Agenda packet — Rocklin City Council, November 18, 2025 (part 4 of 7)

Rocklin Site A Portion, v3
ATTACHMENT NO. 3

SCHEDULE OF PERFORMANCE
For the purposes of this Schedule of Performance, the “Date of Agreement” is ________ __, 2025. The City Manager may extend by not more than three hundred sixty -five (365) days the time under this Schedule of Performance by which any obligation of Developer shall be performed.

1. TCAC Approval . Developer shall have
obtained allocation by TCAC of a
preliminary reservation for tax credits for
the Development in an amount of not less
than the Tax Credit Amount.

On or before the Tax Credit Deadline.

2. Satisfaction of City Conditions Precedent.

Developer shall satisfy the City Conditions
Precedent.

Not later than the Tax Credit Deadline.

3. Recording of Documents. The City Lease
or a memorandum thereof (as prepared by
City) is recorded; in addition, each and
every document required to be executed
and delivered in connection with the
Leasehold Transfer shall have been
delivered and each and every document
required to be recorded shall have been
recorded, including without li mitation the
City Regulatory Agreement).

As soon as feasible following the satisfaction of
the City Conditions Precedent.

4. Commencement of Construction .

Developer shall have commenced
construction of the Improvements.

Not later than first anniversary of the Date of
Agreement.

5. Completion of Construction . Developer
shall complete construction of the
Improvements.

On or before the second anniversary of the
commencement of construction.

6. Rental Units Occupied. Developer causes
the Required Affordable Units to be
occupied using rents prescribed by and i n
conformity with the Agreement.

Within three hundred (300) days after the earlier
of (i) issuance of a Certificate of Completion for
the Improvements or (ii) the time established for
completion of construction of the Improvements
herein, which deadline shall be subject to any
applicable extensions under Section 9.10 of the
Agreement.

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Attachment No. 4

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Rocklin Site A Portion, v3
ATTACHMENT NO. 4

CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
TO: City of Rocklin
3970 Rocklin Road
Rocklin, California 95677
Attention: City Manager
The undersigned, _______________, being duly authorized to execute this Certificate of Continuing Program Compliance (this “Certificate”) on behalf of Pacific Street Housing Associates Four, L.P., a California limited partnership (the “Developer”), hereby represents and warrants that:

1. He has read and is thoroughly familiar with the provisions of the Affordable Housing Agreement (the “AHA”) by and between City, the City of Rocklin (“City”) and Developer dated as of ________ __, 2025, including without limitation the City Regulatory Agreement, the City Lease, and other attachments thereto. Capitalized terms used herein shall have the same meaning as that set forth in the AHA; and

2. As of the date of this Certificate, the following number of completed residential units at the Portion A Site: (i) are currently occupied by Extremely Low Income Households at Affordable Rent; (ii) are currently occupied by an Extremely Low Income Households at Affordable Rent; (iii) are currently occupied by Lower Income Households at Affordable Rent; (iv) are currently vacant and being held available for occupancy by an Extremely Low Income Household at Affordable Rent; (v) are currently vacant and being held available for occupancy by a Low Income Household since the date of Low Income Household vacated such unit and have been so held continuously since the date a Lower Income Household vacated such unit):

Occupied at an Affordable Rent by:
i. Extremely Low Income Households (30%) ___ # of Units, Nos.:
ii. Very Low Income Households (50%) __ # of Units, Nos.: ____________ ii. Low Income Households (60%) ___ # of Units, Nos.:

Vacant:
a. Held for occupancy by:
i. Extremely Low Income Households (30%) ___ # of Units, Nos:
ii. Very Low Income Households (50%) ___ # of Units, Nos: ________ ii. Lower Income Households (60%) ___ # of Units, Nos.:

b. Last occupied by:
i. Extremely Low Income Households (30%) ___ # of Units, Nos:
ii. Very Low Income Households (50%) ___ # of Units, Nos: ____________ ii. Lower Income Households (60%) ___ # of Units, Nos.:
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Attachment No. 4

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Rocklin Site A Portion, v3

3. At no time since the date of filing of the last Certification of Continuing Program Compliance have less than one hundred percent (100%) of the Required Affordable Units as completed units in the Project been occupied by, or been last occupied, or have been available for occupancy by Extremely Low Income Households, Very Low Income Households and/or Lower Income Households at an Affordable Rent, and all of the Required Affordable Units have been occupied in conformity with the Tenant Selection and Tenant Services Plan.

4. Developer is not in default under the terms of the Agreement, including without limitation the attachments thereto (such as the City Lease, and the City Regulatory Agreement).

PACIFIC STREET HOUSING ASSOCIATES
FOUR, L.P., a California limited partnership
By: CHW Pacific Street Four LLC, its managing
general partner
By: Community HousingWorks, a California
nonprofit public benefit corporation (its sole
member and manager)
By: __________________________________
Kevin Leichner
Senior Vice President Housing and Real
Estate Development
(DEVELOPER)
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Attachment No. 5

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Rocklin Site A Portion, v3
ATTACHMENT NO. 5

NOTICE OF AFFORDABILITY RESTRICTIONS
[to come: this will be prepared later to conform to the City Regulatory Agreement(s) following closing after the Final Financing Plan has been approved]

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Attachment No. 6

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Rocklin Site A Portion, v3
ATTACHMENT NO. 6

CITY LEASE

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Attachment No. 7

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ATTACHMENT NO. 7

CALCULATION OF AFFORDABLE RENTS
Placer County
Affordable Rent Worksheet
(2025 Income Figures)
Method of Determining Rents1

1. Income Eligibility2,3
The first step in determining eligibility for an affordable housing program is determining whether the family which will be purchasing or renting the housing unit meets the following income standards applicable to Placer County, based upon the size of the family:

Income
Level
1 person
household
2 person
household
3 person
household
4 person
household
5 person
household
6 person
household
7 person
household
8 person
household
Extremely
Low
$27,050 $30900 $34,750 $38,600 $41,700 $44,800 $48,650 $54,150 Very Low

$45,050 $51,450 $57,900 $64,300 $69,450 $74,600 $79,750 $84,900 Lower

$72,050 $82,350 $92,650 $120,900 $111,150 $119,400 $127,600 $135,850 Median

$84,550 $96,650 $108,700 $120,800 $130,450 $140,150 $149,800 $159,450 Moderate

$101,450 $115,950 $130,450 $144,950 $156,550 $168,150 $179,750 $191,350

2. Determining Affordable Rent
For rental housing, the second step in determining compliance with affordable housing requirements is determining whether the total rent costs payable by the tenant are within allowable amounts.

1 Based on currently effective median income of Placer County, as released by the Department of Housing and Community Development (“HCD”) by memorandum dated as of April 23, 2025 as posted to the HCD website. These median income figures are revised annually. Where projects receive financial assistance under agreements made after January 1, 2025 (such as this Agreement) figures should be reviewed based upon additional standards (such as those associated with Tax Credits) which may apply . The Developer is responsible for charging rents in the amounts allowable under this Agreement. The Developer is encouraged to annually confirm proposed rents with the City.
2 Affordable Rent for Extreme ly Low Income Households is the product of 30 percent times 30 percent of the area median income adjusted for family size appropriate to the unit. Health and Safety Code Section 50053 (b)(1). If any units are Acutely Low Income Household units, the income limitations and maximum allowable rents will be available from City. 3 Affordable Rent for Very Low Income Households is the product of 30 percent times 50 percent of the area median income adjusted for family size appropriate to the unit. Health and Safety Code Section 50053 (b)(2).
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Attachment No. 7

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Rocklin Site A Portion, v3
For Extremely Low Income Households:4
 renting a 0 bedroom unit, monthly rent may not exceed $634.13  renting a 1 bedroom unit, monthly rent may not exceed $724.88  renting a 2 bedroom unit, monthly rent may not exceed $815.25  renting a 3 bedroom unit, monthly rent may not exceed $906.00  renting a 4 bedroom unit, monthly rent may not exceed $978.38  renting a 5 bedroom unit, monthly rent may not exceed $1,051.13 For Very Low Income Households: 5
 renting a 0 bedroom unit, monthly rent may not exceed $1,056.88  renting a 1 bedroom unit, monthly rent may not exceed $1,208.13  renting a 2 bedroom unit, monthly rent may not exceed $1,358.75  renting a 3 bedroom unit, monthly rent may not exceed $1,510.00  renting a 4 bedroom unit, monthly rent may not exceed $1,630.63  renting a 5 bedroom unit, monthly rent may not exceed $1,751.88 For Lower Income Households:
 renting a 0 bedroom unit, monthly rent may not exceed $1,268.25  renting a 1 bedroom unit, monthly rent may not exceed $1,449.75  renting a 2 bedroom unit, monthly rent may not exceed $1,630.50  renting a 3 bedroom unit, monthly rent may not exceed $1,812.00  renting a 4 bedroom unit, monthly rent may not exceed $1,956.75  renting a 5 bedroom unit, monthly rent may not exceed $2,102.25

4 Affordable Rent for Extremely Low Income Households is the product of 30 percent times 30 percent of the area median income adjusted for family size appropriate to the unit. Health and Safety Code Section 50053(b)(1).
5 Affordable Rent for Very Low Income Households is the product of 30 percent times 50 percent of the area median income adjusted for family size appropriate to the unit. Health and Safety Code Section 50053(b)(3).
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In addition, for any Lower Income Household whose income falls within the following guidelines, it is optional for City to require that affordable rent not exceed 30 percent of the gross income of the household:6
 1 person households whose income is between $50,730 and $72,050  2 person households whose income is between $57,990 and $82,350  3 person households whose income is between $65,220 and $92,650  4 person households whose income is between $72,480 and $102,900  5 person households whose income is between $78,270 and $111,150  6 person households whose income is between $84,090 and $119,400  7 person households whose income is between $89,880 and $127,600  8 person households whose income is between $95,670 and $135,850 For purposes of determining Affordable Rent, “Rent” is an average of estimated housing costs for the next twelve months. “Rent” includes the total of monthly payments for all of the following:7
 Use and occupancy of a housing unit and land and facilities associated therewith.  Any separately charged fees or service charges assessed by the lessor which are required of all tenants, other than security deposits.
 A reasonable allowance for utilities not included in the above costs, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuels. “Utilities” does not include telephone service. Such an allowance shall take into consideration the cost of an adequate level of service.

Possessory interest taxes or other fees o r charges assessed for use of the land and facilities associated therewith by a public or private entity other than the lessor.

6 Health and Safety Code Section 50053 (b)(3).
7 25 California Code of Regulations Section 6918.
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Attachment No. 8

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Rocklin CHW AHA v6
ATTACHMENT NO. 8

REQUEST FOR NOTICE OF DEFAULT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Rocklin
3970 Rocklin Road
Rocklin, California 95677
Attention: City Manager

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

Exempt from fee per Government Code section 27388.1(a)(2); recorded concurrently in connection with a transfer subject to the imposition of documentary transfer tax
Request for Notice Under Section 2924b Civil Code
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. _____ on _____________, 20 2__, in Book ______, Page ______, Official Records of Placer County , California, and describing land therein as
See Exhibit A attached hereto
executed by ________________________, as Trustor, in which ______________________ is named as Beneficiary, and ____ ________________________ as Trustee, be mailed to City of Rocklin , at 3970 Rocklin Road, Rocklin, California 95677, Attention: City Manager.

NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE WILL BE SENT ONLY TO THE ADDRESS CONTAINED IN THIS RECORDED REQUEST.

IF YOUR ADDRESS CHANGES, A REQUEST MUST BE RECORDED.

Aly Zimmermann
City Manager

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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 )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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

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

WITNESS my hand and official seal.

Signature of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT Individual
Corporate Officer
________________________________ ___________________________ Title(s)
________________________________ ___________________________ Title Or Type Of Document
Partner(s) Limited General
Attorney-In-Fact
Trustee(s)
Guardian/Conservator
Other:________________________________ _____

Signer is representing:

Name Of Person(s) Or Entity(ies)
________________________________ ___________________________ ________________________________ ___________________________ ________________________________ ___________________________ Number Of Pages
________________________________ ___________________________ Date Of Documents
________________________________ ___________________________ Signer(s) Other Than Named Above

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Attachment No. 9

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Rocklin Site A Portion, v3
ATTACHMENT NO. 9

SCOPE OF DEVELOPMENT
I. GENERAL DESCRIPTION
The Portion A Site is specifically delineated on the Portion A Site Map and the Legal Description of the Portion A Site.

II. DEVELOPMENT
Developer shall construct fifty (50) multifamily rental housing units on the Portion A Site together with features described or referenced in Administrative Determination AD -2025-0004 as approved May 8, 2025 by the Community Development Director of the City of Rocklin (including without limitation all conditions contained therein), and additiona l and use approvals for the development of the Portion A Site, if any, as may hereafter be approved by the City acting in the exercise of its police power. All such improvements, including all conditions of deposit now or hereafter imposed by City (including without limitation and mitigation measures) collectively constitute the “Improvements.” The number of bedrooms for the Required Affordable Units is set forth within the definition, Required Affordable Units. Unit sizes shall not be less than as herea fter approved by City as part of its land use approval process and under the authorization of this Agreement.

Developer is encouraged to confer and consult with Community Development staff concerning the size and amenities associated with the housing units. Developer shall accomplish the Development in strict conformity with the Entitlements.

The quality of construction shall be of a high level. The Improvements shall conform to such plans as are hereafter approved by City and maintained on file with City as supplemented by the Design Development Drawings.

The Development shall consist of all -electric buildings with energy efficient features such as ENERGY Star appliances, including dishwashers and garbage disposals, energy efficient dual -pane windows, no-VOC paint, high efficacy lighting, and low-flow plumbing fixtures to reduce water use.

The landscape shall be designed to reduce the Development’s water consumption with water - conservation irrigation system and drought tolerant and native plants. In addition to a tot lot and shared outdoor space, the Development will provide indoor community space that includes a leasing office, a dedicated office space for resident services, a conference room, restrooms, and a multi -purpose room with a kitchen.

The Improvements shall include parking as hereafter designated by City as part of its land use approval process to be located on the Portion A Site. In addition, the City intends to make available on a non-exclusive basis the ability to park certain vehicles on that certain property defined herein as the “Adjacent City Parking Area”; the Adjacent City Parking Area is a portion of the block (APN 010- 0404-039, approximately 0.9 acres) from the back edge of the alley towards the train tracks as originally granted to C ity through an Act of Congress, under a grant which restricts the use of such property. Developer shall design and construct the parking lot at its cost and the City will maintain the parking lot thereafter; the parties intend to enter an agreement after the Date of Agreement which sets forth the arrangements for the operation of the Adjacent City Parking Area by Developer. It is contemplated that in addition to residents of the Portion A Site, the Adjacent City Parking Area will 676

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Rocklin Site A Portion, v3
also be available, on a non-exclusive basis, to residents of development which occurs on the Portion B Area. While no portion of the parking lot can be restricted for the exclusive use of the affordable housing project on Site A (or that on the Portion B Area) , City intends that the parking lot, including approximately 70 spaces will be made available for use, including overnight use, by residents of the project along with members of the public; such parking spaces are further intended to be available for residents of the improvements to be constructed under a different agreement as to the Portion B Area.

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

III. DEVELOPMENT STANDARDS
The Improvements sha ll conform to all applicable state laws and regulations and to local zoning, applicable provisions of the City Code and the following development standards:

A. General Requirements:

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

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

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

4. Landscaping. Developer shall provide and maintain landscaping within the public rights-of-way and within setback area along all street frontages and conforming with the plans as hereafter a pproved by City excepting for landscaping, if any, installed by City within the public right of way.

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

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

6. Building Design. Buildings shall be constructed such that the Improvements shall be of high architectural quality and shall be effectively and aesthetically designed and in conformance with City approvals.

7. Mitigation Measures. Mitigation measures approved for the Development under the California Environmental Quality Act (CEQA).
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B. Design Features:

The following design features are considered essential components to the Improvements:

Handicapped Units – The greater of ten percent (10%) of the Units or the number of units required by TCAC are to be fully handicapped accessible in compliance with State Housing Code - Title 24 requirements.

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

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

Mobility/Agility - All facilities shall comply, to the extent feasible, with “New Horizon Accessible, Adap table Apartments for the Physically Disabled” published by HCD dated July 1989, and shall comply with those portions of Title 24 of the California Code of Regulations that have been adopted by HCD relating to handicapped units, and the requirements of the federal Department of Housing and Urban Development, Part VI, 24 C.F.R. Ch. 1, Vol. 56, No. 44, as published in the Federal Register March 6, 1991.

IV. SOILS
Developer agrees to accept the Portion A Site in its as -is condition, subject only to express representations and warranties made by City under the AHA and assumes responsibility for surface and subsurface conditions at the Portion A Site and the suitability of the Portion A Site for the Improvements. Developer will undertake all investigation of the Portion A Site as it shall deem necessary and has not received or relied upon any representations of City, its officers, agents and employees.

V. SPECIAL AMENITIES
Developer shall undertake all improvements required by City as a condition of development of the Portion A Site under the Entitlements.

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Attachment No. 10

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Rocklin Site A Portion, v3
ATTACHMENT NO. 10

CERTIFICATE OF COMPLETION

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

APN: ______________

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

CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (the “Certificate”) is made by the CITY OF ROCKLIN, a municipal corporation (the “ City”), in favor of PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P. , a California limited partnership (the “Developer”), as of the date set forth below.

R E C I T A L S
A. City and Developer have entered into that certain unrecorded Affordable Housing Agreement (the “AHA”) dated as of ________ __, 202_ concerning the redevelopment of certain real property situated in the City of Rocklin, California, as more fully described in Exh ibit “A” attached hereto and made a part hereof ( the “ Portion A Site”). A copy of the AHA is on file with City as a public record.

B. As referenced in Section 6.13 of the AHA, City is required to furnish Developer or its successors with a Certificate of Completion upon completion of construction of the “Improvements” (as defined in Section 1.1 of the AHA), which Certificate is required to be in such form as to permit it to be recorded in the Recorder’s Office of Placer County. This Certificate is conclusive determination of satisfactory completion of the construction and development required by the AHA.

C. City has conclusively determined that the construction and development of the Development has been satisfactorily completed.

NOW, THEREFORE, City hereby certifies as follows:

1. City does hereby certify that the Improvements to be constructed by Developer has been fully and satisfactorily completed in full conformance with the AHA. 679

Attachment No. 10

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

3. This Certificate shall not constitute evidence of Developer’s compliance with those covenants in the AHA that survive the issuance of this Certificate.

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

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

IN WITNESS WHEREOF, City has executed this Certificate of Completion this ___ day of ________________, 202__.

CITY OF ROCKLIN, a municipal corporation
By:

Aly Zimmermann
City Manager

ATTEST:

Avinta Madhukansh-Singh, City Clerk

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Exhibit “A” to Attachment No. 10

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EXHIBIT “A” TO ATTACHMENT NO. 10

LEGAL DESCRIPTION
Real property in the City of Rocklin, County of Placer, State of California, described as follows:
[to come]

APN:

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Rocklin Site A Portion, v3

STATE OF CALIFORNIA )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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 of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

Signer is representing:

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Attachment No. 11

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ATTACHMENT NO. 11

CITY REGULATORY AGREEMENT
RECORDING REQUESTED BY:

WHEN RECORDED RETURN TO:

City of Rocklin
3970 Rocklin Road
Rocklin, California 95677
Attention: City Manager

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

Exempt from fee per Government Code section 27388.1(a)(2); recorded concurrently in connection with a transfer subject to the imposition of documentary transfer tax

REGULATORY AGREEMENT
These Covenants, Conditions and Restrictions, herein sometimes referred to as these “CC&Rs” or “Declaration” or “Regulatory Agreement” are made by the signatories hereto.

R E C I T A L S
WHEREAS, each of the CITY OF ROCKLIN, a municipal corporation (“City”), the CITY OF ROCKLIN, a charter city duly organized and existing under and by virtue of the Constitution and the laws of the State of California (“City”), and PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P., a California limited partnership (“Developer”) is a party to this Declaration. City and Developer are sometimes collectively referred to herein as the “Declarants.” WHEREAS, City and Developer have entered into that certain unrecorded Amended and Restated Affordable Housing Agreement dated as of ________ __, 202 5 (the “ AHA”) for the improvement and development of certain real property described in Exhibit “A” (to which these CC&Rs are attached) as the “ Portion A Site ”, which AHA provides for the recordation of this Regulatory Agreement. The AHA is incorporated herein by t his reference and any capitalized term not defined herein shall have the meaning established therefor in the AHA. A copy of the AHA is on file with City as a public record.

WHEREAS, this Regulatory Agreement establishes a plan for the improvement, development and maintenance of the Portion A Site, for the benefit of City.

WHEREAS, it is contemplated under the AHA that, as of the recordation of this Regulatory Agreement, Developer has entered into or will enter into a lease of the “ Portion A Site” and described in the legal description attached hereto as Exhibit “A” and incorporated herein by this reference. The form of the lease, as prescribed by the AHA, is referenced to as the “City Lease.” 683

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WHEREAS, the AHA sets forth certain restrictive covenants applicable to the Portion A Site, particularly the use of the Portion A Site for the provision of rental housing units available to Extremely Low Income Households, Very Low Income Households, and Low Income Households at Affordable Rents as those terms are defined therein.

WHEREAS, City and Developer wish to adopt this Regulatory Agreement to further govern the use of the Portion A Site in conjunction and along with the AHA and to ensure that City achieves credit for production of affordable housing units in th e manner described by Section 33413 of the California Health and Safety Code.

NOW, THEREFORE, each of City (which is the owner of the Portion A Site) and Developer (which shall own improvements upon development thereon under the AHA) in City, declares that the Portion A Site shall be held, transferred, encumbered, used, sold, conveyed, leased and occupied subject to the Covenants, Conditions and Restrictions hereinafter set forth expressly and exclusively for the use and benefit of said prope rty, and City. Each and all of the restrictions, limitations, conditions, covenants, liens, reservations and charges herein contained shall run with the land and be recorded on the property title and shall be binding on Declarants, their grantees, success ors, heirs, executors, administrators, devisees or assigns, and all subsequent owners of all or any part of the Portion A Site.

ARTICLE I

DEFINITIONS
The definitions provided herein shall be applicable to this Declaration and also to any amendment or suppl emental Declaration (unless the context implicitly or explicitly shall prohibit), recorded against the Portion A Site pursuant to the provision of this Declaration. Any capitalized terms not defined herein shall have the respective meanings set forth therefor in the AHA. “Adjacent City Parking Area” has the meaning set forth therefor in the AHA. “Affiliated Person” means, when used in reference to a specific person, any person that directly or indirectly controls or is controlled by or under common control with the specified person, any person that is an officer or director of, a trustee of, or a general partner, managing member or operator in, the specified person or of which the specified person is an officer, director, trustee, general partner or managing member, or any person that directly or indirectly is the beneficial owner of ten percent (10%) or more of any class of the outstanding voting securities of the specified person. “Affordable Housing Project” means an affordable housing project operated in conformity with this Regulatory Agreement throughout the Required Covenant Period. “Affordable Rent” has the following meaning: For an Extremely Low Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thir ty percent (30%) of thirty percent (30%) of the Median Income for the Area for a household size appropriate to the unit. For a Very Low Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thirty percent (30 %) of fifty percent (50%) of the Median Income for the Area for a household size appropriate to the unit. For a Lower Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thirty percent (30%) of sixty percent ( 60%) of the Median Income for the Area for a household size appropriate to the Unit. “Household size appropriate to the unit,” as used herein, means two persons for each one -bedroom 684

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unit, three persons for each two -bedroom unit, and four persons for ea ch three-bedroom unit. The maximum monthly rental amount of the units shall be adjusted annually by the formula set forth above upon the promulgation of revised Placer County median income figures by regulation of the California Department of Housing and Community Development. In addition, in the event tax credits are utilized to finance the Approved Housing Project, Health and Safety Code Section 50053 provides in part that rents prescribed under the tax credit program may be utilized. Actual rent charged may be less than such maximum rent.
“Approved Housing Project ” means all improvements as provided to be developed by Developer under the AHA. The Approved Housing Project must be completed in strict conformity with all specifications contained in or referred to in the AHA. “Area” means the Placer County, as periodically defined by HUD. “Calculation of Affordable Rents ” means the worksheet sub stantially in the form of Attachment No. 7 to the AHA.
“Certificate” or “Certification” is defined in Section 3(a). “City”, as defined in the first Recital hereof, means the City of Rocklin, a charter city duly organized and existing under and by virtue of the Constitution and the laws of the State of California. “City Code” means and refers to the City of Rocklin Municipal Code as revised from time to time and includes, without limitation, the Uniform Codes. “Commencement Date of the City Lease” means the commencement of the City Lease as more particularly set forth therein.
“City” means the City of Rocklin and its successors in interest. “City Lease” means a ground lease substantially in the form of Attachment No. 6 to the AHA. “Common Areas” means all areas on the Portion A Site that are open or accessible to all tenants of the Portion A Site (such as grounds, but excluding buildings). “Extremely Low Income Households ” means households earning not greater than thirty percent (30%) of Median Income for the Area pursuant to Health and Safety Code Section 50106. “Extremely Low Income Unit ” or “ Extremely Lower Income Unit ” means Unit occupied at Affordable Rent by an Extremely Low Income Household.
“Gross Income” means all payments from all sources received by a person (together with the gross income of all persons of the age of 18 years or older who intend to reside with such person in one residential unit) whether in cash or in kind as calculated pursuant to the Department of Housing and Urban Development (“HUD”) Regulations (24 C.F.R. § 813) in effect as of the Date of Agreement. “Low Income Household ” or “ Lower Income Household ” means a household earning not greater than sixty percent (60%) of median income for the Area. 685

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“Low Income Unit ” or “ Lower Income Unit” means Unit occupied at Affordable Rent by a Low Income Household.
“Map of the Portion A Site” means Exhibit B hereto.
“Median Income for the Area ” means the median income for the Area as most recently determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or, if programs under Section 8 are terminated, Median Income for the Area determined under the method used by the Secretary prior to such termination. “Prescribed Income Lev els” means the following: (i) for six (6) one -bedroom Units, thirty percent (30%) of Median Income; (ii) for two (2) two-bedroom Units, thirty percent (30%) of Median Income; (iii) for six (6) three -bedroom Units, thirty percent (30%) of Median Income; (i v) for seven (7) one-bedroom Units, fifty percent (50%) of Median Income; (v) for four (4) two -bedroom Units, fifty percent (50%) of Median Income; (vi) for two (2) three -bedroom Units, fifty percent (50%) of Median Income; (vii) for thirteen (13) one -bedroom Units, sixty percent (60%) of Median Income; (viii) for eight (8) two -bedroom Units, sixty percent (60%) of Median Income; and (ix) for two (2) three-bedroom Units, sixty percent (60%) of Median Income. “Project” has the meaning set forth therefor in the AHA. “Regulatory Agreement ” means this Regulatory Agreement and any amendments, modifications or supplements which may also be referred to herein as this “Declaration.” “Required Affordable Unit” means any of one hundred nine (109) of the dwelling units in the Project, as constructed under the AHA, and available to, occupied by, or held vacant for occupancy only by tenants qualifying as Extreme Low Income Households , Very Low Income Households and Low Income Households and rented at Afforda ble Rent in conformity with the Prescribed Income Levels.
“Required Covenant Period ” means the period commencing on the date this Regulatory Agreement is recorded and ending eighty-seven (87) years thereafter. “The Portion A Site ” means all of the real pro perty and appurtenances as described in the Recitals above, including all structures and other improvements thereon, and those hereafter constructed.
“Tax Credit Rent ” means that maximum rent permitted to be paid for a household corresponding to an income category set forth in this agreement (such as 50% of Median Income) under the Tax Credit Rules.
“Tax Credit Rules” means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and Ca lifornia Health and Safety Code Section 50199, et seq., and the rules and regulations implementing the foregoing, including without limitation the program regulations promulgated by TCAC. “Tax Credits ” means 4% Low Income Tax Credits granted pursuant to Se ction 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq. 686

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“Tenant Selection and Tenant Services Plan” shall have the meaning set forth in the AHA. “Uniform Codes” means each of the following as in effect from time to time as approved by City: the Uniform Building Code, the Uniform Housing Code, the National Electrical Code, the Uniform Plumbing Code, the Uniform Mechanical Code, and the Uniform Code for the Abatement of Dangerous Buildings.
“Unit” means a dwelling unit on the Project.
“Very Low Income Households ” means households earning not greater than fifty percent (50%) of Median Income for the Area pursuant to Health and Safety Code Section 50105. “Very Low Income Unit ” means Unit occupied at Affordable Rent by a Very Low Income Household.
“Year” means a calendar year, excepting that the last Year hereunder shall be deemed to end as of the expiration of this Regulatory Agreement.

ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the Approved Housing Project on the Portion A Site in conformity with the AHA. Thereafter, the Portion A Site shall be operated as an Affordable Housing Project and devoted only to the uses specified in the AHA and the City Lease for the periods of time specified herein. All uses conducted on the Portion A Site, including, without limitation, all activities undertaken by Developer pursuant to the AHA, shall conform to all applicable provisions of the City Code and the City Approvals.

The Portion A Site shall be used, maintained and operated in accordance with the AHA, the City Lease, and this Regulatory Agreement for the Required Covenant Period. None of the units in the Project shall at any time be utilized on a transient basis nor shall the Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer court or park. No part of the Portion A Site , from the date Developer acquired a leasehold interest in the Portion A Site, has been or will at any time be owned or used as a cooperative housing corporation or a community apartment project or a stock cooperative.

Section 2. Affordable Housing.

Number of Units. Throughout the Required Covenant Period, the Required Affordable Units shall be rented to households as set forth as the Prescribed Income Levels. The Required Affordable Units shall be continuously occupied by or held available for occupancy by Extremely Low Income Household or, as applicable, Very Low Income Households or Low Income Households, at an Affordable Rent. All Required Affordable Units shall be rented at Affordable Rent. For this purpose, a tenant who qualifies as an Extremely Low Income Hou sehold at the time he or she first occupies an Affordable Unit shall be deemed to continue to be so qualified until such time as a recertification of such individual’s or family’s income in accordance with Section 3 below demonstrates that such individual or family no longer qualifies as an Extremely Low Income Household. Moreover, a unit previously occupied by an Extremely Low Income Household, and then vacated shall be considered occupied by such Extremely Low Income Household until reoccupied, 687

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other than for a temporary period, at which time the character of the unit shall be redetermined; a similar protocol shall apply with respect to Very Low Income Units and Lower Income Units respectively. In no event shall such temporary period exceed thirty-one (31) days.

At such time as a tenant ceases to qualify as an Extremely Low Income Household, the Developer shall replace each such Extremely Low Income Unit by designating the next available unit and any necessary units thereafter as an Extremely Low Income Unit. For purposes of this Agreement, such designated unit will be considered an Extremely Low Income Unit if it is held vacant and available for occupancy by an Extremely Low Income Household, and, upon occupancy, the income eligibility of the tenant as a n Extremely Low Income Household is verified and the unit is rented at Affordable Rent. A similar protocol shall apply with respect to Very Low Income Units and Lower Income Units respectively.

Duration of Affordability Requirements. The Required Afforda ble Units shall be available to and occupied by Extremely Low Income Households and, to the extent provided under Prescribed Income Levels, Extremely Low Income Households, Very Low Income Households, Lower Income Households, and, if applicable, Moderate Income Households at Affordable Rent throughout the Required Covenant Period. All tenants residing in any Unit for which rents are limited by virtue of this Regulatory Agreement or pursuant to other regulation during the last two (2) years of the Required Covenant Period shall be given notice by Developer at least once every six (6) months prior to the expiration date of this requirement, that the rent payable on such Unit may be raised to a market rate rent at the end of the Required Covenant Period.

Selection of Tenants. As specified hereinbelow, Developer shall demonstrate to City that the proposed tenants of each of the Required Affordable Units constitutes an Extremely Low Income Household or, to the extent provided herein, a Very Low Income Household or a Lower Income Household. To the greatest extend allowable, Developer shall cause the Required Affordable Units to be rented in accordance with the Tenant Selection and Tenant Services Plan.

Prior to the rental or lease of an Required Affordable Unit to a tenant, and as set forth in this Section 2 of Article II of this Declaration, Developer shall require the tenant to execute a written lease and to complete an Income Verification certifying t hat the tenant(s) occupying the Required Affordable Unit is/are an Extremely Low Income Household or, to the extent provided herein, a Very Low Income Household or a Lower Income Household and meet(s) the eligibility requirements established for the Required Affordable Unit. Developer shall verify the income of the tenant(s).

Developer shall accept as tenants on the same basis as all other prospective tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing pr ogram under Section 8 of the United States Housing Act of 1937, or its successor. Developer shall not apply selection criteria to Section 8 certificate holders which are more burdensome than criteria applied to any other prospective tenants.

Determination of Affordable Rent for the Affordable Units. The Affordable Units shall be rented or leased at Affordable Rent. As of the approval of the AHA, Affordable Rent is calculated in accordance with the Affordable Rent Worksheet or, if lower, the Tax Credit Rents. The maximum monthly rental for the Affordable Unit shall be adjusted annually as permitted by Section 50053 of the California Health and Safety Code based on the annual adjustment to the Median Income for the Area established pursuant to Section 50093 of the California Health and Safety Code, as more particularly set forth in the Affordable Rent Worksheet.
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Relationship to Tax Credit Requirements. Notwithstanding any other provision of this Regulatory Agreement, to the extent that requirements associated with the provision of financing, other than by City, are more restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Regulatory Agreement, whichever is more restrictive in each case, shall control and Developer’s compliance therewith shall not be a default hereunder. If, following completion of construction of the Improvements, Developer restricts a greater number of Units as affordable units than is required under this Regulatory Agreement as of the date it is first executed, Developer agrees, upon request therefor by City , to execute and record such addendum or supplement to this Regulatory Agreement as would restrict such additional units to be affordable on a similar basis to that set forth herein.

DEVELOPER UNDERSTANDS AND KNOWINGLY AGREES THAT THE

MAXIMUM RENTAL FOR THE AFFORDABLE UNITS ESTABLISHED BY THE AHA, THIS

REGULATORY AGREEMENT AND THE CITY LEASE IS SUBSTANTIALLY BELOW THE FAIR MARKET RENT FOR THE AFFORDABLE UNITS.

Section 3. Developer Verification and Program Compliance.

Income Verification and Certification. Developer will obtain and maintain on file an Income Verification from each tenant (for every Unit on the Portion A Site), dated immediately prior to the initial occupancy of such tenant in the Project.

On July 15 following the completion of the Improvements, Developer shall file with City or its designee a Certificate, containing all information required pursuant to Health and Safety Code Section 33418, in a form prescribed by City . Each Certificate shall cover the immediately preceding Lease Year.

Developer shall maintain on file throughout the Required Covenant Period each tenant’s executed lease and Income Verification and rental records for the Project and the Housing Units. Developer shall maintain complete and accurate records pertaining to th e Extremely Low Income Units, the Very Low Income Units, the Low Income Units and any other Units, and will permit any duly authorized representative of City to inspect the books and records of Developer pertaining to the Project, including those records pertaining to the occupancy of the Extremely Low Income Units, the Very Low Income Units, the Low Income Units and any other units. Developer shall prepare and submit to City annually commencing the July 15 first following the recording of the Memorandum of Lease and continuing throughout the Required Covenant Period, a Certificate of Continuing Program Compliance. Such documentation shall state for each unit in the Project the unit size, the rental amount, the number of occupants, and the income of the oc cupants and any other information which may be used to determined compliance with the terms of this Regulatory Agreement and the AHA.

As part of its annual report, Developer shall include a statement of amounts payable by Developer under this Regulatory Ag reement supported by an Audited Financial Statement (prepared by an independent accounting firm reasonably acceptable to City) which sets forth information in detail sufficient for adequate review by City for the purposes of confirming those amounts payabl e by Developer to City, including without limitation amounts payable under the City Note, as well as showing the general financial performance of the Project (“Annual Financial Report”). Each Annual Financial Report shall include a profit and loss stateme nt showing Gross Revenues, Operating Expenses, Debt Service, Capital Replacement Reserve, and Residual Receipts, all certified by the Audited Financial Statement. In the event the amounts reported or paid deviate by five percent (5%) 689

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or more from that amo unt owing upon review of Developer’s submittal, Developer shall reimburse City for its cost to review (which may require engagement of auditors) and collect the amounts owing; such amounts shall, until paid, be added to the amount payable under the City Promissory Note.

In addition, as part of its annual report, at City’s request, but not less frequently than prior to each initial and subsequent rental of each Unit to a new tenant household (but not lease renewals) and annually thereafter, Developer shall also provide to City completed income computation, asset evaluation, and certification forms, for any such tenant or tenants, in substantially the form provided by City from time to time. Developer shall obtain an annual certification from each household of each Unit demonstrating that such household is an Extremely Low Income Household, a Very Low Income Household or a Low Income Household, as applicable, and meets the eligibility requirements established for each such Unit. Developer shall verify the inc ome certification of each tenant household. In order to comply with this Section 3, Developer shall submit to City any and all tenant income and occupancy certifications and supporting documentation required to be submitted to TCAC pursuant to the Tax Credit Rules and the Tax Credit Regulatory Agreement for the Project; provided, City may request (and Developer shall provide) additional documentation to assist City’s evaluation of Developer’s compliance with this Agreement, if determined to be necessary in the reasonable discretion of the City Manager , specifically including (without limitation) any documentation or additional certifications that may be necessary to verify compliance with all requirements from all funding sources. This requirement is in ad dition to and does not replace or supersede Developer’s obligation to annually submit the Certificate of Continuing Program Compliance to City. Further, City has the right, but not the obligation to monitor compliance with respect to each tenant household at the Project, and City’s election to monitor some, but not all, of the Units shall not constitute a waiver of City’s right to monitor and enforce compliance with respect to all Units in the future.

Verification of Income of New and Continuing Residential Tenants. Gross income calculations for prospective (and continuing) tenants shall be determined in accordance with 25 Cal.

Code Regs. Section 6914. Developer shall verify the income and information provided in the income certification of the proposed tenant as set forth below. (a) Developer shall verify the income of each proposed tenant of the Project and by at least one of the following methods as appropriate to the proposed tenant:
(i) obtain two (2) paycheck stubs from the person’s two (2) most recent pay periods;
(ii) obtain a true copy of an income tax return from the person for the most recent tax year in which a return was filed;
(iii) obtain an income verification certification from the employer of the person;
(iv) obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the person receives assistance from such agencies; or
(v) obtain an alternate form of income verification reasonably requested by Authority, if none of the above forms of verification is available to Developer. 690

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Verification Regarding Eligibility of New Residential Tenants. Developer shall retain documentation regarding the eligibility of each new tenant household.

Reporting Amounts. City is required by Section 33418 of the California Health and Safety Code to require Developer to monitor affordability of the Affordable Units and submit the annual reports required by Section 3 of Article II of this Declaration. City relies upon the information contained in such reports to satisfy its own reporting requirements and to provide certain information described at Sections 33080 and 33080.1 of the California Health and Safety Code. In the event Developer fails to submit to City or its designee the Certification as required by Section 3(a), Developer shall be in noncompliance with this Regulatory Agreement. In the event Developer remains in noncompliance for thirty (30) days following receipt of written notice from City of such noncompliance under Sections 3(a) and 3(b) of Article II hereinabove, then Developer shall, without further notice or opportunity to cure, pay to City Two Hundred Fifty Dollars ($250.00) per Required Affordable Unit for each year Developer fails to submit a Certificate covering each and every housing unit on the Portion A Site.

Section 4. Nondiscrimination. Developer shall refrain from restricting the rental, sale or lease of the Portion A Site , or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(1) In deeds: “The grantee herein covenants by and for hims elf or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to t he selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
(2) In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Sec tion 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her , establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
(3) In contracts: “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of 691

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the Government Code, as those bases are defined in Sections 12926, 12926.1, subd ivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall t he grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” The covenants established in this Declaration and the deeds of conveyance for the Portion A Site shall, without regard to technical classification and designation , be binding for the benefit and in favor of City, its successors and assigns, City and any successor in interest to the Portion A Site, together with any property acquired by Developer pursuant to this Agreement, or any part thereof. The covenants agains t discrimination as set forth in this Section 1 of Article II shall remain in effect in perpetuity.

Section 5. Keeping of Animals. No animals of any kind shall be raised, bred or kept on the Portion A Site , except that domesticated dogs, cats or other hou sehold pets may be kept by the tenants in the Project at the discretion of Developer and subject to compliance with all laws. However, no animal shall be kept, bred or maintained for any commercial purpose or for fighting purposes.

Nothing permitted herein shall derogate in any way the right of Developer to further restrict keeping of pets.

Section 6. Parking of Vehicles. Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the parking areas designated for the Re quired Affordable Units.

Developer shall not permit the parking, storing or keeping of any large commercial type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger vehicle, upon any portion of the Common Areas, including parking spaces. For purposes of this Section 6, a picku p truck with a pickup bed mounted camper shall be considered a private passenger vehicle; provided however, that no such vehicle shall be used for residential purposes while parked on the premises.

Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the Common Area, including the parking areas, except for emergency repairs thereto and then only to the extent necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall be stored or kept in the Common Area. Developer shall give the vehicle owner not less than four (4) days, nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or kept in violation of the provisions of this Declaration. Notice shall consist minimally of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any vehicle parked, stored or kept in violation of the provisions of this Declaration.

Section 7. Maximum Occupancies . No persons shall be permitted to occupy any Apartment within the Project in excess of applicable limit of maximum occupancy set by the City Code and the laws of the State of California.
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Section 8. Signs Required. “Illegally parked vehicles will be towed” signs in compliance with California Vehicle Code requirements will be posted and enforced by Developer.

Section 9. Fences and Electronic Installations. Developer shall not install or knowingly permit to be installed on the exterior of any improvement or building on any fences or any antenna or other television or radio receiving device, excepting satellite dishes having a diameter of eighteen inches (18”) or less, without prior written consent of City. This prohibition shall not prohibit the installation of cable television or subscription wires or receiving devices.

Section 10. Structural Change. Nothing shall be done on the Portion A Site in, on or to any building which would materially structurally change the exterio r or the interior bearing walls of any such building or structure, except as otherwise provided herein. Nothing herein shall affect the rights of Developer to repair, alter or construct improvements on the buildings on the Portion A Site unless such repair, alteration or improvement would impair the structural integrity and/or exterior appearance of said buildings. Nothing herein shall be deemed to prohibit work ordered to be performed by the City building official.

Section 11. Compliance with Laws . Developer shall comply with all applicable laws in connection with the development and use of the Portion A Site , including without limitation the California Community Redevelopment Law (Health and Safety Code Section 33000, et seq.) and Fair Housing Act ( 42 U.S.C. § 3601, et seq., and 24 C.F.R. § 100.300, et seq.). Developer shall also comply with the Tax Regulatory Agreement. Developer is a sophisticated party, with substantial experience in the acquisition, development, financing, obtaining financing for, marketing, and operation of affordable housing projects, and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the acquisition, development and operation of the Project and has obtained advice from any advisers of its own choosing in connection with this Agreement.

ARTICLE III
DUTIES OF DEVELOPER: SPECIFIC MAINTENANCE RESPONSIBILITIES Section 1. Exterior Building Maintenance . All exterior, painted surfaces shall be maintained at all times in a clean and presentable manner, free from chipping, cracking and defacing marks. Any such defacing marks shall be cleaned or removed within a reasonable period of ti me as set forth herein.

Section 2. Front and Side Exteriors . Developer shall at all times maintain the front exterior and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair and any visible side exteriors. Developer shall hire maintenance personnel to maintain and/or repair any front exterior or yard or visible side yard and exterior of any lot or building.

Section 3. Graffiti Removal. All graffiti, and defacement of any type, including marks, words and pictures must b e removed and any necessary painting or repair completed by the later to occur of (i) seventy-two (72) hours of their creation or (ii) seventy-two (72) hours after notice to Developer.
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Section 4. Driveways. All driveways must be paved and maintained with impervious material in accordance with the City Code. In addition, all water must be made to drain freely to the public part of the waterway without any pooling.

Section 5. Exterior Illumination. Developer shall at all times maintain adequate lighting in all entrance ways and parking areas. Adequate lighting means outdoor, night lighting designed and installed, which provides no less than one (1.0) foot candles in the parking areas and no less than one and one-half (1-1/2) foot candles in the walking are as or common areas and no less than 0.2 foot candles at the point of least illumination.

Section 6. Front Setbacks. All front setback areas that are not buildings, driveways or walkways shall be adequately and appropriately landscaped in accordance with m inimum standards established by City and shall be maintained by Developer. The landscaping shall meet minimum standards set from time to time by City.

Section 7. Trash Bins. All trash shall be collected and placed at all times in an enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located so that the bin will, to the extent possible, be readily accessible from the street.

Section 8. Prohibited Signs. No sign of any kind shall be displayed to the public view on or from any portion of the Portion A Site without the approval of City and appropriate City departments if any as required by the City Code.

ARTICLE IV

OBLIGATION TO MAINTAIN, REPAIR AND REBUILD
Section 1. Maintenance by Developer . Developer shall, at its sole cost and expense, maintain and repair the Portion A Site and the improvements thereon keeping the same in a decent, safe and sanitary manner, in accordance with the United States Department of Housing and Urban Development (“HUD”) Uniform Physical Condition Standards (24 CFR 5.703) and as required under 24 CFR 92.251(a) , and in good condition and making all repairs as they may be required by these CC&Rs and by all applicable City Code provisions including without limitation Uniform Code provisions. Developer shall also maintain the landscaping required to be planted in a healthy condition.

If, at any time, Developer fails to maintain the Project or any portion thereof, and said condition is not corrected after the expiration of forty -five (45) days from the date of written notice from City, City may perform the necessary maintenance and Developer shall pay such costs as are reasonably incurred for such maintenance. Payment shall be due within fifteen (15) days of receipt of an invoice from City.

Section 2. Damage and Destruction Affecting Project - Developer’s Duty to Rebuild. If all or any portion of the Portion A Site and the improvements thereon is damaged or destroyed by fire or other casualty, it shall be the duty of Developer to rebuild, repair or reconstruct said portion of the Portion A Site and/or the improvements in a timely manner which will restore it to Code compliance condition.

In furtherance of the requirements of this Section 2, Developer shall keep the construction on the Portion A Site insured by carriers at all times satisfactory to City against loss by fire and such other hazards, casualties, liabilities and contingencies as included within an all risk extended coverage hazard insurance policy, in an amount of the full replacement cost of the constructions. In the event of loss, Developer shall give prompt notice to the insurance carrier and to City. 694

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If the Portion A Site is abandoned by Developer, or if Developer fails to respond to City within thirty (30) days from the date notice is mailed by City to Developer that the insurance carrier offers to settle a claim for insurance benefits, City is authorized to collect and apply the insurance proceeds at City’s option either to restoration or repair of the Portion A Site.

Section 3. Variance in Exterior Appearance and Design. In the event the Project sustains substantial physical damage due to a casualty event, Developer may apply to the City of Rocklin for approval to reconstruct, rebuild or repair in a manner which will provide different exterior appearance and lot design from that which existed prior to the date of the casualty.

Section 4. Time Limitation. Upon damage to the Portion A Site or the Project or other improvements, Developer shall be obligated to procee d with all due diligence hereunder and commence reconstruction within two (2) months after the damage occurs and complete reconstruction within six (6) months after damage occurs or demolition and vacate within two (2) months, unless prevented by causes be yond their reasonable control, in which event reconstruction shall be commenced and completed at the earliest feasible time ; excepting in the event of a casualty causing very substantial damage that cannot reasonably be remedied within six (6) months from the commencement of construction, the period for construction shall be deemed extended for a reasonable time (but not to exceed twelve (12) months) to remedy such damage.

ARTICLE V

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

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

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

Section 2. Nuisance. The resul t of every act or omission whereby any of the covenants contained in this Declaration are violated in whole or in part is hereby declared to be and constitutes a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or pr ivate, shall be applicable against every such result and may be exercised by any owner or its successors in interest, without derogation of City’s rights under law.

Section 3. Right of Entry . In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the project area for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of City, and for maintenance and/or repair of any or all publicly owned utilities. In addition, City has the right of entry at reasonable hours and upon and after reasonable attempts to contact Developer, on any lot to effect emergency repairs or maintenance which Developer has failed to perform. Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the Portion A Site at reasonable hours to enforce compliance with this Declaration which Developer has failed to perform. City shall additionally have rights of entry as a 695

Attachment No. 11

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landlord under the City Lease. This Section 3 is without limitation as to the exercise of police powers of City.

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

Section 5. Cumulative Remedies . The remedies herein provided for breach of the covenants contained in this Declaration shall be deemed cumulative, and none of such rem edies shall be deemed exclusive.

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

Section 7. Enforcement and Nonliability. City may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing this Declaration. However, City will not be subject to any liability for failure to affirmatively enforce any provision of this Declaration.

ARTICLE VI

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

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

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

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

Developer shall be obligated by this Declaration to comply with the provisions hereof, as well as the City Lease . In the event of conflict, Developer shall comply with the most stringent requirements, in each case.
696

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

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

Section 7. Notices. Any notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either personally or by certified mail. Notice to City shall be made by certified mail to the City Manager or his or her designee at 3970 Rocklin Road, Rocklin, California 95677 (with a copy to the City Attorney ), and shall be effective upon receipt.

Notice to Developer shall be made by certified mail to Pacific Street Housing Associates Four, L.P., a California limited partnership, 3111 Camino del Rio North, Suite 800, San Diego, CA 92108, and shall be effective upon receipt. Such addresses may be changed from time to time by notice in writing.

697

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PACIFIC STREET HOUSING ASSOCIATES FOUR,
L.P., a California limited partnership

By: CHW Pacific Street Four LLC, its managing
general partner
By: Community HousingWorks, a California
nonprofit public benefit corporation (its sole
member and manager)

By: Community HousingWorks, a California
nonprofit public benefit corporation (its sole
member and manager)

By: __________________________________
Kevin Leichner
Senior Vice President Housing and Real Estate
Development

698

Attachment No. 11

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CITY:

CITY OF ROCKLIN, a municipal corporation
By:

Jill Gayaldo, Mayor
ATTEST:

Avinta Madhukansh-Singh, City Clerk
APPROVED AS TO FORM:

Mark Huebsch, Consulting Attorney

699

Exhibit “A” to Attachment No. 11

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Rocklin Site A Portion, v3

EXHIBIT A

LEGAL DESCRIPTION OF THE PORTION A SITE
Real property in the City of Rocklin, County of Placer, State of California, described as follows:

[to come]

700

Exhibit “B” to Attachment No. 11

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EXHIBIT B

MAP OF THE PORTION A SITE
[to come]

701

Rocklin Site A Portion, v3

STATE OF CALIFORNIA )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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 of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

Signer is representing:

702

Rocklin Site A Portion, v3

STATE OF CALIFORNIA )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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 of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

Signer is representing:

703

Rocklin Site A Portion, v3

STATE OF CALIFORNIA )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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 of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

Signer is representing:

704

Attachment No. 12

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ATTACHMENT NO. 12

INCOME VERIFICATION
Part I -- General Information

1. Project Location:

2. Landlord’s Name:

Part II -- Unit Information

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

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

A. (My/Our) gross income (anticipated total annual income) does not exceed thirty percent (30%) of the median income for the Placer County as such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable median income is $ . The following computation includes all income (I/we) anticipate receiving for the 12-month period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier.

Tenant(s)’ Initials
B. (My/Our) gross income (anticipated total annual income) exceeds thirty percent (30%) but does not exceed fifty percent ( 50%) of the median income for the Placer Coun ty as such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable median income is $_______. The following computation includes all income (I/we) anticipate receiving for the 12 month period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier.

Tenant(s)’ Initials
B. (My/Our) gross income (anticipated total annual income) exceeds fifty percent (50%) but does not exceed sixty percent (60%) of the median income for the Placer County as such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community 705

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Development in the California Code of Regulations. (I/We) un derstand that the applicable median income is $_______. The following computation includes all income (I/we) anticipate receiving for the 12-month period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the date on which ( I/we) will initially occupy such unit, whichever is earlier.

Tenant(s)’ Initials

706

Attachment No. 12

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1. All tenants must complete the following:

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

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

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

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

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

Alimony, child support, other
periodic allowances

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

Other

Total:

Total x 12 _________________ = Gross Annual Household Income Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; lump sum payments such as inheritances, insurance payments (including payments under health and accident insuranc e and worker’s compensation), 707

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capital gains and settlement for personal or property losses; educational scholarships paid directly to the student or educational institution; government benefits to a veteran for education; special pay to a serviceman head of family away from home and under hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible household; relocation payments under Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received pursuant to participation in the following programs: ROCKLIN, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience.

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

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

4. (I/We) acknowledge that (I/we) have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of (my/our) agreement with the Landlord to rent the unit and will additionally enable the Landlord and/or the City of Rocklin to initiate and pursue all applicable legal and equitable remedies with respect to the unit and to me/us.

(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct.

Date Tenant

Date Tenant
708

Attachment No. 12

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

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

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

Signature Date
Please send to:

709

Attachment No. 12

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

Signature Date

710

Rocklin CHW AHA v6 711

Attachment No. 13

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Rocklin CHW AHA v6
ATTACHMENT NO. 13

CITY PROMISSORY NOTE
________________, 202_ (“Date of Promissory Note”) $_____________ Rocklin, California
FOR VALUE RECEIVED, the undersigned PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P., a California limited partnership, (“Maker” or “Developer”), having its principal place of business at 3111 Camino del Rio North , Suite 800, San Diego, California 92108, promises to pay to the order of the CITY OF ROCKLIN, a municipal corporation (“Payee” or “City”), at 3970 Rocklin Road, Rocklin, California 95677, or at such other place as the holder of this Note from time to time may designate in writing, the principal sum of [Two Million Six Hundred Thousand Dollars ($2,600,000.00)] (the “Original Principal Amount”), as well as additional amounts described in Section 1 below, together with interest on the unpaid principal amount of this Promissory Note (“Promissory Note”) from time to time outstanding at the “Applicable Interest Rate,” as defined in that certain Affordable Housing Agreement dated as of ________ _ _, 202_ by and between City, the City of Rocklin, a municipal corporation (“City”), and Developer (the “AHA”) in lawful money of the United States of America. This Promissory Note is being delivered pursuant to the AHA. The loan evidenced by this Promissory Note shall be governed by such provisions of the AHA (including without limitation the attachments thereto) as shall be applicable. Interest shall accrue on the Original Principal Amount at the Applicable Interest Rate commencing as of the Date of Promissory Note. All capitalized terms used herein shall have the meanings set forth therefor in the AHA. Interest shall accrue only on the City Loan Amount and such additional amounts as may become payable under Section 1 of this Promissory Note.

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

2. Payments.
(a) Payments of Additional Amounts due pursuant to Section 1 hereof shall be due and payable as of the last day of the Lease Year during which an obligation therefor first arises; (b) Excepting to the extent earlier times apply to the payment of Additional Amounts pursuant to paragraph (a) of this Section 2, payments under this Promissory Note shall be due and payable as follows: payments of the Applicable Percentage of Residual Receipts payable on the first anniversary of the Date of the Promissory Note, and each anniversary thereafter until this Promissory Note has been satisfied in full. In addition, the entire amount of the City Loan together with accrued interest and any additional amounts which become owing hereunder shall be paid by 712

Attachment No. 13

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Rocklin Site A Portion, v3
maker to Payee as of the fifty-seventh (57th) anniversary of the Date of the Promissory Note (which fifty-seventh anniversary date constitutes the “Maturity Date” of this Promissory Note. (c) Payments to City may, at the option of Payee, be accelerated and shall be due and payable hereunder in the event of the occurrence of any default under the AHA, the City Deed of Trust, this Promissory Note, the City Regulatory Agreement, which default continues past such notice or cure period as may be applicable under the AHA.

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

3. Other Loan Documents; Limitation Upon Refinancing. Repayment of this Promissory Note is secured by a deed of trust (the “ City Deed of Trust”) of this date executed by Maker for the benefit of Payee encumbering the property described in the Deed of Trust (the “Property” or the “Portion A Site”).

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

5. Due on Sale or Encumbrance . In the event of any Transfer (as defined below) of the Property, or any portion thereof or interest therein, Payee shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. As used herein, the term “Transfer” means and includes the direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or other alienation of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract, sales agreement or similar instrument affecting all or a portion of the Property, granting of an option to purchase any portion of or interest in the Property or any interest therein, or the lease of all or substantially all of the Property or of all or substantially all of the improvements located thereon. Transfer shall not include the sale, transfer, assignment, pledge, hypothecation or encumbrance by Developer’s limited partner of its partnership interest to the extent permitted by the AHA nor shall Transfer include the removal of any general partner of Developer by the limited partner for cause and the replacement of s uch removed general partner by another person or entity in accordance with the terms of Developer’s partnership agreement to the extent permitted by the AHA. “Transfer” shall not include a Transfer permitted in the AHA or the leasing of individual Units on the Property so long as Trustor complies with the provisions of the Regulatory Agreement, the City Lease and the AHA relating to such leasing activity. Failure of Beneficiary to exercise the option to declare all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver of the right to exercise this option in the event of any subsequent Transfer.

6. Subordination to Multifamily Note . Developer and the Payee each makes the following representations and warranties to [name of lender’s agent: to come], as Agent (“Agent”):
“The indebtedness evidenced by this Promissory Note is and shall be subordinate in right of payment to the prior payment in full of the indebtedness evidenced by a Multifamily Note of even date herewith in the original principal amount of [approximately $_ _________] issued by Maker and payable to [to come] (“Senior Lender”), or order, to the extent and in the manner provided in that certain Subordination Agreement, dated as of _______________, 20 2_, between the payee of this Promissory Note, and the Senior Lender and the maker of the Promissory Note (the 713

Attachment No. 13

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Rocklin Site A Portion, v3
“Subordination Agreement”). The mortgage or deed of trust securing this Promissory Note is and shall be subject and subordinate in all respects to the Assignment of Rents, Security Agreement and Fixture Filing securing the rights and remedies of the payee and each subsequent holder of this Promissory Note under the mortgage or deed of trust securing this Promissory Note are subject to the restrictions and limitations set forth in the Subordination Agreement. Each subsequent holder of this Promissory Note shall be deemed, by virtue of such holder’s acquisition of the Promissory Note, to have agreed to perform and observe all of the terms, covenants and conditions to be performed or observed by the Subordinate Lender under the Subordination Agreement.” In the event of the refinancing of the senior loan for an amount not in excess of the outstanding principal balance of the existing senior loan and reasonable and customary closing costs, City will execute an instrument or instruments evidencing the subordination of the indebtedness evidenced by this Promissory Note to such new senior loan.

7. Miscellaneous.
(a) Governing Law . All questions with respect to the construction of this Promissory Note and the rights and liabilities of the parties to this Promissory Note shall be governed by the laws of the State of California.
(b) Binding on Successors. This Promissory Note shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Promissory Note. (c) Attorneys’ Fees.
(i) Maker shall reimburse Payee for all reasonable attorneys’ fees, costs and expenses, incurred by Payee in connection with the enforcement of Payee’s rights under this Promissory Note, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state or federal statute, including, without limitati on, reasonable attorneys’ fees, costs and expenses incurred to protect Payee’s security and attorneys’ fees, costs and expenses incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Payee in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted by Payee in connection with any such proceeding. (ii) Payee shall also be entitled to its attorneys’ fees, costs and expenses incurred in any post -judgment proceedings to collect and enforce the judgment. This provi sion is separate and several and shall survive the merger of this Promissory Note into any judgment on this Promissory Note.
(d) Entire Agreement. This Promissory Note and the relevant provisions of the AHA constitute the entire agreement and understandin g between and among the parties in respect of the subject matter of such agreements and supersede all prior agreements and understandings with respect to such subject matter, whether oral or written. (e) Time of the Essence . Time if of the essence with re spect to every provision hereof.
714

Attachment No. 13

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(f) Waivers by Maker. Except as otherwise provided in any agreement executed in connection with this Promissory Note, Maker waives: presentment; demand; notice of dishonor; notice of default or delinquency; notice of acce leration; notice of protest and nonpayment; notice of costs, expenses or losses and interest thereon; and diligence in taking any action to collect any sums arising under this Promissory Note or in any proceeding against any of the rights or interests in o r to properties securing payment of this Promissory Note.
(g) Non-waivers. No previous waiver and no failure or delay by Maker in acting with respect to the terms of this Promissory Note or the City Deed of Trust shall constitute a waiver of any breach, default, or failure of condition under this Promissory Note, the City Deed of Trust or the obligations secured thereby. A waiver of any term of this Promissory Note, the City Deed of Trust or of any of the obligations secured thereby must be made in writin g and shall be limited to the express written terms of such waiver. In the event of any inconsistencies between the terms of this Promissory Note and the terms of any other document related to the loan evidenced by this Promissory Note, the terms of this Promissory Note shall prevail.
(h) Non-recourse Liability of Developer . Notwithstanding anything to the contrary of this Promissory Note, neither Developer nor any of its partners shall be personally liable for any default, loss, claim, damage, expense or liability or any person and the sole remedy against Developer hereunder shall be limited to its interest in the Development. (signature on following page)

715

Attachment No. 13

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By: __________________________________
Kevin Leichner
Senior Vice President Housing and Real Estate
Development

716

Attachment No. 14

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Rocklin CHW AHA v6
ATTACHMENT NO. 14

CITY DEED OF TRUST
Order No.

Escrow No.

Loan No.

WHEN RECORDED MAIL TO:

City of Rocklin
3970 Rocklin Road
Rocklin, California 95677
Attention: City Manager

APN: SPACE ABOVE THIS LINE FOR RECORDER’S USE
Exempt from fee per Government Code section 27388.1(a)(2); recorded concurrently in connection with a transfer subject to the imposition of documentary transfer tax

DEED OF TRUST WITH ASSIGNMENT OF RENTS
(SHORT FORM)
This DEED OF TRUST, made as of ________________, 202_, among PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P. , a California limited partnership , herein called TRUSTOR, whose address is:
3111 Camino del Rio North, Suite 800, San Diego, California 92108 STEWART TITLE GUARANTY COMPANY, a California corporation, herein called TRUSTEE, and the CITY OF ROCKLIN, a municipal corporation, herein called BENEFICIARY, WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of Rocklin, County of Placer, State of California, described as:

SEE EXHIBIT “A” ATTACHED HERETO AND MADE A PART HEREOF. together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) payment of the sum of Two Million Six Hundred Thou sand Dollars ($2,600 ,000.00) with interest thereon according to the terms of a promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and extensions or renewals thereof, (2) the performance of each and every obligation, covenant, promise or agreement of Trustor contained in the City Regulatory Agreement as recorded as to the Property of even date herewith, and that certain unrecorded Affordable Housing Agreement by and between the Beneficiary, the City of Rocklin (“City”) and the Trustor dated as of ________ __, 202_ (the “AHA”), which is on file with the Beneficiary as a public record and is incorporated herein by reference, or contained herein, and (3) payment of additional sums and interest thereon which may herea fter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. A breach or default under the promissory 717

Attachment No. 14

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Rocklin CHW AHA v6
note or a breach or default under the “Agreement” or any instrument referenced in Exhibit B hereto, which is attached hereto and incorporated herein by reference, or under any obligation to which this deed of trust is subordinated, shall be deemed to constitute a default hereunder.

To protect the security of this Deed of Trust, and with respect to the property above described, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutual ly agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Placer County in Book 1028 Page 379 among the Official Records of said County, shall inure to and bind the parties hereto, with r espect to the property above described. Said agreements, terms and provisions contained in said subdivisions A and B, (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law.

The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him at his address hereinbefore set forth.

By: __________________________________
Kevin Leichner
Senior Vice President Housing and Real Estate
Development

718

Exhibit A to Attachment No. 14

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EXHIBIT A

LEGAL DESCRIPTION
Real property in the City of Rocklin, County of Placer, State of California, described as follows:

THAT CERTAIN LEASEHOLD ESTATE CREATED PURSUANT TO THAT CERTAIN UNRECORDED GROUND LEASE DATED AS OF _________ __, 202_ BY AND BETWEEN THE CITY, AS “LANDLORD”, AND DEVELOPER AS “LESSEE” (AS MODIFIED FROM TIME TO TIME) (THE “GROUND LEASE”):

[to come]

APN: [APNs to come]

719

Exhibit B to Attachment No. 14

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Rocklin Site A Portion, v3

EXHIBIT B

RIDER TO DEED OF TRUST
Exhibit B to Deed of Trust with Assignment of Rents dated as of ___________, 202_, executed by Pacific Street Housing Associates Four, L.P. , a California limited partnership , as “Trustor”, to Stewart Title Guaranty Company , a California corporation, as Trustee, for the benefit of the City of Rocklin, a municipal corporation, as “Beneficiary” (“Deed of Trust”).

1. DEFAULT - OTHER DEEDS OF TRUST, DEED, COVENANTS CONDITIONS AND RESTRICTIONS (CC&Rs) AND AGREEMENT . A default under any of the following shall, upon continuance thereof following the applicable notice and cure period under the AHA, at Beneficiary’s option, constitute a default under this Deed of Trust:
(a) A default under the AHA or any default under any City Promissory Note delivered under the Agreement, whether senior or junior to this Deed of Trust (all capitalized terms not defined herein shall have the meanings established therefor u nder the Agreement);
(b) A default under the “City Regulatory Agreement” (as executed and recorded pursuant to the AHA);
(c) A default under any instrument which is superior to this Deed of Trust; or (e) A default under the Lease (as entered into pursuant to the AHA).

2. NON-IMPAIRMENT. Except as supplemented and/or modified by this Deed of Trust, all of the terms, covenants and conditions of the Other Deeds of Trust and the other loan documents executed in connection therewith shall remain in full force and effect.

3. DUE ON SALE OR ENCUMBRANCE. In the event of any Transfer (as defined below) of the Property, or any portion thereof or interest therein, Beneficiary shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. As used herein, the term “Transfer” means and includes the direct or indirect sale, transfer, conveyance, mortgage, further encumbrance, assignment, or ot her alienation of the Property, or any portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract, sales agreement or similar instrument affecting all or a portion of the Property, granting of an option to purchase any portion of or interest in the Property or any interest therein, or the lease of all or substantially all of the Property or of all or substantially all of the improvements situated on the Property. “Transfer” shall not include a Transfer permitted in the AHA or the leasing of individual dwelling units on the Property so long as Trustor complies with the provisions of the Agreement relating to such leasing activity and such transfers as are permitte d under the City Regulatory Agreement. Failure of Beneficiary to exercise the option to declare all sums secured hereby immediately due and payable upon a Transfer will not constitute waiver of the right to exercise this option in the event of any subsequent Transfer. 720

Exhibit B to Attachment No. 14

Page 2 of 2 ends

Rocklin Site A Portion, v3

4. PRIORITY OF DEED OF TRUST . This Deed of Trust is subject and subordinate to the following:
(i) the City Regulatory Agreement; and (ii) deeds of trust securing senior loans as approved by the City between [_____________________] and Trustor (a copy of each of which shall be maintained on file with the City).

5. NOTICE AND CURE RIGHTS BY LIMITED PARTNERS. Notwithstanding anything to the contrary contained in the Lease, City hereby agrees that any cure of any default made or tendered by Developer’s limited partners shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer. Copies of all notices which are sent to Developer under the terms of the Lease shall also be sent to Developer’s Limited Partner, at the following address: [to come: tax credit investor address].

721

Certificate of Acceptance to Attachment No. 14

Page 1 of 1 ends

Rocklin Site A Portion, v3

CERTIFICATE OF ACCEPTANCE
This is to certify that the fee interest in real property conveyed under the foregoing Deed of Trust by Pacific Street Housing Associates Four, L.P. , a California limited partnership , as to the following property:

Real property in the City of Rocklin, County of Placer, State of California, described as follows:
[to come]
is hereby accepted by the City Manager of the City of Rocklin (the “City”) on behalf of the governing board of the City pursuant to authority conferred by action of the governing board of the City on ________ __, 202_ , and the Grantee consents to recordation thereof by its duly authorized officer.

CITY OF ROCKLIN,
a municipal corporation
By:

Aly Zimmermann
City Manager

722

Rocklin Site A Portion, v3

STATE OF CALIFORNIA )
) ss.

COUNTY OF ____________ )
On _____________________________ , before me, _______________________________ , Notary Public, (Print Name of Notary Public)
personally appeared

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 of Notary Public

OPTIONAL
Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form.

Signer is representing:

Page 1 of 2 ends

ATTACHMENT NO. 15

INSURANCE DURING REMAINDER OF LEASE TERM
Developer shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Developer’s operation and use of the leased premises. The cost of such insurance shall be borne by the Developer.

1. MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

2. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease. (This applies to lessees with employees).

3. Property insurance against risks of loss (ISO “Special Form” perils) to any tenant improvements or betterments, at full replacement cost with no coinsurance penalty provision.

If the Developer maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Developer.

2. Other Insurance Provisions

The insurance policies are to contain, or be endorsed to contain, the following provisions:

3. Additional Insured Status
The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance (at least as broad as ISO Form CG 20 10 11 85 or if not available, through the addition of both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 if a later edition is used).

4. Primary Coverage
For any claims related to this contract, the Developer’s insurance coverage shall be primary and non-contributory and at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Developer’s insurance and shall not contribute with it. This requirement shall also apply to any Excess or Umbrella liability policies. 724

Attachment No. 15
Page __ of __
Rocklin Site A Portion, v3

5. Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, unless 30 days prior written notice has been provided to Developer (except 10 days for nonpayment of premium), and Developer shall in turn provide such notice to the City.

6. Waiver of Subrogation
Developer hereby grants to City a waiver of a ny right to subrogation which any insurer of said Developer may acquire against the City by virtue of the payment of any loss under such insurance. Developer agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

Self-Insured Retentions
Self-insured retentions must be declared to and approved by the City. The City may require the Developer to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City. The CGL and any policies, including Excess liability policies, may not be subject to a self-insured retention (SIR) or deductible that exceeds Two Hundred Fifty Thousand Dollars ($250,000) unless approved in writing by City. Any and all deductibles and SIRs shall be the sole responsibility of Developer who procured such insurance and shall not apply to the Indemnified Additional Insured Parties.

City may deduct from any amounts otherwise due Developer to fund the SIR/deductible. Policies shall NOT contain any self-insured retention (SIR) provision that limits the satisfaction of the SIR to the Named. The policy must also provide that Defense costs, including the Allocated Loss Adjustment Expenses, will satisfy the SIR or deductible. City reserves the right to obtain a copy of any policies and endorsements for verification.

7. Acceptability of Insurers
Insurance is to be placed with insurers approved to conduct business in the state with a current A.M. Best’s rating of no less than A-:VII, unless otherwise acceptable to the City.

8. Verification of Coverage
Developer shall furnish the City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements and copies of the Declarations & Endorsements pages are to be received and approved by the City before work commences.

However, failure to obtain the required documents prior to the work beginning shall not waive the Developer’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including 725

Attachment No. 15
Page __ of __
Rocklin Site A Portion, v3
endorsements required by these specifications, at any time. City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

9. Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
726
Attachment No. 16

Page 3 of 4 ends

ATTACHMENT NO. 16

INSURANCE DURING CONSTRUCTION
Developer shall procure or provide evidence to confirm that Developer or contractor(s) has procured and will maintain for the duration of the contract, and for 5 years thereafter, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Developer and/or Developer’s contractor, his agents, representatives, employees, or subcontractors.

10. MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $5,000,000 per occurrence. Such limits may be achieved through the combination of primary general liability and one or more umbrella/excess liability policy(ies).

2. Automobile Liability: Insurance Services Office Form CA 0001 covering all owned (if any), non-owned and hired automobiles, with limits no less than $5,000,000 per accident for bodily injury and property damage. Such limits may be achieved through the combination of primary general liability and one or more umbrella/excess liability policy(ies).

3. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.

4. Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project a nd no coinsurance penalty provisions.

5. Surety Bonds as described below.

6. Professional Liability (if Design/Build), with limits no less than $2,000,000 per occurrence or claim, and $2,000,000 policy aggregate. This coverage is to be provided by the Architect and/or Design-Build General Contractor providing such professional services.

7. Contractor’s Pollution Liability and/or Asbestos Legal Liability (if project involves environmental hazards) with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. This coverage will be provided by the General Contractor.

If the Developer or contractor maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the either. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

Self-Insured Retentions
Self-insured retentions must be declared to and approved by the City. The City may require the Developer or contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City. The CGL and any policies, including Excess 727
Attachment No. 16

Page 4 of 4 ends

liability policies, may not be subject to a self-insured retention (SIR) or deductible that exceeds Two Hundred Fifty Thousand Dollars ($250,000) unless approved in writing by City. Any and all deductibles and SIRs shall be the sole responsibility of Developer or contractor or subcontractor who procured such insurance and shall not apply to the Indemnified Additional Insured Parties. City may deduct from any amounts otherwise due Developer or contractor to fund the SIR/deductible. Policies shall NOT contain any self-insured retention (SIR) provision that limits the satisfaction of the SIR to the Named Insured. The policy must also provide that Defense costs, including the Allocated Loss Adjustment Expenses, will satisfy the SIR or deductible. City reserves the right to obtain a copy of any policies and endorsements for verification.

11. Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions:

12. The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Developer or contractor including materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of the Developer or contractor. General liability coverage can be provided in the form of an endorsement to the Developer or contractor’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used).

13. For any claims related to this project, the Developer or contractor’s insurance coverage shall be primary and non-contributory insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self- insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Developer or contractor’s insurance and shall not contribute with it. This requirement shall also apply to any Excess or Umbrella liability policies.

14. Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City.

15. Builder’s Risk (Course of Construction) Insurance
Developer or contractor may submit evidence of Builder’s Risk insurance in the form of Course of Construction coverage. Such coverage shall name the City as a loss payee as their interest may appear.

16. Claims Made Policies
If any coverage required is written on a claims-made coverage form:

1. The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.

2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of contract work.

3. If coverage is cancelled or non -renewed, and not replaced with another claims -made policy form with a retroactive date prior to the contract effective, or start of work date, the Developer or contractor must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work.

4. A copy of the claims reporting requirements must be submitted to the City for review.

5. If the services involve lead -based paint or asbestos identification/remediation, the Developer 728
Attachment No. 16

Page 5 of 4 ends

or contractors Pollution Liability policy shall not contain lead -based paint or asbestos exclusions. If the services involve mold identification/remediation, the Developer or contractors Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold.

17. Umbrella or Excess Policies
The Developer or contractor may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Developer or contractor’s primary and excess liability policies are exhausted.

18. Acceptability of Insurers
Insurance is to be placed with insurers approved to conduct business in the state with a current A.M.

Best rating of no less than A-: VII, unless otherwise acceptable to the City.

19. Waiver of Subrogation
Developer or contractor hereby agrees to waive rights of subrogation which any insurer of Developer or contractor may acquire from Developer or contractor by virtue of the payment of any loss. Developer or contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Developer or contractor, its employees, agents and subcontractors or contractors.

20. Verification of Coverage
Developer or contractor shall furnish the City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause and a copy of the Declarations and Endorsements Pages of the CGL and any Excess policies listing all policy endorsements. All certificates and endorsements and copies of the Declarations & Endorsements pages are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Developer or contractor’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

21. Subcontractors

22. Developer or contractor shall require and verify that all subcontractors maintain insurance meeting all requirements stated herein, and Developer or contractor shall ensure that City is an additional insured on insurance required from subcontractors. For CGL coverage, subcontractors or contractors shall provide coverage with a form at least as broad as CG 20 38 04 13.

23. Duration of Coverage
CGL & Excess liability policies for any construction related work, including, but not limited to, maintenance, service, or repair work, shall continue coverage for a minimum of 5 years for 729

Attachment No. 16
Page __ of __
Rocklin Site A Portion, v3
Completed Operations liability coverage. Such Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.

24. Surety Bonds

25. Developer or contractor shall provide the following Surety Bonds:

1. Performance Bond

2. Payment Bond

3. Maintenance Bond
The Payment Bond and the Performance Bond shall be in a sum equal to the contract price. If the Performance Bond provides for a one-year warranty a separate Maintenance Bond is not necessary. If the warranty period specified in the contract is for longer than one year a Maintenance Bond equal to 10% of the contract price is required. Bonds shall be duly executed by a responsible corporate surety, approved to issue such bonds in the State of Califo rnia and secured through an authorized agent with an office in California.

26. Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other circumstances
730

Attachment No. 17
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Rocklin Site A Portion, v3
ATTACHMENT NO. 17

MAP OF THE PORTION B AREA

731

Attachment No. 18
Page __ of __
Rocklin Site A Portion, v3
ATTACHMENT NO. 18

MAP OF THE ADJACENT CITY PARKING AREA

732

4811-0875-8641v12/200471-0009

GROUND LEASE
By and Between

CITY OF ROCKLIN,
LESSOR
and
PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P.,
a California limited partnership
LESSEE

733

i
4811-0875-8641v12/200471-0009

TABLE OF CONTENTS
Page

1. SUBJECT OF LEASE; DEFINITIONS .................................................................................... 1

1.1 Definitions ..................................................................................................................... 1

2. LEASE OF THE SITE ............................................................................................................ 13

3. LEASE TERM......................................................................................................................... 13

4. USE OF THE PROPERTY ..................................................................................................... 13

4.1 Use of the Property ..................................................................................................... 13

4.2 Management ................................................................................................................ 13

4.3 Only Lawful Uses Permitted ....................................................................................... 17

5. RENT ....................................................................................................................................... 17

5.1 Rent Payments ............................................................................................................ 17

5.2 [Intentionally Omitted] ............................................................................................... 18

5.3 Net Lease .................................................................................................................... 18

5.4 Payment of Rent .......................................................................................................... 18

6. AFFORDABLE HOUSING AND OTHER OCCUPANCY REQUIREMENTS .................. 18

6.1 Number of Required Affordable Units [and Other Units] .......................................... 18

6.2 Duration of Affordability Requirements ..................................................................... 18

6.3 Selection of Tenants .................................................................................................... 18

6.4 Income of Tenants ....................................................................................................... 19

6.5 Determination of Affordable Rent for the Required Affordable Units ....................... 19

6.6 Verifications ................................................................................................................ 19

6.7 Regulatory Instruments ............................................................................................... 21

7. UTILITIES AND TAXES ....................................................................................................... 21

7.1 Utilities ........................................................................................................................ 21

7.2 Real Estate Taxes ........................................................................................................ 21

7.3 Personal Property ........................................................................................................ 22

7.4 Possessory Interest ...................................................................................................... 22

8. OWNERSHIP OF IMPROVEMENTS, FIXTURES AND FURNISHINGS ......................... 22

8.1 Ownership During Term ............................................................................................. 22

8.2 Ownership at Termination .......................................................................................... 22

9. MECHANICS LIENS; FAITHFUL PERFORMANCE ......................................................... 22

10. MAINTENANCE AND REPAIR; CAPITAL REPLACEMENT RESERVE ....................... 23

11. ENVIRONMENTAL MATTERS ........................................................................................... 25

11.1 Definitions ................................................................................................................... 25

11.2 Site Evaluation ............................................................................................................ 26

11.3 Indemnification; Lessee’s Indemnity .......................................................................... 26

11.4 Duty to Prevent Hazardous Material Contamination .................................................. 27

11.5 Obligation of Lessee to Remediate Premises .............................................................. 27

11.6 Storage or Handling of Hazardous Materials .............................................................. 28

11.7 Environmental Inquiries .............................................................................................. 28

12. ALTERATION OF IMPROVEMENTS ................................................................................. 29 734
TABLE OF CONTENTS (Cont.)
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4811-0875-8641v12/200471-0009

13. DAMAGE OR DESTRUCTION ............................................................................................ 29

13.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance ..................................................................................................................... 29

13.2 Continued Operations ................................................................................................. 30

13.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance ..................................................................................................................... 30

14. SALE, ASSIGNMENT, SUBLEASE OR OTHER TRANSFER ........................................... 30

15. ANCILLARY DUTIES ........................................................................................................... 32

16. INDEMNITY .......................................................................................................................... 32

17. INSURANCE .......................................................................................................................... 33

17.1 Insurance to be Provided by Lessee ............................................................................ 33

17.2 Definition of “Full Insurable Value” .......................................................................... 33

17.3 General Insurance Provisions...................................................................................... 33

17.4 Failure to Maintain Insurance ..................................................................................... 34

17.5 Insurance Proceeds Resulting from Loss or Damage to Improvements ..................... 34

18. EMINENT DOMAIN .............................................................................................................. 34

19. OBLIGATION TO REFRAIN FROM DISCRIMINATION ................................................. 36

20. NONDISCRIMINATION IN EMPLOYMENT ..................................................................... 37

21. COMMISSION PURCHASE OPTION .................................................................................. 37

22. COMPLIANCE WITH LAW.................................................................................................. 37

23. ENTRY AND INSPECTION .................................................................................................. 38

24. RIGHT TO MAINTAIN ......................................................................................................... 38

25. EVENTS OF DEFAULT AND REMEDIES .......................................................................... 38

25.1 Events of Default by Lessee........................................................................................ 38

25.2 Remedies of City ......................................................................................................... 40

25.3 Right of City in the Event of Termination of Lease ................................................... 40

25.4 Damages ...................................................................................................................... 41

25.5 Rights and Remedies are Cumulative ......................................................................... 41

26. MISCELLANEOUS ................................................................................................................ 41

26.1 Governing Law; Interpretation ................................................................................... 41

26.2 Legal Actions .............................................................................................................. 41

26.3 Acceptance of Service of Process ............................................................................... 42

26.4 Attorneys’ Fees And Court Costs ............................................................................... 42

26.5 Financial Statement; Inspection of Books and Records .............................................. 42

26.6 Interest ......................................................................................................................... 42

26.7 Notices ........................................................................................................................ 42

26.8 Time is of the Essence ................................................................................................ 44

26.9 Non-Merger of Fee and Leasehold Estates ................................................................. 44

26.10 Holding Over .............................................................................................................. 44

26.11 Conflict of Interest ...................................................................................................... 44

26.12 Non-Liability of City Officials And Employees ......................................................... 44

26.13 Relationship ................................................................................................................ 44 735
TABLE OF CONTENTS (Cont.)
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4811-0875-8641v12/200471-0009

26.14 Transactions with Affiliates ........................................................................................ 44

26.15 Waivers And Amendments ......................................................................................... 45

26.16 Non-Merger With AHA .............................................................................................. 45

26.17 Entire Agreement; Duplicate Originals; Counterparts ................................................ 45

26.18 Severability ................................................................................................................. 45

26.19 Terminology ................................................................................................................ 45

26.20 Recordation ................................................................................................................. 45

26.21 Binding Effect ............................................................................................................. 46

26.22 Estoppel Certificate ..................................................................................................... 46

26.23 Force Majeure ............................................................................................................. 46

26.24 Quiet Enjoyment ......................................................................................................... 46

26.25 City Approvals and Actions ........................................................................................ 46

26.26 No Third Parties Benefited Except for City, Limited Partner, and Approved Leasehold Mortgagee; City Option to Acquire Interest of City .................................. 46

26.27 Lessee’s Limited Partners ........................................................................................... 46

26.28 Bankruptcy .................................................................................................................. 47

26.29 Liens on Lessor’s Fee Estate ....................................................................................... 48

EXHIBITS
Exhibit A Portion A Site Map ................................................................................................... A-1 Exhibit B Portion A Site Legal Description .............................................................................. B-1 Exhibit C Memorandum of Lease ............................................................................................. C-1 Exhibit D Certificate of Continuing Program Compliance ....................................................... D-1 Exhibit E Ground Lease Rider .................................................................................................. E-1 Exhibit F Insurance During Construction ................................................................................. F-1 Exhibit G Insurance During Lease Term ................................................................................... G-1 Exhibit H Map of the Adjacent City Parking Area .................................................................... H-1 Exhibit I Map of the Portion B Area ......................................................................................... I-1

736

4811-0875-8641v12/200471-0009

GROUND LEASE
This GROUND LEASE (the “Lease”) is made as of ______, 202__ by and between the CITY OF ROCKLIN , a municipal corporation (the “ City” or “Lessor”), and PACIFIC STREET HOUSING ASSOCIATES FOUR, L.P. , a California limited partnership [the “Developer” or the “Lessee”).

1. SUBJECT OF LEASE; DEFINITIONS.

The purpose of this Lease is to effectuate provisions of that certain unrecorded Amended and Restated Affordable Housing Agreement dated as of October _, 2025 (the “AHA”) by and between Developer and City, a copy of which is on file with the City as a publ ic record. Except as may otherwise be expressly set forth in this Lease, all capitalized terms shall have the same meanings as set forth in the AHA.

1.1 Definitions.
“Additional Rent” is defined in Section 6.6.
“Adjacent City Parking Area” means that certain area depicted on the Map of the Adjacent City Parking Area.
“Adjusted Value of the Improvements” means that amount or amounts as determined in good faith from time to time by the City as the adjusted value of the Improvements consistent with Section 5.1(b) of this Lease.
“Affiliated Person” means, when used in reference to a specific person, any person that directly or indirectly controls or is controlled by or under common control with the specified person, any person that is an officer or director of, a trustee of, or a general partner, managing member or operator in, the specified person or of which the specified person is an officer, director, trustee, general partner or managing member, or any person that directly or indirectly is the beneficial owner of ten percent (10%) or more of any class of the outstanding voting securities of the specified person. “Affordability Period” means that period commencing with the Commencement Date and ending as of the last day of the Term.
“Affordable Rent” has the following meaning: For an Extremely Low Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thirty percent (30%) of thirty percent (30%) of the Median Income for t he Area for a household size appropriate to the Unit. For a Very Low Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thirty percent (30%) of fifty percent (50%) of the Median Income for the Area for a h ousehold size appropriate to the Unit. For a Lower Income Household, Affordable Rent means a monthly rent which does not exceed one twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of the Median Income for the Area for a household size appr opriate to the Unit. The maximum monthly rental amount of the Units shall be adjusted annually by the formula set forth above upon the promulgation of revised Placer County median income figures by regulation of the California Department of Housing and Co mmunity Development. Actual rent charged may be less than such maximum rent a cost not in excess of the lesser of (i) that rent which may be charged the applicable Eligible Person or Family pursuant to Section 50053 of the California Health and Safety Cod e and 737

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(ii) the limits as set forth in this Agreement. Notwithstanding the foregoing, in the event a reservation of Tax Credits is obtained for the Project, affordable rents, including a reasonable utility allowance, shall not exceed the rent prescribed by deed restrictions or regulatory agreements imposed by TCAC. “AHA” or “Agreement”, as set forth in the Recitals above, means that certain agreement entitled “Amended and Restated Affordable Housing Agreement by and between the City and the Developer, dated as of October _, 2025. A copy of the AHA is on file with the City Clerk as an official record. “Applicable Federal Rate” means the interest rate set by the United States Treasury from time to time for the purpose of determining applicable Low Income Housing Tax Credit interest rates. The Applicable Federal Rate is published by the Internal Revenue Service in monthly revenue rulings. “Approved Construction and/or Permanent Lender” means an Approved Construction Lender and, upon the initial completion of the Improvements, an Approved Permanent Lender. “Approved Construction Lender means a mutually acceptable reputable and established bank, savings and loan association, or other similar financial institution or state agency or instrumentality, with each of City and Developer acting at their respective discretion. “Approved Permanent Lender” means Cedar Rapids Bank and Trust Company, an Iowa state- chartered banking corporation (“CRBI”) or one or more entities included under th e definition of Approved Construction Lender, an Institutional Lender, or any other lender approved by the City Manager. Each of California Community Reinvestment Corporation and the County of Placer acting through the Health and Human Services Agency is an Approved Permanent Lender. “Area” means the Placer Primary Metropolitan Statistical Area, as periodically defined by HUD.
“Audited Financial Statement” means an audited financial statement, including without limitation a profit and loss statement, genera ted by Leaf & Cole, LLP or another third party certified public accountant acceptable to the City in its reasonable discretion, showing, for the previous Lease Year, on a monthly basis and in an easily readable format, Gross Revenues, Operating Expenses, Debt Service, Operating Reserve, Capital Replacement Reserve and Residual Receipts. “Base Rent” has the meaning established therefor in Section 5.1 hereof. “Capital Replacement Reserve” means a reserve fund for the Residential Component to be established by the Lessee under this Lease as a capital replacement reserve in the minimum amount of Three Hundred Dollars ($300) per unit per year and a maximum of Five Hundred Dollars ($500) per unit per year, and may be increased annually by [three and one half percent (3.5%)] per year, or such other amount as the City Manager and the Developer shall mutually approve. The Capital Replacement Reserve is more fully described in Section 10 of this Lease. Interest earned on moneys held in the Capital Replacement Reserve shall be retained in the Capital Replacement Reserve unless otherwise directed by the Permanent Lender. To the extent Developer is required to maintain a Capital Replacement Reserve by any Approved Construction and/or Permanent Lender or the Limited Partner, Developer shall receive a credit hereunder for such amounts maintained by it in compliance such Approved Construction and/or Permanent Lender or Limited Partner capital replacement reserve requirement. It is contemplated that the Capital Replacement Reserve will be held by the Permanent Lender.
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“Certificate of Completion” means the document which evidences the Developer’s satisfactory completion of construction of the Development, as set forth in Section 4.13 of the AHA, substantially in the form of Attachment No. 10 to the AHA.
“Certificate of Continuing Program Compliance” means Exhibit D hereto. “Chargeable Reserves” means each of the following, within the respective parameters therefor set forth in this Lease: (i) Capital Replacement Reserve; and (ii) Operating Reserve. “CHW” means Community HousingWorks, a California nonprofit public benefit corporation. “City” means the City of Rocklin, California, a California municipal corporation. “City Code,” means the Municipal Code of the City of Rocklin as may be amended from time to time and includes, without limitation, the Uniform Codes. “City Manager” means the City Manager of the City.
“City Regulatory Agreement” means an instrument substantially in the form of Attachment No. 11 to the AHA.
“Closing” means the day on which the Term of this Lease commences upon recordation of this Lease or a memorandum of lease.
“Commencement” means the commencement of this Lease.
“Commencement Date” means the date on which the Closing occurs. “Cost Savings” has the meaning established therefor in Section 4.16.1 of the AHA. “CHW” means Community HousingWorks, a California non-profit public benefit corporation. “Cost Overrun Amounts” has the meaning established therefor in the AHA. “County” means the County of Placer, California.
“County Housing Authority” means the Housing Authority of the County of Placer. “Date of Agreement” means October __, 2025.
“Debt Service” means required debt service payments for the Primary Construction Loan and/or the Primary Permanent Loan including the funding obligations in respect of all reserves or escrows required thereunder.
“Default” means the failure of a party to perform any action or covenant required by this Lease within the time periods provided herein following any applicable notice and opportunity to cure period, as may be set forth herein.
“Deferred Developer Fee” means any portion of the Developer Fee the receipt of which is deferred.
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“Design Development Drawings” means those plans and drawings to be submitted to City for its approval, pursuant to the AHA.
“Developer” is defined in the first paragraph of this Lease. “Developer Fee” has the meaning set forth therefor in the AHA. “Developer Percentage” means fifty percent (50%) of Residual Receipts. “Development” means the new apartment complex including all improvements as required by the AHA to be as: (i) constructed by the Developer upon the Portion A Site , with related of fsite improvements, as more particularly described in the Scope of Development and (ii) operated as an affordable housing complex in conformity with this Lease, the Regulatory Agreement. “Entitlements” means all development rights as determined under Admin istrative Determination AD-2025-0004 as approved May 8, 2025 by the Community Development Director of the City of Rocklin (including without limitation all conditions contained therein), and additional and use approvals for the development of the Portion A Site, if any, as may hereafter be approved by the City acting in the exercise of its police power.
“Environmental Laws” means all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: the Clean Air Act, as amen ded, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq .; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environment Respon se, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C.

Section 9601, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq .; the Safe Dr inking Water Act, as amended, 42 U.S.C. Section 300f et seq.; all comparable state and local laws, laws of other jurisdictions or orders and regulations; and all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, the City, or any other political subdivision in which the Portion A Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the City, Lessee, or the Portion A Site. “Extremely Low Income Household” means a household earning not greater than thirty percent (30%) of median income for the Area, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50106. “Extremely Low Income Units” means Units available to and occupied by Extremely Low Income Households.
“First Mortgage” means any First Mortgage -Construction Financing or First Mortgage - Permanent Financing and such refinancing thereof, if any, as sha ll have been approved by the City Manager.
“First Mortgage -Construction Financing” means a loan from an Approved Construction Lender to be secured by a leasehold deed of trust in first (1 st) lien position against Lessee’s leasehold 740

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interest in the Portion A Site (but not, in any event, to be secured by Lessor’s fee interest in the Portion A Site), which shall be used by Lessee to pay a portion of the cost of constructing the Project. “First Mortgage-Permanent Financing” means a loan in an amount not to exceed the amount of the First Mortgage -Construction Financing from an Approved Construction Lender to be secured by a leasehold deed of trust in first (1st) lien position against Lessee’s leasehold interest in the Portion A Site (but not, in any event, Lessor ’s fee interest in the Portion A Site ) which replaces the First Mortgage-Construction Financing upon the completion of construction of the Project or results from a conversion of the First Mortgage-Construction Financing into the First Mortgage-Permanent Financing pursuant to the terms of such loan and satisfaction of the applicable conversion conditions. “Foreclosure Event” means completion of judicial or nonjudicial foreclosure proceedings for any First Mortgage or any conveyance in lieu of foreclosure. “General Partner Fee” or “Asset Management Fee” means a fee if charged by the general partner not to exceed the amounts so delineated therefor in the Base Pro Forma; provided that the initial annual amount of such fee shall be limited to increases of three percent (3.0%) annually; provided that the General Partner Fee together with the Limited Partner Fee shall not for any Lease Year exceed the amount permitted under the City Lease for the Partnership Fees (as such fees are aggregated). The foregoing shall not limit the amounts which Developer may pay to its General Partner from the Developer Percentage.
“Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County , the City, or any other political subdivision in which the Portion A Site is located, and of any other political subdivision, City, or instrumentality exercising jurisdiction over the Developer or the Portion A Site. “Gross Revenues” means the sum of the following: the total rental income and all other revenues or income received by the Lessee or its successors or assigns in connection with the Project, including without limitation Housing Rent, laundry charges (as received by Developer) or consideration received from an entity that contracts to provide laundry services, payments in connection with Section 8 certificates, if any (including payments under such certificates that are in excess of the restricted rents provided for herein), cable income or cons ideration received from an entity that contracts to provide cable services, each of (i) amounts paid to Developer or any Affiliated Person on account of Operating Expenses for further disbursement by Developer or such affiliate to a third party or parties, including, without limitation, grants received to fund social services or other housing supportive services at the Development; (ii) late charges and interest paid on rentals; (iii) rents and receipts from licenses, concessions, vending machines, coin laundry, and similar sources; (iv) other fees, charges, or payments not denominated as rental but payable to Developer in connection with the rental of office, retail, storage, or other space in the Development; (v) consideration received in whole or in part for the cancellation, modification, extension or renewal of leases; and (vi) interest and other investment earnings on security deposits, reserve accounts and other Development accounts to the extent disbursed, but does not include: (x) the proceeds of the sale of Tax Credits to finance the Development; (y) insurance proceeds applied to reconstruct or repair the Improvements; or (z) Refinancing Net Proceeds.
“Ground Lease Rider” means Exhibit E to this Lease.
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“Hazardous Material” or “Hazardous Materials” means and include any substance, material, or waste which is or becomes regulated by any local governmental authority, including the County, the Regional Water Quality Control Board, the State of California, or the United States Government, including, but not limited to, any material or substance which is: (i) defined as a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of t he California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter Presley Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory) ; (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials; (vii) lead ba sed paint or any lead based or lead products; (viii) polychlorinated biphenyls, (ix) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C.

Section 6903); (xi) Methyl tertiary Butyl Ether; (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensa tion, and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any “Governmental Requirements” (as defined in Paragraph I of this Section 308) either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defin ed in the Lead Based Paint Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U.S.C. § 4800, et seq., specifically §§ 4821–4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Mater ials” shall not include such products in quantities below attainment levels identified in one or more of the enactments identified above as Governmental Requirements, including those product and amounts as are customarily used in the construction, maintena nce, rehabilitation, management, operation and residence of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly i ngested by a significant population living within the Development, including without limitation alcohol, aspirin, tobacco and saccharine. “Housing Rent” means the total of monthly payments by the tenants of a Housing Unit for (a) use and occupancy for the Housing Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Developer which are required of all tenants of the Housing Units, other than security deposits, (c) a reasonable allowance for utilities no t included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of the County Housing Authority pursuant to 24 C.F.R. Section 5.600 et seq. or by the California Utility Allowance Calculator as pe rmitted by TCAC and (d) possessory interest, taxes or other fees or charges assessed for the use of the Housing Units and facilities associated therewith by a public or private entity other than the Developer.
“Housing Units” or “Units” means the fifty (50 ) individual apartment units within the Development to be constructed and operated by the Developer on the Portion A Site, as provided in Section 4.1 of the AHA and in the Scope of Development. 742

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“HUD” means the United States Department of Housing and Urban Development or its successor(s).
“Improvements” means all improvements required by the AHA with respect to the land that is the subject of this City Lease to be accomplished by the Developer, as more fully described in the Scope of Development.
“Income Verification” means the Income Verification in the form of Attachment No. 12 to the AHA.
“Institutional Lender” shall mean any one of the following institutions having assets or deposits in the aggregate of not less than One Hundred Million Dollars ($100,000,000): a California chartered bank; a bank created and operated under and pursuant to the laws of the Unite d States of America; an “incorporated admitted insurer” (as that term is used in Section 1100.1 of the California Insurance Code); a “foreign (other state) bank” (as that term is defined in Section 1700(1) of the California Financial Code); a federal savin gs and loan association (Cal. Fin. Code Section 8600); a commercial finance lender (within the meaning of Section 2600 et seq. of the California Financial Code); a “foreign (other nation) bank” provided it is licensed to maintain an office in California, i s licensed or otherwise authorized by another state to maintain an agency or branch office in that state, or maintains a federal agency or federal branch in any state (Section 1716 of the California Financial Code); a bank holding company or subsidiary of a bank holding company which is not a bank (Section 3707 of the California Financial Code); a trust company, savings and loan association, insurance company, investment banker, college or university, pension or retirement fund or system, either governmenta l or private, or any pension or retirement fund or system of which any of the foregoing shall be trustee, provided the same be organized under the laws of the United States or of any state thereof; and a Real Estate Investment Trust, as defined in Section 856 of the Internal Revenue Code of 1986, as amended, provided such trust is listed on either the American Stock Exchange or the New York Stock Exchange.
“Lease” means this Ground Lease, which is referred to in the AHA as the “City Lease.” “Lease Rider” means a lease rider agreement to address considerations raised by TCAC in a mutually acceptable form.
“Lease Year” means the period commencing as of Commencement Date and ending as of December 31 of that calendar year, then each calendar year thereafter; p rovided that the final Lease Year will be a portion of a calendar year ending on December 31 of the corresponding calendar year. “Lessee’s Mortgagee” means any one or more Approved Construction and/or Permanent Lender which has provided financing for the Development. “Limited Partner” means NEF Assignment Corporation, an Illinois not-for-profit corporation, its successors and/or assigns.
“Limited Partner Fee” or “Partnership Management Fee” means fees as so denominated in the Base Pro Forma; provided that s uch fees may not increase by more than by three percent (3.0%) annually so long as the Partnership Agreement is in effect; provided that the General Partner Fee together with the Limited Partner Fee shall not for any Lease Year exceed the amount permitted under this Lease for the Partnership Fees (as such fees are aggregated). The foregoing shall not limit the 743

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amounts which Developer may pay as Limited Partner Fee or Partnership Management Fee from the Developer Percentage.
“Locals” means persons living or working within the corporate limits of the City. “Lower Income Household” means a household earning not greater than sixty percent (60%) of median income for the Area as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5. “Lower Income Units” means dwelling Units available to and occupied by Lower Income Households.
“Map of the Adjacent City Parking Area” means Exhibit H. “Map of the Portion B Area” means Exhibit I.
“Median Income” means the median income for the Area as most recently determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or, if programs under Section 8 are terminated, Median Income for the Area determined under the method used by the Secretary prior to such termination. “Memorandum of Lease” means Exhibit C to this Lease.
“Net Operating Income” means Gross Revenues, less (i) Operating Expenses; (ii) Debt Service; (iii) Chargeable Reserves; (iv) the Deferred Developer Fee; (v) General Partner Fee; and the (vi) Limited Partner Fee, as such capitalized terms are defined in this Lease. “Notice” means a notice in the form prescribed by Section 10.2 of the AHA. “Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly incurred and for which payment has been made and which are attributable to the operation, maintenance, and management of the Project and consisting of only the following (and such additional items, if any, as to which the prior written approval of the City Manager is first obtained. Such approval shall be granted, granted subject to conditions, or refused at the sole and absolute discretion of the City Manager): painting, cleaning, maintenance, repairs and alterations; landscaping; utilities; rubbish removal; sewer charges; costs incurred to third parties in connection with generating laundry charges (but in no event to exceed the laundry charges); real and personal property taxes and a ssessments; insurance premiums; security; advertising, promotion and publicity; office, janitorial, cleaning and building supplies; actual and customary salary payable to an on -site manager which directly and exclusively benefits residents of the Residential Component of the Project; the actual and customary salary paid for one assistant manager, one on -site maintenance manager and such other on -site management personnel, if any, which directly and exclusively benefit residents of the Residential Component of the Project, subject to the prior written approval of the City Manager at his sole and absolute discretion; a management fee (“Management Fee”) (excluding any on -site management personnel) of not to exceed six percent (6%) of Gross Revenues; purchase, r epairs, servicing and installation of appliances, equipment, fixtures and furnishings; payment of Tax Credit adjustment amounts to the Limited Partner or reimbursement of Tax Credit adjustment amounts paid by the administrative and/or managing general part ners and/or the guarantors to the general partner of Developer or a refinancing fee, which fee is and shall be subject to the approval of the City Manager 744

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at the time of each refinancing and which shall not exceed five percent (5%) of the amount of the approved refinancing; repayment of loans made to Developer for the Project by the Limited Partner, and repayment of operating deficit loans made pursuant to the Partnership Agreement as such Partnership Agreement is in effect as of the recording of the Primary Construction Loan; repayment of development advances and loans made by the general partner or guarantor of Developer; reasonable and customary fees and expenses of accountants, attorneys, consultants and other professionals as incurred commencing after the completion of the Improvements (as evidenced by the issuance by City of a certificate of occupancy for the corresponding building developed as part of the Improvements) in connection with the operation of the Project; the Limited Partner Fee; the Genera l Partner Fee; any unpaid portion of the Developer Fee; on -site service provider fees for tenant social services in the amount of Forty Thousand Dollars ($40,000) per year, and may be increased annually by three percent (3.0%) per year, or such other amount as the City Manager and Developer shall mutually approve, or such amount as is designated therefor in the approved Tenant Selection and Tenant Services Plan ; payments of deductibles in connection with casualty insurance claims not normally paid from reserves; the amount of uninsured losses actually replaced, repaired or restored and not normally paid from reserves; and payments made by Developer to satisfy indemnity obligations and other payments by Developer pursuant to this Lease other than to Developer, partners or other related persons; provided, however, that payments to parties related to Developer for Operating Expenses must not exceed market rates. The Operating Expenses shall not include non -cash expenses, including without limitation, depreciation. The Operating Expenses shall be reported in the Audited Financial Statement and shall be b roken out in line item detail. The funding and maintenance of the Operating Reserve and the Capital Replacement Reserve shall not be treated ipso facto as Operating Expenses for purposes of the definition of Residual Receipts herein.
“Operating Reserve” means a reserve fund to be established by the Lessee under the City Lease as a reserve for operating expenses as to the Residential Component in the minimum amount equal to three (3) months of (i) Debt Service on the First Mortgage and (ii) Operating Expenses pursuant to an approved budget. Interest earned on moneys held in the Operating Reserve shall be retained in the Operating Reserve unless otherwise directed by the Permanent Lender. To the extent Developer is required to maintain an Operating Reserve by any Approved Construction and/or Permanent Lender, the Partnership Agreement or TCAC, Developer shall receive a credit hereunder for such amounts maintained by it in compliance such Approved Construction and/or Permanent Lender, the Partnership Agreement or TCAC operating reserve requirement, and the amounts in such Operating Reserve shall be deemed to satisfy the requirements of this Lease. It is contemplated that the Operating Reserve will be held by the Permanent Lender. “Partnership Agreement” means the Amended and Restated Agreement of Limited Partnership of the Developer as may be amended from time to time, so long as consistent with t he requirements of the AHA and this Lease. The Partnership Agreement shall include provisions which incorporate or otherwise conform to the cash flow priorities included in the definition of “Residual Receipts” set forth in the AHA.
“Partnership Fees” means the General Partner Fee and the Limited Partner Fee. [For each Lease Year until the seventeenth (17th) anniversary of the Commencement Date, the total Partnership Fees (for the General Partner Fee and the Limited Partner Fee, as aggregated) shall not exceed Twenty Two Thousand Dollars ($ 22,000), adjusted for inflation at three percent ( 3.0%) per Lease Year measured from the Commencement Date. For each Lease Year after the seventeenth (17th) anniversary of the Commencement Date, the Partnership Fees (the General Partner Fee and Limited Partner Fee as 745

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aggregated) shall not exceed Seventeen Thousand Five Hundred Dollars ($1 7,500), adjusted for inflation at three and one half percent (3.5%) per Lease Year measured from the Commencement Date.] “Person” means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental department or City or any other entity which has the legal capacity to own property.
“Portion A Site” means that certain real property which is described in the Portion A Site Legal Description and depicted on the Portion A Site Map.
“Portion A Site Legal Description” means the description of the Portion A Site which is attached hereto as Exhibit B and incorporated herein.
“Portion A Site Map” means the map of the Portion A Site which is attached hereto as Exhibit A and incorporated herein.
“Portion B Area” means that area depicted in the Map of the Portion B Area. “Prescribed Income Levels” means: (i) for six (6) one-bedroom Units, thirty percent (30%) of Median Income; (ii) for two (2) two-bedroom Units, thirty percent (30%) of Median Income; (iii) for six (6) three-bedroom Units, thirty percent (30%) of Median Income; (iv) for seven (7) one -bedroom Units, fifty percent (50%) of Median Income; (v) for four (4) two-bedroom Units, fifty percent (50%) of Median Income; (vi) for two (2) three-bedroom Units, fifty percent (50%) of Median Income; (vii) for thirteen (13) one-bedroom Units, sixty percent (60%) of Median Income; (viii) for e ight (8) two- bedroom Units, sixty percent (60%) of Median Income; and (ix) for two (2) three-bedroom Units, sixty percent (60%) of Median Income.
“Primary Construction Loan” means, collectively, the mortgage loans and letters of credit obtained by the Developer from an Approved Construction Lender. “Primary Permanent Loan” means, collectively, the mortgage loans obtained by the Developer from an Approved Permanent Lender in an amount limited to satisfaction of the outstanding balance of the Primary Construction Loan or in an amount in excess of such outstanding balance so long as such excess proceeds are used to pay (or prepay) the Developer Fee, Cost Overrun Amounts and outstanding development costs.
“Principals” means CHW.
“Project” means the residential rental housing development located on the Portion A Site to be constructed and operated by the Developer pursuant to this Lease and the AHA. “Property” means the leasehold interest in the Portion A Site provided to Lessee by this Lease. “Property Manager” means the person or organization responsible for the management and operation of the Project, the reasonable approval of which by the City shall be required, and which shall initially be ConAm Management Corporation , or another manager mutually acceptable to the City and the Lessee. Additionally, the Lessee may self-manage the Project, subject to City’s reasonable prior approval.
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“Reciprocal Easement and Joint Use Agreement ” has the meaning set forth therefor in the AHA.
“Refinancing Net Proceeds” means the proceeds of any refinancing of any of the Primary Construction Loan or the Primary Permanent Loan or other approved financing secured by interest of Developer in the Portion A Site, net of: (i) the amount of the existing financing which is satisfied out of such proceeds; (ii) reasonable and customary costs and expenses i ncurred in connection with the refinancing; (iii) the funding of reasonable reserves and costs of improvements to the Portion A Site which constitute the Development, including hard and soft costs to the extent approved in writing by the City Manager prior to the closing of the refinancing; (iv) the balance of loans to the Development made by the Limited Partner(s) of Developer for development or operating deficits, amounts expended to maintain compliance with the Tax Credit Rules, or contributions for capital expenditures in excess of available Project revenues, if any, including interest at the Applicable Federal Rate; (v) the balance, if any, of operating loans or development loans made by the general partners of Developer to the Development, including interest at the Applicable Federal Rate; (vi) payment of unpaid Tax Credit adjustment amounts or reimbursement of Tax Credit adjustmen t amounts paid by the general partner and/or the guarantors to the Development pursuant to the approved Partnership Agreement, if any; and (vii) the payment to the general partner of Developer of a refinancing fee, which fee is and shall be subject to the approval of the City Manager at the time of each refinancing and which shall not exceed five percent (5%) of the amount of the approved refinancing. “Regulatory Agreement” means the City Regulatory Agreement which is to be recorded against the Portion A Site in accordance with the AHA, substantially in the form of Attachment No. 11 to the AHA.
“Related Entity” means CHW or an Affiliated Person.
“Rent” is defined in Section 5 of this Lease.
“Reporting Amount(s)” means the sum of Two Hundred Fifty Hundred Dollars ($250.00) per unit per year for each dwelling unit as to which Lessee fails to deliver to City, during any Lease Year, a full and adequate report that conforms to Section 33418 of the California Health and Safety Code. “Required Affordable Units” means fifty (50) of the fifty (50) dwelling units required to be developed on the Portion A Site under the AHA (including without limitation Section 7.2 thereof) and maintained in conformity with the Prescribed Income Levels at Affordable Rents. “Residual Receipts” for a particular Lease Year means Gross Revenues for the corresponding Lease Year less (i) Debt Service payments made during such Lease Year on the Primary Construction Loan or the Primary Permanent Loan, including payments under escrow and reserve provisions thereunder in amounts not in excess of the amounts due and payable during such month (and not including prepayments), and (ii) the sum of Operating Expenses and, to the extent funded, payments made to Chargeable Reserves as made during the corresponding Lease Year, and payments of Deferred Developer Fee as made to Developer during the corresponding Lease Year. All calculations of Residual Receipts shall be made annually, on or before May 15 for the preceding Lease Year, on a cash (and not accrual) basis and the components thereof shall be subject to verification and approval, on an annual basis, based upon conformity with the terms of this Lease and the AHA, by the City Manager on behalf of the City.
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“Schedule of Performance” means Attachment No. 3 to the AHA. “Scope of Development” means that certain Scope of Development attached to the AHA as Attachment No. 9 and is incorporated herein by reference, which describes the scope, amount, and quality of the Development to be constructed by the Developer pursuant to the terms and conditions of the AHA. The Scope of Development is subject to revision only as provided in the AHA. “Tax Credit Regulatory Agreement” means a regulatory agreement, if any, required by TCAC in connection with the reservation of Tax Credits for the Project. “Tax Credit Rent ” means that maximum rent permitted to be paid for a household corresponding to an income category set forth in this Lease (such as 50% of Median Income) under the Tax Credit Rules.
“Tax Credit Rules” means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq., and the rules and regulations implementing the foregoing. “Tax Credits” means 4% Low Income Housing Tax Credits\ granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq. “TCAC” means the Tax Credit Allocation Committee of the State of California. “Tenant Selection and Tenant Services Plan ” shall have the meaning established therefor under the AHA.
“Term” or “Term of the City Lease” means a period beginning as of the Commencement Date and ending on the eighty-seventh (87th) anniversary of the Commencement Date. “Uniform Codes” means each of the following as in effect from time to time as approved by City: the Uniform Building Code, the Uniform Housing Code, the Nat ional Electrical Code, the Uniform Plumbing Code, the Uniform Mechanical Code, and the Uniform Code for the Abatement of Dangerous Buildings.
“Unit” means each of the fifty (50) dwelling units required to be developed by the Developer under the AHA and this Lease.
“Very Low Income Household” means a household earning not greater than fifty percent (50%) of median income for the Area, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105. “Very Low Income Units ” means Units available to and occupied by Very Low Income Households.
“Year” means a fiscal year beginning as of July 1 and ending June 30 of the following calendar year or such other annual period as may be mutually agreed to by City and Lessee.

Any other capitalized terms not defined herein shall have the respective meanings established therefor in the AHA.
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2. LEASE OF THE SITE.

City, for and in consideration of the rents, covenants, and agreements hereinafter reserved and contained on the part of Lessee to be paid, kept, performed and observed by Lessee, hereby leases to Lessee, and Lessee hereby leases from City, that certain real property in the City of Rocklin (the “City”) shown on the “ Portion A Site Map” attached hereto as Exhibit A and incorporated herein by this reference, and having the legal description in the “ Portion A Site Description” attached hereto as Exhibit B and inco rporated herein by this reference (the “ Portion A Site ”). Except as expressly provided to the contrary in this Lease, reference to the Portion A Site is to the described land, exclusive of any improvements now or hereafter located on the land, notwithstan ding that any such improvements may or shall be construed as affixed to and as constituting part of the real property. In the event that after the date first above written the City and Lessee agree to add certain territory as part of the property leased hereunder, such territory shall thereafter be included as part of the Portion A Site for the purposes of this Lease.

3. LEASE TERM.

Lessee shall lease the Portion A Site from City and City shall lease the Portion A Site to Lessee for the Term as provided for herein.

4. USE OF THE PROPERTY.

4.1 Use of the Property. Lessee covenants and agrees for itself, its successors and assigns, that during the Term, the Lessee shall, by the respective times established therefor in the Schedule of Performance (in the AHA) as the same may be extended in accordance with the terms of this Lease, commence and complete the Development in conformance with the Scope of D evelopment, all applicable laws, and thereafter the Property and the Improvements shall be devoted to those uses as set forth in this Lease, the Regulatory Agreement, the AHA, and the Reciprocal Easement and Joint Use Agreement. Lessee shall apply for and obtain all necessary permits and shall complete the Improvements as provided by the AHA. In the event of any inconsistency between this Lease or the AHA, this Lease shall control ; provided that there shall be no subordination of the Regulatory Agreement excepting as expressly provided in the AHA.

4.2 Management. Lessee shall manage or cause the Property and the Improvements to be managed in a prudent and business -like manner, consistent with other newly -constructed rental housing projects, including market rate projects, in Placer County, California, and in conformity with the Regulatory Agreement, and the Tenant Selection and Tenant Services Plan.

Lessee has contracted with the Property Manager to operate and maintain the Portion A Site and the Improvements in accordance with the terms of this Lease; the select ion and hiring of such management company was subject to, and the selection of any other manager shall be subject to, approval by City Manager.

Lessee shall submit or shall cause its Property Manager to submit to the City Manager on or before the sixtieth (60th) day following commencement of the Term, and each anniversary thereof, an annual budget for the ongoing operation of the Project. Each of the Lessee and the City shall cause its respective representative(s) to meet during the thirty (30) days follow ing the receipt of the annual budget to review the budget; such review is without obligation to either party to propose or agree to any modification of permitted Operating Expenses. In the event a budget is not agreed upon the Project 749

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shall be operated pursuant to the most recently approved annual budget with each line item increased for such year by the increase in the applicable cost of living index published for Placer County until a budget is agreed upon (subject to the cap on Management Fees as set fo rth within the definition of Operating Expenses).

Additional maintenance requirements are as follows:
(a) Maintenance and Repair; Capital Replacement Reserve . Lessee agrees to assume full responsibility for the management, operation and maintenance of the Imp rovements and the Portion A Site throughout the Term without expense to City, and to perform all repairs and replacements necessary to maintain and preserve the Improvements and the Portion A Site in good repair, in a neat, clean, safe and orderly conditio n reasonably satisfactory to City and in compliance with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Improvements and the Portion A Site. Lessee hereby waives all rights to make repairs or to cause any work to be performed at the expense of City as provided for in Section 1941 and 1942 of the California Civil Code.

The following standards shall be complied with by Lessee and its maintenan ce staff, contractors or subcontractors:
(1) Lessee shall maintain the Improvements, including without limitation individual Required Affordable Units, all common areas, all interior and exterior facades, and all exterior project site areas, in a safe and sani tary fashion suitable for a high quality, rental housing project. Lessee agrees to provide utility services, administrative services, supplies, contract services, maintenance, maintenance reserves, and management for the entire project including interior tenant spaces, common area spaces and exterior common areas. The services provided by Lessee shall include, but not be limited to, providing all common area electricity, gas, water, television, cable television, property, fire and liability insurance in the amounts and coverages required under this Lease, all property taxes and personal property taxes, any and all assessments, maintenance and replacement of all exterior landscaping, and all administration and overhead required for any property manager. (2) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing, edging, and trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
(3) Clean-up maintenance shall include, but not be limited to: maintenance of all private paths, parking areas, driveways and other paved areas in clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weed s, leaves and other debris are properly disposed of by maintenance workers.
(4) The Improvements shall be maintained in conformance and in compliance with the approved construction and architectural plans and design scheme, as the same may be amended from time to time with the approval of City. 750

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(5) All maintenance work shall conform to all applicable federal and state Occupation Safety and Health Act standards and regulations for the performance of maintenance. (6) Any and all chemicals, unhealthful substances, and pes ticides used in and during maintenance shall be applied only by persons in strict accordance with all governing regulations.
(7) Parking lots, lighting fixtures, trash enclosures, and all areas shall be kept free from any accumulation of debris or waste materials by regularly scheduled maintenance.

Capital repairs to and replacement of the Improvements shall include only those items with a long useful life, including without limitation the following:
(a) Appliance replacement;
(b) Hot water heater replacement;
(c) Plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets;
(d) Air conditioning and heating replacement;
(e) Asphalt replacement;
(f) Roofing replacement;
(g) Landscape tree replacement and irrigation pipe and controls replacement;
(h) Gas line pipe replacement;
(i) Lighting fixture replacement; and
(j) Miscellaneous motors and blowers.
(b) Exterior Building Maintenance . All exterior, painted surfaces shall be maintained at all times in a clean and presentable mann er, free from chipping, cracking and defacing marks. Any such defacing marks shall be cleaned or removed within a reasonable period of time as set forth herein.
(c) Front and Side Exteriors. Lessee shall at all times maintain the front exterior and yard in a clean, safe and presentable manner, free from defacing marks or any disrepair and any visible side exteriors. Lessee shall hire maintenance personnel to maintain and/or repair any front exterior or yard or visible side yard and exterior of any lot or building. (d) Graffiti Removal. All graffiti, and defacement of any type, including marks, words and pictures must be removed and any necessary painting or repair completed by the later to occur of (i) seventy two (72) hours of their creation or (ii) seventy two (72) hours after notice to Lessee. 751

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(e) Driveways. All driveways must be paved and maintained with impervious material in accordance with the City Code. In addition, all water must be made to drain freely to the public part of the waterway without any pooling.
(f) Exterior Illumination. Lessee shall at all times maintain adequate lighting in all entrance ways and parking areas. Adequate lighting means outdoor, night lighting designed and installed, which provides no less than one (1.0) foot candles in the parki ng areas and no less than one and one-half (1-1/2) foot candles in the walking areas or common areas and no less than 0.2 foot candles at the point of least illumination.
(g) Front Setbacks. All front setback areas that are not buildings, driveways or walkways shall be adequately and appropriately landscaped in accordance with minimum standards established by City and shall be maintained by Lessee. The landscaping shall meet minimum standards set from time to time by City.
(h) Trash Bins. All trash shall be collected and placed at all times in an enclosable bin to be placed in a designated refuse/trash bin area. The designated area shall be located so that the bin will, to the extent possible, be readily accessible from the street. (i) Prohibited Signs. No sign of any kind shall be displayed to the public view on or from any portion of the Portion A Site without the approval of City and appropriate City departments if any as required by the City Code.
(j) Gross Mismanagement . During the Term, and in the event of “Gross Mismanagement” (as defined below) of the Development, City Manager shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, if such condition(s) is/are not ceased and/or corrected after expiration of sixty (60) days from the date of written notice from City Manager. If Lessee or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written notice (with evidence of such submitted to the City Manager), but has failed to complete such cure by the 60th day (or such longer period if the cure cannot reasonably be accomplished in sixty (60) days as reasonably determined by the non-defaulting party), then Lessee shall have an additional thirty (30) days to complete the cure of Gross Mismanagement condition(s).

For purposes of this Agreement, the term “Gross Mismanagement” means management of the Development in a manner which violates the terms and/or intention of this Lease and the AHA to operate a first quality affordable housing complex, and shall include, but is not limited to, any one or more of the following:
(a) Leasing to tenants who exceed the Prescribed Income Levels; (b) Subject to fair housing laws, allowing tenants to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (c) Under-funding required reserve accounts;
(d) Failing to submit timely and/or adequate annual reports to City as required herein;
(e) Failing to comply with the Regulatory Agreement;
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(f) Failing to comply with the Tax Credit Regulatory Agreement; (g) Fraud or embezzlement of Development funds, including without limitation funds in the reserve accounts;
(h) Failing to fully cooperate with the Rocklin Police Department or other local law enforcement agency(ies) with jurisdiction over the Development, in maintaining a crime-free environment within the Development;
(i) Failing to fully cooperate with the Rocklin Fire Department or other local public safety agency(ies) with jurisdiction over the Development, in maintaining a safe and accessible environment within the Development;
(j) Failing to fully cooperate with the Rocklin Planning and Building and Safety Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Development, in maintaining a decent, safe and sanitary environment within the Development; and (k) Failing to implement the Tenant Selection and Tenant Services Plan. (k) Code Enforcement . Lessee acknowledges and agrees that City and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Development and the in dividual dwelling units at the Development (and not limited to the Required Affordable Units), both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Lessee and/or an individual tenant. If such notice is provided by City representative(s) to Lessee, then Lessee shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Units at the Development to be made available and open for inspection. Lessee shall include express advisement of such inspection rights within the lease/rental agreements for each Unit in the Development in order for each and every tenant and tenant household to be aware of this inspection right. The foregoing portion of this Section 4.2 is without limitation as to the exercise of police powers by City.

Notwithstanding the above, Lessee shall use its best efforts to correct any defects in management at the earliest feasible time and, if neces sary, to replace the management company prior to the elapsing of such time period.

4.3 Only Lawful Uses Permitted. The Portion A Site and the Improvements shall not be used for any purpose that is in violation of any law, ordinance or regulation of any federal, state, county or local governmental authority, body or entity. Furthermore, Lessee shall not maintain or commit any nuisance or unlawful conduct (as now or hereafter defined by any applicable statutory or decisional law) on the Portion A Site or the Improvements, or any part thereof.

5. RENT.

5.1 Rent Payments. During the Term, Lessee is required to and shall pay to City the Base Rent and, to the extent applicable Additional Rent. Base Rent shall be payable as set forth in the 753

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remainder of this Section 5.1. Additional Rent, if any, shall be payable as provided under Section 6.6 (and if not sooner paid shall be paid when the next payment of Base Rent is due). (a) During each Lease Year during the Term, Lessee agrees to pay the ‘Base Rent’ of One Dollar ($1.00) to City. Base Rent shall be paid on the Commencement Date and on the first day of each subsequent Lease Year which occurs during the Term. (b) The parties understand and acknowledge that the primary consideration for this Lease is the performance of the covenants set forth in this Lease and the AHA, particularly (without limitation, however) the covenants to rent the units at Affordable Rent households of limited income.

5.2 [Intentionally Omitted].

5.3 Net Lease. It is the intent of the parties hereto that the rent provided herein shall be absolutely net to City and that Lessee shall pay all costs, taxes, charges, and expenses of every kind and nature against the Portion A Site and the Improvements which may arise or become due during the Term, and which, except for execution hereof, would or could have been payable by City.

5.4 Payment of Rent. All rent that becomes due and payable pursuant to this Lease shall be paid to City at the address of City listed in Section 26.7 or such other place as City may from time to time designa te by written notice to the Lessee without notice or demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction.

6. AFFORDABLE HOUSING AND OTHER OCCUPANCY REQUIREMENTS.

6.1 Number of Required Affordable Units . Lessee agrees to make available, restrict occupancy to, and rent fifty (50) (the “Required Affordable Units”) of the fifty (50) rental units to be located on the Portion A Site (the “Housing Units”) at an Affordable Rent. Lessee agrees to make available, restrict occupancy to, and rent all of the Required Affordable Units at Affordable Rent. The bedroom counts and corr elating income levels are set forth in the definition of Prescribed Income Levels; Units shall be maintained in conformity with households conforming to the Prescribed Income Levels at Affordable Rents. The approximate square footages of the respective un its shall be as follows: (i) for one-bedroom units, 636 square feet per unit; (ii) for two-bedroom units, 858 square feet per unit; and ( iii) for three-bedroom units 1,075 square feet per unit . Rental of the Required Affordable Units shall conform to the Prescribed Income Levels and be accomplished at Affordable Rents.

In the event the Lessee charges rents for one or more of the Required Affordable Units which exceed Affordable Rent, the Lessee shall promptly, and without necessity of notice or request therefor by th e City, correct such rent . Any penalties arising from the charging of rents which exceed Affordable Rent shall be paid solely by Lessee.

6.2 Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Section 6 for the Affordability Period.

6.3 Selection of Tenants. Lessee shall be responsible for the selection of tenants for the Housing Units in compliance with the criteria set forth in this Section 6 of this Lease and the Tenant Selection and Tenant Services Plan.
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6.4 Income of Tenants. Prior to the rental or lease of any Housing Unit to a tenant, and annually thereafter, the Lessee shall submit to the City or its designee, at Lessee’s expense, a completed income computation and certification form, in a form to be provided by the City. Each tenant shall be an Extremely Low Income Household, a Very Low Income Ho usehold, or Lower Income Household (in accordance with the Prescribed Income Levels) which meets the eligibility requirements established for the Housing Unit, and Lessee shall obtain a certification from each tenant leasing an Affordable Unit which substa ntiates such fact, which include the Income Verification. Lessee shall verify the income certification of the tenant as set forth in Section 5.3 of the AHA.

Except to the extent prohibited by federal law, in the event a household’s income initially complies with the income restriction for an Extremely Low Income Household (or, as applicable, a Very Low Income Household , or a Lower Income Household) but the inc ome of such household increases, such increase shall not be deemed to result in a violation by Lessee of the restrictions of this Lease concerning limitations upon income of occupants, provided that: (i) financing by multifamily housing bonds or low incom e housing tax credits was obtained for the Improvements, and (ii) if the resulting income of such household exceeds one hundred forty percent (140%) of the applicable income limit, the next available unit is rented to an Extremely Low , Very Low or Lower In come Household, as applicable.

6.5 Determination of Affordable Rent for the Required Affordable Units . Each Required Affordable Unit shall be rented at an “Affordable Rent” to be established as provided herein:

The maximum monthly rental amount for the Required Affordable Units to be rented to Extremely Low Income Households shall be established at one -twelfth (1/12) of thirty percent (30%) of thirty percent (30%) of Placer County median income for a household of a size appropriate to the Housing Unit. The maximum monthly rental amount for the Required Affordable Units to be rented to Very Low Income Households shall be established at one -twelfth (1/12) of fifty percent (50%) of thirty percent (30%) of Placer County median income for a household of a size appropriate to the Housing Unit. The maximum monthly rental amount for the Required Affordable Units to be rented to Lower Income Households shall be established at one-twelfth (1/12th) of thirty percent (30%) of sixty percent (60%) of Placer County median income for a household size appropriate to the Housing Unit.

Notwithstanding the foregoing, if Tax Credits are used for the Project, Tax Credit Rents shall be applied to the extent these are lower than the rents otherwise prescribed in this Section 6.5. “Household size appropriate to the unit,” for the purpose of the calculation of rent herein (and without regard to actual occupancy), means two persons for each one bedroom unit, three persons for each two bedroom unit and four persons for each three bedroom unit. The maximum monthly rental amount of the Housing Units shall be adjusted annually by the formula set forth above upon the promulgation of revised Placer County median income figures by regulation of the California Department of Housing and Community Development. Actual rent charged may be less than such maximum rent.

6.6 Verifications.
(a) Income Verification . Lessee shall veri fy the income of each proposed and existing tenant of the Housing Units.
(b) Annual Reports. Following the issuance of the Certificate of Completion, and on or before July 15 of each Lease Year commencing after the earlier to occur of (i) completion of the Improvements or (ii) occurrence of the time indicated in the AHA for the completion of the 755

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Improvements, Lessee shall submit to City or its designee the reports described by Health and Safety Code Section 33418, as the same may be amended from time to time, with each such report to be in the form prescribed by City. Each annual report shall cover the immediately preceding Lease Year.

In addition, commencing as of July 15 first following the issuance of the Certificate of Completion, and continuing on each July 15 thereafter during the Term, the Lessee shall submit an Audited Financial Statement for the previous Lease Year (or portion thereof), including all funds from whatever source provided to the Lessee or any Related Entity in connection with the Projec t. The Audited Financial Statement shall demonstrate ongoing compliance with this Lease, including without limitation Section 5.1(b) hereof.

The Lessee shall maintain on file each tenant’s executed lease and Income Verification and rental records for the Project and the Required Affordable Units. The Lessee shall maintain complete and accurate records pertaining to the Extremely Low Income Units, the Lower Income Units and any other Units, and will permit any duly authorized representative of the City to inspect the books and records of the Lessee pertaining to the Project, including those records pertaining to the occupancy of the Extremely Low Income Units and the Lower Income Units and any other units. The Lessee shall prepare and submit to the City annually commencing July 15, first following the issuance of the Certificate of Completion and continuing throughout the Term, a Certificate of Continuing Program Compliance. Lessee shall maintain records and report to City annually demonstrating compliance with the requirements with respect to the availability and use of the Required Affordable Units for Locals.

Such documentation shall state for each Required Affordable Unit in the Project the unit size, the rental amount, the number of occupants, and the income of the occupants and any other information which may be used to determined compliance with the terms of this Lease and the AHA.

As part of its annual report, the Lessee shall include a statement of amounts payable by Lessee under this Lease supported by an Audited Financial Statement (prepared by an independent accounting firm reasonably acceptable to the City) which sets forth information in detail sufficient for adequate review by the City for the purposes of confirming those amounts payable by the Lessee to the City as well as showing the general financial performance of the Project (“Annual Financial Report”). Each Annual Financial Report shall include a profit and loss statement showing Gross Revenues, Operating Expenses, Debt Services, Operating Reserve, Capital Replacement Reserve, Chargeable Reserves (and all components thereof), and Residual Receipts, all certified by the Audited Financial Statement. In the event the amounts reported or paid deviate by five percent (5%) or more from that amount owing upon review of the Lessee’s submittal, Lessee shall reimburse City for its cost to review (which may require engagement of auditors) and collect the amounts owing; such amounts shall, until paid, be added to the amount payable under this Lease as “Additional Rent.” The Lessee acknowledges that City, in respect to the Portion A Site , may be required by Section 33418 of the California Health and Safety Code or may elect to require Lessee to monitor the Housing Units and submit the annual reports required by Section 3 of Article II of the City Regulatory Agreement. The City relies upon the information contained in such reports to satisfy its own reporting requirements, including those as described as Sections 33080 and 33080.1 of the California Health and Safety Code. In the event the Lessee fails to submit to the City or its designee its Certificate of Continuing Program Compliance for the corresponding Year and Lessee remains in noncompliance for thirty (30) days following receipt of written notice from the City of such noncompliance, then Lessee shall, without further notice or opportunity to cure, pay to the City Two Hundred Fifty Dollars ($250.00) (the “Reporting Amount(s)”) per each Required Affordable Unit for each year Lessee fails 756

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to submit a Certificate of Con tinuing Program Compliance covering each and every housing unit on the Portion A Site.

6.7 Regulatory Instruments. The Lessee shall execute, acknowledge, and deliver to City a “Regulatory Agreement,” in the form of Attachment No. 11 to the AHA, to be recorded with respect to the Portion A Site in the official records of Placer County, California. The Lessee shall comply with the Regulatory Agreement. The Regulatory Agreement is subject to modification (which amendment shall have the same priority as the Regulatory Agreement) to conform to the number of Units regulated by other restrictions of record if that number is greater than originally provided in the Regulatory Agreement. The Regulatory Agreement and this Lease shall be construed to be consistent to the greatest feasible extent. In the event of any express conflict, this Lease shall control over the Regulatory Agreement; however, there shall be no subordination of the Regulatory Agreement on account of any such express conflict.

7. UTILITIES AND TAXES.

7.1 Utilities. Lessee shall pay or cause to be paid all common area charges for gas, electricity, water, sewer, garbage collection, cable television, and other utilities furnished to the Portion A Site and the Improvements and all sewer use charges, hookup or similar charges or assessments for utilities levied against the Portion A Site and the Improvements for any period included within th e Term.

7.2 Real Estate Taxes.
(a) As used herein, the term “real estate taxes” means all real estate taxes, municipal or county water and sewer rates and charges, or any other assessments or taxes, which shall be levied against the Portion A Site or the Improvements, or any interest therein, and which become a lien thereon and accrue during the Term.
(b) Any real estate taxes which are payable by Lessee hereunder shall be prorated between City and Lessee as of the Commencement Date and then again at the expiration or earlier termination of the Term.
(c) Lessee shall have the right to contest the amount or validity of any real estate taxes, in whole or in part, by appropriate administrative and lega l proceedings, without any costs or expense to City, and Lessee may postpone payment of any such contested real estate taxes pending the prosecution of such proceedings and any appeals so long as such proceedings shall not operate to prevent the collection of such real estate taxes and the sale of the Portion A Site and any Improvements to satisfy any lien arising out of the nonpayment of the same. (d) Lessee shall have the right to apply for and may obtain any exemption(s) as may be applicable as to real estate taxes based upon the operation of the Portion A Site for affordable rental housing. So long as Lessee is not in breach under this Lease or the AHA, the City, in its capacity as the fee owner of the Portion A Site, shall cooperate as reasonably necessary for Lessee to apply for and obtain such exemptions, provided that in no event shall the City be required to incur costs in connection therewith.
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7.3 Personal Property . Lessee covenants and agrees to pay before delinq uency all personal property taxes, assessments and liens of every kind and nature upon all personalty as may be owned by Lessee and from time to time situated within the Portion A Site and any Improvements.

7.4 Possessory Interest. Pursuant to Health and Safety Code Section 33673, to the extent applicable, the Portion A Site is to be assessed and taxed in the same manner as privately owned property. The Lessee shall pay taxes upon the entire property and not merely the assessed value of its leasehold interest. City will provide notice to the Placer County Assessor within thirty (30) days of the commencement of this Lease as required by Health and Safety Code Section 33673.1; provided that the failure to do so, by City, shall not be deemed to constitute a Default by City. Lessee shall pay or cause to be paid, before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all real estate taxes which may be levied against any and all interests in the Portion A Site and any Improvements during the Term, and not merely the assessed value of the leasehold interest in the Portion A Site; provided, however, that Lessee may apply for and receive any applicable exemption from the payment of property taxes and assessments. Lessor shall use reasonable efforts to cause the Portion A Site to be assessed as a separate parcel.

8. OWNERSHIP OF IMPROVEMENTS, FIXTURES AND FURNISHINGS.

8.1 Ownership During Term . All Improvements constructed on the Portion A Site by Lessee as provided in the AHA and as permitted by this Lease shall, during the Term, be and remain the property of Lessee and owned in fee by Lessee; provided, however, that Lessee shall have no right to waste the Improvements, or to destroy, demolish or remove the Improvements except as otherwise permitted pursuant to this Lease; and provided further that Lessee’s rights and powers with respect to the Improvements are subject to the terms and limitations of this Lease. City and Lessee covenant for themselves and all persons claiming under or through them that the Improvements are real property.

City agrees that Lessee shall have the exclusive right during the Term to deduct, claim, retain and enjoy any and all rental income, appreciation gain, depreciation, amortization, and tax credits for federal and state tax purposes relating to the Improvements and any additions thereto, substitu tions therefor, fixtures therein, and property relating thereto, and City shall treat Lessee as the tax owner of the Improvements for federal income tax purposes and shall not file any tax returns inconsistent with such treatment.

8.2 Ownership at Termination. Upon termination of this Lease, whether by expiration of the Term or otherwise, all Improvements, fixtures and furnishings shall, without compensation to Lessee, then become City’s property, free and clear of all liens, encumbrances, and claims to or against them by Lessee or any third person, firm or entity, including but not limited to any mortgagee or lender, unless otherwise approved by City in writing at its discretion. At the option of City, the City may require the Lessee to demolish and remove any improvements to the Portion A Site which have not previously been approved by the City.

9. MECHANICS LIENS; FAITHFUL PERFORMANCE.

Lessee shall not suffer or permit any mechanics’ or materialmen’s liens to be enforced against the fee simple estate in reversion of City as to the Portion A Site and Improvements, nor against Lessee’s leasehold interest therein by reason of work, labor, services or materials supplied or claimed to have been supplied to Lessee or anyone holding the Portion A Site and the Improvements, or any part thereof, through or under Lessee, and Lessee agrees to defend, indemnify, and hold City and its officers, officials, employees, agents, and representatives, harmless against such liens. If any such lien 758

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shall at any time be filed against the Portion A Site or any Improvements, Lessee shall, within thirty (30) days after notice to Lessee of the filing thereof, cause the same to be discharged of record; provided, however, that Lessee shall have the right to contest the amount or validity, in whole or in part, of any such lien by appropriate proceedings but in such event, Lessee shall notify City and promptly bond such lien in the manner authorized by law with a responsible surety company qualified to do business in the State of California or provide other security acceptable to City. Lessee shall prosecute such proceedings with due diligence. Nothing in this Lease shall be deemed to be, nor shall be construed in any way to constitute, the consent or request of City, express or implied, by inference or otherwise, to any person, firm or limited partnership for the performance of any labor or the furnishing of any materials for any construction, rebuilding, alteration or repair of or to the Portion A Site, the Improvements, or any part thereof. Prior to commencement of reconstruction of the Improvements on the Portion A Site , or any repair or alteration thereto having a cost in excess o f $10,000, Lessee shall give City not less than thirty (30) days advance notice in writing of intention to begin said activity in order that nonresponsibility notices may be posted and recorded as provided by State and local laws.

10. MAINTENANCE AND REPAIR; CAPITAL REPLACEMENT RESERVE.

Lessee agrees to assume full responsibility for the management, operation and maintenance of the Improvements and the Portion A Site throughout the Term without expense to City, and to perform all repairs and replacements necessary to maintain and preserve the Improvements and the Portion A Site in good repair, in a neat, clean, safe and orderly condition reasonably satisfactory to City and in compliance with all applicable laws. Lessee agrees that City shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Improvements and the Portion A Site . Lessee hereby waives all rights to make repairs o r to cause any work to be performed at the expense of City as provided for in Section 1941 and 1942 of the California Civil Code.

The following standards shall be complied with by Lessee and its maintenance staff, contractors or subcontractors:
(1) Lessee shall maintain the Improvements, including individual Affordable Units, all common areas, all interior and exterior facades, and all exterior project site areas, in a safe and sanitary fashion suitable for a high quality, rental housing project. The Lessee agrees to provide utility services, administrative services, supplies, contract services, maintenance, maintenance reserves, and management for the entire project including interior tenant spaces, common area spaces and exterior common areas. The services provided by the Lessee shall include, but not be limited to, providing all common area electricity, gas, water, television, cable television, property, fire and liability insurance in the amounts set forth in this Lease, all property taxes and personal property taxes, any and all assessments, maintenance and replacement of all exterior landscaping, and all administration and overhead required for the Property Manager. (2) Landscape maintenance shall include, but not be limited to:
watering/irrigation; ferti lization; mowing, edging, and trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and optimum irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
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(3) Clean-up maintenance shall include, but not be limited to: maintenance of all private paths, parking areas, driveways and other paved areas in clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers.
(4) The I mprovements shall be maintained in conformance and in compliance with the approved construction and architectural plans and design scheme, as the same may be amended from time to time with the approval of the City (and City, if such approval is required). (5) All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. (6) Any and all chemicals, unhealthful substances, and pesticides used in and during mainten ance shall be applied only by persons in strict accordance with all governing regulations.
(7) Parking lots, lighting fixtures, trash enclosures, and all areas shall be kept free from any accumulation of debris or waste materials by regularly scheduled maintenance. (8) Lessee shall, or shall cause the Property Manager to, set aside in an Operating Reserve, which shall be maintained as a separate interest-bearing trust account, in an amount as prescribed under the Primary Permanent Loan and the Partnership Agreement . To the extent this Lease requires that an Operating Reserve be funded at a level in excess of that required under the Primary Permanent Loan and the Partnership Agreement, such excess amount shall be funded by Lessee from the Developer Percentage. Lessee shall provide, on not less than an annual basis, evidence reasonably satisfactory to City Manager of compliance herewith, and shall thereafter cause such amount to be retained in the Operating Reserve, to cover shortfalls between Improvements income and actual project operating expenses. The Operating Reserve shall be replenished to the full amount prior to any further disbursement of Residual Receipts to the Lessee. Commencing as of the first anniversary of the January 1st which first occurs after conversion, no Gross Revenues thereafter generated shall be used to fund the Operating Reserve excepting as necessary to restore the Operating Reserve to the original principal amount or, if applicable, the amount designated therefor by TCAC. Moneys, if any, in the Operating Reserve which are not expended as of the termination of this Lease shall be treated as Residual Receipts.
(9) Lessee shall also, or cause the Property Manager or permanent lender to, commencing as of the first month following the first annive rsary of the completion of the first Housing Unit (as such completion is evidenced by the issuance of a certificate of occupancy by the City as to the corresponding building) set aside the Capital Replacement Reserve. The Capital Replacement Reserve shall be deposited into a separate interest -bearing trust account. Funds in the Capital Replacement Reserve shall be used for capital replacements to the Improvements’ fixtures and equipment which are normally capitalized under generally accepted accounting principles. As capital repairs and improvements of the Project become necessary, the Capital Replacement Reserve shall be the first source of payment therefor; provided, however, that Lessee may first use other funds for payment with the prior consent of City Manager, which approval shall not be unreasonably withheld.

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Lessee of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Portion A Site in the manner prescribed in this Section 10 and the AHA. Lessee, at its expense, shall submit to City on not less than an annual basis an accounting for the Capital Replacement Reserve. Any amounts of the Capital Replacement Reserve in excess of the level of such reserve required by the Approved Permanent Lender shall be funded from Residual Receipts. Any moneys in the Capital Replacement Reserve which are not expended as of the termination of this Lease shall be treated as Residual Receipts.

Lessee shall arrange for a manager to be on site at the Portion B Area (adjacent to the Portion A Site) who is responsible for day-to-day management of the Portion A Site; Lessee shall be responsible for management of the Portion A Site without regard to whether a manager is resident at the Portion B Area.

11. ENVIRONMENTAL MATTERS.

11.1 Definitions. For the purposes of this Lease, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified:
(a) The term “Hazardous Material” or “Hazardous Materials” means and include any substance, material, or waste which is or becomes regulated by any local governmental authority, including the County, the Regional Water Quality Control Board, the State of California, or the United States Government, including, but not limited to, any material or substance which is: (i) defined as a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardou s Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, 761

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Chapter 6.8 (Carpenter Presley Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazar dous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (iv) defined as a “hazardous substance” under Section 25281 of the Cal ifornia Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials; (vii) lead based paint or any lead based or lead products; (viii) polychlorinated biphenyls, (ix) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 6903); (xi) Methyl tertiary Butyl Ether; (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any “Governmental Requirements” (as defined in Paragraph (c) of this Section 308) either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defined in the Lead Based Paint Poisoning Prevention Act, Title X of the 19 92 Housing and Community Development Act, 42 U.S.C. § 4800, et seq ., specifically §§ 4821 –4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities below attainment l evels identified in one or more of the enactments identified above as Governmental Requirements, including those product and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and residence of residentia l developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Development, inc luding without limitation alcohol, aspirin, tobacco and saccharine.
(b) The term “Hazardous Materials Contamination” means the contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, in, or under the Portion A Site by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time (whether before or after the Date of Agreement) emanating from the Portion A Site in violation of Governmental Requirements. (c) The term “Governmental Requirements” means all past, present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the city, or any other political subdivision in which the Portion A Site is located, and any other state, county city, political subdivision, City, instrumentality or other entity exercising jurisdiction over City, Lessee or the Site.

11.2 Site Evaluation. Lessee assumes any and all responsibility and Liabilities (as defined in and subject to the limitations in Section 11.3 of this Lease) for all Hazardous Materials Contamination of the Portion A Site which occurs during the Term of this Lease or extension thereof.

11.3 Indemnification; Lessee’s Indemnity . Lessee shall save, protect, pay for, defend (with counsel acceptable to City), indemnify and hold harmless City, and its elected and appointed officials, officers, employees, attorneys, representatives, volunteers, contractors and agents (collectively, “Indemnitees”) from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties , fines and monetary sanctions), losses, 762

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costs or expenses (including, without limitation, consultants’ fees, investigation and laboratory fees, attorneys’ fees and remedial and response costs and third -party claims or costs) (the foregoing are hereinafter collectively referred to as “Liabilities”) that may now or in the future be incurred or suffered by Indemnitees by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of: (i) the presence, use, release, escape, seepage, leakage, spillage, emission, generation, discharge, storage, or disposal of any Hazardous Materials in, on, under, or about, or the transportation of any such Hazardous Materials to or from, the Portion A Site occurring during the Term or caused by Lessee; (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, leakage, spillage, emission, escape, discharge, storage, disposal, or transportation of Hazardous Materials in, on, under, or about, or to or from, the Portion A Site; (iii) the physical and environmental condition of the Portion A Site in violation of Governmental Requirements occurring during the Term or caused by Lessee, and (iv) any Liabilities caused or contributed to by acts or omissions of the Lessee relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or physical condition of the Portion A Site caused by Lessee or occurring during the Term. The foregoing indemnification shall continue in full force and effect regardless of whether such condition, liability, loss, damage, cost, penalty, fine, and/or expense shall accrue or be discovered before or after the termination of the Term. This indemnification supplements and in no way limits the indemnification set forth in Section 6.7 of the AHA. Lessee’s obligations under this Section 11.3 shall survive the expiration of this Lease and sha ll not merge with any grant deed. Notwithstanding the foregoing, Lessee shall not be obligated to indemnify the City with respect to the consequences of any act of gross negligence or willful misconduct of the City.

11.4 Duty to Prevent Hazardous Material Co ntamination. Lessee shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment in violation of Governmental Requirements. Such prec autions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with the standards generall y applied by apartment complexes in Placer County, California as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials. Lessee shall notify City, and provide to City a copy or copies of any notices of violation, notices to co mply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to all Environmental Laws and other Governmental Requirements, and Lessee shall report to City, as soon as possible after each incident, any unusual or potentially important incidents in the event of a release of any Hazardous Materials into the environment.

11.5 Obligation of Lessee to Remediate Premises . Notwithstanding the obligation of Lessee to indemnify City pursuant to Section 11.3 of this Lease, Lessee shall, at its sole cost and expense, promptly take (i) all actions required by any federal, state, region al, or local governmental authority or political subdivision or any Governmental Requirements and (ii) all actions necessary to make full economic use of the Portion A Site for the purposes contemplated by this Lease, which requirements or necessity arise from the presence upon, about or beneath the Portion A Site of any Hazardous Materials in violation of Governmental Requirements or Hazardous Materials Contamination caused by Lessee or arising during the Term. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Portion A Site, the preparation of any feasibility studies or reports and the performance of any cleanup, remedial, removal or restoration work. Lessee shall take all actions necessary to promptly restore the Portion A Site in compliance with 763

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all applicable Governmental Requirements. Lessee’s obligations under this Section 11.5 shall not apply to any Hazardous Materials or Hazardous Materials Contamination arising prior to the Term.

11.6 Storage or Handling of Hazardous Materials. Lessee, at its sole cost and expense, shall comply with all Governmental Requirements for the storage, use, transportation, handling and disposal of Hazardous Materials on or about the Portion A Site. In the event Lessee does store, use, transport, handle or dispose of any Hazardous Materials in violation of Governmental Requirements, Lessee shall notify City in writing at least ten (10) days prior to their first appearance on the Portion A Site and Lessee’s failure to do so shall constitute a material default under this Lease. Lessee shall conduct all monitoring activities required or prescribed by applicable Governmental Requirements, and shall, at its sole cost and expense, comply with all posting requirements of Proposition 65 or any other similarly enacted Governmental Requirements. In addition, in the event of any complaint or governmental inquiry with respect to Lessee’s storage, use, transportatio n, handling and disposal of Hazardous Materials on or about the Portion A Site, or if otherwise deemed necessary by City in its reasonable judgment, City may require Lessee, at Lessee’s sole cost and expense, to conduct specific monitoring or testing activities with respect to Hazardous Materials on the Portion A Site. Lessee’s monitoring programs shall be in compliance with applicable Governmental Requir ements, and any program related to the specific monitoring of or testing for Hazardous Materials on the Portion A Site, shall be satisfactory to City, in City’s reasonable discretion. Lessee shall further be solely responsible, and shall reimburse City, for all costs and expenses incurred by City arising out of or connected with the removal, clean-up and/or restoration work and materials necessary to return the Portion A Site and any property adjacent to the Portion A Site affected by Hazardous Materials e manating from the Portion A Site during the Term (or as otherwise caused by Lessee) to their condition existing at the time of the Lessee’s Portion A Site Evaluation. Lessee’s obligations hereunder shall survive the termination of this Lease and shall not merge with any grant deed.

11.7 Environmental Inquiries. Lessee shall notify City upon receipt, and provide to the City a copy or copies, of the following environmental permits, disclosures, applications, entit lements or inquiries relating to the Portion A Site and the Development: notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self- reporting requirements and reports filed or applications made pursuant to any Environmental Laws and other applicable Governmental Requirements relating to Hazardous Materials and underground tanks, and Lessee shall report to City, as soon as possible after each incident, all material information relating to or arising from such incident, including, but not limited to, the following:
(a) All required reports of releases of Hazardous Materials, including notices of any release of Hazardous Materials as required by any Governmental Requirements; (b) All notices of suspension of any permits relating to Hazardous Materials; (c) All notices of violation from federal, state or local environmental authorities relating to Hazardous Materials;
(d) All orders under the State Hazardous Waste Control Act and the State Hazardous Substance Account Act and corresponding federal statutes, concerning investigation, compliance schedules, clean up, or other remedial actions; (e) All orders under the Porter Cologne Act, including corrective action orders, cease and desist orders, and clean up and abatement orders; 764

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(f) Any notices of violation from OSHA or Cal OSHA concerning employees’ exposure to Hazardous Materials;
(g) All complaints and other pleadings filed against Lessee relating to Lessee’s storage, use, transportation, handling or disposal of Hazardous Materials on or about the Portion A Site; and
(h) Any and all other notices, citations, inquiries, orders, filings or any other reports containing information which would have a materially adverse effect on the Portion A Site or the City’s liabilities or obligations relating to Hazardous Materials.

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

12. ALTERATION OF IMPROVEMENTS.

Upon completion of the Improvements, Lessee shall not make or permit to be made any material structural alteration of, addition to or change in the Improvements (which shall be deemed to be material if the cost or value of such alteration(s) or addition(s) exceeds $50,000.00 as to any item or $125,000.00 as all such items are aggregated), nor demolish all or any part of the Improvements without the prior written consent of City; provided, however, that the foregoin g shall not prohibit or restrict the repair and/or replacement of the Improvements by Lessee in accordance with Section 10 hereof. In requesting such consent Lessee shall submit to City detailed plans and specifications of the proposed work and an explanation of the need and reasons therefor.

This provision shall not limit or set aside any obligation of Lessee under this Lease to maintain the Improvements and the Portion A Site in a clean and safe condition, including structural repair and restoration of d amaged Improvements. City shall not be obligated by this Lease to make any improvements to the Portion A Site or to assume any expense therefor.

Lessee shall not commit or suffer to be committed any waste or impairment of the Portion A Site or the Improvements, or any part thereof, except as otherwise permitted pursuant to this Lease.

Lessee agrees to keep the Portion A Site and the Improvements clean and clear of refuse and obstructions, and to dispose of all garbage, trash and rubbish in a manner satisfactory to City.

13. DAMAGE OR DESTRUCTION.

13.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance.

Subject to Section 13.3 below, if the Improvements shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against and recoverable by insurance proceeds held by such policy(ies) maintained by Lessee, Lessee shall proceed to obtain 765

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insurance proceeds as soon as practicable and take all steps necessary to begin reconstruction and, upon receipt of insurance proceeds as soon as practicable, to commence the repair or r eplacement of the Improvements to substantially the same condition as the Improvements are required to be maintained in pursuant to this Lease, whether or not the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restora tion, and Lessee shall complete the same as soon as practicable thereafter so that the Improvements can continue to be operated and occupied as an affordable housing project in accordance with this Lease. Subject to Section 26.23, in no event shall the repair, replacement, or restoration period exceed t hirty (30) months from the date Lessee obtains one hundred percent (100%) of the insurance proceeds unless City Manager, in his or her reasonable discretion, approves a longer period of time. City shall cooperate with Lessee, at no expense to City, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then-existing laws of any other governmental agencies with jurisdiction over the Portion A Site do not permit the repair, replacement, or restoration, Lessee may (with the consent of the Limited Partner so long as the Partnership Agreement remains in effect) elect not to repair, replace, or restore the Improvements by giving notice to City (in which event, subject to the terms of all of Lessee’s Mortgages, Lessee will be entitled to all insurance proceeds but Lessee shall be required to remove all debris from the Portion A Site) or Lessee may reconstruct such other improvements on the Portion A Site as are consistent with applicable land use regulations and approved by the City, Limited Partner (so long as the limited Partnership Agreement remains in effect) and the other governmental City or agencies with jurisdiction. In the event Lessee elects not to repa ir, replace, or restore and give City notice of such election as provided herein, this Lease shall, subject to Section 1.3(a) of Exhibit E to this Lease, terminate.

13.2 Continued Operations. During any period of repair, Lessee shall continue, or cause the continuation of, the operation of the Improvements on the Portion A Site to the extent reasonably practicable from the standpoint of prudent business management.

13.3 Damage or Destruction Due to Cause Not Required to be Covered by Insurance.

If the Improvements are completely destroyed or substantially damaged by a casualty for which Lessee is not required to (and has not) insured against, then Lessee shall not be required to repair, replace, or restore such improvements and may elect (with the consent of the Limited Partner so long as the Partnership Agreement remains in effect) not to do so by providing City with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction.

In such event, Lessee shall remove all debris from the Portion A Site. As used in this Section 13.3, “substantial damage” caused by a casualty not required to be (and not) covered by insurance means damage or destruction which is twenty -five percent (25%) or more of the replacement cost of the improvements comprising the Improvements. In the event Lessee does not timel y elect not to repair, replace, or restore the Improvements as set forth in the first sentence of this Section 13.3, Lessee shall be conclusively deemed to have waived its right not to repair, replace, or restore the Improvements and thereafter Lessee shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed Improvements in accordance with Section 13.1 above and continue operation of the Improvements during the period of repair (if practicable) in accordance wi th Section 13.2 above.

In the event Lessee elects not to repair, replace, or restore, and gives City notice of such election as provided herein, subject to Section 1.3 of Exhibit E to this Lease, this Lease shall terminate.

14. SALE, ASSIGNMENT, SUBLEASE OR OTHER TRANSFER.

Except for (a) leases of particular dwelling Units to tenants, and (b) the lease of or grant of an easement or license to the City, Lessee shall not sell, assign, sublease, or otherwise transfer this Lease 766

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or any right therein, nor make any total or partial sale, assignment, sublease, or transfer in any other mode or form of the whole or any part of the Portion A Site or the Improvements (each of which events is referred to in this Lease as an “Assignment”), without prior written approval of City. The term “Assignment” shall be deemed to include (without limitation) all refinancing thereof and any other loans approved by City, excepting to the extent loans have been previously approved from one or more approved Construction and/or Permanent Lenders (with respect to such loans); provided that a change in limited partners shall not be deemed to constitute an Assignment. Any purported assignment without the prior written consen t of City shall be made null and void and shall confer no rights whatsoever upon any purported assignee or transferee. Notwithstanding the foregoing, Exhibit E shall be enforceable in accordance with its terms.

Notwithstanding any other provision of this L ease to the contrary, the City shall not unreasonably withhold its approval of an assignment of this Lease or conveyance of the Portion A Site or Improvements, or any part thereof, in connection with any of the following:
(a) Any transfers to an entity or entities in which Lessee retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management and control of the transferee entity or entities.
(b) The conveyance or dedication of any portion of the Portion A Site to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Improvements. In the event of a proposed assignment by Lessee under subparagraphs (a) through (c), inclusive, above, Lessee agrees that at least thirty (30) days prior to such assignment it shall give written notice to City including a request for approval of such assignment and satisfactory evidence that the assignee has assumed the obligations of this Lease, subject to the provisions of the following paragraph.

City agrees that it will consider in good faith a request for City’s consent to a transfer made pursuant to this Section 14 after the achievement of occupancy of ninety percent (90%) or more of the Housing Units in conformity with this Lease following the issuance by City of a Certificate of Completion for the last building to be constructed as part of the Improvements, provided Lessee delivers written notice to City requesting such approval and provided further that, the Regulator y Agreement remain in full force and effect (unless the same have been extinguished or terminated by operation of such documents or under another document as may be hereafter executed by City). Such notice shall be accompanied by sufficient evidence regar ding the proposed assignee’s or purchaser’s development and/or operational qualifications and experience, and its financial commitments and resources, and the financial terms of such Assignment (including the consideration proposed to flow to the Developer or a Related Entity and/or the Principals) in sufficient detail to enable City to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 14, and as reasonably determined by City. City shall evaluate such proposed t ransferee or assignee on the basis of its development qualifications and experience and/or qualifications and experience in the operation of facilities similar to the Improvements, and its financial commitments and resources, and may reasonably disapprove any proposed transferee or assignee, which City reasonably determines does not possess sufficient qualifications. An assignment and assumption agreement in form satisfactory to City’s legal counsel shall also be required for all proposed assignments. The Lessee agrees and acknowledges that in connection with any such assignment approved by the City pursuant to this Lease, the Lessee shall remain liable for performance pursuant to this Lease for a period of five (5) years following such assignment; provide d that the five -year limitation shall not apply (and the ongoing liability of Developer shall not be thereby limited) in connection with the transfer of limited partnership 767

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interests to tax credit investors. For the avoidance of doubt, no transfer of limited partner interests in Lessee shall require the approval of City. Within thirty (30) days after the receipt of the Lessee’s written notice requesting approval of an assignment or transfer pursuant to this Section 14, City shall either approve or disappro ve such proposed assignment or shall respond in writing by stating what further information, if any, City reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Lessee shall promptly furnish to City such further information as may be reasonably requested.

Notwithstanding any provision in this Section 14 to the contrary, in no event shall Lessee make any assignment which would or could be effective bey ond the Term without the prior consent of the City. Notwithstanding anything contained in this Section 14 to contrary effect, transfers or assignments otherwise permitted in Section 8.3 of the AHA shall not be limited by the terms of this Section 14 or require City consent and in the event of any conflict between the terms of this Section 14 and Section

8.3 of the AHA with respect to transfers or assignments under the purview of Section 8.3, Section 8.3 of the AHA shall control; provided that Lessee shall promptly inform City in writing of any such transfers.

15. ANCILLARY DUTIES.

The City and the Lessee intend that this Lease be a so called “triple net” lease, and that except as expressly provided herein all costs, expenses and obligations with respect to the Portion A Site during the Term shall be borne by the Lessee and not by the City. Unless this Lease provides otherwise, all Ancillary Duties shall be satisfied and/or paid with the next applicable payment of Rent. “Ancillary Duties” shall include, without limitation: (i) the payment of all taxes and assessments, including without lim itation those taxes (whether characterized as possessory interest taxes or otherwise) described in Section 7.4 of this Lease, which become due and owing during the Term (provided that Lessee shall not hereby be precluded from applying for or obtaining any applicable exemption from property tax); (ii) an amount equal to one hundred fifteen percent (115%) of the amounts paid by City for insurance premiums or costs to repair and maintain the Development upon the failure by Lessee to timely and fully provide su ch insurance and maintenance; (iii) Reporting Amount(s) (as described in Section 6.6 hereof); and (iv) in the event an Audited Financial Statement shows an underpayment to the City of five percent (5%) or greater of the amount paid to the City for the corr esponding Lease Year, the Developer shall pay to the City: (a) the City’s costs (including accountant and consultant fees, attorneys’ fees, and a reasonable estimation of the cost of staff time) incurred in connection with the City’s audit of Lessee under Section 26.5 of this Lease, and (b) an amount equal to twenty -five percent (25%) of the shortfall as a penalty which shall not be deemed to constitute an Operating Expense for the purposes of this Lease; and (iv) the Reporting Amount(s), which Reporting Amount(s) shall not be deemed to constitute an Operating Expense for the purposes of this Lease.

16. INDEMNITY.

During the Term, Lessee agrees that City, its agents, officers, representatives and employees, shall not be liable for any claims, liabilities, penalties, fines or for any damage to the goods, properties or effects of Lessee, its sublessees or representatives, agents, employees, guests, licensees, invitees, patrons or clientele or of any other person whomsoever, nor fo r personal injuries to, or deaths of any persons, whether caused by or resulting from any act or omission of Lessee or its sublessees or any other person on or about the Portion A Site and the Improvements, or in connection with the operation thereof, or from any defect in the Portion A Site or the Improvements, or from any displacement of tenants or liability for relocation assistance pursuant to Government Code Section 7260, et seq., due to 768

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the acts of Lessee hereunder. Lessee agrees to indemnify and sav e free and harmless City and its authorized agents, officers, representatives and employees against any and all claims, actions, damages, liability (including reasonable expenses and attorneys’ fees) concerning loss of life, personal injury and/or damage t o property arising from or out of any occurrence in, upon or at the Portion A Site and/or the Improvements or the occupancy or use by Lessee of the Portion A Site and/or the Improvements or any part thereof, or arising from or out of Lessee’s failure to co mply with any provision of this Lease or otherwise occasioned wholly or in part by any act or omission of Lessee, its agents, representatives, contractors, employees, servants, customers or licensees. Lessee shall not be responsible for (and such indemnit y shall not apply to) any acts, errors or omissions of City or its agents, officers, representatives or employees.

17. INSURANCE.

17.1 Insurance to be Provided by Lessee . Commencing as of first day of the Term and continuing throughout the Required Covenant Period, and, in addition at all times during which Lessee is conducting work on the Portion A Site or any portion thereof, including times prior to the Leasehold Transfer, Lessee shall maintain at Lessee’s sole expense, with insurers reasonably approved by City, the following policies of insurance in form and substance reasonably satisfactory to City: (i) at all times commencing with the Leasehold Transfer and continuing throughout the Required Covenant Period, Lessee shall provide those coverages described in the “Insurance During Lease Term” (Note:
to be conformed to Affordable Housing Agreement); and (ii) at all times during the period commencing with the Leasehold Transfer and ending as of end of the Required Covenant Period when construction is taking place on the Portion A Site, the Lessee shall additionally provide those coverages set forth in the “Insurance During Construction” (to be conformed to the Affordable Housing Agreement).

17.2 Definition of “Full Insurable Value ”. The term “Full Insurable Value” as used in this Section 17 means the actual replacement cost (excluding the cost of excavation, foundation and footings below the lowest floor and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineerin g fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the Full Insurable Value to be determined from time to time by appraisal by the insurer or, if no such appraisal is available, by an appraiser mutually acceptable to City and Lessee, not less often than once every five (5) years.

17.3 General Insurance Provisions . All policies of insurance provided for in this Section 17, except for the workers’ compensation insurance, shall name Lessee as the named insured and loss payee and City and its officers, employees, agents, and representatives, as additional insureds (for general liability and excess liability insurance) , as their respective interests may appear . All property casualty insurance policies shall include the interest of any Lessee’s Mortgagees and may provide that any loss is payable to Lessee’s Mortgagee in which event such policies shall contain standard mortgage loss payable clauses. Lessee agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to comply and secure compliance with all insurance requirements necessary for the maintenance of such insurance. Lessee agrees to submit policies of all insurance required by this Section 17 of this Lease, or certificates evidencing the existence thereof, to City on or before the effective date of this Lease, indicating full coverage of the contractual liability imposed by this Lease. At least thirty (30) days prior to expiration of any such policy, copies of renewal policies, or certificates evidencing the existence thereof shall be submitted to City. All policies of insurance required of Lessee herein shall be issued by insurance companies with a general policy holder’s rating of not less than A and a financial rating of not less that Class XVII as rated in the most current available “Best’s Key Rating Guide”, and which are approved to do business in the State of California. All 769

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policies or certificates of insurance shal l also: (i) provide that such policies shall not be canceled or limited in any manner without at least thirty (30) days prior written notice to City; and (ii) provide that such coverage is primary and not contributing with any insurance as may be obtained by City and shall contain a waiver of subrogation for the benefit of City.

Coverage provided hereunder by Lessee shall be primary insurance and not be contributing with any insurance maintained by City, and the policy shall contain such an endorsement. T he insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City.

None of the above -described policies shall require Developer to meet a deductible or self -insured retention amount of more than One Hundred Thousand Dollars ($100,000.00) or such other amount as may be approved by the City Manager in writing in connection with the Financing Plan . All policies shall be written by good and solvent insurers approved to do business in California and shall have a policyholder’s rating of A or better in the most recent edition of “Best’s Key Rating Guide – Property and Casualty.” The required certificate shall be furnished by Lessee at the time set forth herein.

17.4 Failure to Maintain Insurance . If Lessee fails or refuses to procure or maintain insurance as required by this Lease, City shall have the right, at City’s election, and upon ten (10) days prior notice to Lessee, to procure and maintain such insurance. The premiums paid by City shall be treated as added rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. City shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s).

17.5 Insurance Proceeds Resulting from Loss or Damage to Improvements . All proceeds of insurance with respect to loss or damage to the Improvements during the term of this Lease shall be payable, under the provisions of the policy of insurance, to Lessee, and said proceeds shall be used for the restoration, repair and rebuilding of the Improvements in accordance with plans and specifications approved in writing by City and as further described in Section 13 of this Lease. To the extent that such proceeds exceed the cost of such restoration, repair or rebuilding, then such proceeds shall be retained by the party that purchased the insurance. Notwithstanding the foregoing, within the period during which there is an outstanding mortgage upon the Improvements, such proceeds shall be payable in accordance with Section 17.3 of this Lease.

In the event this Lease is terminated by mutual agreement of City and Lessee and said Improvements are not restored, repaired or rebuilt, the insurance proceeds shall be applied first to any payments due under this Lease from Lessee to City, second to restore the Portion A Site and Improvements to their original condition and to a neat and clean condition, and finally any excess shall be apportioned between Lessee and City as their interests may appear; provided, however, that within any period when there is an outstanding mortgage upon the Improvements, such proc eeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph, subject to the requirements of Lessee’s mortgagees.

18. EMINENT DOMAIN.

In the event that the Portion A Site and/or the Improvements or any part thereof shall be taken for public purposes by any public agency other than the City by condemnation as a result of any action or proceeding in eminent domain, then, as between City and Lessee (or mortgagee, if a mortgage is then in effect), and subject to the requirements of any Leasehold Mortgagee, the interests of City and Lessee (or mortgagee) in the award and the effect of the taking upon this Lease shall be as follows:
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(a) Lessor shall provide notice of any pending condemnation proceeding (of which City has actual knowledge) to the holder of any Leasehold Mortgage of which City has prior written notice in accordance with Exhibit E attached hereto. Lessor and Lesse acknowledge and agree that a holder of a Leasehold Mortgage may participate in any such condemnation proceeding. (b) In the event of such taking of only a part of the Portion A Site , leaving the remainder of the Portion A Site in such location and in such form, shape and siz e as to be used effectively and practicably for the conduct thereon of the uses permitted hereunder, this Lease shall terminate and end as to the portion of the Portion A Site so taken as of the date title to such portion vests in the condemning authority, but shall continue in full force and effect as to the portion of the Portion A Site not so taken and from and after such date the rental required by this Lease to be paid by Lessee to City shall be reduced in the proportion which the number of square feet so taken bears to the total number of square feet in the Portion A Site.
(c) In the event of taking of only a part of the Portion A Site, leaving the remainder of the Portion A Site in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable, for the conduct thereon of the uses permitted hereunder, this Lease and all right, title and interest thereunder shall cease on the date title to the Portion A Site or the portion thereof so taken vests in the condemning authority.
(d) In the event the entire Portion A Site is taken, this Lease and all of the right, title and interest thereunder, shall cease on the date title to the Portion A Site so taken vests in the condemning authority.
(e) Promptly after a partial taking, at Lessee’s expense and in the manner specified in provisions of this Lease related to maintenance, repairs, alterations, Lessee shall restore the Improvements, to the extent of condemnation proceeds received by Lessee and allowed to be used for such purpose by Lessee’s Mortgages, so as to place them in a condition suitable for the uses and purposes for which the Portion A Site was leased.
(f) In the event of any taking under subparagraphs (a), (b) or (c) hereinabove, that portion of any award of compensation attributable to the fair market value of the Portion A Site or portion thereof taken, valued as subject to this Lease, shall belong to City. That portion of any award attributable to the fair market value of Lessee’s leasehold interest in the Portion A Site pursuant to this Lease as determined by taking into account the limitation on rents and income levels as set forth in Sections 6.1 through 6.7 hereof and, in the event a Foreclosure E vent has occurred, Section 3 of Exhibit E hereof, shall belong to Lessee. That portion of any award attributable to the fair market value of the Improvements or portion thereof taken shall belong to City and Lessee, as their interests may appear, except that in the event of a partial taking, where this Lease remains in effect and Lessee is obligated to restore or repair the Improvements, then Lessee shall be entitled to any portion of the award attributable to severance damages to the remaining Improvement s to the extent necessary to restore or repair the Improvements and any remaining severance damages shall be payable to City and Lessee as their interests may appear. Said award shall be used for the restoration, repair or rebuilding of the Improvements i n accordance with plans and specifications approved in writing by City to the extent necessary to restore or repair the Improvements and any remaining severance damages shall be payable to Lessee; except that, during the last ten (10) years of the Term, an y remaining severance damages shall be payable to City. The value of each interest for the purpose of apportionment under this Section shall be the fair market value of such interests at the time of the taking. 771

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(g) Provided, however, that within the period during which there is an outstanding mortgage on the Improvements, the mortgagee shall be entitled to any portion of the award attributable to the fair market value of Lessee’s leasehold interest in the Portion A Site as determined by taking into account the limitation on rents and income levels as set forth in Sections 6.1 through 6.7 hereof and, in the event a Foreclosure Event has occurred, Section 3 of Exhibit E hereof, and the value of the Improvements, to the extent of its interest therein. Any excess portion of the award attributable to the condemnation of the Improvements shall be payable as provided in this Section 18. (h) Notwithstanding the foregoing provisions of this Section, City may, in its discretion and without affecting the validity and existence of this Lease, transfer City’s interests in the Portion A Site in lieu of condemnation to any authority entitled to exercise the power of eminent domain. In the event of such transfer by City, Lessee (or mortgagee if a mortgage is then in effect) and City shall retain whatever rights they may have to recover from said authority the fair market value of their respective interests in the Portion A Site, as the value of Lessee’s interest is determined taking into account the limitation on rents and income l evels as set forth in Sections 6.1 through 6.7 hereof and, in the event a Foreclosure Event has occurred, Section 3 of Exhibit E hereof, the Improvements taken by the authority.
(i) All valuations to be made pursuant to this Section 18 shall be made by mutual agreement of City and Lessee.
(j) The City and the City agree that during the Term, provided that this Lease shall remain in effect, neither the City nor the City shall exercise eminent domain powers as to the Portion A Site or the Improvements.

19. OBLIGATION TO REFRAIN FROM DISCRIMINATION.

There shall be no discrimination against or segregation of any person or group of p ersons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Portion A Site and the Improvements, and Lessee itself or any person claiming under or through it shall not 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 thereof or any portion thereof, or in the providing of goods, services, facilities, privileges, advantages and accommodation.

Lessee shall refrain from restricting the rental, sale, or lease of the Portion A Site and the Improvements, or any portion thereof, on the basis of sex, marital status, race, color, creed, religion, ancestry or national origin of any person. All such leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In Leases:
“The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision 772

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(m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees i n the premises herein leased.”
(b) In Contracts:
“There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are de fined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenan ts, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

20. NONDISCRIMINATION IN EMPLOYMENT.

Lessee, for itself and its successo rs and assigns, agrees that during the operation of the Improvements provided for in this Lease, and during any work of repair or replacement, Lessee shall not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, physical or mental disability, sexual orientation, ancestry or national origin, or on the basis of any other category or status not permitted by law.

21. CITY PURCHASE OPTION.

In addition to and without limitation as to all other rights and remedies the City has under this Lease, the City shall have an option to purchase and Lessee shall be obligated to sell the leasehold and improvements as more particularly described in the AHA. This option to purchase shall be subordinate in all respects to the rights of any senior lender. The City’s option to purchase is a material part of this Lease but for which the City would not have entered into this Lease.

22. COMPLIANCE WITH LAW.

Lessee agrees, at its sole cost and expense, to comply and secure compliance by all contractors and tenants of the Portion A Site and Improvements with all the requirements now in force, or which may hereafter be in force, o f all municipal, county, state and federal authorities, pertaining to the Portion A Site and the Improvements, as well as operations conducted thereon, and to faithfully observe and secure compliance by all contractors and tenants of the Portion A Site and Improvements with, in the use of the Portion A Site and the Improvements all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, and to pay before delinquency all taxes, assessments, and fees, if any, assessor levied upon Lessee or the Portion A Site or the Improvements, including the land and any buildings, structures, machines, appliances or other 773

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improvements of any nature whatsoever, erected, installed or maintained by Lessee or by reason of the business or other activities of Lessee upon or in connection with the Portion A Site and the Improvements. Lessee shall use good faith efforts to prevent tenants from maintaining any nuisance or other unlawful conduct on or about the Propert y and shall take such actions as are reasonably required to abate any such violations by tenants of the Portion A Site and Improvements. The judgment of any court of competent jurisdiction, or the admission of Lessee or any sublessee or permittee in any action or proceeding against them, or any of them, whether City be a party thereto or not, that Lessee, sublessee or permittee has violated any such ordinance or statute in the use of the Portion A Site or the Improvements shall be conclusive of that fact a s between City and Lessee, or such sublessee or permittee. Lessee shall comply with all applicable laws, regulations, and any applicable labor standards, all of which laws and regulations shall be deemed to be incorporated herein by reference.

Lessee shall comply with the Tax Credit Rules.

23. ENTRY AND INSPECTION.

In addition to and without limitation to such rights as the City may have as a matter of law, the City reserves and shall have the right between the hours of 8:00 a.m. and 8:00 p.m., upon twenty-four (24) hours prior notice (except in cases of emergency in which case entry may be made at any time and without notice) to Lessee by the City Manager, to enter the Portion A Site and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in the Portion A Site and the Improvements or to inspect the operations conducted thereon. In exercising such rights, the City shall endeavor to avoid any unreasonabl e interference with the use or operation of the Development.

24. RIGHT TO MAINTAIN.

In the event that the entry or inspection by City pursuant to Section 23 hereof discloses that the Portion A Site or the Improvements are not in a decent, safe, and sanitary condition, City shall have the right, after thirty (30) days written notice to Lessee (except in case of emergency, in which event no notice shall be necessary), to have any necessary maintenance work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by City in having such necessary maintenance work done in order to keep the Portion A Site and the Improvements in a decent, safe and sanitary condition. The rights reserved in this Section shall not create any obligations on City or increase obligations elsewhere in this Lease imposed on City.

25. EVENTS OF DEFAULT AND REMEDIES.

25.1 Events of Default by Lessee. The occurrence of any one (1) or more of the following shall constitute an event of default hereunder:
(a) Lessee shall fail to construct the Improvements in accordance with the AHA and within the times set forth in the AHA; or
(b) Lessee shall abandon or surrender the Portion A Site, or the Improvements after sixty (60) days written notice to Lessee; or
(c) Lessee shall fail or refuse to pay, within fifteen (15) days of written notice from City that the same is due, any installment of rent or any other sum required by this Lease to be paid by Lessee; or
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(d) Lessee shall fail to perform any covenant or condition of this Lease other than as set forth in subparagraphs (a) or (b) above or paragraphs (e), (h), (i) or (j) below, and any such failure shall not be cured within thirty (30) days following the service on Lessee of a written notice from City specifying the failure complained of, or if it is not practicable to cure or remedy such failure within such thirty (30) day period, then Lessee shall not be deemed to be in default if Lessee shall commence such cure within such thirty (30) day period and thereafter diligently prosecute such cure to completion; or
(e) Subject to any restrictions or limitations p laced on City by applicable laws governing bankruptcy, Lessee’s (i) application for, consent to or suffering of the appointment of a receiver, trustee or liquidator for all or for a substantial portion of its assets; (ii) making a general assignment for th e benefit of creditors; (iii) admitting in writing its inability to pay its debts or its willingness to be adjudged a bankrupt; (iv) becoming unable to or failing to pay its debts as they mature; (v) being adjudged a bankrupt; (vi) filing a voluntary petit ion or suffering an involuntary petition under any bankruptcy, arrangement, reorganization or insolvency law (unless in the case of an involuntary petition, the same is dismissed within ninety (90) days of such filing); (vii) convening a meeting of its cre ditors or any class thereof for purposes of effecting a moratorium, extension or composition of its debts; or (viii) suffering or permitting to continue unstayed and in effect for sixty (60) consecutive days any attachment, levy, execution or seizure of al l or a portion of Lessee’s assets or of Lessee’s interest in this Lease; or
(f) Lessee shall charge or accept rent that is in excess of the Affordable Rents; provided however, if any such default shall not be cured within thirty (30) days following the service on Lessee of a written notice from City specifying the default complained of, or if it is not practicable to cure or remedy such default within such thirty (30) day period, then Lessee shall not be deemed in default if Lessee shall commence such cure within such thirty (30) day period and thereafter diligently prosecute such cure to completion, in any event within thirty (30) additional days. A cure of a default by the Limited Partner shall be accepted as if made of tendered by the Lessee; or (g) Lessee shall rent a Required Affordable Unit to a tenant, or allow occupancy by a person or household, that is not an Extremely Low Income Household, a Very Low Income Household or a Lower Income Household in accordance with the Prescribed Income Levels; provided, however, if such default shall not be cured within sixty (60) days following the service on Lessee of a written notice from City identifying the default complained of because it is impractical to do so, then Lessee shall not be deemed in default if lessee com mences to cure within such sixty (60) day period and thereafter diligently prosecutes such cure to completion, in any event within thirty (30) additional days; or
(h) Lessee shall repeatedly rent one or more Units not in compliance with the Tenant Selection and Tenant Services Plan; provided, however, if such default shall not be cured within sixty (60) days following the service on Lessee of a written notice from City identifying the default complained of because it is impractical to do so, then Lessee shall n ot be deemed in default if lessee commences to cure within such thirty (30) days period and thereafter diligently prosecutes such cure to completion, in any event within thirty (30) additional days; then, upon notice having been given by City and the failure to cure within thirty (30) of such notice or such longer period as provided above in this Section 25.1, such event shall constitute an event of default under this Lease. Any cure provided by any Limited Partner of the Lessee shall be treated as a cure by 775

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the Lessee. A copy of any default notice delivered hereunder to Lessee shall also be delivered to its Limited Partner at the address set forth herein.

25.2 Remedies of City.

In the event of any default as described in Section 25.1 which default has not been timely cured, the City may, at its option:
(1) Correct or cause to be corrected said default and charge the costs thereof (including costs incurred by the City in enforcing this provision) to the account of Lessee, which charge shall be due and payable within thirty (30) days after presentation by the City of a statement of all or part of said costs;
(2) Correct or cause to be corrected said default and pay the costs thereof (including costs incurred by the City in enforcing this provision) from the proceeds of any insurance; (3) Exercise its right to maintain any and all actions at law or suits in equity to compel Lessee to correct or cause to be corrected said default; (4) Have a receiver appointed to take possession of Lessee’s interest in the Portion A Site and the Improvements, with power in said receiver to administer Lessee’s interest in the Portion A Site and the Improvements, to collect all funds available to Lessee in connection with its operation and maintenance of the Portion A Site and the Improvements; and to perform all other activities consistent with Lessee’s obligations under this Lease as the court deems proper; (5) Maintain and operate the Portion A Site and the Improvements, without terminating this Lease; or
(6) Terminate this Lease by written notice to Lessee of its intention to do so; or
(7) Exercise its rights under the City Promissory Note and/or the City Deed of Trust.

25.3 Right of City in the Event of Termination of Lease. Upon termination of this Lease pursuant to Section 25.2, it shall be lawful for City to re-enter and repossess the Portion A Site and the Improvements and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver the Portion A Site and the Improvements peaceably to City immediately upon such termination in good order, condition and repair, except for reasonable wear and tear. Lessee agrees that upon such termination, title to all the Improvements on the Portion A Site shall vest in City pursuant to Section 8.2.

Even though Lessee has breached this Lease and abandoned the Portion A Site, this Lease shall continue in effect for so long as City does not terminate Lessee’s right to possession, and City may enforce all of its right and remedies under this Lease, including, but not limited to, the right to recover the rent as it becomes due under this Lease. No ejectment, re-entry or other act by or on behalf of City shall constitute a termination unless City gives Lessee notice of termination in writing. 776

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Termination of this Lease shall not relieve or release Lessee from any obligation incurred pursuant to this Lease prior to the date of such termination. Termination of this Lease shall not relieve Lessee from the obligation to pay any sum due to City or from any claim for damages against Lessee.

25.4 Damages. Should City elect to terminate this Lease pursuant to the provisions of this Section 25, City may recover from Lessee, as damages, the following: (a) The worth at the time of the award of any unpaid rent which had been earned at the time of the termina tion, plus (b) the worth at the time of the award of the amount by which the unpaid rent which would have been earned after termination until the time of the award exceeds the amount of rent loss Lessee proves could have been reasonably avoided, plus (c) the worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of rent loss that Lessee proves could be reasonably avoided, plus (d) any other amounts necessary to compensate City for all the detriment proximately caused by Lessee’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom including, but not limited to, any costs or expenses incurred by City in (i) retaking possession of the Portion A Site and the Improvements, including reasonable attorneys’ fees therefor, (ii) maintaining or preserving the Portion A Site and the Improvements after default, (iii) preparing the Portion A Site and the Improvements for reletting to a new tenant, including repairs or alterations to the Portion A Site and the Improvements, (iv) leasing commissions, or (v) any other costs necessary or appropriate to relet the Portion A Site and the Improvements, plus I at City’s election, any other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by the law of the State of California.

As used in subparagraphs (a) and (b) above, the “worth at the time of award” is computed by allowing interest at the maximum lawful rate. As used in subparagraph (c) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank situated nearest to the location of the Portion A Site at the time of th e award plus one percent (1%).

25.5 Rights and Remedies are Cumulative. The remedies provided by this Section 25 are not exclusive and shall be cumulative to all other rights and remedies possessed by City. The exercise by City of one or more such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by Lessee.

26. MISCELLANEOUS.

26.1 Governing Law; Interpretation. The laws of the State of California shall govern the interpretation and enforcement of this Lease.

This Lease shall be reasonably interpreted in light of its purposes to provide affordable housing and to afford the City those rents and other revenues as are provided for herein.

This Lease shall be interpreted as if jointly prepared by both parties.

This Lease shall be construed as consistent with the AHA and the Regulatory Agreement to the greatest extent feasible; in the event of conflict this Lease shall control.

26.2 Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the 777

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Superior Court of Placer County, State of California, in any other appropriate court in that County, or in the Federal District Court in the District of California in which the Portion A Site is located.

26.3 Acceptance of Service of Process . In the event that any legal action is commenced by Lessee against City, service of process on City shall be made by personal service upon the Chairman of the City or the City Manager, or in such other manner as may be provided by law.

In the event that any legal action is commenced by City against Lessee, service of process on Lessee shall be made by personal service upon Lessee or in such other manner as may be provided by law and shall be effective whether made within or without the State of California.

26.4 Attorneys’ Fees And Court Costs. In the event that either City or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then the prevailing party shall be entitled to and shall be paid reasonable attorneys’ fees and court costs therefor in addition to whatever other relief such prevailing party may be entitled.

26.5 Financial Statement; Inspection of Books and Records. Lessee shall submit to the City on an annual basis, not later than ninety (90) days after the last day of each Lease Year, an Audited Financial Statement for the operation of the Portion A Site and Improvements, which is prepared by a certified public accounting firm, including without limitation the information described in Section 6.6 hereof. In addition, City shall have the right (at Lessee’s office, upon not less than forty -eight (48) hours’ notice, and during normal business hours) to inspect the books and records of Lessee pertaining to the Portion A Site as pertinent to the purposes of this Lease and the AHA. Lessee also has the right (at City’s office, upon not less than forty-eight (48) hours’ notice, and at all reasonable times) to inspect the books and records of City pertaining to the Portion A Site as pertinent to the purposes of this Lease and the AHA.

26.6 Interest. Any amount due City that is not paid when due shall bear interest from the date such amount becomes due until it is paid. Interest shall be at a rate equal to the lesser of (i) ten percent (10%) per annum, compounded annually, on the first day of the month such amount becomes due, and (ii) the maximum rate permitted by applicable law.

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

City: City of Rocklin
3970 Rocklin Road
Rocklin, California 95677
Attention: City Manager
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with a copy to each: (delivery of which copies shall not constitute notice to City) Office of City Attorney
3970 Rocklin Road
Rocklin, California 95677
Lessee: Pacific Street Housing Associates Four, L.P., c/o Community HousingWorks
3111 Camino del Rio North, Suite 350
San Diego, California 92108
Attention: Kevin Leichner

with a copy to: (delivery of which copy shall not constitute notice to Lessee) Gubb & Barshay
235 Montgomery Street, Suite 1110
San Francisco, California 94104
Attention: Nicole Kline

and a copy to: NEF Assignment Corporation
540 W. Madison Street, Suite 1990
Chicago, Il 60661
Attention: General Counsel

and a copy to: Bocarsly Emden Cowan Esmail & Arndt
633 West 5th Street, Suite 5880
Los Angeles, CA 90071
Attention: Rachel Rosner

and a copy to: Cedar Rapids Bank and Trust Company
500 First Avenue NE, Suite 100
Cedar Rapids, Iowa 52401
Attention: Brad Curtin

and a copy to: Winthrop & Weinstine, P.A.
225 South Sixth Street, Suite 3500
Minneapolis, Minnesota 55402
Attention: Robert P. Singleton
or to such other address as either party shall later designate for such purposes by written notice to the other party.

Notices shall be deemed effective upon receipt provided that the party to whom notice is being given has notified the other party of it s current address, and otherwise upon the earlier of personal receipt or within seven (7) days after delivery thereof to the address(es) as provided above; provided, however that refusal to accept delivery after reasonable attempts thereto shall constitute receipt. Any notices attempted to be delivered to an address from which the receiving party has moved without notice to the delivering party shall be effective on the third day after the attempted delivery or deposit in the United States mail. Lessee and City hereby agree that any cure of any default made or tendered 779

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by Lessee’s limited partners shall be deemed to be a cure by Lessee and shall be accepted or rejected on the same basis as if made or tendered by Lessee.

26.8 Time is of the Essence . Time is of the essence in the performance of the terms and conditions of this Lease.

26.9 Non-Merger of Fee and Leasehold Estates. If both City’s and Lessee’s estates in the Portion A Site or the Improvements or both become vested in the same owner, this Lease shall nevertheless not be destroyed by application of the doctrine of merger except at the express election of City and Lessee’s Mortgagee. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work as a merger and shall, at the option of City, terminate all or any existing sublease or subtenancies or may, at the option of City, operate as an assignment to City of any or all such existing subleases or subtenancies.

26.10 Holding Over. The occupancy of the Portion A Site after the expiration of the Term of this Lease shall be construed to be a tenancy from month to month, and all other terms and conditions of this Lease shall continue in full force and effect.

26.11 Conflict of Interest. No member, official or employee of City shall have any personal interest, direct or indirect, in this Lease nor shall any such member, official or employee participate in any decision relating to this Lease which affects his personal interests or the interests of any limited partnership, partnership or association in which he is directly or indirectly interested.

Lessee warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Lease.

26.12 Non-Liability of City Officials And Employees . No member, official, officer, employee, agent, or representative of City shall be personally liable to Lessee, or any successor in interest, in the event of any default or breach by City or for any amount which may beco me due to Lessee or successor or on any obligations under the terms of this Lease.

26.13 Relationship. The relationship between the parties hereto shall at all times be deemed to be that of landlord and tenant. The parties do not intend nor shall this Lease be deemed to create a partnership or joint venture.

26.14 Transactions with Affiliates. Lessee shall not have the right to enter into transactions with subsidiaries, aff iliates and other related entities for the purpose of leasing space, providing cleaning, maintenance and repair services, insurance policies and other purposes related to the use and development of the Portion A Site and the Improvements, without the prior written approval of the City, which approval shall be given only if the City reasonably concludes that all such costs, charges and rents are competitive with the costs, charges, rent and other sums which would be paid by or to, as the case may be, an unrelated third party.

The City acknowledges that Lessee is entering into or has entered into a property management agreement with [to come], substantially in the form dated as of [to come], a copy of which is on file with the City (the “Designated Management Agreement”), on terms and conditions which have been reviewed by City, and City hereby expressly approves and consents to Lessee entering into the Designated Management Agreement. The approval of the Designated Management Agre ement shall 780

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not amend or modify any provision of this Lease. The final Designated Management Agreement shall be maintained on file with the City.

26.15 Waivers And Amendments. All waivers of the provisions of th is Lease must be in writing and signed by the appropriate authorities of City or Lessee. The waiver by City of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition, or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by City shall not be deemed to be a waiver of any preceding breach of Lessee of any term, covenant or condition of this Lease, regardless of City’s knowledge of such preceding breach at the time of acceptance of such rent. Failure on the part of City to require or exact full and complete compliance with any of the covenants or conditions of this Lease shall not be construed as in any manner changing the terms hereof and shall not prevent City from enforcing any provision hereof.

All amendments or modifications hereto must be in writing and signed by the appropriate authorities of City and Lessee and, so long as the Partnership Agreement remains in effect, approved by the Limited Partner. The Leasehold Mortgagees permitted by this Lease shall not be bound by any waiver, modification, or amendment to this Lease without such Leasehold Mortgagee having given its prior written consent to same.

The Lessee’s mortgagee permitted by this Lease shall not be bound by any waiver or amendment to this Lease without Lessee’s mortgagee giving its prior written consent.

26.16 Non-Merger With AHA. None of the terms, covenants or conditions agreed upon in writing in the AHA and other instruments between the parties to this Lease with respect to obligations to be performed, kept or observed by Lessee or City in respect to the Portion A Site or any part thereof, shall be deemed to be merged with this Lease.

26.17 Entire Agreement; Duplicate Originals; Counterparts . Except as set forth in Section 26.16, this Lease sets forth the entire und erstanding of the parties with respect to Lessee’s ground lease of the Portion A Site . This Lease is executed in three (3) duplicate originals and counterparts, each of which is deemed to be an original. This Lease includes forty-eight (48) pages, plus signature pages, and nine (9) exhibits, Exhibits A, B, C, D, E , F, G, H and I . The Exhibits are incorporated by reference herein.

26.18 Severability. If any provision of this Lease or the application thereof to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforceable to the greatest extent permitted by law.

26.19 Terminology. All personal pronouns used in this Lease, whether used in the masculine, feminine, or neuter gender, shall include all othe r genders; the singular shall include the plural, and vice versa. Titles of sections are for convenience only and neither limit nor amplify the provisions of this Lease itself. Except for terms expressly defined in this Lease, all terms shall have the same meaning as set forth in the AHA.

26.20 Recordation. A short form memorandum of this Lease, in the form attached hereto as Exhibit C, shall be recorded concurrently with the Closing. The failure to record such Memorandum shall not affect this Lease.
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26.21 Binding Effect . This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.

26.22 Estoppel Certificate. Each of the parties shall at any time and from time to time, but not more frequently than twice during any calendar year, upon not less than twenty (20) days’ prior notice by the other, execute, acknowledge and deliver to such other party a statement in writing certifying that this Lease is unmodified and is in full force and effect (or if there shall have been modifications that this Lease is in full force and effect as modified and stating the modifications), and the dates to which the rent has been paid (which may be based upon the best knowledge of the party providing the certificate), and stating whether or not to the bes t knowledge of the signer of such certificate such other party is in default in performing or observing any provision of this Lease, and, if in default, specifying each such default of which the signer may have knowledge, and such other matters as such other party may reasonably request, it being intended that any such statement delivered by Lessee may be relied upon by City or any successor in interest to City or any prospective mortgagee or encumbrancer thereof, and it being further intended that any such statement delivered by City may be relied upon by any prospective assignee of Lessee’s interest in this Lease or any prospective mortgagee or encumbrancer thereof. Reliance on any such certificate may not extend to any default as to which the signer of the certificate shall have had no actual knowledge.

26.23 Force Majeure. The time within which City or Lessee is obligated herein to perform any obligation hereunder, other than an obligation that may be performed by the p ayment of money, shall be extended and the performance excused when the delay is caused by fire, earthquake or other acts of God, pandemics, quarantine restrictions, strike, lockout, acts of public enemy, riot, insurrection or other cause beyond the control of the applicable party.

26.24 Quiet Enjoyment. City does hereby covenant, promise and agree to and with Lessee that Lessee, for so long as Lessee is not in default hereof, shall and may at all times peaceably and quietly have, hold, use, occupy and possess the Portion A Site throughout the Term.

26.25 City Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager or his or her designee is authorized to act on behalf of City unless specifically provided otherwise or the law otherwise requires.

26.26 No Third Parties Benefited Except for City, Limited Partner, and Approved Leasehold Mortgagee. This Lease is made for the purpose of setting forth rights and obligations of Lessee and City, and no other person (except for the City) shall have any rights hereunder or by reason hereof. Except for the City, the Limited Partner, and each leasehold mortgagee approved by City, each of which shall be deemed to be a third party beneficiary of this Lease, there sha ll be no third party beneficiaries of this Lease. City, in addition to City, shall have the authority to enforce this Lease.

26.27 Lessee’s Limited Partners . Lessee has advised the City that concurrently with the execution of this Lease, the Limited Partner will be admitted to Lessee’s partnership pursuant to the Partnership Agreement.
(a) Notwithstanding anything to the contrary contained in this Lease or the AHA, the respective interests of the Limited Partner shall be freely transferable and any amendment to Lessee’s Partnership Agreement, to the extent such amendment effectuates such transfers, shall not 782

47 4811-0875-8641v12/200471-0009
require City consent; provided that the Limited Partner and/or investor limited partner inform the City in writing of any such transfers.
(b) Notwithstanding anything to the contrary contained in this Lease or the AHA, the removal, or withdrawal in lieu of removal and replacement thereof, of Lessee’s general partner (s) for cause in accordance with Partnership Agreement shall not require the consent of the City and/or the City and shall not constitute a default under this Lease or the AHA. Any amendment to Lessee’s Partnership Agreement, to the extent such amendment effectuates such removal and/or withdrawal, and such admission of the substitute general partner shall not require Lessor consent. (c) Notwithstanding anything to the contrary contained in this Lease or the AHA, if a default or event of default occurs under th e terms of any of this Lease, prior to exercising any remedies thereunder, Lessor will give lessee and its Limited Partner written notice of such default. If the default is reasonably capable of being cured within thirty (30) days, Lessee shall have such period to effect a cure prior to exercise of remedies by Lessor under this Lease, or such longer period of time as may be specified in this Lease. If the default is such that it is not reasonably capable of being cured within thirty (30) days (or such lon ger period if so specified), and if Lessee (a) initiates corrective action within said period, and (b) diligently, continually, and in good faith works to effect a cure as soon as possible, then Lessee shall have such additional time as is reasonably neces sary to cure the default prior to the exercise of any remedies by Lessor.

Notwithstanding any provision of this Lease to contrary effect (including without the preceding portion of this Section 26.27), approval by the Limited Partner and notice to the Limited Partner shall not be required as of such time as Limited Partner does not hold an interest in the Project or Lessee’s rights under this Lease.

26.28 Bankruptcy
If any case commenced by or against Lessor under Title 9 or 11 of the United States Code (the “Bankruptcy Code”), and Lessor elects to reject this Lease pursuant to the provisions of the Bankruptcy Code, such rejection will not terminate this Lease but will be treated only as a breach of this Lease by Lessor. Lessor further agrees that in any such bankruptcy case, Lessee shall be deemed in possession of the Project for purposes of Section 365(h) of the Bankruptcy Code, whether Lessee has retained actual occupancy and use, or has by sublease, assignment or license permitted third parties to occupy and use portions of the Project; and as a result, upon a rejection of the Lease by Lessor, Lessee shall have the right to elect to remain in possession of the Project under Section 365(h), Lessor acknowledges that the Approved Construction Lender and/or Permanent Lender, as applicable, shall have a lien on any rights and interests acquired or retained by Lessee as a result of Lessor’s rejection of the Lease.

Lessor further agrees that following rejection of the Lease, if Lessee assigns to Approved Construction Lender and/or Permanent Lender, or any third party its interest in the Lease or its interest or right to remain in possession of the leasehold estate under Sec tion 365(h) of the Bankruptcy Code, then such assignee shall have all of the rights of Lessee, and Lessor will not assert that this Lease has been terminated, nor will Lessor otherwise attempt to limit, modify or prohibit the assignment of such interests. Lessor acknowledges that any Approved Construction Lender and/or Permanent Lender has in such bankruptcy case a power of attorney or other right to act for and on behalf of Lessee in relation to any proposed rejection or assumption of this Lease, and as such any Approved Construction Lender and/or Permanent Lender shall have standing to appear and act as a party to this Lease for purposes of Section 365 of the Bankruptcy Code (but no Approved Construction Lender and/or Permanent Lender shall have any obligations under this Lease unless such Leasehold Mortgagees expressly assumes the 783

48 4811-0875-8641v12/200471-0009
same). Lessor shall, during its bankruptcy case, serve on each Approved Construction Lender and/or Permanent Lender and the Limited Partner a copy of all notices, pleadings or documents which would otherwise be given to Lessee, and service shall be contemporaneous with and in the same manner as given to Lessee.

26.29 Liens on Lessor’s Fee Estate.
(a) Lessor represents and warrants to an y Approved Construction and/or Permanent Lender that as of the date of this Lease, (i) Lessor has not caused Lessor’s fee interest in the Portion A Site to be subject to a lien, and (ii) Lessor’s predecessor -in-interest has not caused Lessor’s fee interest in the Portion A Site to be subject to a lien. (b) This Lease, and any first leasehold mortgage encumbering the leasehold interest created by this Lease, shall be and remain superior in priority to any fee mortgage hereafter encumbering the Portion A Site, and Lessor shall cause any fee mortgagee to execute and deliver to the holder of such first leasehold mortgage a written subordination agreement in form and substance satisfactory to such leasehold mortga gee providing further assurance of the superior priority of this Lease and the leasehold mortgage.
784

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4811-0875-8641v12/200471-0009
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by their lawfully authorized officers.

LESSOR:

CITY OF ROCKLIN, a municipal corporation
By:

Aly Zimmermann, City Manager
ATTEST:

Avinta Madhukansh-Singh, City Clerk
APPROVED AS TO FORM:

Mark Huebsch, Consulting Attorney
[signatures continue on following page]

785

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4811-0875-8641v12/200471-0009
[signatures continue from previous page]
LESSEE:

PACIFIC STREET HOUSING ASSOCIATES
FOUR, L.P., a California limited partnership
By: CHW Pacific Street Four LLC, its managing
general partner
By: Community HousingWorks, a California
nonprofit public benefit corporation (its sole member
and manager)
By: __________________________________
Kevin Leichner
Senior Vice President of Housing and Real Estate
Development
786

Exhibit A

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Rocklin City CouncilNovember 18, 2025

Rocklin City Council
November 18, 2025