Attachment 3 - CSB - LMIHAF Loan & Regulatory Agreement - DRAFT — Mayor and City Council, November 5, 2025

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LMIHAF LOAN AGREEMENT
By and Between the

CITY OF SAN BERNARDINO
And
E Street Veterans Apartments, LP,
a California limited partnership
[E Street Veteran Apartments (1351 N. E Street, San Bernardino, California)] Loan No: _____________________
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TABLE OF CONTENTS
Page
100. DEFINITIONS ...................................................................................................................2 101. Terms ......................................................................................................................2 200. LOAN AGREEMENT........................................................................................................8 201. Loan ........................................................................................................................8 202. Repayment of Loan.................................................................................................9 302.1 Maturity Date ...........................................................................................9 302.2 Interest Rate..............................................................................................9 302.3 Repayment Terms ....................................................................................9 203. Use of Funds...........................................................................................................9 204. Disbursement of Loan Funds..................................................................................9 204.1 Conditions Precedent to Disbursement ....................................................9 205. Repayment of Loan...............................................................................................10 206. City Not Liable .....................................................................................................10 300. REPRESENTATIONS AND WARRANTIES ................................................................10 301. City Representations.............................................................................................10 301.1 Authority ................................................................................................10 301.2 No Conflict.............................................................................................10 301.3 No Bankruptcy .......................................................................................10 301.4 No Condemnation ..................................................................................11 302. Borrower’s Representations..................................................................................11 302.1 Organization ...........................................................................................11 302.2 Authority to Borrow ...............................................................................11 302.3 Authority of Persons Executing Documents ..........................................11 302.4 No Conflict.............................................................................................11 302.5 Compliance with Laws; Consent and Approvals ...................................11 302.6 Valid Binding Agreement ......................................................................11 302.7 Pending Proceedings ..............................................................................11 302.8 Financial Statements ..............................................................................12 302.9 No Material Adverse Event....................................................................12 302.10 Accuracy.................................................................................................12 302.11 Disclosure of Information ......................................................................12 302.12 No Condemnation ..................................................................................12 302.13 Eligible Costs .........................................................................................12 302.14 FIRPTA ..................................................................................................12 400. COVENANTS OF BORROWER ....................................................................................12 401. Borrower’s Financing ...........................................................................................12 402. Reserved ...............................................................................................................13 403. Permits, Licenses and Approvals..........................................................................13 404. Notices to City ......................................................................................................13 405. Insurance...............................................................................................................13 55600.00203\44217572.6
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405.1 Required Insurance.................................................................................14 405.2 Nature of Insurance ................................................................................14 405.3 Policy Requirements and Endorsements ................................................14 406. Indemnity..............................................................................................................16 406.1 Borrower Indemnity Obligations ...........................................................16 406.2 Independence of Insurance Obligations .................................................16 406.3 Survival of Indemnification and Defense Obligations...........................17 406.4 Indemnification Procedures....................................................................17 407. Financial Statements and Reports.........................................................................17 408. Books and Records ...............................................................................................18 409. Compliance...........................................................................................................18 500. REHABILITATION.........................................................................................................18 501. Covenant to Complete the Project ........................................................................18 502. Cost of Project ......................................................................................................18 600. USE AND MAINTENANCE OF THE PROPERTY; NONDISCRIMINATION; RIGHTS OF SECURITY FINANCING HOLDERS.......................................................18 601. Restrictive Covenants ...........................................................................................18 602. Maintenance of the Property.................................................................................18 603. Obligation to Refrain from Discrimination ..........................................................19 604. Form of Nondiscrimination and Nonsegregation Clause .....................................19 605. Rights of Access ...................................................................................................20 606. Effect and Duration of Covenants ........................................................................20 607. Recordation and Priority of Regulatory Agreement.............................................20 700. DEFAULTS AND REMEDIES .......................................................................................20 701. Default ..................................................................................................................20 702. Remedies...............................................................................................................21 702.1 City .........................................................................................................21 702.2 Borrower.................................................................................................21 703. Rights and Remedies Cumulative.........................................................................21 800. GENERAL PROVISIONS ...............................................................................................21 801. Notices ..................................................................................................................21 802. Applicable Law.....................................................................................................22 803. Enforced Delay; Extension of Times for Performance.........................................22 804. Transfers of Interest in Property or Agreement....................................................22 804.1 Prohibition..............................................................................................22 804.2 Permitted Transfers ................................................................................23 805. Relationship Between City and Borrower ............................................................23 806. Reserved ...............................................................................................................23 55600.00203\44217572.6
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807. City Approvals and Actions..................................................................................24 808. Counterparts..........................................................................................................24 809. Integration.............................................................................................................24 810. Attorneys’ Fees.....................................................................................................24 811. Titles and Captions ...............................................................................................24 812. Interpretation.........................................................................................................24 813. No Waiver.............................................................................................................24 814. Modifications........................................................................................................24 815. Severability...........................................................................................................25 816. Incorporation of Recitals ......................................................................................25 817. Incorporation of Attachments ...............................................................................25 818. Legal Advice.........................................................................................................25 819. Time of Essence....................................................................................................25 820. Cooperation...........................................................................................................25 821. Conflicts of Interest ..............................................................................................25 822. Time for Acceptance of Agreement .....................................................................25 823. Agreement Binding...............................................................................................25 824. Non-Liability of Officials and Employees of City ...............................................26 55600.00203\44217572.6
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ATTACHMENTS
Attachment No. 1 Legal Description of Property
Attachment No. 2 Loan Budget
Attachment No. 3 Promissory Note
Attachment No. 4 Deed of Trust
Attachment No. 5 Regulatory Agreement
Attachment No. 6 Notice of Affordability Restrictions
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55600.00203\44217572.6

LMIHAF LOAN AGREEMENT

BETWEEN THE

CITY OF SAN BERNARDINO
AND

E STREET VETERAN APARTMENTS, LP, A CALIFORNIA LIMITED

PARTNERSHIP
[E Street Veteran Apartments (1351 N. E Street, San Bernardino, California)] Loan Amount: $2,014,599
This LMIHAF Loan Agreement (“Agreement”) is entered into as of [DATE BASED ON CLOSE OF PERMANENT FINANCING], by and between the CITY OF SAN BERNARDINO, a California municipal corporation (“City”), and E Street Veteran Apartments, LP, a California limited partnership (“Borrower”).

RECITALS
A. City is a California municipal corporation that, as housing successor to the City’s former redevelopment agency, is, among other activities, involved in programs designed to develop affordable housing including the funding of acquisition, predevelopment and development of affordable housing projects.

B. In connection with this Agreement, Borrower has developed a thirty (30) unit rental housing project, which includes one (1) manager unit (the “Project”) located at 1351 North E Street in San Bernardino, California, APN [insert APN #], as more particularly described in Attachment No. 1, attached hereto and incorporated herein by this reference (the “Property”).

C. As part of the conditions of this Agreement, City is requiring that fifteen (15) in the Project be restricted for rental to Qualifying Households at an Affordable Rent, as more specifically set forth herein.

D. City, as housing successor to the City’s former redevelopment agency, intends to loan Borrower an amount not to exceed Two Million Fourteen Thousand Five Hundred Ninety- Nine Dollars ($2,014,599) (the “Loan”) as permanent financing for the Project from the City’s Low and Moderate Income Housing Asset Fund (“LMIHAF”), pursuant to Health and Safety Code section 34176.1, subdivision (a)(3)(A).

E. This Agreement and the other documents executed in connection with the Loan, including but not limited to the Promissory Note, Deed of Trust, as Regulatory Agreement, all as defined herein, are collectively referred to in this Agreement as the “Loan Documents”.

F. The California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) (“CEQA”), imposes no conditions on the City’s consideration and approval of this Agreement, because funding of a proposal is not subject to environmental review under CEQA, as it does not constitute a “project,” does not commit the City to a definite course of action, does not constitute discretionary approval of a specific project, and will not result in a direct or reasonably 55600.00203\44217572.6
2 foreseeable indirect physical change in the environment, and in the alternative is exempt from CEQA.

NOW, THEREFORE, City and Borrower hereby agree as follows:

AGREEMENT
100. DEFINITIONS
101.Terms. The following terms, as used in this Agreement, shall have the meaning ascribed them in this Section:
a.“Affordable Rent” means, in reference to each Affordable Unit, a level which is no higher than thirty percent (30%) of gross income for the household size appropriate for the applicable Affordable Unit.
b.“Affordable Units” means the fifteen (15), including twelve (12) one- bedroom units and three (3) two-bedroom units, of the thirty (30) residential units included in the Project that will be restricted by Borrower in the manner set forth in this Agreement and the Regulatory Agreement for rental to and occupancy by Qualifying Households in accordance with the terms and conditions of this Agreement and the Regulatory Agreement. c.“Additional Borrower Financing” has the meaning set forth in Section 401.
d.“Affiliate” means any other Person Controlling or Controlled by or under common Control with a specified Person.
e.“Agreement” means this Loan Agreement.
f.“Annual Loan Payment” has the meaning set forth in Section 202.3. g.“Annual Operating Expenses” means for each calendar year, the following costs reasonably and actually incurred for operation and maintenance of the Project: (i) Property taxes and assessments imposed on the Project; (ii) debt service currently due on a non- optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on the Additional Borrower Financing; (iii) on-site service provider fees for tenant social services, provided the City have approved, in writing, the plan and budget for such services before such services begin; (iv) property management fees and reimbursements, on–site property management, office expenses, and salaries of property management and maintenance personnel, not to exceed amounts that are standard in the industry and which are pursuant to a management contract approved by the City; (v) fees for accounting, audit, legal and other services incurred by Borrower in the asset management of the Project (including, for the avoidance of doubt, an asset management fee payable to the Borrower’s general partner/managing member), not to exceed amounts that are standard in the industry; (vi) premiums for insurance required for the Property or the improvements thereon to satisfy the requirements of any lender of Approved Financing; (vii) utility services not paid for directly by tenants, including water, sewer, and trash collection; (viii) maintenance and repair expenses and services; (ix) any annual license or certificate of occupancy fees required for 55600.00203\44217572.6
3 operation of the Project; (x) security services; (xi) advertising and marketing; (xii) cash deposited into any replacement reserve account or operating reserve account approved by the City, which approval shall not be unreasonably withheld, conditioned or delayed (it being acknowledged and agreed that the City approves the deposit of any property tax refunds received by Borrower into the Project’s replacement reserve account); (xiii) extraordinary operating costs specifically approved in writing by the City; (xiv) payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves, and other ordinary and reasonable operating expenses approved in writing by the City and not listed above; (xv) and other ordinary and reasonable operating expenses approved in writing by the City and not listed above.

Annual Operating Expenses do not include the following: depreciation, amortization, depletion or other non-cash expenses, initial deposits to capitalize a reserve account, any amount expended from a reserve account, and any capital cost associated with the Project. For purposes of determining Annual Operating Expenses, the following shall apply:
(1) The “property management fees” shall be limited to $60 per unit per month, increases at 3.0% per year.
(2) A minimum annual Replacement Reserve deposit is to be $500 per unit. (3) The cost for tenant social services shall be a minimum of $3,212 per unit, increasing at 3% per year, or as otherwise approved by the City. (4) A Limited Partner Asset Management Fee shall not exceed $10,000.00 per year, with allowable annual increases of 3% per year.
(5) A Managing General Partner Asset Management Fee shall not exceed $10,000 per year, with allowable annual increases of 3% per year. h.“Approved Financing” means the Loan and the Additional Borrower Financing.
i.“Area Median Income” means the area median income for San Bernardino County as published by HUD, adjusted for household size. j.“Automobile Liability Insurance” means insurance coverage against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used by Borrower. Such insurance shall be provided by a business or commercial vehicle policy and may be provided through a combination of primary and excess or umbrella policies, all of which shall be subject to pre-approval by City, which approval shall not be unreasonably withheld.
k.“Borrower” has the meaning set forth in the introduction to this Agreement. l.“City” means the City of San Bernardino.
m.“City Share of Residual Receipts” means 7.50% of Residual Receipts. 55600.00203\44217572.6
4 n.“Claim” means any claim, loss, cost, damage, expense, liability, Lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind. o.“Close of Escrow” means the date upon which all conditions of the City as set forth in Section 204.1 of this Agreement, along with any conditions required by any lender providing Additional Borrower Financing for the acquisition of the Property, but not later than ______________, 2027.
p.“Conditions Precedent to Disbursement” has the meaning set forth in Section 204.1.
q.“Control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person and contractually bind such Person, whether by ownership of Equity Interests, by contract, or otherwise. r.“Construction” means any alteration, construction, excavation, demolition, grading, development, expansion, reconstruction, redevelopment, repair, restoration, or other work affecting the Property.
s.“County” means the County of San Bernardino, California. t.“Deed of Trust” means that certain Deed of Trust executed by Borrower in substantially the form attached hereto as Attachment No. 4 that will encumber the Property to secure repayment of the Loan.
u.“Project” has the meaning set forth in Recital B.
v.“Disbursement” has the meaning set forth in Section 204.1. w.“Draw Request” has the meaning set forth in Section 204.2. x.“Effective Date” means the date first set forth in this Agreement above. y.“Environmental Claim” means any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including reasonable attorney’s fees and costs and costs of environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever, directly or indirectly, relating to or arising from any actual or alleged violation of any Environmental Law or Hazardous Substance Discharge.
z.“Environmental Document” means any exemption determination, any Negative Declaration (mitigated or otherwise) or any Environmental Impact Report (including any addendum or amendment to, or subsequent or supplemental Environmental Impact Report) required or permitted pursuant to the National Environmental Policy Act (codified as 42 U.S.C. §§ 4321 et seq.) or the California Environmental Quality Act (codified as Public Resources Code 55600.00203\44217572.6
5 Sections 21000 et seq.), as applicable, to issue any discretionary Approval required to approve this Agreement.
aa.“Environmental Law” means any Federal or California law regarding any of the following at, in, under, above, or upon the Property: (a) air, environmental, ground water, or soil conditions; or (b) clean-up, remediation, control, disposal, generation, storage, release, discharge, transportation, use of, or liability or standards of conduct concerning, Hazardous Substances, as now or may, at any later time, be in effect. bb.“GAAP” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the United States accounting profession, which are applicable to the circumstances as of the date of determination. cc.“Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees, of the United States, the State of California, the County, City of San Bernardino, or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Borrower or the Property.
dd.“Gross Revenue” means for each calendar year, all revenue, income, receipts, and other consideration actually received from the operation and leasing of the Development. Gross Revenue includes, but is not limited to: (i) all rents, fees and charges paid by tenants; (ii) Section 8 payments or other rental subsidy payments received for the dwelling units; (iii) deposits forfeited by tenants; (iv) all cancellation fees; (v) price index adjustments and any other rental adjustments to leases or rental agreements; (vi) net proceeds from vending and laundry room machines; (vii) the proceeds of business interruption or similar insurance not paid to senior lenders; (viii) the proceeds of casualty insurance not used to rebuild the Development and not paid to senior lenders; and (ix) condemnation awards for a taking of part or all of the Development for a temporary period. Gross Revenue does not include tenants’ security deposits, loan proceeds, capital contributions or similar advances. ee.“Hazardous Substance” means any flammable substances, explosives, radioactive materials, asbestos, asbestos-containing materials, polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, medical wastes, toxic substances or related materials, explosives, petroleum, petroleum products and any “hazardous” or “toxic” material, substance or waste that is defined by those or similar terms or is regulated as such under any Law, including any material, substance or waste that is: (a) defined as a “hazardous substance” under Section 311 of the Water Pollution Control Act (33 U.S.C. § 1317), as amended; (b) substances designated as “hazardous substances” pursuant to 33 U.S.C. § 1321; (c) defined as a “hazardous waste” under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., as amended; (d) defined as a “hazardous substance” or “hazardous waste” under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund 55600.00203\44217572.6
6 Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq., or any so-called ‘superfund” or ‘superlien” law; (e) defined as a “pollutant” or “contaminant” under 42 U.S.C. § 9601(33); (f) defined as “hazardous waste” under 40 C.F.R. Part 260; (g) defined as a “hazardous chemical” under 29 C.F.R. Part 1910; (h) any matter within the definition of “hazardous substance” set forth in 15 U.S.C. § 1262; (i) any matter, waste or substance regulated under the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; (j) any matter, waste or substance regulated under the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; (k) those substances listed in the United States Department of Transportation (DOT) Table [49 C.F.R. 172.101]; (l) any matter, waste or substances designated by the EPA, or any successor authority, as a hazardous substance [40 C.F.R. Part 302]; (m) any matter, waste or substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code; (n) any substance defined as a “hazardous substance” in Section 25316 of the California Health and Safety Code; (o) any matter, waste, or substance that is subject to any other Law regulating, relating to or imposing obligations, liability or standards of conduct concerning protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property free from the presence in the environment of any solid, liquid, gas, odor or any form of energy from whatever source; or (p) other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under Law or in the regulations adopted pursuant to said Law, including manure, asbestos, polychlorinated biphenyl, flammable explosives and radioactive material. Notwithstanding the foregoing, “Hazardous Substances” shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Development including, without limitation, alcohol, aspirin, tobacco and saccharine.
ff.“Hazardous Substance Discharge” means any deposit, discharge, generation, release, or spill of a Hazardous Substance that occurs at on, under, into or from the Property, or during transportation of any Hazardous Substance to or from the Property, or that arises at any time from the Construction, use or operation of the Development or any activities conducted at on, under or from the Property, whether or not caused by a Party. gg.“HCD” means the California State Department of Housing and Community Development.
hh.“HUD” means the U.S. Department of Housing and Urban Development. ii.“Insurance Requirements” means the insurance coverage requirements described in Section 405 of this Agreement.
jj.“Land Use Laws” has the meaning set forth in Section 402. kk.“Liability Insurance” means commercial general liability insurance against claims for bodily injury, personal injury, death, or property damage occurring upon, in, or about the Property, the Development or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CG0001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a 55600.00203\44217572.6
7 combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Development or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence.
ll. “Limited Partner” mean R4 ESCA Acquisition LP, a Delaware limited partnership, its successors and/or assigns.
mm.“Loan” has the meaning set forth in Section 201.
nn.“Loan Budget” means that certain budget for the use of the Loan proceeds that has been approved by the City, attached hereto and incorporated herein as Attachment No. 2. oo.“Loan Documents” means the documents, instruments and agreements evidencing and securing the Loan including, but not limited to, this Agreement, the Note, the Deed of Trust, the Notice of Affordability Restrictions and the Regulatory Agreement. pp.“Official Records” means the Official Records of the County of San Bernardino, State of California.
qq.“Person” means any association, corporation, governmental entity or agency, individual, joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated organization or other entity of any kind. rr.“Prevailing Wage Action” means any of the following: (a) any determination by the California Department of Industrial Relations that prevailing wage rates should have been paid, but were not; (b) any determination by the California Department of Industrial Relations that higher prevailing wage rates than those paid should have been paid; (c) any administrative or legal action or proceeding arising from any failure to comply with the Federal Davis-Bacon Act (codified as 40 U.S.C. §§ 3141 et seq.) or California Labor Code Sections 1720 through 1781, as amended from time to time, regarding prevailing wages, including maintaining certified payroll records; or (d) any administrative or legal action or proceeding to recover wage amounts at law or in equity.
ss.“Promissory Note” means that certain promissory note in the form attached hereto as Attachment No. 3, to be executed by Borrower, for the purpose of evidencing Borrower’s repayment obligations for the Loan.
tt.“Property” has the meaning set forth in Recital B. The Property is described in the Legal Description of Property, attached hereto and incorporated herein as Attachment No. 1.
uu.“Property Insurance” means insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County of San Bernardino, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Development (excluding excavations and foundations) and in any 55600.00203\44217572.6
8 event sufficient to avoid co-insurance and with no co-insurance penalty provision, with “ordinance or law” coverage. To the extent customary for like properties in the County of San Bernardino at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an “increased cost of construction” endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits. vv.“Qualifying Household” means a household that: (1) intends to reside in an Affordable Unit; and (2) upon initial income certification, and each year thereafter (subject to the terms of the Regulatory Agreement), qualifies as an “extremely low income household” under California Health and Safety Code section 50106, or who otherwise meets the income restrictions as set forth in Section 2.3 of the Regulatory Agreement for the applicable Affordable Unit, based on a household size appropriate for the Affordable Unit. ww.“Regulatory Agreement” or “LMIHAF Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants executed by Borrower and City pursuant to this Agreement and to be recorded in the Official Records, in substantially the forms attached hereto as Attachment No. 5, for the purpose of ensuring that the Development shall be operated as an affordable multi-family residential development for the full term of the Loan in accordance with the terms of this Agreement.
xx.“Residual Receipts” means for each calendar year, the amount by which Gross Revenue exceeds Annual Operating Expenses.
yy. “Term” means the term of this Agreement, and the Loan, which commences as of the Effective Date and, unless terminated earlier pursuant to the provisions of this Agreement, ends on the later of: (i) fifty-seven (57) years after the date of the recordation of the Deed of Trust against the Property; or (ii) fifty-five (55) years after the date the first building located on the Property is constructed and obtains a certificate of occupancy, or equivalent document, from the City.
zz.“Third Person” means any Person that is not a Party, an Affiliate of a Party, or an elected official, officer, director, manager, shareholder, member, principal, partner, employee or agent of a Party.
aaa.“Workers Compensation Insurance” Workers compensation insurance complying with the provisions of California law and an employer’s liability insurance policy or endorsement to a liability insurance policy, with a minimum liability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of Borrower. 200. LOAN AGREEMENT
201.Loan. City hereby agrees to make a loan (the “Loan”) to Borrower in a total amount not to exceed Two Million Fourteen Thousand Five Hundred Ninety-Nine Dollars ($2,014,599), subject to the terms and conditions of the Loan Documents. The Loan shall be evidenced by, and repayable in accordance with, the Promissory Note, which is secured by the Deed of Trust, recorded against the Property. The Promissory Note, Deed of Trust, and Regulatory Agreement for each property are attached as Attachments 3, 4, and 5. City and Borrower shall execute the Note, Deed of Trust, and Regulatory Agreement for the Property, concurrently with 55600.00203\44217572.6
9 the execution of this Agreement by City, and the Deed of Trust and the Regulatory Agreement shall thereafter be recorded in the Official Records.
202.Repayment of Loan.
202.1Maturity Date. The Loan shall be due and payable in full at the earlier of (i) any sale of the Property by Borrower, to any Party other than an Affiliate of Borrower; (ii) an uncured Default under this Agreement; or (iii) Fifty-Five (55) years after the date of execution of the Promissory Note (the “Maturity Date”).
202.2Interest Rate. The Loan shall be repaid pursuant to the terms of the Promissory Note and in accordance with Section 202.3 of this Agreement, and shall bear simple interest at the rate of Three Percent Simple Interest (3%) per annum on the amounts disbursed to Borrower, commencing upon the date of the closing of the Loan. 202.3Repayment Terms. Commencing on April 1 of the year following the year when the Project converts to permanent financing , and on the anniversary of such date of each year thereafter during the Term, Borrower shall make a loan payment in an amount equal to the City Share of Residual Receipts for the prior calendar year (each such payment, an “Annual City Loan Payment”). The City shall apply all Annual City Loan Payments to the Loan as follows: (1) first, to accrued interest, and (2) second, to principal on the Loan. 203.Use of Funds. The proceeds from the Loan may be used only for permanent financing of the Project in accordance with the Loan Budget. 204.Disbursement of Loan Funds.
204.1Conditions Precedent to Disbursement. The City shall disburse the Loan Funds pursuant to this Agreement (the “Disbursement”) only following satisfaction or waiver by City of each and all of the conditions precedent, described below (“Conditions Precedent to Disbursement”), which are solely for the benefit of the City, and which shall be fulfilled or waived by the time periods provided for herein.
a.Subject to expiration of any applicable cure period, Borrower shall not be in default of any of its obligations under the terms of this Agreement. b.Execution and delivery of the Promissory Note, the Regulatory Agreement, the Notice of Affordability Restrictions and the Deed of Trust. c.With respect to the Regulatory Agreement, satisfaction of all requirements set forth in Section 607 of this Agreement.
d.Delivery of a binding commitment by a title insurance company acceptable to the City to issue a lender’s policy of title insurance with any endorsements the City may reasonably require, insuring the City in the principal amount of the Loan, of the validity and priority of the Deed of Trust upon the Property, subject only to liens and matters of record approved by the City in writing, and showing fee simple title to the Property in the name of the Borrower. 55600.00203\44217572.6
10 e.Borrower shall have provided the City with a copy of the resolution of the Borrower approving and authorizing execution of this Agreement and all documents contemplated hereby on behalf of Borrower and with such other documentation required by the City regarding Borrower’s creation, status and authority to enter into this transaction. f.Borrower shall have provided City with a certificate showing it to be in good standing under the laws of the State of California. g.Borrower shall have delivered to City evidence that Borrower has obtained all approvals and commitments for the Additional Borrower Financing necessary and sufficient to obtain and close permanent financing for the Project.
h.Borrower shall have satisfied all of the applicable terms and conditions set forth in this Agreement, including without limitation providing evidence that it possesses the insurance required by Section 405 of this Agreement.
i.All of the representations and warranties made by the Borrower in this Agreement and in the Promissory Note, the Deed of Trust and the Regulatory Agreement shall be true and correct in all material respects as of the date of the Disbursement. j.Borrower shall have completed construction of the Project and closed on the permanent financing for the Project.
205.Due in Full. All outstanding principal and accrued interest on the Loan shall be due in full on the earlier to occur of: (i) the date of any Default (following any applicable cure periods); or (ii) the expiration of the Term.
206.City Not Liable. In no event shall City be liable to Borrower or any other party, including but not limited to any lender, contractor or subcontractor, for any damage whatsoever which may result in whole or in part from any action or inaction of City hereunder, including without limitation, failure or delay in making any disbursement of Loan funds, except to the extent of City’s gross negligence or willful misconduct.
300. REPRESENTATIONS AND WARRANTIES
301.City Representations. City represents and warrants to Borrower as follows:
301.1Authority. City has full power and authority to execute and deliver this Agreement, to execute and deliver all applicable Loan Documents and to perform and observe the terms and provisions of all of the above.
301.2No Conflict. To the best of City’s knowledge, City’s execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which it is bound. 301.3No Bankruptcy. City is not the subject of a bankruptcy proceeding. 55600.00203\44217572.6
11 301.4No Condemnation. No condemnation proceeding or moratorium is pending or threatened against the Property or any portion thereof that would impair the use, occupancy or full operation of the Property in any manner whatsoever. 302.Borrower’s Representations. To induce City to enter into the Loan and provide the Loan Funds pursuant hereto, Borrower hereby makes the following representations and warranties to City. The Borrower shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section not to be true, immediately provide written notice of such fact or condition to City.
302.1Organization. Borrower is a duly organized limited partnership in good standing under the laws of the State of California. The copy of the certificate of limited partnership agreement which have been delivered to City is a true and complete copy of the original, as amended to the date of Borrower’s execution of this Agreement. 302.2Authority to Borrow. Borrower has full power and authority to execute and deliver this Agreement, to make and accept the Loan contemplated hereunder, to execute and deliver all applicable Loan Documents and to perform and observe the terms and provisions of all of the above.
302.3Authority of Persons Executing Documents. The applicable Loan Documents have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all actions required under the Borrower’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of the Loan Documents have been duly taken. 302.4No Conflict. The execution, delivery and performance by Borrower of the Loan Documents to which it is a party will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to Borrower or the Property; or (ii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which Borrower is a party or by which any of its properties may be bound or, except as specifically contemplated herein, result in the creation of any lien on any asset of Borrower.
302.5Compliance with Laws; Consent and Approvals. Borrower shall comply with all Governmental Requirements, including all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency as applicable.
302.6Valid Binding Agreement. The Loan Documents executed by Borrower constitute, or if not yet executed, will constitute when so executed, legal, valid and binding obligations of Borrower enforceable by and against it in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the rights of creditors generally and general principals of equity. 302.7Pending Proceedings. Borrower is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there 55600.00203\44217572.6
12 are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially and adversely affect Borrower’s ability to repay the Loan.
302.8Financial Statements. All financial statements and information delivered to City by or on behalf of Borrower, including information relating to the financial condition of Borrower and the Property, fairly and accurately represent the financial condition of the subject thereof and have been prepared in accordance with GAAP, consistently applied, or another sound accounting practice consistently applied as previously submitted by Borrower to City and approved by City. Borrower acknowledges and agrees that City may request and obtain additional information from third parties.
302.9No Material Adverse Event. There has been no material adverse change in the value or physical condition of the Property or in the financial condition of Borrower since the dates of the latest financial statements of Borrower furnished to City, and except as otherwise disclosed to City in a specified writing, Borrower has not entered into any material transaction that is not disclosed in such financial statements.
302.10Accuracy. All reports, documents, instruments, information and forms of evidence delivered to City concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give City true and accurate knowledge of their subject matter and do not contain any misrepresentation or omission. 302.11Disclosure of Information. All material information concerning the Property known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, has been disclosed to City. There are no facts or information known to Borrower, or that should have been known to Borrower in the exercise of reasonable care, that would make any of the information furnished to City by Borrower inaccurate, incomplete, or misleading in any material respect.
302.12No Condemnation. No condemnation proceeding or moratorium is pending or threatened against the Property or any portion thereof that would impair the use, occupancy or full operation of the Property in any manner whatsoever. 302.13Eligible Costs. The proceeds of the Loan shall be used only for the acquisition of the Property.
302.14FIRPTA. Borrower is not a “Foreign Person” within the meaning of FIRPTA, or is exempt from the provisions of FIRPTA, and Borrower has complied and will comply with all of the requirements under FIRPTA.
400. COVENANTS OF BORROWER
401.Borrower’s Financing. In addition to the Loan provided for herein, the Borrower has secured or will secure financing (collectively, the “Additional Borrower Financing”), as follows:
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13 a.A construction loan from Banc of California in the approximate amount of $10,172,391 (the “Construction Loan”), which shall be satisfied at conversion to permanent financing;
b.A loan from the State of California Housing and Community Development Department in the approximate amount of $4,426,369.00, consisting of funds from the Veterans Housing and Homelessness Prevention Program (the “VHHP Funding”); c.A sponsor loan from U.S. VETS Housing Corporation in the approximate amount $500,000.00;
d.A separate loan from the City of San Bernardino using Permanent Local Affordable Housing funds (the “PLHA Loan”) in the amount of One Million Nine Hundred Eighty Five Thousand Four Hundred One Dollars and Zero Cents ($1,985,401.00), which will be made pursuant to a PLHA Loan Agreement (the “PLHA Loan”); and, e.A loan from the County of San Bernardino in the amount of $5,000,000.00.
402.Compliance with Regulatory Agreement; Affordable Unit Mix. Borrower shall operate the Property in accordance with the Regulatory Agreement. 402.1The Project shall include the Affordable Units that are restricted for Affordable Rent in accordance with the Regulatory Agreement imposed as part of the LMIHAF Loan and the PLHA Loan. As required by the PLHA Loan, a PLHA Regulatory Agreement was recorded against the Property on or about November ___, 2025 (the “PLHA Regulatory Agreement”).
402.2The Regulatory Agreement and the LMIHAF Loan apply to fifteen (15) Affordable Units, and the PLHA Loan and PLHA Regulatory Agreement apply to fourteen (14) Affordable Units as reflected in the unit matrix below:
# UNITS BEDROOMS %AMI RESTRICTIONS
12 1 30% LMIHAF Regulatory Agreement
9 1 50% PLHA Regulatory Agreement
3 2 30% LMIHAF Regulatory Agreement
5 2 50% PLHA Regulatory Agreement
403.Permits, Licenses and Approvals. Borrower shall properly obtain, comply with and keep in effect all permits, licenses and approvals which are required to be obtained in order to acquire the Property and/or develop the Project.
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14 404.Notices to City. Borrower shall promptly notify City in writing of:
a.Any litigation affecting Borrower, where the amount claimed is One Hundred Thousand Dollars ($100,000.00) or more;
b.Any communication, whether written or oral, that Borrower may receive from any governmental, judicial or legal authority, giving notice of any claim or assertion that any portion of the Property or the Development fail in any respect to comply with any Governmental Requirement;
c.Any default by any contractor, design professional, subcontractor, material supplier or surety in the performance of its or their obligations with respect to the construction, or any material adverse change in the financial condition or operations of any of them; d.Any material adverse change in the physical condition of the Property (including any damage suffered as a result of earthquakes or floods), or in Borrower’s business condition (financial or otherwise), operations, properties or prospects, or Borrower’s ability to repay the Loan; or
e.The institution of any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision in such litigation or proceeding, which may cause a material adverse effect to Borrower, the Property or the completion of the construction. 405.Insurance.
405.1Required Insurance. To protect City against all insurable Claims resulting from the actions of Borrower in connection with this Agreement, the Property and the Project, at the sole cost and expense of Borrower, Borrower shall maintain for the Development the following insurance (or its then reasonably available equivalent): (a) Liability Insurance; (b) Automobile Liability Insurance; (c) Property Insurance; and (d) Workers Compensation Insurance. 405.2Nature of Insurance. All Liability Insurance, Property Insurance, Workers Compensation Insurance and Automobile Liability Insurance policies required by this Agreement shall be issued by carriers that: (a) are listed in the then current “Best’s Key Rating Guide—Property/Casualty—United States & Canada” publication (or its equivalent, if such publication ceases to be published) with a minimum financial strength rating of “A-” and a minimum financial size category of “XI” (exception may be made for the California Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in California.

A Party may provide any insurance under a “blanket” or “umbrella” insurance policy, provided that: (i) such policy or a certificate of such policy shall specify the amount(s) of the total insurance allocated to the Property and the Development, which amount(s) shall equal or exceed the amount(s) required by this Agreement; and (ii) such policy otherwise complies with this Agreement.
405.3Policy Requirements and Endorsements. All insurance policies required by this Agreement shall contain (by endorsement or otherwise) the following provisions:
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15 a.Insured. Liability Insurance and Automobile Liability Insurance policies shall name City or its successor in interest, as applicable, as “additional insured.” Property Insurance policy shall name City as a “loss payee.” The coverage afforded to City shall be at least as broad as that afforded to Borrower regarding the Property and may not contain any terms, conditions, exclusions, or limitations applicable to City that do not apply to Borrower. b.Primary Coverage. Any insurance or self-insurance maintained by City or its successor in interest shall be in excess of all insurance required under this Agreement and shall not contribute to any insurance required under this Agreement. c.Contractual Liability. Liability Insurance policies shall contain contractual liability coverage, for Borrower’s indemnity obligations under this Agreement. Borrower’s obtaining or failure to obtain such contractual liability coverage shall not relieve Borrower from nor satisfy any indemnity obligation of Borrower under this Agreement. d.Deliveries to City. Borrower shall deliver to City evidence of all insurance policies required by this Agreement as set forth in Section 405.1. No later than three (3) days before any insurance required by this Agreement expires, is cancelled or its liability limits are reduced or exhausted, Borrower shall deliver to City evidence of that Party’s maintenance of all insurance this Agreement requires. Each insurance policy required by this Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days’ advance written notice of such action has been given to City by certified mail, return receipt requested; provided, however, that thirty (30) days advance written notice shall be required for any such action arising from non-payment of the premium for the insurance. Phrases such as “endeavor to” and “but failure to mail such Notice shall impose no obligation or liability of any kind upon the company” shall not be included in the cancellation wording of any certificates or policies of insurance applicable to City pursuant to this Agreement.
e.Waiver of Certain Claims. Borrower shall cause each insurance carrier providing any Liability Insurance, Worker’s Compensation Insurance, Automobile Liability Insurance or Property Insurance coverage under this Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to City, if not already in the policy. To the extent that Borrower obtains insurance with a Waiver of Subrogation, the Parties release each other, and their respective authorized representatives, from any Claims for damage to any Person or property to the extent such Claims are paid by such insurance policies obtained pursuant to and in satisfaction of the provisions of this Agreement.
f.No Claims Made Coverage. None of the insurance coverage required under this Agreement may be written on a claims-made basis.
g.Fully Paid and Non-Assessable. All insurance obtained and maintained by Borrower pursuant to this Section 405 shall be fully paid for and non-assessable. However, such insurance policies may be subject to insurer audits.
h.City Option to Obtain Coverage. During the continuance of a Default arising from the failure of Borrower to carry any insurance required by this Agreement, City may, 55600.00203\44217572.6
16 at its sole option, purchase any such required insurance coverage and City shall be entitled to immediate payment from the defaulting Party of any premiums and associated reasonable costs paid by City for such insurance coverage. Any amount becoming due and payable to City under this Section 405 that is not paid within fifteen (15) calendar days after written demand from City for payment of such amount, within an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per annum or the maximum interest rate allowed by applicable law, whichever is less. Any election by City to purchase or not to purchase insurance otherwise required by the terms of this Agreement to be carried by any Party shall not relieve that Party of its obligation to obtain and maintain any insurance coverage required by this Agreement.
i.Separation of Insured. All Liability Insurance and Automobile Liability Insurance shall provide for separation of insured for Borrower and the City. Insurance policies obtained in satisfaction of or in accordance with the requirements of this Agreement may provide a cross-suits exclusion for suits between named insured persons, but shall not exclude suits between named insured persons and additional insured persons. j.Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions under insurance policies required by this Agreement shall be declared to and approved by City. Borrower shall pay all such deductibles or self-insured retentions regarding City or, alternatively, the insurer under each such insurance policy shall eliminate such deductibles or self- insured retentions with respect to City.
k.No Separate Insurance. Borrower shall carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Agreement, unless City is made an additional insured thereon, as required by this Agreement. l.Insurance Independent of Indemnification. The insurance requirements of this Agreement are independent of the Parties” indemnification and other obligations under this Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Parties” indemnification or other obligations or to limit the Parties” liability under this Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall the provision of such insurance preclude City from taking such other actions as are available to it under any other provision of this Agreement or otherwise at law or in equity.
406.Indemnity.
406.1Borrower Indemnity Obligations. Borrower shall indemnify City against any claim to the extent such claim arises from any wrongful intentional act, fraud, or negligence of Borrower. Borrower shall also indemnify City against any and all of the following: (a) any application made by or at Borrower’s request; (b) any agreements that Borrower (or anyone claiming by or through Borrower) makes with a Third Person regarding the Property or the Project; (c) any workers compensation claim or determination relating to any employee of Borrower or their contractors; (d) any Prevailing Wage Action relating to this Agreement or the Project; (e) any claim for relocation benefits arising from the Project conducted at the Development; and (f) any Environmental Claim attributable to any action or failure to act by Borrower. Borrower assumes 55600.00203\44217572.6
17 the risk of delays and damages that may result to Borrower from any Third Person legal actions related to City’s approval of this Agreement or any associated approvals, even in the event that an error, omission or abuse of discretion by City is determined to have occurred. If a Third Person files a legal action regarding City’s approval of this Agreement or any associated approval (exclusive of legal actions alleging violation of Government Code Section 1090 by elected officials of City), Borrower shall indemnify City against such Third Person legal action, including all legal costs, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. City shall reasonably cooperate in its defense in any legal action subject to this Section 406 subject to Borrower’s indemnity obligations for such legal action. Nothing contained in this Section 406 is intended to be nor shall be deemed or construed to be an express or implied admission that City may be liable to Borrower or any other party for damages or other relief regarding any alleged or established failure of City to comply with any law. Any legal action that is subject to this Section 406 (including any appeal periods and the pendency of any appeals) shall constitute an Enforced Delay and the time periods for performance by any Party under this Agreement may be extended pursuant to the provisions of this Agreement in Section 803. The indemnification set forth in this section is not intended to indemnify the City for the City’s own gross negligence of willful misconduct.
406.2Independence of Insurance Obligations. The indemnification obligations made by Borrower under this Agreement shall not be construed or interpreted as in any way restricting, limiting, or modifying Borrower insurance or other obligations under this Agreement.

Borrower’s obligation to indemnify City under this Agreement is independent of Borrower’s insurance and other obligations under this Agreement. Borrower’s compliance with its insurance obligations and other obligations under this Agreement shall not in any way restrict, limit, or modify Borrower’s indemnification obligations under this Agreement and are independent of Borrower’s indemnification and other obligations under this Agreement. 406.3Survival of Indemnification and Defense Obligations. The indemnity and defense obligations of the Parties under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations. 406.4Indemnification Procedures. Wherever this Agreement requires any Party to indemnify the other Party:
a.Prompt Notice. The indemnifying Party shall promptly notify the other Party of any claim.
b.Selection of Counsel. The indemnifying Party shall select counsel reasonably acceptable to the other Party. Counsel to indemnifying Party’s insurance carrier that is providing coverage for a claim shall be deemed reasonably satisfactory, except in the event of a potential or actual conflict of interest for such counsel regarding such representation or such counsel proves to be incompetent regarding such representation. Even though the indemnifying Party shall defend the claim, the other Party may, at its option and its own expense, engage separate counsel to advise it regarding the claim and its defense. The other Party’s separate counsel may 55600.00203\44217572.6
18 attend all proceedings and meetings. The indemnifying Party’s counsel shall actively consult with the other Party’s separate counsel. The indemnifying Party’s counsel shall, however, control the defense, except to the extent that the other Party waives its rights to indemnity and defense of such Claim.
c.Cooperation. The other Party shall reasonably cooperate with the indemnifying Party’s defense of the other Party.
d.Settlement. The indemnifying Party may only settle a claim without the consent of other Party, if the claim is within the policy limits of applicable insurance policies provided in satisfaction of the requirements of this Agreement and such settlement procures a release of other Party from the subject claims, does not require other Party to make any payment to the claimant and neither the indemnified Party nor indemnifying Party on behalf of the indemnified Party admits any liability.
e.Insurance Proceeds. The indemnifying Party’s obligations shall be reduced by any net insurance proceeds actually received by the other Party for the matter giving rise to the indemnification obligation.
407.Financial Statements and Reports. Borrower shall furnish to City, within ten (10) days after demand, the financial statements of Borrower, which may be internally prepared, on a consolidating and consolidated basis and in conformity with GAAP, consisting of at least statements of income, cash flow, changes in financial position and stockholders” equity, and a consolidated balance sheet, setting forth in each case in comparative form corresponding figures from the previous financial statements delivered to City pursuant to this Section. 408.Books and Records. Borrower shall keep adequate and proper records and books of account in connection with the Development, in which full and correct entries will be made of its dealings, business and affairs. Upon reasonable advanced notice to Borrower, all records and books of accounts and other materials deemed to be relevant to the Development shall be accessible at any time during normal business hours to the authorized representatives of City for the purpose of examination or audit. Any expenditure from the Loan proceeds that is not authorized by this Agreement or that cannot be adequately documented shall be disallowed and must be reimbursed to City or its designee by Borrower immediately. Expenditures not described in this Agreement shall be deemed authorized if the performance of such activities is approved in writing by City prior to their commencement. Absent fraud or mistake on the part of City, the determination by City of the qualification of any expenditure shall be final. 409.Compliance. Borrower shall comply and shall cause the Property and the Development to comply at all times in all material respects with all Governmental Requirements to which they may be subject.
500. PROJECT
501.Covenant to Complete the Project. Borrower covenants to and for the exclusive benefit of City that Borrower shall commence, pursue and complete the Project in accordance with the timeframes and other requirements of this Agreement, including but not limited to the commitment not to displace or require the permanent relocation of any tenants as a result of the 55600.00203\44217572.6
19 Project. The covenants of this Section shall run with the Property until the issuance of a Certificate of Completion for the Project.
502.Cost of Project. All cost and expense in performing the construction of the Project, and for all materials and equipment related thereto, shall be borne solely by Borrower. 600. USE AND MAINTENANCE OF THE PROPERTY; NONDISCRIMINATION;

RIGHTS OF SECURITY FINANCING HOLDERS
601.Restrictive Covenants. Borrower covenants and agrees for itself, its successors, assigns, and every successor in interest to devote the Property to the operation of an affordable housing development in accordance with the terms of the Regulatory Agreement and this Agreement for the period of time specified therein. The foregoing covenant shall run with the land.
602.Maintenance of the Property. For the period of time set forth in Section 606, Borrower shall keep the Property in good condition, order and repair and shall not commit waste or permit impairment, demolition or deterioration of the Property; shall comply with all applicable state and federal regulations addressing the physical condition of the Property and buildings located on the Property and all applicable standards of the City including but not limited to building standards, planning regulations, and utilities code; shall complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed and to pay when due all claims for labor performed and materials furnished; shall maintain the buildings in a habitable condition; and do all other acts which from the character or use of the Property may be reasonably necessary. City shall have the right to inspect the Property during normal business hours, provided Borrower and the occupant are given at least seventy-two (72) hours written notice prior to any such inspection.
603.Obligation to Refrain from Discrimination. The Borrower covenants and agrees for itself, its successors, its assigns and every successor in interest to the Property, or any part thereof, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, source of income, age, marital status, physical or mental disability, medical condition, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Borrower itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land and shall remain in effect in perpetuity. 604.Form of Nondiscrimination and Nonsegregation Clause. The Borrower shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color, creed, religion, sex, sexual orientation, source of income, age, marital status, physical or mental disability, medical condition, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses. Agency understands that the wording of certain services agreements are not within the control of Borrower, and to such extent that Borrower does not have control of the wording, then Borrower is excused from complying with this section. 55600.00203\44217572.6
20 In deeds. “The grantee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.”
In leases. “The lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions: “That there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased.” In contracts. “There shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee himself, or any person claiming under or through him, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.” 605.Rights of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the reasonable right of access to the Property without charges or fees for the purpose of inspection of the Property as to maintenance of the improvements thereon. Such representatives of the City shall be those who are so identified in writing by the City Manager, or his/her designee.
606.Effect and Duration of Covenants. The covenants contained in Sections 601, 602 and 605 of this Agreement shall remain in effect for not less than fifty-five (55) years commencing with the date the Regulatory Agreement is recorded on the Property, and continuing thereafter until the later of the date when amounts due and owing under the Note, and Deed of Trust, as applicable, are repaid in full, and the date when the affordability restrictions for each of the Affordable Units have expired pursuant to the terms of the Regulatory Agreement. The covenants against discrimination contained in Sections 603 and 604 of this Agreement shall remain in effect in perpetuity. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding on the part of the Borrower and any successors and 55600.00203\44217572.6
21 assigns to the Property or any part thereof, and the tenants, lessees, sublessees and occupants of the Property, for the benefit of and in favor of the City and any successor in interest thereto. 607.Recordation and Priority of Regulatory Agreement. Borrower shall cause the Regulatory Agreement to be recorded against the Property prior to disbursement of the Loan. The Regulatory Agreement shall be recorded in a priority senior to any and all monetary liens recorded against the Property. If there are pre-existing monetary liens on the Property as of the Effective Date of this Agreement, Borrower shall cause a subordination agreement specifying the priority of the Regulatory Agreement over such monetary liens to be recorded against the Property prior to the disbursement of the Loan. Notwithstanding the foregoing, the City may, in its sole and absolute discretion, (i) agree to subordinate the Regulatory Agreement to other restrictive covenants with affordability restrictions that are required to be recorded against the Property in connection with other governmental funding for the Project and (ii) agree to subordinate the Deed of Trust to both monetary and non-monetary liens that are required to be recorded against the Property in connection with the Approved Financing.
700. DEFAULTS AND REMEDIES
701.Default. A party to this Agreement shall be in default if it fails to perform or satisfy any obligation or requirement set forth (A) herein after thirty (30) days of receiving written Notice from the non-defaulting party of such default, provided that in the case of a default that cannot with reasonable diligence be cured within thirty (30) days after the effective date of such Notice, such thirty (30) day period shall automatically be extended if and only for so long as Borrower does all of the following: (i) within thirty (30) days after Notice of such default, advise the City of the intention of Borrower to take all reasonable steps to cure such default; (ii) duly commence such cure within such period, and then diligently prosecute such cure to completion; and (iii) complete such cure within a reasonable time under the circumstances; or (B) under any applicable Loan Document after any applicable cure period.
702.Remedies.
702.1City. Upon default by Borrower subject to applicable notice and cure periods, City shall not be obligated to disburse any Loan proceeds pursuant to this Agreement and Borrower shall immediately remit to City all cost and expense, interest and principal due City under the Note.
702.2Borrower. Upon default by City, Borrower’s sole remedy for such breach shall be to institute an action at law or equity to seek specific performance of the terms of this Agreement. Borrower shall not be entitled to recover damages for any default by City hereunder.

Such legal actions must be instituted in the Superior Court of the County of San Bernardino, State of California, or in the United States District Court for the District of California in which San Bernardino County is located.
703.Rights and Remedies Cumulative. The rights and remedies of City hereunder are cumulative, and the exercise by City of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default caused by Borrower.
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22 200. GENERAL PROVISIONS
201.Notices. Any notice required or authorized under this Agreement, or service of process, shall be effective if, and only if, in writing and if, and only if, personally served or mailed, postage prepaid, by registered or certified mail, to the party in question at the address shown below:

Borrower: E Street Veterans Apartments, LP
c/o U.S.VETS Housing Corporation
800 W. 6th Street, Suite 1505
Los Angeles, CA 90017
Attn: Carla Ford
With a copy to: Bergman and Allderdice
1200 Wilshire Blvd, Suite 610
Los Angeles, CA 90017
Phone: (213) 736-5101, ext.1
Attn: Beth S. Bergman
c/o R4 Capital LLC
780 Third Avenue, 16th Floor
New York, New York 10017
Attention: Marc Schnitzer
Telephone Number: 646.576.7659
Telecopier Number: 212.546.9085
E-Mail Address: [email protected]
And
Holland & Knight LLP
787 Seventh Avenue, 31st Floor
New York, New York 10119
Attention: Alan S. Cohen.

Telephone Number: 212.513.3404
Telecopier Number: 212.385.9010
E-Mail Address: [email protected]
City: City of San Bernardino
290 North D Street
San Bernardino, CA 92401
Attn: City Manager
With a copy to: Sonia R. Carvalho
Best Best & Krieger LLP
18101 Von Karman Avenue, Suite 1000
Irvine, CA 92612
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23 An address set forth in this Section may be changed by the respective party providing the other party with written notice indicating the new address for purposes of this Section. 802.Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
803.Enforced Delay; Extension of Times for Performance. In addition to specific provisions of this Agreement, performance by a party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to: war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; inability to secure necessary labor, materials or tools; acts or omissions of the other party; acts or failures to act of City or any other public or governmental agency or entity (other than the acts or failures to act of City which shall not excuse performance by City); or any other cause beyond the control or without the fault of the party claiming an extension of time to perform. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Borrower. 804.Transfers of Interest in Property or Agreement.
804.1Prohibition. The qualifications and identity of Borrower are of particular concern to City. It is because of those unique qualifications and identity that City has entered into this Agreement with Borrower. Borrower shall not transfer, assign, sell or grant any interest in this Agreement or any portion of the Property except as expressly set forth herein. 804.2Permitted Transfers. City approval of a transfer of this Agreement or an interest in the Property, or any part thereof, shall not be required in connection with any of the following transfers:
(a) Any requested assignment for purposes of financing the construction of improvements upon the Property;
(b) Any mortgage, deed of trust, or other form of conveyance for all or any portion of the Additional Borrower Financing, as provided in Section 301, but Borrower shall notify City in advance of any such mortgage, deed of trust or other form of conveyance for financing pertaining to the Property;
(c) Any mortgage, deed of trust or other form of conveyance for restructuring or refinancing of any amount of indebtedness described in subsection (b) above; (d) A sale or transfer resulting from or in connection with a reorganization as contemplated by the provisions of the Internal Revenue Code of 1986, as amended or otherwise, in which the ownership interests of a corporation are assigned directly or 55600.00203\44217572.6
24 by operation of law to a person or persons, firm or corporation which acquires the control of the voting capital stock of such corporation or all or substantially all of the assets of such corporation; (e) The lease of residential units at the Development to qualified tenants;
(f) The transfer of the Borrower’s limited partnership interest in the Borrower; and
(g) The removal of the general partner of the Borrower by its limited partner according to the terms of the Borrower’s limited partnership agreement.

In the event of a transfer by Borrower under subparagraphs (a) through (d) not requiring City’s prior approval, Borrower nevertheless agrees that: (i) at least ten (10) days prior to such assignment it shall give written notice to City of such transfer and satisfactory evidence that the transferee has assumed the obligations of this Agreement, if applicable, and (ii) the Regulatory Agreement remains in senior lien priority relative to all monetary liens on the Property upon completion of the transfer. Such requirements are not applicable to transfers under subparagraph (e).
805.Relationship Between City and Borrower. It is hereby acknowledged that the relationship between City and Borrower is not that of a partnership or joint venture and that City and Borrower shall not be deemed or construed for any purpose to be the agent of the other.

Accordingly, except as expressly provided herein, City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Property. Borrower agrees to indemnify, hold harmless and defend City from any claim made against City arising from a claimed relationship of partnership or joint venture between City and Borrower with respect to the development, operation, maintenance or management of the Property. 806.Reserved.
807.City Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager or his or her designee is authorized to act on behalf of City unless specifically provided otherwise or the context should require otherwise. 808.Counterparts. This Agreement may be executed in any number of counterparts and by different signatories hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument, for the same effect as if all signatories hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages.
809.Integration. This Agreement and the Loan Documents contain the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into the Loan Documents and shall be of no further force or effect. Each party 55600.00203\44217572.6
25 is entering into the Loan Documents upon the representations set forth in the Loan Documents and upon each party’s own independent investigation of any and all facts such party deems material. 810.Attorneys’ Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of the Loan Documents, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys’ fees. 811.Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms.

Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 812.Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word “including” shall be construed as if followed by the words “without limitation.” This Agreement shall be interpreted as though prepared jointly by both parties. 813.No Waiver. City may at any time and from time to time waive any one or more of the terms or conditions contained in this Agreement, but any such waiver shall be deemed to be made pursuant to this Agreement and not in modification thereof, and any such waiver in any instance or under any particular circumstances shall not be construed a waiver of such term or condition or of any subsequent default. In order to be effective, all such waivers must be in writing.

The failure of City to promptly exercise its rights or remedies shall not be deemed to be a waiver or grounds for the claim of estoppel.
814.Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party.
815.Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 816.Incorporation of Recitals. The recitals set forth above, and all defined terms set forth in such recitals and in the introductory paragraph preceding the recitals, are hereby incorporated into this Agreement as if set forth in full. 817.Incorporation of Attachments. All attachments referenced in this Agreement are hereby incorporated into this Agreement by this reference. 818.Legal Advice. Each party represents and warrants to the other the following: they have carefully read the Loan Documents, and in signing the Loan Documents, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in the Loan Documents, or have knowingly chosen not to consult legal counsel as to the matters set forth in the Loan Documents; and, they 55600.00203\44217572.6
26 have freely signed the Loan Documents without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in the Loan Documents, and without duress or coercion, whether economic or otherwise.
819.Time of Essence. Time is expressly made of the essence with respect to the performance by City and Borrower of each and every obligation and condition of the Loan Documents.
820.Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, shall execute any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements.
821.Conflicts of Interest. No member, official or employee of City shall have any personal interest, direct or indirect, in the Loan Documents, nor shall any such member, official or employee participate in any decision relating to the Loan Documents which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested.
822.Time for Acceptance of Agreement. This Agreement, when executed by Borrower and delivered to City, must be executed and delivered by City on or before fifteen (15) days after signing and delivery of this Agreement by Borrower or this Agreement shall be void, except to the extent that Borrower shall consent in writing to a further extension of time for the execution and delivery of this Agreement.
823.Agreement Binding. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.
824.Non-Liability of Officials and Employees of City. No member, official or employee of City shall be personally liable to Borrower, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower hereby waives and releases any claim it may have against the members, officials or employees of City with respect to any default or breach by City or for any amount which may become due to Borrower or its successors, or on any obligations under the terms of the Loan Documents. Borrower makes such release with full knowledge of Civil Code Section 1542 and hereby waives any and all rights thereunder to the extent of this release, if such Section 1542 is applicable. Section 1542 of the Civil Code provides as follows:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
[Signatures to appear on the following page.]
55600.00203\44217572.6
26 55600.00203\44217572.6
27 IN WITNESS WHEREOF, City and Borrower have executed this Agreement on the respective dates set forth below.

Date:

CITY:

CITY OF SAN BERNARDINO, a California municipal
corporation
By:

Eric Levitt, City Manager
ATTEST:

Telicia Lopez, City Clerk
APPROVED AS TO FORM:

Sonia R. Carvalho, City Attorney
55600.00203\44217572.6
28 Date:

BORROWER:

E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public
benefit corporation,
its managing member
By:
____________________________
Lori Allgood, Chief Operating
Officer
By: Kingdom Development, Inc.,
a California nonprofit public
benefit corporation,
its member
By:
___________________________
William Leach, President
55600.00203\44217572.6
28 55600.00203\44217572.6
Attachment 1
ATTACHMENT NO. 1

LEGAL DESCRIPTION
Real Property in the City of San Bernardino, County of San Bernardino, State of California, described as follows:
[INSERT]
55600.00203\44217572.6
Attachment 1
55600.00203\44217572.6
Attachment 2
ATTACHMENT NO. 2

PROPERTY MAP
[INSERT]
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Attachment 2
55600.00203\44217572.6
Attachment 3
ATTACHMENT NO. 3

FORM OF NOTE

PROMISSORY NOTE
(E STREET VETERANS APARTMENTS)
Principal Sum Not to Exceed ____________, 2027
$2,014,599 San Bernardino, California
FOR VALUE RECEIVED, E Street Veterans Apartments, LP, a California limited partnership (the “Maker” or “Borrower”), having an address at [INSERT], promises to pay the CITY OF SAN BERNARDINO, a California municipal corporation (the “Payee” or “City”), the principal sum not to exceed Two Million Fourteen Thousand Five Hundred Ninety-Nine Dollars ($2,014,599), or so much of such principal as may be advanced, together with interest thereon accruing from the date of this Note at a rate of 3% simple interest.

1. Purpose. This Note is made and delivered pursuant to and in implementation of the LMIHAF Loan Agreement entered into by and between City and Borrower, of even date herewith (the “Loan Agreement”), which provides for the acquisition by the Maker of the Development described in Section 3 below. The term “Property” means that real property described in the Deed of Trust securing this Note. Capitalized terms used in this Note that are not defined herein have the meaning set forth in the Loan Agreement.

2. Security. Payment of this Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing of even date herewith (the “Deed of Trust”) from Maker to Payee recorded upon the Property in the official records of San Bernardino County.

3. Project. Maker will acquire the Property and develop the Project, all as more fully described in the Loan Agreement (collectively, the “Development”).

4. Maturity Date. This Note shall be due and payable in full at the earlier of (i) sale of the Development by Borrower to a Person other than an Affiliate (except for a sale approved by the City in writing in compliance with terms of the Loan Agreement and Regulatory Agreement); (ii) an uncured Default under the Loan Agreement or (iii) fifty-five (55) years after the date hereof (the “Maturity Date”).

5. Payment. Principal and interest under this Note are due and payable as follows:
(a) Annual Residual Receipts Payment. Borrower shall make annual Residual Receipts Payments as follows: Borrower shall make annual Residual Receipts Payments as follows: Commencing on [DATE OF CONVERSION TO PERMANENT FINANCING], and on the anniversary of such date of each year thereafter during the Term, Borrower shall make a loan payment in an amount equal to the City Share of Residual Receipts for the prior calendar year (each such payment, an “Annual City Loan Payment”). The City shall apply all Annual City 55600.00203\44217572.6
Error! Unknown document property name.2
Loan Payments to the PLHA Loan as follows: (1) first, to accrued interest, and (2) second, to principal on the Loan.
(b) Due in Full. All outstanding principal and accrued interest on the PLHA Loan shall be due in full on the earlier to occur of: (i) the date of any Default, or (ii) the expiration of the Term.
(c) Right to Prepay. Borrower may prepay, in whole or in part, the PLHA Loan at any time without premium or penalty. However, the PLHA Loan Agreement and the PLHA Regulatory Agreement shall remain in effect for the entire Term regardless of any prepayment.

Payments made shall be credited first against accrued interest and then against outstanding principal.
6 Payment Location. Payment shall be made in lawful money of the United States to the City of San Bernardino, 290 North D Street, San Bernardino, CA 92401. The place of payment may be changed from time to time as the Payee may from time to time designate in writing.

7. Default. The occurrence of any of the following shall constitute an event of default under this Note:

A. Maker fails to pay any amount due hereunder within thirty (30) days of its due date; or
B. Any default by Maker under this Note, the Deed of Trust, the Loan Agreement or the Regulatory Agreements recorded against the Property after the expiration of all applicable cure periods; or
C. Any default by Maker under any other obligation of Maker recorded against the Property after the expiration of all applicable cure periods; or Maker shall not be considered in default under this Note until the expiration of all notice and cure periods provided to Maker. Upon the occurrence of any uncured event of default, or at any time thereafter, at the option of the Payee hereof, the entire unpaid principal and interest owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee’s option. Payee’s failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Payee’s failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.

8. Default Interest Rate. At all times when Maker is in default hereunder by reason of Maker’s failure to pay any amounts due under this Note within applicable cure periods, the interest rate on the sums as to which Maker is in default (including principal, if Payee has elected to declare it immediately due and payable), shall be the highest rate then allowed by law as of the date of the default or 8% per annum, whichever is lower.
55600.00203\44217572.6
Error! Unknown document property name.3

9. Waivers. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability.

10. Costs. Maker agrees to pay immediately upon demand all reasonable costs and expenses of Payee actually incurred including reasonable attorneys’ fees:

A. If after default and the expiration of all notice and cure periods this Note is placed in the hands of an attorney or attorneys for collection; B. If after a default hereunder or under the Deed of Trust or Loan Agreement and after the expiration of all notice and cure periods Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefor or to the protection of its rights under this Note, the Deed of Trust, the Loan Agreement or other loan documents executed in connection with the Development; or
C. If Payee seeks to have the Property abandoned by or reclaimed from any estate in bankruptcy, or attempts to have any stay or injunction prohibiting the enforcement or collection of this Note or prohibiting the enforcement of the Deed of Trust or any other agreement evidencing or securing this Note lifted by any bankruptcy or other court.

D. If Payee shall be made a party to or shall reasonably intervene in any action or proceeding, whether in court or before any governmental entity, affecting the Property or the title thereto or the interest of the Payee under the Deed of Trust, including, without limitation, any form of condemnation or eminent domain proceeding, Payee shall be reimbursed by Maker immediately upon demand for all costs, charges and reasonable attorneys” fees incurred by Payee in any such case, and the same shall be secured by the Deed of Trust as a further charge and lien upon the Property.

11. Notices. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in this Note or at such address as either party may designate by written notice.

12. Successors. This Note shall be binding upon Maker, its successors and assigns.

13. California Law. This Note shall be construed in accordance with and be governed by the laws of the State of California.

14. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

15. Nonrecourse. This Note is a nonrecourse obligation of Maker. Neither Maker nor any of its officers, directors or agents shall have any personal liability for repaying the principal or interest 55600.00203\44217572.6
Error! Unknown document property name.4
of the Note. In any action brought to enforce the obligations of Maker under this Note, the Deed of Trust or any other instrument or agreement evidencing, securing or relating to the indebtedness evidenced by this Note, the judgment or decree shall be enforceable against Maker solely and only to the extent of its interest in the property described in the Deed of Trust or its interest in any other security loaned by Maker as security for this Note, and Payee shall not seek any deficiency judgment against the Maker. The foregoing provisions shall not prevent recourse to the collateral security for the loan or constitute a waiver, release or discharge of or otherwise affect the obligation to pay, any indebtedness evidenced by the loan documents executed in connection with the Development or limit the right of any person to name the Maker or any other person claiming an interest in or right to such collateral as party defendant in any action or suit for judicial foreclosure or in the exercise of any other remedy, including injunctive or other equitable relief, under any of the loan documents executed in connection with this Development so long as no deficiency judgment shall be sought against the Maker.

The foregoing limitation shall not apply to any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys’ fees and expenses) to the extent incurred by Payee as a result of any:

A. Fraud or material misrepresentation under or in connection with the loan or any loan document executed in connection with the Development; B. Intentional bad faith waste of the Property by the Maker; C. Losses resulting from Maker’s failure to maintain insurance as required under the Deed of Trust; or
D. Misappropriation of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security by the Maker.

If any of the events listed in the foregoing (A) through (D) occurs, Payee shall have the right to proceed directly against Maker at the time the event giving rise to the recourse liability occurred to recover any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys’ fees and expenses) incurred by Payee.

16. Nonliability of Maker and Payee Officials and Employees.

A. No partner, official or employee of the Payee shall be personally liable to the Maker in the event of any default or breach by the Agency or on any obligations under the terms of this Note.

B. No member, official or employee of the Maker shall be personally liable to the Payee in the event of any default or breach by the Maker or for any amount which may become due to the Payee or on any obligations under the terms of this Note. 55600.00203\44217572.6
Error! Unknown document property name.5
MAKER / BORROWER:

E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public
benefit corporation,
its managing member
By: ____________________________
Lori Allgood, Chief Operating Officer
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its member
By: ___________________________
William Leach, President
55600.00203\44217572.6
Error! Unknown document property name.5
55600.00203\44217572.6
Attachment 4
ATTACHMENT NO. 4

FORM OF DEED OF TRUST

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of San Bernardino
290 North D Street
San Bernardino, CA 92401
Attn: City Clerk
Space above line for Recorder’s use only
Exempt from Recording Fees pursuant to Govt. Code § 27383

CITY OF SAN BERNARDINO

DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND

FIXTURE FILING
([E Street Veteran Apartments])
This Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) is made as of [INSERT], among E Street Veterans Apartments, LP, a California limited partnership, whose address is [INSERT BORROWER] (“TRUSTOR”); [INSERT ESCROW/TITLE COMPANY], whose address is [INSERT] (“TRUSTEE”); and the CITY OF SAN BERNARDINO, whose address is 290 North D Street, San Bernardino, California 92401 (“BENEFICIARY”).

Trustor irrevocably grants, conveys, transfers, and assigns to Trustee in trust, with power of sale and right of entry and possession, all of Trustor’s estate, right, title, and interest in, to and under the following property (collectively, the “Property”): (a) the real property in San Bernardino County, California, described on Exhibit A attached hereto and incorporated herein by this reference, together with all existing and future easements and rights affording access to it (the “Land”), (b) together with all buildings, structures, and improvements now existing or hereafter constructed thereon (the “Improvements”), (c) together with all articles of personal property now or hereafter attached to, placed upon for an indefinite term, or used in connection with the Land and/or Improvements, together with all goods and other property that are, or at any time become, so related to the Property that an interest in them arises under real estate law, or they are otherwise adjudged to be a “fixture” under applicable law (each a “Fixture,” collectively “Fixtures”), (d) together with all other property and interests of any kind or character which may be reasonably necessary or desirable to promote the present and future beneficial use and enjoyment of such real property and improvements.

1. Secured Obligations. Trustor makes the grant, conveyance, transfer, and assignment herein for the purpose of securing the following obligations (the “Secured Obligations”): (a) payment of the sum of Two Million Fourteen Thousand Five Hundred Ninety- Nine Dollars ($2,014,599) with interest thereon according to the terms of a promissory note (the “Note”) of even date herewith, executed by Trustor in favor of Beneficiary or order and any 55600.00203\44217572.6
Attachment 4
extension or renewals thereof; (b) payment of such further sums as the then record owner of the Property may borrow from Beneficiary, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust; and (c) performance of each agreement and obligation of Trustor under that certain LMIHAF Loan Agreement executed by Trustor and Beneficiary dated [INSERT] (the “Loan Agreement”), providing for the acquisition of improvements on the Property and operation of the Property and improvements thereon as affordable housing (the “Project”); and (d) obligations under the Regulatory Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions Restricting Use of Property for Affordable Housing ([INSERT]), dated of even date herewith (the “Regulatory Agreement”) recorded against the Property on even date with this Deed of Trust. The payment of the amount owing pursuant to the terms of the Note by Trustor does not extinguish the rights of the Beneficiary under the Regulatory Agreement. This Deed of Trust shall secure the Beneficiary against any default under the Regulatory Agreement for the term of the Regulatory Agreement, provided however, that in the event that this Deed of Trust is extinguished due to foreclosure by a senior lender, the Regulatory Agreement, which is recorded against the Property in a position prior to the security interests of the senior lenders, shall remain in full force and effect.

2. Maintenance and Repair. Trustor shall (a) keep the Property in good condition and repair and not remove or demolish any building; (b) complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed; (c) pay when due all claims for labor performed and materials furnished; (d) comply with all laws affecting the Property or requiring any alterations or improvements to be made; (e) not commit or permit waste; and (f) cultivate, irrigate, fertilize, fumigate, prune, and do all other acts which from the character or use of the Property may be reasonably necessary.

3. Insurance. Trustor shall maintain hazard insurance against loss by fire, hazards included with the term “extended coverage,” and any other hazards for which Beneficiary requires insurance, and liability insurance as set forth in the Loan Agreement and Regulatory Agreement.

The insurance carrier and the insurance policies and amounts of coverage shall comply with the terms of the Loan Agreement and Regulatory Agreement or shall otherwise be acceptable to Beneficiary, the policies shall name Beneficiary as a loss payee or an additional insured, as applicable, the policies shall include Beneficiary as an additional insured, as applicable.

4. Defense of Security. Trustor shall appear in and defend any action or proceeding purporting to affect the security or the rights or powers of Beneficiary or Trustee. Trustor shall pay all costs and expenses, including costs of evidence of title and attorneys’ fees, in any such action or proceeding in which Trustee or Beneficiary may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.

5. Payment of Taxes and Liens. Trustor shall pay (a) at least 10 days before delinquency, all non-abated taxes and assessments affecting the Property, including water stock assessments; (b) when due, all encumbrances, charges, and liens, with interest, on the Property, which are or appear to be prior or superior to this Deed of Trust; and (c) upon demand all reasonable and documented costs, fees, and expenses of this Deed of Trust. If Trustor fails to make any payment or to do any act provided for in this Deed of Trust after written notice of such failure by Beneficiary and a reasonably opportunity to cure, then Beneficiary or Trustee may, without obligation to do so, and with or without notice to or demand upon Trustor, and without 55600.00203\44217572.6
Attachment 4
releasing Trustor from any obligation under this Deed of Trust: (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; (b) appear in or commence any action or proceeding purporting to affect the security, or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest or settle any encumbrance, charge or lien which in the judgment of either appears to be senior to this Deed of Trust; and (d) in exercising any such powers, pay allowable expenses, including attorneys’ fees.

6. Reimbursement of Costs. Trustor shall pay upon demand all reasonable and documented sums expended by Beneficiary or Trustee provided for in this Deed of Trust or allowed by law, with interest from date of expenditure at the maximum rate provided in the Note.

7. No Waiver. By accepting payment of any sum after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums or declare a default for failure to pay.

8. Reconveyance. That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said note or notes to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals of such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto.”

9. Assignment of Rents. Subject to the rights of senior lenders, Trustor hereby absolutely and unconditionally assigns to Beneficiary all of the rents, issues, profits, royalties, revenues, income, and other benefits (collectively, the “Rents”) derived from the Property, whether now due, past due or to become due, and hereby gives to and confers upon Beneficiary, either directly or through a receiver, the right, power, and authority, but not the obligation, to collect the Rents, and to sue, either in the name of Trustor or Beneficiary, for all such Rents and to apply the same to the indebtedness secured hereby in such order as Beneficiary may determine in its sole discretion. This assignment of Rents is intended to create and shall be construed to create an absolute assignment to Beneficiary of all of Trustor’s right, title, and interest in the Rents.

So long as no default exists by Trustor in the payment of any indebtedness secured hereby, or in any other covenant contained herein, or in said note or notes or in any other document evidencing or securing such indebtedness, Trustor shall have the right to collect all Rents from the Property and to retain, use, and enjoy the same. Upon the occurrence of such a default beyond any applicable notice and cure periods, without the necessity of demand or other notice to Trustor or any other act to enforce Beneficiary’s interest pursuant to this assignment, Trustor shall have no interest whatsoever in the Rents that are received by Trustor after a default, and all such Rents shall be received and held by Trustor in constructive trust for Beneficiary and delivered promptly to Beneficiary, or to a court-appointed receiver for the Property, without the necessity for further notice to, or demand upon, Trustor. Upon the occurrence of such a default, beyond any applicable notice and cure periods, and at any time thereafter during the continuance thereof, Beneficiary may, at its option, send any tenant of the Property a notice to the effect that: (a) a default has occurred; (b) Beneficiary has elected to exercise its rights under this assignment; and (c) such tenant is thereby directed to thereafter make all payments of Rents to or for the benefit of 55600.00203\44217572.6
Attachment 4
Beneficiary or as Beneficiary shall direct. Any such tenant shall be entitled to rely upon any notice from Beneficiary and shall be protected with respect to any payment of Rents made pursuant to such notice, irrespective of whether a dispute exists between Trustor and Beneficiary with respect to the existence of a default or the rights of Beneficiary hereunder. Any such tenant shall not be required to investigate or determine the validity or accuracy of such notice or the validity or enforceability of this assignment. Trustor hereby agrees to indemnify, defend, and hold any such tenant harmless from and against any and all losses, claims, damages or liabilities arising from or related to any payment of Rents by such tenant made in reliance on and pursuant to such notice.

10. Default and Foreclosure. Upon default by Trustor in payment or performance of any Secured Obligation, subject to any applicable notice and cure period, Beneficiary may declare all sums secured immediately due and payable by delivery to Trustee of a declaration of default and demand for sale and of a notice of default and of a notice of sale, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, said note or notes, and all documents evidencing expenditures secured by this Deed of Trust. Upon default of any obligation secured by this Deed of Trust and acceleration of all sums due, Beneficiary may instruct Trustee to proceed with a sale of the Property under the power of sale granted in this Deed of Trust, noticed and held in accordance with California Civil Code Sections 2924, et seq., as such statutes may be amended from time to time. Trustor waives all rights it may have to require marshaling of assets or to require sales of assets in any particular order, including any rights under California Civil Code Sections 2899 and 3455.

11. Substitution of Trustee. Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers, and duties. Said instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, the book and page where this Deed of Trust is recorded, and the name and address of the new Trustee.

12. Successors and Assigns. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” shall mean the owner and holder, including pledgees, of the secured note or notes, whether or not named as Beneficiary herein.

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

14. Further Assurances. Trustor shall, at its own cost and expense, do, execute, acknowledge, and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, and assurances as Trustee or Beneficiary shall from time to time reasonably require, for better assuring, conveying, assigning, transferring, and confirming unto Trustee the Property and rights hereby conveyed or assigned or intended now or 55600.00203\44217572.6
Attachment 4
hereafter so to be, or which Trustor may be or may hereafter become bound to convey or assign to Trustee, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust, or for filing, registering, or recording this Deed of Trust. Trustor shall, on demand, execute and deliver, and hereby authorizes Trustee and Beneficiary, or either of them, to execute in the name of Trustor, to the extent it may lawfully do so, one or more financing statements, chattel mortgages, or comparable security instruments, to evidence more effectively the lien hereof. Immediately upon the execution and delivery of this Deed of Trust, and thereafter from time to time, Trustor shall cause this Deed of Trust, and any security instruments creating a lien or evidencing the lien hereof upon any personal property and each instrument of further assurance, to be filed, registered, or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the title of Trustee to, the Property encumbered hereby.

15. Condemnation and Insurance Proceeds. Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney-in-fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary’s expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary’s option, as attorney-in-fact for Trustor, to commence, appear in, and prosecute, in Beneficiary’s or Trustor’s name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary’s expenses incurred in the collection of such amounts, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums secured by this Deed of Trust. Beneficiary shall be under no obligation to question the amount of any compensation, awards, proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds, damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require.

Notwithstanding the above, the Beneficiary shall release all insurance and condemnation proceeds to Trustor to be used to reconstruct the improvements on the Property provided that Beneficiary reasonably determines that such restoration, repair or rebuilding is economically feasible. If such insurance proceeds shall be insufficient for such purposes, Trustor shall make up the deficiency.

If the Project is subject to a partial condemnation or taking, then the proceeds received therefrom shall be applied to restore the Project taken, provided the Beneficiary determines that such 55600.00203\44217572.6
Attachment 4
restoration is economically feasible and no default exists under the Loan Documents following the expiration of all applicable cure periods. If the Project is subject to a total condemnation, or if Beneficiary determines that restoration of the Project is not feasible following a partial condemnation, or if a default exists then the proceeds from any condemnation award or claim for damages shall be used first to repay all sums under the Note, with the excess, if any, paid to Trustor, subject to the rights of the senior lender.

16. Severability. If any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Deed of Trust, but this Deed of Trust shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein or therein, but only to the extent of such invalidity.

17. Estoppel Certificate. Trustor shall, within thirty (30) days of a written request from Beneficiary, furnish Beneficiary with a written statement, duly acknowledged, setting forth the sums secured by this Deed of Trust and any right of set-off, counterclaim or other defense which exists against such sums and the obligations of this Deed of Trust.

18. California Uniform Commercial Code Security Agreement; Fixture Filing.

Trustor hereby grants Beneficiary a security interest in all personal property of Trustor located on the Property and wherever located and used in any way in connection with or in any way relating to the Property, and whether now owned or hereafter in existence, acquired or created (including equipment, inventory, goods, documents, instruments, general intangibles, chattel paper, accounts, accounts receivable, deposit accounts, and contract rights), and all fixtures of Trustor now owned or hereafter in existence, acquired or created on, of or relating to the Property, and all substitutions, replacements, additions, accessions, and proceeds (including insurance proceeds) of all of the foregoing (collectively, the “Personal Property”). Beneficiary may file this Deed of Trust, or a reproduction hereof, in the real estate records or other appropriate index, as a financing statement for the Personal Property. Any reproduction of this Deed of Trust or of any other security agreement or financing statement shall be sufficient as a financing statement. In addition, Trustor shall execute and deliver to Beneficiary, upon Beneficiary’s request, any financing statements, as well as extensions, renewals, and amendments thereof, and reproductions of this Deed of Trust in such form as Beneficiary may require to perfect a security interest with respect to the Personal Property. Trustor shall pay all costs of filing such financing statements and any extensions, renewals, amendments, and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements Beneficiary may reasonably require. Upon Trustor’s breach of any covenant or agreement of Trustor contained in this Deed of Trust, including the covenants to pay when due all sums secured by this Deed of Trust, Beneficiary shall have the remedies of a secured party under the California Uniform Commercial Code and, at Beneficiary’s option, may also invoke any remedies provided in this Deed of Trust as to the Personal Property.

In exercising any of such remedies, Beneficiary may proceed against the Property and any of the Personal Property separately or together and in any order whatsoever, without in any way affecting the availability of Beneficiary’s remedies under the California Uniform Commercial Code or the remedies provided in the Deed of Trust. This Deed of Trust also covers goods which are or which are to become fixtures on the Property and constitutes and is filed as a fixture filing under the California Uniform Commercial Code.
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19. Due-On-Sale or Encumbrance. Except as set forth in the definition of "Transfer" in the Regulatory Agreements, and Section 804.2 of the Loan Agreement, if all or any part of the Property, or any interest therein, or any beneficial interest in Trustor (if Trustor is not a natural person or persons but is a corporation, partnership, trust, limited liability company or other legal entity), is sold, transferred, mortgaged, assigned, pledged, or further encumbered, whether directly or indirectly, whether voluntarily or involuntarily, or by operational law, Beneficiary may, at Beneficiary’s option, declare all of the sums secured by this Deed of Trust to be immediately due and payable, and Beneficiary may invoke any remedies permitted by this Deed of Trust. [CONTINUED ON NEXT PAGE]
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The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to Trustor at Trustor’s address hereinbefore set forth.

TRUSTOR:

E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public
benefit corporation,
its managing member
By: ____________________________
Lori Allgood, Chief Operating Officer
By: Kingdom Development, Inc.,
a California nonprofit public benefit
corporation,
its member
By: ___________________________
William Leach, President
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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
Real Property in the City of San Bernardino, County of San Bernardino, State of California, described as follows:
[INSERT]
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ACKNOWLEDGEMENTS
State of California
County of ________________
On ______________________ before me, ________________________________, notary public, personally appeared ________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature ____________________________ (Seal)
* * * * *

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

WITNESS my hand and official seal.

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

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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Attachment 5
ATTACHMENT NO. 5

REGULATORY AGREEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of San Bernardino
290 North D Street
San Bernardino, CA 92401
Attn: City Clerk
Space above line for Recorder’s use only
Exempt from Recording Fees pursuant to Govt. Code § 27383

CITY OF SAN BERNARDINO

REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS

RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING
([E STREET VETERAN APARTMENTS])

THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING (this “Regulatory Agreement”) is dated as of E Street Veterans Apartments, LP, a California limited partnership (the “Effective Date”), and is made by and between the CITY OF SAN BERNARDINO, a municipal corporation (the “City”), and E Street Veterans Apartments, LP, a California limited partnership (the “Owner”), with reference to the following recited facts (each, a “Recital”).

RECITALS
A. The Owner owns or will own and operates that certain real property specifically defined as the “Property” in Section Error! Reference source not found. of this Regulatory Agreement, which will be improved with a multifamily rental housing development comprising of a total of thirty (30) apartment units;
B. Pursuant to Health and Safety Code section 34176.1, subdivision (a)(3)(A), the City, as housing successor to the City’s former redevelopment agency, has agreed to make a loan to Owner in an amount not to exceed Two Million Fourteen Thousand Five Hundred Ninety-Nine Dollars ($2,014,599) from the City’s Low and Moderate Housing Asset Fund (the “Loan”) for a portion of the acquisition and development costs for the Property, as more particularly described in that LMIHAF Loan Agreement entered into by and between City and Owner (the “Loan Agreement”);
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C. This Regulatory Agreement shall, subject to the terms and conditions set forth herein, restrict the use of the Property for a term of not less than fifty-five (55) years commencing on the date of recordation of this Regulatory Agreement as more specifically set forth herein, to ensure that each Affordable Unit included within the Development shall, at all times until expiration of such period, be occupied or reserved for occupancy by a Qualifying Household (as defined in Section 1.1.48 of this Regulatory Agreement) at an Affordable Rent (as defined in Section 1.1.1 of this Regulatory Agreement);
D. The purpose of this Regulatory Agreement is to create such conditions, covenants, restrictions, reservations, agreements, liens, servitudes and charges upon the Property and subject to which each and every part of the Property shall be developed, occupied, owned, maintained, held, leased, rented, sold and conveyed;

NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES, COVENANTS AND

UNDERTAKINGS SET FORTH IN THIS REGULATORY AGREEMENT AND FOR OTHER

GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF

WHICH IS HEREBY ACKNOWLEDGED, THE OWNER AND THE CITY COVENANT,

DECLARE AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AS FOLLOWS:

1.DEFINITIONS

1.1 Definitions. As used in this Regulatory Agreement, the following words, phrases and terms shall have the meaning as provided in the initial paragraph of this Regulatory Agreement, the Recitals, the Loan Agreement, or in this Section 1, unless the specific context of usage of a particular word, phrase or term may otherwise require:

1.1.1Affordable Rent. In reference to each Affordable Unit, “Affordable Rent” shall be set at a level which is no higher than thirty percent (30%) of gross income for the household size appropriate for the applicable Affordable Unit, in accordance with California Health and Safety Code Section 50053 and any implementing regulations published by the California Department of Housing and Community Development. Subject to requirements of the LMIHAF Loan, the Affordable Rent may be determined by deed restrictions or regulatory agreements that restrict the Affordable Units pursuant to terms of public financing or public financial assistance.

1.1.2Affordable Units. Fifteen (15) of the thirty (30) residential units included in the Project will be restricted by Owner in the manner set forth in this Regulatory Agreement for rental to and occupancy by Qualifying Households in accordance with the terms and conditions of this Agreement. The Affordable Units shall be different from, and in addition to, the units restricted by the PLHA Regulatory Agreement recorded against the Property on or about __________, 2025.

1.1.3Annual Report. A report in substantially the form of Exhibit “C” attached to this Regulatory Agreement or in such other form as subsequently reasonably required by the City.

1.1.4Approval. Any license, permit, approval, consent, certificate, ruling, 55600.00203\44217572.6
Attachment 5
variance, authorization, conditional use permit, or amendment to any of the foregoing, as shall be necessary or appropriate under any Law to commence, perform, or complete the Construction of the Development.

1.1.5Area Median Income. The then current area median income for San Bernardino County, as determined by and published by the United States Department of Housing and Urban Development (“HUD”) as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen months, then the City shall provide Owner with other income determinations which are reasonably similar with respect to method of calculation to those previously published by HCD or HUD.

1.1.6Available. When an Affordable Unit is held available for occupancy by a Qualifying Household, the Affordable Unit shall be considered to be held available for occupancy by a Qualifying Household, until occupied or reoccupied by a Qualifying Household, provided that the Owner is exercising bona fide good faith efforts to let or relet the Affordable Unit to a Qualifying Household.

1.1.7Bankruptcy Law. Title 11, United States Code, and any other or successor State or Federal statute relating to assignment for the benefit of creditors, appointment of a receiver or trustee, bankruptcy, composition, insolvency, moratorium, reorganization, or similar matters.

1.1.8Bankruptcy Proceeding. Any proceeding, whether voluntary or involuntary, under any Bankruptcy Law.

1.1.9City. The City of San Bernardino, California, a municipal corporation.

1.1.10City Manager. The appointed City Manager of the City, or his or her designee.

1.1.11City Parties. Collectively, City, its governing body, elected officials, employees, agents and attorneys.

1.1.12City Party. Individually, City, its governing body, elected officials, employees, agents or attorneys.

1.1.13Claim. Any claim, loss, cost, damage, expense, liability, lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award, assessment, fine or penalty of any kind (including consultant and expert fees and expenses and investigation costs of whatever kind or nature, and if an Indemnitor improperly fails to provide a defense for an Indemnitee, then Legal Costs of counsel retained by the Indemnitee) and any judgment.

1.1.14Condemnation. Any of the following: (a) Any temporary or permanent taking of (or of the right to use or occupy) all or any part of the Property by condemnation, eminent domain, or any similar proceeding; or (b) any action by any Government not resulting in an actual transfer of an interest in (or of the right to use or occupy) all or any part of the Property, but creating 55600.00203\44217572.6
Attachment 5
a right to compensation, such as a change in grade of any street upon which the Property abuts.

1.1.15Control. Possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person and contractually bind such Person, whether by ownership of Equity Interests, by contract, or otherwise.

1.1.16County. The County of San Bernardino, California.

1.1.17Deed of Trust. The Deed of Trust, executed by Owner as Trustor, in favor of the City as Beneficiary, of even date with this Regulatory Agreement.

1.1.18Default Interest. Interest at an annual rate equal to the lesser of: (a) eight percent (8%) per annum; or (b) the Usury Limit.

1.1.19Development. The improvements that have been constructed on the Property, which include a thirty (30) unit multifamily residential housing development and associated amenities.

1.1.20Environmental Claim. Any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including Legal Costs and fees and costs of environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever, directly or indirectly, relating to or arising from any actual or alleged violation of any Environmental Law or Hazardous Substance Discharge.

1.1.21Environmental Law. Any Law regarding any of the following at, in, under, above, or upon the Property: (a) air, environmental, ground water, or soil conditions; or (b) clean-up, remediation, control, disposal, generation, storage, release, discharge, transportation, use of, or liability or standards of conduct concerning, Hazardous Substances.

1.1.22Equity Interest. All or any part of any direct or indirect equity or ownership interest(s) (whether stock, partnership interest, beneficial interest in a trust, membership interest in a limited liability company, or other interest of an ownership or equity nature) in any entity, at any tier of ownership, that directly or indirectly owns or holds any ownership or equity interest in a Person.

1.1.23Event of Default. The occurrence of any one or more of the following:
(a)Reporting Default. If the Owner fails to deliver any Annual Report as and when required in Section 2.8.6 or fails or refuses to allow and cooperate with any City audit of Development Records in accordance with Section 8, each after fifteen (15) calendar days’ Notice of such failure;
(b)Bankruptcy or Insolvency. Owner admits in writing that it is unable to pay its debts as they become due or becomes subject to any Bankruptcy Proceeding (except an involuntary Bankruptcy Proceeding dismissed within one hundred twenty (120) days after commencement), or a custodian or trustee is appointed to take possession of, or an attachment, execution or other judicial seizure is made with respect to, substantially all of Owner’s assets or 55600.00203\44217572.6
Attachment 5
Owner’s interest in this Regulatory Agreement (unless such appointment, attachment, execution, or other seizure was involuntary, and is contested with diligence and continuity and vacated and discharged within one hundred twenty (120) days);
(c)Transfer. The occurrence of a Transfer, whether voluntarily or involuntarily or by operation of Law, in violation of the terms and conditions of this Regulatory Agreement or the Loan Agreement;
(d)Other Default. Any default, other than those specifically addressed in Section 1.1.1(a), Section 1.1.23Error! Reference source not found. or Section 1.1.23(c), that is not cured within thirty (30) days after Notice to the Owner describing the default in reasonable detail, or, in the case of a default that cannot with reasonable diligence be cured within thirty (30) days after the effective date of such Notice, if the Owner does not do all of the following: (a) within thirty (30) days after Notice of such default, advise the City of the intention of the Owner to take all reasonable steps to cure such default; (b) duly commence such cure within such period, and then diligently prosecute such cure to completion; and (c) complete such cure within a reasonable time under the circumstances; or

1.1.24Full Insurable Value. The actual cost of replacing the property in question, without allowance for depreciation, as calculated from time to time (but not more often than once every calendar year) by the insurance company or companies providing property insurance coverage for such property.

1.1.25Government. Each and every governmental agency, City, bureau, department, quasi-governmental body, or other entity or instrumentality having or claiming jurisdiction over the Property or the Development (or any activity this Regulatory Agreement requires or allows), including the government of the United States of America, the State and the County governments and their subdivisions and municipalities, including the City, the City, and all other applicable governmental agencies, authorities, and subdivisions thereof. “Government” shall also include any planning commission, board of standards and appeals, department of buildings, city council, zoning board of appeals, design review board or committee or similar body having or claiming jurisdiction over the Property or any activities on or at the Property.

1.1.26Hazardous Substance. Any flammable substances, explosives, radioactive materials, asbestos, asbestos-containing materials, polychlorinated biphenyls, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, medical wastes, toxic substances or related materials, explosives, petroleum, petroleum products, and any “hazardous” or “toxic” material, substance or waste that is defined by those or similar terms or is regulated as such under any Law, including any material, substance or waste that is: (a) defined as a “hazardous substance” under Section 311 of the Water Pollution Control Act (33 U.S.C. § 1317), as amended; (b) substances designated as “hazardous substances” pursuant to 33 U.S.C. § 1321; (c) defined as a “hazardous waste” under Section 1004 of the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et seq., as amended; (d) defined as a “hazardous substance” or “hazardous waste” under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Reauthorization Act of 1986, 42 U.S.C. § 9601, et seq., or any so-called “superfund” or “superlien” law; (e) defined as a “pollutant” or “contaminant” under 42 U.S.C. § 9601(33); (f) defined as 55600.00203\44217572.6
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“hazardous waste” under 40 C.F.R. Part 260; (g) defined as a “hazardous chemical” under 29 C.F.R. Part 1910; (h) any matter within the definition of “hazardous substance” set forth in 15 U.S.C. § 1262; (i) any matter, waste or substance regulated under the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; (j) any matter, waste or substance regulated under the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; (k) those substances listed in the United States Department of Transportation (DOT) Table [49 C.F.R. 172.101]; (l) any matter, waste or substances designated by the EPA, or any successor City, as a hazardous substance [40 C.F.R. Part 302]; (m) any matter, waste or substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code; (n) any substance defined as a “hazardous substance” in Section 25316 of the California Health and Safety Code; (o) any matter, waste, or substance that is subject to any other Law regulating, relating to or imposing obligations, liability or standards of conduct concerning protection of human health, plant life, animal life, natural resources, property or the enjoyment of life or property free from the presence in the environment of any solid, liquid, gas, odor or any form of energy from whatever source; or (p) other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under Law or in the regulations adopted pursuant to said Law, including manure, asbestos, polychlorinated biphenyl, flammable explosives and radioactive material. Hazardous Substances do not include substances of a type and quantity typically used in the construction and operation of developments similar to the Development and used in compliance with Environmental Laws

1.1.27Hazardous Substance Discharge. Any deposit, discharge, generation, release, or spill of a Hazardous Substance that occurs at, on, under, into or from the Property, or during the transportation of any Hazardous Substance to or from the Property, or that arises at any time from the Construction, installation use or operation of the Development or any activities conducted at, on, under or from the Property, whether or not caused by a Party.

1.1.28HUD. The Secretary of the United States Department of Housing and Urban Development.

1.1.29Income Certification Form. A certification in substantially the form of Exhibit “B” attached to this Regulatory Agreement or in such other form subsequently reasonably required by City.

1.1.30Indemnify. Where this Regulatory Agreement states that any Indemnitor shall “indemnify” any Indemnitee from, against, or for a particular Claim, that the Indemnitor shall indemnify the Indemnitee and defend and hold the Indemnitee harmless from and against such Claim (alleged or otherwise). “Indemnified” shall have the correlative meaning.

1.1.31Indemnitee. Any Person entitled to be Indemnified under the terms of this Regulatory Agreement.

1.1.32Indemnitor. A Party that agrees to Indemnify any other Person under the terms of this Regulatory Agreement.

1.1.33Legal Costs. In reference to any Person, all reasonable costs and expenses such Person incurs in any legal proceeding (or other matter for which such Person is entitled to be reimbursed for its Legal Costs), including reasonable attorneys’ fees, court costs and 55600.00203\44217572.6
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expenses, and consultant and expert witness fees and expenses.

1.1.34Liability Insurance. Commercial general liability insurance against claims for bodily injury, personal injury, death or property damage occurring upon, in, or about the Property, the Development or adjoining streets or passageways, at least as broad as Insurance Services Office Occurrence Form CG001, with a minimum liability limit of Two Million Dollars ($2,000,000) for any one occurrence and which may be provided through a combination of primary and excess or umbrella insurance policies. If commercial general liability insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Development or the general aggregate limit shall be twice the required minimum liability limit for any one occurrence.

1.1.35Maintenance Deficiency. Defined in Section Error! Reference source not found..

1.1.36Maintenance Standard. Defined in Section Error! Reference source not found.

1.1.37Notice. Any consent, demand, designation, election, notice, or request relating to this Regulatory Agreement, including any Notice of Default. All Notices must be in writing.

1.1.38Notice of Default. Any Notice claiming or giving Notice of a Default or alleged Default.

1.1.39Notify. To give a Notice.

1.1.40Owner Parties. Collectively, the Owner, members, directors, officers, employees, agents, partners, managers and holders of Equity Interests in the Owner.

1.1.41Owner Party. Individually, the Owner, each of its members, directors, officers, employees, agents, partners, managers, and each holder of Equity Interests in the Owner.

1.1.42Parties. Collectively, the City and the Owner.

1.1.43Party. Individually, either the City or the Owner, as applicable.

1.1.44Person. Any association, corporation, governmental entity or agency, individual, joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated organization or other entity of any kind.

1.1.45Property Records. All books, records, statements, contracts and other records of the Owner or any Affiliate relating in any way to the use, occupancy or operation of the Property or the Development, including Income Certification Forms completed by applicants or tenants of the Development, Annual Reports, accounting of Development revenues, and accounting of Development expenses. All Development Records shall be prepared in accordance with industry standards and generally accepted accounting principles. 55600.00203\44217572.6
Attachment 5

1.1.46Property. That certain real property located within the City of San Bernardino, County of San Bernardino, State of California, specifically described in the legal 55600.00203\44217572.6
Attachment 5
description attached as Exhibit “A” to this Regulatory Agreement, which is incorporated into this Regulatory Agreement by this reference.

1.1.47Property Insurance. Insurance providing coverage for the Property and all improvements on or to the Property against loss, damage, or destruction by fire and other hazards encompassed under the broadest form of property insurance coverage then customarily used for like properties in the County, in an amount equal to one hundred percent (100%) of the replacement value (without deduction for depreciation) of all improvements comprising the Development (excluding excavations and foundations), and in any event sufficient to avoid co- insurance and with no co-insurance penalty provision, with “ordinance or law” coverage. To the extent customary for like properties in the County at the time, such insurance shall include coverage for explosion of steam and pressure boilers and similar apparatus located on the Property; an “increased cost of construction” endorsement; and an endorsement covering demolition and cost of debris removal, all subject to policy sublimits. Property Insurance shall also include rental or business interruption insurance in an amount, at least, equal to the average annual Gross Income of the Development for the preceding three (3) calendar years and providing for a 12-month extended period of indemnity.

1.1.48Qualifying Household. A household that: (1) intends to reside in an Affordable Unit; and (2) upon initial income certification, and each year thereafter (subject to the terms of this Regulatory Agreement), meets the income restrictions for an “extremely low income household,” as defined by California Health and Safety Code section 50106 and implementing regulations, in accordance with the income limits published by HUD.

1.1.49Security Instrument. Any security instrument, deed of trust, security deed, contract for deed, deed to secure debt, or other voluntary real property (including leasehold) security instrument(s) or agreement(s) intended to grant real property (including leasehold) security for any obligation (including a purchase-money or other promissory note) encumbering the Property, as entered into, renewed, modified, consolidated, increased, decreased, amended, extended, restated, assigned (wholly or partially), collaterally assigned, or supplemented from time to time, unless and until paid, satisfied, and discharged of record. If two or more such security instruments are consolidated or restated as a single lien or held by the same Lender (as applicable), then all such security instruments so consolidated or restated shall constitute a single Security Instrument. A participation interest in a security instrument (or partial assignment of the secured loan) does not itself constitute a Security Instrument.

1.1.50Term. The period of time beginning on the date of recordation of this Regulatory Agreement and ending on the fifty-fifty (55th) anniversary of the date when all Affordable Units are leased to or Available to Qualifying Households as more specifically set forth in Section 2.4 of this Regulatory Agreement.

1.1.51Transfer. Regarding any property, right or obligation means any of the following, whether by operation of law or otherwise, whether voluntary or involuntary, and whether direct or indirect: (a) any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such property, right or obligation, or of any legal, beneficial, or equitable interest or estate in such property, right or obligation or any part of it (including the grant of any easement, lien, or other encumbrance); (b) 55600.00203\44217572.6
Attachment 5
any conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or indirect Equity Interest(s) in the owner of such property, right or obligation by the holders of such Equity Interest(s); (c) any transaction described in “b” affecting any Equity Interest(s) or any other interest in such property, right or obligation or in any such owner (or in any other direct or indirect owner at any higher tier of ownership) through any manner or means whatsoever, except, as applicable, for a transfer by the investor member/limited partner of its Equity Interests in Owner or the removal of a managing member/general partner of Owner by an investor member/limited partner of Owner for a default under Owner’s operating/limited partnership agreement; or (d) any transaction that is in substance equivalent to any of the foregoing. A transaction affecting Equity Interests, as referred to in clauses “b” through “d,” shall be deemed a Transfer by the Owner even though the Owner is not technically the transferor. A “Transfer” shall not, however, include any of the following (provided that the other Party has received Notice of such occurrence) relating to the Property and/or any Equity Interest: (i) a mere change in form of ownership with no material change in beneficial ownership and constitutes a tax-free transaction under federal income tax law and the State real estate transfer tax; (ii) a conveyance only to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit; (iii) a conveyance only to any Person that, as of the date this Regulatory agreement is recorded, holds an Equity Interest in the entity whose Equity Interest is being transferred; (iv) the original sale of Equity Interests in Owner; (v) a conveyance only to an Affiliate of Owner; (vi) the transfer of the interests in the limited partner to the Owner; or (vii) the removal of the general partner of the Owner by its limited partner according to the terms of the Owner’s limited partnership agreement.

1.1.52Unavoidable Delay. A delay in either Party performing any obligation under this Regulatory Agreement, except payment or deposit of money, arising from or on account of any cause whatsoever beyond the Party’s reasonable control, including strikes, labor troubles or other union activities, casualty, war, acts of terrorism, riots, litigation, governmental action or inaction, regional natural disasters or inability to obtain required materials. Unavoidable Delay shall not include delay caused by a Party’s financial condition, illiquidity, or insolvency.

1.1.53Waiver of Subrogation. A provision in, or endorsement to, any insurance policy, by which the carrier agrees to waive rights of recovery by way of subrogation against either Party to this Regulatory Agreement for any loss such policy covers.

1.1.54Workers Compensation Insurance. Workers compensation insurance complying with the provisions of State law and an employer’s liability insurance policy or endorsement to a liability insurance policy, with a minimum liability limit of One Million Dollars ($1,000,000) per accident for bodily injury or disease, covering all employees of the Owner and the Management Agent.

2.AFFORDABLE RENTAL HOUSING COVENANTS AND RESTRICTIONS

2.1 Reservation of Property for Development. The Owner covenants and agrees to reserve and restrict the Property and, thereafter, use and make Available the Affordable Units within the Property for residential occupancy by individuals and families who, at the time of initial occupancy of an Affordable Unit and continuously thereafter (subject to the other provisions of this Regulatory Agreement), until the end of the Term, are members of a Qualifying Household. 55600.00203\44217572.6
Attachment 5

2.2 RESERVED.

2.3 RESERVED.

2.4 Term of Affordability for Affordable Units. The Affordable Units that are confirmed to be rented to Qualifying Households in the initial Annual Report shall be rented or Available to Qualifying Households for not less than 55 years from recordation of this Regulatory Agreement.

Affordable Units that are first rented to Qualifying Households at a later date shall be rented or Available to Qualifying Households for 55 years from the date that each Affordable Unit is first rented to a Qualifying Household. Owner shall indicate the date that each Affordable Unit was first rented to a Qualifying Household in the Annual Reports filed with the City.

2.5 Restrictive Covenant for Affordable Units on the Property. The Owner shall make available and rent the Affordable Units as follows: Twelve (12) one-bedroom units and three (3) two-bedroom units shall be available and rented to households whose income does not exceed thirty percent (30%) of the Area Median Income at an Affordable Rent, as set forth in Section 2.8.

The Affordable Units restricted under this Agreement shall be in addition to the units restricted by the LMIHAF Regulatory Agreement. The applicable restrictions are further set forth below:
# UNITS BEDROOMS %AMI RESTRICTIONS
12 1 30% LMIHAF Regulatory Agreement
9 1 50% PLHA Regulatory Agreement
3 2 30% LMIHAF Regulatory Agreement
5 2 50% PLHA Regulatory Agreement

2.6 Continuous Operation Covenant. The Owner covenants to and for the benefit of the City to cause the Development to be continuously operated, in accordance with the other provisions of this Section 2, throughout the Term.

2.7 Abandonment. The Owner shall not abandon or surrender the operation of all or any part of the Development during the Term, except due to material casualty or condemnation.

2.8 Affordable Rent. The monthly rent charged to a Qualifying Household for the occupancy of an Affordable Unit may never exceed an Affordable Rent for such Affordable Unit.

2.8.1Rent Increases. Rent for Affordable Units may be increased only once per calendar year, based on changes in Area Median Income; provided that the City may, in its reasonable discretion, waive the restriction on number of rent increases in a calendar year.

Notwithstanding the foregoing, the rent for each Affordable Unit must never exceed an Affordable Rent for the Affordable Unit.

2.8.2Determination of Household Income. Determination of Qualifying 55600.00203\44217572.6
Attachment 5
Household income shall be made by the Owner at the time of initial application by an individual or family for occupancy of an Affordable Unit. At the time of initial application, the Owner shall require an applicant to complete the Income Certification Form and certify the accuracy of the information provided on such form. Annually thereafter, the Owner shall require each Qualifying Household occupying an Affordable Unit to recertify the Qualifying Household’s income on the Income Certification Form. The Owner shall make a good faith effort to verify the accuracy of income information provided in any Income Certification Form by an applicant for occupancy of an Affordable Unit or by a Qualifying Household occupying an Affordable Unit, by taking one or more of the following steps, as reasonably required or indicated: (1) obtain an income tax return and copy of each W2 Wage and Earnings Statement for the most recently concluded income tax year; (2) conduct a credit reporting agency or similar search; (3) obtain an income verification form from the applicant’s or the Qualifying Household’s current employer(s); (4) obtain an income verification form from the United States Social Security Administration and/or the California Department of Social Services, if the applicant or the Qualifying Household receives assistance from either of such agencies; or (5) if the applicant or an adult member of a Qualifying Household is unemployed and has no such income tax return, obtain another form of independent verification.

For purposes of this Section 2.8.2, the Owner may conclusively rely upon the evidence of the age of the occupant(s) of an Affordable Unit as presented in a valid California Driver’s License, other form of identification issued by the State of California or the United States Government, which includes a date of birth. All such verification information shall only be obtained by the Owner after obtaining the applicant’s or the Qualifying Household’s written consent for the release of such information to the Owner. Failure to consent in writing to the release of such income verification information to the Owner may disqualify an applicant for occupancy of an Affordable Unit or be grounds for termination of Qualifying Household’s occupancy of an Affordable Unit.

2.8.3 If, upon any recertification, the income of a previously Qualifying Household is less than one hundred forty percent (140%) of the appropriate income level for the applicable Affordable Unit as adjusted for household size, then such household shall continue to be deemed a Qualifying Household under this Regulatory Agreement. If, upon any recertification, the income of a previously Qualifying Household exceeds one hundred forty percent (140%) of Lower Income as adjusted for household size, then, to the extent allowed by Law, the Owner shall notify such household that its lease for its Affordable Unit will not be renewed upon the expiration of its lease, unless the household again becomes a Qualifying Household upon recertification prior to the expiration of its lease.

2.8.4 The Owner shall maintain on file all Income Certification Forms completed by applicants for occupancy of Affordable Units and by Qualifying Households that occupied or are occupying Affordable Units in accordance with Section 2.9 and shall provide copies of the rent roll and Income Certification Forms to the City for its review and approval within fifteen (15) days following Notice to the Owner.

2.8.5 The Owner shall, and the Owner shall make best efforts to cause each Qualifying Household occupying an Affordable Unit to, permit the City to conduct inspections of the Property, the Development and each Affordable Unit, from time-to-time, for purposes of verifying compliance with this Regulatory Agreement, upon fifteen (15) days prior written notice to the Owner.
55600.00203\44217572.6
Attachment 5

2.8.6 Within thirty (30) days of recordation of this Regulatory Agreement, and thereafter on each April 30 during the Term and within sixty (60) days following the expiration of the Term, the Owner shall submit an Annual Report to the City. The City shall maintain the confidentiality of the information contained in any Annual Report specifically relating to any particular Qualifying Household occupying an Affordable Unit, to the extent reasonably allowed by Law, as determined by the City’s general or special counsel.

2.9 Owner Covenant Regarding Lease of Affordable Units. The Owner, for itself, its successors and assigns, covenants and agrees that, if any Affordable Unit is rented or leased during the Term, the rental or lease of the Affordable Unit shall be accomplished through a written lease agreement and all of the following restrictions shall apply:

2.9.1 A Qualifying Household shall be the record tenant and only occupant of the Affordable Unit.

2.9.2 The Owner shall provide a legible copy of this Regulatory Agreement to each prospective tenant of any Affordable Unit, upon request by such tenant.

2.9.3 The lease for each Affordable Unit shall expressly state that it is subject and subordinate to this Regulatory Agreement and shall incorporate each and every provision of this Regulatory Agreement, either expressly or by reference.

2.9.4 The lease for each Affordable Unit shall be for a period of not less than twelve (12) months.

2.9.5 The lease for each Affordable Unit shall not contain any of the following provisions:
(a) An agreement by the Qualifying Household to be sued, to admit guilt or to the entry of a judgment in favor of the Owner in a lawsuit brought in connection with the lease;
(b) An agreement by the Qualifying Household that the Owner may take, hold or sell personal property of any member(s) of the Qualifying Household, without notice to the Qualifying Household and a court decision on the respective rights of the Owner and the member(s) of the Qualifying Household, other than an agreement by the Qualifying Household concerning disposition of personal property remaining in the Affordable Unit after the Qualifying Household has moved out of the Affordable Unit;
(c) An agreement by the Qualifying Household not to hold the Owner or its agents legally responsible for any willful misconduct or negligence attributable to the Owner or its agents;
(d) An agreement by the Qualifying Household that the Owner may institute a lawsuit, involving or affecting the Qualifying Household or any of its members, without notice to the Qualifying Household;
(e) An agreement by the Qualifying Household that the Owner may 55600.00203\44217572.6
Attachment 5
evict the Qualifying Household without instituting a civil court proceeding in which the Qualifying Household has an opportunity to present a defense or before a court decision on the respective rights of the Owner and the Qualifying Household;
(f) An agreement by the Qualifying Household to waive any right to a trial by jury;
(g) An agreement by the Qualifying Household to waive the Qualifying Household’s right to appeal or to otherwise challenge a court decision in connection with the lease;
(h) An agreement by the Qualifying Household to pay attorney’s fees or other legal costs, even if the Qualifying Household wins in a court proceeding by the Owner against the Qualifying Household; provided, however, the Qualifying Household may be obligated to pay costs if the Qualifying Household loses such a legal action; (i) An agreement by the Qualifying Household to pay one (1) or more security deposits (or the equivalent) totaling in excess of the amount of one month’s rent for such Affordable Unit. Failure to pay any security deposit installment may constitute a breach of the lease.

2.9.6 Each lease for an Affordable Unit shall contain all of the following provisions:
(a) An agreement authorizing the Owner to immediately terminate the tenancy of a Qualifying Household occupying an Affordable Unit, where one or more members of that Qualifying Household misrepresented any fact material to the qualification of such household as a Qualifying Household;
(b) An agreement providing that each Qualifying Household occupying an Affordable Unit shall be subject to annual certification or recertification of income as a condition to continued occupancy of the Affordable Unit; (c) An agreement providing that each Qualifying Household occupying an Affordable Unit may be subject to rental increases in accordance with this Regulatory Agreement;
(d) Providing that the Owner will not discriminate on the basis of race, creed, color, gender, sexual orientation, national origin, ancestry, religion, marital status, age, disability or receipt of public assistance or housing assistance in connection with rental of an Affordable Unit, or in connection with the employment or application for employment of persons for operation and management of the Development, and all contracts, applications and leases entered into for such purposes shall contain similar non-discrimination clauses to such effect; and (e) Providing that the Qualifying Household shall occupy the Affordable Unit as its principal residence and shall not sublease all or part of the Affordable Unit for any purpose.
55600.00203\44217572.6
Attachment 5

2.9.7 The Owner shall not terminate the tenancy or refuse to renew the lease or rental agreement of a Qualifying Household except for: (i) serious or repeated violations of the terms and conditions of the lease; (ii) because the previously Qualifying Household is no longer a Qualifying Household; (iii) for violation of applicable Federal, State, or local law; or (iv) for other good cause. The Owner shall, in connection with termination of the tenancy of a Qualifying Household or a refusal to renew the lease or rental agreement of a Qualifying Household, serve written notice upon the Qualifying Household specifying the grounds for the action in accordance with all applicable Laws and at least thirty (30) days before the effective date of the termination of the tenancy, unless the termination is pursuant to a legal action in unlawful detainer.

2.10 Tenant Selection Policies and Criteria. The Owner shall adopt written tenant selection policies and criteria that:

2.10.1 are consistent with the purpose of providing affordable rental housing for Qualifying Households at an Affordable Rent;

2.10.2 are reasonably related to tenant eligibility and ability to perform the obligations of the lease for an Affordable Unit;

2.10.3 subject to applicable fair housing laws, give reasonable preference and consideration to the housing needs of individuals that are involuntarily displaced by activities of the City;

2.10.4 provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable;

2.10.5 give prompt written notice to any rejected applicant of the grounds for rejection;

2.10.6 provide for all of the Affordable Units to be Available for occupancy on a continuous basis to Qualifying Households at an Affordable Rent;

2.10.7 do not give preference to any particular class or group of Persons in leasing or renting the Affordable Units, except as provided in 2.10.3 and to the extent that a tenant must be a Qualifying Household;

2.10.8 provide that there shall be no discrimination against or segregation of any Person or group of Persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property, nor shall Owner or any Person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the Property.

Notwithstanding the immediately preceding sentence, with respect to familial status, this Section Error! Reference source not found. shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section Error! Reference source not found. shall be construed to affect Sections 51.2, 51.3, 55600.00203\44217572.6
Attachment 5

51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to 55600.00203\44217572.6
Attachment 5
housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code. All deeds, leases or contracts made or entered into by the Owner as to Affordable Units or the Property shall contain covenants prohibiting discrimination, as set forth in Health and Safety Code Section 33436(b).

2.11 Property Records Retention; Audit and Examination Rights.

2.11.1Retention of Development Records. The Owner shall prepare and maintain and shall cause its Affiliates to prepare and maintain complete and accurate Development Records for all periods during the Term. The Owner shall, at all times during the Term and for a period of six (6) years following the end of the Term, maintain and cause to be maintained by its Affiliates, safe and intact, all of the Development Records for a period of not less than six (6) years from the generation of such Development Records. From time to time, upon request from the City, the Owner shall make all Development Records, whether in the custody or control of the Owner or its Affiliates, available to the City, the City’s auditor, representative or agent for examination and copying at any reasonable time, on fifteen (15) calendar days advance Notice. The Owner shall also provide the City any additional information concerning the Affordable Units, the Development or the Property reasonably requested by the City.

2.11.2Audit Procedures.
(a) The City may cause an audit of any and all Development Records by an independent auditor of the City’s selection. The City shall preserve the confidentiality of information contained in the Development Records, to the extent permitted by Law, as determined by the City’s general counsel.
(b) If the Owner fails to provide any Annual Report to the City, as and when required under Section 2.8.6, and such failure is not cured within the time periods described in Section 1.1.22(d) of this Regulatory Agreement, the Owner shall be in Default under this Regulatory Agreement. Notwithstanding any other provision of this Regulatory Agreement, if the Owner fails to deliver any Annual Report to the City, within thirty (30) calendar days after Notice specifying such Default, the City shall have the right, in addition to any other rights or remedies the City may have under this Regulatory Agreement regarding such Default, to conduct an audit of any and all applicable Development Records to attempt to identify the information that should have been provided by the Owner in such Annual Report. The Owner shall reimburse the City for the reasonable cost of any audit conducted pursuant to this Section 2.11.2(b), on Notice of such cost from the City. The Owner shall pay Default Interest to the City on the amount of any audit cost becoming due to the City from the Owner pursuant to this Section 2.11.2(b), that is not paid within fifteen (15) calendar days following Notice requesting such payment, from the date of such Notice until paid in full.

2.12 Compliance. The Owner shall, during the Term and at the Owner’s sole cost and expense, in all material respects: (a) comply with all Laws; and (b) procure and comply with all Approvals required by Law.

3.PROPERTY MANAGEMENT

3.1 Management. The Owner shall operate the Development in a manner that will provide 55600.00203\44217572.6
Attachment 5
decent, safe and sanitary residential facilities to the occupants of the Development, will comply with all the provisions of this Regulatory Agreement, any other applicable contract or agreement between the City and the Owner, and all applicable Law. The Owner shall be responsible for management of the Development, including, without limitation, the selection of Qualifying Households for Affordable Units, certification and recertification of household size and income for Qualifying Households occupying all Affordable Units, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City shall have no responsibility for the management or operation of the Development or the Property.

For the purposes of this Regulatory Agreement, the Owner may directly perform the management functions associated with the Development through its employees or by means of a service contract with an Affiliate, without seeking approval from the City. If the Owner desires to retain a Person other than the Owner or an Affiliate, to manage the Development on the Owner’s behalf, the Owner shall submit for City’s approval the identity of any proposed management agent, together with additional information relevant to the background and experience of any proposed management agent, as reasonably requested by the City. The City may approve the proposed management agent by Notice to the Owner within thirty (30) days following the City’s receipt of all requested information regarding such agent, as provided for in the immediately preceding sentence. Unless the proposed management agent is reasonably disapproved by the City within such thirty (30) day period, the management agent shall be deemed approved by the City. The City hereby approves the Eden Housing Management, Inc. as the management agent for the Development.

3.1.1Performance Review. Upon Notice from the City, the Owner shall, with the participation of the City, periodically review the management practices and financial status of the Development and the Owner or management agent. The City shall not request such periodic review more frequently than twice each calendar year. The purpose of each periodic review will be to enable the City to determine whether or not the Development is being operated, maintained, and managed in accordance with the requirements and standards of this Regulatory Agreement and all applicable Law relevant to the Regulatory Agreement.

3.1.2Replacement of Management Agent. Any contract for the operation or management of the Development entered into by the Owner with a Person shall provide that the contract shall have a term of no more than one (1) calendar year and that the contract is subject to the provisions of this Regulatory Agreement. If the Affordable Units are not being operated and managed materially in accordance with the requirements and standards of this Regulatory Agreement and all applicable Law, the City shall provide written notice to the Owner of such deficiency and shall within 30 days following the receipt of such notice the Owner shall remove the management agent and replace the management agent with a different Person approved by the City, pursuant to Section Error! Reference source not found.. The Owner’s failure to remove and replace the Management Agent in any such circumstance shall constitute a Default by the Owner under this Regulatory Agreement.

3.2 Insurance.

3.2.1Owner to Insure. To protect the City Parties against all insurable Claims resulting from the actions of Owner or the Management Agent in connection with this Regulatory Agreement, the Property or the Development, Owner shall maintain, at the sole cost and expense of Owner, the following insurance (or its then reasonably available equivalent): (a) 55600.00203\44217572.6
Attachment 5
Liability Insurance; (b) Property Insurance; and (c) Workers Compensation Insurance. 55600.00203\44217572.6
Attachment 5

3.2.2Nature of Insurance Program. All Liability Insurance and Property Insurance policies this Regulatory Agreement requires shall be issued by carriers that: (a) are listed in the then current “Best’s Key Rating Guide—Property/Casualty—United States & Canada” publication (or its equivalent, if such publication ceases to be published) with a minimum financial strength rating of “A-” and a minimum financial size category of “VII” (exception may be made for the State Compensation Insurance Fund when not specifically rated); and (b) are authorized to do business in the State. The Owner may provide any insurance under a “blanket” or “umbrella” insurance policy, provided that: (1) such policy or a certificate of such policy shall specify the amount(s) of the total insurance allocated to Property and the Development, which amount(s) shall equal or exceed the amount(s) required by this Regulatory Agreement; and (2) such policy otherwise complies with the requirements of this Regulatory Agreement.

3.2.3Policy Requirements and Endorsements. All insurance policies required by this Regulatory Agreement shall contain (by endorsement or otherwise) the following provisions:
(a)Insured. Liability Insurance policies shall name the City as “additional insured.” Property Insurance and Builders Risk Insurance policies shall name the City as a “loss payee.” The coverage afforded to the City shall be at least as broad as that afforded to Owner regarding the Property and the Development and may not contain any terms, conditions, exclusions or limitations applicable to the City Parties that do not apply to Owner. (b)Primary Coverage. Any insurance or self-insurance maintained by the City Parties shall be excess of all insurance required under this Regulatory Agreement and shall not contribute with any insurance required by this Regulatory Agreement. (c)Contractual Liability. Liability Insurance policies shall contain contractual liability coverage for the Owner’s indemnity obligations under this Regulatory Agreement and the City and Owner acknowledge and agree that any proceeds received by Owner as a result of such coverage shall constitute Surplus Cash that may be used for the purpose of indemnifying the City in accordance with the requirements of this Regulatory Agreement. The Owner’s obtaining or failure to obtain such contractual liability coverage shall not relieve the Owner from nor satisfy any indemnity obligation of the Owner under this Regulatory Agreement. (d)Notice to City. Each insurance carrier shall give the City no less than thirty (30) calendar days’ advance written notice of any cancellation or non-renewal of any insurance policy required by this Regulatory Agreement. Also, phrases such as “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company” shall not be included in the cancellation wording of any certificates of insurance or any coverage for the City Parties. The Owner shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy. (e)Deliveries to City. Evidence of Owner’s maintenance of all insurance policies required by this Regulatory Agreement shall be delivered to the City on the date of this Regulatory Agreement. No later than three (3) days before any insurance required by this Agreement expires, is cancelled or its liability limits are reduced or exhausted, Owner shall deliver 55600.00203\44217572.6
Attachment 5
to the City evidence of Owner’s maintenance of all insurance this Regulatory Agreement requires.

Each insurance policy required by this Regulatory Agreement shall be endorsed to state that coverage shall not be cancelled, suspended, voided, reduced in coverage or in limits, except after thirty (30) calendar days’ advance written notice of such action has been given to City by certified mail, return receipt requested; provided; however, that only ten (10) days’ advance written notice shall be required for any such action arising from non-payment of the premium for the insurance.

Phrases such as “endeavor to” and “but failure to mail such Notice shall impose no obligation or liability of any kind upon the company” shall not be included in the cancellation wording of any certificates or policies of insurance applicable to the City Parties pursuant to this Regulatory Agreement.
(f)Waiver of Certain Claims. Owner shall cause each insurance carrier providing any Liability Insurance, Worker’s Compensation Insurance, Automobile Liability Insurance or Property Insurance coverage under this Regulatory Agreement to endorse their applicable policy(ies) with a Waiver of Subrogation with respect to the City Parties, if not already in the policy. To the extent that the Owner obtains insurance with a Waiver of Subrogation, the Owner and the City release each other, and their respective authorized representatives, from any Claims for damage to any Person or property to the extent such Claims are paid by such insurance policies obtained pursuant to or in satisfaction of the provisions of this Regulatory Agreement.
(g)No Representation. No Party makes any representation that the limits, scope, or forms of insurance coverage this Regulatory Agreement requires are adequate or sufficient.
(h)No Claims Made Coverage. None of the insurance coverage required under this Regulatory Agreement may be written on a claims-made basis. (i)Fully Paid and Non-Assessable. All insurance obtained and maintained by Owner in satisfaction of the requirements of this Regulatory Agreement shall be fully paid for and non-assessable. However, Owner’s policies may be subject to insurer audits. (j)City Option to Obtain Coverage. During the continuance of an Event of Default arising from the failure of Owner to carry any insurance required by this Regulatory Agreement, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Owner of any premiums and associated reasonable costs paid by the City for such insurance coverage. Any amount becoming due and payable to the City under this Section 3.2.3(j) that is not paid within fifteen (15) calendar days after written demand from the City for payment of such amount, with an explanation of the amounts demanded, will bear interest from the date of the demand at the rate of eight percent (8%) per annum or the Usury Limit, whichever is less. Any election by the City to purchase or not to purchase insurance otherwise required by the terms of this Regulatory Agreement to be carried by Owner shall not relieve the Owner of its obligation to obtain and maintain any insurance coverage required by this Regulatory Agreement.
(k)Separation of Insured. All Liability Insurance and Automobile Liability Insurance shall provide for separation of insured for Owner and the City Parties. 55600.00203\44217572.6
Attachment 5
Insurance policies obtained in satisfaction of or in accordance with the requirements of this Agreement may provide a cross-suits exclusion for suits between named insured Persons, but shall not exclude suits between named insured Persons and additional insured Persons.

3.2.4Insurance Independent of Indemnification. The insurance requirements of this Regulatory Agreement are independent of the Owner’s indemnification and other obligations under this Regulatory Agreement and shall not be construed or interpreted in any way to satisfy, restrict, limit, or modify the Owner’s indemnification or other obligations under this Regulatory Agreement or to limit the Owner’s liability under this Regulatory Agreement, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage. Further, the Owner’s provision of the insurance required by this Regulatory Agreement shall not preclude the City from taking such other actions as are available to the City under any other provision of this Regulatory Agreement or otherwise at law or in equity.

3.2.5Deductibles and Self-Insured Retentions. All deductibles and self- insured retentions under the Owner’s insurance policies are subject to the City’s prior written approval, which shall not be unreasonably withheld. The Owner shall pay or get the insurance company to waive any and all deductibles and self-insured retentions under all insurance policies issued in satisfaction of the terms of this Regulatory Agreement regarding any Claims relating to the City Parties, except to the extent that any such Claims arise from the negligence or willful misconduct of an City Party.

3.2.6No Separate Insurance. The Owner shall not carry separate or additional insurance relating to the Development that is concurrent in form or contributing in the event of loss with the insurance required under this Regulatory Agreement, unless such insurance is endorsed in favor of the City Parties as required by this Regulatory Agreement.

3.2.7No Representation. Neither Party makes any representation that the limits, scope, or forms of insurance coverage this Regulatory Agreement requires are adequate or sufficient.

3.3 Casualty. If any casualty occurs to the Development during the Term, Owner shall, except as otherwise provided in this Section 3.3, Restore the Development with reasonable promptness. If the cost of Restoration of the Development following a casualty exceeds the insurance proceeds available to Owner for such Restoration (if Owner maintains all insurance required by this Regulatory Agreement and inclusive of any deductible or self-insured retention amounts), then Owner shall not be required to Restore the Development, but this Regulatory Agreement shall not be affected.

3.4 Condemnation. If any portion of the Development is taken by exercise of the power of eminent domain by a Government during the Term, then Owner shall Restore the remaining portions of the Development with reasonable promptness, to the extent practicable.

3.5 Maintenance. The Owner, for itself, its successors and assigns, covenants and agrees that:

3.5.1Maintenance Standard. The entirety of the Property and the 55600.00203\44217572.6
Attachment 5
Development shall be maintained by the Owner in good condition and repair, normal wear and tear excepted, and a neat, clean and orderly condition, including, without limitation, maintenance, repair, reconstruction and replacement of any and all asphalt, concrete, landscaping, utility systems, irrigation systems, drainage facilities or systems, grading, subsidence, retaining walls or similar support structures, foundations, signage, ornamentation, and all other improvements on or to the Property, now existing or made in the future by or with the consent of the Owner, as necessary to maintain the appearance and character of the Property, as improved with the Development. The Owner’s obligation to maintain the Property and the Development described in the immediately preceding sentence shall include, without limitation, all of the following, at the Owner’s sole cost and expense: (i) maintaining the surfaces in a level, smooth and evenly covered condition with the type of surfacing material originally installed or such substitute as shall in all respects be equal in quality, use, and durability; (ii) removing all papers, mud, sand, debris, filth and refuse and thoroughly sweeping areas to the extent reasonably necessary to keep areas in a clean and orderly condition; (iii) removing or covering graffiti with the type of surface covering originally used on the affected area, (iv) placing, keeping in repair and replacing any necessary and appropriate directional signs, markers and lines; (v) installing, operating, keeping in repair and replacing where necessary, such artificial lighting facilities as shall be reasonably required; (vi) providing security services as reasonably indicated; (vii) maintaining, mowing, weeding, trimming and watering all landscaped areas and making such replacements of plants and other landscaping material as necessary to maintain the appearance and character of the landscaping; (viii) properly maintaining the windows, structural elements, and painted exterior surface areas of the Development in a clean and presentable manner; (ix) keeping the common areas of the Development and the Property free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the Property; (x) parking of any commercial motor vehicle in excess of 7,000 pounds gross weight anywhere on the Property on other than on a temporary basis; and (xi) the use of garage areas on the Property for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of the Owner or persons residing at the Property. The Owner’s obligation to maintain the Development and the Property described in the two immediately preceding sentences is, collectively, referred to in this Regulatory Agreement as the “Maintenance Standard.” The Owner may contract with a maintenance contractor to provide for performance of all or part of the duties and obligations of the Owner with respect to the maintenance of the Property or the Development; provided, however, that the Owner shall remain responsible and liable for the maintenance of the Property and the Development, at all times.

3.5.2Maintenance Deficiency. If, at any time during the Term, there is an occurrence of a material adverse condition on any area of the Property or the Development in contravention of the Maintenance Standard (each such occurrence being a “Maintenance Deficiency”), then the City may notify the Owner in writing of the Maintenance Deficiency. If the Owner fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) calendar days following its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and/or the Development and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency.

Any sum expended by the City for the abatement of a Maintenance Deficiency pursuant to this Section 3.5.2 shall be reimbursed to the City by the Owner within thirty (30) calendar days after written demand to the Owner for payment. If any amount becoming due to the City under this 55600.00203\44217572.6
Attachment 5
Section 3.5.2 is not paid within thirty (30) calendar days after written demand to the Owner for payment, the Owner shall also pay Default Interest on such amount until paid in full.

3.5.3Graffiti. Graffiti, as defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Owner by either painting over the evidence of such vandalism with a paint that has been color- matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within seventy-two (72) hours following the time of the discovery of the graffiti, or if Owner fails to commence and diligently pursue to remove such graffiti within seventy-two (72) hours following the time of the discovery of the graffiti, the City shall have the right to enter the Property and/or the Development and remove the graffiti, without notice to the Owner. Any sum expended by the City for the removal of graffiti pursuant to this Section 3.5.3, shall be limited to an amount not to exceed Five Hundred Dollars ($500) per entry by the City and shall be reimbursed to the City by the Owner within thirty (30) calendar days after written demand to the Owner for payment. If any amount becoming due to the City for graffiti removal under this Section 3.5.3 is not paid within thirty (30) calendar days after written demand to the Owner for payment, the Owner shall also pay Default Interest in such amount, until paid in full.

3.6 No City Responsibility for Development. The City shall have no responsibility for the construction, installation, management, operation or maintenance of the Development or the Property.
55600.00203\44217572.6
Attachment 5

4.COVENANTS RUN WITH THE LAND

4.1 Covenants to Run With the Land. The Owner and the City hereby declare their mutual specific intent that the covenants, conditions, restrictions, reservations and agreements set forth in this Regulatory Agreement are part of a plan for the promotion and preservation of affordable rental housing within the City and that each shall be deemed covenants running with the land of the Property, binding upon and each successor-in-interest of the Owner in the Development or the Property for the duration of the Term. Regardless of classification or characterization, each of the covenants, conditions, restrictions and agreements contained in this Regulatory Agreement touch and concern the land of the Property and each of them is expressly declared to be for the benefit and in favor of the City for the duration of the Term, regardless of whether the City is or remains an owner of any land or interest in land to which such covenants, conditions, restrictions or agreements relate. The City, in the event of any breach of this Regulatory Agreement, has the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach, as provided in this Regulatory Agreement, at law or in equity. The Owner hereby expressly assumes the duty and obligation to perform each of the agreements and covenants and to honor each of the reservations and restrictions set forth in this Regulatory Agreement. Each and every contract, deed or other instrument hereafter executed covering or conveying all or any portion of the Property or the Development or any interest in the Property or the Development or any Affordable Unit shall incorporate all of the provisions of this Regulatory Agreement, either expressly or by reference, and any contract, deed or other instrument transferring any estate or interest in the Property or the Development shall conclusively be deemed to have been executed, delivered and accepted subject to the agreements, covenants, conditions, reservations, and restrictions of this Regulatory Agreement, regardless of whether such agreements, covenants, conditions, reservations and restrictions are set forth in or referenced such contract, deed or other instrument.

5.REMEDIES

5.1 Remedies. If an Event of Default occurs, then the City shall, at the City’s option, have any or all of the following described remedies, all cumulative (so exercise of one remedy shall not preclude exercise of another remedy), in addition to such other remedies as may be available at law or in equity or under any other terms of this Regulatory Agreement. The City’s remedies shall include:

5.1.1Suits Before End of Term. The City may sue the Owner for damages or other relief, from time to time, at the City’s election, without terminating this Regulatory Agreement, including by mandamus or other suit, action or proceeding at law or in equity, to require the Owner to perform the covenants or agreements or observe the conditions or restrictions of this Regulatory Agreement, or enjoin any acts or things that may be unlawful or in violation of the rights of the City under this Regulatory Agreement; or by other action at law or in equity, as necessary or convenient to enforce the covenants, agreements, conditions or restrictions of this Regulatory Agreement.

5.1.2Receipt of Moneys. No receipt of money by the City from the Owner after any Notice of Default shall affect any Notice previously given to the Owner, or waive the City’s right to enforce payment or deposit of any amount payable or later falling due, or the City’s 55600.00203\44217572.6
Attachment 5
right to enter the Development, it being agreed that after service of Notice of Default or the commencement of suit or proceedings, or after final order or judgment, the City may demand, receive, and collect any moneys due or thereafter falling due, without in any manner affecting such Notice, proceeding, order, suit or judgment, all such moneys collected being deemed payments on account of the Owner’s liability to the City.

5.1.3No Waiver. No failure by the City to insist upon strict performance of any condition, covenant, agreement, restriction or reservation of this Regulatory Agreement or to exercise any right or remedy upon a Default, and no acceptance of full or partial payment of any amount due or becoming due to the City during the continuance of any such Default, shall waive any such Default or such condition, covenant, agreement, restriction or reservation. No obligation of the Owner under this Regulatory Agreement, and no Default, shall be modified, except by a written instrument executed by the City. No waiver of any Default shall modify this Regulatory Agreement. Each and every covenant, agreement, condition, restriction and reservation of this Regulatory Agreement shall continue in full force and effect with respect to any other then-existing or subsequent Default of such condition, covenant, agreement, restriction or reservation of this Regulatory Agreement.

5.1.4Damages. The City may recover from the Owner all damages the City incurs by reason of the Owner’s Default and reimbursement of the City’s reasonable out of pocket costs, including Legal Costs and bank fees for dishonored checks. The City may recover such damages at any time after the Owner’s Default, including after the expiration of the Term.

Notwithstanding any Law to the contrary, the City need not commence separate actions to enforce the Owner’s obligations for each amount or payment not paid, or each month’s accrual of damages and costs for the Owner’s Default, but may bring and prosecute a single combined action for all such damages and costs.

5.1.5Injunction of Breaches. Whether or not an Event of Default has occurred, the City may obtain a court order enjoining the Owner from continuing any Default or from committing any threatened Default. The Owner specifically and expressly acknowledges that damages would not constitute an adequate remedy to the City for any Default.

5.2 Specific Enforcement. The Owner agrees that specific enforcement of the Owner’s non-monetary obligations under this Regulatory Agreement is one of the reasons that the City agreed to restructure the Loan and that, if the Owner breaches any such obligation, potential monetary damages to the City, as well as to prospective Qualifying Households, would be difficult, if not impossible, to evaluate and quantify. Therefore, in addition to any other relief to which the City may be entitled as a consequence of the Owner’s default under this Regulatory Agreement, the Owner agrees to the imposition of the remedy of specific performance against the Owner under this Regulatory Agreement.

5.3 Enforcement. The City shall have the power to enforce this Regulatory Agreement and no other Person shall have any right or power to enforce any provision of this Regulatory Agreement on behalf of the City or to compel the City to enforce any provision of this Regulatory Agreement against the Owner, the Development, the Property or any Affordable Unit. Further, pursuant to Health and Safety Code Section 33334.3(f)(7), this Regulatory Agreement shall be enforceable by the City, any resident of an Affordable Unit, any resident association with members 55600.00203\44217572.6
Attachment 5
who reside in Affordable Units, former residents of Affordable Units who last resided in any such Affordable Unit, applicants for occupancy of Affordable Units and persons on an affordable housing waiting list, subject to the specific requirements of such law.

5.4 Cure by Limited Partner. Any limited partner or non-managing member of Owner shall have the opportunity, but not the obligation, to effect a cure on behalf of Owner within the cure periods afforded to Owner as set forth herein, and City shall accept such cure as if it had been made by Owner. Notwithstanding the foregoing sentence, failure to provide such notice to such limited partner or managing member shall not result in any liability to the City nor permit Owner additional time to cure a default hereunder.

5.5 Termination by Agreement. Any provision of this Regulatory Agreement may be terminated upon written agreement between the City and the Owner, if the City in its sole and absolute discretion determines that such a termination will not adversely affect the affordable rental housing goals or requirements of the City.

6.GENERAL PROVISIONS

6.1 Relationship of Parties. Nothing contained in this Regulatory Agreement shall be interpreted or understood by any of the Parties, or by any Third Person, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the City and the Owner or the Owner’s agents, employees or contractors. The Owner shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform any services required of them by the terms of this Regulatory Agreement regarding the Development or the Property. Except as otherwise expressly provided in this Regulatory Agreement, the Owner has the right to exercise full control of employment, direction, compensation and discharge of all Persons assisting the Owner in the development, operation or maintenance of the Development or the Property. The Owner shall be solely responsible for all matters relating to payment of its employees, including compliance with tax withholding and all other Laws governing such employees. The Owner shall be solely responsible for its own acts and those of its agents and employees.

6.2 No Claims. Nothing contained in this Regulatory Agreement shall create or justify any claim against the City by any Person that the Owner may have employed or with whom the Owner may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the operation or maintenance of the Development or the Property.

6.3 Approvals.

6.3.1 Any approvals required from the City under this Regulatory Agreement shall not be unreasonably withheld, conditioned or delayed, except where otherwise specifically provided in this Regulatory Agreement. Wherever this Regulatory Agreement states that a Party’s approval shall be “reasonable” or not unreasonably withheld: (a) such approval shall not be unreasonably withheld, delayed or conditioned; (b) no withholding of approval shall be deemed reasonable, unless withheld by Notice specifying reasonable grounds, in reasonable detail, for such withholding, and indicating specific reasonable changes in the proposal under consideration that 55600.00203\44217572.6
Attachment 5
would make it acceptable; and (c) if a Party grants its consent to any matter, this shall not waive its rights to require such consent for any further or similar matter.

6.3.2 Except as otherwise specifically provided in this Regulatory Agreement, whenever this Regulatory Agreement calls for approval by a Party of a proposed document to be submitted by the other Party, the receiving Party shall notify the other Party of its approval or disapproval of such document within thirty (30) calendar days after receipt of the proposed document. Unless otherwise provided in this Regulatory Agreement, a Party’s failure to respond within such thirty (30) calendar day period shall be deemed the Party’s approval. A Party shall provide specific reasons for any disapproval.

6.4 Warranty Against Payment of Consideration for Regulatory Agreement. Owner represents and warrants to the City that: (a) it has not employed or retained any Person to solicit or secure this Regulatory Agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees of Owner and Third Persons to whom fees are paid for professional services related to planning, design or Construction of the Development or documentation of this Regulatory Agreement; and (b) no gratuities, in the form of entertainment, gifts or otherwise have been or will be given by Owner or any of its agents, employees or representatives to any elected or appointed official or employee of either the City or the City in an attempt to secure this Regulatory Agreement or favorable terms or conditions for this Regulatory Agreement. Breach of the representations or warranties of this Section 6.4 shall entitle the City to terminate this Regulatory Agreement upon seven (7) days’ Notice to the other Parties and Escrow Agent. Upon any such termination of this Regulatory Agreement, Owner shall immediately refund any payments made to or on behalf of Owner by the City or the City pursuant to this Regulatory Agreement or otherwise related to the Property, any Approval, or the Development, prior to the date of any such termination.

6.5 Non-liability of City Officials or Employees. No City Party shall be personally liable to the Owner, or any successor in interest to the Owner, in the event of any Default by the City under this Regulatory Agreement, except to the extent of the negligence or willful misconduct of an City Party.

6.6 Governing Law. This Regulatory Agreement shall be governed by the laws of the State of California. without application of conflicts of laws principles. Any legal action brought in connection with this Agreement shall be instituted in the Superior Court of San Bernardino County, State of California, or in the Federal District Court for the Northern District of California.

6.7 Amendment. This Regulatory Agreement may be amended only by a written instrument executed by both the Owner and the City.

6.8 Attorneys’ Fees. In the event that a Party brings an action to enforce in this Regulatory Agreement or otherwise arising out of this Regulatory Agreement, the prevailing Party in such action shall be entitled to recover from the other Party Legal Costs to be fixed by the court in which a judgment is entered, as well as the costs of such suit. For the purposes of this Regulatory Agreement, the words “reasonable attorneys’ fees” in the case of the City, include both the costs of outside legal counsel retained by the City and the salaries, costs and overhead of the lawyers 55600.00203\44217572.6
Attachment 5
employed in the Office of the City Attorney of the City who are legal counsel to the City in such an action, as allocated on an hourly basis.

6.9 Severability. If any term or provision of this Regulatory Agreement or its application to any Person or circumstance shall to any extent be invalid or unenforceable, then the remainder of this Regulatory Agreement, or the application of such term or provision to Persons or circumstances, other than those as to which it is invalid or unenforceable, shall not be affected by such invalidity. All remaining provisions of this Regulatory Agreement shall be valid and be enforced to the fullest extent Law allows.

6.10 Time is of the Essence. Time is of the essence with respect to the performance of each term, provision, covenant, condition, restriction, reservation or agreement contained in this Regulatory Agreement.

6.11 Titles and Headings for Reference Only. The titles and headings of the articles, paragraphs and sections of this Regulatory Agreement are for convenience and reference only and are not to be considered a part of this Regulatory Agreement and shall not in any way interpret, modify or restrict the meaning of any term, provision, covenant, condition, restriction, reservation or agreement contained in this Regulatory Agreement.

6.12 Notices.

6.12.1 Any and all Notices sent by either Party to the other Party pursuant to or as required by this Regulatory Agreement shall be proper, if in writing and transmitted to the principal office of the City or the Owner, as applicable, as designated in Section 6.12.2, by one or more of the following methods: (i) messenger for immediate personal delivery, (ii) a nationally recognized overnight delivery service (i.e., Federal Express, United Parcel Service, etc.) or (iii) registered or certified United States mail, postage prepaid, return receipt requested. Such Notices may be sent in the same manner to such other addresses as either Party may from time to time designate by Notice, in accordance with this Section 6.12. Any such Notice shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States mail, as provided in this Section 6.12.

Rejection, other refusal to accept or the inability to deliver a Notice because of a changed address of which no notice was given, shall be deemed receipt of the Notice.

6.12.2 The following are the authorized addresses for the submission of Notices to the Parties:
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Attachment 5
If to the City: City of San Bernardino
290 North D Street
San Bernardino, CA 92401
Attn: City Manager
With a copy to: Sonia R. Carvalho
Best Best & Krieger LLP
18101 Von Karman Avenue, Suite 1000
San Bernardino, CA 92401
If to the Owner: E Street Veterans Apartments, LP
c/o U.S.VETS Housing Corporation
800 West Sixth Street, Suite 1505
Los Angeles, CA 90017
Attention: Carla Ford
With a copy to: Bergman & Allderdice
1200 Wilshire Blvd, Suite 610
Los Angeles, CA 90017
Attn: Beth Bergman
And
c/o R4 Capital LLC
780 Third Avenue, 16th Floor
New York, New York 10017
Attention: Marc Schnitzer
Telephone Number: 646.576.7659
Telecopier Number: 212.546.9085
E-Mail Address: [email protected]
And
Holland & Knight LLP
787 Seventh Avenue, 31st Floor
New York, New York 10119
Attention: Alan S. Cohen.

Telephone Number: 212.513.3404
Telecopier Number: 212.385.9010
E-Mail Address: [email protected]

6.13 Entire Agreement.

6.13.1 This Regulatory Agreement may be executed in counterpart originals, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument. This Regulatory Agreement includes ___________ (__) pages and three (3) 55600.00203\44217572.6
Attachment 5
exhibits.

6.13.2 None of the terms, conditions, covenants, restrictions, reservations, terms, provisions or agreements set forth in this Regulatory Agreement shall be deemed to be merged with any deed conveying title to any estate or interest in the Property or the Development.

6.13.3 This Regulatory Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument.

6.13.4 Signatures delivered by facsimile shall be binding as originals upon the Parties so signing and delivering; provided, however, that original signature(s) shall be required for documents to be recorded.
55600.00203\44217572.6
Attachment 5
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Attachment 5

SIGNATURE PAGE
TO

REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS

RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING
([INSERT])
IN WITNESS WHEREOF, the Owner and the City have caused this Regulatory Agreement to be signed, acknowledged and attested on their behalf by their duly authorized representatives, as set forth below:

Date:

CITY:

CITY OF SAN BERNARDINO, a municipal
corporation
By:

Eric Levitt, City Manager
ATTEST:

Telicia Lopez, City Clerk
APPROVED AS TO FORM:

Sonia R. Carvalho, City Attorney
55600.00203\44217572.6
Attachment 5
Date: BORROWER:

E Street Veterans Apartments, LP,
a California limited partnership
By: U.S.VETS – E Street LLC,
a California limited liability company,
its managing general partner
By: U.S.VETS Housing Corporation,
a California nonprofit public
benefit corporation,
its managing member
By:
____________________________
Lori Allgood, Chief Operating
Officer
By: Kingdom Development, Inc.,
a California nonprofit public
benefit corporation,
its member
By:
___________________________
William Leach, President
[SIGNATURES OF PRINCIPALS MUST BE
NOTARY ACKNOWLEDGED FOR RECORDING]
55600.00203\44217572.6
Attachment 5
55600.00203\44217572.6
Attachment 5

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

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

WITNESS my hand and official seal.

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

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

WITNESS my hand and official seal.

REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS

RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING
([INSERT])
Legal Description
Real Property in the City of San Bernardino, County of San Bernardino, State of California, described as follows:
[INSERT]
55600.00203\44217572.6
Attachment 5
55600.00203\44217572.6
Attachment 5
EXHIBIT “B”
TO

REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS

RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING
([E STREET VETERAN APARTMENTS])
Income Certification Form
[Attached behind this cover page]
55600.00203\44217572.6
Attachment 5
55600.00203\44217572.6
Attachment 5

55600.00203\44217572.6
Attachment 5
55600.00203\44217572.6
Attachment 5

55600.00203\44217572.6
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55600.00203\44217572.6
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EXHIBIT “C”
TO

REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE

COVENANTS, CONDITIONS AND RESTRICTIONS

RESTRICTING USE OF PROPERTY FOR AFFORDABLE HOUSING
([E STREET VETERAN APARTMENTS])
Form of Annual Report
[Attached behind this cover page]
55600.00203\44217572.6
Attachment 5
55600.00203\44217572.6
Attachment 5

55600.00203\44217572.6
Attachment 6

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

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

WITNESS my hand and official seal.

FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS

RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:

City of San Bernardino
290 North D Street
San Bernardino, CA 92401
Attn: City Clerk
Exempt from recording fees pursuant
to Government Code Section 27383

NOTICE OF AFFORDABILITY RESTRICTIONS

ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies, and other persons, regarding affordable housing restrictions on the real property described in this Notice: The following development has received funding from the City of San Bernardino (“City”) in its capacity as the successor agency to the former Redevelopment Agency of the City of San Bernardino to support the development of affordable housing. A Regulatory Agreement has been recorded against the Property described below as Instrument No. ________________ on ____________________, , Official Records of the County of San Bernardino, State of California, which restrict the price and terms at which certain Affordable Units may be rented. These restrictions may limit the rents of the Affordable Units to an amount which is less than the fair market value of the Units. These restrictions also limit the income of persons and households who are permitted to rent the Units.

Title of Document Containing Affordable Housing Restrictions:

Regulatory Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions Restricting Use of Property for Affordable Housing (referred to in this Notice as the “Affordable Housing Restrictions”).

Parties to Affordable Housing Restrictions:

City of San Bernardino (“City”), and
[INSERT], a [INSERT]
55600.00203\44217572.6
Attachment 6
Term:

The Affordable Housing Restrictions will expire not less than the date fifty-five (55) years following the date of recordation as stated above.

Description of Project: [INSERT]
[INSERT]
Thirty (30) total units—fifteen (15), including twelve (12) one- bedroom units and three (3) two-bedroom units restricted as affordable units by the City of San Bernardino
Parcel Number(s): [INSERT]
Legal Description
Attached hereto as Exhibit A.

Summary of Affordable Housing Restrictions:

The Project consists of thirty (30) rental units, fifteen (15) of which shall be rented to households with a gross income that does not exceed thirty percent (30%) of Area Median Income (the “LMIHAF Units”) at an Affordable Rent as set forth in the Affordable Housing Restrictions.
“Area Median Income” means the then current area median income for San Bernardino County, as determined by and published by the United States Department of Housing and Urban Development (“HUD”) as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen months, then the City shall provide Owner with other income determinations which are reasonably similar with respect to method of calculation to those previously published by HCD or HUD.

This Notice does not contain a full description of the details of all of the terms and conditions of the Affordable Housing Restrictions. You will need to obtain and read the Affordable Housing Restrictions to fully understand the restrictions and requirements which apply to the Property. In the event of any conflict between the terms of this Notice and the terms of the Affordable Housing Restrictions, the terms of the Affordable Housing Restrictions shall control.

This Notice is being recorded and filed in compliance with Health and Safety Code Section 33334.3(f) (3) and (4) and shall be indexed against the City and the current owner of the Property. 55600.00203\44217572.6
Attachment 6
Property Owner:
[INSERT], a [INSERT]
By:

Name: [INSERT]
Title: [INSERT]
City:

CITY OF SAN BERNARDINO, a municipal
corporation
By:

Eric Levitt, City Manager
55600.00203\44217572.6
EXHIBIT “A”
Legal Description
Real Property in the City of San Bernardino, County of San Bernardino, State of California, described as follows:
[INSERT]
55600.00203\44217572.6
55600.00203\44217572.6

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

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

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

WITNESS my hand and official seal.

Signature (Seal)

Mayor and City CouncilNovember 5, 2025

Mayor and City Council
November 5, 2025