San Marcos City Council
April 8, 2025

AMENDED AND RESTATED

DEVELOPMENT AND LOAN AGREEMENT
(Richmar Senior Village)
THIS AMENDED AND RESTATED DEVELOPMENT AND LOAN AGREEMENT (“Agreement”) is dated as of the 8th day of April, 2025, by and among the City of San Marcos (“City”), the City of San Marcos in its capacity as the successor housing agency to the former San Marcos Redevelopment Agency (“SHA”), and NCRC Richmar Senior Village LP (f/k/a Richmar Station San Marcos, LP), a California limited partnership (“Developer”).

RECITALS
A. Developer and SHA are all of the parties to that certain Development and Loan Agreement (Richmar Station) dated as of August 11, 2015, which was amended by that certain Amendment to Development and Loan Agreement (Richmar Station-311 Pleasant Way) dated September 15, 2017, and by that certain Second Amendment to Development and Loan Agreement (Richmar Station-Kumar and Trapezoid) dated July 11, 2018 (as amended, the “Original DLA”). Pursuant to this Agreement, Developer, SHA and City desire to restate the Original DLA in its entirety as set forth herein.

B. Developer desires to redevelop certain real property in the City of San Marcos Redevelopment Project area. The Site is comprised of the three (3) parcels north of Richmar Avenue, which are designated on Exhibit A as APN’s 220-082-03 (“City Phase 1 Property”), 220-082-04 (“Developer Phase 1 Property”) and 220-082-05 (“SHA Phase 1 Property”). The City Phase 1 Property, Developer Phase 1 Property and SHA Phase 1 Property shall be referred to collectively herein as the “Site.” C. The Prior SHA Loan funds, as defined below, were used, in part, to assist with Developer’s purchase of the four (4) parcels north of West Mission Road which are designated on Exhibit A as APN’s 220-083-06, 220-084-06, 220-084-07 and 220-084-10 (collectively, the “SHA-Funded, Developer Properties”).

D. City, SHA and Developer desire by this Agreement: (i) to amend and restate the Original DLA; (ii) for the Developer to agree to transfer the Developer Phase 1 Property to the SHA in consideration for the release of the Prior SHA Loan, (iii) for the City to transfer the City Phase I Property to the SHA such that the Site will be held in fee by the SHA, it being the intent that ultimately the SHA (in such capacity, the “Ground Lessor”) will ground lease the Site to Developer for a term of at least 99 years; (iv) for the Developer to agree to construct a residential development on the Site which will consist of fifty-one (51) deed restricted affordable units, and one (1) unrestricted three-bedroom manager’s unit and certain on and off-site improvements (collectively, the “Project”); (v) for the SHA to agree to make a $6,000,000.00, 3%, 55-year residual receipts loan (“New SHA Loan”) to Developer to partially fund construction of the Project; and (vi) for the Developer to agree to transfer the SHA-Funded, Developer Properties to the SHA. All development of the Site shall be subject to the review and approval by the City and SHA.

E. Developer’s construction of the Project on the Site pursuant to the terms of this Agreement, is in the vital and best interest of the City and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements under which the Redevelopment Project has been undertaken. The Affordable Units and the Project shall be smoke-free, except for a designated smoking area.

F. The qualifications and identity of Developer, and its principals, are of particular concern to the community and the SHA. Developer further recognizes that it is because of such qualifications and identity that the SHA is entering into the Agreement with Developer. No person including, without limitation, any voluntary or involuntary successor in interest of Developer, shall acquire any portion of the Site or any rights or powers under this Agreement except as expressly set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, City, SHA and Developer hereby amend and restate the Original DLA in its entirety and agree as follows:
100. Definitions.
“Administrative General Partner” shall mean the entity or entities designated as the Administrative General Partner by the Developer (NCRC Richmar Senior Village LP, a California limited partnership). “Affordable Units” shall mean the fifty-one (51) smoke-free rental dwelling units to be constructed on the Site by Developer whose rent and occupancy are restricted to low income households pursuant to the Declaration. The Affordable Units will be comprised of ten (10) studio units and forty-one (41) one-bedrooms units. “Agreement” means this Amended and Restated Development and Loan Agreement between the City, SHA and Developer. “Area Median Income” shall mean the area median income defined by the Department of Housing and Urban Development (HUD), as adjusted in order to comply with the California Community Redevelopment Law (Health & Safety Code Section 33000, et seq.) and published by the California Tax Credit Allocation Committee (TCAC), as the then current area median income for the San Diego-Carlsbad Metropolitan Statistical Area, established periodically by HUD and published in the Federal Register, as adjusted for family size. In the event HUD and/or TCAC ceases to publish an established area median income as aforesaid, City and SHA may, in their sole discretions, use any other reasonably comparable method of computing area median income. “City” means the City of San Marcos, a California municipal corporation. “City Grant Deed” means a duly executed and acknowledged grant deed, in a form mutually acceptable to by the City and SHA in each of their sole discretions, conveying fee simple title to the City Phase 1 Property from the City to SHA. “City Phase 1 Property” means the real property designated on Exhibit A as APN 220-082-03. “CFD’s” means any and all community facility district fees applicable to the Site, including without limitation, CFD 98-01 Police only, CFD 98-02 Lighting, Landscaping, Traffic, CFD 2001-01 Fire/Paramedic and CFD 2011-01 Congestion Management. “Construction Closing” means the closing of all of the following which shall occur concurrently: (i) Developer and Ground Lessor execution of a ground lease of the Site for a term of not less than 99 years; (ii) the making of the New SHA Loan and execution and recordation of all documents and agreements with respect to the New SHA Loan; and (iii) Developer closing on Developer’s financing for construction of the Project. “Construction Closing Deadline” means December 31, 2027, subject to extension in writing signed by the Developer and by the City Manager on behalf of the City and SHA. NCRC is required to make 9% applications starting July 2025, March 2026, July 2026 and March 2027. NCRC is also authorized to make 4% applications during that same timeframe. “Construction Closing Minimum Requirements” means the requirements Developer must satisfy for the benefit of the SHA, as set forth in Section 307 hereof. “Construction Deed of Trust” means a deed of trust recorded against the leasehold interest in the Site for the purpose of obtaining construction financing for construction of the Project. “Declaration” shall mean a declaration of covenants, conditions and restrictions, in a form agreed to by the City, SHA and Developer, to be executed by Developer and recorded against the leasehold interest in the Site at the Construction Closing, which shall restrict occupancy of the Affordable Units to Eligible Tenants and shall restrict rent to amounts which are affordable to Low Income Households. Provided all of the Construction Closing Minimum Requirements are satisfied by the Construction Closing Deadline, the Declaration may be subordinated to the Construction Deed of Trust and Permanent Deed of Trust, pursuant to a subordination agreement acceptable to the SHA in its reasonable discretion. The Declaration shall require Developer to pay the set-up fee and annual occupancy monitoring and inspection fee imposed by the SHA, which fee is in addition to any fees payable by the Developer to the SHA pursuant to that certain Supplemental Housing Support Agreement, dated as of December 9, 2014, between the Developer and the SHA. The Declaration shall provide that: (i) households which are displaced from their primary residence as a result of an action of City or SHA; (ii) honorably discharged veterans of the U.S. armed forces, especially combat disabled veterans; (iii) households with at least one member who resides within the City, as that person’s primary place of residence; (iv) households with at least one member who works or has been hired to work within the City, as that person’s principal place of full-time employment or is expected to work within the City as a result of a bona fide offer of employment within the City; and (v) any  person  who  was displaced as a result of an action of City or SHA, shall be given priority when potential tenants are selected for the Affordable Units, to the maximum extent allowed by law. The Declaration shall further provide the Developer shall utilize any universal affordable housing application system, if the same is adopted by the City. “Default” means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 501 hereof. “Developer” means NCRC Richmar Senior Village LP, a California limited partnership. Where the term Developer is used herein, such term shall include any permitted nominee, assignee or successor in interest as herein provided. “Developer Grant Deed” means a duly executed and acknowledged grant deed, in a form mutually acceptable to the SHA and Developer in each of their sole discretions, conveying fee simple title to the Developer Phase 1 Property and the SHA-Funded, Developer Properties from the Developer to the SHA. “Developer Phase 1 Property” means the real property designated on Exhibit A as APN 220-082-04. “Developer Deed of Trust” means the amended and restated deed of trust securing the Developer Note and the Declaration, in a form agreed to by the City, SHA and the Developer, to be executed by Developer and recorded as an encumbrance against a leasehold interest in the Site at the Construction Closing. Provided all of the Construction Closing Minimum Requirements are satisfied by the Construction Closing Deadline, the Developer Deed of Trust may be subordinated to the Construction Deed of Trust and Permanent Deed of Trust. Any such subordination shall be in a form acceptable to the City and SHA in their reasonable discretions. “Developer Note” means the amended and restated promissory note, in a form agreed to by the SHA and the Developer, in an original principal amount equal to the amount of the New SHA Loan (i.e., $6,000,000), to be executed by Developer at the Construction Closing. “Developer Title Policy” means an American Land Title Association owner’s policy issued to the Developer, with endorsements satisfactory to Developer in an amount equal to the value of the Site, insuring a leasehold interest in the Site is held by Developer, subject only to exceptions to coverage that are acceptable to the Developer. “Eligible Tenants” shall mean persons who meet the definition of Low Income Household and who otherwise meet the requirements of the Declaration. “Environmental Indemnity” shall mean an amended and restated unsecured environmental indemnity agreement, in a form agreed to by the City, SHA and Developer, to be executed by Developer, City and SHA at the Construction Closing. “Escrow” is defined in Section 201.2 hereof.
“Escrow Agent” means Chicago Title Insurance Company, or such other title insurance company as shall be mutually selected by the parties hereto. “Escrow Instructions” shall mean the Escrow Instructions, in a form agreed to by the City, SHA and Developer, to be executed by Developer, City and SHA as set forth in Section 201.2 hereof. “Governmental Requirements” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the City, SHA, Developer or the Site. “Gross Income” shall mean the gross income of the Developer from all components of the Site. Provided however that Gross Income shall not include (i) insurance proceeds or condemnation proceeds; (ii) security deposits or other tenant deposits; or (iii) interest earned on project reserves. Interest earned (if any) on project reserves shall accrue to the applicable project reserve account and shall only be used for the purpose for which the reserve was established. “Ground Lessor” means the SHA.
“Ground Lease” means the ground lease to be entered into between the Ground Lessor and the Developer for the Site with a term of at least 99 years from the date of the Construction Closing for a total consideration of $1.00 per year, which Ground Lease shall be in a form approved by the Executive Director of the SHA. “Hazardous Materials” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United State Government. Provided, however, the term “Hazardous Materials” shall not include substances typically used in the ordinary course of developing, operating and maintaining apartment complexes in California or small amounts of chemicals, cleaning agents and the like commonly employed in routine household uses in a manner typical of occupants in other similar properties, provided that such substances are used in compliance with applicable laws. “Land Closing” means the latest closing of all of the following: (i) City transfer of the City Phase 1 Property to SHA; (ii) Developer transfer of the Developer Phase I Property to SHA; and (iii) Developer transfer of the SHA-Funded, Developer Properties to the SHA. “Land Closing Deadline” means no later than June 30, 2025, subject to extension if mutually agreed by the parties in writing signed by the Developer and by the City Manager on behalf of the City and SHA. “Low Income Household” means persons and families whose income does not exceed sixty percent (60%) of the then current Area Median Income. “Managing General Partner” shall mean the entity or entities designated as the Managing General Partner by the Developer (NCRC Richmar Senior Village LP, a California limited partnership. “Memorandum of Option” means a memorandum of option, in a form agreed to by the SHA and the Developer, to be executed by Developer and the SHA and recorded as an encumbrance against the Site at the Construction Closing. “New Project Proforma” means the proforma to be submitted by Developer to the City and SHA as provided in Section 201.5(a) of this Agreement. Developer represents and warrants to the City and SHA that the amounts that will be shown on the New Project Proforma will be accurate and will be the amounts for which Developer will be able to and shall construct the Project in a workmanlike and defect-free manner. “New SHA Loan” means a means the $6,000,000.00, 3%, 55-year residual receipts loan from the SHA to the Developer to partially fund construction of the Project. “Notice” shall mean a notice in the form prescribed by Section 601 hereof. “Notice of Affordability Restrictions on Transfer of Property” means a notice of affordability restrictions on transfer of property, in a form agreed to by the SHA and the Developer, to be executed by Developer and the SHA and recorded as an encumbrance against a leasehold interest in the Site at the Construction Closing. “Operating Expenses” shall mean actual, reasonable and customary costs, fees and expenses directly attributable to the operation, maintenance, taxes and management of all residential components of the Site, to the extent approved by the City and SHA in Developer’s annual operating budget, expressly including, but not limited to, the following: CFD’s, required debt service payments on any loan permitted to be secured by the Site that is senior to the Developer Deed of Trust, repayment of any deferred developer fee approved by the City and SHA, scheduled deposits to reserves, as approved by SHA, a reasonable property management fee in an amount not to exceed 6% of Gross Income in any one year, an asset management fee and a partnership management fee as approved by the City and SHA. “Permanent Deed of Trust” means a deed of trust recorded against a leasehold interest in the Site for purposes of permanently financing for the Project. “Prior SHA Loan” means, collectively, the loans previously made by the SHA to the Developer in the aggregate principal amount of $4,291,870.00, of which $4,148,010.03 was funded to pay costs of acquisition of the SHA-Funded, Developer Properties and predevelopment costs. At the Land Closing, the Prior SHA Loan shall be forgiven in consideration of the Developer’s conveyance of the Developer Phase I Parcel and the SHA-Funded, Developer Properties to SHA. “Project” has the meaning set forth in Recital D, above, which shall include the smoke-free Affordable Units and certain on and off-site improvements. Developer shall obtain all approvals and permits required for completion of the Project, all subject to the review and approval of the City and SHA in their sole discretions. The Project shall be designed, constructed and operated in a manner that meets the Leadership in Energy and Environmental Design Silver Level standard of the U.S. Green Building Council. “Redevelopment Plan” means the Redevelopment Plan for the San Marcos Redevelopment Project incorporated herein by reference. “Redevelopment Project” means the San Marcos Redevelopment Project, adopted by SHA pursuant to the Redevelopment Plan. “Residual Receipts” shall mean Gross Income less Operating Expenses, calculated on a calendar year basis, as provided herein. All calculations of Residual Receipts shall be subject to verification and approval by the SHA. “Security Agreement” shall mean the amended and restated security agreement, in a form agreed to by the City, SHA and the Developer, to be executed by Developer, City and SHA at the Construction Closing. “SHA” means the City of San Marcos in its capacity as the successor housing agency to the former San Marcos Redevelopment Agency, and any assignee of or successor to its rights, powers and responsibilities. “SHA-Funded, Developer Properties” means, collectively, the four (4) parcels north of West Mission Road which are designated on Exhibit A as APN’s 220-083-06, 220-084-06, 220-084-07 and 220-084-10. “SHA Land Title Policies” means American Land Title Association owner’s policies issued to the SHA, with endorsements satisfactory to SHA in the amounts of agreed-upon values of each of the City Phase 1 Property, SHA Phase 1 Property and SHA-Funded, Developer Properties, insuring fee title to the same are vested in the SHA, subject only to exceptions to coverage that are acceptable to the SHA. “SHA Loan Title Policy” means an American Land Title Association lender’s policy issued to the SHA, with endorsements satisfactory to SHA in the amount of $6,000,000.00, insuring that leasehold title to the Site is vested in Developer, fee title to the Site is vested in the SHA, and that the Developer Deed of Trust is an encumbrance against the leasehold interest in the Site that is subject and subordinate only to exceptions to coverage that are acceptable to the SHA. “SHA Phase 1 Property” means the real property designated on Exhibit A as APN220-082-05. “Site” means, collectively, the City Phase 1 Property, Developer Phase 1 Property and SHA Phase 1 Property. “Title Company” means Chicago Title Insurance Company, or such other title insurance company as shall be mutually selected by the parties hereto. 200. Property Transfers; SHA Loan.
201. Acquisition of Properties by SHA.
201.1 Land Closing.
(a) Transfer of the Properties. Subject to all of the terms and conditions of this Agreement, it is intended that fee title to the Site shall be conveyed to the SHA who will then enter into the Ground Lease with the Developer at the Construction Closing. In furtherance thereof, at the Land Closing, the City shall convey the City Phase 1 Parcel to the SHA and the Developer shall convey the Developer Phase 1 Property to the SHA. In consideration of the transfer of title to the Developer Phase I Property, the deed of trust to the Prior SHA Loan will be reconveyed and the Prior SHA Loan will be cancelled. (b) Transfer of SHA-Funded, Developer Properties. Subject to all of the terms and conditions of this Agreement, the Developer shall convey the SHA-Funded, Developer Properties to SHA at the Land Closing. The SHA-Funded, Developer Properties shall be conveyed to the SHA in an “as is” physical and environmental condition, with no warranty, express or implied, by the Developer as to the condition of any existing improvements, the soil, its geology, the presence of known or unknown faults or Hazardous Materials or toxic substances, and it shall be the sole responsibility of the SHA at its expense to investigate and determine the physical and environmental conditions. Prior to the Land Closing, the SHA shall have the right to engage its own environmental consultant (“SHA’s Environmental Consultant”) and other consultants to make such investigations of the SHA-Funded, Developer Properties as the SHA deems necessary, including any soils, geotechnical and other testing of the SHA-Funded, Developer Properties, and the Developer shall promptly be provided with copies of all reports and test results provided to the SHA by the SHA’s Environmental Consultant. Except as otherwise provided herein, the SHA-Funded, Developer Properties shall no longer be subject to this DLA and the Developer waives and releases all claims to develop the SHA-Funded, Developer Properties; provided, however, the Developer shall have the right to apply under any City or SHA-issued requests for proposals and/or to make future proposals to develop the SHA-Funded, Developer Properties. 201.2 Escrow. Developer, City and SHA shall open an escrow (“Escrow”) with Escrow Agent to facilitate the Land Closing and conveyances of the City Phase 1 Property and Developer Phase I Property and SHA-Funded, Developer Properties to the SHA as set forth herein. The parties will execute the Escrow Instructions prior to the Land Closing, which shall provide for the order of recordation, distribution of original documents and other provisions customarily contained in escrow instructions. Developer shall pay all fees, charges, and costs which arise from Escrow, including without limitation the premiums for the SHA Land Title Policy, as well as all documentary transfer taxes, if any. 201.3 Land Closing Conditions for the Benefit of the City and SHA. The City’s obligation to transfer the City Phase 1 Property to the SHA and for the SHA to acquire a fee interest in the same are conditioned upon satisfaction (or waiver) of each and all of the conditions set forth in this Section 201.3 on or before the Land Closing Deadline. Any such waiver shall be effective only if the same is (i) expressly waived in writing signed by the City and SHA or by email from the City and SHA, and (ii) delivered or emailed to the Developer and Escrow Agent. In the event that one or more of the conditions set forth in this Section 201.3 are not satisfied or expressly waived on or before the Land Closing Deadline, the City and SHA (provided the City or SHA is not in default hereunder) may unilaterally terminate this Agreement by mailing or emailing notice of conditional termination to the Developer and Escrow Agent. After receipt of such notice of conditional termination, the Developer shall have three (3) business days to cure any non-satisfaction of a condition or other default specified in the notice of conditional termination. If such matter is unsatisfied or cured prior to the expiration of such three (3) day period, then the Land Closing shall proceed and the SHA waives any right to damages or compensation with respect to the unsatisfied condition. If such matter remains unsatisfied or the default remains uncured after the expiration of such three (3) day period, then this Agreement shall terminate at the close of business on such third (3rd) day. Any such termination of this Agreement shall not release the Developer from liability under this Agreement. (a) No Default. Developer is not in default in any of its obligations under the terms of this Agreement and all representations and warranties of the City and SHA contained herein shall be true and correct in all material respects. (b) Insurance. Developer has provided proof of insurance as required by Section 307 hereof. (c) Grant Deeds. The Developer has deposited the duly executed and acknowledged Developer Grant Deed into Escrow and the City has deposited the duly executed and acknowledged City Grant Deed into Escrow. (d) Additional Documents. The deposit by the Developer into Escrow of all other documents and instruments reasonably required by the Escrow Agent. (e) FIRPTA. The deposit by City and SHA into Escrow of each of the City’s and SHA’s affidavits that each of them is not a foreign person and is a “United States Person” as such term is defined in Section 7761(a)(30) of the Internal Revenue Code of 1986, in the form prescribed by federal regulations, if required by Escrow Agent. (f) FTB Form 590. The deposit by City and SHA into Escrow of a duly executed FTB Form 590 or other evidence that withholding of any funds is not required by the Revenue and Taxation Code of California, if required by Escrow Agent. (g) Title Policy. Title Company is prepared and irrevocably obligated to issue the SHA Land Title Policy. 201.4 Land Closing Conditions for the Benefit of the Developer. The Developer’s obligation to close on the transfer to the SHA of the Developer Phase 1 Property and the SHA-Funded, Developer Properties is conditioned upon satisfaction (or waiver) of each and all of the conditions set forth in this Section 201.4 on or before the Land Closing Deadline. Any such waiver shall be effective only if the same is (i) expressly waived in writing signed by the Developer or by email from the Developer, and (ii) delivered or emailed to the City, SHA and Escrow Agent. In the event that one or more of the conditions set forth in this Section 201.4 are not satisfied or expressly waived on or before the Land Closing Deadline, the Developer (provided the Developer is not in default hereunder) may unilaterally terminate this Agreement by mailing or emailing notice of conditional termination to the City, SHA and Escrow Agent. After receipt of such notice of conditional termination, the City or SHA, as applicable, shall have three (3) business days to cure any non-satisfaction of a condition or other default specified in the notice of conditional termination. If such matter is unsatisfied or cured prior to the expiration of such three (3) day period, then the Land Closing shall proceed and the Developer waives any right to damages or compensation with respect to the unsatisfied condition. If such matter remains unsatisfied or the default remains uncured after the expiration of such three (3) day period, then this Agreement shall terminate at the close of business on such third (3rd) day. Any such termination of this Agreement shall not release the City or SHA from liability under this Agreement. (a) No Default. The City and SHA are not in default in any of their obligations under the terms of this Agreement and all representations and warranties of the City and SHA contained herein shall be true and correct in all material respects. (b) Additional Documents. The deposit by the SHA into Escrow of all other documents and instruments reasonably required by the Escrow Agent. (c) FIRPTA. The deposit by Developer into Escrow of Developer’s affidavit that Developer is not a foreign person and is a “United States Person” as such term is defined in Section 7761(a)(30) of the Internal Revenue Code of 1986, in the form prescribed by federal regulations. (d) FTB Form 590. The deposit by Developer into Escrow of a duly executed FTB Form 590 or other evidence that withholding of any funds is not required by the Revenue and Taxation Code of California. 202. Site Mapping. After the Land Closing, the Developer shall process and file a lot line adjustment or property consolidation as required in order for the City Phase 1 Property, Developer Phase 1 Property and SHA Phase 1 Property to be combined into the Site. 203. Ground Lease to the Developer.
203.1 Construction Closing. Subject to all of the terms and conditions of this Agreement, at the Construction Closing the SHA and Developer will then enter into the Ground Lease. The leasehold interest in the Site shall be conveyed to the Developer in an “as is” physical and environmental condition, with no warranty, express or implied, by the SHA or City as to the condition of any existing improvements, the soil, its geology, the presence of known or unknown faults or Hazardous Materials or toxic substances, and it shall be the sole responsibility of the Developer at its expense to investigate and determine the physical and environmental conditions. Prior to the Construction Closing, the Developer shall have the right to engage its own environmental consultant (“Developer’s Environmental Consultant”) and other consultants to make such investigations of the Site as the Developer deems necessary, including any soils, geotechnical and other testing of the Site, and the City and SHA shall promptly be provided with copies of all reports and test results provided to the Developer by the Developer’s Environmental Consultant. It shall be the sole responsibility and obligation of the Developer to take such action as may be necessary to place the physical and environmental conditions of the Site in a condition entirely suitable for the purposes set forth in this Agreement. 203.2 Escrow. Developer, City and SHA shall open an escrow (“Escrow”) with Escrow Agent to facilitate the Construction Closing. The parties will execute the Escrow Instructions prior to the Construction Closing, which shall provide for the order of recordation, distribution of original documents and other provisions customarily contained in escrow instructions. Developer shall pay all fees, charges, and costs which arise from Escrow, including without limitation the premiums for the Developer Title Policy and the SHA Title Policy, as well as all documentary transfer taxes, if any, due with respect to Developer’s acquisition of a leasehold interest in the Site. 203.3 Closing Conditions for the Benefit of the SHA. The SHA’s obligation to ground lease the Site to Developer is conditioned upon satisfaction (or waiver) of each and all of the conditions set forth in this Section 203.3 on or before the Closing Deadline. Any such waiver shall be effective only if the same is (i) expressly waived in writing signed by the SHA or by email from the SHA, and (ii) delivered or emailed to the Developer and Escrow Agent. In the event that one or more of the conditions set forth in this Section 203.3 are not satisfied or expressly waived on or before the Construction Closing Deadline, the City and SHA (provided the City or SHA is not in default hereunder) may unilaterally terminate this Agreement by mailing or emailing notice of conditional termination to the Developer and Escrow Agent. After receipt of such notice of conditional termination, the Developer shall have three (3) business days to cure any non-satisfaction of a condition or other default specified in the notice of conditional termination. If such matter is unsatisfied or cured prior to the expiration of such three (3) day period, then the Construction Closing shall proceed and the SHA waives any right to damages or compensation with respect to the unsatisfied condition. If such matter remains unsatisfied or the default remains uncured after the expiration of such three (3) day period, then this Agreement shall terminate at the close of business on such third (3rd) day. Any such termination of this Agreement shall not release the Developer from liability under this Agreement. (a) No Default. Developer is not in default in any of its obligations under the terms of this Agreement and all representations and warranties of the City and SHA contained herein shall be true and correct in all material respects. (b) Insurance. Developer has provided proof of insurance as required by Section 307 hereof. (c) Attorneys’ Fees. The Developer has paid prior to or will pay concurrently with the Closing and all reasonable attorneys’ fees incurred by the City and SHA with respect to the same. (d) Additional Documents. The deposit by the Developer into Escrow of all other documents and instruments reasonably required by the Escrow Agent. (e) Title Policy. Title Company is prepared and irrevocably obligated to issue the SHA Loan Title Policy. (f) Closing Minimum Requirements. Developer has satisfied all of the Construction Closing Minimum Requirements set forth in Section 202.5, below. 203.4 Closing Conditions for the Benefit of the Developer. The Developer’s obligation to close is conditioned upon satisfaction (or waiver) of each and all of the conditions set forth in this Section 203.4 on or before the Construction Closing Deadline. Any such waiver shall be effective only if the same is (i) expressly waived in writing signed by the Developer or by email from the Developer, and (ii) delivered or emailed to the City, SHA and Escrow Agent. In the event that one or more of the conditions set forth in this Section 203.4 are not satisfied or expressly waived on or before the Construction Closing Deadline, the Developer (provided the Developer is not in default hereunder) may unilaterally terminate this Agreement by mailing or emailing notice of conditional termination to the City, SHA and Escrow Agent. After receipt of such notice of conditional termination, the City or SHA, as applicable, shall have three (3) business days to cure any non-satisfaction of a condition or other default specified in the notice of conditional termination. If such matter is unsatisfied or cured prior to the expiration of such three (3) day period, then the Construction Closing shall proceed and the Developer waives any right to damages or compensation with respect to the unsatisfied condition. If such matter remains unsatisfied or the default remains uncured after the expiration of such three (3) day period, then this Agreement shall terminate at the close of business on such third (3rd) day. Any such termination of this Agreement shall not release the City or SHA from liability under this Agreement. (a) No Default. The City and SHA are not in default in any of their obligations under the terms of this Agreement and all representations and warranties of the City and SHA contained herein shall be true and correct in all material respects. (b) Additional Documents. The deposit by the SHA into Escrow of all other documents and instruments reasonably required by the Escrow Agent. (c) Title Policy. Title Company is prepared and irrevocably obligated to issue the Developer Title Policy. (d) Construction Closing Minimum Requirements. Developer has satisfied all of the Construction Closing Minimum Requirements set forth in Section 203.5, below. (e) Ground Lease. The SHA has executed a Ground Lease with Developer, on terms reasonably acceptable to Developer. 203.5 Construction Closing Minimum Requirements
. Developer shall satisfy each and all of the conditions set forth in (a) through (h), inclusive, described below (“Construction Closing Minimum Requirements”), which shall be fulfilled or waived on or before the Construction Closing Deadline:
(a) New Project Proforma. Developer has prepared and submitted the New Project Proforma to the City and SHA and the City and SHA have reviewed and approved the New Project Proforma in their sole discretions. (b) Forms of Documents. The Developer, City and the SHA shall have agreed to the forms of the Declaration, Developer Note, Developer Deed of Trust, Security Agreement, Memorandum of Option and Notice of Affordability Restrictions on Transfer of Property. (c) Insurance. Developer shall have provided proof of insurance as required by Section 307 hereof. (d) Other Financing. Developer shall have obtained binding commitments from all financing sources to be used for financing the construction of the Project which are sufficient to complete construction of the Project. All of such financing, including all documentation of the same, shall be subject to the review and approval of the City and SHA in their reasonable discretions. The City and SHA shall have the right and power to review and approve any and all agreements entered into by and between Developer and any tax credit investor(s)/tax credit limited partner. (e) Map. Developer shall have obtained and filed all maps necessary to consolidate the City Phase 1 Property, Developer Phase 1 Property and SHA Phase 1 Property into the Site and to construct the Project. (f) Performance and Payment Bond. Provided Developer obtains tax credit financing for the Project and the City and SHA approve such financing as set forth in Section 307(e), below, Developer shall not be required to post the performance and payment bond described in this Section 203.5(f). Provided Developer does not obtain tax credit financing for the Project, as set forth in the immediately foregoing sentence, Developer shall have posted security in the form of a performance and payment bond in an amount and in a form acceptable to the City and SHA in their reasonable discretions, to assure the design and construction of the Project. The performance and payment bond shall insure that construction of the Project is timely accomplished, free and clear of mechanic’s liens, stop notices and other encumbrances, concerning the provision of material, labor and supplies. Upon a failure of Developer to timely perform its requirements under the terms of this Agreement, the City and SHA may resort to the security to ensure performance of this Agreement, by either requiring the bonding company, or its designees, to comply with the terms of this Agreement, or at the election of the City and SHA, by requiring the bonding company to pay all costs necessary for the City or SHA, to take over and complete construction of the Project at the cost and expense of the bonding company. (g) Construction Contract. The construction contract for the Project, acceptable to the City and SHA, shall have been executed by the Developer and the general contractor who has been selected to do the work. (h) Ministerial Processing. Developer shall have secured any and all ministerial processing and other permits and approvals which may be required for the Project by the City or any other governmental agency affected by such construction or work and Developer shall have paid any and all applicable fees (including, without limitation, communities facility district fees and public facilities fees imposed by the City or any other governmental agency having jurisdiction with respect to the same). The execution of this Agreement does not constitute the granting of or a commitment to obtain any required ministerial processing, permits, or approvals.

In the event that one or more of the above conditions are not satisfied on or before the Construction Closing Deadline then (i) the City and SHA may waive satisfaction of such condition or conditions in writing (delivered to Developer) on or prior to the Construction Closing Deadline, and the Construction Closing shall proceed, or (ii) the City and SHA can immediately terminate this Agreement in writing (delivered to Developer), and pursue all of City’s and SHA’s rights and remedies against the Developer as set forth herein, or as otherwise available at law or in equity, including without limitation those remedies set forth in Section 204, below. 201.6 No Sale of Transfer of the Site. The qualifications and identity of Developer, and its principals, are of particular concern to the community, City and SHA. Developer further recognizes that it is because of such qualifications and identity that the City and SHA are entering into the Agreement with Developer. The Developer shall not sell, transfer or otherwise convey all or any portion of its ground leasehold interest in the Site without the prior written approval of the City and SHA, which approval may be withheld in the sole discretions of the City and SHA. Any sale, transfer or conveyance of all or any portion of the Site without the prior written approval of the City and SHA shall be void. Notwithstanding the foregoing, Developer may transfer its interest in the Site to National Community Renaissance of California or an affiliate thereof following the expiration of the tax credit compliance period without City and/or SHA consent. 204. New SHA Loan. The proceeds of the New SHA Loan shall be allocated solely and exclusively to eligible costs directly attributable to the Site, and upon SHA’s written request delivered to Developer at any time no later than one (1) year after completion of construction of the Project (as evidenced by a certificate of occupancy), Developer shall provide to SHA written proof that such is the case. The proceeds of the New SHA Loan ($6,000,000.00) shall be disbursed pursuant to written draw requests submitted by the Borrower to the SHA supported by such back up documentation as the SHA requires. Disbursements of approved draws shall be conditioned upon the receipt of lien release(s) from the general contractor and any applicable subcontractors for the work performed and contained within the draw request or evidence of an adequate bond or other security reasonably acceptable to the SHA. Review and/or approval of any work by a fund control, disbursement of monies pursuant to a draw request, or any City or SHA review and/or approval of the New SHA Loan and/or work shall be understood to be general review and/or approval only, and shall not relieve Borrower of the responsibility to design, engineer, and construct the Project in accordance with all applicable laws, codes, regulations, and good design, construction, and engineering practice. Any deficiencies or defects shall be corrected at Borrower’s cost and expense and without any cost to the City or SHA. 204.1 Promissory Note.
(a) The New SHA Loan shall be evidenced by the Developer Note executed by the Developer, in favor of the SHA, in the amount not to exceed $6,000,000.00. The New SHA Loan and the Developer Note shall be recourse during the period from the Construction Closing until the timely completion of construction of the Project and issuance of a certificate of occupancy for all units at the Site. Upon completion of construction of the Project and issuance of a certificate of occupancy for all units at the Site, the New SHA Loan shall become a nonrecourse obligation of Developer, except that Developer shall indemnify, defend, protect and hold City and SHA harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense (including, without limitation, reasonable attorneys’ fees and expenses) incurred by City or SHA as a result of any (i) fraud or material misrepresentation under or in connection with the New SHA Loan or any document executed by Developer with respect to the New SHA Loan; (ii) intentional bad faith waste of the Site; (iii) losses resulting from Maker’s failure to maintain insurance as required by any document executed by Developer with respect to the New SHA Loan; and (iv) misapplication of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security in a manner prohibited by any document executed by Developer with respect to the New SHA Loan. (b) The New SHA Loan shall bear simple interest at three percent (3%) per annum commencing on the date of disbursement. However, in the event of a Default, the Developer Note shall bear interest at the rate of ten percent (10%) per annum from the date of disbursement and all of the principal and accrued interest on the Developer Note shall be immediately due and payable by Developer to the SHA. Beginning on the May 1, immediately following the calendar year in which the Project is completed (as evidenced by a certificate of occupancy), and annually on May 1 of each year thereafter during the term of the Developer Note, Developer shall deliver financial statements to the SHA. Beginning on the May 1, immediately following the calendar year in which the Project is completed (as evidenced by a certificate of occupancy), and annually on May 1 of each year thereafter during the term of the Developer Note, Developer shall pay fifty percent (50%) of such Residual Receipts to the SHA in the manner provided in the Developer Note and retain fifty percent (50%) of such Residual Receipts. The principal and interest of the Developer Note may be prepaid in whole or in part at any time and from time to time, without notice or penalty. Any prepayment shall be allocated first to unpaid interest and then to principal. All principal and interest on the Developer Note shall be due and payable from the Developer to the SHA on the date that is 55 years after the date the Project is completed (as evidenced by a certificate of occupancy). (c) The parties acknowledge that the Developer Note and Developer Deed of Trust do not constitute a purchase money mortgage for purposes of Code of Civil Procedure Section 580b. (d) Should Developer agree to or actually sell, convey, transfer, further encumber or dispose of the Site or any interest in it, except for any Permitted Transfer as defined in Section 603.2, below (or obtain any other secured debt with respect to the Site or Developer’s activities at the Site, regardless of whether the source, including without limitation, any funds for special needs populations), without first obtaining the written consent of the holder of the Developer Note (the SHA), then all obligations secured by the Developer Note may be declared due and payable at the option of SHA. The consent of the executive director of the SHA (without the requirement for further formal SHA approval) shall be required for Developer to obtain any other subordinate mortgage loan financing on the Site, provided that all security for any such other subordinate loan financing shall be subordinate to the SHA Declaration and SHA Deed of Trust. The consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions. The Declaration shall remain in place whether or not SHA approves or disapproves a successor-in-interest, commencing on completion of construction of the Project and continuing for a term of ninety-nine (99) years. 204.2 Security. Developer shall execute, acknowledge and deliver the Developer Deed of Trust and shall cause the Developer Deed of Trust to be recorded at the Construction Closing, as security for the Developer Note, New SHA Loan, Declaration and this Agreement. A copy of this Agreement shall not be attached to and recorded as part of such Developer Deed of Trust but any breach of or misrepresentation under this Agreement shall, upon the expiration of any applicable cure period(s), constitute an event of default under such Developer Deed of Trust. 204.3 Subsequent Financing. No further secured loan, deed of trust, or encumbrance, except for the Construction Deed of Trust and Permanent Deed of Trust shall be placed by Developer upon any portion of the Site or Project, whether by refinancing or otherwise, without first obtaining the express written consent of SHA, except for any Permitted Transfer as defined in Section 603.2, below. Further, during any SHA approved refinancing or subsequent encumbrance, the SHA shall be provided American Land Title Association (“ALTA”) title insurance or endorsements acceptable to it, at the cost and expense of Developer. Said written consent shall be at SHA’s sole discretion, failure to obtain such consent shall be a default hereunder and such unconsented to financing or refinancing shall be void. Except for refinancing allowed by this Section 202.4, if Developer refinances the Site, the SHA shall receive one hundred percent (100%) of the of the net amount of the refinancing, unless otherwise agreed by the SHA in its sole discretion. Notwithstanding the foregoing, the SHA shall have no right to receive amounts from any SHA-approved financing obtained by Developer in order to satisfy the Construction Closing Minimum Requirements or from any refinancing of the same. After timely completion of construction of the Project, (as evidenced by a certificate of occupancy for all of the Affordable Units), if Developer refinances the Site, the SHA shall receive fifty percent (50%) of the amount of the net proceeds of such refinancing, unless otherwise agreed by the SHA in its sole discretion, provided that the SHA shall not be entitled to receive any amounts in excess of the amount owed under the Developer Note. 205. Default. Notwithstanding anything contained herein to the contrary, in the event of any default in the performance of any of the terms, covenants and conditions contained in: (i) this Agreement, the Developer Note, Declaration or Developer Deed of Trust; (ii) any document or instrument executed by the Developer in conjunction with this Agreement; (iii) any prior or junior note secured by an encumbrance on the Site or any portion of it; (iv) any note or deed of trust given in conjunction herewith; (v) in the event of the filing of a bankruptcy proceeding by Developer; or (vi) in the event of the filing of a bankruptcy against Developer which is not dismissed within ninety (90) days of filing, then (a) all sums owing by Developer to the SHA shall at the option of SHA immediately become due and payable; (b) SHA shall have no obligation to disburse any further funds to Developer or any other person: and (c) SHA shall be released from any and all obligations to Developer under the terms of this Agreement. These remedies shall be in addition to any and all other rights and remedies available to SHA, either at law or in equity. Further, default interest shall accrue on the principal balance of the Developer Note from the date of the Developer Note at the rate of ten percent (10%) simple interest per annum or the maximum rate than allowed by law, whichever is less. 206. Representations and Warranties.
206.1 SHA and City Representations and Warranties
. SHA represents and warrants to Developer that SHA is a public body, corporate and politic, existing pursuant to the California Community Redevelopment Law (California Health and Safety Code Section 33000), which has been authorized to transact business pursuant to action of the City. City represents and warrants to Developer that City is a municipal corporation, which has been authorized to transact business under California law. SHA represents and warrants to Developer that SHA has full right, power and lawful authority to ground lease the Site to Developer as provided herein and the execution, performance and delivery of this Agreement by SHA has been fully authorized by all requisite actions on the part of SHA. 206.2 Developer’s Representations and Warranties
. Developer represents and warrants to the City and SHA as follows:
(a) Authority. Developer is a California limited partnership. The persons executing this Agreement, and all other documents executed by Developer in conjunction herewith, on behalf of Developer have all necessary authority to do so and this Agreement is a binding obligation of Developer. Execution of this Agreement shall not result with the passage of time or the giving of notice or both in breach of or in acceleration of performance under any contract or document to which Developer may be a party. Copies of a certificate of good standing, issued by the California Secretary of State shall have been delivered to the City and SHA prior to the Construction Closing. These copies will be true, complete and fully-executed copies of the originals, as amended to the date of the Construction Closing. Developer has the full right, power and lawful authority to convey the Developer Phase 1 Property and the SHA-Funded, Developer Properties to the SHA and to ground lease the Site from the SHA and to undertake all obligations as provided herein and the execution, performance and delivery of this Agreement by Developer has been fully authorized by resolution of and all requisite actions on the part of Developer. (b) No Conflict. Developer’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 Developer is a party or by which it is bound. (c) No Bankruptcy. Developer is not the subject of a bankruptcy proceeding. (d) Use of Funds. Developer agrees to use the New SHA Loan funds solely for the purpose of constructing the Project. Funds advanced by SHA pursuant to the New SHA Loan are advanced wholly or in part for the benefit of the Site. (e) Acknowledgement of Agreement. The principal and interest due and payable under the New SHA Loan are subject to the terms and conditions of this Agreement, any other security documents or instruments provided for herein. (f) Rent and Occupancy Restrictions. Developer shall at all times after the Construction Closing during the 99-year term comply with the requirements of the Declaration. 207. Developer Precautions After Closing
. Commencing upon the Construction Closing, Developer shall take all necessary precautions to prevent the release in, on or under the Site of any Hazardous Materials. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Developer shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 208. Required Disclosures
. After the Construction Closing, Developer shall notify the City and SHA, and provide to the City and SHA a copy or copies, of all environmental permits, disclosures, applications, entitlements or inquiries relating to the Site, including notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks. After the Construction Closing, Developer shall report to the City and SHA, as soon as possible after each incident, any unusual or potentially important incidents with respect to the environmental condition of the Site. After the Construction Closing, in the event of a release of any Hazardous Materials into the environment from, under or relating to the Site, Developer shall, as soon as possible after the release, furnish to the City and SHA a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request, Developer shall furnish to the City and SHA a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential. 209. Developer Indemnity
. After the Construction Closing, the Developer shall indemnify, defend and hold SHA and/or City harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys’ fees), resulting from, arising out of, or based upon any of the following: (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Site, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. This indemnity does not include any condition arising solely as a result of the negligence or willful misconduct of the SHA or its employees, agents, representatives, successors or assigns; provided, however that nothing in this Section 209 shall release the Developer from liability for any losses, liabilities, damages, injuries, costs, expenses, or claims proximately caused by the Developer. 300. Development of the Site. Developer shall satisfy all of the Construction Closing Minimum Requirements on or before the Construction Closing Deadline (December 31, 2026), subject to force majeure delays, failure to do so shall be a material, non-curable default by Developer. 301. Site Plan and Scope of Development.
301.1 Site Plan
. Prior to the Construction Closing, the Developer shall prepare and submit to the City and SHA for the City’s and SHA’s review and approval, in their sole discretions, a site plan (“Site Plan”) which shows the location of all improvements to be constructed on the Site. The City and SHA shall have thirty (30) days after receipt of a Site Plan to approve the Site Plan or give Developer notice of any objections to the Site Plan. If the SHA gives Developer notice of any objections to the Site Plan, the Developer shall cause the Site Plan to be revised accordingly and submit the revised Site Plan to the SHA for review and approval as set forth in this Section 301.1. Approval of progressively more detailed drawings and specifications will be granted by the SHA if developed as a logical evolution of drawings or specifications theretofore approved. 301.2 Scope of Development
. Not less than ninety (90) days prior to the Construction Closing, Developer shall prepare and submit to the City and SHA for the City’s and SHA’s review and approval, in their sole discretions, a Scope of Development which shall describe the scope, amount and quality of development of the Project to be constructed by Developer pursuant to the terms and conditions of this Agreement. The City and SHA shall have thirty (30) days after receipt of a Scope of Development to approve the Scope of Development or give Developer notice of any objections to the Scope of Development. If the City or SHA gives Developer notice of any objections to the Scope of Development, Developer shall cause the Scope of Development to be revised accordingly and submit the revised Scope of Development to the City and SHA for review and approval as set forth in this Section 301.2. Approval of progressively more detailed drawings and specifications will be granted by the City and SHA if developed as a logical evolution of drawings or specifications theretofore approved. Developer shall develop the Project in accordance with the Scope of Development and the plans, drawings and documents submitted by Developer and approved by the City and SHA as set forth herein. Developer shall incorporate universal design standards into the Project to the maximum extent feasible. Developer shall design and construct the Project to meet, and shall operate the Site in a manner that meets the Leadership in Energy and Environmental Design Rated certification standard of the U.S. Green Building Council and shall obtain certification of the same within the normal and customary time for similarly situated development projects. Furthermore, Developer shall employ a solar photovoltaic cell (“PV”) system in the Site to the greatest extent possible and said PV system will provide a significant portion of the electrical power needs of the common areas, as determined by the City and SHA in their reasonable discretions. Careful consideration shall be given to the maximum extent feasible for features which include, but are not limited to (i) water conserving features; (ii) appropriate landscaping; (iii) high efficiency/low flow fixtures and appliances; (iv) indoor and outdoor lighting designed to reduce energy use; (v) recycling, including recycling of construction waste; and (vi) use of San Marcos local labor, contractors, vendors, suppliers and materials. 303. Defects in Plans
. The City and SHA shall not be responsible or liable in any way, either to Developer or to any third parties, for any incomplete, inaccurate, or defective work on the Project. Developer shall hold harmless and indemnify the SHA, the City and their officers, employees, agents and representatives from and against any and all claims, demands and suits for damages to property or injuries to persons arising out of or in any way relating to the Project or the Site, violation of any laws, or for defects in work performed by the Developer or any contractor or subcontractor of the Developer. 304. Ministerial Approvals
. Before commencement of construction of the Project or other works of improvement upon the Site, Developer shall, at Developer’s sole expense, secure or cause to be secured any and all ministerial approvals and , permits which may be required for the Project by the City or any other governmental agency affected by such construction or work. The execution of this Agreement does not constitute the granting of or a commitment to obtain any required ministerial approvals or permits.. 305. Deadline for Completion of Project
. Developer shall use best efforts to complete the Project (as evidenced by a certificate of occupancy) on or before December 31, 2029, subject to force majeure delays. Notwithstanding the foregoing, if the Developer does not receive the necessary allocation of tax-exempt bonds and/or Low Income Housing Tax Credits by December 31, 2026, the City and SHA shall confer with the Developer in good faith for a period not to exceed ninety (90) calendar days (commencing on the date the Developer is notified that the Project did not obtain a CDLAC or TCAC commitment) to determine if a feasible and mutually acceptable alternate arrangement can be made to extend this Agreement or modify terms of this Agreement; provided however, if the Developer, City and SHA cannot agree on a mutually acceptable alternate arrangement, then any of them shall have the right to terminate this Agreement upon written notice. 306. Cost of Construction
. All costs whatsoever shall be borne by Developer, including without limitation the cost of planning, designing, developing and constructing of all of the Project, as well as site preparation and grading. 307. Insurance Requirements
. Developer shall take out and maintain during the term of the Declaration, and shall cause its contractor and subcontractors to take out and maintain until completion of construction of the Project (as evidenced by a certificate of occupancy), a comprehensive general liability policy in the amount of not less than $4,000,000 combined single limit policy for the contractor and not less than $2,000,000 combined single limit policy for subcontractors, and a comprehensive automobile liability policy in the amount of $2,000,000 combined single limit, or such other policy limits as the City and SHA may approve in their discretions, including contractual liability, as shall protect the Developer, City and SHA from claims for such damages. Such policy or policies shall be written on an occurrence form. Developer shall also furnish or cause to be furnished to the City and SHA evidence satisfactory to the City and SHA that Developer, and any contractor with whom it has contracted for the performance of work on the Site or otherwise pursuant to this Agreement, carries workers’ compensation insurance as required by law. Developer shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier on a form approved by the City and SHA setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and SHA and their respective officers, agents, and employees as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status. The certificate and endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify City and SHA of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by Developer shall be primary insurance and not be contributing with any insurance maintained by SHA or City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City and SHA. The required certificate shall be furnished by Developer to the City and SHA prior to the Construction Closing. 308. Developer’s Indemnity
. Developer shall be responsible for all injuries to persons and/or all damages to real or personal property of SHA, the City, or others, caused by or resulting from the sale, rental, ownership or operation of the Site, the negligence and/or material breach of this Agreement, of itself, its employees, subcontractors and/or its agents during the construction of or arising out of the construction of the Project. Developer shall defend and hold harmless and indemnify SHA, the City, and all of their officers and employees from and against all claims, liens, claims of lien, losses, damages, judgments, costs, and expenses, whether direct or indirect, arising in any way from (i) the sale, rental, ownership or operation of the Site, including without limitation the Project; (ii) Developer’s negligence; (iii) material breach of this Agreement, by Developer, its employees, subcontractors and/or its agents; and/or (iv) arising out of the construction of the Project, except those arising from the sole negligence or willful misconduct of the SHA or the City, or any of their officers, employees or agents. 309. Rights of Access.

The City and SHA and their representatives shall have the right of reasonable access to the Site, upon prior reasonable notice during normal business hours, without charges or fees, for the purposes of inspection of the work being performed in constructing the Project and monitoring compliance with this Agreement. 310. Compliance With Laws
. Developer represents and warrants that during the term of this Agreement that it will comply with all State and Federal prevailing wage requirements to the extent the same are applicable to the work. Developer shall carry out the design and construction of the Project in conformity with all applicable laws, including all applicable state labor standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the Title 24 of the California Code of Regulations, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. Developer hereby agrees to carry out development, construction (as defined by applicable law) and operation of the Project on the Site, including, without limitation, any and all public works (as defined by applicable law), in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any requirement to pay state prevailing wages). Developer hereby expressly acknowledges and agrees that neither City nor SHA has ever previously affirmatively represented to the Developer or its contractor(s) for the Project in writing or otherwise, in a call for bids or otherwise, that the work to be covered by the bid or contract is or is not a “public work,” as defined in Section 1720 of the Labor Code. Developer hereby agrees that Developer shall have the obligation to provide any and all disclosures, representations, statements, rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer hereby agrees that Developer shall have the obligation to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. The Developer hereby agrees that the Developer shall have the obligation, at the Developer’s sole cost, risk and expense, to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. Developer shall indemnify, protect, defend and hold harmless the SHA, City and their respective officers, employees, contractors and agents, with counsel reasonably acceptable to SHA and City, from and against any and all loss, liability, damage, claim, cost, expense, and/or “increased costs” (including labor costs, penalties, reasonable attorneys’ fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction (as defined by applicable law) and/or operation of the Project, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (i) the noncompliance by Developer of any applicable local, state and/or federal law, including, without limitation, any applicable federal and/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages); (ii) the implementation of Sections 1726 and 1781 of the Labor Code, as the same may be enacted, adopted or amended from time to time, or any other similar law; (iii) failure by Developer to provide any required disclosure, representation, statement, rebidding and/or identification which may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; (iv) failure by Developer to provide and maintain any and all bonds to secure the payment of contractors (including the payment of wages to workers performing any public work) which may be required by the Civil Code, Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law; and/or (v) failure by the Developer to obligate any party as may be required by Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, or any other provision of law. It is agreed by the parties that, in connection with the development, construction (as defined by applicable law) and operation of the Project, including, without limitation, any public work (as defined by applicable law), Developer shall bear all risks of payment or nonpayment of state prevailing wages and/or the implementation of Labor Code Sections 1726 and 1781, as the same may be enacted, adopted or amended from time to time, and/or any other provision of law. “Increased costs” as used in this Section 310 shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be enacted, adopted or amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of construction of the Project (as evidenced by a certificate of occupancy). 310.1 Nondiscrimination in Employment
. Developer certifies and agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies, and all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability, and in compliance with Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29 U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, Cal. Government Code Section 12900, et seq., the California Equal Pay Law, Cal. Labor Code Section 1197.5, Cal. Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., and all other anti-discrimination laws and regulations of the United States and the State of California as they now exist or may hereafter be amended. Developer shall allow representatives of SHA access to its employment records related to this Agreement during regular business hours to verify compliance with these provisions when so requested by SHA. 310.2 Taxes and Assessments
. Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Site. Developer shall remove or have removed any levy or attachment on any of the Site or any part thereof, or assure the satisfaction thereof within a reasonable time. 310.3 Liens and Stop Notices
. Developer shall not allow to be placed on the Site or any part thereof any lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting the Project, Developer shall, within thirty (30) days of such recording or service or within ten (10) days of the City’s and SHA’s demands, whichever last occurs:
(a) pay and discharge the same;
(b) effect the release thereof by recording and delivering to the City and SHA a surety bond in sufficient form and amount as approved by the City and SHA in its sole discretion; or (c) provide the City and SHA with other assurance which the City and SHA deem, in their sole discretions, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of the City and SHA from the effect of such lien or bonded stop notice. 311. Financing of the Project.
311.1 No Encumbrances Except Mortgages or Deeds of Trust . Except as otherwise provided herein, mortgages and deeds of trust may be permitted only with City’s and SHA’s prior written approval, and only for the purpose of securing loans of funds to be used for financing the acquisition of a leasehold interest in the Site, construction of the Project (including architecture, engineering, legal, and related direct costs as well as indirect costs) on or in connection with the Site, and any other purposes necessary and appropriate in connection with development under this Agreement. Developer shall notify the City and SHA in advance of any mortgage or deed of trust, if Developer proposes to enter into the same before completion of the construction of the Project. Except as otherwise provided herein, Developer shall not enter into any such mortgage or deed of trust for financing without the prior written approval of the City and SHA, which approval the City and SHA agrees to give if any such mortgage or deed of trust for financing is given to a responsible financing lending institution or person or entity, as determined by the City and SHA in its reasonable discretion. If the City and SHA shall disapprove any such evidence of financing, the City and SHA shall do so by Notice to Developer stating the reasons for such disapproval and Developer may elect either to obtain and submit to the City and SHA new evidence of financing or to terminate this Agreement. The City and SHA agree that the Developer Deed of Trust shall be subordinated to the Construction Deed of Trust and Permanent Deed of Trust, such subordination shall be in a form acceptable to the City and SHA in its reasonable discretion. Furthermore, the City and SHA shall subordinate the Declaration, Notice of Affordability Restrictions and Memorandum of Option, to the Construction Deed of Trust and Permanent Deed of Trust, to the extent necessary to obtain construction and permanent financing for the Project. Any such subordination shall be in a form acceptable to the City and SHA in their reasonable discretions. 311.2 Right to Cure Mortgage or Deed of Trust Default. In the event of a mortgage or deed of trust default or breach by Developer prior to completion of construction of the Project (evidenced by a certificate of occupancy), Developer shall immediately deliver to the City and SHA a copy of any mortgage holder’s notice of default. The City and SHA shall have the right but not the obligation to cure the default. In such event, the City and SHA shall be entitled to reimbursement from Developer of all costs and expenses incurred by the City and SHA in curing such default, including without limitation reasonable attorneys’ fees. 312. Occupancy Monitoring and Inspection Fees. Each year during the term of the Declaration, the Developer shall pay to the SHA an affordable housing occupancy monitoring and inspection fee in the amount of $220 per affordable unit in the first year after the Project are placed in service, and increased by 2% each year thereafter. The affordable housing occupancy monitoring and inspection fee is in addition to any fees payable by the Developer to the SHA pursuant to that certain Supplemental Housing Support Agreement, dated as of December 9, 2014, between the Developer and the SHA. 313. SHA Option to Acquire the Project.
313.1 Grant of Option. Effective upon the Construction Closing, Developer grants to each of the City and SHA the exclusive option to purchase the Project (“Option”), on the terms and conditions set forth in this Section 313. The Option shall commence upon the earlier of: (i) cancellation, redemption or termination, for any reason, of the low income housing tax credits allocated to the Developer from the California Tax Credit Allocation Committee; or (ii) on the first day of the taxable year in which the “compliance period” (within the meaning of section 42(i)(1) of the Internal Revenue Code) terminates for the Project (“Option Commencement Date”), and shall expire one (1) year after the Option Commencement Date (“Option Term”). 313.2 Consideration for the Option. The execution of this Agreement, conveyance of the City Phase 1 Property, conveyance of the SHA Phase 1 Property and the making of the New SHA Loan by the SHA to the Developer shall be the consideration for entering into the Option. The Developer hereby acknowledges that the City and SHA would not enter into this Agreement or agree to conveyance of the City Phase 1 Property, conveyance of the SHA Phase 1 Property or agree to make the New SHA Loan without the Developer granting the Option to the City and SHA. 313.3 Project Related Tax Liability of the Limited Partner. On the Option Commencement Date the Developer shall provide written notice to the City and SHA, which notice shall state the total amount of the tax liability of the general partner and the limited partner of the Developer (“Limited Partner Project Related Tax Liability”) that would be incurred upon exercise by the City and SHA of the Option and shall further provide to the City and SHA such back-up documentation necessary, as determined by the City and SHA in its sole discretion, to show the calculation and verification of the same. 313.4 Exercise of the Option. During the Option Term, either the City or SHA may exercise the Option by delivering written notice of the same to the Developer. 313.5 Purchase Price. If the City or SHA exercises the Option, the total consideration payable by the City or SHA, as applicable, to the Developer for the Site, shall be the greater of: (i) the Fair Market Value (as defined in Section 315.6, below) of the Developer’s leasehold interest in the Site and all of the Project; or (ii) the sum of: (w) the Limited Partner Project Related Tax Liability; plus (x) the then principal of and all accrued interest on the New SHA Loan, plus (y) principal of and all accrued interest on the loan secured by the Permanent Deed of Trust plus (z) the principal of and all accrued interest on any other secured loans encumbering the Site which were expressly approved by the City and SHA. In the event the SHA exercises the Option, all of the then principal and interest of the New SHA Loan shall be forgiven and such amount shall be credited against the purchase price payable by the SHA, as determined pursuant to the immediately preceding sentence. 313.6 Fair Market Value Defined. Fair Market Value of the Developer’s leasehold interest in the Site is the amount which a buyer would pay for the same in an arm’s-length transaction as determined by an appraiser selected by the City and SHA (with the Developer’s written consent, which shall not be unreasonably, conditioned, delayed or withheld) that holds a MAI designation from the Appraisal Institute that has experience in the geographic area in which the Site is located. The appraisal shall take into account the following factors and restrictions, but only to the extent that such factors and/or restrictions are true or in effect (as the case may be) as of the date on which such Fair Market Value is being determined: (i) the requirement that the dwelling units at the Site remain dedicated for the use of low income persons; and (ii) any restrictions under any loan agreements or regulatory agreements pertaining to the Site and all of the Project.. 313.7 Escrow. Within ten (10) days following the City’s or SHA’s exercise of the Option pursuant to Section 313.4 of this Agreement, the Developer and City or SHA, as applicable, shall open an escrow at a reputable escrow company in San Diego County, California. The parties shall sign the escrow instructions prepared by the escrow holder within ten (10) days of receipt thereof, so long as the instructions (i) state that it is the sole purpose of the escrow holder to comply with and carry out the terms and conditions of this Section 313 of this Agreement, and (ii) contain such other general provisions as are then customarily found in such escrow holder’s escrow instructions. Either party failing to sign the escrow holder’s escrow instructions as provided above shall be deemed to be in breach of this Agreement. The escrow shall provide for a closing on or before ninety (90) days after it is opened. The escrow holder’s escrow instructions signed by the parties shall state the date escrow was opened. 313.8 Memorandum of Option. The Developer shall execute, acknowledge, deliver and cause the Memorandum of Option to be recorded at the Construction Closing. 400. Covenants and Restrictions.
401. Use in Accordance with Redevelopment Plan
. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that commencing upon the Construction Closing and during construction and thereafter, Developer shall devote the Site to the uses specified in the Redevelopment Plan, Declaration and this Agreement for the periods of time specified herein. All uses conducted on the Site, including, without limitation, all activities undertaken by Developer pursuant to this Agreement, shall conform to the Redevelopment Plan and all applicable provisions of the San Marcos Municipal Code. The foregoing covenants shall run with the land. 402. Affordable Units.
402.1 Developer Covenants Concerning Affordable Units. Developer acknowledges that the SHA is funding the New SHA Loan from the SHA’s Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the California Health and Safety Code. Developer agrees that all of the New SHA Loan shall be used for purposes that are eligible under the applicable provisions of the California Health and Safety Code. No part of the New SHA Loan shall be used to finance the construction or operation of any commercial portion of the Site. Also, Developer shall construct Affordable Units at the Site as required by the City and SHA. The number of Affordable Units, the bedroom composition and affordability levels shall be as set forth in the Declaration. At the Construction Closing, the Developer shall execute the Declaration and cause it to be recorded against the leasehold interest in the Site. The Declaration will prohibit smoking at the Site and will set forth the applicable rent and occupancy restriction in more detail. Developer further covenants and agrees that the Affordable Units will be rented only to Low Income Households, at rents affordable to the same. The parties acknowledge that the rents contained herein and in the Declaration are the rents specified in the Leitch stipulated judgment, a copy of which has been provided by the SHA to Developer. 402.2 Timing. Completion of construction of all of the Project, including all of the Affordable Units, shall occur on or before December 31, 2029, subject to force majeure. 402.3 Declaration. The obligation of SHA to make and fund the New SHA Loan hereunder is subject to the execution and recordation of the Declaration. Developer hereby covenants and agrees to pay the property tax applicable to the Property during the term of the Declaration. 403. Maintenance Covenants
. Developer shall maintain the Site and Project, in compliance with the terms of the Redevelopment Plan, all applicable provisions of the San Marcos Municipal Code and all housing quality standards contained within 24 CFR §92.251 (regardless of whether such section would apply to the Site without the foregoing provision). Developer hereby consents to periodic inspection by the City’s and SHA’s designated inspectors and/or designees during regular business hours, including the Code Enforcement Agents of the City, to assure compliance with said zoning, building codes, regulations, and housing quality standards. 404. Obligation to Refrain from Discrimination.
404.1 State and Federal Requirements. Developer shall, at all times during the term of this Agreement, comply with all of the affirmative marketing procedures adopted by the City or SHA. Developer shall maintain records to verify compliance with the applicable affirmative marketing procedures and compliance. Such records are subject to inspection by the City and SHA during regular business hours upon five (5) days written notice. Developer covenants by and for itself and any successors in interest 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, gender identity, marital status, national origin, ancestry, familial status, source of income or disability in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall Developer or any person claiming under or through it establish or permit any such practice or practices of discrimination 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, with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site or the rental, lease, sale of the Site. The foregoing covenants shall run with the Site. 404.2 Additional Requirements. Developer hereby agrees to comply with the Title VII of the Civil Rights Act of 1964, as amended, the California Fair Employment Practices Act, and any other applicable Federal and State laws and regulations. 404.3 Fair Housing Laws. All activities carried out by Developer and/or agents of Developer shall be in accordance with the requirements of the Federal Fair Housing Act. The Fair Housing Amendments Act of 1988 became effective on March 12, 1989. The Fair Housing Amendments Act of 1988 and Title VIII of the Civil Rights Act of 1968, taken together, constitute the Fair Housing Act. The Fair Housing Act provides protection against the following discriminatory housing practices if they are based on race, sex, religion, color, handicap, familial status, or national origin: denying or refusing to rent housing, denying or refusing to sell housing, treating differently applicants for housing, treating residents differently in connection with terms and conditions, advertising a discriminatory housing preference or limitation, providing false information about the availability of housing, harassing, coercing or intimidating people from enjoying or exercising their rights under the Fair Housing Act, blockbusting for profit, persuading owner to sell or rent housing by telling them that people of a particular race, religion, etc., are moving into the neighborhood, imposing different terms for loans for purchasing, constructing, improving, repairing, or maintaining a home, or loans secured by housing; denying use or participation in real estate services, e.g., brokers’ organizations, multiple listing services, etc., The Fair Housing Act gives HUD the authority to hold administrative hearings unless one of the parties elects to have the case heard in U.S. District Court and to issue subpoenas. Both civil and criminal penalties are provided. The Fair Housing Act also provides protection for people with disabilities and proscribes those conditions under which senior citizen housing is exempt from the prohibitions based on familial status. The following State of California Laws also govern housing discrimination and shall be complied with by Developer: Fair Employment and Housing Act, Unruh Civil Rights Act of 1959, Ralph Civil Rights Act of 1976, and Civil Code Section 54.1. 405. Nondiscrimination Covenants
. Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of, any person or group of persons on the basis of race, color, creed, religion, sex, sexual orientation, gender identity, marital status, national origin, ancestry, familial status, source of income or disability of any person in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall Developer or any person claiming under or through it establish or permit any such practice or practices of discrimination 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, with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) Deeds. In deeds “The grantee herein covenants by and for itself, its successors 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 race, color, religion, sex, sexual orientation, gender identity, disability, medical condition, familial status, source of income, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 in the land herein conveyed. The foregoing covenants shall run with the land.” (b) Leases. In leases “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, 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 race, color, religion, sex, sexual orientation, gender identity, disability, medical condition, familial status, source of income, marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit 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.” (c) Contracts. In contracts for the rental, lease or sale of the Site or any dwelling unit “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, sexual orientation, gender identity, disability, medical condition, familial status, source of income, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee 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 land.” 406. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction . The City and SHA are deemed the beneficiaries of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided, without regard to whether the City or SHA has been, remains or is an owner of any land or interest therein in the Site. The City and SHA shall each have the right, if this Agreement or its covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. 500. Defaults and Remedies.
501. Default Generally
. Subject to the extensions of time set forth in Section 602 of this Agreement, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a “Default” under this Agreement. A party claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence. 502. Institution of Legal Actions
. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the County of San Diego, State of California, in an appropriate court in that county, or in the District of the United States District Court in which such county is located. 503. Termination by City and SHA
. In the event that City and SHA are not in Default under this Agreement and Developer is in Default of this Agreement and Developer fails to cure such Default within the time set forth in Section 501 hereof, including without limitation if Developer assigns or attempts to assign this Agreement or any rights therein or to convey or transfer all or any portion of the Site in violation of this Agreement, one or more of the closing conditions set forth in Section 201.3 is not fulfilled by the Developer or waived by the City and SHA on or before the Construction Closing Deadline, Developer fails to satisfy the Construction Closing Minimum Requirements, then: (i) this Agreement and any rights of Developer or any assignee or transferee with respect to or arising out of the Agreement or the Site, shall, at the option of the City and SHA, be terminated by the City and SHA by written notice thereof to Developer in addition to all other rights and remedies available to the City and SHA; and (ii) the City or SHA shall have the right, at its election, to enter and take possession of the Site, with all improvements thereon, and vest title to the Site in the City or SHA by foreclosing on the Developer Deed of Trust. From the date of the written notice of termination of this Agreement by the City and SHA to Developer and thereafter this Agreement shall be terminated and there shall be no further rights or obligations between the parties, except that the parties may pursue any other remedies they may have hereunder. 504. Entry and Vesting of Title Prior to Completion of Construction .
504.1 Right of Entry. In additional to all other rights and remedies the City or SHA may have at law or in equity, but subject to force majeure delays, the City and SHA has the right, at their election, to enter and take possession of the Site, with all improvements thereon, and vest title to the Site in the City or SHA by foreclosing on the Developer Deed of Trust, if after the Construction Closing, Developer:
(a) fails to start the construction of the Project as required by this Agreement for a period of thirty (30) days after written notice thereof from the City and SHA (unless otherwise extended with City and SHA approval); or (b) abandons or substantially suspends construction of the Project required by this Agreement for a period of thirty (30) days after written notice thereof from the City and SHA (unless otherwise extended with City and SHA approval); or (c) transfers or suffers any involuntary transfer of the Site or any part thereof in violation of contrary to the provisions of Section 603 or any other section of this Agreement. 504.2 Limitations on Right of Entry. Such right to enter and vest shall be subject to and be limited by and shall not defeat, render invalid or limit any mortgage or deed of trust permitted by this Agreement that is senior to the Developer Deed of Trust. 505. Acceptance of Service of Process
. In the event that any legal action is commenced by Developer against the City or SHA, service of process on the City or SHA shall be made by personal service upon the City Manager or in such other manner as may be provided by law. In the event that any legal action is commenced by the City or SHA against Developer, service of process on Developer shall be made by personal service upon Developer or in such other manner as may be provided by law. 506. Rights and Remedies are Cumulative
. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party 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 by the other party. 507. Inaction Not a Waiver of Default
. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies shall govern the interpretation and enforcement of this Agreement. 600. General Provisions.
601. Notices, Demands and Communications Between the Parties . Any approval, disapproval, demand, document or other notice (“Notice”) which either party may desire to give to the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice.

To SHA: City of San Marcos
Attn. City Manager
1 Civic Center Drive
San Marcos, CA 92069
Copy To: Christensen & Spath LLP
Attn. Walter F. Spath III, Esq.
401 West A Street, Suite 2250
San Diego, CA 92101
To Developer: NCRC Richmar Senior Village LP
c/o The Southern California Housing Development Corporation of Orange 9421 Haven Avenue
Rancho Cucamonga, CA 91730
Attention: Chief Executive Officer
And:

Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94104
Attn: Lauren B. Fechter
Any written notice, demand or communication shall be deemed received immediately if delivered by hand and shall be deemed received on the third day from the date it is postmarked if delivered by registered or certified mail. 602. Enforced Delay; Extension of Times of Performance
. In addition to specific provisions of this Agreement, performance by either 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; unusually severe weather; acts or omissions of the other party; or any other causes beyond the control and 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 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 five (5) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of the City Manager (on behalf of the City and SHA) and Developer. 603. Transfers of Interest in Site or Agreement.
603.1 Prohibition
. The qualifications and identity of Developer are of particular concern to the City and SHA. It is because of those qualifications and identity that the City and SHA have entered into this Agreement with Developer. For the period commencing upon the date of this Agreement and during the ninety-nine (99) year terms of the Ground Lease and Declaration, no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement, nor shall Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Site or the Project thereon without prior written approval of the City and SHA, except as expressly set forth herein. Any proposed total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Site or the Project, other than those permitted in Section 603.2, will entitle the City and SHA to its right of reentry and revesting as set forth in Section 504 hereof. For the reasons cited above, Developer represents and agrees for itself, each member and any successor in interest of itself and each member that prior to completion of construction of the Project (evidenced by a certificate of occupancy) and without the prior written approval of the SHA, there shall be no significant change in the ownership of Developer or in the relative proportions thereof, or with respect to the identity of the parties in control of Developer or the degree thereof, by any method or means. Developer shall promptly notify the City and SHA of any and all changes whatsoever in the identity of the parties in control of Developer or the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. Any significant change (voluntary or involuntary) in partners, management or control, of Developer or its associates (other than such changes occasioned by the death or incapacity of any individual) shall be a Default. 603.2 Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, City and SHA approval of an assignment of this Agreement or conveyance of the Site, or any part thereof, will be granted in connection with any of the following, subject to the City, SHA and Developer executing appropriate documents of transfer which contain any exceptions or reservation of rights permitted under this Agreement:
(a) the leasing of one or more Affordable Units to an occupant in compliance with the Declaration; (b) transfer of up to a ninety-nine and ninety nine hundredths percent (99.99%) limited partnership interest in the Developer to a tax credit investor partner in connection with a tax credit syndication; (c) transfer by the tax credit investor partner of its interest in the Developer to an entity in which the tax credit investor partner or its affiliate manages and controls, directly or indirectly, the management decisions of such entity in connection with the tax credit syndication; (d) Developer granting an option to purchase the Site after the expiration of the 15-year tax credit compliance period to an entity in which Developer or its affiliate manages and controls, directly or indirectly, the management decisions of such entity, provided that any such option shall be subject and subordinate to the Option; (e) the conveyance or dedication of any portion of the Site to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Project (as defined herein); (f) any requested assignment for financing purposes (subject to such financing being reasonably approved by the City and SHA), including the grant of a deed of trust to secure the funds necessary for construction of the Project; or (g) any deed of trust or related document recorded against the Site in connection with financing approved by the City and SHA. 603.3 Successors and Assigns
. All of the terms, covenants and conditions of this Agreement shall be binding upon Developer and its permitted successors and assigns. Whenever the term “Developer” is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 603.4 Assignment by City and SHA. The City or SHA may assign or transfer this Agreement in its entirety, or any of its rights or obligations hereunder with prior notice to Developer. 604. Non-Liability of Officials and Employees of the City or SHA . No member, official or employee of the SHA or City shall be personally liable to Developer, or any successor in interest, in the event of any Default or breach of this Agreement or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Agreement. 605. Relationship Between City, SHA and Developer
. It is hereby acknowledged that the relationship between the City and SHA on one hand and Developer is that of independent contractors and not that of a partnership or joint venture and that the City, SHA and Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein, the City and SHA shall have no rights, powers, duties or obligations with respect to the operation, maintenance or management of the Project. Developer agrees to indemnify, hold harmless and defend the City and SHA from any claim made against the City or SHA arising from a claimed relationship of partnership or joint venture between the City, SHA and Developer. 606. Approvals and Actions
. Whenever a reference is made herein to an action or approval to be undertaken by the City or SHA, the City Manager or designee is authorized to act on behalf of City or SHA, unless specifically provided otherwise. 607. Counterparts
. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. 608. Integration
. This Agreement contains the entire understanding between the parties relating to the subject matter of this Agreement. All prior or contemporaneous agreements, understandings, representations and statements, oral and written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party’s own independent investigation of any and all facts such party deems material. 609. No Real Estate Brokerage Commissions
. City, SHA and Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder’s fee in connection with any of the property conveyances and transfers contemplated by this Agreement. City, SHA and Developer each agrees to defend and hold harmless one another from any claim by any broker, agent or finder with respect to the property conveyances and transfers contemplated by this Agreement. 610. Attorneys’ Fees
. The parties agree that the prevailing party in litigation for the breach and/or interpretation and/or enforcement of the terms of this Agreement shall be entitled to their expert witness fees, if any, as part of their costs of suit, and reasonable attorneys’ fees as may be awarded by the court, pursuant to California Code of Civil Procedure (“CCP”) Section 1033.5 and any other applicable provisions of California law, including, without limitation, the provisions of CCP Section 998. In addition, in the event Developer requests any future amendments to this Agreement or any further agreements, documents or instruments are to be executed by the SHA or the City, the Developer shall pay any and all attorneys’ fees incurred by the City or SHA with respect to the same. 611. 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. References to section numbers are to sections in this Agreement, unless expressly stated otherwise. 612. Interpretation
. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall 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. 613. No Waiver
. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 614. Modifications
. Any amendment, alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed by the Developer, City and SHA (any amendment, alteration, change or modification of this Agreement on behalf of the City or SHA, including without limitation changes to the economic terms of this Agreement and its attachments, shall be made in the sole discretion of the City Manager). 615. 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. 616. Computation of Time
. The time in which any act is to be done under this Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term “holiday” shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 617. Legal Advice
. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, 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 this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement 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 this Agreement, and without duress or coercion, whether economic or otherwise. 618. Time of Essence
. Time is expressly made of the essence with respect to the performance by the City, SHA and Developer of each and every obligation and condition of this Agreement. 619. Cooperation
. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign 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. 620. Conflicts of Interest
. No member, official or employee of the City or SHA shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 621. Exhibits and Recitals Incorporated. All exhibits referred to in this Agreement are hereby incorporated in this Agreement by this reference, regardless of whether or not the exhibits are actually attached to this Agreement. The recitals to this Agreement are hereby incorporated in this Agreement by this reference. 622. Applicable Law
. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 623. No Novation. This Agreement is not a novation of, and does not amend or modify in any way, the Supplemental Housing Support Agreement, dated as of December 9, 2014, between the Developer and the SHA. 624. Authority to Sign. All individuals signing this Agreement for a party which is a corporation, limited liability company, partnership or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the other parties hereto that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. 625. Liability of the Managing General Partner and Administrative General Partner. Notwithstanding any other provision of this Agreement or any related or ancillary agreement between the parties, except in the case of acts of gross negligence or willful misconduct of the Managing General Partner or the Administrative General Partner, the liability of the Managing General Partner and/or the Administrative General Partner to the Partnership, the Limited Partners or any other Partner or Person under this Agreement or any ancillary document shall be limited to the respective interest of the Managing General Partner or the Administrative in the Partnership and shall not extend to or be enforceable against any other assets of the Managing General Partner or the Administrative General Partner, nor their respective officers, directors, employees or representatives.

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

SHA:

City of San Marcos in its capacity as the
successor housing agency to the former
San Marcos Redevelopment Agency
By:_____________________________________
Michelle Bender, City Manager
CITY:

City of San Marcos
By:_____________________________________
Michelle Bender, City Manager
APPROVED AS TO FORM:

Christensen & Spath LLP
By:_____________________________________
Walter F. Spath III
Special Counsel to the City and SHA
[SIGNATURES CONTINUED ON FOLLOWING PAGE]

DEVELOPER:

NCRC Richmar Senior Village LP, a California limited partnership By: NCRC Richmar Senior Village MGP LLC, a
California limited liability company
Its: Managing General Partner
By: National Community Renaissance of California, a California nonprofit public benefit corporation, its manager
By:_____________________________________
Print Name:______________________________
Its:_____________________________________

Exhibit A
Richmar Senior Village Area Map
2 192.035/638179