual knowledge of the same, the Lessee shall immediately advise the Lessor in writing of: (A) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Lessee or the Improvements or the Leased Premises pursuant to any applicable Hazardous Materials Laws; (B) any and all claims made or threatened by any third party against the Lessee or the Improvements or the Leased Premises relating to damage, contribution, cost recovery, 128

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compensation, loss or injury resulting from any Hazardous Materials; (C) the presence of any Hazardous Materials in, on or under the Improvements or the Leased Premises in such quantities which require reporting to a government agency; or (D) any restrictions on the ownership, occupancy, transferability or use of the Leased Premises or the Improvements under any Hazardous Materials Laws (the matters set forth in the foregoing clauses (A) through (D) are hereinafter referred to as “Hazardous Materials Claims”). If the Lessor reasonably determines that the Lessee is not adequately responding to a Hazardous Material Claim, the Lessor shall have the right, but not the obligation, to join and participate in, as a party if it so elects, any legal proceedings or actions initiated against Lessee or the Improvements or the Leased Premises in connection with any such Hazardous Materials Claims.
(c) Lessee shall not, without Lessor's prior written consent, which shall not be unreasonably withheld or delayed, take any remedial action in response to the presence of any Hazardous Materials in, on, under, or about the Improvements or the Leased Premises (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims.
(d) Lessee hereby acknowledges and agrees that Lessee's duties, obligations and liabilities under this Lease are in no way limited or otherwise affected by any information Lessor may have concerning the Improvements or the Leased Premises and/or the presence within the Improvements of any Hazardous Materials, whether Lessor obtained such information from Lessee or from its own investigations.
(e) Lessee hereby agrees to indemnify, defend, and hold harmless, the Indemnitees from and against any and all Hazardous Materials Claims, and any other demands, losses, damages, liabilities, fines, penalties, charges, causes of action, administrative and judicial proceedings and orders, settlements, judgments, remedial action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith, including without limitation, attorneys’ fees, arising directly or indirectly, in whole or in part, out of any of the following except to the extent caused by the willful misconduct or gross negligence of the Indemnitees: (1) any action or omission, during the Term, of Lessee or any other Person acting under the authority or control of Lessee, other than any Indemnitee, relating to Hazardous Materials on, under, in, or about the Improvements or the Leased Premises, including the failure to comply with any Hazardous Materials Law or relating to the handling, treatment, presence, removal, storage, decontamination, cleanup, transportation or disposal of Hazardous Materials into, on, under or from the Improvements; or (2) the release or discharge of any Hazardous Materials during the Term into, on, under or from the Improvements or the Leased Premises, excluding any release or discharge caused by any Indemnitee. The provisions of this paragraph shall survive the expiration or sooner termination of this Lease.

Section 11.4 Condition of the Leased Premises.
(a) In fulfillment of the purposes of Health and Safety Code Section 25359.7(a), Lessor hereby represents and warrants that it has no knowledge, and has no reasonable cause to believe, that any release of Hazardous Materials has come to be located on or beneath the Leased Premises, except as previously disclosed to Lessee, and 129

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that Lessor has disclosed in writing expressly identifying such Hazardous Materials, all such information concerning Hazardous Materials to Lessee. (b) “AS IS” CONVEYANCE. Lessee acknowledges and agrees that prior to the Commencement Date, Lessee, and its agents, performed certain testing and testing work, and otherwise had access to the Leased Premises pursuant to the License Agreement and other agreements with Lessor. Lessee accepts the Leased Premises as of the Commencement Date in its “AS-IS” condition as of such date, with no warranties or representations, express or implied concerning the condition of the Leased Premises, including the presence or absence of any Hazardous Materials (other than as expressly set forth herein). Lessee hereby agrees and acknowledges that Lessor has not made any representation as to any matters concerning the Leased Premises, including without limitation: (a) the quality, nature, adequacy and physical condition of the Leased Premises (including, without limitation, topography, climate, air, water rights, water, gas, electricity, utility services, grading, drainage, sewers, access to public roads and related conditions); (b) the quality, nature, adequacy, and physical condition of soils, geology and groundwater; (c) the development potential of the Leased Premises, and the Leased Premises' use, habitability, merchantability, or fitness, suitability, value or adequacy of the Leased Premises for any particular purpose; (d) the presence or absence of Hazardous Materials on, under or about the adjoining or neighboring property; (e) the condition of title to the Leased Premises; and (f) any infrastructure improvements, or any other site work performed by or on behalf of Lessor prior to the Commencement Date. Lessee affirms that Lessee has not relied on the skill or judgment of Lessor or any of its agents, employees or contractors to select or furnish the Leased Premises for any particular purpose, and that Lessor makes no warranty that the Leased Premises are fit for any particular purpose, including but not limited to, the development of the Improvements.

Lessee acknowledges that it used its independent judgment and made its own determination as to the scope and breadth of its due diligence investigation which it made relative to the Leased Premises, and relied upon its own investigation of the physical, environmental, economic and legal condition of the Leased Premises (including, without limitation, whether the Leased Premises are located in any area which is designated as a special flood hazard area, dam failure inundation area, earthquake fault zone, seismic hazard zone, high fire severity area or wildland fire area, by any federal, state or local agency). Lessee undertakes and assumes all risks associated with all matters pertaining to the Leased Premises' location in any area designated as a special flood hazard area, dam failure inundation area, earthquake fault zone, seismic hazard zone, high fire severity area or wildland fire area, by any federal, state or local agency. (c) Acknowledgement. Lessee acknowledges that the Base Rent payable under this Lease reflect the “as is” nature of this transaction and any faults, liabilities, defects or other adverse matters that may be associated with the Leased Premises. Lessee has fully reviewed the disclaimers and waivers set forth in this Lease with Lessee's counsel and understands the significance and effect thereof. Lessee further acknowledges and agrees that (i) to the extent required to be operative, the disclaimers of warranties contained in this Section 11.4 are “conspicuous” disclaimers for purposes of all applicable laws and other Legal Requirements, and (ii) the disclaimers and other agreements set forth in such Section are an integral part of this Lease, that this Lease has been adjusted to 130

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reflect the same and that Lessor would not have agreed to lease the Leased Premises to Lessee pursuant to this Lease without the disclaimers and other agreements set forth in this Section.
(d) Release. Except with respect to fraud or misrepresentation by Lessor, Lessee, on behalf of itself and anyone claiming by, through or under Lessee hereby waives its right to recover from and fully and irrevocably releases Lessor and the other Indemnitees from any and all claims that Lessee may have or hereafter acquire against any of the Indemnitees for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to (i) the condition (including any construction defects, errors, omissions or other conditions, latent or otherwise), valuation, salability or utility of the Leased Premises or their suitability for any purpose whatsoever, (ii) any presence of Hazardous Materials at the Leased Premises, and (iii) any information furnished by Lessor or the other Indemnitees in connection with this Lease or the Leased Premises. (e) Scope of Release. The release set forth in paragraph (b) above hereof includes claims of which Lessee is presently unaware or which Lessee does not presently suspect to exist which, if known by Lessee, would materially affect Lessee's release of the released parties. Lessee specifically waives the provision of any statute or principle of law that provides otherwise. In this connection and to the extent permitted by law, Lessee agrees, represents and warrants that Lessee realizes and acknowledges that factual matters now unknown to Lessee may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Lessee further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Lessee nevertheless hereby intends to release, discharge and acquit Lessor from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses. Accordingly, Lessee, on behalf of itself and anyone claiming by, through or under Lessee, hereby assumes the above- mentioned risks and hereby expressly waives any right Lessee and anyone claiming by, through or under Lessee, may have under Section 1542 of the California Civil Code, which reads as follows:
“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”
Lessee's Initials: __________

Lessee acknowledges that the effect and import of the provisions of California Civil Code Section 1542 have been explained to it by its own counsel. Lessee understands and acknowledges the significance and the consequence of such specific waiver of unknown claims and hereby assumes full responsibility for any injuries, damages, losses or liabilities that it may hereinafter incur from the waiver of these unknown claims. The provisions of paragraphs (d) and (e) of this Section 11.4 shall survive the expiration or sooner termination of this Lease. 131

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Section 11.5 Environmental Work and Lessee Indemnity.
(a) Lessee Obligation to Perform Work. In addition to the obligations set forth in Article 9, Lessee shall be responsible for performing the work of any investigation and remediation of the Leased Premises that may be required in order to construct the Improvements and operate the Development in accordance with this Lease. Lessee shall notify Lessor promptly upon discovery of Hazardous Materials, and upon any release thereof, and shall consult with Lessor in order to establish the extent of remediation to be undertaken and the procedures by which remediation thereof shall take place. Lessee shall comply with, and shall cause its agents and contractors to comply with, all Hazardous Materials Laws regarding the use, removal, storage, transportation, disposal and remediation of Hazardous Substances necessary to construct the Improvements and operate the Development. All work performed by, or on behalf of, Lessee pursuant to this Section 11.5, or otherwise, shall be carried out in accordance with all applicable Legal Requirements (including without limitation, all Hazardous Materials Laws). The obligation of Lessee to indemnify the Indemnitees, as set forth in Section 11.3, above, shall also apply to Lessee's acts, or failure to act, under this Section 11.5. (b) Limitation on Lessee Indemnity. Notwithstanding any contrary provision of this Lease, Lessee, on behalf of itself and any Person acting by or under Lessee, agrees and acknowledges that in no event shall the Lessor be required to reimburse Lessee for costs incurred by, or on behalf of, Lessee in connection with remediation or abatement of Hazardous Materials that is contemplated by the Approved Final Plans or financed by a funding source set forth in, or contemplated by, the Approved Financing. As between the Lessor and the Lessee, the performance of any work related to, or necessary for, the abatement or remediation of any Hazardous Materials shall be performed by the Lessee.
(c) Survival. This Section shall survive the expiration of the Term or earlier termination of this Lease.

ARTICLE 12.

EMINENT DOMAIN
Section 12.1 Termination of Lease. Lessor and Lessee agree that, in the event of a Taking such that Lessee reasonably determines that the Leased Premises cannot continue to be operated, at reasonable cost, for its then current use, then, subject to the rights and any required consent of Leasehold Mortgagees and the Limited Partner, this Lease shall, at Lessee's sole option, terminate as of the Taking Date.

Section 12.2 Continuation of Lease and Presumption of Restoration. Lessor and Lessee agree that, in the event of a Taking that does not result in the termination of this Lease pursuant to Section 12.1 above, this Lease shall continue in effect as to the remainder of the Leased Premises, and the Net Condemnation Award will be disbursed in accordance with Section 12.4 below to Lessor, Lessee and the Leasehold Mortgagees, if the terms of the applicable Leasehold Mortgage so require, and shall be used so as to make the same a complete, unified and efficient operating unit as nearly as reasonably possible to the condition existing prior to the Taking, subject to any applicable requirements of the Leasehold Mortgagee. 132

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Section 12.3 Temporary Taking. If there shall be a temporary Taking with respect to all or any part of the Leased Premises or of Lessee's interest in this Lease, then the Term shall not be reduced, and Lessee shall continue to pay all Base Rent, Additional Rent, Impositions and other charges required herein, without reduction or abatement thereof at the times herein specified; provided, however, that Lessee shall not be required to perform such obligations that Lessee is prevented from performing by reason of such temporary Taking. Any award payable for or on account of such temporary Taking shall be paid to Lessee.

Section 12.4 Award. After the Closing, subject to the rights of Leasehold Mortgagees and the HUD Documents, if there is a Taking, whether whole or partial, Lessor and Lessee shall be entitled, to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed, taking into consideration Lessor's fee interest in the Land (as encumbered by this Lease) and reversionary interest in the Improvements upon the expiration or termination of this Lease. If the Improvements will be restored as is contemplated in Section 12.2 above, Lessee shall be entitled to recover the costs and expenses reasonably incurred in such restoration out of any Net Condemnation Award payable to Lessee.

Thereafter, if the condemning authority does not make separate awards, the Parties agree that any Net Condemnation Award will be allocated as follows on a proportionate basis reflecting the Parties’ respective interests in the Land and Improvements and the remaining duration of the Term as follows:
(a) Award on Total or Substantial Taking. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order:
(1) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.
(2) To Lessor that portion of the award equal to the fair market value of the Land and Lessor’s reversionary interest in the Improvements. (3) To Lessee, that portion of the award equal to the fair market value of the Improvements (less Lessor’s reversionary interest in the Improvements), less the amount paid to the Lenders pursuant to (a) above. (4) Any “bonus value” (i.e., any portion of the award
attributable to the fact that the rent payable by Lessee under this Lease is at a below market rate) shall be paid to Lessor; provided however, if the condemning agency is Lessor, any such “bonus value” shall be equally divided between Lessor and Lessee.
(5) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Improvements less the value of Lessor’s reversionary interest in the Improvements.
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(b) Award on Partial Taking. In the event of a partial taking, after application of the Award for restoration, any remaining portion of such award shall be apportioned as follows, in the following order:
(1) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.
(2) To Lessor, that portion of the award attributable to the fair market value of the portion of the Land taken.
(3) To Lessee, that portion of the award equal to the fair market value of the portion of the Improvements taken (subject to Lessor’s reversionary interest in the Improvements), less the amount paid to the Lenders pursuant to (a) above, but only to the extent that the proceeds of the award are not used for restoration of the Improvements.
(4) Any “bonus value” (i.e., any portion of the award
attributable to the fact that the rent payable by Lessee under this Lease is at a below market rate) shall be paid to Lessor; provided however, if the condemning agency is Lessor, any such “bonus value” shall be equally divided between Lessor and Lessee.
(5) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Improvements less the value of Lessor’s reversionary interest in the Improvements.
(6) Any severance damages awarded or payable because only a portion of the Land and Improvements are taken by eminent domain shall be (a) paid to Lessee during the first 49.5 years of this Lease and (b) equally divided between Lessee and Lessor during the next 49.5 years of this Lease (except to the extent needed to replace any Improvements taken by eminent domain with equivalent Improvements on the remainder of the Land).

If the Parties are unable to agree on the amounts of the above allocations, then each Party shall select an independent M.A.I. real estate appraiser (an “Appraiser”). Each Appraiser shall separately determine the amount of the balance of the Net Condemnation Award that is to be allocated to the interests of each Party. If the Net Condemnation Award each Appraiser allocates to each Party are within ten percent (10%) of each other, the two appraisals shall be averaged, and such average shall be the final allocation of the Net Condemnation Award the Parties. If the Net Condemnation Award each Appraiser allocates to each Party differ by more than ten percent (10%), the two Appraisers shall select a third Appraiser who shall independently allocate the Net Condemnation Award between Lessor and Lessee, and the middle of such three allocations shall be the final allocation of the Net Condemnation Award. Notwithstanding the foregoing, if a Taking occurs while a Leasehold Mortgage is in effect, condemnation proceeds shall be applied in accordance with the terms of that lender's Leasehold Mortgage. The provisions of this Section 134

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12.4 that pertain to the allocation of any Net Condemnation Award are subject to the provisions of Section 10.13.

Section 12.5 Joinder. If a Leasehold Mortgage exists, the Leasehold Mortgagees, to the extent permitted by law, shall be made a party to any Taking proceeding.

ARTICLE 13.

DAMAGE OR DESTRUCTION
Section 13.1 Damage or Destruction to Leased Premises. Lessee shall give prompt written notice to Lessor after the occurrence of any fire, earthquake, act of God or other casualty to or in connection with the Leased Premises, the Improvements or any portion thereof (“Casualty”). Subject to Sections 13.2 and 13.4 below and the rights of any Leasehold Mortgagees, if during the Term the Improvements are damaged or destroyed by Casualty, Lessee shall repair or restore the Improvements, so long as Lessee determines, in its sole discretion, that it is feasible to do so, and in such event Lessee provides or causes to be provided sufficient additional funds which, when added to insurance proceeds, will fully effect such repair or restoration. Upon the occurrence of any Casualty, Lessee, promptly and with all due diligence, shall apply for and collect all applicable insurance proceeds recoverable with respect to such Casualty. If within thirty (30) days after Lessee’s receipt of any such insurance proceeds, Lessee determines that it is not economically practical to restore the Improvements and/or the Leased Premises to substantially the same condition in which they existed prior to the occurrence of the Casualty, and such determination is approved by HUD, then by written notice to Lessor, Lessee may terminate this Lease as of a date that is not less than thirty (30) days after the date of such notice; provided, however, any termination of this Lease by Lessee, pursuant to this Section 13.1 shall be void and of no force and effect unless all Leasehold Mortgagees and the Limited Partner have consented in writing to such termination. If Lessee terminates this Lease pursuant to this Section 13.1, Lessee shall surrender possession of the Leased Premises to Lessor immediately and assign to Lessor (or, if same has already been received by Lessee, pay to Lessor) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Leasehold Mortgagee therein, as referenced in Section 13.3 below. Notwithstanding the foregoing, if a Casualty occurs while a Leasehold Mortgage is in effect, insurance proceeds shall be delivered to the Leasehold Mortgagee in accordance with the terms of the applicable Leasehold Mortgage. Lessor shall provide reasonable prior notice to each Leasehold Mortgagee and the Limited Partner of any proceedings for adjustment or adjudication of any insurance claim involving the Leased Premises and will permit each Leasehold Mortgagee and the Limited Partner to participate in the proceedings as an interested party. If Lessee restores the Improvements as contemplated by this Section, any insurance proceeds remaining after restoration is completed shall, subject to the applicable rights of any Leasehold Mortgagee, be retained by Lessee.

Section 13.2 Damage or Destruction Near End of Term. If, during the last seven (7) years of the Term, the Improvements are damaged by a Casualty, then Lessee shall have the option, to be exercised within one hundred twenty (120) days after such Casualty:
(a) To repair or restore the Improvements as hereinabove provided in this Article 13; or
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(b) Subject to the rights of any Leasehold Mortgagees and the Limited Partner, to terminate this Lease by notice to Lessor, which termination shall be deemed to be effective as of the date of the Casualty. If Lessee terminates this Lease pursuant to this Section 13.2, Lessee shall surrender possession of the Leased Premises to Lessor immediately and assign to Lessor (or, if same has already been received by Lessee, pay to Lessor) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Leasehold Mortgagee therein, as referenced in Section 13.3 below.

Section 13.3 Distribution of Insurance Proceeds. If insurance proceeds are not applied to restoration of the Leased Premises, and this Lease is terminated pursuant to Sections 13.1 or

13.2 above, the insurance proceeds received as the result of such Casualty shall be distributed to the Leasehold Mortgagees whose Leasehold Mortgages are in effect, in accordance with their respective Leasehold Mortgages, to be paid to such Leasehold Mortgagees in order of seniority with the obligations secured by the senior Leasehold Mortgagees being paid in full prior to payment of any junior Leasehold Mortgagees.

Section 13.4 HUD Provisions. Notwithstanding any other provision in this Lease, if any provision herein, including without limitation the provisions of this Article 13 pertaining to restoration, conflicts with the provisions of the HUD Documents, the provisions of the applicable HUD Documents will control; provided however, if this Lease or the Regulatory Agreement impose stricter rent restrictions than the HUD Documents, the provisions of this Lease and the Regulatory Agreement shall control with respect to such restrictions.

ARTICLE 14.

EVENTS OF DEFAULT
Section 14.1 Events of Default. Each of the following shall be an “Event of Default” by Lessee hereunder:
(a) Failure by Lessee to pay any Base Rent or Additional Rent when due or to pay or cause to be paid any Impositions, insurance premiums or other liquidated sums of money herein stipulated to be paid by Lessee, if such failure shall continue for a period of thirty (30) days after written notice thereof has been given by Lessor to Lessee; (b) Lessee’s failure to maintain insurance on the Leased Premises and the Improvements as required hereunder, and the failure of Lessee to cure such default within five (5) days;
(c) Subject to Lessee’s right to contest the following charges, Lessee’s failure to pay taxes or assessments due on the Leased Premises or the Improvements or failure to pay any other charge that may result in a lien on the Leased Premises or the Improvements, and Lessee’s failure to cure such default within twenty (20) days of delinquency, but in all events prior to the date upon which the holder of any such lien has the right to foreclose thereon;
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(d) A Transfer, sale, lease, assignment, conveyance, mortgage, pledge, encumbrance or other transfer of any or all of the Leased Premises, the Improvements, or the ownership or control of Lessee occurs in violation of Article 18. (e) Lessor’s default in the performance of any provision of this Lease other than an obligation enumerated in this Section 14.1 (including without limitation, Lessee’s failure to commence or complete construction of the Improvements in accordance with the terms and conditions of this Lease) if such breach shall continue for a period of thirty (30) days after written notice thereof has been given by Lessor to Lessee; provided, however, that if any such failure cannot reasonably be cured within such thirty (30)-day period, then Lessor shall not have the right to terminate this Lease or Lessee's right to possession hereunder so long as Lessee promptly commences the curing of any such failure and thereafter proceeds in good faith and with due diligence to remedy and correct such failure within a reasonable period of time; provided, however, that such period shall not extend for more than ninety (90) days after the date of Lessor's notice to Lessee;
(f) The holder of any debt instrument secured by a mortgage or deed of trust on the Improvements and/or Lessee’s interest in the Land declares a default, and such default remains uncured beyond any applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder. (g) The subjection of any right or interest of Lessee in this Lease to attachment, execution or other levy, or to seizure under legal process, if not released within sixty (60) days;
(h) The filing by Lessee of a petition for voluntary bankruptcy under the Bankruptcy Code of the United States or any similar law, state or Federal, now or hereafter in effect;
(i) The filing against Lessee of any involuntary proceedings under such Bankruptcy Code or similar law, if such proceedings have not been vacated or stayed within sixty (60) days of the date of filing;
(j) The appointment of a trustee or receiver for Lessee or for all or the major part of Lessee's property or the Leased Premises, in any involuntary proceeding, or taking of jurisdiction by any court over all or the major part of Lessee's property or the Leased Premises in any involuntary proceeding for the reorganization, dissolution, liquidation or winding up of Lessee, if such trustee or receiver shall not be discharged or such jurisdiction relinquished or vacated or stayed on appeal or otherwise stayed within sixty (60) days; or
(k) A general assignment by Lessee for the benefit of creditors or Lessee's admittance in writing of its insolvency or inability to pay its debts generally as they become due or Lessee's consent to the appointment of a receiver or trustee or liquidator for Lessee, all or the major part of its property, or the Leased Premises. 137

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Section 14.2 Rights and Remedies. At any time after the occurrence of an Event of Default hereunder, Lessor, subject in all respects to the standstill provision in Section 10.3(c) and the provisions of this Lease with respect to Lessor's rights to cure defaults by Lessee and with respect to the rights of Limited Partner and any Leasehold Mortgagees, may terminate this Lease by giving Lessee written notice thereof (with a copy of such notice to the Leasehold Mortgagees), setting forth in such notice an effective date for termination which is not less than thirty (30) days after the date of such notice, in which event this Lease and Lessee's Estate created hereby and all interest of Lessee and all parties claiming by, through or under Lessee shall automatically terminate upon the effective date for termination as set forth in such notice, with the same force and effect and to the same extent as if the effective date of such notice had been the date originally fixed in Article 2 hereof for the expiration of the Term. In such event, Lessor, its agents or representatives, shall have the right, without further demand or notice, to re- enter and take possession of the Leased Premises and the Improvements (including all buildings and other Improvements comprising any part thereof) at any time from and after the effective termination date without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of rent or existing breaches of covenants; provided that Lessor shall not be entitled to disturb possession of any Tenants or others in possession pursuant to Tenant Leases so long as such Tenants or others are not in default thereunder and attorn to Lessor as their landlord. In addition, Lessor shall be entitled, subject to the rights of Leasehold Mortgagees, to pursue and enforce any and all other remedies available at law or at equity, including, but not limited to, an action for damages, injunctive relief, or specific performance.

Lessor hereby agrees to accept any cure hereunder made or tendered by the Limited Partner on the same terms and conditions as if made or tendered by Lessee. (a) Upon the exercise of Lessor’s remedies pursuant to this Section 14.2, Lessee shall execute such releases, deeds and other instruments in recordable form as Lessor shall reasonably request in order to accurately set forth of record the then current status of Lessee’s Estate and Lessee’s rights hereunder. Such obligations shall survive the termination of this Lease.
(b) At any time after the occurrence of an Event of Default and the expiration of all applicable cure periods, subject in all respects to the rights of the Limited Partner and any Leasehold Mortgagees, Lessor may pursue any remedy available under this Lease or at law or in equity, including without limitation, an action for damages, injunctive relief and/or specific performance, and the exercise of applicable remedies under the Authority Documents. Except as otherwise expressly stated in this Lease, such remedies are cumulative, and the exercise of one or more such remedies shall not preclude the exercise at the same or different time of any other rights or remedies for the same or any other default. All reasonable costs incurred by Lessor to cure any Lessee default hereunder and all costs incurred by Lessor in connection with the enforcement of this Lease shall be due immediately from Lessor, together with interest at the highest rate permitted by applicable law.
(c) No failure or delay by Lessor in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive Lessor of its rights to institute and maintain any action or 138

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proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default.

Section 14.3 Default by Lessor.
(a) Events of Default. Lessor shall be in default of this Lease if it fails to perform any provision of this Lease that it is obligated to perform or if any of Lessor's representations or warranties are untrue or become untrue in any material respect, and if the failure to perform or the failure of such representation or warranty is not cured within thirty (30) days after written notice of the default has been given to Lessor. If the default cannot reasonably be cured within thirty (30) days, Lessor shall not be in default of this Lease if Lessor commences to cure the default within such thirty (30)-day period and diligently and in good faith continues to cure the default until completion; provided, however, that such period shall not extend for more than one hundred twenty (120) days after the date Lessor receives notice of such default. (b) Right to Cure; Lessee's Remedies. Subject to Section 14.4 below, if Lessor fails to cure a default by Lessor after expiration of the applicable time for cure of a particular default, Lessee, at its election, but without obligation therefor (i) may seek specific performance of any obligation of Lessor, after which Lessee shall retain, and may exercise and enforce, any and all rights that Lessee may have against Lessor as a result of such default, (ii) from time to time, without releasing Lessor in whole or in part from the obligations to be performed by Lessor hereunder, may cure the default at Lessor's cost, (iii) may, with the consent of all Leasehold Mortgagees and the Limited Partner, terminate this Lease, and/or (iv) may exercise any other remedy given hereunder or now or hereafter existing at law or in equity. Any reasonable costs incurred by Lessee in order to cure such a default by Lessor shall be due immediately from Lessor, together with interest.

Section 14.4 Notices. Notices given by Lessor or by Lessee pursuant to this Article 14 shall specify the alleged default and the applicable Lease provisions, and shall demand that Lessee or Lessor, as applicable, perform the appropriate provisions of this Lease within the applicable period of time for cure. No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice.

Section 14.5 Limited Damages. Notwithstanding any contrary provision of this Lease, a Party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages.

ARTICLE 15.

QUIET ENJOYMENT AND POSSESSION; INSPECTIONS
Section 15.1 Quiet Enjoyment. Lessor covenants and warrants that Lessee shall peaceably and quietly have, hold, occupy, use and enjoy, and shall have the full, exclusive and unrestricted use and enjoyment of, all of the Leased Premises during the Term, subject only to the provisions of this Lease and all applicable Legal Requirements.

Section 15.2 Lessor's Right of Inspection.
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(a) Notwithstanding Section 15.1 above, Lessor, in person or through its agents, upon at least 48 hours' prior written notice to Lessee, shall have the right, subject to the rights of Tenants, to enter upon the Leased Premises and the Improvements for purposes of reasonable inspections performed during reasonable business hours in order to assure compliance by Lessee with its obligations under this Lease. (b) Lessee agrees to grant a right of access to Lessor, HUD, the Comptroller General of the United States, or any of their authorized representatives, with respect to any books, documents, papers, or other records related to this Lease, the Leased Premises, or the Improvements in order to make audits, examinations, excerpts, and transcripts.

ARTICLE 16.

VACATION OF LEASED PREMISES
Section 16.1 Vacation.
(a) Lessee covenants that upon any termination of this Lease, whether by lapse of time or because of any of the conditions or provisions contained herein, Lessee will peaceably and quietly yield and surrender possession of the Leased Premises to Lessor. (b) The foregoing, however, will be subject to the rights of Tenants or others in possession pursuant to Tenant Leases with Lessee, provided that such Tenants are not in default thereunder and attorn to Lessor as their lessor. An action of forcible detainer shall lie if Lessee holds over after a demand for possession is made by Lessor.

ARTICLE 17.

NON-MERGER
Section 17.1 Non-Merger. There shall be no merger of this Lease or any interest in this Lease, nor of the leasehold estate created hereby, with the fee estate in the Land, by reason of the fact that this Lease or such interest therein, or such leasehold estate may be directly or indirectly held by or for the account of any person who shall hold the fee estate in the Land, or any interest in such fee estate, nor shall there be such a merger by reason of the fact that all or any part of the leasehold estate created hereby may be conveyed or mortgaged in a Leasehold Mortgage to a Leasehold Mortgagee who shall hold the fee estate in the Land or any interest of the Lessor under this Lease unless and until all persons, including any assignee of Lessor and any Leasehold Mortgagee, having an interest in (i) this Lease or Lessee's Estate created hereunder, and (ii) the fee estate in the Land or any part thereof, shall join in a written instrument effecting such merger and shall duly record the same.

ARTICLE 18.

ASSIGNMENTS AND TRANSFERS
Section 18.1 Consent Required. Except as expressly provided herein or as expressly permitted by and subject to the terms and conditions of the Legal Requirements, Lessee shall not, without the prior written consent of HUD, the Leasehold Mortgagees, the Limited Partner, and Lessor, assign this Lease or any interest therein (“Transfer”). Any attempted Transfer without 140

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such consents shall be null and void. So long as the Leased Premises are subject to the HUD Use Agreement, a Transfer shall be deemed to include any attempt by Lessee to (a) demolish all or any portion of the Improvements except as expressly provided in the Approved Final Plans; (b) make or permit any voluntary or involuntary, total or partial, sale, lease, assignment, conveyance, mortgage, pledge, encumbrance, or other transfer of any or all of the Leased Premises or the Improvements; or (c) transfer, convey or assign (i) any interest of a managing member, general partner, or controlling affiliate or stockholder (any such interest being referred to as a “Controlling Interest”) in the Lessee, or (ii) a Controlling Interest in any entity which has a Controlling Interest in the Lessee, or (iii) prior to payment in full of all equity contributions described in the Partnership Agreement, any other interest in the Lessee, or in any partner or member thereof.

Section 18.2 Prohibited Transfers. Lessee agrees for itself and its successors and assigns in interest hereunder that it will not, other than by the deeds of trust, pledges, and/or assignments, securing the Approved Financing and Bond Regulatory Agreement: (1) assign this Lease or any of its rights under this Lease as to all or any portion of the Leased Premises, the Improvements, the Unit equipment or the Development generally, or (2) make or permit any voluntary or involuntary total or partial sale, lease, assignment, conveyance, mortgage, pledge, encumbrance or other transfer of any or all of the Leased Premises, the Improvements, the Unit equipment or the Development or the occupancy or use thereof, other than in accordance with the HUD Documents and this Lease (including, but not limited to (i) any sale at foreclosure or by the execution of any judgment of any or all of Lessee's rights hereunder, or (ii) any Transfer by operation of law), without first obtaining Lessor's and HUD's express written consent thereto.

Section 18.3 Lessor Pre-Approval of Certain Transfers. Notwithstanding any provision of this Lease to the contrary, none of the following Transfers shall require Lessor's consent or constitute a default under any provision of this Lease: (i) any withdrawal, removal, and/or replacement of a general partner of Lessee pursuant to the terms of the Partnership Agreement so long as the substitute general partner is a nonprofit public benefit corporation exempt from federal income tax pursuant to Section 501(c)(3) of the Code, or a limited liability company whose sole member is (or all members are) a nonprofit public benefit corporation exempt from federal income tax pursuant to Section 501(c)(3) of the Code, approved in advance by Lessor in its reasonable discretion; provided, however, the Limited Partner, or any affiliate of the Limited Partner is hereby approved as a substitute general partner by Lessor; (ii) any transfer of limited partner interests in Lessee or the partnership interests in the Limited Partner provided that either the Limited Partner remains obligated to fund any outstanding equity contribution, or the new limited partner assumes the obligations to fund any outstanding equity contribution in accordance with the terms of the Partnership Agreement; (iii) any Transfer which occurs in accordance with the Article 10 of this Lease; and (iv) the execution of Tenant Leases consistent with the requirements of this Lease and the Regulatory Agreement. Lessor agrees that amendments to the Partnership Agreement to implement Transfers described in this Section 18.3 will not require Lessor consent.

Section 18.4 Subsequent Assignment. In cases where Lessor's consent is required, Lessor's consent to one assignment will not waive the requirement of its consent to any subsequent assignment.
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Section 18.5 Request for Consent. If Lessee requests Lessor's consent to a specific assignment, Lessee shall provide to Lessor such information as may reasonably be required by Lessor and, if applicable, by HUD.

Section 18.6 General Partner’s Purchase Option; Limited Partner’s Put Option.

Notwithstanding any contrary provision hereof, nothing in this Lease shall operate to prohibit or prevent: (a) the General Partner’s or EAH’s exercise of its Option or its Right of First Refusal to purchase the Limited Partner’s interest in Lessee or Lessee’s interest in the Leased Premises or the Improvements in accordance with the Partnership Agreement, or (b) the exercise by the Limited Partner of its right to enforce any repurchase requirements under the Partnership Agreement. Lessor’s consent shall not be required in connection with Transfers resulting from the exercise of the foregoing rights.

ARTICLE 19.

MISCELLANEOUS PROVISIONS
Section 19.1 Lenders' Requirements. The Parties acknowledge and agree that the terms of this Lease may require amendments in connection with the lenders providing construction and permanent loans to assist in the development of the Improvements. Lessor agrees that it will make reasonable amendments requested by such lenders.

Section 19.2 Entire Agreement; Modifications. This Lease and the Authority Documents contain entire understanding between the Parties with respect to the leasing of the Leased Premises, and all promises, inducements, offers, solicitations, agreements, representations and warranties heretofore made between the Parties, if any, are merged into this Lease. This Lease supersedes all prior discussions and agreements between the Parties with respect to the leasing of the Leased Premises. Without limiting the generality of the foregoing, all provisions of the Master Development Agreement pertaining to the Leased Premises are hereby superseded by this Lease. This Lease shall not be modified or amended in any respect, except by written instrument specifically referencing such a modification or amendment which is executed by or on behalf of the Parties in the same manner as this Lease is executed and to which HUD, Limited Partner and each Leasehold Mortgagee has consented in writing. No amendment shall impair the obligations of the Lessee to construct the Improvements and operate the Development in accordance with the HUD Requirements.

Section 19.3 Governing Law. This Lease and the rights and obligations of the Parties hereunder shall be governed by and construed in accordance with the substantive laws of the State of California. In the event of any legal action to interpret or to enforce the terms of this Lease, the venue for such action shall be the Superior Court of the County of Contra Costa, or federal district court for the Northern District of California.

Section 19.4 Binding Effect. This Lease shall inure to the benefit of and be binding upon the Parties hereto, their heirs, successors, administrators, executors and permitted assigns.

Section 19.5 Severability. In the event any provision or portion of this Lease is held by any court of competent jurisdiction to be invalid or unenforceable, such holding shall not affect the remainder hereof, and the remaining provisions shall continue in full force and effect to the 142

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same extent as would have been the case had such invalid or unenforceable provision or portion never been a part hereof, except to the extent the rights and obligations of the Parties have been materially altered by such unenforceability.

Section 19.6 Further Assurances. From and after the date of this Lease, Lessor and Lessee, at the request of the other Party, shall make, execute and deliver or obtain and deliver all such affidavits, deeds, certificates, resolutions and other instruments and documents, and shall do or cause to be done all such other things that either Party may reasonably require in order to effectuate the provisions and the intention of this Lease.

Section 19.7 Captions. All captions, headings, paragraphs, subparagraphs, letters and other reference captions are solely for the purpose of facilitating convenient reference to this Lease and shall not supplement, limit or otherwise vary the text of this Lease in any respect, and shall be wholly disregarded when interpreting the meaning of any terms or provisions hereof.

Section 19.8 Gender. Words of any gender used in this Lease shall be held and construed to include any other gender, and words of a singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

Section 19.9 Exhibits. Exhibits A through L, attached hereto are incorporated into this Lease.

Section 19.10 References. All references to paragraphs or subparagraphs shall be deemed to refer to the appropriate paragraph or subparagraph of this Lease. Unless otherwise specified in this Lease, the terms “herein”, “hereof”, “hereinafter”, “hereunder” and other terms of like or similar import, shall be deemed to refer to this Lease as a whole, and not to any particular paragraph or subparagraph hereof. Any reference to a particular article or section of this Lease shall mean a reference to all subsections and paragraphs thereof unless expressly stated otherwise.

Section 19.11 Rights and Remedies Cumulative. Except as expressly limited by the terms of this Lease, all rights, remedies, powers and privileges conferred hereunder shall be cumulative and not restrictive of those provided at law or in equity.

Section 19.12 Notices. All notices, requests, demands, or other communications required or permitted to be given hereunder shall be in writing and shall be addressed and delivered by hand or by certified mail, return receipt requested, or by Federal Express, or by hand delivery by a recognized, reputable courier, to each party at the addresses set forth below. Any such notice, request, demand or other communication shall be considered given or delivered, as the case may be, on the date of receipt. Rejection or other refusal to accept or inability to deliver because of changed address of which proper notice was not given shall be deemed to be receipt of the notice, request, demand or other communication. By giving prior written notice thereof, any Party, from time to time, may change its address for notices hereunder. Legal counsel for the respective Parties may send to the other Party any notices, requests, demands or other communications required or permitted to be given hereunder by such Party. 143

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Lessor: Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attn: Executive Director

With a copy to: City of Richmond
450 Civic Center Plaza
Richmond, CA 94804
Attn: City Manager
And: City of Richmond
450 Civic Center Plaza
Richmond, CA 94804
Attn: City Attorney
Lessee: Nevin Plaza II, L.P.
c/o EAH Inc.
22 Pelican Way
San Rafael, CA 94901

With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 West Fifth Street, 64th Floor
Los Angeles, California 90071
Attention: Nicole Deddens, Esq.

And:

With a copy to:

Section 19.13 Counterparts.

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

Section 19.14 Time of Essence. Time is and shall be of the essence in this Lease.

Section 19.15 Delay. Either Party shall not be deemed to be in default if such default is due to (i) a labor dispute, lock-out or strike; (ii) war, an act of terrorism or the public enemy, insurrection, or riot; (iii) a fire, earthquake, or other casualty or act of God; (iv) pandemic, epidemic, quarantine or shelter in place order; (v) the filing of any action or the issuance of any order or ruling from a court or other Governmental Authority; (vi) the imposition of governmental restrictions or limitations or the failure of a Governmental Authority to issue required approvals, permits or legal authorizations within a reasonable period of time following submission of a complete application therefor; or (vii) unusually adverse weather or wet soil conditions or other construction related causes (including a qualified labor shortage or a shortage or delay in the shipment of necessary material or fuel) beyond the reasonable control of Lessee's 144

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general contractor and which entitle such contractor to a delay under the applicable construction contract. An extension of time for cause will be deemed granted if notice by the Party claiming such extension is sent to the other Party within ten (10) days from the date the Party seeking the extension first discovered the cause and such extension of time is not rejected in writing by the other Party within ten (10) days after receipt of the notice. In no event shall the cumulative delays exceed one hundred twenty (120) days, unless otherwise agreed to by the Parties in writing.

Section 19.16 Relationship of Parties. No relationship exists between Lessor and Lessee other than landlord and tenant. The Parties expressly declare that, in connection with the activities and operations contemplated by this Lease, they are neither partners nor joint venturers, nor does a debtor-creditor, principal-agent or any other relationship except as aforesaid, exist between them. Nothing contained in any other agreement or contract between the Parties hereto, nor any act of HUD, Lessor, or Lessee, will be deemed or construed to create any relationship of third party beneficiary, principal and agent, limited or general partnership, joint venture or any association or relationship involving HUD.

Section 19.17 Non-Liability of Lessor. Notwithstanding anything to the contrary in this Lease, no individual member of Lessor’s Board of Commissioners, officer, employee or agent of Lessor shall be personally liable to Lessee, its successors and assigns, in the event of any default by Lessor, or for any amount which may become due to Lessee, its successors and assign, under this Lease.

ARTICLE 20.

PARTICULAR COVENANTS
Section 20.1 Non-Discrimination. Lessee shall not discriminate against, or segregate any person or group of persons on the grounds of race, color, creed, religion, sex, sexual orientation, condition of Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related complex, marital status, national origin or ancestry or disability in the lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises or the Improvements, nor shall Lessee, or any person claiming under or through Lessee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Tenants, lessees, subtenants, sublessees or vendees of the Leased Premises. The foregoing covenant shall run with the land.
(a) Lessor shall be entitled to invoke any remedies available at law or in equity to redress any breach of this subsection or to compel compliance therewith by Lessee. The obligations of Lessee and Lessor to comply with Section 20.1(a) above shall inure to the benefit of each other.

Section 20.2 Section 3 Requirements. To the extent applicable, Lessee shall comply with Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (“Section 3”) and implementing regulations at 24 CFR Part 135. The responsibilities outlined in 24 CFR Subpart B, § 135.32 include: (i) implementing procedures designed to notify Section 3 residents about training and employment opportunities generated by Section 3 covered assistance and Section 3 business concerns about contracting opportunities generated by Section 3 covered 145

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assistance, (ii) notifying potential contractors for Section 3 covered projects of the requirements of Section 3 and incorporating the Section 3 clause set forth in 24 CFR Section 135.38 in all solicitations and contracts in excess of $100,000, (iii) facilitating the training and employment of Section 3 residents and the award of contracts to Section 3 business concerns by undertaking activities to reach the goals set forth in 24 CFR Section 135.30, (iv) assisting and actively cooperating with Lessor and HUD in obtaining the compliance of contractors and subcontractors with the requirements of Section 3, and refraining from entering into any contract with any contractor where the recipient has notice or knowledge that the contractor has been found in violation of the regulations in 24 CFR Part 135, and (v) documenting actions taken to comply with the requirements of Section 3, the results of those actions taken and impediments, if any.

Section 20.3 Covenants Binding Upon Successors. This Lease is a covenant running with the land and obligates Lessee and Lessor, and any successor who acquires title to the Lessee's Estate by foreclosure of a Leasehold Mortgage, to maintain and operate the Development in compliance with all applicable HUD Documents.

Section 20.4 Disclaimer of Partnership Status.
(a) Lessee and Lessor acknowledge that the lease of the Leased Premises to Lessee for the development and operation of the Development shall not be deemed to be an assignment of any funds provided by HUD to Lessor. Accordingly, neither Lessee, nor any other participating party, shall succeed to any rights or benefits of the Lessor under the HUD Documents. Lessee further agrees to include this disclaimer in each of its agreements or contracts with any partner, participating party, or any other party involving the use of HUD funds for the Development.
(b) Nothing contained in the HUD Documents, or in any agreement between Lessor and Lessee, nor any act of HUD or Lessor, shall be deemed or construed to create any relationship of third-party beneficiary, principal and agent, limited or general partnership, or joint venture.

Section 20.5 HUD Restrictions. Notwithstanding any other clause or provision in this Lease and so long as the Use Agreement is in effect, the following provisions shall apply:
(a) If any of the provisions of this Lease conflict with the terms of the Use Agreement, the provisions of the Use Agreement shall control; provided however, if this Lease or the Regulatory Agreement impose stricter rent restrictions than the Use Agreement, the provisions of this Lease and the Regulatory Agreement shall control with respect to such restrictions.
(b) The provisions in this Section are required to be inserted into this Lease by HUD and may not be amended without HUD's prior written approval. (c) Violation of the Use Agreement constitutes an Event of Default of this Lease.
(d) Notwithstanding any other contract, document or other arrangement, upon termination of this Lease, title to the real property leased herein shall remain vested 146

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in Lessor and title to the buildings, fixtures, improvements, trade fixtures and equipment that belong to Lessee shall vest in Lessor.
(e) Neither Lessee nor any of its members or partners shall have any authority to take any action in violation of the Use Agreement. (f) Except to the extent permitted by the Use Agreement, neither Lessee nor any members or partners thereof shall have any authority without the consent of Lessor and HUD to sell, transfer, convey, assign, mortgage, pledge, sublease or otherwise dispose of, at any time, the Leased Premises, the Improvements, or any part thereof.

Section 20.6 Form of Nondiscrimination and Nonsegregation Clauses. Lessee shall refrain from restricting the rental or lease of the Leased Premises and Improvements on any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code. All leases and contracts pertaining to the Leased Premises or the Improvements shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In leases:
“(1) The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 4760 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1).” (b) In contracts:
147

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“(1) There shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.
(2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 4760 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1).” Section 20.7 Reserved.

Section 20.8 Asbestos Notification for Commercial Property. Lessee acknowledges that Lessor has advised Lessee that, because of their age, the preexisting improvements, such as concrete on the Leased Premises may contain asbestos-containing materials (“ACMs”). If ACMs are likely to be disturbed in the course of constructing or rehabilitating any alterations, additions or improvements, Lessee shall encapsulate or remove the ACMs in accordance with an asbestos-removal plan reasonably approved by Lessor and otherwise in accordance with all applicable Hazardous Materials Laws, including giving all notices required by California Health & Safety Code Sections 25915-25919.7.

Section 20.9 Lead Warning Statement. Lessee acknowledges that Lessor has advised Lessee that the soils within the Leased Premises may contain lead-based paints (“LBP”). Lead from paint, paint chips and dust can pose health hazards if not managed properly. Lessee may at its sole cost and expense, have a state-certified LBP Inspector complete a LBP inspection and abatement and, if Lessee completes such inspection, shall provide an abatement certification to Lessor. Lessor has no specific knowledge of the presence of LBP in or about the Leased Premises.

Section 20.10 Reserved.

Section 20.11 Public Art. Lessee shall comply with all applicable provisions of the One- Percent for Public Art on Private Projects Program Ordinance (RMC Chapter 12.62). [SIGNATURE PAGE FOLLOWS]
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4866-6691-0105 v7
S-1
IN WITNESS WHEREOF, this Lease is made and entered into as of the date first written above.

LESSOR:

HOUSING AUTHORITY OF THE CITY OF RICHMOND, a public body, corporate and politic

By: __________________________
, Executive Director

LESSEE:

NEVIN PLAZA II, L.P., a California limited partnership

By: Nevin Plaza II EAH, LLC, a California limited liability company

Its: General Partner

By: EAH Inc., a California nonprofit public benefit corporation

Its: Sole member/manager

By:_________________________

Print Name:__________________

Title:________________________

149

4866-6691-0105 v7 Exhibit C-1

EXHIBIT A

LEASED PREMISES

The land referred to herein is situated in the County of Contra Costa, City of Richmond, State of California, and is described as follows:

Lots 7 through 10, inclusive and 19 through 22, inclusive and a portion of Lot 6 and Lot 23, Block 2, as shown on the map of "Nicholl MacDonald Avenue Civic Center, Richmond, California", which map was filed on October 29, 1912 in Map Book 8, Page 190, Contra Costa County Records, more particularly described as follows:

Beginning at the intersection of the southerly line of Nevin Avenue and the easterly line of 24th Street (formerly Grand Blvd.) as said Nevin Avenue and Grand Blvd. are shown on said map; thence along said easterly line of said 24th Street, South 10°12’53” West, 141.90 feet to the point of beginning; thence South 79°45’00” East, 199.81 feet to the westerly line of 25th Street (formerly Elmer Ave) as shown on said map; thence along last said line, South 10°13’28” West, 108.00 feet to the most southerly corner of said Lot 19; thence along the southerly lines of said Lots 19 and 10, North 79°45’00” West, 199.79 feet to said easterly line of said 24th Street; thence along last said line, North 10°12’53” East, 108.00 feet to the point of beginning.

APN’s: 515-261-010, 515-261-003, 515-261-002 and portion 515-261-001 150

4866-6691-0105 v7 Exhibit C-2

EXHIBIT C

MEMORANDUM OF LEASE

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attn: Executive Director

No fee for recording pursuant to
Government Code Sections 27383 and 27388.1

Mail Tax Statements as Directed Above
________________________________________________________________________ (SPACE ABOVE THIS LINE FOR RECORDER'S USE)

MEMORANDUM OF GROUND LEASE
(Nevin Plaza Phase II)

THIS MEMORANDUM OF GROUND LEASE (the “Memorandum”), dated for reference as of _________, 20__, is executed by and between the Housing Authority of the City of Richmond, a public body, corporate and politic (“Lessor”), and Nevin Plaza II, L.P., a California limited partnership (“Lessee”) with respect to that certain Ground Lease Agreement (Nevin Plaza II) dated as of the date of this Memorandum (the “Lease”) executed by and between Lessor and Lessee.

Pursuant to the Lease, Lessor hereby leases to Lessee and Lessee leases from Lessor certain improved real property situated in the City of Richmond, County of Contra Costa, California, more specifically described on Exhibit A attached hereto (the “Leased Premises”).

The Commencement Date of the Lease shall be the date that this Memorandum is recorded in the Official Records of Contra Costa County. The Lease shall continue in effect until the day immediately preceding the ninety-ninth (99th) anniversary of the date of the recordation of this Memorandum.

This Memorandum incorporates all of the terms and provisions of the Lease as though fully set forth herein. This Memorandum is solely for recording purposes and shall not be construed to alter, modify, amend or supplement the Lease, of which this is a memorandum.

The Leased Premises are subject to that certain HUD Use Agreement by and among Lessor, Lessee, and the U.S. Department of Housing and Urban Development (“HUD”) recorded concurrently herewith.
151

4866-6691-0105 v7 Exhibit C-3

This Memorandum may be executed in counterparts.

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

LESSOR:

HOUSING AUTHORITY OF THE CITY OF
RICHMOND, a public body, corporate and politic

By: ____________________

Executive Director

LESSEE:

NEVIN PLAZA II, L.P., a California limited
partnership

By: Nevin Plaza II EAH, LLC, a California limited
liability company

Its: General Partner

By: EAH Inc., a California nonprofit public
benefit corporation

Its: Sole member/manager

By:_________________________

Print Name:__________________

Title:_______________________

152

4866-6691-0105 v7 Exhibit C-4

STATE OF CALIFORNIA )
)
COUNTY OF __________________ )

On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(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.
______________________________________
Name: ______________________________
Notary Public
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. 153

4866-6691-0105 v7 Exhibit C-5

:

Notary Public

STATE OF CALIFORNIA )
)
COUNTY OF __________________ )

On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(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.

______________________________________
Name: ______________________________
Notary Public

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. 154

4866-6691-0105 v7 Exhibit C-6

EXHIBIT A

LEGAL DESCRIPTION OF THE LAND

The land referred to herein is situated in the County of Contra Costa, City of Richmond, State of California, and is described as follows:

Lots 7 through 10, inclusive and 19 through 22, inclusive and a portion of Lot 6 and Lot 23, Block 2, as shown on the map of "Nicholl MacDonald Avenue Civic Center, Richmond, California", which map was filed on October 29, 1912 in Map Book 8, Page 190, Contra Costa County Records, more particularly described as follows:

Beginning at the intersection of the southerly line of Nevin Avenue and the easterly line of 24th Street (formerly Grand Blvd.) as said Nevin Avenue and Grand Blvd. are shown on said map; thence along said easterly line of said 24th Street, South 10°12’53” West, 141.90 feet to the point of beginning; thence South 79°45’00” East, 199.81 feet to the westerly line of 25th Street (formerly Elmer Ave) as shown on said map; thence along last said line, South 10°13’28” West, 108.00 feet to the most southerly corner of said Lot 19; thence along the southerly lines of said Lots 19 and 10, North 79°45’00” West, 199.79 feet to said easterly line of said 24th Street; thence along last said line, North 10°12’53” East, 108.00 feet to the point of beginning.

APN’s: 515-261-010, 515-261-003, 515-261-002 and portion 515-261-001 155

4866-6691-0105 v7 Exhibit D-1
4866-6691-0105 v4

EXHIBIT D

SCHEDULE OF PERFORMANCE

Nevin Plaza II Schedule of Performance
Not later than 30
days prior to the
Commencement
Date

________, 20__

Submit proposed Construction Contract, documents
relating to Approved Financing, draft Partnership
Agreement to Lessor

Building permits approved
________, 20__
Finalize construction numbers
________, 20__ Close financing/start construction

________, 20__

Construction Complete; City Building Department
sign off following final inspection

______, 20__ 95% occupancy

______, 20__

______, 20__
Conversion to Permanent Financing

8609

156

4866-6691-0105 v7 Exhibit F-1
4866-6691-0105 v4

EXHIBIT F

RESIDENT SELECTION PLAN

[Attach Plan.]

157

4866-6691-0105 v7 Exhibit G-1
4866-6691-0105 v4

EXHIBIT G

ANNUAL OPERATING BUDGET

[Attach Operating Budget.]

158

4866-6691-0105 v7 Exhibit H-1
4866-6691-0105 v4

EXHIBIT H

APPROVED FINANCING

“Approved Financing” means all of the following financing obtained by Lessee for the purpose of financing the development of the Improvements:
(i) A construction loan provided by _________________ (“Bank”), in the approximate amount of $___________ that will be funded through the issuance of tax-exempt multifamily housing revenue bonds issued by the [California Municipal Finance Authority (“CMFA”)];
(ii) A construction loan provided by Bank in the approximate amount of $__________ that will be funded through the issuance of taxable bonds issued by CMFA; (iii) A permanent loan provided by Bank in the approximate amount of $____________;
(iv) Equity contributions in the approximate amount of $____________ provided by the Limited Partner;
(v) A capital contribution from Lessee’s general partner in an amount to be determined.
159

4866-6691-0105 v7 Exhibit I-1
4866-6691-0105 v4

EXHIBIT I

FIRST SOURCE HIRING AGREEMENT

[Attach Agreement.]

160

4866-6691-0105 v7 Exhibit J-1
4866-6691-0105 v4

EXHIBIT J

REGULATORY AGREEMENT

[Attach Agreement.]

161

4866-6691-0105 v7 Exhibit L-1

EXHIBIT L

FORM OF CERTIFICATE OF COMPLETION

Recording requested by
and when recorded mail to:

Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attn: Executive Director

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383

Space above this line for Recorder’s use.

CERTIFICATE OF COMPLETION
This Certificate of Completion (this “Certificate”) is made by the Housing Authority of City of Richmond, a public body corporate and politic (“Authority”) effective as of __________, 20__.

A. Authority and Nevin Plaza II, L.P., a California limited partnership (“Lessee”) entered into that certain Ground Lease Agreement dated as of _____________, 20__ (the “Ground Lease”) concerning the development and operation of certain improved real property located in the City of Richmond, Contra Costa County, California and more particularly described in Exhibit A attached hereto (the “Property”). A Memorandum of the Ground Lease was recorded in the Official Records of Contra Costa County (“Official Records”) on ___________, 20__, as Document No. _____________. Capitalized terms used herein without definition shall have the meaning ascribed to such terms in the Ground Lease.

A. Pursuant to Section 3.7 of the Ground Lease, the Authority is required to furnish the Lessee or its successors with a Certificate of Completion upon completion of construction of the Improvements in accordance with the Ground Lease.

B. The Authority has determined that the construction of the Improvements has been satisfactorily completed in accordance with the Ground Lease.

NOW, THEREFORE, Authority hereby certifies as follows:

1. Construction of the Improvements has been satisfactorily completed in conformance with the Ground Lease.
162

4866-6691-0105 v7 Exhibit L-2

2. All indemnity, use, maintenance, and nondiscrimination covenants contained in the Ground Lease shall remain in effect and enforceable in accordance with the Ground Lease. This Certificate does not constitute evidence of Lessee’s compliance with those covenants in the Ground Lease that survive the issuance of this Certificate, including without limitation, compliance with the Affordable Housing Regulatory Agreement entered into pursuant to the Ground Lease and recorded in the Official Records on ___________, 20__ as Document No. _______________.

3. This Certificate does not constitute evidence of compliance with or satisfaction of any obligation of Lessee to any holder of a deed of trust securing money loaned to finance the Project or any part thereof, and does not constitute a notice of completion under California Civil Code Section 9204.

4. Nothing contained in this instrument shall modify any provisions of the Ground Lease or any other document executed in connection therewith.

IN WITNESS WHEREOF, Authority has executed and issued this Certificate of Completion as of the date first written above.

HOUSING AUTHORITY OF THE CITY OF RICHMOND
a public body corporate and politic
By:______FORM- DO NOT SIGN_________

163

4866-6691-0105 v7 Exhibit L-3

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

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

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

WITNESS my hand and official seal.

Signature_____________________________
164

4866-6691-0105 v7 Exhibit L-4

Exhibit A

PROPERTY

The land referred to herein is situated in the County of Contra Costa, City of Richmond, State of California, and is described as follows:

Lots 7 through 10, inclusive and 19 through 22, inclusive and a portion of Lot 6 and Lot 23, Block 2, as shown on the map of "Nicholl MacDonald Avenue Civic Center, Richmond, California", which map was filed on October 29, 1912 in Map Book 8, Page 190, Contra Costa County Records, more particularly described as follows:

Beginning at the intersection of the southerly line of Nevin Avenue and the easterly line of 24th Street (formerly Grand Blvd.) as said Nevin Avenue and Grand Blvd. are shown on said map; thence along said easterly line of said 24th Street, South 10°12’53” West, 141.90 feet to the point of beginning; thence South 79°45’00” East, 199.81 feet to the westerly line of 25th Street (formerly Elmer Ave) as shown on said map; thence along last said line, South 10°13’28” West, 108.00 feet to the most southerly corner of said Lot 19; thence along the southerly lines of said Lots 19 and 10, North 79°45’00” West, 199.79 feet to said easterly line of said 24th Street; thence along last said line, North 10°12’53” East, 108.00 feet to the point of beginning.

APN’s: 515-261-010, 515-261-003, 515-261-002 and portion 515-261-001

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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attn: Executive Director

NO FEE REQUIRED PER GOVT CODE
SECTION 27383

(Space above for Recorder’s use only)

AFFORDABLE HOUSING REGULATORY AGREEMENT AND DECLARATION OF

RESTRICTIVE COVENANTS

This Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (the “Agreement”) dated for reference purposes as of ____________, 20__, is executed by and between the Housing Authority of the City of Richmond, a public body corporate and politic (the “Authority”), and Nevin Plaza II, L.P., a California limited partnership (the “Owner”).

RECITALS

A. Authority owns fee title to the land described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”). Authority and Owner have entered into a ground lease dated as of the date hereof (the “Ground Lease”), pursuant to which Owner will lease the Property for the purpose of developing and operating an affordable residential rental housing development thereon (the “Project”). A Memorandum of the Ground Lease (“Memorandum”) was recorded in the Official Records of Contra Costa County (“Official Records”) on ____________, 20__ as Document No. __________.

B. Pursuant to the Ground Lease, Owner will construct and operate the Project as an affordable housing development that will include 75 residential units that will be rented to Low- Income Households at Affordable Rents and one (1) unrestricted manager’s unit. During the term of the Ground Lease, Owner will be the owner of the improvements located on the Property.

C. As consideration for, and as a condition to, Authority’s agreement to enter into the Ground Lease, Owner has agreed to operate the Project as affordable housing for Low- Income Households for a minimum of 99 years, subject to the restrictions contained herein. The purpose of this Agreement is to regulate and restrict the occupancy, rents, operation, ownership, and management of the Property and the Project for affordable housing and related uses. The covenants in this Agreement are intended to run with the land and be binding on Owner and its successors and assigns in the Project and the Property.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and the Authority hereby agree as follows:

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2 1. Definitions. The following terms have the meanings set forth in this Section wherever used in this Agreement or attached exhibits. Capitalized terms used without definition in this Agreement shall have the meaning ascribed to such terms in the Ground Lease.

“Actual Household Size” means the actual number of persons in the applicable household.
“Adjusted for Family Size Appropriate for the Unit” shall be determined consistent with Section 50052.5(h) of the California Health and Safety Code, subject to the application of federal rules and regulations applicable to Project financing sources, including Section 42(g)(2) of the Internal Revenue Code of 1986 as amended (or successor provision) if applicable to the Project.
“Affordable Rent” means a monthly rent equal to the lesser of (i) Fair Market Rent as determined by HUD, and (ii) one-twelfth of thirty percent (30%) of sixty percent (60%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit, minus a utility allowance and other fees and charges required to be paid by tenants of the Project on a non-optional basis, and subject to any limitations imposed by HUD.

“Applicable Requirements” means the requirements applicable to the Project pursuant to the Use Agreement, the Ground Lease, the Bond Regulatory Agreement, this Agreement, and the TCAC Requirements.

“Area Median Income” or “AMI” means the median income for Contra Costa County, California, as determined by HUD pursuant to Section 8 of the United States Housing Act of 1937 and as published from time to time by the State of California Department of Housing and Community Development (“HCD”) in Section 6932 of Title 25 of the California Code of Regulations or successor provision.
“Authority” is defined in the preamble to this Agreement.

“Authority Documents” means collectively the LDDA, the Ground Lease and this Agreement as they may be amended, modified, or restated from time to time, along with all exhibits and attachments to these documents.

“Bond Regulatory Agreement” means that certain Regulatory Agreement and Declaration of Restrictive Covenants executed by and between the [California Municipal Finance Authority] and Owner and recorded in the Official Records substantially concurrently herewith.

“City” means the City of Richmond, California.

“Claims” is defined in Section 6.

“Effective Date” means the date that the Memorandum of the Ground Lease is recorded 167

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3 in the Official Records.

“Gross Income” means the total anticipated annual income of all persons in a household calculated using the methods set forth in TCAC regulations, or if TCAC regulations do not address such matter, the total anticipated annual income of all persons in a household as defined in 24 CFR

5.609.

“Ground Lease” is defined in Recital A.

“HUD” means the U.S. Department of Housing and Urban Development.

“Indemnitees” is defined in Section 19.

“LDDA” means that certain Lease Disposition and Development Agreement dated as of ___________, 20__, and executed by and between the Authority and Owner.

“Limited Partner” means [________________], and its successors and assigns.

“Low-Income Household” means a household whose household Gross Income at initial occupancy does not exceed sixty percent (60%) of the Area Median Income Adjusted for Actual Household Size.

“Official Records ” means the Official Records of the Contra Costa County Clerk - Recorder.

“Owner” means Nevin Plaza II, L.P., a California limited partnership, and its successors and assigns permitted pursuant to the Ground Lease.

“Project” is defined in Recital A.

“Property” is defined in Recital A.

“Qualifying Household” means a household that qualifies as a Low-Income Household, that includes at least one member who is age 62 or older or other qualifying resident as defined in California Civil Code Section 51.3.

“Tax Credit Restrictive Covenant” means the agreement to be executed by Owner and TCAC following completion of construction of the Project. “TCAC” means the California Tax Credit Allocation Committee. “TCAC Requirements” means the Tax Credit Restrictive Covenant and all TCAC regulations applicable to the Project.
“Term” is defined in Section 4.
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4 “Use Agreement” means that certain Use Agreement executed by and among the Authority, Owner, and HUD and recorded against the Property in the Official Records substantially concurrently with this Agreement.

2. Compliance with Requirements and Regulations. Owner shall comply with all Applicable Requirements and all applicable California, federal, and City laws, ordinances, statutes, rules and regulations.

3. Use and Affordability Restrictions. Owner agrees that, at all times during the Term of this Agreement, the Property will be used solely for the operation of a multifamily rental housing development in compliance with the Applicable Requirements and this Agreement. Throughout the Term, a minimum of seventy-five (75) residential units in the Project shall be occupied, or if vacant, available for occupancy by Qualifying Households at Affordable Rents.

Notwithstanding any contrary provision of this Agreement, if other Project lenders, Project investors, or regulatory agencies require stricter household income eligibility or affordability requirements than those imposed hereby, the stricter requirements pertaining to rent limitations, income limits, and occupancy requirements applicable pursuant to the TCAC Requirements and/or the Bond Regulatory Agreement, shall prevail during such time that such requirements apply to the Project. In addition to the foregoing, Owner and Authority agree to make best good faith efforts (including without limitation, seeking funds from the City, the County, other public agencies, and private sources) to secure rent subsidies and social services funding sufficient to enable Owner to set aside of eight (8) residential units for formerly unhoused residents with the tenant-paid portion of the rent payable for such units not greater than 30% of the tenant’s monthly household Gross Income.

4. Term of Agreement. This Agreement will continue in effect for a period of ninety-nine (99) years commencing upon the Effective Date.

5. Tenant Selection. Owner shall adopt written tenant selection policies that: (a) are reasonably related to program eligibility and the applicant’s ability to perform the obligations of the lease; (b) are consistent with the purpose of providing housing for Qualifying Households including those who were formerly homeless; and (c) provide for prompt written notification to any rejected applicant of the grounds for rejection. To the extent permitted by applicable law, the TCAC Requirements, and the requirements of the Bond Regulatory Agreement, Owner shall give a preference in the rental of the residential units restricted under this Agreement to applicants who are currently residents of the County of Contra Costa or who currently work in the County of Contra Costa.

6. Senior Housing. Owner has elected to operate the Project as a senior housing development and as such to require all dwelling units in the Project except for the managers’ units to be occupied or held available for occupancy by households that include “elderly” or “senior” residents in accordance with applicable law. To the extent applicable, the Project will be operated at all times in accordance with (a) the Unruh Act, including without limitation California Civil Code Sections 51.2, 51.3, and 51.4; (b) the federal Fair Housing Act, 42 U.S.C. 169

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5 Section 3607(b) and 24 CFR 100.304; (c) the California Fair Employment and Housing Act, Government Code Section 12900 et seq., and (d) all other applicable laws and regulations.

Owner shall develop and implement appropriate age verification procedures to ensure compliance with this Section 6, and shall provide Authority with a copy of such verification procedures.

7. Fair Housing; Nondiscrimination. Owner shall comply with all applicable fair housing and civil rights requirements with respect to the marketing, rental, and operation of the Project, including the obligations to affirmatively further fair housing and adhere to the site selection and neighborhood standards set forth in 24 CFR §§ 1.4(b)(3) and 941.202, as applicable. Owner shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, the Project, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, gender identity, disability, marital status, ancestry, or national origin of any person. Owner covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof.

Owner shall include such provision in all deeds, leases, contracts and other instruments executed by Owner, and shall enforce the same diligently and in good faith. Owner shall include a statement in all advertisements, notices and signs for the availability of units for rent to the effect that Owner is an Equal Housing Opportunity Provider. Owner shall accept as tenants, on the same basis as all other prospective tenants, applicants who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto.

8. Federal Accessibility Requirements. Owner shall comply with all applicable federal accessibility requirements under the Fair Housing Act and the implementing regulations at 24 CFR Part 100, Section 504 of the Rehabilitation Act of 1973 and the implementing regulations at 24 CFR Part 8, and Titles II and III of the Americans with Disabilities Act and the implementing regulations at 28 CFR Parts 35 and 36, respectively.

9. Income Certification and Increases in Tenant Income. Owner shall certify the incomes of all prospective tenants in the Project prior to their initial occupancy of a unit, and shall recertify their incomes annually. If upon recertification, a tenant’s income exceeds the limit for Low- Income Households, Owner may increase the rent for such tenants to no more than 30% of the tenant’s monthly household Gross Income, less utility and other mandatory charges, and the tenant may be permitted to continue to occupy a unit in the Project subject to compliance with all Applicable Rules. Owner shall provide Authority an annual report evidencing that Project occupants are Qualifying Households.

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

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

12. Review of Management Policies and Marketing Plan and Resident Services Plan. If not previously provided, not later than ninety (90) days following commencement of construction of the Project, Owner shall submit for Authority review and approval, a plan for marketing and managing the Property (“Marketing and Management Plan”). The Marketing and Management Plan shall address in detail how Owner plans to market the Project to prospective Qualifying Households in accordance with fair housing laws and this Agreement, Owner’s tenant selection criteria, how Owner plans to certify the eligibility of Qualifying Households, and the social services to be provided to residents of the Project. The Plan shall also describe the management team and shall address how Owner and the management entity plan to manage and maintain the Property and the Project, and shall identify the social services provider. The Plan shall include the proposed management agreement, social services agreement, and the form of rental agreement that Owner proposes to enter into with Project tenants. Owner shall abide by the terms of the Marketing and Management Plan in marketing, managing, and maintaining the Property and the Project, and throughout the term of this Agreement, shall submit proposed modifications to Authority for review and approval, such approval not to be unreasonably withheld, conditioned or delayed.

13. Repair, Maintenance and Security. Throughout the term of this Agreement, Owner shall at its own expense, maintain the Property and the Project in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Owner agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, meeting rooms, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Owner shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. Owner shall provide adequate security measures for the Project, including without limitation, the installation of adequate lighting and deadbolt locks.

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7 14. Authority’s Right to Perform Maintenance. In the event that Owner breaches any of the covenants contained in Section 13, and such default continues for a period of ten (10) days after written notice from Authority (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from Authority (with respect to landscaping, building improvements and general maintenance), then Authority, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the right, but not the obligation, to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Property. All costs expended by Authority in connection with the foregoing, shall constitute an indebtedness of Owner, and Owner shall pay such sums to Authority upon demand. All such sums remaining unpaid thirty (30) days following delivery of Authority’s invoice therefor will bear interest at the lesser of 10% per annum or the highest rate permitted by applicable law.

15. Fees, Taxes, and Other Levies. Owner shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Property or the Project, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. Owner shall not be required to pay any such charge so long as (a) Owner is contesting such charge in good faith and by appropriate proceedings, (b) Owner maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Owner immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest. The foregoing is not intended to impair Owner’s ability to apply for any applicable exemption from property taxes or other assessments and fees.

16. Insurance Coverage. Throughout the Term, Owner shall comply with the insurance requirements set forth in the Authority Documents, and shall, at Owner’s expense, maintain in full force and effect insurance coverage as specified in the Authority Documents.

17. Inspection and Records. Owner shall maintain records that clearly document Owner's performance of its obligations to operate the Property and the Project in accordance with this Agreement. Owner shall submit any records to the Authority within ten (10) business days of the Authority's request. Owner shall permit the Authority to enter and inspect the Property and the Project for compliance with obligations under this Agreement upon seventy-two (72) hours advance notice delivered to Owner or Owner's management agent and to the tenants of any residential units that will be inspected.

18. Annual Report. By not later than April 30 of each year, Owner shall submit to the Authority a report for the preceding calendar year showing the information necessary to allow the Authority to determine Owner's compliance with this Agreement, and within thirty (30) days after receipt of a written request, Owner shall provide any other information or completed forms requested by the Authority in order to comply with the reporting requirements of the Authority.

Without limiting the generality of the foregoing, the annual report submitted by Owner pursuant to this Section shall at a minimum, include the following information for each dwelling unit in the Project: (i) unit number; (ii) number o f bedrooms; (iii) current rent and other charges; (iv) dates of any vacancies during the previous year; (v) number of people residing in the unit; (vi) 172

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8 total household income of the residents; (vii) documentation of source of household income; (viii) lease commencement and termination dates, (ix) initial move-in date, and (x) the identity of each household member and the age of each household member or other basis upon which each household member qualifies for occupancy under California Civil Code Section 51.3 et seq.

19. Indemnity. To the greatest extent permitted by law, Owner shall indemnify, defend (with counsel reasonably approved by Authority) and hold the Authority and the City, and their respective elected and appointed officers, officials, employees, agents, consultants, contractors and representatives (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) arising directly or indirectly, in whole or in part, from Owner’s or Owner’s employees’, agents’, contractors’, or subcontractors’ construction, rehabilitation, management, or operation of the Property and the Project, or failure to perform any obligation as and when required by this Agreement, or failure to comply with all applicable legal requirements, including without limitation fair housing laws. This indemnity obligation shall not extend to any Claim arising solely from the gross negligence or willful acts of the Indemnitees. The indemnity provisions of this Section shall apply whether or not any insurance policies shall have been determined to be applicable to any such Claims, and shall survive the expiration or other termination of this Agreement.

20. Default and Remedies; Limited Partner Cure Rights. In the event of any breach of any agreement or obligation under this Agreement by Owner, the Authority shall provide written notice to Owner and Limited Partner of such breach. Owner and Limited Partner shall have an opportunity to cure such breach within thirty (30) days from Owner's and Limited Partner’s receipt of such written notice or such longer period of time as the Authority determines is necessary to cure the breach if Owner or Limited Partner diligently undertakes to cure such breach. If Owner fails to complete a timely cure of the specified breach, the Authority may proceed with any remedy provided under the Authority Documents or allowed by law or in equity to enforce the terms of this Agreement. A cure by the Limited Partner shall be accepted or rejected on the same basis as if made or tendered by Owner; provided however, if the default is of such nature that the Limited Partner reasonably determines that it is necessary to replace the general partner of Owner in order to cure such default, then the cure period shall be extended by an additional sixty (60) days after the removal and replacement of such general partner, provided that the Limited Partner has promptly commenced and diligently proceeded with all requisite actions to effect such removal and replacement. Authority shall provide a copy of any notice of default hereunder to the Limited Partner at the address set forth in Section 24.5 hereof, or to such other address provided to the Authority in writing, concurrently with the provision of such notice to Owner.

21. Effectiveness Succeeds Conveyance of Property. This Agreement will remain effective and fully binding for the full term hereof regardless of any sale, assignment, transfer, or conveyance of the Project or the Property, or any part thereof or interest therein.

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9 22. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property and the Project to the covenants and restrictions set forth in this Agreement. The Authority and Owner hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Owner and Authority, regardless of any sale, assignment, conveyance or transfer of the Property, the Project or any part thereof or interest therein. Any successor -in- interest to Owner, including without limitation any purchaser, transferee or lessee of the Property or the Project (other than the tenants of the individual dwelling units within the Project) shall be subject to all of the duties and obligations imposed hereby for the full term of this Agreement.

Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or the Project or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Project in favor of Authority.

23. Reconveyance. Upon the termination of this Agreement, the Parties agree to execute and record appropriate instruments to release and discharge this Agreement; provided, however, the execution and recordation of such instruments shall not be necessary or a prerequisite to the termination of this Agreement upon the expiration of the term.

24. Miscellaneous.

24.1 Non-Liability of Officials, Employees and Agents. No officer, director, employee or agent of the Authority shall be personally liable to Owner or any successor in interest, in the event of any default or breach by the Authority, or for any obligation created under the terms of this Agreement.

24.2 Governing Law; Venue. This Agreement shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law and those provisions preempted by federal law. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Contra Costa County, California or in the Federal District Court for the Northern District of California.

24.3 Attorneys' Fees and Costs. In the event that any legal or administrative action is commenced to interpret or to enforce the terms of this Agreement, the prevailing party in any such action shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action.

24.4 Consents and Approvals. Any consent or approval of the Authority required under this Agreement may be provided by the Executive Director of the Authority or his or her 174

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10 designee unless the Executive Director determines that the matter requires approval by the Authority’s governing board.

24.5 Notices. Notices delivered pursuant to this Agreement shall be delivered by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the principal offices of Owner and the Authority as follows:

AUTHORITY:

with a copy to:

OWNER:

with a copy to:

with a copy to:

Housing Authority of the City of Richmond
450 Civic Center Plaza, 2nd floor
Richmond, CA 94804
Attn: Executive Director

City of Richmond
450 Civic Center Plaza
Richmond, CA 94804
Attn: City Manager

Nevin Plaza II, L.P.
c/o EAH Inc.
22 Pelican Way
San Rafael, CA 94901

24.6 Relationship of the Parties. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of Owner and Authority shall not be construed as a joint venture, equity venture, partnership or any other relationship. Authority neither undertakes nor assumes any responsibility or duty to Owner (except as expressly provided in this Agreement) or to any third party with respect to the Project. Owner shall no authority to act as an agent of Authority or to bind Authority to any obligation.

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

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11 24.8 Amendments and Modifications. Any amendments or modifications to this Agreement must be in writing, executed by both Owner and the Authority, and recorded in the Official Records.

24.9 Severability. Every provision of this Agreement is intended to be severable. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

24.10 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Richmond shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.

24.11 Entire Agreement. This Agreement, together with the other Authority Documents contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto.

24.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement.

SIGNATURES ON FOLLOWING PAGE.
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IN WITNESS WHEREOF, Authority and Owner have caused this Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants to be executed by their duly authorized representatives as of the date first written above.

AUTHORITY:

HOUSING AUTHORITY OF THE CITY OF
RICHMOND, a public body, corporate and politic

By: __________________________________
, Executive Director

OWNER:

Nevin Plaza II, L.P., a California limited partnership

By: Nevin Plaza II EAH, LLC, a California limited liability company

Its: General Partner

By: EAH Inc., a California nonprofit public benefit corporation

Its: Sole member/manager

By:_________________________

Print name:___________________

Title:________________________

SIGNATURES MUST BE NOTARIZED.

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

State of California )

County of __________________)

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

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

WITNESS my hand and official seal.

Signature_____________________________

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

State of California )

County of __________________)

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

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

WITNESS my hand and official seal.

Signature_____________________________
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Exhibit A

LEGAL DESCRIPTION

Real property in the City of Richmond, County of Contra Costa, State of California, described as follows:

Lots 7 through 10, inclusive and 19 through 22, inclusive and a portion of Lot 6 and Lot 23, Block 2, as shown on the map of "Nicholl MacDonald Avenue Civic Center, Richmond, California", which map was filed on October 29, 1912 in Map Book 8, Page 190, Contra Costa County Records, more particularly described as follows:

Beginning at the intersection of the southerly line of Nevin Avenue and the easterly line of 24th Street (formerly Grand Blvd.) as said Nevin Avenue and Grand Blvd. are shown on said map; thence along said easterly line of said 24th Street, South 10°12’53” West, 141.90 feet to the point of beginning; thence South 79°45’00” East, 199.81 feet to the westerly line of 25th Street (formerly Elmer Ave) as shown on said map; thence along last said line, South 10°13’28” West, 108.00 feet to the most southerly corner of said Lot 19; thence along the southerly lines of said Lots 19 and 10, North 79°45’00” West, 199.79 feet to said easterly line of said 24th Street; thence along last said line, North 10°12’53” East, 108.00 feet to the point of beginning.

APN’s: 515-261-010, 515-261-003, 515-261-002 and portion 515-261-001

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