Sacramento City Council
November 14, 2023

City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01400 11/14/2023 Discussion Item 4.

Approval to Execute Final Loan Documents for The Sequoia File ID: 2023-01400
Location: 911 K Street, District 4, Represented by Councilmember Valenzuela Recommendation: Adopt a City Council Resolution authorizing a) the Executive Director, or her designee, to enter into, execute, and amend as necessary the Mixed-Income Housing Funds (MIHF) funding agreement with The John Stewart Company (Developer) or related entity; b) the Executive Director, or her designee, to execute any and all documents deemed necessary related to the transaction; c) amend the SHRA budget, and d) making related findings.

Contact: Christine Weichert, Director, Development Finance, (916) 440-1353, [email protected]; Whitney Hinton, Program Manager, Development Finance, (916) 440-1325, [email protected], Sacramento Housing and Redevelopment Agency
Presenter: Whitney Hinton, Program Manager, Development Finance, (916) 440-1325, [email protected], Sacramento Housing and Redevelopment Agency Attachments:
1-Description/Analysis
2-City Council Resolution
3- Exhibit A- Loan Documents
4-Vicinty Map
5-Site Photo
6- Project Summary
7-Cash Flow Proforma
8- Maximum Income and Rent Limits
Description/Analysis
Issue Detail: On March 28, 2022, the California Department of Housing and Community Development (HCD) announced $332.2 million available through a Notice of Funding Availability (NOFA) for the Portfolio Reinvestment Program (PRP). The PRP provides funding to HCD-assisted projects where HCD affordability restrictions have expired and have not been removed from the project, HCD affordability restrictions are expiring on or before December 31, 2031, or have been foreclosed on by the Department or another public lender. The PRP funding is derived from the Coronavirus State

File ID: 2023-01400 11/14/2023 Discussion Item 4.

Fiscal Recovery Fund (CSFRF) established by the federal American Rescue Plan Act of 2021(ARPA) and the state General Fund.

The Sequoia Hotel is located at 911 K Street in downtown Sacramento. The hotel was originally opened in 1910. In 1985, 911 K Street Investors, LP purchased and rehabilitated the Project using funds from the Sacramento Housing Redevelopment Agency (SHRA) and the HCD Special User Housing Rehabilitation Program, converting the hotel into an 89-Single Room Occupancy (SRO) project for low and very low-income residents. The Project went into financial default in 2005 and was foreclosed upon in April 2022 by HCD, who took ownership of the property. At the request of HCD, the John Stewart Company (JSCo) became its property manager in 2022. A vicinity map and site photo of The Sequoia is shown in Attachment 4 and 5.

The Project has fallen into serious disrepair and is critically in need of extensive rehabilitation. HCD approached JSCo and requested they acquire the foreclosed property and renovate it with funding from the PRP. Following due diligence and a preliminary determination of feasibility, JSCo submitted a PRP application to HCD for $40 million (the maximum possible award amount) and operating assistance. In addition, JSCo applied to SHRA for $3.4 million in Capitalized Operating Reserves to ensure required property management and case management for residents. It is anticipated the Project will be refinanced within the next ten years.

On June 13, 2023, City Council approved $3.4 million of Mixed-Income Housing Funds to be used as a Capitalized Operating Reserve to the Developer or related entity for the Project.

On November 7, 2023, the County Board of Supervisors approved $2.1 million in Mental Health Services Act (MHSA) Funds for additional capital improvements that include new fire pumps, reinforcing the structural masonry wall at roof parapets, new lightwell parapets, and exterior wall material.

Construction is anticipated to begin in December of 2023 and is expected to be completed within 24 months.

In this report, staff are recommending approval for the Executive Director to negotiate and enter into funding agreements for the Project.

Project Description:

The Project will rehabilitate 88 permanent supportive housing units and one manager’s unit. The 16 studio units will include new bathrooms and kitchenettes. The 72 SRO units will have access to the common kitchen/lounge area and bathroom on each floor. Several of the SRO units will have stove-top burners, and all units will have microwaves. The building will have a new heating and cooling system, new flooring, plumbing, mechanical systems, exterior envelope, and light fixtures. Elevators will be replaced, and stairwells will include code-compliant handrails. The ground floor will be converted to include a manager’s office, service offices, a computer room, a laundry room, bike storage, and a community room.

File ID: 2023-01400 11/14/2023 Discussion Item 4.

Project-Based Vouchers and Gap Funding: In February 2022, SHRA, on behalf of the Housing Authority, released a Request for Proposals for Project-Based Vouchers (PBV) to serve homeless families/individuals. In April 2023, the Developer was awarded 88 project-based vouchers for permanent support/homeless housing units for the Project from SHRA.

Project Developer: The Developer of the Project is JSCo, which was founded by John K. Stewart in 1978 to provide high-quality property management for affordable housing. Today, JSCo is a full- service housing management, development, and consulting organization employing almost 1,500 people throughout California. JSCo is the owner of five affordable developments in Sacramento.

Property Management: The John Stewart Company (JSCo) will serve as property manager. JSCo manages properties throughout the state of California and directly manages 3,595 market rate and affordable housing units in the Sacramento region.

Resident Services: Lutheran Social Services (LSS) will provide a minimum of 20 hours per week of onsite resident services that will include enrichment activities, educational classes covering job search skills, and resume writing services.

LSS will also provide four full-time onsite case managers who will offer supportive services that include a comprehensive psychosocial assessment of each client and an evaluation of the client’s medical, psychosocial, environmental, legal, and financial situations, as well as their education, strengths, needs, and available resources. The Case Management services will include benefits counseling and advocacy, mental health care, physical health care, and substance use services.

There will be 16 units restricted to MHSA residents, and the County of Sacramento will provide one full-time case manager for supportive services to the residents.

Security Plan:

The Project will include the installation of a security camera system where staff will be monitoring surveillance video throughout their shifts to ensure safety. There will be 24/7desk coverage present.

Project Financing: The financing structure of this Project includes HCD Portfolio Reinvestment Program funds (PRP), a three-year HCD Capitalized Operating Subsidy Reserve (COSR), Mental Health and Services Act funds and SHRA Operating Reserve using Mixed-Income Housing Funds (MIHF).

The Sequoia - SHRA Funding Programs LOAN AMOUNTS
Mixed-Income Housing Funds - City $3,400,000
Mental Health and Services Act (MHSA) - County $2,100,000 TOTAL Local FUNDING $5,500,000

File ID: 2023-01400 11/14/2023 Discussion Item 4.

Low-Income Set-Aside Requirements: SHRA requires at least 15 percent of the units to have rents that are affordable to households with income up to 50 percent AMI and at least 5 percent of the units to have rents that are affordable to households with income up to 30 percent AMI, based on financial feasibility. SHRA has committed a total of 88 Project Based Vouchers (PBV) to this Project.

Project affordability restrictions will be specified in regulatory agreements with the Developer. The Project Summary and Proforma are included in Attachments 5 and 6, and a schedule of Maximum Income and Rent Limits is included as Attachment 7. These anticipated sources and their affordability requirements are summarized in the following table:

The Sequoia
Affordability Restrictions (55 years) Units % of Units
Extremely Low Income (30% AMI) 16 18
Very-Low Income (50% AMI) 72 81
Manager Unit (1Bedroom) 1 1
Total 89 100
*The tenant rent will not exceed 30% of the household adjusted gross income with Project Based Vouchers
Policy Considerations: The recommended actions are also consistent with a) SHRA Multifamily Lending and Mortgage Revenue Bond Policies adopted by the Council in December of 2019, Subsection 1.1.(3), Rehabilitation of existing affordable housing; and b) the Downtown Housing initiative and initiation of the Downtown Specific Plan, to bring 10,000 places to live Downtown Sacramento by 2025.

Economic Impacts: The Sequoia project is expected to create an estimated 564.07 total jobs (319.64 direct jobs and 244.43 jobs through indirect and induced activities) and create an estimated $47,006,085 in total economic output ($28,653,137 of direct output and another $18,352,947 of output through indirect and induced activities). The indicated economic impacts are estimates calculated using a calculation tool developed by the Center for Strategic Economic Research (CSER). CSER utilized the IMPLAN input-output model (2009 coefficients) to quantify the economic impacts of a hypothetical $1 million of spending in various construction categories within the City of Sacramento in an average one-year period. Actual impacts could differ significantly from the estimates and neither the City of Sacramento nor CSER shall be held responsible for consequences resulting from such differences.

Environmental Considerations:

California Environmental Quality Act (CEQA): This project is categorically exempt under

File ID: 2023-01400 11/14/2023 Discussion Item 4.

CEQA per Guidelines Section 15301, Existing facilities, because it includes minor alteration and repair of an existing facility, and Section 15332 because it is an infill project and the site is not more than five acres, is substantially surrounded by urban uses, the project is consistent with the General Plan, and will not result in any significant impacts of noise, air quality or water quality.

National Environmental Policy Act (NEPA): NEPA review is underway for the proposed project, and it is anticipated that the review will result in a Finding of No Significant Impact. No choice limiting action will be taken prior to completing NEPA review.

Sustainability: The proposed Project has been reviewed for consistency with the goals, policies and targets of the Sustainability Master Plan and the 2030 General Plan. If approved, these projects will advance the following goal, policy, and target of goal number one - Energy Independence, specifically by reducing the use of fossil fuels and providing long-term affordable and reliable energy.

Commission/Committee Action: Not applicable.

Rationale for Recommendation: The actions recommended in this report support the Agency’s ability to continue to fulfill its mission of providing a range of affordable housing opportunities in the City and are consistent with the Agency’s approved Multifamily Lending and Mortgage Revenue Bond Policies, and the City of Sacramento’s 2013-2021 Housing Element as part of Sacramento’s 2035 General Plan.

Financial Considerations: The recommended funding for this Project is $3.4 million in Mixed- Income Housing Funds and $2.1 million in Mental Health Services Act Funds. SHRA will receive an annual administration fee equal to 12.5 basis points (0.125 percent) of the original loan amount as compensation for monitoring compliance with regulatory restrictions and the administration of the loan. SHRA will also receive a fee equal to $100 per SHRA-funded unit per year and a prorated semi- annual installment at loan closing and equal semi-annual installments following the effective date of regulatory agreement during the term of the regulatory period for each loan.

Local Business Enterprise (LBE):

M/WBE & Section 3 Considerations:

Minority and Women’s Business Enterprise requirements and Section 3 considerations will be applied to all activities to the extent required by the federal funding and in accordance with SHRA’s Section 3 Economic Opportunity Plan.

RESOLUTION NO. 2023 -

Adopted by the Sacramento City Council

on date of

THE SEQUOIA (PROJECT) APPROVAL TO EXECUTE FINAL LOAN DOCUMENTS

WITH THE JOHN STEWART COMPANY, OR RELATED ENTITY

BACKGROUND

A. The John Stewart Company has applied for an allocation of $ 3.4 million in Mixed- Income Housing Fund (MIHF) fund s to assist in the Project’s operations.

Additionally, the Developer has applied for an allocation of $4 6.8 million in HCD- Portfolio Reinvestment Program funds to strengthen the funding to rehabilitate this Project. Th is Project will rehabilitate the property and will serve homeless households.

B. The Project is consistent with a) the Sacramento Housing and Redevelopment Agency’s (SHRA) previously approved Multifamily Lending and Mortgage Revenue Bond Policies, Funding Priority # 3: Rehabilitation of existing affordable housing (Resolution No. 2009-0022); b) the Downtown Housing initiative and initiation of the Downtown Specific Plan, to bring 10,000 places to live to Downtown Sacramento by 2025 (Resolution No. 2015-282).

C. This Project is categorically exempt under the California Environmental Quality Act per Guidelines Section 15301, Existing facilities, because it includes minor alteration and repair of an existing facility, and Section 15332 because it is an infill project and the site is not more than five acres, it is substantially surrounded by urban uses, the project is consistent with the General Plan, and will not result in any significant impacts of noise, air quality or water quality.

D. Review pursuant to the National Environmental Policy Act (NEPA) is currently underway for the proposed project, and it is anticipated that the review will result in a Finding of No Significant Impact . No choice limiting action will be taken prior to completing NEPA review.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:

Section 1. All evidence presented having been duly considered, the findings, including environmental findings regarding this action, as stated above, are found to be true and accurate and are hereby approved adopted.

Section 2. The Sacramento Housing and Redevelop ment Agency is authorized to negotiate, enter into, execute, and amend as needed the funding agreement and related documents for the acquisition, construction, operation , and permanent financing of the Project with the Developer, and execute other documents, as approved to form by its Office of the General Counsel, perform other actions required for the MIHF funds, including without limits, negotiation, amendment, subordination, regulatory agreement, financial restructuring, and extensions, consistent with its adopted policy and with this resolution.

Section 3. SHRA is authorized to amend its budget and allocate up to $3.4 million of MIHF funds to provide operational financing for the Project.

Section 4. This resolution shall take effect immediately upon its adoption.

Table of Contents:

Exhibit A: Loan Documents

MHSA Permanent and Construction Loan Agreement – Sequoia Page 1

MHSA CONSTRUCTION AND PERMANENT LOAN AGREEMENT

THE SEQUOIA
IN CONSIDERATION of their mutual promises, the parties agree as follows:

1. LOAN. Lender is making the Loan pursuant to the terms and conditions of this Loan Agreement. Lender and Borrower have entered this Loan Agreement as of the Effective Date.

2. DEFINITIONS TABLES. The capitalized terms in this Loan Agreement shall have the mea nings assigned in the following Definitions Tables and in Section 3 Definitions. Terms being defined are indicated by quotation marks. If an item in the Definitions Table is marked “None”, “Not Applicable”, “N/A” or equivalent or is left blank, that defined term is not applicable to this Loan or the referenced item is not required or is not included in this Loan as the context may indicate.

A. “LOAN INFORMATION” The general loan provisions of the Loan:
“EFFECTIVE DATE” November XX, 2023 The date as of which this Loan Agreement shall be effective. “LENDER” The following public agency that is making the Loan, and whose legal status and address are:

Name Sacramento Housing and Redevelopment Agency
Legal Status A joint powers agency
Principal Address 801 12th Street, Sacramento CA 95814
“BORROWER” The borrower of the Loan Proceeds whose name, legal status and address are:

Name 911 K Street Partners, L.P.

Legal Status a California limited partnership
Principal Address 1388 Sutter Street 11th Floor, San Francisco, CA 94109 “LOAN” The Loan made by this Loan Agreement.
“LOAN COMMITMENT” Lender’s loan commitment, made by letter dated as of November XX, 2023 “LOAN PROGRAM” Lender’s Loan Programs commonly known as Mental Health Services Act (MHSA) funds
“LOAN AMOUNT” Two Million One Hundred Thousand Dollars and No Cents ($2,100,000.00) “INTEREST RATE” The interest rate is 0% per year, simple interest. “MATURITY DATE” The first day of the 480th calendar month following the Effective Date: XXX, 2063 “PAYMENT SCHEDULE” The first day of the 480th calendar month following the Effective Date: XXX, 2063 “BORROWER EQUITY”
N/A
Which is the minimum amount of cash or cash equivalent
(excluding land equity or other non-cash investment in the Project) that Borrower is investing in the Project.

N/A Which is Borrower’s non -cash contribution to the Project (such as deferred Developer fees).
“SPECIAL TERMS”
“PROJECT”
Which is the Project to be developed
on the Property with the Loan
Proceeds, described as:

The Project will rehabilitate 88 permanent supportive
housing units and one manager’s unit. The 15 studio units will include new bathrooms and kitchenettes. The 73
Single Room Occupancy ( SRO) units will have access to
the common kitchen/lounge area and bat hroom on each
floor. Several of the SROs units will have stove top
burners and all units will have microwaves. The building will have a new heating and cooling system, new flooring, plumbing, mechanical systems, exterior envelope, and
light fixtures. Elev ators will be replaced, and stairwells will include code compliant handrails. The ground floor will be converted to include a manager’s office, service offices, a computer room, laundry room, bike storage, and community room.

Exhibit A
MHSA Permanent and Construction Loan Agreement – Sequoia Page 2

B. “COLLATERAL” The Collateral securing repayment of the Loan, which Collateral consists of the following:
“PROPERTY” The following described real property, which is security for the Loan and the site of the Project:

Address 911 K Street, Sacramento, CA 95814
Assessor’s Parcel
Number 006-0101-020-0000
“Legal Description” The Property is situated in the State of California, County of Sacramento, and is more particularly described in Exhibit 1: Legal Description attached and incorporated by reference.

Borrower’s Title
Interest
Borrower has fee interest in the Property or, if the Additional Escrow Instructions so indicate, Borrower will acquire fee interest in the Property at Close of Escrow. “ADDITIONAL
COLLATERAL”
The Additional Collateral securing repayment of the Loan is any additional security required by Lender under this Loan Agreement, including without limitation the following items, if any

“PERSONAL PROPERTY”
Borrower’s interest in the following
personal property, tangible and
intangible, and all other such property
listed as security in this Loan
Agreement:

Materials and supplies for the Project,
Assigned Documents
OTHER ADDITIONAL COLLATERAL Borrower’s interest in the following property: None

C. “ESCROW INFORMATION”:
“Title Company” and
“Escrow Agent” Placer Title Company Which is the title company that will issue the Title Policy and that will act as Escrow Agent for the Escrow.
“Escrow” The escrow with Escrow Agent
“Closing Date” November XX, 2023 Which is the date for close of the Escrow, as it may be extended.

D. “LIST OF EXHIBITS” (The following are attached and incorporated in this Loan Agreement):

EXHIBIT DEFINED TERM
Exhibit 1: Legal Descriptions “Legal Description”
Exhibit 2: Scope of Development “Scope of Development” Exhibit 3: Note Form “Note”
Exhibit 4: Trust Deed Form “Trust Deed”
Exhibit 5: Regulatory Agreement “Regulatory Agreement”
Exhibit 6: Escrow Instructions “Escrow Instructions
Exhibit 7: Funding Requirements

“Funding Requirements”

E. “APPROVAL DOCUMENTS” Borrower shall submit the following documents for Lender approval:

Construction Agreements for the Project
Architectural Agreement for the Project
Borrower’s organizational documents, such as partnership agreements or corporate articles and by -laws “Budget” for the Project
Evidence of financing as described in this Loan Agreement Plans and Specifications as defined in this Loan Agreement

F. “ASSIGNED DOCUMENTS” Borrower shall assign the following documents to Lender:

Construction Contract
Architectural Contract

G. “CONSTRUCTION INFORMATION”:
“Completion Date” May XX, 2025 Which is the date on or before which the Completion of the Project must occur.
“General Contractor” Mid-State Construction Which is the general contractor for construction of the Project.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 3

“Project Architect” The John Stewart Company Which is or are the architect(s) for design of the Project “Retention”
The following percentage of each disbursement made
for construction work, in aggregate not to exceed the
following percentage of the Loan Amount, which shall
be retained by Lender for disbursement w ith the final
disbursement of the Loan
Percentage of
Loan: TEN Percent (10%)
“Senior Lender” During construction: Century Housing Corporation; after the Project converts to its permanent phase: Department of Housing and Community Development (HCD)

H. “SPECIAL PROVISIONS” The following special provisions shall be in addition to the provisions of this Loan Agreement:

Loan Proceeds shall be used solely for rehabilitation and development of Project. No Loan Proceeds shall be used for predevelopment costs, except as provided in an approved Lender budget. Unless otherwise noted in the budget, predevelopment costs are not subject to withholding as Retention.

3. DEFINITIONS. Terms not defined in this Loan Agreement shall have the definitions assigned in the Trust Deed. As used in this Loan Agreement, the following terms shall have the following meanings:

3.1. “Budget” is the budget approved by Lender for the development of the Project.

3.2. “California Environmental Quality Act” or “CEQA” is established in the California Public Resources Codes § 21000 et seq. and is applicable to private activities requiring discretionary governmental approvals (Pub. Res. Code §210001.1, 21001, 21080 and 14 California Code of Regulations § 15002(c)

3.3. “Change” means any extra work or installation of materials not included in the Plans and Specifications or any change in or deviation from the Plans and Specifications.

3.4. “Close of Escrow” means the fulfillment of the Escrow terms and conclusion of the Escrow, including, without limitation, the execution of unexecuted documents, the recordation of documents specified for recording, the issuance of title insurance policies, the payment of fees and the delivery of funds and documents as directed in the escrow instructions for the Escrow. The Close of Escrow shall occur on the Closing Date.

3.5. “Completion of the Project,” or “Completion,” means that, in Lender's sole judgment the Project has been constructed, rehabilitated, completed, equipped, and furnished in a good and proper manner in accordance with the Plans and Specifications, the Scope of Development and the Budg et as approved by Lender; all notices of completion with respect to the Project have been filed and all statutory lien periods have expired; all costs of constructing the Project have been paid; all necessary certificates of occupancy have been issued; and all of the conditions to final disbursement of the Loan have been satisfied.

3.6. “Environmental Review” means the investigation and analysis of the Project’s impacts on the environment as may be required by CEQA and/or National Environmental Policy Act (NEP A), or of the Project’s impacts on any species of plant or animal listed as a species of concern, or a threatened or endangered species under California or federal laws or regulations.

3.7. “Escrow” is the escrow with Title Company for the closing of the Loan.

3.8. “Escrow Instructions" means the Escrow Instructions for the Escrow signed by each of the parties to this Loan Agreement.

3.9. “Event of Default” is breach of or default , subject to all applicable notice and cure periods, in a party’s obligations under this Loan Agreement, the Trust Deed, the Note, the Regulatory Agreement and any other instrument which is incorporated in this Loan Agreement or which otherwise secures the repayment of the Loan that has not been cured after expiration of all applicable cure periods.

3.10. “Financial Statements” means the certified financial statements of Borrower (and any other persons on whose financial capacity Lender has relied in making this Loan) as may be required by Lender from time to time, including operating statements, balance sheets, and any other financial reports and information that Lender may require.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 4

3.11. “Fixtures” means all fixtures located on or within the Project or now or later installed in or used in connection with any of the Project, including, as applicable and without limitation, all partitions, screens, awnings, motors, engines, boilers, furnaces, pipes, plumbing, elevators, cleaning and sprinkler systems, fire extinguishing apparatus and equipment, water tanks, heating, ventilating, air conditioning and air c ooling equipment, built -in refrigerators, and gas and electric machinery, appurtenances, and equipment, whether or not permanently affixed to the Project.

3.12. “General Contractor” means the general contractor named by Borrower in its application or supporting documents as the general contractor to do the Project, or any other general contractor so designated by Borrower and approved in writing in advance by Lender.

3.13. “Governmental Authority” means the United States of America, the State of California, the Count y of Sacramento, the City of Sacramento or any other political subdivision, agency, department, commission, board, bureau, or instrumentality of any of them.

3.14. “Governmental Requirement” means any law, ordinance, order, rule, regulation, plan, ruling, determination or requirement of a Governmental Authority.

3.15. “Loan” is the loan from Lender to Borrower made pursuant to this Loan Agreement.

3.16. “Loan Agreement” means this Construction and Permanent Loan Agreement, all exhibits attached to this Loan Agreement (which are incorporated in this Loan Agreement by this reference) and the Loan Documents which are not otherwise included in this definition.

3.17. “Loan Documents” means the Note, this Loan Agreement, the Security Documents, the Regulatory Agreement, and all other documents (including guaranties, if any) evidencing, securing, or relating to the Loan.

3.18. “Loan Maturity Date” means the date on which the entire unpaid balance of the Loan, including principal and interest, is due and payable.

3.19. “Loan Procee ds” means funds disbursed by Lender on account of the Loan and pursuant to this Loan Agreement.

3.20. “Mitigation Measure(s)” means those feasible measures, actions, or features that are to be incorporated into the Project in order to avoid or substantially reduce the Projects significant impact on the environment.

3.21. “National Environmental Policy Act” or “NEPA” contains the federally required procedures to review and analyze the effect and impact of the Project on the environment as applied to the Project under 24 Code of Federal Regulations Parts 50 and 58 et seq.

3.22. “Note” means that certain promissory note evidencing the Loan and attached hereto as Exhibit 3.

3.23. “Other Lender Draw” means a draw request or other request for disbursement submitted to another lender for the Project.

3.24. “Person” means any natural person, corporation, firm, partnership, association, trust, government, governmental agency, or any other entity, whether acting in an individual, fiduciary, or other capacity.

3.25. “Personalty” means, whether or not listed as Additional Collateral, all of Borrower's interest in all accounts, contract rights, and general intangibles (specifically including any insurance proceeds and condemnation awards) arising out of the ownership, development, or operation of the P roperty, and all furniture, furnishings, equipment, machinery, construction materials and supplies, leasehold interests in personal property, and all other personal property (other than Fixtures) of Borrower now or later located about the Property, togethe r with all present and future attachments, accessions, replacements, substitutions, and additions, and the cash and noncash proceeds.

3.26. “Plans and Specifications” means the final set of architectural, structural, mechanical, electrical, grading, sewer, wate r, street, and utility plans and specifications for the Project, including all supplements, amendments, and modifications.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 5

3.27. “Potential Default” means an event that would constitute an Event of Default but for any requirement of notice to be given or period of grace or time to elapse.

3.28. “Project” means the development of the Property in accordance with the Plans and Specifications including, without limitation, all existing buildings, improvements, and appurtenances on the Property, all work of demolition and rehabilitation to be conducted on the Property, and all improvements, additions, and replacements constructed or placed at any time on the Property.

3.29. “Security Documents” means the Trust Deed, together with all other documents entered into between Borrower and Lender or by Borrower in favor of, or for the benefit of, Lender that recite that they are to secure the Loan.

3.30. “Title Policy” means the title insurance policies to be issued in connection with this Loan, as further defined in the Escrow Instructions.

3.31. “Trust Deed” means that certain Deed of Trust and Assignment of Rents between Borrower, as trustor, Lender, as beneficiary, and trustee which secures the Note and is attached hereto as Exhibit 4.

3.32. “Unavoidable Delay” is a delay in the performan ce by a party of any obligation which delay is unforeseeable and beyond the control of such party and without its fault or negligence. Unavoidable Delay shall not be reasonably foreseeable events consisting solely of acts of God, acts of the public enemy, acts of the Federal Government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weath er (as for example, floods, tornadoes, or hurricanes) or delays of subcontractors due to such causes. In the event of the occurrence of any such enforced delay, the time or times for performance of such obligations of the parties shall be extended for the period of the enforced delay, as determined by Lender, provided that the party seeking the benefit of the provisions of this Section shall, within thirty (30) days after it has or should have knowledge of any such enforced delay, have first notified the other party, in writing, of the delay and its cause, and requested an extension for the period of the enforced delay.

4. BORROWER'S REPRESENTATIONS AND WARRANTIES. As a material inducement to Lender to enter into this Loan Agreement and to make the Loan to Borrower, Borrower unconditionally, and each signatory who signs on its behalf, to the extent of their actual knowledge, represents and warrants to Lender, as of the Close of Escrow, as follows:

4.1. LEGAL ORGANIZATION. Borrower is duly formed and validly exists in the form stated in Section 2 hereof, is qualified to do business in California, and has full power to consummate the transactions contemplated.

4.2. BORROWER'S POWERS. Borrower has full authority to execute this Loan Agreement, the Note, the Trust Deed, and all of the other Loan Documents, to undertake and consummate the contemplated transactions, and to pay, perform, and observe all of the conditions, covenants, agreements, and obligations.

4.3. BINDING OBLIGATION. This Loan Agreement, the Note, the Trust Deed, and each of the other Loan Documents constitute a legal and binding obligation of, and are valid and enforceable against, each party other than Lender, in accordance with the terms of each.

4.4. LITIGATION. There are no actions, suits, or proceedings pending or, to the best knowledge of Borrower, threatened against or affecting Borrower, the Property, or any part of it, or involving the validity or enforceability of the Trust Deed, the priority of the lien, or the validity or enforceability of any of the other Loan Documents, at law or in equity, or before or by any Governmental Authority. Borr ower is not in default with respect to any order, writ, injunction, decree, or demand of any court or other Governmental Authority.

4.5. NO OTHER BREACH. The consummation of the transactions covered by this Loan Agreement and the payment and performance of al l of the obligations in the Loan Documents will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, contract, loan or credit agreement, corporate charter, bylaws, partnership agreement, trust agreement, or other instrument to which Borrower or any of its general partners is a party or by which it or they or the Property may be bound or affected.

4.6. NO DEFAULT. There is no Event of Default or Potential Default on the part of Borrower.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 6

4.7. TITLE TO PROPERTY. Borrower is the sole legal and beneficial owner of the Property, which is free of all claims, liens, and encumbrances other than those shown in the Title Policy.

4.8. NO UNAPPROVED LOANS. Borrower has not received financing for either the acquisition of the Property, the construction of the Project or the permanent financing of the Project except as has been specifically disclosed to and approved by Lender in writing.

4.9. TITLE OF PERSONALTY. All Personalty is vested solely in Borrower, free of all claims, lie ns, and encumbrances, and the security interest of Lender in the Personalty is a lien subject to the lien of the Senior Lender and SHRA.

4.10. USE OF PROCEEDS. All Loan Proceeds will be disbursed as provided in this Loan Agreement and used only for payment of the costs of rehabilitation and development of the Project in accordance with the Plans and Specifications and for other purposes specified in the Loan.

4.11. TAXES PAID. Borrower has filed all required Federal, State, County, and City tax returns and has pa id all taxes due and owing. Borrower knows of no basis for additional assessments with respect to any taxes, other than the lien of taxes not yet due.

4.12. PLANS AND SPECIFICATIONS. The Plans and Specifications are satisfactory to Borrower and the General Contractor and have been approved by Lender and all other construction lenders. There are no structural defects in the Project as shown in the Plans and Specifications that are known to or reasonably should have been known to Borrower or its agents and employees, and to the best of Borrower's knowledge, no violation of any Governmental Requirement exists.

4.13. ACCURACY. All applications, Financial Statements, reports, documents, instruments, information, and forms of evidence delivered to Lender concerning th e Loan or required by this Loan Agreement or any of the other Loan Documents are accurate, correct, and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any untrue statement of a material fact or omit any material fact necessary to make them not misleading.

5. BORROWER’S COVENANTS AND CONDITIONS. From the Effective Date until payment and performance in full of all obligations of Borrower under this Loan Agreement, the Note, the Security Documents, and the other Loan Documents or the earlier release of the liens of the Loan Documents (and all related obligations) in accordance with the terms of this Loa n Agreement, the Note, the Security Documents, and the other Loan Documents, Borrower hereby covenan ts and agrees with Lender that:

5.1. USE OF PROCEEDS. All Loan Proceeds will be disbursed as provided in this Loan Agreement and used only for payment of the costs of construction of the Project in accordance with the Plans and Specifications and for other purposes specified in the Loan.

5.2. PROPERTY MANAGEMENT. Subject to Lender’s written approval, Borrower shall obtain and maintain for the life of the Loan a top quality property management agreement with a duly accredited real estate property management company for the management of the Property, and shall assure compliance of the property manager with the property management agreement. Lender shall not disburse any funds under this Loan Agreement unless and until it has reviewed and approved the agreement as adequate and the property management company as top quality and duly accredited. Lender shall have the right to review and approve or reject any proposed changes to scope of said agreement and to changes in the real estate property management company prior to making such changes. Any such changes made without Lender approval shall be an Event of Default under this Loan Agreement. Lender has approved John Stewart Management Company as the qualified property management company for the Project.

5.3. BORROWER'S RESPONSIBILITIES. To prevent and avoid construction defects, Borrower shall inspect, review, supervise, and assure the high quality, adequacy, and suitability of: (i) the Plans and Specifications and all change s and amendments; and (ii) architects, contractors, subcontractors, and material suppliers employed or used in the Project, and the workmanship of and the materials used by all of them; and (iii) the progress and course of construction and its conformance with the Plans and Specifications and any am endments, alterations, and changes that may be approved by Lender. Borrower will, at Borrower's expense, defend, indemnify, save, and hold Lender harmless against all claims, demands, losses, expenses, damages (general, punitive, or otherwise), and causes of action (whether legal or equitable) asserted by any Person arising out of the use of the proceeds of the Loan. Borrower will pay Lender on demand all claims, judgments, damages, losses, or expenses (including reasonable attorney fees and expenses) incurred by Lender as a result of MHSA Permanent and Construction Loan Agreement – Sequoia Page 7

any legal action arising out of the use of the proceeds of the Loan. The provisions of this Section will survive the termination of this Loan Agreement and the repayment of the Loan.

6. INSURANCE.

6.1. PROPERTY INSURANCE. Borrower shall procure and maintain property insurance in a form and substance approved by Lender. Coverage shall be for protection against loss of, or damage to the Property and its improvements to their full insurable value. Borrower shall also procure and maintain insurance against specific hazards affecting Lender's security for the Loan as may be required by Lender, governmental regulations, or any permanent lender. All such policies shall contain a standard mortgagee loss payable clause in favor of Lender. The insurance required shall be written with a deductible of not more than Twenty-Five Thousand Dollars ($25,000.00).

6.2. COMMERCIAL GENERAL LIABILITY AND OTHER INSURANCE. Borrower shall carry insurance as set forth below, effective prior to the disbursement of the Loan, and such insurance shall be maintained in full force and effect at al l times. Such insurance coverage must list Lender as an additional insured, and mus t be approved in writing by Lender prior to the disbursement of the Loan.

6.2.1. Commercial general liability insurance, in Insurance Services Office (ISO) policy form CG 00 01 or equivalent, with limits of liability not less than: $1,000,000 per occurrence, a nd $2,000,000 general aggregate, all per location of the project, such coverage to include contractual liability to include bodily injury, property damage and persona l injury;

6.2.2. Personal injury insurance with the employment exclusion deleted, unless Lender gives prior written approval for the employment exclusion to remain in the policy;

6.2.3. Workers’ compensation and all other insurance required under applicable law, in the amount required by applicable law or by Lender, whichever amount is greater.

6.3 INSURANCE PROVISIONS. Each policy of insurance required under this Loan Agreement shall be obtained from a provider licensed to do business in California and having a current Best's Insurance Guide rating of A VII or better, which rating has been substantially the same or increasing for the last five (5) years, or such other equivalent rating, as may reasonably be approved by Lender's legal counsel. Each policy shall contain the following provisions as applicable, unless otherwise approved by Lender's legal counsel in writing in advance:

6.3.1 ADDITIONAL INSURED. Borrower shall obtain a policy in ISO form CG 20 33, or equivalent, naming Lender
as additional insured under the Commercial General Liability Policy at the same limits as required above.

6.3.2 SINGLE PROPERTY INSURANCE. It is the intent of the parties that the Project have available all the specified insurance coverages. Borrower shall not provide insurance coverages that are considered in aggregate with other properties which Borrower owns or operates

6.3.3 CERTIFIED POLICY COPY. Borrower shall provide Lender with a certified copy of each required policy of insurance, upon request by Lender. Borrower shall provide Lender with a Certificate of Insurance of Insurance for each policy on the applicable ACORD form and, specific sections of the policy may be requested by Lender for review. The ACORD form shall not substitute for the policy, if the policy is requested. The most current ACORD 25 -S “Certificate of Liability Insurance shall be used for liability insurance.

6.3.4 CANCELLATION. Each policy shall bear an endorsement precluding cancellation or termination of the policy or reduction in coverage unless Lender has been given written notice of such intended action at least thirty (30) days prior to its effective date. In the alternative to such endorsement, Borrower will provide Lender with the cancellation clause and/or any amendatory endorsements that modify or change the policy cancellation clause of the insurance policies in force.

It is Borrower’s responsibility t o notify Lender of any notice of cancellation, non -renewal or non -payment of premium in accordance with your policy provisions. In the event insurance is cancelled or not renewed, Borrower shall notify Lender within forty-eight (48) hours of such cancellation or non-renewal.

_____Borrower’s Initials

MHSA Permanent and Construction Loan Agreement – Sequoia Page 8

6.3.5 FAILURE TO MAINTAIN. If Borrower fails to obtain or maintain, or cause to be obtained and maintained, any insurance required by this Loan Agreement, Lender shall have the right to purchase the insurance on Borrower’s behalf, and Borrower shall promptly reimburse the full cost of such insurance to Lender. If Borrower fails to reimburse Lender for insurance, the amount of unpaid reimbursement shall bear interest, at the maximum rate permissible under the law, until paid.

6.3.6 BLANKET COVERAGE. Borrower’s obligation to carry insurance as required under this Loan Agreement may be satisfied by coverage under a “blanket” policy or policies of insurance (as the term is customarily used in the insurance industry); provided, however, that Lender shall nevertheless be named as an additional insured under such blanket policy or policies to the extent required by this Section, the coverage afforded Lender will not be reduced or diminished thereby, and all of the other requirements of this Section 17 with respect to such insurance shall otherwise be satisfied by such blanket policy

7. NONLIABILITY FOR NEGLIGENCE, LOSS, OR DAMAGE. Borrower acknowledges, understands, and agrees as follows:

7.1. The relationship between Borrower and Lender is, and will at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of th e quality, adequacy, or suitability of the Project work, except as to matters which are within the intent and purpose for which Lender has made the Loan.

7.2. Lender owes no duty of care to protect Borrower against negligent, faulty, inadequate, or defective building or construction.

7.3. Lender will not be responsible or liable to Borrower for any loss or damage of any kind to person or property whether suffered by Borrower or any other Person or group of Persons or for negligent, faulty, inadequate, or defective building or construction, and Borrower will hold Lender harmless from any liability, loss, or damage for these things.

7.4. BORROWER RESERVES. Commencing upon commencement of the initial occupancy of the Project, Borrower shall maintain reserves for replacement and repairs required to be made to the Property, fixtures on the Property or personal property used on the Property, or otherwise as approved by Lender. Commencing upon initial occupancy of the first unit in the Project, Borrower shall make annual contributions to replacement reserve in an amount equal to $500/unit.

7.5. FINANCIAL REPORTING. During the term of the Loan, Borrower shall deliver to Lender within 120 days of the end of each calendar year audited Financial Statements prepared in accordance with generally accepted accounting principles and signed by authorized officers of Borrower. Prior to the Close of Escrow and during the term of the Loan, Borrower shall deliver to Lender any such additional Financial Statement as may be requested by Lender. Lender reserves the right to review and approve Financial Statements and other credit information and references prior to the Close of Escrow.

During the term of the Loan, and commencing at Completion. Upon request Borrower must deliver to Lender a monthly rent- roll including household composition information and operating statements with respect to the Property and improvements, as Lender may request.

7.6. ANNUAL ADMINISTRATIVE FEE. Borrower agrees to pay an annual administrative fee (“Fee”) to Lender as compensation for monitoring compliance with regulatory restrictions and the administration of the Loan. Borrower shall pay annually a Fee equal to 12.5 basis points (0.125%) of the Loan Amount and One Hundred Dollars and No Cents ($100.00) for each unit assisted by the Loan Program, not to exceed Fifteen Thousand Dollars and No Cents ($15,000.00). Fee payments shall commence on the Closing Date for the prorated semian nual period from the Closing Date to and including November 30, 2023, and in equal semiannual installments in advance on each May 1 and November 1 of each year thereafter throughout the term of the Regulatory Agreement.

8. LOAN. Lender agrees to lend to Bor rower, and Borrower agrees to borrow from Lender, an amount not to exceed the Loan Amount, to finance the development of the Project and for other purposes as specified in the Scope of Development, subject to the terms, conditions, representations, warranties, and covenants in this Loan Agreement.

8.1. PRINCIPAL AMOUNT. The principal amount of the Loan shall be the actual disbursements of Lender on account of the Project, not to exceed the amounts stated in the Budget (as the Budget may be adjusted by written approval of Lender). In any event, the principal amount of the Loan shall not exceed the Loan Amount.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 9

8.2. USE OF LOAN PROCEEDS. Loan Proceeds shall be used solely for actual costs of the Project as stated in the Budget. No Loan Proceeds shall be used for an y costs, except as provided in the Budget. Unless otherwise noted in the Budget, allowed predevelopment costs, if any, are not subject to the withholding as Retention.

8.3. LOAN TERMS. The Loan is made pursuant to the Loan Program and is subject to the laws, rules and regulations of the Loan Program. Lender agrees to disburse the Loan Proceeds in the manner and subject to the limitations stated in this Loan Agreement. Interest, at the Interest Rate, shall accrue on each disbursement of Loan Proceeds commencing on the date on which each such disbursement is made. Repayment of the loan shall be made, in payments of principal and interest, in lawful tender of the United States, in accordance with the Payment Schedule on page 1 of this agreement and terms of the Note.

8.4. CLOSING IN ADVANCE OF SENIOR LOAN. Lender may subordinate this Loan to the Senior loan, provided that the senior loan does not require modification of this Loan Agreement or Lender’s entry into any agreements containing new or modified Loan terms.

8.5. NOTE AND SECURITY DOCUMENTS. The Loan is evidenced by the Note executed by Borrower in favor of Lender and delivered to Lender upon Close of Escrow. Repayment of the Note is secured by the Trust Deed covering the Property and the Project. Borrower shall execute the Trust Deed in fav or of the Title Company as Trustor in trust for the benefit of Lender and deliver it to Escrow for recordation. The Loan is also secured by the Additional Collateral, if any, a s evidenced by the applicable Security Documents.

8.6. SECURITY AGREEMENT. This L oan Agreement is a "security agreement" within the meaning of the Uniform Commercial Code. Borrower by executing and delivering this Loan Agreement has granted and hereby grants to Lender, as security for the Loan, a security interest in the Additional Collateral to the full extent that the Additional Collateral may be subject to the Uniform Commercial Code. Borrower irrevocably appoints Lender as its true and lawful limited attorney-in-fact solely to execute and deliver any and all financing statements p ursuant to the appropriate statutes, and any other documents or instruments as are required to convey to Lender a valid perfected security interest in the Additional Collateral. Borrower agrees to perform all acts which Lender may reasonably request so as to enable Lender to maintain such valid perfected security interest in the Additional Collateral in order to secure the payment of the Note in accordance with their terms. Lender is authorized to file a copy of any such financing statement in any jurisdi ction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this Loan Agreement. Lender may require at any time, and from time to time additions of new contracts and other property to the Addit ional Collateral.

Borrower irrevocably assigns to Lender, effective upon Lender’s written demand, as security for the due performance of this Loan Agreement all of its right, title, and interest in the Assigned Documents.

8.7. REGULATORY AGREEMENT. The Regulatory Agreement imposing covenants, conditions and restrictions running with the land is a material consideration for the making of the Loan. Borrower shall execute the Regulatory Agreement prior to Close of Escrow and deliver it to Escrow for recordation. Violation of the Regulatory Agreement is an Event of Default of this Loan.

8.8. ESCROW. The parties shall open the Escrow promptly after the Effective Date. Escrow shall close as provided in the Escrow Instructions on or before the Closing Date.

8.9. COMMISSIONS. Lender is not responsible, by this Loan Agreement or otherwise, to pay commissions in relation to this transaction.

8.10. ACCELERATION ON TRANSFER OR REFINANCING OF THE PROPERTY; ASSUMPTION. Except as otherwise provided in the Loan Agreement, if all or any part of the Property or an interest in the Property is sold, transferred or conveyed to any person, or refinanced by Borrower such that additional debt is added to the Property or the cash flows change without Lender's prior written consent, Lender may, at Lender's option, declare all the sums secured by the Trust Deed to be immediately due and payable. Lender shall have waived such option to accelerate if, prior to the sale or transfer, Lender and the Person to whom the Property is to be sold or transferred reach agreement in writing that the Loan may be assumed. If Lender has waived the option to accelerate provided in this Section and if Borrower's successor in interest has executed a written assumption agreement accepted in writing by Lender, Lender shall release Borrower from all obligations under the Trust Deed and the Note.

9. TITLE INSURANCE. Borrower must procure and deliver to Lender an ALTA Lender's Policy of Title Insurance, together with such endorsements as Lender may require, including but not limited to ALTA endorsement nos. 9.6 and 9.7 MHSA Permanent and Construction Loan Agreement – Sequoia Page 10

and ALTA endorsement no. 25 insuring Lender in an amount equal to the principal amount of the Loan, that Lender 's Trust Deed constitutes a first lien or charge upon the Property and improvements subject only to such items as shall have been approved by Lender. There must be no exceptions permitted for mechanics liens. Title insurance for the Loan must be issued by a title insurer approved by Lender.

10. PERFORMANCE CONDITIONS. The following are conditions precedent to performance under this Loan Agreement:

10.1. CONDITION OF TITLE. Lender shall cause Escrow Agent to issue to Borrower (with a copy to Lender) the Preliminary Report, together with co pies of all documents relating to title exceptions referred to in the Preliminary Report.

At Close of Escrow, Lender’s Trust Deed shall be a valid lien against the Property securing the Loan and subject to no exceptions to title (of record or off record) other than the exceptions listed in the “Conditions of Title” in the Escrow Instructions.

10.2. CONDITIONS TO LENDER'S PERFORMANCE. Lender's obligation to perform under this Loan Agreement is subject to all of the following conditions: (a) Borrower has perfor med all of its obligations then to be performed pursuant to this Loan Agreement; (b) Borrower has met the Additional Conditions to Close of Escrow and applicable Special Provisions, if any; (c) the closing conditions as defined in the Escrow Instructions h ave been fulfilled as of Close of Escrow; (d) Borrower’s representations and warranties in this Loan Agreement are true and correct as of the date of this Loan Agreement and as of Close of Escrow; (e) this Loan Agreement continues to be in full force and effect, no default on the part of Borrower has occurred under this Loan Agreement, and no event has occurred that, with the giving of notice or the passage of time, will constitute a default by Borrower under this Loan Agreement; and (f) Lender has approved the Approval Documents.

10.3. CONDITIONS TO BORROWER'S PERFORMANCE. Borrower's obligation to perform under this Loan Agreement is subject to satisfaction of all of the following conditions: (a) the closing conditions as defined in the Escrow Instructions have been fulfilled as of Close of Escrow; (b) Lender has met the Additional Conditions to Close of Escrow and applicable Special Provisions, if any; (c) Lender’s representations and warranties in this Loan Agreement are true and correct as of the date of this Loan Agreement and as of the Close of Escrow; and (d) this Loan Agreement continues to be in full force and effect, and no default on the part of Lender has occurred under this Loan Agreement.

11. RESERVED

12. CONSTRUCTION. As a condition of the Loan, Borrower will diligently proceed with rehabilitation in accordance with the Scope of Development as approved by Lender. Borrower shall complete such work on or before the Completion Date, subject to Unavoidable Delay.

12.1. CHANGES. In order to assure sufficient funding for the Project, Borrower shall not authorize any Change without the prior written consent of Lender, to be given or withheld in Lender’s sole and absolute discretion. If any Change will increase the cost of the P roject, then at Lender’s written request, Borrower will, as a condition precedent to Lender's consent, provide Lender with evidence satisfactory to Lender that (a) the contingency reserve is sufficient to both pay for all such Changes and maintain, at mini mum, the same percentage of the original contingency reserve as the percentage of the Project then remaining to be completed , and (b) Borrower will not request an Other Lender Draw related to the Change that will violate any term of Lender’s Loan or impair Lender’s ability to realize the practical realization of its rights under the Loan and related documents . Borrower will submit any Change to Lender for approval on a form acceptable to Lender, together with approvals by the Project Architect, if any, and the General Contractor.

12.2. CONTRACTORS AND CONTRACTS. All contracts between Borrower and a ny contractor related to the construction, rehabilitation, or development of the Project, shall be subject to Lender's approval prior to the Closing Date.

Lender also reserves the right to require performance and material payment bonds on any or all contractors, or in lieu of bond a letter of credit acceptable in form and substance to Lender, as it determines to its sole satisfaction. Upon Lender’s request, Borrower will furnish to Lender correct lists of all contractors, subcontractors and material suppliers employed in connection with the Project, specifying their addresses, their respective portion of the Project and their respective Project cost. Len der may contact directly each contractor, subcontractor, and material supplier to verify the facts disclosed by the list or for any other purpose related to the Loan. All contracts by Borrower or its contractors relating to the Project will require terms sufficient to permit disclosure to Lender of any information Lender deems, in its sole determination, necessary to make such verifications.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 11

12.3. NO DISCRIMINATION DURING CONSTRUCTION. Borrower for itself, the general contractor and their respective successors and assigns, agrees that the following provisions shall apply to, and be contained in all contracts and sub-contracts for the construction of the Project:

12.3.1. EMPLOYMENT. Borrower shall not discriminate against any employee or applicant for employment because of sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation. Borrower will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, w ithout regard to their sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation. Such action shall include, but not limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Borrower agrees to post in conspicuous places, available to employees and applicants for emplo yment, notices to be provided by Lender setting forth the provisions of this nondiscrimination clause.

12.3.2. ECONOMIC OPPORTUNITY EMPLOYMENT REQUIREMENTS. This Loan requires that to the greatest extent feasible, opportunities for training and employment be given to lower income residents in and around the area of the project. Borrower will instruct its General Contractor and its subcontractors to utilize lower income project area residents as employees to the greatest extent feasible by:

(a) Identifying the number of positions in the various occupational categories including skilled, semi-skilled, and unskilled labor, needed to perform each phase of the Project;

(b) Identifying, within the positions identified in Paragraph (1) of this subsection, the number of positions in the various occupational categories which are currently occupied by regular, permanent employees;

(c) Identifying, within the positions described in Paragraph (1) of this subsection, the number of positions in the various occupational categories which are not currently occupied by regular, permanent employees;

(d) Establishing the positions identified in Paragraph (3) of this subsection, a goal which is consistent with the purpose of this subsection within each occupational category of the number of positions to be filled by lower income Project area residents; and

(e) Making a good faith effort to fill all of the positions established in Paragraph (4) of thi s subsection with lower income Project area residents through Greater Sacramento Urban League, Sacramento Works, Sacramento Employment Training Agency, or similar local workforce agencies.

12.3.3. ADVERTISING. Borrower will, in all solicitations or advertisement s for employees placed by or on behalf of Borrower, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, creed, sex, marital status, national origin, ancestry, familial status, or disability .

12.3.4. MONITORING PROVISIONS. Borrower, the General Contractor and subcontractors shall comply with the requirements of Lender for monitoring the anti-discrimination and all applicable labor requirements.

12.4. INSPECTION. Lender may, at any time and without noti ce to Borrower, enter on the Property and inspect the Project; and, during regular business hours , examine the books, records, accounting data, plans, shop drawings, specifications, and other documents of Borrower pertaining to the Project and to make ext racts or copies. Borrower shall make all such documents available to Lender promptly on demand. Borrower agrees to cooperate fully (and to cause the General Contractor to cooperate fully) with Lender and its Lender's designated agent and to permit all ap propriate access to the Property and to all relevant books and records. Borrower shall bear the cost of reasonable inspections, except that Lender shall bear its costs of inspection. If however, Lender’s inspection discovers issues of a nature that requir e further third-party review or investigation, Borrower shall bear the costs of such third party review.

12.5. PROTECTION AGAINST LIEN CLAIMS. Borrower shall promptly and fully discharge all claims for labor, materials and services in connection with the Proje ct. Borrower shall promptly file a valid Notice of Completion on completion of the Project. Borrower shall promptly file a Notice of Cessation in the event of a cessation of labor on the Project for a continuous Period of (30) days or more. Borrower sha ll take all other reasonable steps to protect against the assertion of lien claims against the Property. Within ten (10) days after the filing of any claim of lien against the Property, Borrower shall record a surety bond in the office of the Recorder of t he County where the Property is located in an amount MHSA Permanent and Construction Loan Agreement – Sequoia Page 12

sufficient to release the claim of lien or deliver to Lender any other assurance as may be acceptable to Lender as evidenced by Lender's written acceptance of such assurance.

12.5.1. Lender, at any time, may require Borrower to obtain a lien waiver with respect to each payment to the General Contractor and each payment by the General Contractor or Borrower to each of the various subcontractors and material suppliers. Lender, at any ti me, may require Borrower to make any payments for the Project by joint check made payable to the General Contractor and subcontractor for whose account the payment is to be made, as joint payees.

12.5.2. In any event, Borrower is not required to pay, prior to adjudication, any claims for labor, materials, or services that Borrower, in good faith, reasonably disputes, and that Borrower, at its own expense, is currently and diligently contesting in the proper forum, provided that Borrower has filed the surety bond or given Lender such other assurance as Lender accepts in writing.

12.6. OTHER LENDER DRAW. Borrower shall concurrently submit to Lender any Other Lender Draw. Delivery of such Other Lender Draw shall be made in the same manner as any other notice, except that it shall also be marked “OTHER LENDER DRAW REQUEST” and delivered to the person named in writing by Lender as the recipient of such requests or, in the absence thereof, to Lender’s Portfolio Management office. Borrower shall provide Lender with true, ac curate and correct copies of each Other Lender Draw, if any, including without limitation all supporting information, documents, and other required submittals. Lender shall have the right to reject an Other Lender Draw, for failing to comply with the Loan , for changing the Project in any material way, or for impairing the ability of Lender to enjoy the practical realization of it s rights under the Loan and its related instruments. If Lender rejects an Other Lender Draw, Borrower shall withdraw the notice for such Other Lender Draw and shall not accept and shall return to Lender any disbursement on account of such Other Lender Draw.

12.7. 12.7.1. ACKNOWLEDGMENT OF RELIANCE. Borrower acknowledges that Lender is making Loan disbursements in advance of disbursements of other lenders in reliance upon Borrowers compliance with this provision.

12.7.2. LIQUIDATED DAMAGES. IF BORROWER FAILS TO PROVIDE TO LENDER ANY OTHER LENDER

DRAW, AS AND WHEN REQUIRED UNDER THIS LOAN AGREEMENT, LENDER SHALL BE IRREPARABLY HARMED IN THAT BORROWER’S ABILITY TO REPAY THE LOAN AND LENDER’S SECURITY FOR THE LOAN SHALL BE IMPAIRED TO AN UNKNOWN EXTENT. BORROWER AND LENDER AGREE THAT IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL RESULTING DAMAGES IN SUCH EVENT . BORROWER AND LENDER, THEREFORE, AGREE THAT AN AMOUNT EQUAL TO TWO PERCENT (2%) OF THE LOAN AMOUNT SHALL CONSTITUTE LIQUIDATED DAMAGES PAYABLE TO LENDER ON ACCOUNT OF SUCH

EVENT, RECEIPT OF WHICH SHALL CONSTITUTE THE EXCLUSIVE REMEDY OF LENDER FOR SUCH EVENT , AND ONLY FOR SUCH EVENT. PAYMENT OF SAID AMOUNT TO LENDER AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT INSTEAD , IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO LENDER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE . SAID

AMOUNT SHALL BE IMMEDIATELY DUE AND PAYABLE AS OF THE DATE ON WHICH BORROWER DELIVERED SUCH OTHER LENDER DRAW TO THE OTHER LENDER. LENDER SHALL HAVE THIRTY (30) DAYS AFTER RECEIVING ACTUAL NOTICE OF SUCH EVENT TO NOTIFY BORROWER IN WRITING THAT LIQUIDATED DAMAGES UNDER THIS SECTION ARE DUE. BORROWER SHALL HAVE FIFTEEN (15) DAYS AFTER SUCH WRITTEN NOTIFICATION TO CURE THE DEFAULT BY WITHDRAWING THE OTHER LENDER DRAW AND RETURNING ANY DISBURSEMENT ON AC COUNT OF SUCH OTHER LENDER DRAW. IF BORROWER FAILS TO PAY LIQUIDATED DAMAGES WHEN DUE UNDER THIS SECTION, THE LOAN SHALL BE ALL DUE AND PAYABLE AT THE ELECTION OF LENDER.

_____Lender’s Initials

_____Borrower’s Initials

12.8. PROJECT SIGN. If Borrower pla ces a sign on the Property during construction stating the names of the Project participants, it shall also name Lender as a participant in the Project. Lender’s name on the sign shall be in letters not less than size of letters used to name any of the other participants.

12.9. NO PRIOR LIENS. Borrower shall not allow the Project construction to begin or materials to be delivered to the Project until after Close of Escrow.

12.10. PREVAILING WAGES. In accordance with Labor Code Section 1720(c)(4), so long as the sole and only public subsidy for the Project is from Lender’s Low and Moderate Income Housing Fund , the Project is not subject to MHSA Permanent and Construction Loan Agreement – Sequoia Page 13

prevailing wages. Borrower represents to Lender that Borr ower has obtained no other public subsidy for the Project. If Borrower obtains other public subsidy, Borrower shall pay prevailing wages for the Project. Therefore, Borrower indemnifies, holds harmless and defends Lender from all additional wages, benefit s, fees, penalties, fines, legal fees, court costs, arbitration costs, and other costs arising from the improper application of California prevailing wage laws to the Project by Borrower or General Contractor or both of them. In accordance with Labor Code Section 1720(c)(6)(E)), so long as the public subsidy for the Project consists of below market rate loans, and the Project restricts occupancy on at least 40% of th e units for at least 20 years to individuals or families earning no more than 80% of the are a median income, the Project is not subject to prevailing wages. Borrower represents to Lender that Borrower has obtained no public subsidy for the Project that does not meet such criteria. If Borrower obtains other non-qualifying public subsidy, Borrower shall pay prevailing wages for the Project. Therefore, Borrower indemnifies, holds harmless and defends Lender from all additional wages, benefits, fees, penalties, fines, legal fees, court costs, arbitration costs, and other costs arising from the impr oper application of California prevailing wage laws to the Project by Borrower or General Contractor or both of them. If more than eleven (11) units are assisted with HOME funds as the Funding Source (as indicated in the Regulatory Agreement), Borrower sha ll comply with Davis-Bacon prevailing wage requirements as described in the Funding Requirements.

12.11. DAVIS-BACON AND RELATED ACTS. Borrower shall ensure any work performed on the Property is in compliance at all times with the Davis-Bacon Act and related acts, including without limitation the Copeland Act. Borrower shall ensure that, if required, the General Contractor and any subcontractors insert in any subcontracts the clauses containe d in 29 CFR 5.5(a)(1) through (10).

13. LOAN DISBURSEMENT PROCEDURES.

13.1. CONDITIONS PRECEDENT TO EACH LOAN DISBURSEMENT. The obligation of Lender to make any disbursements of Loan Proceeds shall be subject to the following conditions precedent:

13.1.1. No Event of Default or Potential Default of Borrower has occurred and is continuing ;

13.1.2. If requested by Lender, Borrower has furnished to Lender, as a Project cost, an endorsement to the Title Policy showing no intervening liens or encumbrances on the Property other than the liens showing on the Title Policy and insuring the full disbursement, together with a satisfactory report under the California Uniform Commercial Code showing no liens or interests other than those of Lender and any lender disclosed in writing prior to close of escrow;

13.1.3. Borrower has obtained and maintained, and Lender has approved a loan approval from a financial institution or other lender approved by Lender in its sole discretion, to make the permanent financing obtained by Borrower, or has obtained commitments to issue bonds, which repays after completion of the Pr oject all construction and other loans secured by the Project and which is secured by a senior lien against the Property. Such permanent financing approval must provide: (a) that it is subject only to those conditions that are usual and customary in the industry and that can be satisfied by the proposed closing date of the permanent financing; (b) that it is in full force with no default by any party; (c) any such loan approval or commitments for financing shall not require modification of the Loan Documents, or any term of this commitment letter, (d) any such loan approval or commitments shall not be based upon sources and uses of Project funds that are different from those approved by Lender for the Project, and (e) that Lender will have notice of, and a reasonable opportunity to cure, any Borrower defaults;

13.1.4. Lender is satisfied that all completed work has been done using sound, new materials and fixtures, in a good and proper manner, and all materials, fixtures, and furnishings installed on or acquired for the Property will be owned by Borrower free of any liens, encumbrance, or other interests of any kind other than Lender's lien or security interest;

13.1.5. The representations and warranties in the Loan Documents are correct as of the date of the requested disbursement;

13.1.6. Borrower has paid Lender all commitment, loan, and other fees then due, and Borrower has submitted to, and Lender has approved in writing, all documents, records, statements, certificates, reports, and other materials and information then required to be submitted to Lender for approval under this Loan Agreement;

13.1.7. Borrower shall provide assurances, satisfactory to Lender in its sole discretion, that hazardous materials are not present on the Property or that any hazardous materials on the Property will be remediated as required by applicable law, and that no further remediation is then required by the environmental agency having responsibility for MHSA Permanent and Construction Loan Agreement – Sequoia Page 14

monitoring such remediation . The Borrower and Lender acknowledge that the Project was exempte d from CEQA using SB35.; and

13.1.8. Borrower has delivered to Lender all funds, documents, instruments, policies, evidence of satisfaction of conditions, and other materials then due or otherwise requested by Lender under the Loan Documents.

13.2. CONDITIONS PRECEDENT TO FIRST DISBURSEMENT. Borrower’s request for the first disbursement of Loan Proceeds (the “First Disbursement”) is a representation and warranty by Borrower that there has been no material adverse change in Borrower’s financial capacity or in any repre sentation made to Lender in Borrower’s application for the Loan or Borrower’s supporting documentation. Lender shall make the First Disbursement when the following conditions precedent and the conditions precedent stated in Section 13.1 have been met:

13.2.1. There is no legal action threatened or pending against Borrower or affecting the Property or any Additional Collateral;

13.2.2. All conditions to Close of Escrow have been satisfied in accordance with the Loan Agreement;

13.2.3. Borrower has obtained and Lender has approved a loan approval from a financial institution or other lender approved by Lender in its sole discretion, to make the permanent financing obtained by Borrower, or has obtained commitments to issue bonds, which repays after completion of the Project all construction and other loans secured by the Project and which is secured by a senior lien against the Property. Such permanent financing approval mu st provide: (a) that it is subject only to those conditions that are usual and customary in the industry and that can be satisfied by the proposed closing date of the permanent financing; (b) that it is in full force with no default by any party; and (c) t hat Lender will have notice of, and a reasonable opportunity to cure, any Borrower defaults;

13.2.4. Borrower has provided proof of all insurance required by the Loan Documents;

13.2.5. The Senior Lender’s (for the construction phase ) commitment to make a construction l oan is in full force, has not been modified and no event has occurred that with notice or the passage of time or both could result in the termination of it. Nothing in the permanent loan commitment, or submissions and approvals made under it, conflicts wi th this Loan Agreement. Borrower has done all things necessary to keep unimpaired its rights under the loan commitment for the construction lender's construction loan;

13.2.6. Borrower has filed all tax returns required to be filed and paid all taxes due, which, if unfiled or unpaid, might adversely affect Lender’s security under the Security Documents; and

13.2.7. Borrower must request the First Disbursement consistent with the terms and conditions of this Loan Agreement no later than 11 months following the Effective Date of this Loan Agreement.

13.3. CONDITIONS PRECEDENT TO FINAL DISBURSEMENT. Lender shall make the final loan disbursement under this Loan Agreement when the following conditions precedent and the conditions precedent stated in Section 13.1 have been met:

13.3.1. As applicable, the Project architect and Lender's designated agent will have certified to Lender, on AIA Form G704 and in a manner satisfactory to Lender:

(a) That the Project has been duly completed in a good and proper manner using sound, new materials;

(b) That the Project complies with the Plans and Specifications, the requirements of all Governmental Authorities and any other party having enforceable rights regarding the construction of the Project; and

(c) That the Project is structurally sound.

13.3.2. Borrower has provided to Lender a true, accurate and complete copy of the final draw request to all other lenders for the Project;

MHSA Permanent and Construction Loan Agreement – Sequoia Page 15

13.3.3. Borrower has filed all tax returns required to be filed and paid all taxes due, which, if unfiled or unpaid, might adversely affect Lender’s security under the Security Documents;

13.3.4. Title policy endorsements in form and amount satisfactory to Lender (including an endorsement insuring lien-free completion of the Project) have been furnished to Lender;

13.3.5. Borrower has furnished evidence, in form and substance satisfactory to Lender, that:

(a) The General Contractor and subcontractors and material suppliers and their subcontractors and material suppliers have been paid in full;

(b) Borrower has obtained final certificates of occupancy (or permit card sign off) for all of the Project;

(c) All other permits and approvals necessary for the construction, equipping, management, operation, use, or ownership of the Project have been obtained, subject only to those conditions approved by Lender, and

(d) The completed Project complies with all applicable zoning regulations, subdivision map acts, building code provisions, and similar governmental laws and regulations, and has all utilities and adequate ingress and egress from public streets, that evidence to be in the form of a certificate executed by Borrower in favor of Lender.

13.3.6. That Borrower has provided to Lender an inventory showing make, model, value, cost, and location of all furniture, fixtures, and equipment and other personal property of a value in excess of $1,000 and used in the management, maintenance, and operation of the Project, that are included in the collateral for the Loan;

13.3.7. Borrower has filed a notice of completion of the Project necessary to establish the commencement of the shortest statutory period for filing of mechanics' and materialmen's liens;

13.3.8. Lender has received written approval from the surety on any bond required by Lender;

Borrower has submitted to Lender a final cost certification prepared by a CPA; and

13.3.9. Borrower must request Final Disbursement consistent with terms and conditions of this Loan Agreement no later than 3 years and 11 months following the Effective Date of this Loan Agreement. If Borrower failures to request Final Disbursement consistent with the terms and conditions of this Loan Agreement within 3 years and 11 months of the Effective Date the remaining funds will be recaptured.

13.4. MAKING DISBURSEMENT. Lender shall pay each disbursement request within twenty (20) business days after the disbursement request is submitted t o Lender, subject to fulfillment of the conditions precedent as stated in Section

13.1. Lender shall disburse the actual cost of the work represented in the disbursement request by Borrower, reduced by the cost of work included in the request and not satisfactorily completed and by the amount of the Retention to be withheld.

13.5. DISBURSEMENT OF LESS THAN FULL REQUEST. If Lender makes a disbursement which is less than the full amount of the disbursement requested, Lender shall inform Borrower of the items disallowed for disbursement and the reason for disallowing them. Lender shall disburse the Loan in the following order of priority, exc ept as expressly provided and unless paid by Borrower from other funds: (a) first, to pay Lender ’s Loan fees and expenses due , if any; (b) second, to pay Lender the interest due on the Loan, if any ; (c) third, at Lender's option to pay all impositions due; (d) fourth, at Lender's option, to make any other payments that Lender may in its sole discretion deem necessary or advisable to protect Lender's security under the Loan Documents; and (e) fifth, to make the disbursement of funds then due in response to Borrower’s current request for disbursement. For purposes of this section, impositions means all real estate and personal property taxe s and other taxes and assessments, water and sewer rates and charges, and all other charges of a Governmental Authority and any interest or costs or penalties with respect to them, ground rent and charges for any easement or agreement maintained for the benefit of the Property, of every nature and any kind that at any time may be assessed, levied, imposed, or become a lien on the Property, Fixtures or income received from the Property or Fixtures, or any use or occupancy of the Property; and any charges, expenses, payments, or assessments of any nature that are or may become a lien on the Property or the income received from it.

13.6. NO WAIVER BY DISBURSEMENT. Regardless of the failure of any condition precedent to Lender's obligation to make disbursements to Borrower, Lender may make a disbursement if Lender, in its sole discretion, determines MHSA Permanent and Construction Loan Agreement – Sequoia Page 16

it to be advisable. The making of any disbursement shall not be deemed to constitute an approval or acceptance by Lender of the work completed or a waiver of the condition with respect to a subsequent disbursement.

13.7. COMPLIANCE. To the best of Borrower's knowledge, the construction, use, and occupancy of the Property and Project comply in full with, or if built according to the Plans and Specifications, will comply in full with, all Governmental Requirements. No right to construct or use the Project is to any extent dependent on any real property other than the Property.

All approvals, licenses, permits, certifications, filings, and other actions normally accepted as proof of compliance with al l Governmental Requirements by prudent lending institutions that make investments secured by rea l property in the general area of the Property, to the extent available as of the date of this Loan Agreement, have been given or taken, or Borrower is entitled to have them given or taken as the ministerial act of the applicable Governmental Authority.

14. RESIDENTIAL OPERATIONS.

14.1. VERIFICATION OF NET INCOME. When requested by Lender, Borrower shall provide Financial Statements and such other evidence as Lender may deem necessary to verify the Project net income, including without limitation copies of certified rent rolls, bank statements, billing statements and invoices.

14.2. SECURITY AND LIGHTING. Project shall include a security camera system and lighting adequate to properly illuminate the building.

14.3. RESIDENT SERVICES PLAN: Borrower shall provide Lender with a detailed resident services plan including but not limited to the following information: (1) identification of all entities responsible for providing resident services to Project tenants and each entity’s role in the provision of those services; (2) the s ervices will be provided for a minimum of 15 hours per week, including education activities and service coordination; (3) a description of the services to be provided; , (4) a pro forma resident services budget.

14.4. SMOKE FREE ENVIRONMENT. All residential units and indoor common areas must be smoke free.

15. DEFAULT.

15.1. EVENTS OF DEFAULT. At the option of Lender, each of the following events will constitute an Event of Default, subject to applicable cure rights, if any;

15.1.1. Borrower’s non-performance of any obligation or breach of this Loan Agreement;

15.1.2. The occurrence of a breach or default und er any of the Loan Documents after expiration of all applicable cure periods;

15.1.3. Subject to Borrower’s legal rights to contest a Governmental Requirement, Borrower's failure to comply with any Governmental Requirement, unless within ten (10) days after notic e of such failure by Lender or the respective governmental entity or after any action has been commenced to enforce such requirement, Borrower has cured such failure;

15.1.4. Borrower's failure to keep in full force any permit, license, consent, or approval with respect to the construction, occupancy, or use of the Project, unless within ten (10) days after notice by the issuing entity or Lender of such failure, Borrower has promptly cured such failure;

15.1.5. Any material deviation from the Plans and Specifications in the construction of the Project, or the appearance or use of defective workmanship or materials in the construction of the Project, if Borrower fails to remedy them or to diligently proceed to remedy them to Lender's satisfaction within ten (10) days after Lender's written demand to do so;

15.1.6. Borrower's failure to complete the construction of the Project by the Completion Date subject to Unavoidable Delays;

15.1.7. The filing of any lien against the Property or Project or the service on Lender of any bonded stop notice related to the Loan, if the claim of lien or bonded stop notice continues for thirty (30) days without discharge, satisfaction, or the making of provision for payment (including bonding) to the satisfaction of Lender;

MHSA Permanent and Construction Loan Agreement – Sequoia Page 17

15.1.8. The attachment, levy, execution, or other judicial seizure of any portion of the Property or Project, or any substantial portion of the other assets of Borrower, that is not released, expunged, bonded, discharged, or dismissed within thirty (30) days after the attachment, levy, execution, or seizure; and

15.1.9. Making of any unauthorized payment from Loan Proceeds or other funds of Lender.

15.1.10. Lender hereby agrees that any cure of any default made or tendered hereunder by a limited partner of Borrower shall be accepted or rejected on the same basis as if made by Borrower.

16. REMEDIES.

16.1. OPTION TO ACT. On the occurrence of any Event of Default, subject to applicable notice and right to cure provisions, in addition to its other rights in this Loan Agreement or in any of the other Loan Documents, at law, or in equity, Lender may, without prior demand, exercise any one or more of the following rights and remedies:

16.1.1. Terminate its obligation to make disbursements;

16.1.2. Declare the Note and all other sums owing to Lender with respect to the othe r Loan Documents immediately due;

16.1.3. Make any disbursements after the happening of any one or more of the Events of Default, without waiving its right to demand payment of the Note and all other sums owing to Lender with respect to the other Loan Documents or any other rights or remedies and without liability to make any other or further disbursements, regardless of Lender's previous exercise of any rights and remedies;

16.1.4. Proceed as authorized at law or in equity with respect to the Event of Default, and in co nnection with that, remain entitled to exercise all other rights and remedies described in this Loan Agreement or the Trust Deed; and

16.1.5. Recover its funds expended in exercising or enforcing any of its rights or remedies under any of the Loan Documents, together with interest at the maximum amount allowed by law from the date the funds were spent until repaid which amounts will be deemed secured by the Trust Deed.

16.2. RIGHTS CUMULATIVE, NO WAIVER. All of Lender's rights and remedies provided in this Loan Agreement or in any of the other Loan Documents are cumulative and may be exercised by Lender at any time. Lender's exercise of any right or remedy will not constitute a cure of any Event of Default unless all sums then due to Lender under the Loan Documents are repaid and Borrower has cured all other Events of Default. No waiver will be implied from Lender's failure to take, or delay in taking, any action concerning any Event of Default or from any previous waiver of any similar or unrelated Event of Default. Any waiver under any of the Loan Documents must be in writing and will be limited to its specific terms.

16.3. DISCLAIMER. Whether Lender elects to employ any of the remedies available to it in connection with an Event of Default, Lender will not be liable to construct, complete, or protect the Project; to pay any expense in connection with the exercise of any remedy; or to perform any other obligation of Borrower.

16.4. GRANT OF POWER. Subject to the prior rights of lenders whose loans are secured by the Property and senior to the rights of Lender, Borrower irrevocably appoints Lender as its attorney -in-fact, with full power and authority, including the power of substitution, exercisable on the occurrence of an Event of Default, to act for Borrower in its name, place, and stead as provided in this Loan Agreement, to take possession of the Property and Project, remove all employees, contractors, and agents of Borrower, to complete or attempt to complete the work of construction, and to market, sell, or lease the Property and Project; to make any additions, changes, and corrections in the Plans as may be necessary or desirable, in Lender's sole discretion, or as it deems proper to complete the Project; to employ any contractors, subcontractors, suppliers , architects, inspectors, consultants, property managers, and other agents that Lender, in its sole discretion, deems proper for the completion of the Project, for the protection or clearance of title to the Property or Personalty, or for the protection of Lender's interests, to employ security guards to protect the Property and Project from injury or damage; to pay, settle, or compromise all bills and claims then existing or later arising against Borrower that Lender, in its sole discretion, deems proper for the completion of the Project, for the protection or clearance of title to the Property, or for the protection of Lender's interests; to prosecute and defend all actions and proceedings in connection with the Property or Project; and to execute, acknowledge, and deliver all other instruments and documents in the name of Borrower that are necessary or desirable, to exercise Borrower's rights under all contracts concerning the Property or Project, and to do all other acts with respect to t he MHSA Permanent and Construction Loan Agreement – Sequoia Page 18

Property or Project that Borrower might do on its own behalf, in each case as Lender in its reasonable discretion deems proper.

17. RESERVED..

18. MISCELLANEOUS.

18.1. NONRECOURSE. Subject to the provisions of this Section 18.1, and notwithstanding any provision of the Loan Documents other than this Section 18.1, the personal liability of Borrower, and Borrower’s principals, partners, members, agents, officers, and successors in interest, to pay the principal of and interest on the debt evidenced by the Note and any other agreement ev idencing Borrower's obligations under the Note shall be limited to (a) the Collateral, (b) the personal property described in and pledged under any Loan Document, and (c) the rents, profits, issues, products and income of the Property, including any received or collected by or on behalf of Borrower after an Event of Default.

18.2. CURE BY PARTY OTHER THAN BORROWER. Any lender whose loan is secured by the property and any principal of Borrower may cure a default of the Loan, provided that such cure rights shall be the same as Borrower’s cure rights. Such other curing party must cure by the date on which Borrower was obligated to cure, except if Lender is obligated by this Loan Agreement to give separate notice to such other curing party, in which instance, the cure period shall begin when Lender makes such notice to such other curing party.

18.3. CONDEMNATION. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of all or any part of the Propert y, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender. In the event of a taking of all of the Property, the proceeds shall be applied to the sums provided by this Loan, subject to any claims of prior lienholder, wit h the excess, if any, paid to junior lienholders and Borrower, as they may determine. In the event of the partial taking of the Property, unless Borrower and Lender otherwise agree in writing, and subject to any claims of prior lienholders, there shall be applied to the sums secured by the Trust Deed such proportion of the proceeds as is equal to that proportion which the amount of the sums secured by the Trust Deed immediately prior to the date of taking bears to the fair market value of the Property imme diately prior to the date of taking, with the balance of the proceeds paid to junior lienholders and Borrower, as they may determine.

If the condemnor offers to make an award or settle a claim for damages to the Property and: (1) the Property is abandoned by Borrower; or (2) after notice by Lender to Borrower of the condemnor’s offer, Borrower fails to respond to Lender within 30 days after the date such notice is mailed; Lender is authorized to collect and apply the proceeds, at Lender's option, either to restoration or repair of the Property or to the sums secured by the Trust Deed.

Unless Lender and Borrower otherwise agree in writing, any such application of proceeds to principal shall not extend or postpone the due date of any payment or change the amount of such payment.

18.4. FUNDING REQUIREMENTS. If any Loan Program is federally funded, Borrower shall comply with all laws, rules, regulations and funding requirements that govern the use of such funds. Lender, to the extent required by law, shall cooperate with and assist Borrower in fulfillment of such obligations. If Lender, as a result of actions of Borrower, shall be obligated to repay the Loan Program any amount of the Loan Proceeds, Borrower shall make such repayment on account of Lender and failure to do so shall be an Event of Default.

18.5. NATURE OF REPRESENTATIONS AND WARRANTIES. Borrower certifies to Lender that all representations and warranties made in this Loan Agreement and all other Loan Documents are true and correct in all material respec ts and do not contain any untrue statement of a material fact or omit any material fact necessary to make the representations and warranties not misleading. All representations and warranties will remain true and correct in all material respects and will survive so long as any of Borrower's obligations have not been satisfied or the Loan or any part of it remains outstanding, and for any applicable statute of limitations period. Each request by Borrower for a disbursement will constitute an affirmation that all representations and warranties remain true and correct as of the date of that request. Each representation and warranty made in this Loan Agreement, in any other Loan Documents, and in any other document delivered to Lender by Borrower will be deem ed to have been relied on by Lender, regardless of any investigation, inspection, or inquiry made by Lender or any related disbursement made by Lender. The representations and warranties that are made to the best knowledge of Borrower have been made after diligent inquiry calculated to ascertain the truth and accuracy of the subject matter of each representation and warranty.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 19

18.6. NO WAIVER. No failure or delay on the part of Lender in exercising any right or remedy under the Loan Documents will operate as a waiver nor will Lender be estopped to exercise any right or remedy at any future time because of any such failure or delay. No express waiver will affect any matter other than the matter expressly waived and that waiver will be operative only for the time and to the extent stated. Waivers of any covenant, term, or condition in this Loan Agreement will not be construed to waive any subsequent breach of the same covenant, term, or condition.

18.7. NO THIRD PARTIES BENEFITED. This Loan Agreement is made and entered into for the sole protection and benefit of the parties and their permitted successors and assigns, and no other Person will have any right of action or any rights to funds at any time on deposit in any construction account or impound account, if e stablished.

18.8. NO JOINT VENTURE, PARTNERSHIP, OR OTHER RELATIONSHIP. Nothing contained in this Loan Agreement or in any other document executed in connection with this Loan Agreement shall be construed as creating a joint venture or partnership between Lender and Borrower. Each Party is acting as an independent entity and not as an agent of the other in any respect. No relationship exists as between Lender and Borrower other than that of a lender and a borrower.

18.9. NOTICES. Borrower irrevocably appoints Lender as its agent (the agency being coupled with an interest) to file for record any notices of completion, cessation of labor, or any other notice that Lender deems necessary or desirabl e to protect its interests under this Loan Agreement or under the Loan Documents. All notices to be given under this Loan Agreement shall be in writing and sent to the addresses stated above for the respective recipient by one or more of the following methods.

18.9.1. Certified mail, return receipt requested, in which case notice shall be deemed delivered three (3) business days after deposit, postage prepaid in the United States Mail;

18.9.2. A nationally recognized overnight courier, by priority overnight service, in which case notice shall be deemed delivered one (1) business day after deposit with that courier;

18.9.3. Hand delivery with signed receipt for delivery from a person at the place of business of the receiving party and authorized to accept delivery for the receiving party, in which case notice shall be deemed delivered upon receipt, or

18.9.4. Telecopy, if a copy of the notice is also sent the same day by United States Certified Mail, in which case notice shall be deemed delivered one (1) business day after transmittal by telecopier, provided that a transmission report is automatically generated by the telecopier reflecting the accurate transmission of the notices to receiving party at the “Fax Number” given in the Escrow Attachment or to such other address a s Borrower or Lender may respectively designate by written notice to the other.

18.10. SHORT TERM NOTICES. Notices, including requests for approval, requiring action in less than thirty (30) days may only be given by the foregoing overnight courier or hand delivery method, and shall include the following language on its face: “URGENT – TIME SENSITIVE – IMMEDIATE ACTION REQUIRED” and marked for delivery to Portfolio Management. Such notice shall include the time allowed under this Loan Agreement for action.

18.11. ACTIONS. Lender will have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties, or the disbursement of any funds under this Loan Agreement.

In connection with that, Len der may incur and pay costs and expenses, including, without limitation, reasonable attorney fees. Borrower agrees to pay to Lender on demand all these expenses, and if applicable, Lender is authorized to disburse funds from the construction account for t hat purpose. This Section does not apply to actions or proceedings between the parties.

18.12. SIGNS. Borrower agrees that on the request of Lender, Borrower will erect and place on or in the immediate vicinity of the Property a sign indicating that Lender has provided construction financing for the Project, which sign shall remain for the duration of construction. If Borrower places a sign on the Property during construction stating the names of the Project participants, it shall also name “Sacramento Housing and Redevelopment Agency” as a participant in the Project.

Lender’s name on the sign shall be in letters not less than size of letters used to name any of the other participants.

18.13. ASSIGNMENT. The terms of this Loan Agreement will be binding on and inure to the benefit of successors and assigns of the parties. However, Borrower shall not assign this Loan Agreement or any interest it may have in the monies MHSA Permanent and Construction Loan Agreement – Sequoia Page 20

due or, except as otherwise provided, convey or encumber the Property without the prior written conse nt of Lender.

Notwithstanding the foregoing, if there is an assignment, conveyance, or encumbrance, Lender may nevertheless at its option continue to make disbursements under this Loan Agreement to Borrower or to those who succeed to Borrower's title, and all sums so disbursed will be deemed to be disbursements under this Loan Agreement and not modifications, and will be secured by the Security Documents. Lender may at any time assign the Loan Documents to any affiliate of Lender or to a national bank or other lender having experience with construction lending, and the assignee will assume the obligations of Lender, and Lender will have no further obligation of any nature. In that case, the provisions of this Loan Agreement will continue to apply to the L oan, and the assignee will be substituted in the place and stead of Lender, with all rights, obligations, and remedies of Lender, including, without limitation, the right to further assign the Loan Documents. In addition, Lender may at any time assign a p articipation in the Loan to any other party, provided that Lender continues to be primarily obligated under this Loan Agreement.

18.14. PREPAYMENT. Borrower may prepay the Loan only on and subject to the terms and conditions in the Note.

Borrower shall have no rights to receive, and under no circumstances will Borrower receive repayment of any fees previously paid to Lender.

18.15. CONTROLLING LAW; VENUE. The Loan Documents will be governed by and construed in accordance with California law. The venue for any legal action or proceeding will be in the County of Sacramento, California.

18.16. CONSENTS AND APPROVALS. All consents and approvals by Lender required or permitted by any provision of this Loan Agreement will be in writing. Lender's consent to or approval of any a ct by Borrower requiring further consent or approval will not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act.

18.17. SURVIVAL OF WARRANTIES AND COVENANTS. The warranties, representations, conditions, covenan ts, and agreements in this Loan Agreement and in the other Loan Documents will survive the making of the Loan and the execution and delivery of the Note and will continue in full force until the Loan has been paid in full. Nothing in this Section is intended to limit any other provision of the Loan Documents that by their stated terms survive the repayment of the Loan or the termination of any Loan Document.

18.18. RECORDING AND FILING. Borrower, at its expense, will cause the Security Documents and all supplements to be recorded and filed and re-recorded and re-filed in any manner and in any places as Lender will reasonably request, and will pay all recording, filing, re-recording, and re-filing taxes, fees, and other charges.

18.19. LOAN EXPENSES. In making the first disbursement, Lender may, at its option, deduct from the proceeds of that disbursement a sum equal to the aggregate of the following, to the extent Lender has knowledge of it and demand has been made on Lender at the time of the deposit: all expe nses specifically incurred in connection with the Loan or the preparation, execution, and delivery of the Loan Documents, including, but not limited to, recording costs and expenses, transfer and other taxes (if any), surveys, appraisal fees, title and haz ard insurance premiums, recording, notary, and escrow charges, and all other similar, usual, or customary loan closing charges and expenses; and any other budgeted expenses that have been approved by Lender in writing; and Lender will, for the benefit of B orrower, pay those amounts over to the respective parties on whose behalf the demands will have been received by Lender. Borrower will pay directly any expenses in connection with the Loan not so paid by Lender, including, without limitation, any of the e xpenses specified above, and will hold Lender free from any cost, liability, or obligation of any nature in connection with it, including reasonable attorney fees incurred by Lender. Borrower further agrees to pay on demand all out-of-pocket costs and expenses reasonably incurred by Lender including, without limitation, the fees and disbursements of Lender's outside counsel, in connection with: (i) the administration of the Loan, including, without limitation, all approvals or consents given or contemplate d to be given under the Loan Documents, all amendments to the Loan Documents entered into by Lender or requested by any party to the Loan Documents, and all title insurance policies and endorsements required by Lender, and (ii) the enforcement of any right s or remedies under the Loan Documents, whether any action or proceeding is commenced, or the protection of the security, or interests of Lender under the Loan Documents. All costs and expenses, together with interest at Interest Rate, will form a part of the indebtedness and will be secured by the Security Documents.

18.20. NO REPRESENTATIONS BY LENDER. By accepting or approving anything required to be observed, performed, or fulfilled, or to be given to Lender pursuant to this Loan Agreement or pursuant to the Loan Documents, including, but not limited to, any officer's certificate, balance sheet, statement of income and expense, or other Financial Statement, survey, appraisal, or insurance policy, Lender will not be deemed to have warranted or represented the sufficiency, legality, effectiveness, or legal effect of it or of any particular term, provision, or condition of it, and any acceptance o r approval will not be or constitute any warranty or representation by Lender.

MHSA Permanent and Construction Loan Agreement – Sequoia Page 21

18.21. AMENDMENT. The Loan Documents and the terms of each of them may not be modified, waived, discharged, or terminated except by a written instrument signed by the party against whom enforcement of the modification, waiver, discharge, or termination is asserted.

18.22. TERMINATION. Except as otherwise provided in the Loan Documents, all rights and obligations under this Loan Agreement will terminate except as to any accrued obligations effective on the payment of all Loan owing by Borrower to Lender.

18.23. COUNTERPARTS. The Loan Documents may be executed in any number of counterparts and by different parties in separate counterparts, each of which when executed and delivered will be deemed an original and all of which counterparts taken together will constitute one and the same instrument.

18.24. SEVERABILITY. If any term, provision, covenant, or condition or any application is held by a court of competent jurisdiction to be invalid, void, or unenforceable, all terms, provisions, covenants, and conditions and all applications not held invalid, vo id, or unenforceable will continue in full force and will in no way be affected, impaired, or invalidated.

18.25. CAPTIONS. All Article and Section headings in the Loan Documents are inserted for convenience of reference only and do not constitute a part of the Loan Documents for any other purpose.

18.26. INDEMNITY. Borrower agrees to defend, indemnify, and hold Lender harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorney fees that Lender may reasonably incur as a direct or indirect consequence of the making of the Loan, Borrower's failure to perform any obligations as and when required by this Loan Agreement or any of the other Loan Documents, the failure at any time of any of Borrower's representations or warranties to be true and correct, or any act or omission by Borrower, any contractor, subcontractor, engineer, architect, or other Person with respect to the Property, the Project, or any portion of them except to the extent caused by the gross negligence or willful misconduct of Lender. Borrower will pay immediately on Lender's demand any amounts owing under this indemnity, together with interest at the maximum rate permitted by law from the date Lender makes a payment or incurs a loss. Borrower's duty to indem nify Lender will survive the release and cancellation of the Note and the reconveyance or partial reconveyance of the Trust Deed.

18.27. FURTHER ASSURANCES. At Lender's request and at Borrower's expense, Borrower will execute, acknowledge, and deliver all other instruments and perform all other acts necessary, desirable, or proper to carry out the purposes of the Loan Documents or to perfect and preserve any liens created by the Loan Documents .

18.28. DISCLOSURE OF INFORMATION. If Lender elects to sell the Loan, Lender may forward to the buyer of the Loan all documents and information related to the Loan in Lender's possession, including without limitation all Financial Statements, whether furnished by Borrower or otherwise.

18.29. LENDER'S AGENTS. Lender may designate ag ents or independent contractors to exercise any of Lender's rights under the Loan Documents. Any reference to Lender in any of the Loan Documents will include Lender's employees, agents, and independent contractors.

18.30. INTEGRATION AND INTERPRETATION. The Loan Documents contain or expressly incorporate by reference the entire agreement between Lender and Borrower with respect to the covered matters and supersede all prior negotiations.

Any reference to the Property or Project in any of the Loan Documents will include all or any portion of them. Any reference to the Loan Documents themselves in any of the Loan Documents will include all amendments, renewals, or extensions approved by Lender.

18.31. NUMBER, IDENTITY AND GENDER. When the context and construction so require, all words used in the singular will be deemed to have been used in the plural and vice versa. When the context and construction so require, all words which indicate a gender will be deemed to have been used to indicate the gender as indicated by the context.

18.32. SOURCE OF FUNDS. Lender hereby represents that this Loan will not be funded or subsidized, in whole or in part, directly or indirectly, by the proceeds of any obligation the interest on which is exempt from tax under Section 103 of the Internal Revenue Code, as amended

MHSA Permanent and Construction Loan Agreement – Sequoia Page 22

THE PARTIES HAVE EXECUTED THIS LOAN AGREEMENT in Sacramento, California as of the Effective Date.

BORROWER:

911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

MHSA Construction Loan Agreement – Sequoia Page 23

THE PARTIES HAVE EXECUTED THIS LOAN AGREEMENT in Sacramento, California as of the Effective Date.

LENDER:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY

By: _______________________________________
La Shelle Dozier, Executive Director

Approved as to form:

___________________________________________
Lender Counsel
MHSA Construction Loan Agreement – Sequoia Page 1
Exhibit 1: Legal Description
The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th and 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000
MHSA Permanent and Construction Loan Agreement – Sequioa Page 1 Exhibit 2: Scope of Development
The Sequoia
Scope of Development
Project Summary:

The Sequoia will be a 89-unit serving homeless housing community located at 911 K Street in Sacramento. The Project was originally a hotel which opened in 1910. In 1985, 911 K Street Investors, LP purchased and rehabilitate the Project using funds from the California Department of Housing and Community Development’s (HCD) Special User Housing Rehabilitation Program, converting the hotel into a 89-unit SRO Project for low and very low-income residents. The Project went into default in 2005 and, following a foreclosure process, is now owned by HCD. At the request of HCD, the John Stewart Company (JSCo) became it’s property manager in 2022.

Scope of Development
In order to maintain the habitability of the Sequoia Hotel, an extensive and comprehensive renovation and retrofit is required that affects all major mechanical/electrical/plumbing/fire safety systems, building construction, equipment and finishes, including the following:

1. Strip walls and ceilings down to the studs and replace rotted framing.

2. Reconfigure residential units for new unit count of 89 residential units as follows:
a. 2nd thru 5th floor; (20) residential units per floor, with a unit mix of (3) Studio units with private baths, (17) Single Room Occupancy Units (SRO’s) with common toilet and baths per floor, plus (2) common toilet rooms, (2) common showers, (1) common kitchen/lounge, and (1) janitor’s closet.
b. 6th floor; (4) Single Room Occupancy Units (SRO’s) with common toilet and baths per floor, plus (2) common toilet rooms, (2) common showers, (1) common kitchen/lounge, and (1) janitor’s closet.
c. Ground floor (5) residential units total with a unit mix of (4) Studio residential units with private toilet and baths, and (1) one bedroom/one bath Manager’s unit.

3. Demo ground floor restaurant and kitchen and create new common use spaces, staff kitchen, accessible toilet rooms, management and service offices, plus (5) residential units per above.

4. Replace one existing open stairwell with new enclosed exit stair and shaft, including code compliant handrails and guardrails.

5. Reconstruct one existing open stairwell for full code conformance. including code compliant handrails and guardrails.

6. Replace elevator and all equipment and controls with new gurney accessible elevator.

7. Replace roof and roof flashing.

8. Replace windows with wood sash windows, semi historic type.

9. Provide new heating and cooling system throughout the building, with thru wall heat pumps at the units and central air heat pumps at the ground floor common areas.

10. Replace existing electric service with new service and wiring throughout.

11. Replace plumbing piping and fixtures throughout, including replacement of broken or blocked piping.

12. Replace domestic hot water boiler and storage tank.

13. All new finishes, fixtures, equipment throughout, including resilient flooring throughout, interior painting, new unit kitchenettes with undercounter refrigerator, microwave and sink, and new electrical devices.

14. Provide new central fire alarm and smoke detection system – current only includes pull stations and battery smoke detectors at rooms.

15. Provide seismic retrofit at the upper floors of the building.

16. Provide new CCTV system.

17. Provide new mechanical ventilation system at corridors, toilet and baths, kitchens, and common areas.

18. Repair exterior building façade.

19. Replace sump pump.

MHSA Permanent and Construction Loan Agreement – Sequioa

20. Replace trash chute and upgrade trash areas.

21. Provide new laundry facility by reconfiguring existing laundry room in basement with new finishes.

22. Provide accessibility modifications including a minimum of 10% of the residential units for the mobility impaired, a minimum of 4% of the units for the audible/visual impaired, main entry, elevator, common areas and toilets, and signage.

23. Provide new electronic entry system with video.

24. Provide new LED lighting throughout, interior and exterior.

25. Repaint building exterior.

26. Replace interior unit entry doors.

27. Replace exterior doors and hardware.

28. Replace common area doors.

29. Provide an Asbestos Containing Materials (ACM) and Lead Based Paint (LBP) survey and O&M Manual.

30. Upgrade automatic fire sprinkler system for compliance with residential hotel ordinance.

31. Provide new window coverings throughout.

32. Provide new site and building accessibility signage, including new marquee.

33. Replace mailboxes with Cluster Box Units.

34. Provide new exterior entry awning.

35. Repair all building leaks.

Attachment 1: Lender’s Minimum Construction Standards

MHSA Permanent and Construction Loan Agreement – Sequioa

This attachment is from Exhibit 2 from the Lender’s Multifamily Lending and Mortgage Revenue Bond Policies.

SHRA RENTAL PROPERTY MINIMUM CONSTRUCTION STANDARDS

The following is a list of the required minimum construction standards that must be incorporated into projects participating in SHRA’s Multifamily Financing and/or Mortgage Revenue Bond programs. All rental units and sites associated with these projects must meet or exceed these standards.

Note: For rehabilitation projects, all of the following standards shall apply. The non-rehabilitation sections below shall apply to new construction projects.

Useful Life Expectancy – Rehabilitation only

SHRA shall reference the current edition of Fannie Mae’s “Instructions for Performing a Multifamily Property Condition Assessment, Appendix F. Estima ted Useful Life Tables” in determining the useful life for all building components and systems located within the project. A remaining useful life of 15 years or more is required for all building components and systems located within the approved complex. All items on the Fannie Mae tables with useful lives indicated to be less than 15 years shall be replaced.

General Requirements

A. All materials funded under this loan must be new unless previously approved. Recycled items must be approved in writing by SHRA prior to their use.

B. All work shall comply with Federal and State ADA accessibility requirements, as well as any other requirements stipulated by the funding source(s). When there are differences the stricter of the two shall apply. The developer is responsible for notifying their architect and/or engineer of all funding sources used on the project. The architect and/or engineer must indicate these funding requirements in the project’s plans/scope.

C. All units shall be approved for occupancy by t he local Building Department or any other Agency Having Jurisdiction (AHJ) at the conclusion of the work and prior to occupancy.

D. Web-based security cameras and the equipment to record events are required for primary ingress/egress points to and from t he site and for the principal parking and indoor and outdoor common areas where people will be congregating.

E. Site lighting is required for all parking and outside public spaces, and shall be of LED or similarly energy efficient type. The lenses on the exterior lights shall be cleaned with all oxidation removed or replaced. Light poles shall be new or painted, and shall be structurally sound and stable.

F. The developer’s architect is responsible for providing an Operating Procedure Outline Sheet (OPOS) for window washing systems where applicable, per Cal-OSHA requirements.

MHSA Permanent and Construction Loan Agreement – Sequioa

G. SHRA encourages the use of energy and water -efficient systems wherever they may be incorporated into the project.

General Requirements – Rehabilitation only

A. Any component of the project which does or may present a health or safety hazard to the public or tenants shall be corrected to the satisfaction of the local Building Department or AHJ.

B. A clear pest inspection report will be required at the conclusion of the construction work for rehabilitation projects.

C. For all structures where disturbance of any hazardous materials (e.g. lead, asbestos, mold, etc.) will occur, a clearance report from an environmental consultant is required.

D. Projects deemed historically significant landmark by either the City of Sacramento or the National Register of Historic Places shall consult with the State Historic Preservation Officer (SHPO), and shall conform to the Secretary of the Interior Standards for the Treatment of Historic Properties.

Site Work

A. Trees and large shrubs must be trimmed, grass areas must be mowed, and all planter areas must be weed-free. The landscape design shall incorporate a sustainable design appropriate for the Sacramento Valley. Vegetation that assists in minimizing crime and enhances public safety is preferred. Trees compromising building envelope materials (roofing, siding, windows, etc.) and/or structural integrity (including foundations) must be removed. An arborist shall be consulted for an opinion on trees prior to major branch trimming, root cutting or tree removal. All trees, bushes and other plants that are to be removed shall have the root ball removed by grinding or by mechanical means. A landscape plan describing the above must be provided to SHRA for approval.

B. All landscaped areas must be served by a programmable automated irrigation system. The irrigation controller shall be a “Smart Controller” that senses rain to reduce water use. Irrigation shall be designed to use bubblers and other water saving measures. Irrigation must not spray on building. Sprinklers should minimize overspray that runs to storm drain drop inlets. Areas that show evidence of erosion of soil shall be landscaped to eliminate problems. The landscape plan must be approved by SHRA and applied.

C. For gated communities containing swinging vehicl e gates, driveways shall be striped to show the area under the gate swings for safety purposes.

D. All projects shall contain trash enclosures with concrete aprons. Trash enclosures shall be made of cinder block or stucco. Trash enclosures shall be access ible to all tenants. Provisions for tenants with disabilities must be addressed in the project Scope of Development or the project plans.

E. All projects shall meet the parking requirements of the local Agency Having Jurisdiction (AHJ) over the project. "Grandfathered Projects" will need to show that they are in fact “Grandfathered” or otherwise exempted by the local AHJ. Otherwise, all projects shall meet the governing ADA requirements for parking.

MHSA Permanent and Construction Loan Agreement – Sequioa

F. A two percent (2%) slope shall be maintained for a distance of five feet from all structures and no standing water shall remain on the site. Provide an on- site drainage system if necessary.

G. Stairways in common areas must include closed risers and non-slip concrete finish or other slip-resistant material on the treads.

H. Exterior mounted electrical, mechanical, and plumbing systems must be protected from vandalism.

Site Work – Rehabilitation only

A. All landscaping and irrigation systems must be in a well-maintained condition.

B. All fencing must be in good and serviceable condition. Existing fencing that is to remain shall be free of flaking paint, rust, or any other signs of failure. If existing fencing shows any signs of failure, it shall be repaired, painted and restored to look new. All chain link fencing must be removed and replaced with fencing of another approved material. All pedestrian gates hardware must be functional and in new or near -new condition. Access Control systems are required at exterior pedestrian gates.

C. All driveways and sidewalks must be in good condition. All cracked or uplifted areas (more than ¼”) shall be repaired or replaced.

D. The asphalt shall be in good conditio n, with no alligator cracking, longitudinal cracking, potholes, or standing water. Repairs to portions of parking lots not suitable for new coatings shall be performed by removing and replacing damaged paving. A new seal -coat or slurry -coat shall then be applied to the entire parking lot surface. Parking spaces shall be restriped, including ADA aisles and other applicable striping/painting.

E. All site accessories (bollards, benches, tables, play equipment, bike racks, mailboxes, shade structures, BBQs, sh eds, etc.) shall be replaced or in good repair (cleaned, painted and/or re - coated).

Building Envelope and Moisture Protection – Rehabilitation only

A. All areas exposed to moisture must be sealed and watertight. Buildings showing evidence of water intrusion shall have the areas inspected by a licensed architect/engineer or by a certified water intrusion expert. A water intrusion report shall be submitted to SHRA, and shall include the cause of the issue and a resolution to eradicate the water intrusion. I f the inspection cannot be completed until the demolition phase of the project, the report shall describe a procedure to inspect the issue during demolition.

B. Roofing must have 15 years or more of remaining life with no visible signs of leakage. For roofs containing composition shingles, a maximum of two layers of shingles are allowed (including any proposed new layers). Provide evidence that the roof system has a 15 -year life remaining on the manufacturer’s warranty.

C. All siding must have 15 years or more of remaining life. Hairline cracks in stucco must be

MHSA Permanent and Construction Loan Agreement – Sequioa sealed and painted with elastomeric paint. If requested by SHRA, a statement by a licensed architect and/or engineer that the existing siding contains at least 15 years of useful life remaining shall be provided.

D. Fireplaces must be clean and meet applicable air quality standards. Chimneys shall be clean and must be inspected by a certified chimney inspector for structural integrity. All recommended structural repairs shall be performed.

Doors and Windows

A. All dwelling/tenant units must have screens on all windows that are designed to open.

Windows designed to open must have functional locks and must operate freely without excessive effort. All windows must be dual -paned (minimum), and shal l meet or exceed the State of California’s currently applicable efficiency standards, and any other efficiency standards that may be dictated by the funding source or other governing bodies for the project.

B. All doors must have matching hardware finishes.

C. All exterior doors must have deadbolt locks, keyed latch assemblies, viewers, and screws in strike plates long enough to penetrate the door jamb framing by at least one inch. The dwelling entry door hardware shall have single action hardware to release deadbolt and latch assembly.

D. All sliding exterior doors shall have screen doors and shall have functional locks and must operate freely without excessive effort.

E. All doors and windows must meet current egress standards.

Doors and Windows – Rehabilitation only

A. Retrofit windows are not acceptable. Any windows showing signs of condensation or leakage of any kind shall be replaced.

B. All doors and doorjambs must be in good condition. No damaged or worn doorjambs or doors are allowed. Doors and/or jambs beyond their useful life shall be replaced.

Casework

A. New cabinet boxes shall be made of plywood or solid wood. No particle board boxes will be allowed.

B. All counter tops shall be of solid surface or granite, and in very good con dition with no significant scratches, burns or other imperfections.

C. Face frames, doors and drawer faces shall be solid hardwood. No plastic laminate finishes will be allowed.

Casework – Rehabilitation only

A. All cabinets shall be replaced or in v ery good condition, within their 15 year useful life, both structurally and in appearance.

MHSA Permanent and Construction Loan Agreement – Sequioa

Finishes

A. All dwelling unit kitchens shall contain luxury vinyl plank (LVP) flooring. Bathrooms must be floored with LVP, sheet vinyl or ceramic tile to provide a cleanable, impervious surface.

Bedrooms, hallways, and living and dining rooms may be floored with carpeting, LVP or hardwood. Wear layer of LVP shall be at least 12 mils inside dwelling units. Tenant unit entries shall be floored with LVP or ceramic tile.

In common areas, corridors may be floored with LVP, glue -down carpeting, or carpet tiles.

Community rooms and kitchens shall be floored with LVP. Wear layer of LVP in common/commercial areas shall be a minimum of 20 mils thick.

Carpet shall meet or exceed the minimum standards as set by HUD’s UM-44D bulletin.

Finishes – Rehabilitation only

A. Floor coverings must be in good, useable condition - no holes, tears, rips, or stains.

B. All exterior and interior surfaces must be painted. No peeli ng, cracking, chipping, or otherwise failing paint will be allowed. All painted surfaces must be new, or in near new condition and appearance.

C. Acoustic (popcorn) ceiling texture must be removed and refinished with new texture to match wall texture.

Equipment

A. Dishwashers, refrigerator/freezer, oven, stoves and garbage disposals are required in all dwelling unit kitchens. All appliances must be new or in very good operating condition. All appliances must be Energy Star rated, as applicable. Appliances slated for ADA units shall be per code requirements.

B. SRO projects are encouraged to provide the appliances listed above and will be reviewed and approved on a case-by-case basis.

C. All kitchens must have adequate cabinet and counter space. Inst allation of shelving for microwaves is required if over -the-range microwaves are not used, with the exception of ADA units.

Furnishings

A. Dwelling units must have window coverings on all windows.

Special Construction

A. Non-habitable structures on property must be painted to match primary buildings and must be structurally sound.

MHSA Permanent and Construction Loan Agreement – Sequioa B. Laundry facilities must be provided on the basis of one washer and dryer for every ten dwelling units. Ten percent of the total number of washer/dryers mu st be ADA -accessible machines (unless the ADA units contain their own laundry facilities). Solid surface countertops will be required within laundry rooms and countertops shall meet all ADA requirements.

C. Public pool areas shall have self-closing gate(s). Fences and gates at pool areas shall meet applicable current codes and standards. Joints between coping and concrete deck shall be appropriately caulked. Existing pools shall have no cracks in plaster or tile grout joints. The Developer is responsible for ensuring pool and surroundings meet all applicable current codes and standards. If a project contains two or more pools, at least one must remain following rehabilitation.

Mechanical/Plumbing

A. Water heaters must be installed per current applicable codes.

B. All common areas and tenant units must have heating and air conditioning. Wall mount (i.e. PTAC units) or central systems are acceptable. Evaporative coolers are not acceptable. HVAC units should be protected from vandalism, pursuant to discretion of SHRA.

C. Toilets, showerheads, faucets, and mixing valves shall be new and meet current water conservation codes.

D. Tub surrounds must be one unbroken piece per wall and must be of solid surfaces (such as “Swanstone” or other solid acrylic mater ials, quartz composites), or other similar materials.

Fiberglass/acrylic surrounds are acceptable.

Mechanical/Plumbing – Rehabilitation only

A. All toilets, sinks, and tubs shall be chip and stain free.

Electrical

A. All units must have smoke/carbon monoxide detectors installed per current code.

B. Wiring from telephone/data/cable suppliers shall be installed within walls, attic spaces, and/or crawl spaces. No conduits are allowed to be mounted on the exterior of the buildings in new construction.

Electrical – Rehabilitation only

A. All electrical panels shall meet current code.

B. Any rehabilitation projects with un -grounded electrical systems shall be re -wired with grounded systems to meet current code.

C. For rehabilitation projects, switches , outlets and light fixtures shall be replaced with devices that meet current applicable codes.

MHSA Permanent and Construction Loan Agreement – Sequioa D. Wiring mounted on the exterior of the surface may be allowed if it is concealed in conduit and conduit is painted to match exterior siding. For projects where exterior siding will be removed, this wiring shall be installed within walls, attic spaces, and/or crawl spaces.

Resident Services Community Space

All properties, regardless of project type (i.e. senior, family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/community space. Resident services space includes common kitchens, computer rooms, meeting rooms and general gathering space. It does not include public restrooms, leasing offices, laundry facilities and lobbies. Common kitchens are required, including refrigerator, stove, garbage disposal, and dishwasher.

For existing buildings, these requirements shall apply unless SHRA deems there to be significant physical constraints.

End of Scope of Development

PROMISSORY NOTE

FOR THE SEQUOIA

CONSTRUCTION AND PERMANENT LOAN AGREEMENT
(MHSA)

BORROWER HAS MADE THIS PROMISSORY NOTE (“NOTE”) AS OF THE EFFECTIVE DATE. The Lender is making the Loan pursuant to the terms and conditions of the Loan Agreement and this Note. This Note includes all attachments and Exhibits listed below, which are attached to and incorporated in this Note by this reference. The capitalized terms in this Note shall have the meanings assigned in the following table of definitions and as defined in the body of the Note. (Terms being defined are indicated by quotation marks. If an item in the table is marked “None, Not Applicable, N/A or equivalent or is left blank, that defined term is not applicable to this Note or the referenced item is not required or is not included in this Note as the context may indicate.) The Lender is making the Loan to Borrower in consideration of Borrower making this Note and delivering it to Lender.

For purposes of this Note, the following terms shall have the following meanings:

DEFINED TERM: DEFINITION:
“Effective Date” ***Effective Date***
“Lender” Sacramento Housing and Redevelopment Agency, a joint powers agency “Borrower” 911 K Street Partners, LP
“Borrower Legal
Status”
a California limited partnership
“Loan Agreement” The Loan Agreement between the Borrower and Lender as of the Effective Date for making of the loan (“Loan”) evidenced by this Note.
“Principal
Amount”
Two Million One Hundred Thousand Dollars and No Cents ($2,100,000.00) “Interest Rate” The interest rate is 0% per year, simple interest.

PAYMENT SCHEDULE. Repayment of this Note shall be made as follows:
“Maturity Date” The first day of the 480th calendar month following the Effective Date: November XX, 2063 “Payment Start
Date”
The Payment Start Date is the Maturity Date.
“Payment
Amount(s)”
On the Maturity Date, full payment of any and all outstanding principal and accrued interest is due to Lender.

FOR VALUE RECEIVED, THE UNDERSIGNED, JOINTLY AND SEVERALLY, PROMISES TO PAY to Lender, or its successors or assigns, the Principal Amount or such lesser amount as may be endorsed on this Note on behalf of Lender. The Loan shall bear interest on the outstanding principal balance, computed from the Accrual Date at the Interest Rate.

1. This Note evidences the obligation of Borrower to Lender for repayment of the Loan. The terms and covenants of the Loan Agreement are incorporated in this Note by reference. The Loan Agreement provides for and incorporates the Regulatory Agreement (as defined in the Loan Agreement), the making of which is further consideration for this Note.

2. All payments on this Note shall be applied first to fees and charges due under the Loan Agreement, if any, then to interest and then to the principal due on this Note. Borrower shall make the payments to the Lender at 801 12th Street, Sacramento, CA 95814, or to such other person or organization as may be designated by Lender to Borrower and noticed as provided in the Loan Agreement.

______________________________________________________________________________________

Promissory Note – Sequoia MHSA Page 2

3. If any installment under this Note is not received by Lender within fifteen (15) calendar days after the installment is due, Borrower shall pay to Lender a late charge of five percent (5%) of such installment. Such late charge shall be immediately due and payable without demand by Lender.

4. This Note is secured by a Deed of Trust and Assignment of Rents against the real property described in the Loan Agreement (“Property”), recorded in the office o f the County Recorder of Sacramento County ("Trust Deed"). The Trust Deed securing this Note provides that Lender may at its option, declare all funds secured by the Trust Deed immediately due and payable, if any interest in the Property is refinanced, sold, hypothecated, transferred or conveyed to any person, whether voluntarily or involuntarily. The Trust Deed further provides that if Borrower does not comply with the requirements of the Regulatory Agreement and fails to come into compliance with the Regulatory Agreement within thirty (30) days after Lender’s written notice to Borrower of such failure, Lender may at its option, declare all funds secured by the Trust Deed immediately due and payable.

5. Lender and Borrower shall comply with and fulfill the Special Terms.

6. Upon occurrence of any one or more of the following, Lender may, at its sole discretion, declare all unpaid principal immediately due and payable, together with all unpaid interest at the stated rate from the date of the advancement of the Loan's proceeds, subject to applicable cure periods, if:

a. Borrower defaults in the payment of any principal or interest when due. b. Lender discovers that Borrower, in any application to Lender in connection with the Loan, either (i) failed to disclose, or (ii) misrepresented any fact that would have prevented Borrower from being eligible for the Loan. c. Lender discovers that Borrower has made any misrepresentations or has intentionally withheld any fact in the making or continuation of this Loan, the knowledge of which could have affected the decision of Lender to make the Loan.
d. Borrower defaults or breaches any of the terms of Loan Agreement, the Trust Deed, the Regulatory Agreement or this Note.
e. Borrower fails to perform any covenant, term or condition in any instrument creating a lien upon the Property which is the security under the Trust Deed, or any part thereof, which lien shall have priority over the lien of the Trust Deed securing this Note.
f. The sale, transfer of title, conveyance or further encumbrance of the Property, whether by sale, exchange, gift, inheritance or other means, without prior written consent of Lender. g. Any of the following occur:
1) Borrower becoming insolvent or bankrupt or being unable or admitting, in writing, Borrower’s inability to pay debts as they mature or making a general assignment of or entering into any restructure payment arrangement with creditors.
2) Proceedings for the appointment of a receiver, trustee or liquidator of the assets of Borrower or a substantial part of such assets, being authorized or instituted by or against the Borrower provided, if any of the foregoing are filed against Borrower, the Borrower shall have a thirty (30) day period to cause the same to be dismissed.
3) Proceedings under any bankruptcy, reorganization, readjustment of debt, insolvency, dissolution, liquidation or other similar law of any jurisdiction being authorized or instituted against Borrower provided, if any of the foregoing are filed against Borrower, the Borrower shall have a thirty (30) day period to cause the same to be dismissed.

______________________________________________________________________________________

Promissory Note – Sequoia MHSA Page 3

7. No waiver of any default or breach by Borrower under this Note shall be implied from any omission by Lender to take action on account of such default, and no express waiver shall affect any default, other than the default specified in the waiver. Such waiver shall be in writing and shall be operative only for the time and to the extent therein stated.

8. Borrower may prepay this Note in full or in part at any time, without any prepayment penalty being charged by Lender.

9. During the existence of default or delinquency under the terms of this Note or the Trust Deed, the Lender is expressly authorized to apply all payments made on this Note to the payment of all or part of the delinquency, as it may elect.

10. Subject to the provisions of this Section 10, and notwithstanding any provision of the Loan Documents other than this Section 10, the personal liability of Borrower, and Borrower’s principals, pa rtners, members, agents, officers, and successors in interest, to pay the principal of and interest on the debt evidenced by this Note and any other agreement evidencing Borrower's obligations under this Note shall be limited to (a) the Collateral (as defined in the Loan Agreement), (b) the personal property described in and pledged under any Loan Document, and (c) the rents, profits, issues, products and income of the Property, including any received or collected by or on behalf of Borrower after an Event of Default under the Loan Documents.

11. Borrower shall pay to Lender all costs of enforcement of all or any portion of this Note, the Trust Deed, and the Regulatory Agreement, including reasonable attorney's fees, witness fees, investigator fees and court costs, incurred by Lender, whether or not litigation is commenced.

IN WITNESS WHEREOF, Borrower has executed this Note as of the Effective Date.

Borrower:

911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 1

NO FEE DOCUMENT:

Entitled to free recording
per Government Code §§6103 and 27383.

When recorded, return to:

SACRAMENTO HOUSING AND

REDEVELOPMENT AGENCY
801 12th Street
Sacramento, CA 95814
Attention: Portfolio Management

DEED OF TRUST AND ASSIGNMENT OF RENTS

MHSA LOAN
The Sequoia

For purposes of this Deed of Trust the following capitalized terms shall have the meanings ascribed in the space adjacent to them:

TERM DEFINITION
“Effective Date” November XX, 2023
“Trustor” and
“Grantee”
911 K Street Partners, L.P. a California limited partnership “Grantee Address” 1388 Sutter Street 11th Floor, San Francisco, CA 94109 “Trustee” Placer Title Company
“Beneficiary” and
“Grantor”
Sacramento Housing and Redevelopment Agency, a joint powers agency “Grantor Address” 801 12th Street, Sacramento, CA 95814 “Property”
Which is real property located in the County of Sacramento and the State of California as more particularly described in the Legal Description.

Address 911 K Street, Sacramento, CA 95814
Assessor’s Parcel Number 006-0101-020-0000
“Legal
Description”
The Legal Description of the Property which is more particularly described in the attached Exhibit 1 Legal Description, which is incorporated in and an integral part of this Deed of Trust
“Loan” Which is Grantor’s Loan to Grantee which is secured by this Deed of Trust. “Note” Which is that certain promissory note evidencing the Loan “Loan
Agreement”
Which is the agreement between Grantor and Grantee stating the term and conditions of the Loan, titled MHSA Construction and Permanent Loan Agreement The Sequoia Which is dated: **
“Additional
Notices”
Grantor shall give copies of notices required to be delivered to Grantee to the following parties at the following addresses; provided, however that Grantee acknowledges that such notice is an accommodation and the failure of Grantor to properly deliver any such notice shall not give rise to any claims or defenses of Grantee or any third party:
***Additional Notices***
“Regulatory
Agreement”
Which is that certain Regulatory for Residential Rental Property and Declaration of Restrictive Covenants Affecting Real Property MIHF and MHSA entered into by and between Grantee and Grantor as additional consideration for Grantor making the Loan.

Which is dated: November XX, 2023

THIS DEED OF TRUST is made as of the Effective Date between the Trustor also referenced as Grantee, the Trustee, and the Beneficiary also referenced as Grantor.

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 2

Grantee, in consideration of the indebtedness described below and the trust created by this De ed of Trust, irrevocably grants and conveys the Property to Trustee, in trust with power of sale.

Together with all the improvements now or subsequently erected on the property, and all easements, rights, appurtenances, rents (subject, however, to the rig hts and authorities given to Grantor to collect and apply such rents), royalties, mineral, oil and gas rights and profits, water, water rights, and water stock, and all fixtures, including but not limited to all gas and electric fixtures, engines and machi nery, radiators, heaters, furnaces, heating equipment, steam and hot water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating equipment, cabinets, mantels, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, furniture, shades, awnings, screens, venetian blinds and other furnishings, now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the property covered by this Deed of Trust; and all of the foregoing, together with said property (or the leasehold estate if this Deed of Trust is on a leasehold) are referred to as the "Property";

To secure to Grantor: (a) the repayment of the Loan; and (b) the performance of the covenants and agreements of Grantee contained in this Deed of Trust, the Loan Agreement, the Note, and the Regulatory Agreement.

Grantee covenants that Grantee is lawfully seised of the estate conveyed by this Deed of Trust and has the right to grant and convey the Property, and that Grantee will warrant and defend generally the title of the Property against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring Grantor's interest in the Property.

Grantee and Grantor covenant and agree as follows:

1. Payment of Principal and Interest . Grantee shall promptly pay when due the principal and interest, if any, on the indebtedness evidenced by the Loan Agreement. All payments received by Grantor under the Loan Agreement shall be applied by Grantor first to interest payable on the Loan Agreement and thereafter to the unpaid principal of the Loan Agreement.

2. Charges; Liens . Grantee shall pay all taxes, assessments and other charges, fines and impositions attributable to the Property and leasehold payments or ground rents, if any by Grantee making payment, when due, directly to the appropriate payee. Grantee shall promptly furnish to Grantor all notices of amounts due under this paragraph, and in the event that Grantee makes payment directly, Grantee shall promptly furnish to Grantor receipts evidencing such payments. Grantee shall pay when due any encumbrance, charge and lien, with interest in accordance with its terms, on the Property or any portion which is inferior or superior to this Deed of Trust.

3. Hazard Insurance. Grantee shall keep the improvements now existing or later erected on the Property insured against loss of fire or hazards under a policy approved by Grantor consistent with the insurance requirements of the Loan Agreement. In addition, Grantee shall insure against loss of all furniture, equipment and other personal property owned by Grantee related to Grantee's operation of the Property. Grantor shall have the right to hold the policies and policy renewals, and Grantee shall promptly furnish to Grantor all renewal notices and all receipts of paid premiums. In the event of loss, Grantee shall give prompt notice to the insurance carrier and Grantor. Grantor may make proof of loss if not made promptly by Grantee.

Unless Grantor and Grantee otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged, as and to the extent provided in the Loan Agreement.

Unless Grantor and Grantee otherwise agree in writing, any such application of insurance proceeds to principal shall not extend or postpone the due date of any Loan payment or change the amount of such payment. If the Property is acquired by Grantor pursuant to this Deed of Trust, all right, title and interest of Grantee in and to any insurance policies and proceeds of such policies resulting from damage to the Property prior to the sale of acquisition shall pass to Grantor to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition.

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 3

4. Liability Insurance. In addition to the casualty insurance required under the Loan Agreement during the course of construction, Grantee shall keep comprehensive general liability insurance for the Property in a form and coverage consistent with the provisions of the Loan Agreement and reasonab ly approved by Grantor.

5. Preservation and Maintenance of Property. Grantee shall keep the Property in good repair and shall not commit waste or permit impairment, demolition, or deterioration of the Property.

6. Protection of Grantor's Security. Grantee shall appear and defend any action or proceeding purporting to affect the security under this Deed of Trust or the rights of Grantor. If Grantee fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Grantor's interest in the Property, including, but not limited to, foreclosure, involuntary sale, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Grantor may, upon notice to Grantee, make such appearances, disburse such sums and take such actions as are necessary to protect Grantor's interest, including, but not limited to, disbursement of judgments, costs or reasonable attorney's fees and entry upon t he Property to make repairs.

Any amounts disbursed by Grantor pursuant to this Section 6, with interest, shall become additional indebtedness of Grantee secured by this Deed of Trust. Unless Grantee and Grantor agree to other terms of payment, such amounts shall be payable upon notice from Grantor to Grantee requesting payment, and shall bear interest from the date of disbursement at the highest rate permissible under applicable law. In any event, this Section shall be construed as a right and an option of Grantor and shall not be construed to require Grantor to incur any expense or take any action.

7. Inspection. Grantor, by its designated representative, may make reasonable entries upon and inspections of the Property, provided that Grantor shall give Grantee and any occupant of the Property reasonable prior notice of any such inspection.

8. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of all or any part of the Pr operty, or for conveyance in lieu of condemnation, shall be applied as provided in the Loan Agreement.

If the Property is abandoned by Grantee, or if, after notice by Grantor to Grantee that the condemnor offers to make an award or settle a claim for dama ges, Grantee fails to respond to Grantor within 30 days after the date such notice is mailed, Grantor is authorized to collect and apply the proceeds, at Grantor's option, either to restoration or repair of the Property or to the sums secured by this Deed of Trust.

Unless Grantor and Grantee otherwise agree in writing, any such application of proceeds to principal shall not extend or postpone the due date of any payment or change the amount of such payment.

9. Grantee Not Released. Extension of the time fo r payment of the sums secured by this Deed of Trust granted by Grantor to Grantee or any successor in interest of Grantee shall not operate to release, in any manner, the liability of the original Grantee and Grantee's successors in interest. Grantor shall not be required to commence proceedings against such successor or refuse to extend time payment by reason of any demand made by the original Grantee or Grantee's successors in interest.

10. Forbearance by Grantor Not a Waiver. Any forbearance by Grantor in exercising any right or remedy under this Deed of Trust, or otherwise afforded by applicable law, shall not be a waiver or preclude the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by Grantor shall not be a waiver of Grantor's right to accelerate the maturity of the indebtedness secured by this Deed of Trust.

11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust, the Loan Agreement, the Regulatory Agreement, or afforded by law or equity, and may be exercised concurrently, independently or successively.

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 4

12. Successors and Assigns Bound; Joint and Several Liability Captions . The covenants and agreements contained in this Deed of Trust shall bind, and the rights under this Deed of Trust shall inure to, the respective successors and assigns of Grantor and Grantee, subject to the provisions of Section 15. All covenants and agreements of Grantee shall be joint and several. The captions and headings of the paragraphs of this Deed of Trust are for convenience only and are not to be used to interpr et or to define its provisions.

13. Notice. Except for any notice required under applicable law to be given in another manner, any notice to be given under this Deed of Trust shall be given as provided for in the Loan Agreement. Any notice provided for in this Deed of Trust shall be deemed to have been given to Grantee or Grantor when given in the manner designated.

14. Governing Law; Severability. This Deed of Trust shall be governed by the law of the State of California.

If any term or provision of this Dee d of Trust shall, to any extent, be held invalid or unenforceable, the remainder of this Deed of Trust shall remain in full force and effect and the invalid or unenforceable provision shall be valid and enforceable as to any other person or circumstance.

15. Acceleration on Transfer or Refinancing of the Property; Assumption. Except as otherwise provided in the Loan Agreement, if all or any part of the Property or an interest in the Property is sold or Transferred or refinanced by Grantee without Grantor's prior written consent, Grantor may, at Grantor's option, declare all the sums secured by this Deed of Trust to be immediately due and payable. A “Transfer” occurs whenever any of the following occur: 1) the transfer of any partnership interest to or from any partner; 2) the removal, addition, or substitution of one or more of the general or limited partners of Borrower; or any change in title to the Property or the Project. Grantor shall have waived such option to accelerate if, prior to the refinancing, sale or transfer, Grantor and the person to whom the Property is to be sold or transferred reach agreement in writing that the loan may be assumed. If Grantor has waived the option to accelerate provided in this Section and if Grantee's successor in interest has executed a written assumption agreement accepted in writing by Grantor, Grantor shall release Grantee from all obligations under this Deed of Trust and the Loan Agreement.

If Grantor exercises such option to accelerate, Grantor shall mail Grantee notice of acceleration. Such notice shall provide a period of not less than 30 days from the date the notice is mailed within which Grantee, or any of its principals or anyone with a substantial legal interest in Grantee, may pay the sums declared due.

If Grantee fails to pay such sums prior to the expiration of such period, Grantor may, without further notice or demand on Grantee, invoke any remedies permitted by this Deed of Trust.

16. Acceleration on Breach; Remedies . Except as provided in Sect ion 15, upon Grantee's breach of any covenant or agreement of Grantee in this Deed of Trust , the Regulatory Agreement, or Loan Agreement, Grantor shall mail notice to Grantee specifying: (1) the breach; (2) the action required to cure such breach; (3) a date, no less than 30 days from the date the notice is mailed to Grantee, by which breach must be cured; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Tr ust and sale of the Property. If the breach is not cured on or before the date specified in the notice, Grantor at Grantor's option may declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law. Grantor shall be entitled to collect from Grantee, or sale proceeds, if any, all reasonable costs and expenses incurred in pursuing the remedies provided in this Section, including, but not limited to reasonable attorney's fees.

If Grantor invokes the power of sale, Grantor shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Grantor's election to cause the Property to be sold and shall cause such notice to be recorded in each county in which any portion of the Property i s located. Grantor or Trustee shall mail copies of such notice in the manner prescribed by applicable law to Grantee and to the other persons prescribed by applicable law. Trustee shall give public notice of sale to the persons and in the manner prescribed by applicable law. After the lapse of such time as may be required by applicable law, Trustee, without demand on Grantee, shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale, in one or more parcels and in such order as Trustee may determine. Trustee may postpone sale of all or any parcel of the Property by public

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 5

announcement at the time and place of any previously scheduled sale. Grantor or Grantor's designee may purchase the Property at any sale.

Trustee shall deliver to the purchaser a Trustee's deed conveying the Property so sold without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall be prima facie evidence of the truth of the statements it contains. Trustee shall apply the proceeds of the sale in the following order:
(a) to all reasonable costs and expenses of the sale, including, but not limited to, reasonable Trustee's and attorney's fees and costs of title evidence; (b) to all sums secured by this Deed of Trust; and (c) the excess, if any, to the person or persons legally entitled thereto as determined by Grantor. In the event of a dispute regarding the excess funds, either Grantor or Trustee may file an action in interpleader to determine who shall receive the funds and may then deposit the excess funds with the court.

17. Assignment of Rents; Appointment of Receiver; Grantor in Possession. As additional security, Grantee assigns to Grantor the rents of the Property (the “Rent”), provided that Grantee shall, prior to an acceleration for breach as provided above or abandonment of the Property, have the right to collect the Rent as they become due.

Upon acceleration for breach or abandonment of the Property, Grantor, i n person, by agent or by judicially appointed receiver shall be entitled to enter upon, take possession of and manage the Property and to collect the Rent including those past due. All Rent collected by Grantor, its agent, or the receiver shall be applied first to payment of the costs of management of the Property and collection of Rent, including, but not limited to receiver's fees, premiums on receiver's bonds and reasonable attorney's fees, and then to the sums secured by this Deed of Trust. Grantor, its agent and the receiver shall be liable to account only for the Rent actually received.

18. Financing Statement. This Deed of Trust is both a real property deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Grantee in the Property. Grantee by executing and delivering this Deed of Trust has granted and hereby grants to Grantor, as security for the Loan, a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code (the Property so subject to the Uniform Commercial Code, including without limitation, the Rent, being called in t his paragraph the "Collateral"). Grantee irrevocably appoints Grantor as its true and lawful limited attorney-in-fact solely to execute and deliver any and all financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to Grantor a valid perfected security interest in the Collateral. Grantee agrees to perform all acts which Grantor may reasonably request so as to enable Grantor to maintain such valid perfected security interest in the Collateral in order to secure the payment of the Note in accordance with their terms. Grantor is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this Deed of Trust.

19. Prior Lienholder . The provisions of this Deed of Trust shall operate subject to the claims of prior lienholders to the extent of such claims.

20. Reconveyance. Upon payment of all sums secured by this Deed of Trust, Grantor shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or persons legally entitled to such reconveyance. Such person or persons shall pay all costs of recordation, if any. The recitals in the reconveyance of any matters or facts shall be conclusive proof of their truthfulness.

21. Substitute Trustee. Grantor, at Grantor's option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed under this Deed of Trust. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee by this Deed of Trust and applicable law.

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 6

22. Request for Notice. Grantee and each party listed to receive Additional Notices request that copies of the notice of default and notice of sale be sent to their respective addresses.

23. Statement of Obligation. Grantor may collect a reasonable fee for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California, as it may be amended from time to time.

24. Use of Property. Grantee shall not permit or suffer the use of any of the Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed.

IN WITNESS WHEREOF, Grantee has executed this Deed of Trust as of the Effective Date.

BORROWER (Trustor):

911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

Deed of Trust and Assignment of Rents – MHSA Loan Agreement Page 7

EXHIBIT 1

LEGAL DESCRIPTION

The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th and 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000

The Sequoia – MHSA Regulatory Agreement Page 1

Exhibit **: Regulatory Agreement

NO FEE DOCUMENT:

Entitled to free recording
per Government Code §§6103 & 27383.

Recording requested by and
when recorded, return to:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY
801 12th Street, 4th Floor
Sacramento, CA 95814
Attn: Portfolio Management

REGULATORY AGREEMENT FOR RESIDENTIAL RENTAL PROPERTY

AND DECLARATION OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY (MHSA)

PROJECT NAME: The Sequoia
PROJECT ADDRESS: 911 K Street, Sacramento, CA 95814
APN: 006-0101-020-0000

FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS ACKNOWLEDGED , AGENCY AND OWNER

HAVE ENTERED THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY (REGULATORY AGREEMENT) AS OF THE EFFECTIVE DATE.

1. GENERAL. This Regulatory Agreement includes the Exhibits listed below which are attached to and incorporated in this Regulatory Agreement by this reference.

2. DEFINITIONS. The capitalized terms in this Regulatory Agreement shall have the meanings assigned in the following table and in the body of this Regulatory Agreement as the context indicates. Terms being defined are indicated by quotation marks.

TERM DEFINITION
“Effective Date” This Regulatory Agreement shall be effective as of the following date: November **, 2023 “Agency” Sacramento Housing and Redevelopment Agency
A joint powers agency
“Agency Address” 801 12th Street, Sacramento, CA 95814
“Owner” 911 K Street Partners, LP
“Owner Address” Owner’s business address is as follows: 1388 Sutter Street, 11 th Floor, San Francisco, CA 94109
“Jurisdiction” City of Sacramento
“Property”
That certain real property which is subject to this Regulatory Agreement as further described in the legal description, attached as Exhibit 1 – Legal Description of the Property and incorporated in this Regulatory Agreement by this reference
“Funding
Agreement”
The Funding Agreement between
Agency and Owner as follows: That
certain Loan Agreement between the
parties.

Titled: MHSA Construction and Permanent Loan
Agreement
Dated: November **, 2023

The Sequoia – MHSA Regulatory Agreement Page 2

3. RESTRICTED UNITS; APPROVAL OF LEASES.

a. In order to assure that the proper number and types of units have been rented in accordance with this Regulatory Agreement, Owner is prohibited from leasing any unit within the Project until either the parties have recorded against the Property a list of the Restricted Units or Agency has approved the individual lease or lease form for the Restricted Units.

A “Restricted Unit” is a unit subject to the Agency’s rent and occupancy restrictions as a result of the financial assistance provided by the Agency for the Project. The following numbers of units are restricted for each respective funding source:

MHSA. “Rent” means all amounts owed or paid by an Eligible Household reasonably related to an Eligible Household’s occupancy of a Restricted Unit, including wit hout limitation a utility allowance, if any, and any amounts paid to Owner for parking, fees, taxes, pets, or any other expenses required by Agency or the Funding Requirements. In no event shall Rent exceed 30% of the Affordability Level defined below in Section 3(c).

b. Owner shall ensure that at all times, each of the Restricted Units are leased only to households who meet both of the following requirements:

(1) the household is deemed eligible for assistance in accordance with this Agreement, the Funding Requirements, and all applicable Governmental Requirements; and
(2) the household’s annual adjusted income does not exceed the acceptable “Affordability Level,” which is the maximum annual adjusted income most recently established by the United St ates Department of Housing and Urban Development (HUD) for the Project’s Metropolitan Statistical Area and the household size . (if both requirements are met, an “Eligible Household”)

“Agency Funding”
Agency Funding made by Agency from Mental Health Services Act funds for the construction and operation of the Property.
“Agency Funding
Amount“
The amount of Agency Funding, as follows:

Two Million One
Hundred Thousand
Dollars and No Cents
($2,100,000.00)
“Plans and
Specifications”
That certain Plans and Specifications related to this Project and approved in writing by Agency on **.
“Proportionate
Agency
Assistance”
The percentage of the Project cost, including without limitation, land, predevelopment and development costs, that is attributable to Agency Funding. For rehabilitation projects, the percentage that Agency Funding bears to the total of the fair market value of the Property before rehabilitation and the total costs of rehabilitation.
4%
“Transfer”
A Transfer occurs whenever any of the following occur:

1. The transfer of partnership interests to or from any partner;

2. The removal, addition, or substitution of one or more of the general or limited partners of Owner; or

3. Any change in title to the Property or the Project.
“Funding
Requirements”
The legal restrictions on the use of the funds that Agency has used to make Agency Funding, as applicable to and restricting the Property. The Funding Requirements are s et out in Exhibit 2 – Funding Requirements.
“Approved Use”
The only permitted use of the Property, which is as a residential property available for rent by the eligible residents pursuant to the MHSA Funding Requirements and containing not less than the following number of units:
89 “Governmental
Requirement”
All laws, orders, decrees, ordinances, rules and regulations of any United States federal, California state, local, or other governmental entity with statutory or regulatory authority over the Property or the Project.
“Title Policy” A policy issued by Placer Title Company that protects against losses that occur if the pro perty is not free and clear of encumbrances, liens, and defects.

The Sequoia – MHSA Regulatory Agreement Page 3

An Eligible Household who meets the Project’s eligibility criteria on th e date of the Eligible Household’s initial occupancy shall remain eligible to continue to lease the Restricted Unit where the Eligible Household resides so long as the Eligible Household’s annual adjusted income does not exceed 1 40% of the Affordability Le vel as adjusted for the current number of household members. In the event the Project is assisted with more than one source of Agency Funding, Owner shall determine household eligibility based on the Affordability Level stated for the source of assistance provided for each Restricted Unit, respectively.

c. When determining family size for the purposes of determining whether a prospective tenant qualifies as an Eligible Household, Owner must include all pe rsons applying to reside in the applicable Restricted Unit , except a qualified live-in aid, as determined in accordance with 24 CF R Part 8.

d. The maximum Initial Rent for the Restricted Units shall be the following; provided, however, that upon the request of Owner, Owner and Agency may agree to a schedule of Rents for the Restricted Units that complies with the following affordability requirements as of the date when the Project is first made available for occupancy. In any event, the maximum Rent for the Restricted Units shall not be adjusted more often than once in a 12-month period.

Agency Funding
Source:

Other Funding
Source:

Affordability
Level:

Number of
Restricted
Units:

Type of Restricted
Units:

Maximum
“Initial Rent” per
Restricted Unit
per Month:

Mental Health
Services Act
(MHSA)
Extremely Low -
30% AMI
16 One Bedroom $643.75

e. In the event of a conflict between the Funding Requirements and this Regulatory Agreement regarding the Initial Rent per Unit per Month, the lowest amount shall control.

4. INCOME TARGETING REQUIREMENTS. Owner shall ensure that during any given fiscal year, at least 40% of Restricted Units that become available are leased to Eligible Households. If Owner has actively marketed the available Restricted Units to Eligible Households and has been unable to achieve the 40% target for admissions, Owner must promptly notify Agency and provide complete records of Owner’s marketing efforts, demonstrate that best efforts wer e made to fill available Restricted Units with Eligible Households, and certify that Owner is diligently continuing to attempt to meet the 40% target.

It shall be an Event of Default under this Agreement if Agency finds, in its sole and absolute discretion, that Owner has not made or is currently not making a diligent effort to meet the 40% target.

5. MANAGEMENT COMPANY; MANAGEMENT AGREEMENT.

f. Owner agrees that at all times the Project shall be managed by a property manager (i) approved by Age ncy in its reasonable discretion and (ii) who has successfully managed at least five projects over forty units in size and subject to a recorded regulatory agreement for at least three years’ prior to the application, without any record of material violations of discrimination restrictions or other state or federal laws or regulations or local governmental requirements applicable to such projects (the “Manager”). Owner shall submit to Agency from time to time such information about the background, experien ce and financial condition of any existing or proposed Manager as Agency may reasonably require to determine whether such Manager meets the requirements for a Manager set forth herein. Agency reserves the right to conduct periodic reviews of the managemen t practices and of the Manager to determine if the Project is being operated and managed in accordance with the requirements and standards of this Loan. Owner agrees to cooperate with Agency in such reviews.

g. If Agency determines in its reasonable judgmen t that the Project is not being operated and managed in accordance with one or more of the requirements or standards of the Funding Agreement, Agency may deliver notice to Owner requesting replacement of the Manager, which notice shall state clearly the re asons for such request. Owner agrees that, upon receipt of such notice, Owner shall within 60 days submit to Agency, a proposal to engage a new Manager meeting the requirements of this provision. Agency shall respond within 30 days to such proposal or su ch

The Sequoia – MHSA Regulatory Agreement Page 4

approval shall be deemed given. Upon receipt of such consent or deemed consent, Owner shall promptly terminate the existing Manager’s engagement and engage the new Manager.

h. Owner shall not enter into any management agreement or arrangement with any par ty with respect to the management of the Project without Agency's prior written consent, such consent not to be unreasonably withheld or delayed. Owner shall not materially modify, amend or terminate any approved management agreement (other than as required to comply with the terms of the Funding Agreement and/or applicable law) without Agency's prior written consent, which consent will not be unreasonably withheld or delaye d; provided, however, that Owner shall provide prompt notice to Agency of such remov al. Agency consent shall not be required to extend the term of an existing management agreement.

Approved Management Company
John Stewart Management Company

6. SPECIAL PROVISIONS. Owner shall also comply with the following special provisions.

Provision

1. ANNUAL ADMINISTRATIVE FEE. Owner agrees to pay an annual administrative fee (“Fee”) to Agency as compensation for monitoring compliance with regulatory restrictions and the administration of the Loan. Owner shall pay annually a Fee equal to 12.5 basis points (0.125%) of the Loan Amount and One Hundred and No/100 Dollars ($100.00) for each unit ass isted by the Agency Funding, not to exceed an annual amount of Fifteen Thousand Dollars and No Cents ($15,000.00) per project. Fee payments shall commence on the Closing Date for the prorated semiannual period from the Closing Date to and including November 2023, and in equal semiannual installments in advance on each April 1 and November 1 of each year thereafter throughout the term of the Regulatory Agreement.

2. BORROWER RESERVES. Commencing upon commencement of the initial occupancy of the Project, Borrower shall maintain reserves for replacement and repairs required to be made to the Property, fixtures on the Property or personal property used on the Property, or otherwise as approved by Lender. Commencing upon initial occupancy of the fir st unit in the Project, Borrower shall make annual contributions to replacement reserve in an amount equal to $500/unit.

4. REPRESENTATIONS. Agency has provided Agency Funding to Owner to develop the Property, subject to the terms of the Funding Agreement. For purposes of this Section 6, “Property” shall mean Property or Restricted Unit as the context may indicate. This Regulatory Agreement is a substantial part of the consideration to Agency for making Agency Funding. The funds used by Agency under the Funding Agreement are funds from public funding sources administered by Agency and their use is subject to certain requirements some of whi ch are embodied in this Regulatory Agreement.

Further, Agency has made Agency Funding in accordance with the laws, rules and regulations to which Agency is subject.

Therefore, Agency has made Agency Funding conditioned upon Owner’s agreement, for itself and its successors and assigns, to comply with all provisions of this Regulatory Agreement, including without limitation, the Funding Agreement. Owner represents that it has had full opportunity to make itself independently familiar with such limitations and restrictions, and Owner accepts them and agrees to comply fully with them. As a material inducement to Agency to enter into the Funding Agreement and to make the Loan to Owner, Owner unconditionally, and each signatory who signs on its behalf, to the e xtent of their best knowledge, represents and warrants to Agency, as of the Close of Escrow, as follows:
a. Owner represents that it has had full opportunity to make itself independently familiar with the limitations and restrictions contained herein, and Owner accepts them and agrees to comply fully with them.

b. The Plans and Specifications are satisfactory to Owner and the General Contractor and have been approved by Agency and all other construction lenders. There are no structural defects in the Projec t as shown in the Plans and Specifications that are known to or reasonably should have been known to Owner or its agents and employees, and to the best of Owner’s knowledge, no violation of any Governmental Requirement, including but not limited to an environmental requirement, exists.

The Sequoia – MHSA Regulatory Agreement Page 5

c. Owner is duly formed and validly exists in the form stated above, is qualified to do business in California, and has full power to consummate the transactions contemplated.

d. The consummation of the transactions covered by this Regulatory Agreement and the payment and performance of all of the obligations in the Funding Agreement and all documents evidencing, securing, or otherwise related to the Funding Agreement, will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, contract, loan or credit agreement, corporate charter, bylaws, partnership agreement, trust agreement, or other instrument to which Borrower or any of its general partners is a party or by which it or they or th e Property may be bound or affected.

e. Owner is the sole legal and beneficial owner of the Property, which is free of all claims, liens, and encumbrances other than those shown in the Title Policy.

f. Owner has not received financing for either the acquisition of the Property, the construction of the Project or the permanent financing of the Project except as has been specifically disclosed to and approved by Agency in writing.

g. All Personalty is vested solely in Owner, free of all claims, liens, and encumbrances, and the security interest of Agency in the Personalty is a first lien.

h. Owner has filed all required Federal, State, County, and City tax returns and has paid all taxes due and owing.

Owner knows of no basis for additional assessments with respect to any taxes, other than the lien of taxes not yet due.

5. COVENANTS. Owner makes the following covenants. Unless Owner has received the prior written consent or Agency approval otherwise, Owner shall fully comply with each and every covenant. Except as otherwise stated in this Regulatory Agreement, the following covenants shall have a term that is the same as the longest term specified in the Funding Requirements.

a. Owner shall use and permit others to use the Property only for the A pproved Use. Additionally, Owner shall not use or permit others to use the Property, in whole or in part, for any “ Disapproved Use,” which includes any use not listed as an Approved Use, including but not limited to a liquor store, bar, adult film store, h azardous materials storage or warehousing, tattoo or piercing establishment, pawn shop, check cashing or paycheck advance business, or cannabis sales, including medical cannabis.

b. Owner shall ensure full compliance with the Funding Requirements at all times.

c. Owner shall not convey, Transfer, hypothecate, or otherwise encumber any of the Property or permit the conveyance, Transfer, hypothecation, or encumbrance of the Property unless such conveyance, Transfer, hypothecation, or encumbrance of the Property has received prior, written approval from the Agency and the assignee, transferee, beneficiary, or encumbrancer has agreed, in writing and in a form suitable for recordation, to be bound by the terms of this Regulatory Agreement.

d. Owner shall not cause an d shall not permit expansion , construction, modification, reconstruction, or demolition of all or any part of any improvements on the Property, except as provided by the Funding Agreement or as authorized in a written agreement between Agency and Owner that has been executed by Agency’s Executive Director or their designee.

e. During the construction of the Project, Owner shall ensure that any funding received from Agency is used solely for payment of the costs of construction of the Project in accordance with the Plans and Specifications, or for other purposes specified in a written agreement between Agency and Owner that has been executed by Agency’s Executive Director or their designee.

f. During the Term of this Regulatory Agreement, to prevent defects, Owner shall inspect, review, supervise, and assure the high quality and suitability of any construction, demolition, rehabilitation, alteration, or maintenance performed on the Property. Additionally, Owner shall ensure that any of the above acts are performed in a timely manner.

The Sequoia – MHSA Regulatory Agreement Page 6

g. If, at any time, residents of the Project are displaced, Owner shall comply fully with all relocation laws. Owner’s failure to comply with applicable relocation laws is an Event of Default.

h. Owner shall maintain the Property and all building improvements, grounds, and equipment of the Property in good repair and condition and in compliance with all applicable housing quality standards and local code requirements. Owner shall maintain the Property in good condition and shall keep the Property reasonably free from graffiti and unrepaired vandalism and from accumulation of abandoned property, inoperable vehicles, unenclosed storage, debris, waste materials, and hazardous substances. In the event of a casualty loss, Owner shall cause the restoration or replacement of the Property, in a timely manner.

i. Owner shall not cause and shall not permit discrimination based on race, color, national origin, religion, sexual orientation, gender, familial status, age , source of income, or disability in the sale, lease, or rental or in the use or occupancy of the Property. Owner covenants by and for him/her/itself, his/her/its heirs, executors, administrators, and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. This covenant against discrimination shall continue in perpetuity.

j. Owner shall not evict, refuse to rent to, or otherwise treat someone differently because of that person’s status as a victim of domestic violence, dating violence, sexual assault, or stalking, in compliance with the Violence Against Women Act. This protection is available regardless of sex, gender identity, or sexual orientation.

k. Owner shall ensure compliance with the obligations imposed by the federal Personal Responsibility and Work Opportunity Act (Public Law 104-193, commonly known as the Welfare Reform Act) as amended by California Welfare and Institutions Code Section 17851, which restrict Agency funding of federal, state or local benefits to persons who are not citizens or qualified aliens as defined in such act.

l. At or before Close of Escrow, Owner shall provide Agency with a detailed resident services plan including but not limited to the following information: (1) identification of all entities responsible for providing resident services to Project tenants and each entity’s role in the provi sion of those services; (2) a description of the services to be provided; (3) a resident services budget; and (4) Agency approved resident services at the Project according to the following schedule of twenty (20) hours per week and including the following services (the “Resident Services Plan”). Agency shall have the right to reject or approve the Resident Services Plan submitted by Owner. Prior to initial occupancy, Owner must have a Resident Services Plan in place that has been approved in writing by the Agency.

1) An on-site coordinator who provides services to residents for a minimum of 4 hours per week; and 2) Services of a minimum of 16 hours per week shall be provided and may include, but are not limited to:
a. Educational classes such as nutrition, exercis e, health resources, health insurance application assistance, annual onsite health fair, English as a Second Language (ESL) classes; b. Substance abuse referral and support services; and
c. Other services such as transportation assistance, counseling assistance and employee readiness and job search assistance.

m. Beginning at initial occupancy of the Project, Owner shall ensure the resident services are provided to Project residents at all times in accordance with the Resident Services Plan. Beginning at initial occupancy of the Project, and at all times during the Term of this Regulatory Agreement, Owner shall deliver to Agency a once -quarterly report that includes information deemed necessary by the Agency to evaluate the resident services being provided at the P roject, including but not limited to: the schedule of services and activities offered, the efforts made by Owner or resident services providers to advertise the activities and services, the number of Tenants served by each service or activity per week, the demographics of the Tenants served by each service or activity per week.

n. Owner shall ensure that the resident services offered at the Property are reasonably tailored to the needs of the Project’s resident community. Beginning at 75% occupancy of the Project’s residential units, Owner shall ensure that, at least once annually, the needs of the Project’s resident community are evaluated and, if necessary, the Resident Services

The Sequoia – MHSA Regulatory Agreement Page 7

Plan is amended to best suit the Project residents ’ needs. The Resident Services Plan is not amended until the Agency provides written consent to the amendment.

o. At least once every calendar year, Owner shall deliver to Agency a “Needs Assessment Report,” which describes the following information in sufficient detail for the Agency to determine whether the needs assessment performed was adequate and whether the Resident Services Plan is adequately tailored to the Project’s needs:

1) the methodology used by Owner to determine the Project community’s needs; 2) a summary of the data collected about the Project community’s needs; 3) a summary of the data collected about the utilization of the existing resident services provided at the Project; and 4) an explanation of O wner’s decision to maintain the current Resident Services Plan or to amend the Resident Services Plan.

p. If Agency determines the Owner’s efforts to assess the Project residents’ needs or to tailor the Resident Services Plan to the Project’s residents’ needs are inadequate, Agency shall provide notice to Owner, and Owner shall remedy the deficiencies identified by Agency within 45 days of deemed delivery of such notice. Failure to remedy such deficiencies in a timely manner shall be an Event of Default.

q. Owner shall not permit any entity to provide resident services at the Project without the Agency’s prior approval of such entity, such approval to be given, withheld, or revoked at any time upon Agency’s determination, in Agency’s sole and absolute discretion, that the resident services provider is not performing satisfactorily. Upon deemed delivery of notice from the Agency to Owner of the Agency’s determination that any resident services provider is performing or has performed unsatisfactorily to the Agency, Owner must ensure that such provider is removed and replaced with a new Agency-approved service provider within 60 days. Failure to timely remove and replace such service provider shall be an Event of Default under this Regulatory Agreement.

r. Subject to Agency’s written approval, Owner shall obtain and maintain for the life of the Regulatory Agreement an Agency approved, top quality property management agreement with a duly accredited real estate property management company for the management of the Proper ty, and shall assure compliance of the property manager with the property management agreement. Agency shall have the right to review and approve or reject any proposed changes to scope of said agreement and to changes in the real estate property management company prior to making such changes. Any such changes made without Agency approval shall be an Event of Default under this Regulatory Agreement. Agency approval of a property management company or a property management agreement is fully revocable wit h 60 days’ notice from Agency. Upon the effective date of the revocation of Agency approval of a property management company or a property management agreement, the maintenance by Owner of the disapproved property management company or property management agreement, whichever applies, shall constitute an Event of Default under this Regulatory Agreement.

s. Owner shall not pass utility charges paid by Owner, including water, sewer, and garbage collection charges, through to any Tenant as an add -on to their contracted rent subject to adjustments permitted by applicable utility allowances.

t. Owner shall not make any Tenant’s payment of rental insurance premiums a condition of occupancy. If Owner require renters’ insurance, the policy premium must be deducted from the Tenant’s Rent . Owner shall not add the insurance premium to the Tenant’s Rent in either the initial year or at any time thereafter.

u. Owner shall ensure all of the units, indoor common areas, and buildings are smoke free.

v. Upon Agency’s request, Owner shall promptly provide financial statements and other such evidence as Agency may deem necessary to verify the Project income, including without limitation copies of certified rent rolls, bank statements, billing statements, and invoices.

w. The Property shall include lighting adequate to properly illuminate the parking area and all common spaces. In addition, the Project shall include a security patrol if necessary to ensure resident safety.

6. NATURE OF COVENANTS. The provisions contained in this Regulatory Agreement are covenants which subject and burden the Property as covenants running with the land . It is intended and agreed that the agreements and covenants

The Sequoia – MHSA Regulatory Agreement Page 8

provided in this Agreement shall be covenants running with the land and equitable servitudes on the land and that they shall, in any event, and without regard to technical classifications or designation, be binding, to the fullest extent permitted by law and equity, for the benefit and in favor of, and enforceable by, Agency, Agency's successors and assigns, any other governmental entity acting within its authority and any successor in interest to Agency's interest under this Regulatory Agreement against Owner, its successors and assigns, and every successor in interest to all or any part of the Property.

7. TERM. The “Term” of this Regulatory Agreement shall commence on the Effective Date and continue until the terms of all of the covenants, including without limitation, the terms stated in the Funding Requirements, have expired or otherwise been terminated. Unless a longer term is stated in the Funding Requirements, the term of this Regulatory Agreement shall be 15 years from the Effective Date.

8. EXPIRATION OF AFFORDABILITY PERIOD. Owner agrees the rent of "in-place” Tenants at the conclusion of the Term will continue to be governed by the applicable Affordability Restrictions for as long as those Tenants continue to reside in the Project.

9. REVIVAL OF COVENANTS AFTER FORECLOSURE. The affordability restrictions shall be revived after foreclosure, or deed in lieu of foreclosure, according to the original terms if, during the original term of this Regulatory Agreement, Owner who was owner of record before the termination event, or a party related to Owner obtains an ownership interest in the Property or Restricted Unit , as the case may be. For purposes of this provision, a related party is anyone with whom Owner has or had family or business ties; provided that such interest would not be considered a “remote interest” in the usual and customary use of the term.

10. MULTIPLE FUNDING REQUIREMENTS. If more than one form of Funding Requirements is attached, each Restricted Unit shall be subject to the Funding Requirements for every Funding Source applied to the respective Restricted Unit. If the terms of the Funding Requirem ents shall conflict as to any Restricted Unit, the Funding Requirements shall be construed so as to meet all applicable requirements for the respective Restricted Unit, including without limitation the use of the most restrictive requirements and the use o f the “Recapture” formula that results in the greatest repayment to Agency.

11. RECORDKEEPING AND REPORTING. Upon request of Agency, Owner shall promptly provide any additional information or documentation requested in writing by Agency to verify Owner's comp liance with the provisions of this Regulatory Agreement. At the written request of Agency, Owner shall, within a reasonable time following receipt of such request, furnish reports and shall give specific answers to questions upon which information is desired from time to time relative to the income, assets, liabilities, contracts, operations, and condition of the property and the status of any deeds of trust encumbering the Property. Failure to provide true and correct information or documentation requested by Agency in a reasonable time shall be a default under this Regulatory Agreement.

12. AUDIT AND INSPECTION. The Property and all related equipment, buildings, plans, offices, books, contracts, records, documents and other related papers shall at all times be maintained in reasonable condition for audit and shall be subject to examination by Agency or its agent at any time and without prior notice. The books and accounts of the operations of the Property shall be kept in accordance with generally accepted a ccounting principles. Owner shall provide Agency access to the Property and its tenants during reasonable hours for the purpose of reviewing Owner’s compliance with this Regulatory Agreement.

13. INDEMNITY FOR OWNER’S FAILURE TO MEET LEGAL REQUIREMENTS. Owner shall indemnify and hold Agency, its officers, directors, and employees harmless from any and all liability arising from Owner’s failure to comply with the covenants, conditions and restrictions contained in this Regulatory Agreement or to comply with a ll other laws, rules, regulations and restrictions related to the use of Agency Funding. Without limitation, such indemnity shall include repayment to the appropriate parties of rents or sales proceeds in excess of amounts authorized to be charged and repayment to Agency of the costs of funds and the value of lost opportunities resulting from the required repayment by Agency to the funding source of funds improperly used.

14. CHANGES WITHOUT CONSENT OTHERS. Only Agency and its successors and assigns, and Own er (subject to the reasonable approval of Owner's lender) shall have the right to consent and agree to changes in, or to eliminate in whole

The Sequoia – MHSA Regulatory Agreement Page 9

or in part, any of the covenants or restrictions contained in this Regulatory Agreement without the consent of any easement holder, licensee, other mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Property.

15. DEFAULT. Upon a breach of any of the provisions of this Regulatory Agreement by Owner, Agency may give written notice of such breach to Owner by registered or certified mail. If such violation is not corrected to the satisfaction of Agency within sixty (60) days after the date such notice is mailed or within such further time as Agency ma y determine in its sole and absolute discretion is necessary to correct the breach, and without further notice to Owner, Agency may declare a default under this Agreement, effective on the date of such declaration of default, and upon such default Agency may: (a) during the term of the Funding Agreement, take any action then available under the Funding Agreement for a default under the Funding Agreement; (b) apply to any court for specific performance of this Regulatory Agreement, (c) apply to any court for an injunction against any violation of this Agreement; (d) apply to any court for the appointment of a receiver to take over and operate the Property in accordance with the terms of this Regulatory Agreement, (e) apply to any court for money damages; or ( f) apply to any court or other tribunal for such other relief as may be appropriate.

The parties agree the injury to Agency arising from a default under any of the terms in this Regulatory Agreement would be irreparable, and the amount of damage would be difficult to ascertain.

16. REGULATORY AGREEMENT VIOLATIONS. Owner shall pay the program compliance fees and expenses to Agency set forth in Compliance Violations and Actions (Exhibit 3 - Compliance Violations and Actions) in reimbursement of the amounts and time expended by Agency to insure Owner’s compliance with State statutes and federal regulations and Owner’s obligations under this Regulatory Agreement as a result of Owner not meeting its obligations and reporting requirements. No compliance fee will be assessed for one incident of each type of compliance violation per annual inspection provided the violation is corrected within the specified corrective time period. The second and subsequent violations will be assessed compliance fees as detailed in the Compliance Violations and Actions tables.

17. BINDING SUCCESSORS IN INTEREST. This Regulatory Agreement shall bind and the benefits shall inure to Owner, its successors in interest and assigns, and to Agency and its successors for the term of this Regulatory Agreement.

18. CONTRADICTORY AGREEMENTS. Owner warrants that it has not, and will not, execute any other agreement with provisions contradictory of or in opposition to, the provisions of this Regulatory Agreement, and that, in any event, the requirements of this Regulatory Agreement are paramount and controlling as to the rights and obligations set forth and supersede any other requirements in conflict with this Regulatory Agreement.

19. COMPLIANCE AMENDMENTS. If revisions to the provisions of this Regulatory Agreement are necessitated to comply with the laws or regulations governing Agency Funding, Owner agrees to execute modifications to this Regulatory Agreement that are needed to comply with such laws or regulations.

20. ATTORNEYS' FEES. If the s ervices of any attorney are required by any party to secure the performance of this Regulatory Agreement or otherwise upon the breach of default of another party, or if any judicial remedy or mediation is necessary to enforce or interpret any provision of this Regulatory Agreement or the rights and duties of any person in relation to this Regulatory Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs in addition to any other relief to which such party may be entitled. Any award of damages following judicial remedy or arbitration as a result of this Regulatory Agreement or any of its provisions shall include an award of prejudgment interest from the date of the breach at the maximum amount of interest allowed by law. The prevailing party shall mean the party receiving an award in arbitration or a judgment in its favor, unless the award or judgment is less favorable than the best settlement offered in writing in a reasonable manner by the other party, in which case the pr evailing party is the other party.

21. SEVERABILITY. The invalidity or unenforceability of any clause, part or provision of this Regulatory Agreement shall not affect the validity of the remaining portions.

22. ELECTION OF REMEDIES. To the extent applicable, i n the event of any breach of any covenant, condition or restriction contained in this Regulatory Agreement, Agency shall reasonably endeavor to remedy such breach by conference and conciliation. If, in the opinion of Agency, Agency and Owner are unable mu tually to agree upon a suitable remedy or the circumstances so warrant, such breach may be enjoined or abated by appropriate proceedings brought by Agency.

The Sequoia – MHSA Regulatory Agreement Page 10

Agency may institute or prosecute in its own name, any suit Agency may consider advisable in order to compel performance of any obligation of any owner to develop and maintain the subject property in conformity with this Regulatory Agreement and to remedy any default of this Regulatory Agreement. Agency may also seek a decree requiring removal of any i mprovements constructed on the Property which improvements are designed for uses not permitted under this Regulatory Agreement and which improvements are unsuitable only for uses not permitted under this Regulatory Agreement.

The remedies of Agency under this Regulatory Agreement are cumulative, and the exercise of one or more of such remedies, including, without limitation, remedies under the Funding Agreement shall not be deemed an election of remedies and shall not preclude the exercise by Agency of any one or more of its other remedies.

23. NO WAIVER. No waiver by Agency of any breach of or default under this Regulatory Agreement shall be deemed to be a waiver of any other or subsequent breach or default.

24. NOTICES. Written notices and other written communications by and between the parties shall be addressed to Owner at Owner’s Address and to Agency at Agency Address or such other address as each respective party has designated by written notice to the other party.

The Sequoia – MHSA Regulatory Agreement Page 11

THE PARTIES HAVE EXECUTED THIS REGULATORY AGREEMENT in Sacramento, California as of the Effective Date

OWNER:

911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

The Sequoia – MHSA Regulatory Agreement Page 12

THE PARTIES HAVE EXECUTED THIS REGULATORY AGREEMENT in Sacramento, California as of the Effective Date

AGENCY:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY,
a joint powers agency

By: _______________________________________

La Shelle Dozier, Executive Director

Approved as to form: _________________________
Agency Counsel

The Sequoia – MHSA Regulatory Agreement Page 13

EXHIBIT 1

Legal Description

The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th and 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000

The Sequoia – MHSA Regulatory Agreement Page 14

EXHIBIT 2

Funding Requirements

MENTAL HEALTH SERVICES ACT FUNDING REQUIREMENTS

1. Mental Health Services Act (“MHSA”) funding is being provided to Owner to subsidize operating deficits for apartment units scattered throughout the Project.

2. Rent levels will not exceed thirty percent (30%) of the current Supplemental Security/State Supplemental Program grant amount for a single individual living independently or 30% of total household income whichever is greater and as adjusted by utility allowances if applicable in any of the MHSA designated apartment units.

3. For the purpose of these funding restrictions, Homeless or at Risk of Homelessness m eans living on the streets or lacking a fixed and regular night -time residence. This includes living in a shelter, motel or other temporary living situation in which the individual has no rights of possession. "At Risk of Homelessness" may be due to one of the following situations: (i) transition age youth exiting the child welfare or juvenile justice system; (ii) discharge from crisis and transitional residential settings, a hospital including acute psychiatric hospitals, psychiatric health facilities, skilled nursing facilities with a certified special treatment program for the mentally disordered, and mental health rehabilitation centers; (iii) release from city or county jails, but not a parolee from the state prison; (iv) temporary placement on a resi dential care facility upon discharge from (ii) or (iii) above; and (v) certification by the County Mental Health Director as an individual who has been assessed by and is receiving services from the County and who has been deemed to be at imminent risk of being homeless.

4. Qualified tenants for the MHSA restricted units shall be a person who is homeless or at Risk of Homelessness and who has a mental illness in accordance with California Welfare & Institution Code Section 5600.3(a) or California Welfare & Institution Code Section 5600.3(d), and Department of Mental Health rules in effect as of the effective date of this Agreement.

5. MHSA apartment units will initially be restricted to individuals enrolled in an MHSA Full-Service Partnership program.

6. These covenants shall regulate the MHSA Units for a term of fifteen (15) years.

The Sequoia – MHSA Regulatory Agreement Page 15

EXHIBIT 3

Compliance Violations and Actions

COMPLIANCE VIOLATIONS AND ACTIONS
(All payments due and payable within 30-days of assessment)

Tenant Eligibility and Affordability Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Tenants over income
at
initial move-in
Initial $500 per unit, again every 90 days
until another income qualified tenant is
housed.

Correction: Evict tenant if tenant fraud.

Otherwise, next available unit must be
Affordable and rented to an Income-
Qualified tenant.
90 days from discovery date to avoid additional
$500 charge every 90-days the problem is not
corrected.

Incorrect eligibility
documentation
Initial $50 per file for incorrect
calculations, verifications, or required
documents. Additional $50 per month if
not corrected.

Correction: Submit copies of corrections
to compliance staff as applicable.
30 days from discovery date to submit copies of
corrections to compliance staff to avoid additional
$50 per month if not corrected
Failure to complete
annual
recertifications
Initial $250 for each incomplete file.

Additional $50 per month if not corrected.

Correction: Submit copies of
recertifications to compliance staff.
30 days from discovery date to submit corrections
to avoid additional $50 per month if not
corrected.

Failure to maintain
tenant eligibility
records
Initial $500 per unit, again every 90-days
thereafter until new records in place.

Additional $100 per unit per month the
project remains out of compliance.

Correction: Immediately establish new
files/records.
30 days from discovery date to submit copies of
new records to avoid additional $100 per unit per
month the project remains out of compliance.

Incorrect Rents Reimbursement to tenant of the entire
amount overcharged. $100 payment to
Agency for each over-charged unit.

Correction: Refund tenant with letter of
correction.
30 days from discovery date to avoid additional
$100 per overcharged unit per month fee to
Agency.

Failure to submit
complete and
accurate monthly
Bond Report by due
date
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
7 days from discovery date to submit complete
and accurate report to avoid additional $100 per
day charge.

Failure to comply
with approved
Management Plan
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
30 days from discovery date to submit corrections
to avoid additional $100 per day charge.

The Sequoia – MHSA Regulatory Agreement Page 16

Failure to submit
complete and
accurate quarterly
Resident Services
report by due date
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
7 days from discovery date to submit corrections
to avoid additional $100 per day charge.

Failure to provide a
resident service
required by Resident
Services Plan
Initial $250 per service. Additional $100
per day until service is provided.

Correction: Implement required service or
new resident services plan submitted and
approved; approved plan implemented.
7 days from discovery date to implement required
service or provide new resident services plan to
avoid additional $100 per day charge; 30 days
from discovery date to implement new plan to
avoid additional $100 per day charge.

Noncompliant lease $100 per noncompliant lease.

Correction: Prepare and execute approved
lease or addendum to address the
deficiency.
30 days from discovery date to avoid additional
$100 per noncompliant lease per month charge to
Agency.

Housing Quality Standards Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Verifiable existence
of Toxic Mold
$200 per unit. Additional $75 per day
charge each time efforts fall outside of
corrective timeframes.

Correction: Prepare and submit action plan
that addresses scope of work and timetable
to complete. Relocate tenant if necessary.

Obtain certified clearance that mold has
been abated and unit is safe to occupy
once again.
3-days from discovery date to submit action plan
to address. 10-days to relocate tenant if necessary.
30-days to obtain certification that unit is mold
free. $75 per day additional charge each time
efforts fall outside of these timeframes.

Broken pipes and
plumbing facilities
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Repair/replace as necessary
7-days from discovery date to avoid additional
$75 per day each day thereafter corrective action
not taken.

Smoke detectors not
working in the units
$200 per unit with non-functional smoke
detector. Additional $75 charge per day if
not corrected.

Correction: Replace batteries or non-
working unit within 24 hours.

Within 24 hours of discovery date to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Windows with large
cracks or missing
glass
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

Infestation of roaches
or vermin
$200 per infested unit. Additional $75
charge per day if not corrected.

Correction: Letter from pest control
company verifying removal of pests with
paid invoice to compliance staff.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

Non-working heating
unit (Winter) or air
conditioning unit
(Summer)
$500 per nonworking unit. Additional $75
charge per day if not corrected. $75 re-
inspection fee if necessary to verify
problem corrected.

Correction: Repair/replace as necessary.

Within 24 hours of discovery date to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Excessive amount
of urine/ feces
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Clean unit as necessary and
address problem as the lease allows.

Submit correction letter with
documentation to compliance staff.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

The Sequoia – MHSA Regulatory Agreement Page 17

Excessive amount of
trash/garbage in the
unit
$75 per unit. Additional $75 charge per
day if not corrected.

Correction: Clean unit and send letter of
correction to compliance staff.
14-days from date of discovery to avoid an
additional $75 per day thereafter each day
corrective action not taken.

Hazardous exterior
conditions
$500 for hazardous conditions. Additional
$75 charge per day if not corrected. $75
re-inspection fee.

Correction: Clean and/or repair as
necessary. Re-inspection to verify problem
addressed.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Large holes
walls/ceiling
$100 per unit. Additional $75 charge per
day if not corrected.

Correction: Submit correction letter with
documentation to compliance staff.
30-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Non-Operable
Security Gate
$500 per non-working gate. Additional
$75 charge per day if not corrected. $75
re-inspection fee if necessary to verify
problem corrected.

Correction: Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

No Security Cameras
(if cameras required)
$250 per discovery. Additional $75
charge per day if not corrected. $75 re-
inspection charge to verify problem
corrected.

Correction: Replace cameras.
30-days from the date of discovery to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Non-working
Security Cameras
$100 per camera per discovery.

Additional $75 charge per day if not
corrected. $75 re-inspection charge to
verify problem corrected. Correction:

Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Non-working or non-
accessible
amenities/services
$100 per item per discovery. Additional
$75 charge per day if not corrected. $75
re-inspection charge to verify problem
corrected. Correction: Repair/replace as
necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

* No compliance fee will be assessed for one incident of each type of compliance violation per annual inspection provided the violation is corrected within the specified corrective time period. The second and subsequent violations will be assessed compliance fees as detailed in the Tenant Eligibility and Affordability Violations and Housing Quality Standards Violations tables.

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 1

MIXED-INCOME HOUSING FUNDS CONDITIONAL GRANT AGREEMENT

THE SEQUOIA
Secured by Deed of Trust

The[SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY ("Grantor"), whose address is 801 12th Street, Sacramento, California 95814, hereby grants 911 K Street Partners, L.P, a California limited partnership, ("Grantee"), with its principal office at 1388 Sutter Street 11th floor San Francisco, CA 94109, the principal amount of Three Million Four Hundred Thousand Dollars and No Cents ($3,400,000.00) of Mixed-Income Housing Ordinance (“MIHO”) Funds (“Conditional Grant”), or so much as may be actually advanced under this Conditional Grant Agreement (“Agreement”) effective [November XX, 2023]. The Conditional Grant is secured by a deed of trust ("Deed of Trust") recorded against the real property ("Site") described Exhibit A incorporated in this Agreement by this reference. This Agreement is subject to the terms and conditions stated below.

The “Project” is the project to be developed on the Site with the Conditional Grant, described as: the rehabilitation of 88 permanent supportive housing units and one manager’s unit. The 16 studio units will incl ude new bathrooms and kitchenettes. The 73 SRO units will have access to the common kitchen/lounge a rea and bathroom on each floor.

Several of the SRO units will have stove top burners and all units will have microwaves. The building will have a new heating and cooling system, new flooring, plumbing, mechanical systems, exterior envelope, and light fixtures.

Elevators will be replaced and stairwells will include code compliant handrails. The ground floor will be converted to include a manager’s office, service offices, a computer room, laundry room, bike storage, and community room.

1. CONDITIONAL GRANT. The Conditional Grant shall become unconditional on December 31, 2034, provided that all conditions have then been met and Grantee is not then in default of this Mixed-Income Housing Funds Conditional Grant Agreement (hereafter, the “Conditional Grant Agreement” or “Agreement”). Grantee's obligations regarding repayment of the amount of the Conditional Grant shall cease when the Conditional Grant becomes unconditional. Grantee shall repay the Conditional Grant in full by delivering a check payable to Grantor and delivered to Grantor at the address shown in the preamble above if Grantee is in default of any of the following covenants and conditions and, if curable, has not immediately commenced and diligently cured such default.

2. USE OF FUNDS. The proceeds of the Conditional Grant shall be used solely for the Project as follows:

a) Grantee shall expend the Conditional Grant proceeds solely to carry out the scope of development listed in Attachment 1 (individually and collectively, “Authorized Activity”) in accordance with the budget listed in Attachment 2 (“Approved Budget”). If a term included in Attachment 1 is stated as an Author ized Activity, then Grantee is obligated to perform the term under this Agreement.

b) Grantee shall expend Conditional Grant only during the period between the effective date of this Agreement and December 31, 2034, Grantee shall return all unexpended Conditional Grant proceeds to Grantor by check payable to Grantor and delivered to Grantor at the address shown in the preamble above.

c) Grantee shall comply with all restrictions set forth in the Mixed-Income Housing Funding Requirements, attached hereto as Attachment 3 (“MIHO Funding Requirements”), as they may be amended by law or regulation from time to time. To the extent any MIHO funding requirement is modified by law or regulation, the revised law or regulation shall automatically supersede the MIHO Funding Requirements attached hereto.

d) Grantee shall not use the Conditional Grant to supplant funding provided by Grantor to Grantee under any other Conditional Grant Agreement. Grantee shall include in every contract and subcontract a term that prohibits the contractor or subcontractor from using Conditional Grant proceeds to supplant funding provided by Grantor directly or indirectly to the contractor or subcontractor.

e) Grantee shall comply with all terms set forth in the and MIHO Regulatory Agreement for Residential Rental

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 2

Property and Declaration of Restrictive Covenants Affecting Real Property executed by and between Grantor and Grantee on November XX 2023 (the “Regulatory Agreement”). The Regulatory Agreement is a material consideration for the making of this Conditional Grant Agreement. Grantee shall execute the Regulatory Agreement prior to Close of Escrow and deliver it to Escrow for recordation.

3. DEED OF TRUST. Grantee shall grant a Deed of Trust and is a material consideration for awarding the Conditional Grant. Grantee shall execute the Deed of Trust and deliver it to Placer Title Company located at 301 University Avenue, Suite 120, Sacramento, CA 95825 (the “Title Company”) for recordation.

4. DISBURSEMENT. The proceeds of this Conditional Grant shall be disbursed upon execution by each party and delivery to the other party of this Agreement and subject to the following conditions and procedures:

a) CONDITIONS TO DISBURSEMENT. Grantor shall not be obligated to disburse any of the Conditional Grant proceeds unless and until all of the conditions are met with respect to each such disbursement:

i) Grantee is not in default of any provision of this Agreement or the Regulatory Agreement, subject to the rights of Grantee to cure such default.

ii) The Deed of Trust shall be executed by Grantee and recorded against the Site.

iii) Grantee has fully complied with the following disbursement procedures.

b) DISBURSEMENT PROCEDURES. Grantor shall disburse the Conditional Grant proceeds according to the following procedures:

i) Grantee has made written demand for disbursement stating the amount requested and the intended use of the proceeds to be disbursed.

ii) Grantee has provided evidence of approved construction plans, drawings and specifications that comply with this Agreement and of necessary building permits from governmental entities having jurisdiction over the Project.

iii) No mechanics liens have been filed or recorded on the Site.

5. BOOKS AND RECORDS. During the term of this Agreement and for fifteen years after Grantor makes the last disbursement of Conditional Grant proceeds to Grantee, Grantee shall keep complete and accurate books, records, and accounts in connection with the Conditional Grant proceeds and activities performed under this Agreement, which shall be subject to the following:

a) Grantee shall maintain all records related to this Agreement in accordance with generally accepted accounting practices.

b) Grantee shall make its books, records, and accounts , employees, property, and equipment related to this Agreement available to Grantor’s Accounting Manager (the “Accounting Manager”), Grantor’s Auditor, any independent auditor at all reasonable times so that the Accounting Manager, Grantor’s Auditor, independent auditor may determine whether Grantee has complied with this Agreement. If Grantor requests, Grantee shall obtain and provide to Grantor, at Grantee’s sole cost, an independent financial audit of Grantee’s use of the Conditional Grant proceeds.

6. PREVAILING WAGES. Unless stated otherwise above, Grantor advises Grantee that the Project is subject to the payment of prevailing wages under California law. Grantee shall inform Mid-State Construction (the “General Contractor”) and shall require the General Contractor to inform all subcontractors and materialmen furnishing goods or services to the Project of Grantor’s determination of the applicability of California prevailing wage requirements.

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 3

Grantee and General Contractor have had the opportunity to meet with their respective legal counsel and to request a determination of the matter before the California Department of Industrial Relations and any other appropriate governmental bodies. Grantee and General Contractor have made their own independent determinations of the applicability of prevailing wage laws and have independently implemented such determinations. Grantee indemnifies, holds harmless and defends Grantor from all additional wages, benef its, fees, penalties, fines, legal fees, court costs, arbitration costs, and other costs arising from the improper application of California prevailing wage laws to the Project by Grantee or General Contractor or both of them.

6. NO SALE OR EXCESS REFINANCING. Grantee shall not, without Grantor's written consent: (a) sell or transfer all or any portion of the Site; or (b) refinances the Site for an amount greater than One Hundred Percent (100%) of the independently appraised, fair market value of the Site reduced by the amount of this Conditional Grant remaining unpaid.

Grantor shall not withhold consent to sell to an otherwise financially qualified buyer who assumes Grantees obligations under this Conditional Grant and accepts the terms of this Conditional Grant.

7. LOW INCOME TENANTS. Grantee shall not permit discrimination against tenants because of their status as low-income tenants or as tenants receiving Housing Choice Voucher (“HCV” formerly “Section 8”) rental assistance or any other assistance from the U.S. Department of Housing and Urban Development or from any other federal, state or local program of housing or income assistance.

8. MAINTAIN LOANS. Grantee shall comply with the provisions of all loans secured by the Site and shall promptly and timely cure any default in said loans.

9. PROFESSIONAL MANAGEMENT. Grantee shall obtain and maintain, for not less than fifteen (15) years from the date of occupancy of improvements within the Site, independent professional property management services with a firm pre- approved in writing by Grantor (“Manager”). The John Stewart Company is approved as the Manager. Grantor reserves the right to conduct periodic reviews of the management practices and of the Manager to determine if the Project is being operated and managed in accordance with the requirements and standards of this Loan. Grantee agrees to cooperate with Grantor in such reviews.

If Grantor determines in its reasonable judgment that the Project is not being operated and managed in accordance with one or more of the requirements or standards of the Funding Agreement, Grantor may deliver notice to Grantee requesting replacement of the Manager, which notice shall state clearly the reasons for such request. Grantee agrees that, upon receipt of such notice, Grantee shall within 60 days submit to Grantor, a proposal to engage a new Manager meeting the requirements of this provision. Grantor shall respond within 30 days to such proposal or such approval shall be deemed given. Upon receipt of such consent or deemed consent, Grantee shall promptly terminate the existing Manager’s engagement and engage the new Manager.

Grantee shall not enter into any management agreement or arrangement with any party with respect to the management of the Project without Grantor's prior written consent, such consent not to b e unreasonably withheld or delayed. Grantee shall not materially modify, amend or terminate any approved management agreement (other than as required to comply with the terms of the Funding Agreement and/or applicable law) without Grantor's prior written consent, which consent will not be unreasonably withheld or delayed; provided, however, that such consent shall not be required to extend the term of an existing management agreement.

10. NO NUISANCE. Grantee shall permit no activity on the Site that may be construed to be a nuisance to any tenant on the Site, to any adjacent tenants or property owners or to the general public. In the event that such a nuisance is occurring on the Site, Grantee shall take immediate action to stop such nuisance and to prevent future occurrences of such nuisance.

11. OCCUPANCY. Grantee shall not permit the occupancy of any residential unit on the Site to exceed the occupancy limits established by the U.S. Department of Housing and Urban Development for subsidized housing units.

12. PROJECT MAINTENANCE. Grantee shall assure that the following maintenance and use provisions for the Site shall

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 4

be enforced:

a) BUILDING UPKEEP. Grantee shall keep the exterior appearance of all buildings and structures in a clean and attractive condition. Grantee shall perform refinishing of surfaces immediately when observed to be needed due to damage or deterioration.

b) GROUNDS UPKEEP. Grantee shall maintain all grounds and landscaped areas within the Site and those adjacent to the Site, which Grantee may control or otherwise maintain, in a condition consistent with first-quality landscape care.

Grantee shall assure that shrubs and trees are to be properly and consistently pruned and that all landscaped areas are kept free of weeds, undesirable plants and trash.

c) TRASH STORAGE. Grantee shall assure that all trash, including lawn, shrub and tree cuttings are placed in a screened enclosure when stored for pickup and that collected trash of any kind is not allowed to stand outside of an enclosure for more than eight (8) hours.

d) STORAGE AND REPAIRS. Grantee shall assure that no painting, repairing or storage of personal property is permitted in any open parking area, balcony area, or common area or any other area visible to the public.

e) SIGNS. Grantee shall not install or permit the installation or use of any sign on the Site which creates a hazard by protruding, overhanging, blinking, flashing, exhibiting animation or other dangerous conditions. Grantee shall not install or permit the installation or use of any billboards, pennant s, bunting or similar devices for advertising or commercial display which are not in accordance with all applicable ordinances, regulations and codes. All nonconforming signs shall be removed within the time specified by the organization have jurisdiction over the sign or by Grantor.

13. TERMINATION. Grantor may terminate this Agreement if Grantor determines that:

a) Grantee has failed to perform, or has performed unsatisfactorily, any term of this Agreement, including but not limited to failing to use the Conditional Grant solely for Authorized Activity or failing to complete the Authorized Activity in a timely and proper manner;

b) Grantee has made (with or without knowledge) any material misrepresentation of any nature with respect to any information or statements furnished to Grantor in connection with this Agreement;

c) There is pending litigation with respect to the performance by Grantee of any of its duties or obligations under this Agreement that may materially jeopardize or adversely affect the undertaking of or the carrying out of the Authorized Activity. This Section 13(c) includes but is not limited to the failure of Grantee to effect a full dismissal of any involuntary petition under the Bankruptcy Code or under any other debtor relief law that is filed against Grantee or in any way restrains or limits Grantee reg arding the Grant, the Project, or the Site, prior to the earlier of the entry of any court order granting relief sought in such petition, or ninety days after the fili ng of such involuntary petition;

d) An Event of Default has occurred, and the notice and cure period, if any, has expired; or

e) The sale, assignment, pledge, hypothecation, mortgage, or transfer of all or a substantial portion of assets of Grantee except for permitted transfers approved by Grantor in writing.

14. INDEMNITY. Grantee indemnifies, and will hold harmless and defend, Grantor, its officers, directors, commissioners, employees and agents against all claims, demands, penalties, judgments, awards, orders, expenses and liabilities (“Liabilities”) arising from or related to the Site, Grantee’s activities on the Site, Grantees rights and obligations under this Agreement,. Such liabilities include without limitation, strict liability in tort or liability resulting from a finding that Grantor or Grantee are engaged in a joint venture or partnersh ip. Such expenses include without limitation, court costs, arbitration or mediation fees, witness fees, investigator fees and reasonable attorney’s fees, whether or not litigation is commenced. Grantee shall also defend, hold harmless and indemnify Grantor, its officers,

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 5

directors, commissioners, employees, and each and every one of them, from and against any Liabilities related to the enforcement of paragraph 6(c) of this Agreement brought by any party. The indemnity provisions of this Section 14 shall survive the termination of this Agreement, whatever the reason for such termination.

15. ATTORNEY’S FEES AND COSTS. If a party institutes any action (including without limitation, arbitration, mediation, motions, hearings, suits and appeals) to enforce a provision of this Agreement, the prevailing party shall be entitled to recover from the non -prevailing party its reasonable fees, costs and expenses in connection with such action, including without limitation, the prevailing party’s expert witness fees, investigator fees and attorney’s fees.

Payment of such fees shall include payment for such services whether provided by employees of the prevailing party or independent providers. Prevailing party shall mean the party who obtains a more favorable result than that offered by it in settlement of the issues, or in the absence of such settlement offer, the party obtaining a favorable result.

16. NOT ASSIGNABLE. Grantee shall have no right to, and shall not, assign this Agreement or the Conditional Grant, whether directly, by operation of law, or otherwise without the prior written consent of Grantor, which may be withheld or conditioned at Grantor’s sole and absolute discretion . Any purported assignment that has not been previously consented to by Grantor shall be void ab initio.

17. EVENTS OF DEFAULT. At the option of Grantor, each of the following events will constitute an Event of Default, subject to applicable notice and cure rights, if any:

a) Grantee’s non-performance of any obligation or breach of this Agreement or the Regulatory Agreement;

b) The occurrence of an event of default by Grantee under any loan, indebtedness, financing arrangement, or regulatory agreement in connection with the Project after expiration of all applicable cure periods;

c) Grantee's failure to keep in full force any permit, license, consent, or approval with respect to the construction, occupancy, or use of the Project, unless within ten (10) days after notice by the issuing entity or Grantor of such failure, Grantee has promptly cured such failure;

d) The attachment, levy, execution, or other judicial seizure of any portion of the Site or Project, or any substantial portion of the other assets of Grantee, that is not released, expunged, bonded, discharged, or dismissed within thirty (30) days after the attachment, levy, execution, or seizure; and

e) Making of any unauthorized payment from Conditional Grant proceeds.

f) Notwithstanding the foregoing, following an assignment by Grant ee to a limited partnership, Grantor agrees that any notice of a default under this Agreement shall be provided to Grantee’s limited partner, if any, and such limited partner shall have the right, but not the obligation, to cure any such default during the applicable cure period.

Grantor agrees that a cure of any default by such limited partner shall be deemed a cure by Grantee, and shall be accepted or rejected on the same basis as if made or tendered by Grantee.

18. INTERPRETATION. This Agreement incorpora tes the Deed of Trust in this document by this reference. This Agreement integrates all of the terms and conditions related or incidental to its subject matter, and supersedes all negotiations or previous agreements between the parties with respect to its subject matter. As the context may indicate, the singular and plural forms each include the other and gender references include all other genders. If any provision of this Agreement is held invalid for any reason, the other provisions shall be given ful l force and effect to the extent that the purpose and intent of this Agreement can then be met.

19. SECURITY AGREEMENT. This Conditional Grant Agreement is a "security agreement" within the meaning of the Uniform Commercial Code. Grantee by executing and delivering this Conditional Grant Agreement has granted and hereby grants to Grantor, as security for the Conditional Grant Agreement, a security interest in the Additional Collateral (as defined in the Deed of Trust) to the full extent that the Additional Collateral may be subject to the

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 6

Uniform Commercial Code. Grantee irrevocably appoints Grantor as its true and lawful limited attorney-in-fact solely to execute and deliver any and all financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to Grantor a valid perfected security interest in the Addition al Collateral.

Grantee agrees to perform all acts which Grantor may reasonably request so as to enable Grantor to maintain such valid perfected security interest in the Additional Collateral. Grantor is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this Conditional Grant Agreement. Grantor may require at any time, and from time to time additions of new contracts and other property to the Additional Collateral.

20. WAIVERS AND AMENDMENTS. All waivers of the provisions of this Agreement must be in writing and duly executed by the waiving party. All amendments to this Agreement must be in writing and duly executed by Grantor and Grantee.

21. CUMULATIVE RIGHTS AND REMEDIES. No right, power o r remedy given to Grantor by the terms of this Conditional Grant Agreement is intended to be exclusive of any other right, power or remedy, and each such right, power or remedy will be cumulative and in addition to every other right, power or remedy given to Grantor by the terms of any instrument, by any statute or otherwise.

22. NONLIABILITY OF GRANTOR OFFICIALS AND EMPLOYEES. No member, official or employee of Grantor shall be personally liable to Grantee, or any successor in interest, in the event of any default or breach by Grantor or for any obligations under the terms of this Agreement.

23. NOTICES AND DEMANDS. A notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail postage or prepaid, return receipt requested, or delivered personally or by national courier service, delivery charges prepaid, to the address set out above, or at such other address for the receiving party as has been d uly noticed under this Section 23.

24. EXECUTION OF COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute a single document. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 7

EXECUTED AT SACRAMENTO, CALIFORNIA, as of the date first written above.

GRANTEE:
911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 8

EXECUTED AT SACRAMENTO, CALIFORNIA, as of the date first written above.

GRANTOR:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY, a joint powers agency

By: ________________________________

La Shelle Dozier
Executive Director

Approval as to form:

___________________________________
Grantor Counsel

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 9

Exhibit A - Legal Description

The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th an d 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 10

Attachment 1 - Authorized Activity

Year 1-3 (2025-2027): Service delivery/case management (this is meant to provide an additional FTE during year 1-3).

Year 4-10 (2028-2034): Combination of service delivery and operating expenses (maintenance, repairs, unit turns, utilities for house meters, and other routine operating expenses from the operating budget). This is meant to fill both the service delivery gap and the operating deficit in years 4-10.

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 11

Attachment 2 - Approved Budget

Years 1 – 3 (2025-2027) Maximum Budget Allowed - up to $202,000 or $67,300 per year Years 4-10 (2028-2034) Maximum Budget Allowed - up to $3,198,000 or $533,000 per year or $133,250 per quarter, per year

_____________________________________________________________________________________________ Sequoia Conditional Grant Agreement – MIHO Page 12

Attachment 2 –MIHO Funding Requirements

MIHF FUNDING REQUIREMENTS
MIXED INCOME HOUSING FUNDS – CITY OF SACRAMENTO

FINANCING FOR RESIDENTIAL RENTAL PROPERTY

These “Mixed Income Housing Funding Requirements” (or “MIHF Requirements”) are attached to a Regulatory Agreement and are incorporated in that Regulatory Agreement. In turn, the Regulatory Agreement is incorporated in the Loan that is described in the Regulatory Agreement. The capitalized terms used in these MIHF Requirements shall have the meanings below in the body of these MIHF Requirements. Terms being defined ar e indicated by quotation marks. Capitalized terms in these MIHF Requirements that are not defined below are defined in the Regulatory Agreement.

1. RECITALS. The Loan is funded by the Agency with proceeds of the Mixed Income Housing Fund (“MIHF”) of the City of Sacramento. The Agency has approved the Loan on condition that the property securing the Loan (“Property”) is rehabilitated or developed as residential rental property (“Project”) with certain units regulated in accordance with the Regulatory Agreement (“MIHF-Assisted Units”) by recordation of these MIHF Requirements as covenants running with the land.

2. AFFORDABILITY REQUIREMENTS. Owner shall ensure that all of the MIHF -Assisted Units shall be rented at or below the following rates:

a. Low-Income Units s hall be rented for not more than thirty percent (30%) of eighty percent (80%) of the Sacramento Metropolitan Statistical Area median income as determined annually by the federal Department of Housing and Urban Development (“Median Income”), as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF-Assisted Unit.

b. Very Low-Income Units shall be rented for not more than thirty percent (30%) of fifty percent (50%) of the Median Income as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF - Assisted Unit.

c. Extremely Low-Income Units shall be rented for not more than thirty percent (30%) of thirty percent (30%) of the Median Income as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF- Assisted Unit.

d. Unless Owner has obtained prior written Agency authorization, Owner shall maintain the allocation of MIHF- Assisted Units by the bedroom sizes stated in the Regulatory Agreement.

e. Owner shall be responsible for determining the affordable rents for the MIHF-Assisted Units. Within ten (10) days of Owner request, Agency shall provide all information necessary for Owner to compute such affordable rents and will assist Owner in determining such rents.

3. OCCUPANCY REQUIREMENTS. Owner shall ensure that all MIHF-Assisted Units shall be occupied by households earning less than eighty percent (80%) of Median Income.

4. UNIT QUALITY. Owner shall ensure that MIHF-Assisted Units must be comparable in s ize and amenities to other units in the Project.

5. TERM. These covenants shall burden and regulate the MIHF-Assisted Units for a term of thirty (30) years.

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 1

NO FEE DOCUMENT:

Entitled to free recording
per Government Code §§6103 and 27383.

When recorded, return to:

SACRAMENTO HOUSING AND

REDEVELOPMENT AGENCY
801 12th Street
Sacramento, CA 95814
Attention: Portfolio Management

DEED OF TRUST AND ASSIGNMENT OF RENTS

MIHF CONDITIONAL GRANT
The Sequoia

For purposes of this Deed of Trust the following capitalized terms shall have the meanings ascribed in the space adjacent to them:

TERM DEFINITION
“Effective Date” November XX, 2023
“Trustor” and
“Grantee”
Sacramento Housing and Redevelopment Agency, a joint powers agency “Grantee Address” 801 12th Street, Sacramento, CA 95814 “Trustee” Placer Title Company
“Beneficiary” and
“Grantor”
911 K Street Partners, L.P. a California limited partnership “Grantor Address” 1388 Sutter Street 11th Floor, San Francisco, CA 94109 “Property”
Which is real property located in the County of Sacramento and the State of California as more particularly described in the Legal Description.

Address 911 K Street, Sacramento, CA 95814
Assessor’s Parcel Number 006-0101-020-0000
“Legal
Description”
The Legal Description of the Property which is more particularly described in the attached Exhibit 1 Legal Description, which is incorporated in and an integral part of this Deed of Trust
“Conditional
Grant”
Which is Grantor’s conditional grant to Grantee which is secured by this Deed of Trust. “Conditional
Grant Agreement”
Which is the agreement between Grantor and Grantee stating the term and conditions of the Conditional Grant, titled MIHF Conditional Grant Agreement Sequoia Which is dated: **
“Additional
Notices”
Grantor shall give copies of notices required to be delivered to Grantee to the following parties at the following addresses; provided, however that Grantee acknowledges that such notice is an accommodation and the failure of Grantor to properly deliver any such notice shall not give rise to any claims or defenses of Grantee or any third party:
***Additional Notices***
“Regulatory
Agreement”
Which is that certain Regulatory for Residential Rental Property and Declaration of Restrictive Covenants Affecting Real Property MIHF and MHSA entered into by and between Grantee and Grantor as additional consideration for Grantor making the Conditional Grant.

Which is dated: November XX, 2023

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 2

THIS DEED OF TRUST is made as of the Effective Date between the Trustor also referenced as Grantee, the Trustee, and the Beneficiary also referenced as Grantor.

Grantee, in consideration of the indebtedness described below and the trust created by this De ed of Trust, irrevocably grants and conveys the Property to Trustee, in trust with power of sale.

Together with all the improvements now or subsequently erected on the property, and all easements, rights, appurtenances, rents (subject, however, to the rig hts and authorities given to Grantor to collect and apply such rents), royalties, mineral, oil and gas rights and profits, water, water rights, and water stock, and all fixtures, including but not limited to all gas and electric fixtures, engines and machi nery, radiators, heaters, furnaces, heating equipment, steam and hot water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating equipment, cabinets, mantels, refrigerating plant and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, furniture, shades, awnings, screens, venetian blinds and other furnishings, now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the property covered by this Deed of Trust; and all of the foregoing, together with said property (or the leasehold estate if this Deed of Trust is on a leasehold) are referred to as the "Property";

To secure to Grantor: (a) the repayment of the Conditional Grant; and (b) the performance of the covenants and agreements of Grantee contained in this Deed of Trust, the Conditional Grant Agreement , and the Regulatory Agreement.

Grantee covenants that Grantee is lawfully seised of the estate conveyed by this Deed of Trust and has the right to grant and convey the Property, and that Grantee will warrant and defend generally the title of the Property against all claims and demands, subject to any declaratio ns, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring Grantor's interest in the Property.

Grantee and Grantor covenant and agree as follows:

1. Payment of Principal and Interest . Grantee shall promptly pay when due the principal and interest, if any, on the indebtedness evidenced by the Conditional Grant Agreement. All payments received by Grantor under the Conditional Grant Agreement shall be applied by Grantor first to interest payable on the Conditional Grant Agreement and thereafter to the unpaid principal of the Conditional Grant Agreement.

2. Charges; Liens . Grantee shall pay all taxes, assessments and other charges, fines and impositions attributable to the Property and leasehold payments or ground rents, if any by Grantee making payment, when due, directly to the appropriate payee. Grantee shall promptly furnish to Grantor all notices of amounts due under this paragraph, and in the event that Grantee makes payment directly, Grantee shall promptly furnish to Grantor receipts evidencing such payments. Grantee shall pay when due any encumbrance, charge and lien, with interest in accordance with its terms, on the Property or any portion which is inferior or superior to this Deed of Trust.

3. Hazard Insurance. Grantee shall keep the improvements now existing or later erected on the Property insured against loss of fire or hazards under a policy approved by Grantor consistent with the insurance requirements of the Conditional Grant Agreement . In addition, Grantee shall insure against loss of all furniture, equipment and other personal property owned by Grantee related to Grantee's operation of the Property. Grantor shall have the right to hold the policies and policy renewals, and Grantee shall promptly furnish to Grantor all renewal notices and all receipts of paid premiums. In the event of loss, Grantee shall give prompt notice to the insurance carrier and Grantor. Grantor may make proof of loss if not made promptly by Grantee.

Unless Grantor and Grantee otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged, as and to the extent provided in the Conditional Grant Agreement.

Unless Grantor and Grantee otherwise agree in writing, any such application of insurance proceeds to principal shall not extend or postpone the due date of any Conditional Grant payment or change the amount

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 3

of such payment. If the Property is acquired by Grantor pursuant to th is Deed of Trust, all right, title and interest of Grantee in and to any insurance policies and proceeds of such policies resulting from damage to the Property prior to the sale of acquisition shall pass to Grantor to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition.

4. Liability Insurance . In addition to the casualty insurance required under the Conditional Grant Agreement during the course of construction, Grantee shall keep comprehensive general liability insurance for the Property in a form and coverage consistent with the provisions of the Conditional Grant Agreement and reasonably approved by Grantor.

5. Preservation and Maintenance of Property. Grantee shall keep the Property in good repair and shall not commit waste or permit impairment, demolition, or deterioration of the Property.

6. Protection of Grantor's Security. Grantee shall appear and defend any action or proceeding purporting to affect the security under this Deed of Trust or the rights of Grantor. If Grantee fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Grantor's interest in the Property, including, but not limited to, foreclosure, involuntary sale, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Grantor may, upon notice to Grantee, make such appearances, disburse such sums and take such actions as are necessary to protect Grantor's interest, including, but not limited to, disbursement of judgments, costs or reasonable attorney's fees and entry upon the Property to make repairs.

Any amounts disbursed by Grantor pursuant to this Section 6, with interest, shall become additio nal indebtedness of Grantee secured by this Deed of Trust. Unless Grantee and Grantor agree to other terms of payment, such amounts shall be payable upon notice from Grantor to Grantee requesting payment, and shall bear interest from the date of disbursement at the highest rate permissible under applicable law. In any event, this Section shall be construed as a right and an option of Grantor and shall not be construed to require Grantor to incur any expense or take any action.

7. Inspection. Grantor, by its designated representative, may make reasonable entries upon and inspections of the Property, provided that Grantor shall give Grantee and any occupant of the Property reasonable prior notice of any such inspection.

8. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of all or any part of the Property, or for conveyance in lieu of condemnation, shall be applied as provided in the Conditional Grant Agreement.

If the Property is abandoned by Grantee, or if, after notice by Grantor to Grantee that the condemnor offers to make an award or settle a claim for damages, Grantee fails to respond to Grantor within 30 days after the date such notice is mailed, Grantor is authorized to collect and apply the proceeds, at Grantor's option, either to restoration or repair of the Property or to the sums secured by this Deed of Trust.

Unless Grantor and Grantee otherwise agree in writing, any such application of proceeds to prin cipal shall not extend or postpone the due date of any payment or change the amount of such payment.

9. Grantee Not Released. Extension of the time for payment of the sums secured by this Deed of Trust granted by Grantor to Grantee or any successor in inte rest of Grantee shall not operate to release, in any manner, the liability of the original Grantee and Grantee's successors in interest. Grantor shall not be required to commence proceedings against such successor or refuse to extend time payment by reason of any demand made by the original Grantee or Grantee's successors in interest.

10. Forbearance by Grantor Not a Waiver. Any forbearance by Grantor in exercising any right or remedy under this Deed of Trust, or otherwise afforded by applicable law, shall not be a waiver or preclude the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by Grantor shall not be a waiver of Grantor's right to accelerate the maturity of the indebtedness secured by this Deed of Trust.

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 4

11. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust, the Conditional Grant Agreement, the Regulatory Agreement, or afforded by law or equity, and may be exercised concurrently, independently or successively.

12. Successors and Assigns Bound; Joint and Several Liability Captions . The covenants and agreements contained in this Deed of Trust shall bind, and the rights under this Deed of Trust shall inure to, the respective successors and assigns of Grantor and Grantee, subject to the provisions of Section 15. All covenants and agreements of Grantee shall be joint and several. The captions and headings of the paragraphs of this Deed of Trust are for convenience only and are not to be used to interpret or to define its provisions.

13. Notice. Except for any notice required under applicable l aw to be given in another manner, any notice to be given under this Deed of Trust shall be given as provided for in the Conditional Grant Agreement. Any notice provided for in this Deed of Trust shall be deemed to have been given to Grantee or Grantor when given in the manner designated.

14. Governing Law; Severability. This Deed of Trust shall be governed by the law of the State of California.

If any term or provision of this Deed of Trust shall, to any extent, be held invalid or unenforceable, the remainder of this Deed of Trust shall remain in full force and effect and the invalid or unenforceable provision shall be valid and enforceable as to any other person or circumstance.

15. Acceleration on Transfer or Refinancing of the Property; Assumption. Except as otherwise provided in the Conditional Grant Agreement , if all or any part of the Property or an interest in the Property is sold or Transferred or refinanced by Grantee without Grantor's prior written consent, Grantor may, at Grantor's option, declare all the sums secured by this Deed of Trust to be immediately due and payable. A “Transfer” occurs whenever any of the following occur: 1) the transfer of any partnership interest to or from any partner; 2) the removal, addition, or substitution of one or more of the general or limited partners of Borrower; or any change in title to the Property or the Project. Grantor shall have waived such option to accelerate if, prior to the refinancing, sale or transfer, Grantor and the person to whom the Property is to b e sold or transferred reach agreement in writing that the loan may be assumed. If Grantor has waived the option to accelerate provided in this Section and if Grantee's successor in interest has executed a written assumption agreement accepted in writing b y Grantor, Grantor shall release Grantee from all obligations under this Deed of Trust and the Conditional Grant Agreement.

If Grantor exercises such option to accelerate, Grantor shall mail Grantee notice of acceleration. Such notice shall provide a period of not less than 30 days from the date the notice is mailed within which Grantee, or any of its principals or anyone with a substantial legal interest in Grantee, may pay the sums declared due.

If Grantee fails to pay such sums prior to the expiration of such period, Grantor may, without further notice or demand on Grantee, invoke any remedies permitted by this Deed of Trust.

16. Acceleration on Breach; Remedies . Except as provided in Section 15, upon Grantee's breach of any covenant or agreement of Grantee in this Deed of Trust , the Regulatory Agreement, or Conditional Grant Agreement, Grantor shall mail notice to Grantee specifying: (1) the breach; (2) the ac tion required to cure such breach; (3) a date, no less than 30 days from the date the notice is mailed to Grantee, by which breach must be cured; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Property. If the breach is not cured on or before the date specified in the notice, Grantor at Grantor's option may declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law. Grantor shall be entitled to collect from Grantee, or sale proceeds, if any, all reasonable costs and expenses incurred in pursuing the remedies provided in this Section, including, but not limited to reasonable attorney's fees.

If Grantor invokes the power of sale, Grantor shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Grantor's election to cause the Property to be sold and shall cause such notice to be recorded in each county in which any portion of the Property is located. Grantor or Trustee shall mail copies of such notice in the manner prescribed by applicable law to Grantee and to the

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 5

other persons prescribed by applicable law. Trustee shall give public notice of sale to the persons and in the manner prescribed by applicable law. After the lapse of such time as may be required by applicable law, Trustee, without demand on Grantee, shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale, in one or more parcels and in such order as Trustee may determine. Trustee may postpone sale of all or any parcel of the Property by public announcement at the time and place of any previously scheduled sale. Grantor or Grantor's designee may purchase the Property at any sale.

Trustee shall deliver to the purchaser a Trustee's deed conveying the Property so sold without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall be prima facie evidence of the truth of the statements it contains. Trustee shall apply the proceeds of the sale in the following order:
(a) to all rea sonable costs and expenses of the sale, including, but not limited to, reasonable Trustee's and attorney's fees and costs of title evidence; (b) to all sums secured by this Deed of Trust; and (c) the excess, if any, to the person or persons legally entitle d thereto as determined by Grantor. In the event of a dispute regarding the excess funds, either Grantor or Trustee may file an action in interpleader to determine who shall receive the funds and may then deposit the excess funds with the court.

17. Assignment of Rents; Appointment of Receiver; Grantor in Possession. As additional security, Grantee assigns to Grantor the rents of the Property (the “Rent”), provided that Grantee shall, prior to an acceleration for breach as provided above or abandonment of the Property, have the right to collect the Rent as they become due.

Upon acceleration for breach or abandonment of the Property, Grantor, in person, by agent or by judicially appointed receiver shall be entitled to enter upon, take possession of and manage the Property and to collect the Rent including those past due. All Rent collected by Grantor, its agent, or the receiver shall be applied first to payment of the costs of management of the Property and collection of Rent, including, but not limited to receiver's fees, premiums on receiver's bonds and reasonable attorney's fees, and then to the sums secured by this Deed of Trust. Grantor, its agent and the receiver shall be liable to account only for the Rent actually received.

18. Financing Statement. This Deed of Trust is both a real property deed of trust and a "security agreement" within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Grantee in the Property. Grantee by executing and delivering this Deed of Trust has granted and hereby grants to Grantor, as security for the Conditional Grant, a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code (the Property so subject to the Uniform Commercial Code, including without limitation, the Rent, being called in this paragraph the "Col lateral"). Grantee irrevocably appoints Grantor as its true and lawful limited attorney -in-fact solely to execute and deliver any and all financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to Grantor a valid perfected security interest in the Collateral. Grantee agrees to perform all acts which Grantor may reasonably request so as to enable Grantor to maintain such valid perfected security interest in the Collateral in order to secur e the payment of the Note in accordance with their terms. Grantor is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this Deed of Trust.

19. Prior Lienholder . The provisions of this Deed of Trust shall operate subject to the claims of prior lienholders to the extent of such claims.

20. Reconveyance. Upon payment of all sums secured by this Deed of Trust or upon the Conditional Grant becoming unconditional in accordance with the Conditional Grant Agreement, Grantor shall request Trustee to reconvey the Property and shall surrender this Deed of Trust and all notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or persons legally entitled to such reconveyance. Such person or persons shall pay all costs of recordation, if any. The recitals in the reconveyance of any matters or facts shall be conclusive proof of their truthfulness.

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 6

21. Substitute Trustee. Grantor, at Grantor's option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed under this Deed of Trust. Without conveyance of the Property, the successor trustee shall succeed to all the title, power and duties conferred upon the Trustee by this Deed of Trust and applicable law.

22. Request for Notice. Grantee and each party listed to receive Additional Notices request that cop ies of the notice of default and notice of sale be sent to their respective addresses.

23. Statement of Obligation. Grantor may collect a reasonable fee for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California, as it may be amended from time to time.

24. Use of Property. Grantee shall not permit or suffer the use of any of the Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed.

IN WITNESS WHEREOF, Grantee has executed this Deed of Trust as of the Effective Date.

BORROWER (Trustor):

911 K Street Partners, LP,
a California limited partnership

By: JSCo Sequoia LLC,
a California limited liability company
Its Administrative General Partner

By: John Stewart Company,
a California corporation,
its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

Deed of Trust and Assignment of Rents – MIHF Conditional Grant Agreement Page 7

EXHIBIT 1

LEGAL DESCRIPTION

The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th and 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000

The Sequoia – MIHF Regulatory Agreement Page 1

Exhibit **: Regulatory Agreement

NO FEE DOCUMENT:

Entitled to free recording
per Government Code §§6103 & 27383.

Recording requested by and
when recorded, return to:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY
801 12th Street, 4th Floor
Sacramento, CA 95814
Attn: Portfolio Management

REGULATORY AGREEMENT FOR RESIDENTIAL RENTAL PROPERTY

AND DECLARATION OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY (MIHF)

PROJECT NAME: The Sequoia
PROJECT ADDRESS: 911 K Street, Sacramento, CA 95814
APN: 006-0101-020-0000

FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS ACKNOWLEDGED , AGENCY AND OWNER

HAVE ENTERED THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY (REGULATORY AGREEMENT) AS OF THE EFFECTIVE DATE.

1. GENERAL. This Regulatory Agreement includes the Exhibits listed below which are attached to and incorporated in this Regulatory Agreement by this reference.

2. DEFINITIONS. The capitalized terms in this Regulatory Agreement shall have the meanings assigned in the following table and in the body of this Regulatory Agreement as the context indicates. Terms being defined are indicated by quotation marks.

TERM DEFINITION
“Effective Date” This Regulatory Agreement shall be effective as of the following date: November **, 2023 “Agency” Sacramento Housing and Redevelopment Agency
A joint powers agency
“Agency Address” 801 12th Street, Sacramento, CA 95814
“Owner” 911 K Street Partners, L.P.
“Owner Address” Owner’s business address is as follows: 1388 Sutter Street, 11 th Floor, San Francisco, CA 94109
“Jurisdiction” City of Sacramento
“Property”
That certain real property which is subject to this Regulatory Agreement as further described in the legal description, attached as Exhibit 1 – Legal Description of the Property and incorporated in this Regulatory Agreement by this reference
“Funding
Agreement”
The Funding Agreement between
Agency and Owner as follows: That
certain Grant Agreement between the
parties.

Titled: MIHF Conditional Grant Agreement
Dated: November **, 2023

The Sequoia – MIHF Regulatory Agreement Page 2

3. RESTRICTED UNITS; APPROVAL OF LEASES.

a. In order to assure that the proper number and types of units have been rented in accordance with this Regulatory Agreement, Owner is prohibited from leasing any unit within the Project until either the parties have recorded against the Property a list of the Restricted Units or Agency has approved the individual lease or lease form for the Restricted Units.

A “Restricted Unit” is a unit subject to the Agency’s rent and occupancy restrictions as a result of the financial assistance provided by the Agency for the Project. The following numbers of units are restricted for each respective funding source:

MIHF. “Rent” means all amounts owed or paid by an Eligible Household reasonably related to an Eligible Household’s occupancy of a Restricted Unit, including without limitation a utility allowance, if any, and any amounts paid to Owner for parking, fees, taxes, pets, or any other expenses required by Agency or the Funding Requirements. In no event shall Rent exceed 30% of the Affordability Level defined below in Section 3(c).

b. Owner shall ensure that at all times, each of the Restricted Units are leased only to households who meet both of the following requirements:

(1) the household is deemed eligible for assistance in accordance with this Agreement, the Funding Requirements, and all applicable Governmental Requirements; and
(2) the household’s annual adjusted income does not exceed the acceptable “Affordability Level,” which is the maximum annual adjusted income most recently established by the United States Department of Housing and Urban Development (HUD) for the Project’s Metropolitan Statistical Area and the household size . (if both requirements are met, an “Eligible Household”)

“Agency Funding”
Agency Funding made by Agency from Mixed Income Housing funds for the operation of the Property.
“Agency Funding
Amount“
The amount of Agency Funding, as follows:

Two Million One
Hundred Thousand
Dollars and No Cents
($3,400,000.00)
“Plans and
Specifications”
That certain Plans and Specifications related to this Project and approved in writing by Agency on **.
“Proportionate
Agency
Assistance”
The percentage of the Project cost, including without limitation, land, predevelopment and development costs, that is attributable to Agency Funding. For rehabilitation projects, the percentage that Agency Funding bears to the total of the fair market value of the Property before rehabilitation and the total costs of rehabilitation.

0.06%
“Transfer”
A Transfer occurs whenever any of the following occur:

1. The transfer of partnership interests to or from any partner;

2. The removal, addition, or substitution of one or more of the general or limited partners of Owner; or

3. Any change in title to the Property or the Project.
“Funding
Requirements”
The legal restrictions on the use of the funds that Agency has used to make Agency Funding, as applicable to and restricting the Property. The Funding Requirements are set out in Exhibit 2 – Funding Requirements.
“Approved Use”
The only permitted use of the Property, which is as a residential property available for rent by the eligible residents pursuant to the MIHF Funding Requirements and containing not less than the following number of units:
89 “Governmental
Requirement”
All laws, orders, decrees, ordinances, rules and regulations of any United States federal, California state, local, or other governmental entity with statutory or regulatory authority over the Property or the Project.
“Title Policy” A policy issued by Placer Title Company that protects against losses that occur if the pro perty is not free and clear of encumbrances, liens, and defects.

The Sequoia – MIHF Regulatory Agreement Page 3

An Eligible Household who meets th e Project’s eligibility criteria on the date of the Eligible Household’s initial occupancy shall remain eligible to continue to lease the Restricted Unit where the Eligible Household resides so long as the Eligible Household’s annual adjusted income does n ot exceed 1 40% of the Affordability Level as adjusted for the current number of household members. In the event the Project is assisted with more than one source of Agency Funding, Owner shall determine household eligibility based on the Affordability Level stated for the source of assistance provided for each Restricted Unit, respectively.

c. When determining family size for the purposes of determining whether a prospective tenant qualifies as an Eligible Household, Owner must include all pe rsons applying to reside in the applicable Restricted Unit , except a qualified live-in aid, as determined in accordance with 24 CF R Part 8.

d. The maximum Initial Rent for the Restricted Units shall be the following; provided, however, that upon the request of Owner, Owner and Agency may agree to a schedule of Rents for the Restricted Units that complies with the following affordability requirements as of the date when the Project is first made available for occupancy. In any event, the maximum Rent for the Restricted Units shall not be adjusted more often than once in a 12-month period.

Agency Funding
Source:

Other Funding
Source:

Affordability
Level:

Number of
Restricted
Units:

Type of Restricted
Units:

Maximum
“Initial Rent” per
Restricted Unit
per Month:

Mixed-Income
Housing Funds
(MIHF)
Very- Low - 50%
AMI
16 Studio $937.50
Mixed-Income
Housing Funds
(MIHF)
Very- Low - 50%
AMI
4 One-Bedroom $1072.50

e. In the event of a conflict between the Funding Requirements and this Regulatory Agreement regarding the Initial Rent per Unit per Month, the lowest amount shall control.

4. INCOME TARGETING REQUIREMENTS. Owner shall ensure that during any given fiscal year, at least 40% of Restricted Units that become available are leased to Eligible Households. If Owner has actively marketed the available Restricted Units to Eligible Households and has been unable to achieve the 40% target for admissions, Owner must promptly notify Agency and provide complete records of Owner’s marketing efforts, demonstrate that best efforts were made to fill available Restricted Units with Eligible Households, and certify that Owner is diligently continuing to attempt to meet the 40% target.

It shall be an Event of Default under this Agreement if Agency finds, in its sole and absolute discretion, that Owner has not made or is currently not making a diligent effort to meet the 40% target.

5. MANAGEMENT COMPANY; MANAGEMENT AGREEMENT.

f. Owner agrees that at all times the Project shall be managed by a property manager (i) approved by Agency in its reasonable discretion and (ii) who has successfully managed at least five projects over forty units in size and subject to a recorded regulatory agreement for at least three years’ prior to the ap plication, without any record of material violations of discrimination restrictions or other state or federal laws or regulations or local governmental requirements applicable to such projects (the “Manager”). Owner shall submit to Agency from time to tim e such information about the background, experience and financial condition of any existing or proposed Manager as Agency may reasonably require to determine whether such Manager meets the requirements for a Manager set forth herein. Agency reserves the right to conduct periodic reviews of the management practices and of the Manager to determine if the Project is being operated and managed in accordance with the requirements and standards of this Loan. Owner agrees to cooperate with Agency in such reviews.

The Sequoia – MIHF Regulatory Agreement Page 4

g. If Agency determines in its reasonable judgment that the Project is not being operated and managed in accordance with one or more of the requirements or standards of the Funding Agreement, Agency may deliver notice to Owner requesting replacement of the Manager, which notice shall state clearly the reasons for such request. Owner agrees that, upon receipt of such notice, Owner shall within 60 days submit to Agency, a proposal to engage a new Manager meeting the requirements of this provision. Agency sh all respond within 30 days to such proposal or such approval shall be deemed given. Upon receipt of such consent or deemed consent, Owner shall promptly terminate the existing Manager’s engagement and engage the new Manager.

h. Owner shall not enter into any management agreement or arrangement with any party with respect to the management of the Project without Agency's prior written consent, such consent not to be unreasonably withheld or delayed. Owner shall not materially modify, amend or terminate any app roved management agreement (other than as required to comply with the terms of the Funding Agreement and/or applicable law) without Agency's prior written consent, which consent will not be unreasonably withheld or delaye d; provided, however, that Owner sh all provide prompt notice to Agency of such removal. Agency consent shall not be required to extend the term of an existing management agreement.

Approved Management Company
John Stewart Management Company

6. SPECIAL PROVISIONS. Owner shall also comply with the following special provisions.

Provision

1. ANNUAL ADMINISTRATIVE FEE. Owner agrees to pay an annual administrative fee (“Fee”) to Agency as compensation for monitoring compliance with regulatory restrictions and the administration of the Grant.

Owner shall pay annually a Fee equal to 12.5 basis points (0.125%) of the Loan Amount and One Hundred and No/100 Dollars ($100.00) for each unit as sisted by the Agency Funding, not to exceed an annual amount of Fifteen Thousand Dollars and No Cents ($15,000.00) per project. Fee payments shall commence on the Closing Date for the prorated semiannual period from the Closing Date to and including November 2023, and in equal semiannual installments in advance on each April 1 and November 1 of each year thereafter throughout the term of the Regulatory Agreement.

2. BORROWER RESERVES. Commencing upon commencement of the initial occupancy of the Project, Bo rrower shall maintain reserves for replacement and repairs required to be made to the Property, fixtures on the Property or personal property used on the Property, or otherwise as approved by Lender. Commencing upon initial occupancy of the first unit in the Project, Borrower shall make annual contributions to replacement reserve in an amount equal to $500/unit.

4. REPRESENTATIONS. Agency has provided Agency Funding to Owner to develop the Property, subject to the terms of the Funding Agreement. For purposes of this Section 6, “Property” shall mean Property or Restricted Unit as the context may indicate. This Regulatory Agreement is a substantial part of the consideration to Agency for making Agency Funding. The funds used by Agency under the Funding Agreement are funds from public funding sources administered by Agency and their use is subject to certain requirements some of whi ch are embodied in this Regulatory Agreement.

Further, Agency has made Agency Funding in accordance with the laws, rules and regulations to which Agency is subject.

Therefore, Agency has made Agency Funding conditioned upon Owner’s agreement, for itself and its successors and assigns, to comply with all provisions of this Regulatory Agreement, including without limitation, the Funding Agreement. Owner represents that it has had full opportunity to make itself independently familiar with such limitations and restrictions, and Owner accepts them and agrees to comply fully with them. As a material inducement to Agency to enter into the Funding Agreement and to make the Loan to Owner, Owner unconditionally, and each signatory who signs on its behalf, to the e xtent of their best knowledge, represents and warrants to Agency, as of the Close of Escrow, as follows:
a. Owner represents that it has had full opportunity to make itself independently familiar with the limitations and restrictions contained herein, and Owner accepts them and agrees to comply fully with them.

The Sequoia – MIHF Regulatory Agreement Page 5

b. The Plans and Specifications are satisfactory to Owner and the General Contractor and have been approved by Agency and all other construction lenders. There are no structural defects in the Pro ject as shown in the Plans and Specifications that are known to or reasonably should have been known to Owner or its agents and employees, and to the best of Owner’s knowledge, no violation of any Governmental Requirement, including but not limited to an environmental requirement, exists.

c. Owner is duly formed and validly exists in the form stated above, is qualified to do business in California, and has full power to consummate the transactions contemplated.

d. The consummation of the transactions covered by this Regulatory Agreement and the payment and performance of all of the obligations in the Funding Agreement and all documents evidencing, securing, or otherwise related to the Funding Agreement, will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, contract, loan or credit agreement, corporate charter, bylaws, partnership agreement, trust agreement, or other instrument to which Borrower or any of its general partners is a party or by which it or they or the Property may be bound or affected.

e. Owner is the sole legal and beneficial owner of the Property, which is free of all claims, liens, and encumbrances other than those shown in the Title Policy.

f. Owner has not received financing for either the acquisition of the Property, the construction of the Project or the permanent financing of the Project except as has been specifically disclosed to and approved by Agency in writing.

g. All Personalty is vested solely in Owner, free of all claims, liens, and encumbrances, and the security interest of Agency in the Personalty is a first lien.

h. Owner has filed all required Federal, State, County, and City tax returns and has paid all taxes due and owing.

Owner knows of no basis for additional assessments with respect to any taxes, other than the lien of taxes not yet due.

5. COVENANTS. Owner makes the following covenants. Unless Owner has received the prior written consent or Agency approval otherwise, Owner shall fully comply with each and every covenant. Except as otherwise stated in this Regulatory Agreement, the following covenants shall have a term that is the same as the longest term specified in the Funding Requirements.

a. Owner shall use and permit others to use the Property only for the A pproved Use. Additionally, Owner shall not use or permit others to use the Property, in whole or in part, for any “ Disapproved Use,” which includes any use not listed as an Approved Use, including but not limited to a liquor store, bar, adult film store, h azardous materials storage or warehousing, tattoo or piercing establishment, pawn shop, check cashing or paycheck advance business, or cannabis sales, including medical cannabis.

b. Owner shall ensure full compliance with the Funding Requirements at all times.

c. Owner shall not convey, Transfer, hypothecate, or otherwise encumber any of the Property or permit the conveyance, Transfer, hypothecation, or encumbrance of the Property unless such conveyance, Transfer, hypothecation, or encumbrance of the Property has received prior, written approval from the Agency and the assignee, transferee, beneficiary, or encumbrancer has agreed, in writing and in a form suitable for recordation, to be bound by the terms of this Regulatory Agreement.

d. Owner shall not cause and shall not permit expansion , construction, modification, reconstruction, or demolition of all or any part of any improvements on the Property, except as provided by the Funding Agreemen t or as authorized in a written agreement between Agency and Owner that has been executed by Agency’s Executive Director or their designee.

e. During the construction of the Project, Owner shall ensure that any funding received from Agency is used solely for payment of the costs of construction of the Project in accordance with the Plans and Specifications, or for other purposes

The Sequoia – MIHF Regulatory Agreement Page 6

specified in a written agreement between Agency and Owner that has been executed by Agency’s Executive Director or their designee.

f. During the Term of this Regulatory Agreement, to prevent defects, Owner shall inspect, review, supervise, and assure the high quality and suitability of any construction, demolition, rehabilitation, alteration, or maintenance performed on the Property. Additionally, Owner shall ensure that any of the above acts are performed in a timely manner.

g. If, at any time, residents of the Project are displaced, Owner shall comply fully with all relocation laws. Owner’s failure to comply with applicable relocation laws is an Event of Default.

h. Owner shall maintain the Property and all building improvements, grounds, and equipment of the Property in good repair and condition and in compliance with all applicable housing quality standards and local code requirements. Owner shall maintain the Property in good condition and shall keep the Property reasonably free from graffiti and unrepaired vandalism and from accumulation of abandoned property, inoperable vehicles, unenclosed storage, debris, waste materials, and hazardous substances. In the event of a casualty loss, Owner shall cause the restoration or replacement of the Property, in a timely manner.

i. Owner shall not cause and shall not permit discrimination based on race, color, national origin, religion, sexual orientation, gender, familial status, age , source of income, or disability in the sale, lease, or rental or in the use or occupancy of the Property. Owner covenants by and for him/her/itself, his/her/its heirs, executors, administrators, and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. This covenant against discrimination shall continue in perpetuity.

j. Owner shall not evict, refuse to rent to, or otherwise treat someone differently because of that person’s status as a victim of domestic violence, dating violence, sexual assault, or stalking, in compliance with the Violence Against Women Act. This protection is available regardless of sex, gender identity, or sexual orientation.

k. Owner shall ensure compliance with the obligations imposed by the federal Personal Responsibility and Work Opportunity Act (Public Law 104-193, commonly known as the Welfare Reform Act) as amended by California Welfare and Institutions Code Section 17851, which restrict Agency funding of federal, state or local benefits to persons who are not citizens or qualified aliens as defined in such act.

l. At or before Close of Escrow, Owner shall provide Agency with a detailed resident services plan including but not limited to the following information: (1) identification of all entities responsible for providing resident services to Project tenants and each entity’s role in the provision of those services; (2) a description of the services to be provided; (3) a resident services budget; and (4) Agency approved resident services at the Project according to the following s chedule of twenty (20) hours per week and including the following services (the “Resident Services Plan”). Agency shall have the right to reject or approve the Resident Services Plan submitted by Owner. Prior to initial occupancy, Owner must have a Resident Services Plan in place that has been approved in writing by the Agency.

1) An on-site coordinator who provides services to residents for a minimum of 4 hours per week; and 2) Services of a minimum of 16 hours per week shall be provided and may include, but are not limited to:
a. Educational classes such as nutrition, exercise, health resources, health insurance application assistance, annual onsite health fair, English as a Second Language (ESL) classes; b. Substance abuse referral and support services; and
c. Other services such as transportation assistance, counseling assistance and employee readiness and job search assistance.

m. Beginning at initial occupancy of the Project, Owner shall ensure the resident services are provided to Project residents at all times in accordance with the Resident Services Plan. Beginning at initial occupancy of the Project, and at all times during the Term of this Regulatory Agreement, Owner shall deliver to Agency a once -quarterly report that includes information deemed necessary by the Agency to evaluate the resident services being provided at the Project, including but not limited to: the schedule of services and activities offered, the efforts made by Owner or resident services providers to advertise the activities and services, the number of Tenants served by each service or activity per week, the demographics of the Tenants served by each service or activity per week.

The Sequoia – MIHF Regulatory Agreement Page 7

n. Owner shall ensure that the resident services offered at the Property are reasonably tailored to the needs of the Project’s resident community. Beginning at 75% occupancy of the Project’s residential units, Owner shall ensure that, at least once annually, the needs of the Project’s resident community are evaluated and, if necessary, the Resident Services Plan is amended to best suit the Project residents ’ needs. The Resident Services Plan is not amended until the Agency provides written consent to the amendment.

o. At least once every calendar year, Owner shall deliver to Agency a “Needs Assessment Report,” which describes the following information in sufficient detail for the Agency to determine whether the needs assessment performed was adequate and whether the Resident Services Plan is adequately tailored to the Project’s needs:

1) the methodology used by Owner to determine the Project community’s needs; 2) a summary of the data collected about the Project community’s needs; 3) a summary of the data collected about the utilization of the existing resident services provided at the Project; and 4) an explanation of Owner’s decision to maintain the current Resident S ervices Plan or to amend the Resident Services Plan.

p. If Agency determines the Owner’s efforts to assess the Project residents’ needs or to tailor the Resident Services Plan to the Project’s residents’ needs are inadequate, Agency shall provide notice to Owner, and Owner shall remedy the deficiencies identified by Agency within 45 days of deemed delivery of such notice. Failure to remedy such deficiencies in a timely manner shall be an Event of Default.

q. Owner shall not permit any entity to provide resident services at the Project without the Agency’s prior approval of such entity, such approval to be given, withheld, or revoked at any time upon Agency’s determination, in Agency’s sole and absolute discretion, that the resident services provider is not performing satisfactorily. Upon deemed delivery of notice from the Agency to Owner of the Agency’s determination that any resident services provider is performing or has performed unsatisfactorily to the Agency, Owner must ensure that such provider is removed a nd replaced with a new Agency-approved service provider within 60 days. Failure to timely remove and replace such service provider shall be an Event of Default under this Regulatory Agreement.

r. Subject to Agency’s written approval, Owner shall obtain and maintain for the life of the Regulatory Agreement an Agency approved, top quality property management agreement with a duly accredited real estate property management company for the management of the Property, and shall assure compliance of the property ma nager with the property management agreement. Agency shall have the right to review and approve or reject any proposed changes to scope of said agreement and to changes in the real estate property management company prior to making such changes. Any such changes made without Agency approval shall be an Event of Default under this Regulatory Agreement. Agency approval of a property management company or a property management agreement is fully revocable with 60 days’ notice from Agency. Upon the effective date of the revocation of Agency approval of a property management company or a property management agreement, the maintenance by Owner of the disapproved property management company or property management agreement, whichever applies, shall constitute an Event of Default under this Regulatory Agreement.

s. Owner shall not pass utility charges paid by Owner, including water, sewer, and garbage collection charges, through to any Tenant as an add -on to their contracted rent subject to adjustments permitted b y applicable utility allowances.

t. Owner shall not make any Tenant’s payment of rental insurance premiums a condition of occupancy. If Owner require renters’ insurance, the policy premium must be deducted from the Tenant’s Rent . Owner shall not add the insurance premium to the Tenant’s Rent in either the initial year or at any time thereafter.

u. Owner shall ensure all of the units, indoor common areas, and buildings are smoke free.

v. Upon Agency’s request, Owner shall promptly pr ovide financial statements and other such evidence as Agency may deem necessary to verify the Project income, including without limitation copies of certified rent rolls, bank statements, billing statements, and invoices.

The Sequoia – MIHF Regulatory Agreement Page 8

w. The Property shall include lighting adequate to properly illuminate the parking area and all common spaces. In addition, the Project shall include a security patrol if necessary to ensure resident safety.

6. NATURE OF COVENANTS. The provisions contained in this Regulatory Agreement ar e covenants which subject and burden the Property as covenants running with the land. It is intended and agreed that the agreements and covenants provided in this Agreement shall be covenants running with the land and equitable servitudes on the land and that they shall, in any event, and without regard to technical classifications or designation, be binding, to the fullest extent permitted by law and equity, for the benefit and in favor of, and enforceable by, Agency, Agency's successors and assigns, any other governmental entity acting within its authority and any successor in interest to Agency's interest under this Regulatory Agreement against Owner, its successors and assigns, and every successor in interest to all or any part of the Property.

7. TERM. The “Term” of this Regulatory Agreement shall commence on the Effective Date and continue until the terms of all of the covenants, including without limitation, the terms stated in the Funding Requirements, have expired or otherwise been terminated. Unless a longer term is stated in the Funding Requirements, the term of this Regulatory Agreement shall be 30 years from the Effective Date.

8. EXPIRATION OF AFFORDABILITY PERIOD. Owner agrees the rent of "in-place” Tenants at the conclusion of the Term will continue to be governed by the applicable Affordability Restrictions for as long as those Tenants continue to reside in the Project.

9. REVIVAL OF COVENANTS AFTER FORECLOSURE. The affordability restrictions shall be revived after foreclosure, or deed in lieu of foreclosure, according to the original terms if, during the original term of this Regulatory Agreement, Owner who was owner of record before the termination event, or a party related to Owner obtains an ownership interest in the Property or Restricted Unit , as the case may be. For purposes of this provision, a related party is anyone with whom Owner has or had family or business ties; provided that such interest would not be considered a “remote interest” in the usual and customary use of the term.

10. MULTIPLE FUNDING REQUIREMENTS. If more than one form of Funding Requirements is attached, each Restricted Unit shall be subject to the Funding Requirements for every Funding Source applied to the respective Restricted Unit. If the terms of the Funding Requirem ents shall conflict as to any Restricted Unit, the Funding Requirements shall be construed so as to meet all applicable requirements for the respective Restricted Unit, including without limitation the use of the most restrictive requirements and the use o f the “Recapture” formula that results in the greatest repayment to Agency.

11. RECORDKEEPING AND REPORTING. Upon request of Agency, Owner shall promptly provide any additional information or documentation requested in writing by Agency to verify Owner's comp liance with the provisions of this Regulatory Agreement. At the written request of Agency, Owner shall, within a reasonable time following receipt of such request, furnish reports and shall give specific answers to questions upon which information is desired from time to time relative to the income, assets, liabilities, contracts, operations, and condition of the property and the status of any deeds of trust encumbering the Property. Failure to provide true and correct information or documentation requested by Agency in a reasonable time shall be a default under this Regulatory Agreement.

12. AUDIT AND INSPECTION. The Property and all related equipment, buildings, plans, offices, books, contracts, records, documents and other related papers shall at all times be maintained in reasonable condition for audit and shall be subject to examination by Agency or its agent at any time and without prior notice. The books and accounts of the operations of the Property shall be kept in accordance with generally accepted a ccounting principles. Owner shall provide Agency access to the Property and its tenants during reasonable hours for the purpose of reviewing Owner’s compliance with this Regulatory Agreement.

13. INDEMNITY FOR OWNER’S FAILURE TO MEET LEGAL REQUIREMENTS. Owner shall indemnify and hold Agency, its officers, directors, and employees harmless from any and all liability arising from Owner’s failure to comply with the covenants, conditions and restrictions contained in this Regulatory Agreement or to comply with a ll other laws, rules, regulations and restrictions related to the use of Agency Funding. Without limitation, such indemnity shall include repayment to the appropriate parties of rents or sales proceeds in excess of amounts authorized to be charged and

The Sequoia – MIHF Regulatory Agreement Page 9

repayment to Agency of the costs of funds and the value of lost opportunities resulting from the required repayment by Agency to the funding source of funds improperly used.

14. CHANGES WITHOUT CONSENT OTHERS. Only Agency and its successors and assigns, and Own er (subject to the reasonable approval of Owner's lender) shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants or restrictions contained in this Regulatory Agreement without the consent of any easement holder, licensee, other mortgagee, trustee, beneficiary under a deed of trust or any other person or entity having any interest less than a fee in the Property.

15. DEFAULT. Upon a breach of any of the provisions of this Regulatory Agreement by Owner, Agency may give written notice of such breach to Owner by registered or certified mail. If such violation is not corrected to the satisfaction of Agency within sixty (60) days after the date such notice is mailed or within such further time as Agency ma y determine in its sole and absolute discretion is necessary to correct the breach, and without further notice to Owner, Agency may declare a default under this Agreement, effective on the date of such declaration of default, and upon such default Agency may: (a) during the term of the Funding Agreement, take any action then available under the Funding Agreement for a default under the Funding Agreement; (b) apply to any court for specific performance of this Regulatory Agreement, (c) apply to any court for an injunction against any violation of this Agreement; (d) apply to any court for the appointment of a receiver to take over and operate the Property in accordance with the terms of this Regulatory Agreement, (e) apply to any court for money damages; or ( f) apply to any court or other tribunal for such other relief as may be appropriate.

The parties agree the injury to Agency arising from a default under any of the terms in this Regulatory Agreement would be irreparable, and the amount of damage would be difficult to ascertain.

16. REGULATORY AGREEMENT VIOLATIONS. Owner shall pay the program compliance fees and expenses to Agency set forth in Compliance Violations and Actions (Exhibit 3 - Compliance Violations and Actions) in reimbursement of the amounts and time expended by Agency to insure Owner’s compliance with State statutes and federal regulations and Owner’s obligations under this Regulatory Agreement as a result of Owner not meeting its obligations and reporting requirements. No compliance fee will be assessed for one incident of each type of compliance violation per annual inspection provided the violation is corrected within the specified corrective time period. The second and subsequent violations will be assessed compliance fees as detailed in the Compliance Violations and Actions tables.

17. BINDING SUCCESSORS IN INTEREST. This Regulatory Agreement shall bind and the benefits shall inure to Owner, its successors in interest and assigns, and to Agency and its successors for the term of this Regulatory Agreement.

18. CONTRADICTORY AGREEMENTS. Owner warrants that it has not, and will not, execute any other agreement with provisions contradictory of or in opposition to, the provisions of this Regulatory Agreement, and that, in any event, the requirements of this Regulatory Agreement are paramount and controlling as to the rights and obligations set forth and supersede any other requirements in conflict with this Regulatory Agreement.

19. COMPLIANCE AMENDMENTS. If revisions to the provisions of this Regulatory Agreement are necessitated to comply with the laws or regulations governing Agency Funding, Owner agrees to execute modifications to this Regulatory Agreement that are needed to comply with such laws or regulations.

20. ATTORNEYS' FEES. If the services of any attorney are required by any party to secure the performance of this Regulatory Agreement or otherwise upon the breach of default of another party, or if any judicial remedy or mediation is necessary to enforce or interpret any provision o f this Regulatory Agreement or the rights and duties of any person in relation to this Regulatory Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs in addition to any other relief to which such party may be entitled. Any award of damages following judicial remedy or arbitration as a result of this Regulatory Agreement or any of its provisions shall include an award of prejudgment interest from the date of the breach at the maximum amount of interest allowed by law. The prevailing party shall mean the party receiving an award in arbitration or a judgment in its favor, unless the award or judgment is less favorable than the best settlement offered in writing in a reasonable manner by the other party, in which case the prevailing party is the other party.

21. SEVERABILITY. The invalidity or unenforceability of any clause, part or provision of this Regulatory Agreement shall not affect the validity of the remaining portions.

The Sequoia – MIHF Regulatory Agreement Page 10

22. ELECTION OF REMEDIES. To the extent applicable, in the event of any breach of any covenant, condition or restriction contained in this Regulatory Agreement, Agency shall reasonably endeavor to remedy such breach by conference and conciliation. If, in the opinion of Agency, Agency and Owner are unable mutually to agree upon a suitable remedy or the circumstances so warrant, such breach may be enjoined or abated by appropriate proceedings brought by Agency.

Agency may institute or prosecute in its own name, any suit Agency may consider advisable in orde r to compel performance of any obligation of any owner to develop and maintain the subject property in conformity with this Regulatory Agreement and to remedy any default of this Regulatory Agreement. Agency may also seek a decree requiring removal of any improvements constructed on the Property which improvements are designed for uses not permitted under this Regulatory Agreement and which improvements are unsuitable only for uses not permitted under this Regulatory Agreement.

The remedies of Agency unde r this Regulatory Agreement are cumulative, and the exercise of one or more of such remedies, including, without limitation, remedies under the Funding Agreement shall not be deemed an election of remedies and shall not preclude the exercise by Agency of any one or more of its other remedies.

23. NO WAIVER. No waiver by Agency of any breach of or default under this Regulatory Agreement shall be deemed to be a waiver of any other or subsequent breach or default.

24. NOTICES. Written notices and other written communications by and between the parties shall be addressed to Owner at Owner’s Address and to Agency at Agency Address or such other address as each respective party has designated by written notice to the other party.

The Sequoia – MIHF Regulatory Agreement Page 11

THE PARTIES HAVE EXECUTED THIS REGULATORY AGREEMENT in Sacramento, California as of the Effective Date

OWNER:

JSCo Sequoia LLC, a California limited liability company

By: John Stewart Company,
a California corporation, its sole member and manager

By:_______________________________________
Jack D. Gardner, its CEO

The Sequoia – MIHF Regulatory Agreement Page 12

THE PARTIES HAVE EXECUTED THIS REGULATORY AGREEMENT in Sacramento, California as of the Effective Date

AGENCY:

SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY,
a joint powers agency

By: _______________________________________

La Shelle Dozier, Executive Director

Approved as to form: _________________________
Agency Counsel

The Sequoia – MIHF Regulatory Agreement Page 13

EXHIBIT 1

Legal Description

The land is situated in the State of California, County of Sacramento, City of Sacramento, described as follows:

The West 36 feet of Lot 7, in the block bounded by 9th and 10th, "J" and "K" Streets, according to the official plat thereof.

APN:006-0101-020-0000

The Sequoia – MIHF Regulatory Agreement Page 14

EXHIBIT 2

Funding Requirements

MIHF FUNDING REQUIREMENTS
MIXED INCOME HOUSING FUNDS – CITY OF SACRAMENTO

FINANCING FOR RESIDENTIAL RENTAL PROPERTY

These “Mixed Income Housing Funding Requirements” (or “MIHF Requirements”) are attached to a Regulatory Agreement and are incorporated in that Regulatory Agreement. In turn, the Regulatory Agreement is incorporated in the Loan that is described in the Regulatory Agreement. The capitalized terms used in these MIHF Requirements shall have the meanings below in the body of these MIHF Requirements. Terms being defined are indicated by quotation marks.

Capitalized terms in these MIHF Requirements that are not defined below are defined in the Regulatory Agreement.

1. RECITALS. The Loan is funded by the Age ncy with proceeds of the Mixed Income Housing Fund (“MIHF”) of the City of Sacramento. The Agency has approved the Loan on condition that the property securing the Loan (“Property”) is rehabilitated or developed as residential rental property (“Project”) w ith certain units regulated in accordance with the Regulatory Agreement (“MIHF-Assisted Units”) by recordation of these MIHF Requirements as covenants running with the land.

2. AFFORDABILITY REQUIREMENTS. Owner shall ensure that all of the MIHF-Assisted Units shall be rented at or below the following rates:

a. Low-Income Units shall be rented for not more than thirty percent (30%) of eighty percent (80%) of the Sacramento Metropolitan Statistical Area median income as determined annually by the federal Departm ent of Housing and Urban Development (“Median Income”), as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF-Assisted Unit.

b. Very Low -Income Units shall be rented for not more than thirty percent (30%) of fifty percent (50%) of the Median Income as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF - Assisted Unit.

c. Extremely Low-Income Units shall be rented for not more than thirty percent (30%) of thirty percent (30%) of the Median Income as adjusted for family size appropriate to the size and number of bedrooms in the respective MIHF - Assisted Unit.

d. Unless Owner has obtained prior written Agency authorization, Owner shall maintain the allocation of MIHF - Assisted Units by the bedroom sizes stated in the Regulatory Agreement.

e. Owner shall be responsible for determining the affordable rents for the MIHF -Assisted Units. Within ten (10) days of Owner request, Agency shall provide all information necessary for Owner to compute such affordable rents and will assist Owner in determining such rents.

3. OCCUPANCY REQUIREMENTS. Owner shall ensure that all MIHF-Assisted Units shall be occupied by households earning less than eighty percent (80%) of Median Income.

4. UNIT QUALITY. Owner shall ensure that MIHF -Assisted Units must be comparable in size and amenities to other units in the Project.

5. TERM. These covenants shall burden and regulate the MIHF-Assisted Units for a term of thirty (30) years.

The Sequoia – MIHF Regulatory Agreement Page 15

EXHIBIT 3

Compliance Violations and Actions

COMPLIANCE VIOLATIONS AND ACTIONS
(All payments due and payable within 30-days of assessment)

Tenant Eligibility and Affordability Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Tenants over income
at
initial move-in
Initial $500 per unit, again every 90 days
until another income qualified tenant is
housed.

Correction: Evict tenant if tenant fraud.

Otherwise, next available unit must be
Affordable and rented to an Income-
Qualified tenant.
90 days from discovery date to avoid additional
$500 charge every 90-days the problem is not
corrected.

Incorrect eligibility
documentation
Initial $50 per file for incorrect
calculations, verifications, or required
documents. Additional $50 per month if
not corrected.

Correction: Submit copies of corrections
to compliance staff as applicable.
30 days from discovery date to submit copies of
corrections to compliance staff to avoid additional
$50 per month if not corrected
Failure to complete
annual
recertifications
Initial $250 for each incomplete file.

Additional $50 per month if not corrected.

Correction: Submit copies of
recertifications to compliance staff.
30 days from discovery date to submit corrections
to avoid additional $50 per month if not
corrected.

Failure to maintain
tenant eligibility
records
Initial $500 per unit, again every 90-days
thereafter until new records in place.

Additional $100 per unit per month the
project remains out of compliance.

Correction: Immediately establish new
files/records.
30 days from discovery date to submit copies of
new records to avoid additional $100 per unit per
month the project remains out of compliance.

Incorrect Rents Reimbursement to tenant of the entire
amount overcharged. $100 payment to
Agency for each over-charged unit.

Correction: Refund tenant with letter of
correction.
30 days from discovery date to avoid additional
$100 per overcharged unit per month fee to
Agency.

Failure to submit
complete and
accurate monthly
Bond Report by due
date
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
7 days from discovery date to submit complete
and accurate report to avoid additional $100 per
day charge.

Failure to comply
with approved
Management Plan
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
30 days from discovery date to submit corrections
to avoid additional $100 per day charge.

The Sequoia – MIHF Regulatory Agreement Page 16

Failure to submit
complete and
accurate quarterly
Resident Services
report by due date
Initial $100 per report. Additional $100
per day until complete and accurate report
submitted. Correction: Submit copies of
corrections to compliance staff as
applicable.
7 days from discovery date to submit corrections
to avoid additional $100 per day charge.

Failure to provide a
resident service
required by Resident
Services Plan
Initial $250 per service. Additional $100
per day until service is provided.

Correction: Implement required service or
new resident services plan submitted and
approved; approved plan implemented.
7 days from discovery date to implement required
service or provide new resident services plan to
avoid additional $100 per day charge; 30 days
from discovery date to implement new plan to
avoid additional $100 per day charge.

Noncompliant lease $100 per noncompliant lease.

Correction: Prepare and execute approved
lease or addendum to address the
deficiency.
30 days from discovery date to avoid additional
$100 per noncompliant lease per month charge to
Agency.

Housing Quality Standards Violations
Compliance
Violation
Fees and Actions* Corrective Time Period
Verifiable existence
of Toxic Mold
$200 per unit. Additional $75 per day
charge each time efforts fall outside of
corrective timeframes.

Correction: Prepare and submit action plan
that addresses scope of work and timetable
to complete. Relocate tenant if necessary.

Obtain certified clearance that mold has
been abated and unit is safe to occupy
once again.
3-days from discovery date to submit action plan
to address. 10-days to relocate tenant if necessary.
30-days to obtain certification that unit is mold
free. $75 per day additional charge each time
efforts fall outside of these timeframes.

Broken pipes and
plumbing facilities
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Repair/replace as necessary
7-days from discovery date to avoid additional
$75 per day each day thereafter corrective action
not taken.

Smoke detectors not
working in the units
$200 per unit with non-functional smoke
detector. Additional $75 charge per day if
not corrected.

Correction: Replace batteries or non-
working unit within 24 hours.

Within 24 hours of discovery date to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Windows with large
cracks or missing
glass
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

Infestation of roaches
or vermin
$200 per infested unit. Additional $75
charge per day if not corrected.

Correction: Letter from pest control
company verifying removal of pests with
paid invoice to compliance staff.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

Non-working heating
unit (Winter) or air
conditioning unit
(Summer)
$500 per nonworking unit. Additional $75
charge per day if not corrected. $75 re-
inspection fee if necessary to verify
problem corrected.

Correction: Repair/replace as necessary.

Within 24 hours of discovery date to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Excessive amount
of urine/ feces
$200 per unit. Additional $75 charge per
day if not corrected.

Correction: Clean unit as necessary and
address problem as the lease allows.

Submit correction letter with
documentation to compliance staff.
7-days from date of discovery to avoid $75 per
day additional charge each day thereafter
corrective action not taken.

The Sequoia – MIHF Regulatory Agreement Page 17

Excessive amount of
trash/garbage in the
unit
$75 per unit. Additional $75 charge per
day if not corrected.

Correction: Clean unit and send letter of
correction to compliance staff.
14-days from date of discovery to avoid an
additional $75 per day thereafter each day
corrective action not taken.

Hazardous exterior
conditions
$500 for hazardous conditions. Additional
$75 charge per day if not corrected. $75
re-inspection fee.

Correction: Clean and/or repair as
necessary. Re-inspection to verify problem
addressed.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Large holes
walls/ceiling
$100 per unit. Additional $75 charge per
day if not corrected.

Correction: Submit correction letter with
documentation to compliance staff.
30-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Non-Operable
Security Gate
$500 per non-working gate. Additional
$75 charge per day if not corrected. $75
re-inspection fee if necessary to verify
problem corrected.

Correction: Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

No Security Cameras
(if cameras required)
$250 per discovery. Additional $75
charge per day if not corrected. $75 re-
inspection charge to verify problem
corrected.

Correction: Replace cameras.
30-days from the date of discovery to avoid $75
per day additional charge each day thereafter
corrective action not taken.

Non-working
Security Cameras
$100 per camera per discovery.

Additional $75 charge per day if not
corrected. $75 re-inspection charge to
verify problem corrected. Correction:

Repair/replace as necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

Non-working or non-
accessible
amenities/services
$100 per item per discovery. Additional
$75 charge per day if not corrected. $75
re-inspection charge to verify problem
corrected. Correction: Repair/replace as
necessary.
7-days from date of discovery to avoid $75 per
day additional charge each day corrective action
not taken.

* No compliance fee will be assessed for one incident of each type of compliance violation per annual inspection provided the violation is corrected within the specified corrective time period. The second and subsequent violations will be assessed compliance fees as detailed in the Tenant Eligibility and Affordability Violations and Housing Quality Standards Violations tables.

CHANGING LIVES
- The Sequoia (911 K Street)
The Sequoia
0 Feet
100
Map
Locati
200
Attachment 3

SHRAGIS
April 25, 2023
Attachment 4

Sequoia

ATTACHMENT 5
Addresses
Number of Units
Project Type
Acreage
Unit Mix and Rents 50% AMI
Exempt
Management Unit
SRO Unit 72 0
Studio Unit 16 0
1BR/1BA 0 1
Total Units 88 1
Square Footage Unit Size (sq.ft.) Total (sq. ft.)
SRO Unit 150 10,800
Studio Unit 300 4,800
Common Areas 2,485 2,485
Total Gross 18,085
Resident Facilities
Permanent Sources Total Per Unit Per Square Foot
Permanent Loan 40,000,000$ 449,438$ 2,211.78$
SHRA Capitalized Operating Reserve 3,400,000$ 38,202$ 188.00$ Existing HCD Loan 2,757,041$ 30,978$ 152.45$
HCD - Operating Reserve 510,568$ 5,737$ 28.23$
HCD Capitalized Operating Service Reserve 4,111,184$ 46,193$ 227.33$ TOTAL SOURCES 50,778,793$ 570,548$ 2,807.79$
Permanent Uses Total Per Unit Per Square Foot
Acquisition 2,757,041$ 30,978$ 152.45$
Construction Costs 25,064,945$ 281,629$ 1,385.95$
Architecture & Engineering 1,375,000$ 15,449$ 76.03$ Permits/Fees 742,500$ 8,343$ 41.06$
Hard Cost Contingency 3,712,500$ 41,713$ 205.28$
TOTAL HARD COSTS 33,651,986$ 378,112$ 1,860.77$
Soft Cost Contingency 340,591$ 3,827$ 18.83$
Financing Cost 3,205,725$ 36,019$ 177.26$
Relocation Expenses 1,912,000$ 21,483$ 105.72$
Replacement Reserves 89,000$ 1,000$ 4.92$
Capitalized Operating Reserves 7,422,184$ 83,395$ 410.41$ Operating Reserves 510,568$ 5,737$ 28.23$
Legal Fees 195,000$ 2,191$ 10.78$
Developer Fee 1,578,500$ 17,736$ 87.28$
Third Party Fees, Marketing, Other 1,873,239$ 21,048$ 103.58$ TOTAL SOFT COSTS 17,126,807$ 192,436$ 947.02$
TOTAL USES 50,778,793$ 570,548$ 2,807.79$
SHRA $ per Unit Per Unit Cost
82,908$ 570,548$ $1.00 : $6.88
Management / Expenses
Proposed Developer
Property Management Company
Operating Expenses 830,663$ 9,333$
Property Management Fee 76,485$ 859$
Resident Services 464,619$ 5,220$
Taxes and Insurance 37,021$ 416$
Replacement Reserves 44,500$ 500$
-$ Difference
per unit
Amenities on site will include a common lounge area, Computer room,Community room with Kitchen, laundry facilities, Bike storage, communal shower
Leverage
Leverage
SHRA
John Stewart Company
John Stewart Company
per unit
per unit
per unit
per unit
1 SEQUOIA
Residential Project Summary
911 K Street Sacramento, C A95814
89 Rehabilitation

0.1 Total
72 16
89 Sequoia Area Median Square Total Gross Utility Net Net Rent per Total Monthly Current Unit Type Income % (AMI) Number Feet Sq Feet Rent¹ Allowance Rent Sq Foot Net Rent Annual Rent SRO Units 50% AMI with PBV 72 150 10,800 1,053.00$ 1,053.00$ 7.02$ 75,816$ 909,792$ Studio 50% AMI with PBV 16 300 4,800 1,404.00$ -$ 1,404.00$ 4.68$ 22,464$ 269,568$ 1BR/1BA (Exempt Manager) 1 0 0
Totals 89 450 15,600 98,280$ 1,179,360$
Annual 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Income Increase Per Unit Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Gross Potential Rent 2.50% 1,239,065 1,270,042 1,301,793 1,334,338 1,367,696 1,401,888 1,436,936 1,472,859 1,509,681 1,547,423 Other Income 2.50% 2,338 2,396 2,456 2,517 2,580 2,645 2,711 2,779 2,848 2,919 Less Vacancy 5.00% -61,953 -63,502 -65,090 -66,717 -68,385 -70,094 -71,847 -73,643 -75,484 -77,371 Effective Gross Income $1,179,449 $1,208,936 $1,239,159 $1,270,138 $1,301,892 $1,334,439 $1,367,800 $1,401,995 $1,437,045 $1,472,971 Expenses
Operating Expenses 3.50% 9,333 830,663 859,736 889,827 920,971 953,205 986,567 1,021,097 1,056,836 1,093,825 1,132,109 Property Management 3.50% 859 76,485 79,162 81,933 84,801 87,769 90,841 94,020 97,311 100,717 104,242 Resident Services 3.50% 5,220 464,619 480,881 497,712 515,132 533,161 551,822 571,136 591,125 611,815 633,228 Taxes and Insurance 2.00% 416 37,021 37,761 38,516 39,287 40,072 40,874 41,691 42,525 43,375 44,243 Replacement Reserves 0.00% 500 44,500 44,500 44,500 44,500 44,500 44,500 44,500 44,500 44,500 44,500 Total Expenses 16,329 $1,453,288 $1,502,041 $1,552,488 $1,604,690 $1,658,707 $1,714,604 $1,772,444 $1,832,297 $1,894,232 $1,958,322 Net Operating Income -273,839 -293,105 -313,329 -334,552 -356,816 -380,165 -404,644 -430,302 -457,187 -485,351 Debt Service amount rate amort
Senior Loan $0 0.00% 40 0 0 0 0 0 0 0 0 0 0
HCD Monitoring Fee $40,000,000 0.420% 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 168,000 SHRA Monitoring Fee $3,400,000 0.125% 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 Debt Service Subtotal 174,250 174,250 174,250 174,250 174,250 174,250 174,250 174,250 174,250 174,250 Cash Available after Debt Service -448,089 -467,355 -487,579 -508,802 -531,066 -554,415 -578,894 -604,552 -631,437 -659,601 Priority Distributions
Asset Management Fee 3.00% 25,000 25,750 26,523 27,318 28,138 28,982 29,851 30,747 31,669 32,619 Net Cash after Priority Distributions -473,089 -493,105 -514,102 -536,120 -559,204 -583,397 -608,746 -635,299 -663,106 -692,220 HCD Loans
Principal Balance $40,000,000 6.250% 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 40,000,000 Interest for Period 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Accumulated Interest 2,500,000 5,000,000 7,500,000 10,000,000 12,500,000 15,000,000 17,500,000 20,000,000 22,500,000 25,000,000 Balance 42,500,000 45,000,000 47,500,000 50,000,000 52,500,000 55,000,000 57,500,000 60,000,000 62,500,000 65,000,000 SHRA Loan
Principal Balance $2,100,000.00 0.00% 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 Interest for period 0 0 0 0 0 0 0 0 0 0
Accumulated Interest 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 2,100,000 Balance

HCD - COSR
Principal Balance $2,599,184 2,599,184 2,126,095 1,632,990 1,118,888 582,768 -473,089 -493,105 -514,102 -536,120 -565,311
Balance 2,126,095 1,632,990 1,118,888 582,768 17,457
SHRA Funds
Principal Balance $3,400,000 3,400,000 3,406,107 2,822,711 2,213,965 1,578,666 915,560 6,107 -583,397 -608,746 -635,299 -663,106 -692,220
3,406,107 2,822,711 2,213,965 1,578,666 915,560 223,339

Sequoia
Cash Flow ProformaAttachment 6
Attachment 7
The Sequoia
Maximum Income and Rent Limits 2023
Limits at 30% and 50% of Area Median
Income (AMI) Housing Trust Funds (HTF)
Mixed Income Housing Funds (MIHF)
Maximum Gross Income Limits
Family Size 30% AMI 50% AMI
1 $22,550 $37,500
2 $25,750 $42,900
3 $28,950 $48,250
4 $32,150 $53,600
Maximum Gross Rent Limits*
*The tenant rent will not exceed 30% of the household adjusted gross income with Project Based Vouchers.

Unit Size 30% AMI 50% AMI
Studio $563.75 $937.50
1 Bedroom $643.75 $1072.50