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Home My WebLink AboutFCTC Family, LP - Agreement - 10-13-2022CITY OF FRESNO LENDER ESTOPPEL CERTIFICATE To: CALIFORNIA HOUSING FINANCE AGENCY ("CaIHFA" or the "Agency") Re: SARAH'S COURT APARTMENTS CaIHFA Loan No.: 22-013-A/X/N CaIHFA is the permanent lender under that certain final commitment executed between the Agency and FCTC Family, LP, a California limited partnership (the "Borrower"), entitled "Final Commitment Letter for Permanent Financing (HUD Risk sharing Program/FFB) and Mixed -Income Program/Residual Receipts" dated October 13, 2022 (the "CaIHFA Commitment Letter"), which is attached hereto as Exhibit A. 2. The CaIHFA Commitment Letter relates to a first -lien permanent loan not to exceed $6,364,866.00 (the "Permanent First -Lien Loan") and a second -lien loan made under the Agency's Mixed -Income Loan Program not to exceed $3,450,000.00 (the "MIP Loan") each to be made by Agency to Borrower, upon compliance with all terms and conditions of the CaIHFA Commitment Letter, to finance, in part, the Sarah's Court project located in the City of Fresno, County of Fresno, California (the "Development"). The CaIHFA Commitment Letter provides that the Permanent First -Lien Loan and the MIP Loan shall be evidenced by a promissory note(s) (respectively, the "Permanent First -Lien Note" and the "MIP Note"), the repayment of which will be secured by a deed(s) of trust by Borrower as trustor, to Ca1HFA as beneficiary recorded as an encumbrance on the Development in the official records of the County of Fresno (the "Official Records") (respectively, the deeds of trust are referred to herein as the "Permanent First -Lien Deed of Trust" and the "MIP Deed of Trust"), and shall be subject to the terms and conditions of a regulatory agreement(s) restricting the use and occupancy of the Development (respectively, the "CaIHFA Regulatory Agreement" and the "MIP Regulatory Agreement"). The Permanent First -Lien Note, Permanent First - Lien Deed of Trust, the Ca1HFA Regulatory Agreement, MIP Note, MIP Deed of Trust, MIP Regulatory Agreement and related documents shall be collectively referred to herein as the "CaIHFA Documents." 4. The City of Fresno ("Locality") shall be a subordinate lender for the Development and will provide a loan(s) to Borrower pursuant to the various loan documents between Locality and Borrower, including, but not limited to: a. that certain HOME Investment Partnerships Program Agreement dated July 28, 2022, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099558 ("HOME Agreement"); b. that certain Deed of Trust Assignment of Rents dated July 28, 2022, securing a loan in the amount of $3,169,034, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099559 ("HOME Deed"); C. that certain Community Development Block Grant Program Agreement dated July 28, 2022, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099561 ("CDBG Agreement'); d. that certain Deed of Trust dated July 28, 2022, securing a loan in the amount of $2,480,000, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099562 ("CDBG Deed"); e. that certain Permanent Local Housing Allocation Program Agreement dated November 22, 2022, and recorded in the Official Records on November 23, 2022, as Instrument No. 2022-0142275 ("PLHA Agreement'); and f. that certain Deed of Trust Assignment of Rents dated November 21, 2022, securing a loan in the amount of $530,966, and recorded in the Official Records on December 16, 2022, as Instrument No. 2022-0149137 ("PHLA Deed" and, collectively with the HOME Agreement, HOME Deed, CDBG Agreement, CDBG Deed, and PHLA Agreement; the "Locality Documents"). 5. Locality certifies that: (a) Borrower is in compliance with all of its obligations under the Locality Documents; and (b) Locality has no knowledge of the occurrence of any event or condition that, with or without notice or lapse of time or both, would constitute an event of default under the Locality Documents. 6. Locality acknowledges and accepts that a condition of the Ca1HFA Commitment Letter is that the Locality Documents shall be subordinate in lien position to the Ca1HFA Documents which shall be effectuated by the Subordination Agreement, defined below, by and among Borrower, Locality and Ca1HFA and recorded in the Official Records substantially contemporaneously with the CalHFA Documents at the conversion of the construction financing to permanent financing. 7. Locality has reviewed the Ca1HFA Documents attached to the Ca1HFA Commitment Letter and approved the form of the Locality Subordination Agreement attached hereto as Exhibit B (the "Subordination Agreement'). 8. Borrower and Ca1HFA have agreed to not make material modifications to the Ca1HFA Commitment Letter without the prior written consent of the Locality which the Locality shall not unreasonably withhold, condition or delay. 9. Locality makes this Lender Estoppel Certificate with the understanding that Agency is agreeing to make the Permanent First -Lien Loan and MIP Loan in material reliance on the accuracy of this certificate. This Lender Estoppel Certificate inures to the benefit of Agency and its loan participants, successors and assigns in connection with the Agency's Permanent First -Lien Loan and MIP Loan to the Borrower. SIGNATURE PAGE TO FOLLOW 2 Locality Estoppel Certificate (City of Fresno) Sarah's Court Apartments - Call-IFA No. 22-013-A/X/N 12/ 19/2022.TMH/cic.HFMF-943598018-2 Executed on , 202/, at-� County, California. LOCALITY: CITY OF FRESNO 1 ' Name:. L' a Exhibit A - Agency Permanent Commitment Letter Exhibit B - Form Subordination Agreement APPROVED AS TO FORM CITY ORNEY'S 0 ICE BY: DEPUTY CITY ORNEY 'CraUf N P w.. ATTEST: TODD STERMER, CMC Y CLERK - BY: CITY - d3 Ke 1,"5 SP -ems �, s 3 Locality Estoppel Certificate (City of Fresno) Sarah's Court Apartments - CalHFA No. 22-013-A/X/N 12/19/2022.TMWel e.HFMF-943598018-2 EXHIBIT A AGENCY PERMANENT COMMITMENT LETTER Locality Estoppel Certificate (City of Fresno) Sarah's Court Apartments - CalHFA No. 22-013-A/X/N 12/19/2022.TMH/cic.HFMF-943598018-2 CALIFORNIA HOUSING FINANCE AGENCY FINAL COMMITMENT FOR PERMANENT FINANCING (HUD Risk Sharing Program/FFB) (Mixed Income Program) COMMITMENT SUMMARY October 13, 2022 I. Borrower (Name & Address): A. Managing General Partner: B. Administrative General Partner: H. Project (Name & Description): IV V. VI. FCTC Family, LP 265 East River Park Circle Suite 150 Fresno, CA 93720 Community Revitalization and Development Corporation, a California nonprofit public benefit corporation Dominus Consortium Family LLC, a California limited liability company Sarah's Court Apartments CalHFA No.: 22-013-A/X/N Family/ 120 Units Fresno, Fresno County, CA Senior Loan Committee Approval Date: September 7, 2022 A. Declaration of Official Intent Date: February 16, 2022 B. Good Cost Date: December 18, 2021 Commitment Offer Acceptance Deadline: Permanent Loan Closing Deadline: Estimated Construction Loan Closing Date: October 21, 2022 The later of November 15, 2025, or 36 months from the date of the Construction Loan Closing, plus any extensions provided in accordance with this Final Commitment Letter. November 1, 2022 VII. CDLAC Bond Issuance Deadline/ December 12, 2022 (as may be extended by Construction Loan Closing Deadline: CDLAC. In no event shall the Construction Loan Closing Deadline be later than the deadlines applicable to the Project, set by CDLAC or CTCAC, as may be extended.) CaIHFA Final.Commitment.Summary (Permanent Financing -HUD Risk Sharing Pmgram/FFB)(M1P) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/12/2022.Thffele-Doc 9665445913-3 VIII. Permanent Loan Terms: A. Principal Amount: Up to $6,364,866.00 B. Term/Amortization Period: 17/40 years C. Interest Rate: 6.65% per annum (fixed), based on a fixed-rate lock. Interest rate is subject to change. Interest rate will be locked up to 30 days before Construction Loan closing. Rate is based on a 36-month forward commitment. D. Source: E. HUD/FHA Risk Share Insurance: Tax Exempt Bonds or FFB Yes (50%) IX. Mixed -Income Program ("MIP") Subsidy Loan Terms: A. Anticipated Principal Amount: B. Term and Payments: C. Interest Rate: D. Source: E. Estimated Percentage of residual receipts for debt service of the MIP Subsidy Loan: $3,450,000.00* 17 years**; non -amortizing; residual receipts The greater of 1% or the Applicable Federal Rate at the time of the MIP closing. Estimated at 3% per annum (simple). Mixed -Income Program Funds 35:83% as more particularly described in Exhibit B. F. Subsidy Loan Closing Date: Permanent Loan Closing/Conversion * Payments will be based on actual principal amount outstanding at the time the Construction Loan converts to the Permanent Loan. ** Upon prepayment of the Permanent Loan, the Subsidy Loan shall become due and payable. 0) CaIHFA Final,Commitment.Summary (Permanent Financing -HUD Risk Sharing Program/FFB)(MIP) Sarah's Court Apts. - Ca1HFA No. 22.013-A/X/N 09/12/2022.TMH/cle-Doc #665445913-3 X. Loan Fees: Amount Amount Amount Due Due Date Paid A. Loan Fee $63,649.00 $0.00 $63,649.00 $31,824.50 due at final commitment. Remaining $31,824.5 due at Permanent Loan Closing. B. 1VIIP Loan Fee $34,500.00 $0.00 $34,500.00 $17,250.00 due at final commitment. Remaining $17,250.00 due at Permanent Loan Closing C. Ca11IFA $10,000.00 $10,000.00 $0.00 Submission of application Application for Loan(s); Non - Fee refundable but applied to Legal Fee at Permanent Loan Closing D. Administrative $1,000.00 $0.00 $1,000.00 Permanent Loan Closing Loan Processing Fee E. Construction $15,000,00 $0.00 $15,000.00 Construction Loan Closing Inspection Fees F. Annual $7,500.00 $0.00 $7,500.00 Construction Loan Closing, Monitoring Fee thereafter annually in advance G. Tax Service $780.00 $0.00 $780.00 Permanent Loan Closing Fee (estimated) H. Legal Fee $35,000.00 $0.00 $35,000.00 $17,500.00 due at final commitment; remaining $7,500.00 due at Permanent Loan Closing (applying the Application Fee) I. Conduit Issuer $39,638.000 $0.00 $39,638.00 Construction Loan Closing Fee Based on: $18,606,511 (Tax Exempt Bonds); $5,667.947 Taxable Bonds Ca1HFA Final.Commitment.Summary (Permanent Financing -HUD Risk Sharing Program/FFB)(MIP) Sarah's Court Apts, - Ca1fiFA No. 22-013-A/X/M 09/12/2022.TMH/c1c-Doc #665445913-3 J. Bond $25,000.00 $0.00 $25,000.00 Construction Loan Closing Recycling Fee, if applicable K. CDLAC $6,512.28 $1,800.00 $4,712.28 Construction Loan Closing Allocation Fee Based on: $18,606,511(Tax Exempt Bonds) L. Perm Loan $110,000.00 $0.00 $110,000.00 Permanent Loan Closing Funding Fee M. 3-Month 25% of Due prior to the extension Extension Fee* Loan Fee of the Loan Closing per Deadline as set forth in the extension Final Commitment Letter N. HUD Risk $16,044.00 $16,044.00 $0 Submission of Application Share for Loan(s). Environmental Review *Up to two 3-month extensions available. The approval of any additional extension, and the term and fee thereof, shall be in the Agency's sole discretion Required Impounds/Escrow Deposits: TBD. One year prepaid insurance premiums and property tax assessments due at Permanent Loan Closing XI. Required Reserve Accounts: Amount Due Date A. Operating Expense Reserve $548,535.00 (estimated) Permanent Loan Closing (Six months of operating expenses, reserves, debt service, and monitoring fee) B. Replacement Reserve 1. Initial Deposit $0.00 1. Permanent Loan Closing 2. Annual Deposit $36,000.00 2. $3,000.00 Impounded Monthly in Advance XIL SPECIAL CONDITIONS: SPEC T I L CONDITIONS ATTACHED AS NOTE: For any related conduit issuance by CaWA, the Borrower shall be responsible for all Agency fees set forth in the CaIHFA Conduit Term Sheet as well as for all other costs of Conduit Bond issuance, whether or not they are identified above or in the Ca1HFA Conduit Termsheet, including without limitation, the fees of the underwriter, trustee, rating agencies, lender, compliance administrator, all Bond counsel legal fees, and any other pard fired to complete the transaction. r RME D A BD BY 4 Ca1HFA Final.Commitment.Summary (Permanent Financing -HUD Risk Sharing Prugrsriill?FB]( Sarah's Court Apts. - CaIHFA No. 22-013-A/X/N 16 09/1220227MH/cic•Doc#665445913-3 &4aDato: �C Title: California Housing Finance Agency CALIFORNIA HOUSING FINANCE AGENCY FINAL COMMITMENT LETTER FOR PERMANENT FINANCING (HUD Risk Sharing Program/FFB) and SUBSIDY FINANCING (Mixed -Income Program) October 13, 2022 FCTC Family, LP 265 East River Park Circle Suite 150 Fresno, CA 93720 Re: Final Commitment Letter For (Permanent Financing - HUD Risk Sharing Program/FFB) and (Mixed -Income Program/Residual Receipts) Sarah's Court Apartments Ca1HFA No.: 22-013-A/X/N Family / 120 Units Fresno, Fresno County, CA Dear Applicant: Save Our Water The California Housing Finance Agency ("Agency") has completed its review of the application submitted by you or on your behalf for financing for the referenced development ("Development'). Your application includes the "TCAC Application Workbook and Ca1HFA Application Addendum", dated February 16, 2022, together with all representations and other information provided to Agency with respect to the Development (collectively "Application"). The Application is summarized in Exhibit B, herein referred to as the "Project Summary". Pursuant to the authorization or resolution referenced in the Commitment Summary attached hereto ("Commitment Summary"), and based upon the information and representations in the Application and the Project Summary, Agency offers to make the loan or loans to FCTC Family, LP ("Borrower"), upon acceptance of this offer by Borrower and satisfaction of the terms and conditions set forth in this Commitment, as follows: Permanent Financing - HUD Risk Sharing Program/FFB (the "First Lien Loan"); Mixed -Income Program Subsidy (the "MIP Subsidy Loan"); (The loan or loans identified above shall be referred to herein individually and collectively as the "Loan"). llpSacramento Headquarters 10. Los Angeles Office 500 Capitol Mall, Ste. 1400 100 Corporate Pointe, Ste. 250 Sacramento, CA 95814 Culver City, CA 90230 916.326.8000 310.342.5400 www.calhfa.ca.gov I. ACCEPTANCE/TERMINATION OF COMMITMENT A. Acceptance. Agency's offer to make the Loan ("Commitment") expires at 5:00 p.m. on the "Commitment Offer Acceptance Deadline" as stated on the Commitment Summary unless prior thereto, Borrower accepts the offer by delivering to the Agency, at either of its offices, one copy of this letter, originally executed by Borrower, and by paying any fees related to the Loan required to be paid in connection with such acceptance. B. Termination. Agency may withdraw this Commitment upon any of the following: 1. Failure of the Loan to close on or before the "Permanent Loan Closing Deadline" stated on the Commitment Summary, as may be amended to a later date as set forth in the Ca1HFA Rate Lock Letter for the Development, and which is subject to an approved extension as set forth herein. 2. Failure of Borrower to satisfy each of the conditions set forth in this Commitment in a timely manner. 3. If the Loan is intended to be funded from tax exempt proceeds, failure of Agency, despite its best efforts, to secure financing for the Loan from the sale and delivery of tax-exempt bonds ("Bonds"). 4. Determination by Agency that there has been a misrepresentation or non- disclosure of a material fact by Borrower in connection with the Application. 5. Insolvency of Borrower or any general partner or member of Borrower, or the pendency of any proceeding challenging the legal existence or authority of Borrower or any general partner or member of Borrower or any proceeding challenging the legality of the Development. 6. If at any time Agency becomes aware of any environmental conditions or related title conditions which may materially and adversely affect the Development, it may cancel this Commitment, or any disbursement of funds if the Loan is funded in stages. 7. Expiration of the interest rate locked by Agency for the Permanent Loan as described in more detail on Exhibit A. 8. Failure of the United States Department of Housing and Urban Development ("HUD") to issue a Firm Approval Letter to the Agency and any necessary waivers, exemptions, or exceptions under the under HUD/FHA's Housing Finance Agency Risk - Sharing Program, pursuant to Section 542(c) of the Housing and Community Development Act of 1992, as amended, implementing regulations at 24 CFR Part 266 and HUD Housing Handbook 4590.1 (the "HUD Risk -Sharing Program") for the Loan and the Development which must be received by the Agency prior to the closing/conversion to of the Loan to be insured under the Risk Sharing Program. -2- CaIHFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) (MIP) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/12/2022.TM Wclo-Doc#HFW-665445913-1 1I. EXTENSION OF COMMITMENT. A. If the Borrower requests an extension of the Loan Closing Deadline, the Borrower shall be required to: 1. Pay, prior to the Loan Closing Deadline set forth in the Commitment Summary, and with the request for such extension, the commitment extension fee equal to twenty-five percent (25%) of the Loan Fee(s), as stated in the Commitment Summary, for an extension of three (3) months (the "3 Month Extension Fee"). Borrower may request a second three (3) month extension, upon the payment of another 3-Month Extension Fee and prior to the deadline for the first three (3) month extension. Any approval of the two (2) extensions set forth above shall be in Ca1HFA's sole and absolute discretion.. Any additional extension of this Commitment shall be subject to further CalHFA approval and may be for any additional extension term and fee(s) CalHFA determines to be appropriate, in its sole and absolute discretion. Approval of any extension by CalHFA shall additionally require the Borrower to: 2. Reimburse CalHFA for any financing costs incurred as a result of such extension; and 3. Satisfy any other requirements CalHFA imposes as a condition of its approval. As may be applicable, the term "financing costs" as used herein includes, but is not limited to, the difference between the interest rate at which the proceeds of the Bonds are invested and the actual cost to Agency of holding such Bond proceeds. The commitment extension fee, reimbursement and other extension charges shall be due upon demand by the Agency. Any failure of the Borrower to pay these fees and costs upon demand shall terminate any extension of the Loan Closing Deadline granted by the Agency. 111. TERMS OF LOAN(S). A. Princinal Amount. 1. First Lien Laan. The principal amount of the First Lien Loan will be the least of: (1) the principal amount as stated on the Commitment Summary; (2) one hundred percent (100%) of the costs of rehabilitation/construction of the Development as supported by an Agency -approved budget; (3) ninety percent (90%) of the pro forma appraised restricted value of the completed Development as determined by an appraisal and appraiser approved by Agency; (4) the total of the cost of acquisition and rehabilitation of the Development as shown on the final draft cost certification prepared and certified by a certified public accountant in accordance with the requirements of Agency less the sum of all other permanent financing and all equity contribution commitments, or (5) such lesser amount as the Agency approves in the event the financial assumptions in the Project Summary change, unless Agency in its sole discretion agrees to accept a letter of credit or cash collateral for not less than the amount of the Loan that exceeds such limits. -3= Ca1HFA Final.CommitmentLtr. (Permanent Financing -HUD Risk Sharing Pmgram/FFB) (MIP) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFMF-665445913-1 2. MIP Subsidy Loan. The principal amount of the MIP Subsidy Loan will be, in the Agency's sole discretion, the lesser of: (1) the principal amount as stated on the Commitment Summary; or (2) an amount as determined by the Agency in the event the financial assumptions change and/or there are Cost Savings (as described in Exhibit B) after this Commitment is issued by the Agency. B. Interest Amortization: Payments. 1. First Lien Loan. The First Lien Loan shall bear interest at the rate and be amortized as stated on the Commitment Summary. Amortization of the First Lien Loan shall be on a level payment, fully -amortized basis. Payments of principal, interest and any Agency - required impounds shall be made on the first (1") day of each and every month, commencing on the first (0.) day of the second (2"d) full month following the First Lien Loan closing, and continuing until the end of the amortization period. Any unpaid balance of the First Lien Loan shall be due on the date of the last scheduled payment. 2. M1P Subsidy Loan. Simple interest shall accrue on the principal amount outstanding at the rate stated on the Commitment Summary. Accrued interest and principal shall be paid on an annual basis from the Residual Receipts (defined in the Subsidy Regulatory Agreement (described below) generated from the Development and in the proportionate amount specified in Exhibit Z ("Priority of Payments"). Annual Residual Receipts payments shall be due on the earlier of one year following the date that is thirty (30) days from the date of Agency approval of the Development Financial Report, as defined in the Subsidy Regulatory Agreement, or one hundred fifty (150) days after the end of each fiscal year commencing the first (P) full fiscal year following conversion of Borrower's Loan to one or more permanent loans pursuant to the terms of the Loan Agreement. All outstanding principal and interest shall be due not later than the end of the Term as specified in the Commitment Summary. IV. CONDITIONS TO CLOSING OF PERMANENT LOAN. THE AGENCY SHALL NOT BE OBLIGATED TO CLOSE THE PERMANENT LOAN UNLESS THE BORROWER HAS SATISFIED ALL OF THE FOLLOWING CONDITIONS, IN A MANNER SATISFACTORY TO THE AGENCY IN ITS SOLE DISCRETION, ON OR BEFORE THE EARLIER OF ANY DATE SPECIFIED BELOW, THE PERMANENT LOAN CLOSING OR THE PERMANENT LOAN CLOSING DEADLINE, AS APPLICABLE. A. Construction Loan. The Borrower shall close the construction loan on or before the "Construction Loan Closing Deadline" as stated on the Commitment Summary. Any reference in this commitment to "construction" shall include rehabilitation construction, if applicable. The Borrower may not engage in any construction or other activity with respect to the Development which would have an adverse environmental impact or limit the choice of reasonable alternatives until the completion of the environmental review required by the HUD/FHA mortgage insurance requirements (as further provided in subparagraph IV.G.16 below) at federal regulations 24 CFR 266.210(b) and 24 CFR Part 58 and the issuance of appropriate certifications of compliance. Prior to such construction loan closing, the Borrower shall provide the Agency with each of the following with respect to the Development: -4- CaIHFA Final.Commitment1tr (Permanent Financing -HUD Risk Sharing Program/FFB) (MIP) Sarah's Court Apts. - Ca1HFA No, 22-013-A/X/N 09/12/2022.TMH/CIC-Doc #HFMF-665445913-1 1. A current preliminary report acceptable to the Agency, with copies of all listed exceptions to title insurance. 2. A current ALTA survey acceptable to the Agency. 3. The Borrower's W-9 showing taxpayer identification information. 4. Organizational documents of Borrower and Borrower's general partner (and sponsor or parent company, if sponsor or parent company will be guaranteeing the Permanent Loan in whole or in part). 5. Agency -approved final plans and specifications (_"Plans and Suecidcatims") for construction of the Development as further provided in subparagraph IV.A.11 below. 6. An environmental assessment report Phase I tmej regarding the Development evaluating whether it is affected by any toxic or hazardous materials, substances or wastes or by any other environmental concerns or conditions (collectively, "Environmental Conditions"). The report shall conform with the federal Environmental Protection Agency's standards set forth in 40 C.F.R. Part 312, as amended (which permits the use of American Society for Testing and Materials (ASTM) standard E-1527-13), or such higher standard if necessary to satisfy Comprehensive Environmental Response, Compensation and Liability Act's ("CERCLA") All Appropriate Inquiry standard, and shall include a clear, concise and prominent summary of the findings, conclusions, and recommendations. Such report shall be prepared by an independent and qualified environmental professional (paid for by Borrower) and will be expressly issued for the benefit of and reliance by Borrower and Agency, if required. For the purposes of this subparagraph, a qualified environmental professional means those persons with the training, experience, licenses, references, and insurance coverage that qualify them, in the opinion of Agency, to perform the assessment. Information about the qualifications of the individuals involved in preparing the report shall be included in the report. The Borrower shall also disclose to the Agency the existence of any covenants, conditions, restrictions, agreements or encumbrances which pertain to any environmental condition and affect title to the Development. The Agency may require additional information and/or reports to be issued, at the Borrower's expense, including but not limited to, a Phase II assessment if the Agency determines that such a report is necessary to adequately evaluate the environmental condition of the Development. The condition of the Development as indicated by such report(s) and title documents must be satisfactory to the Agency, in its sole discretion. The Agency may impose conditions upon its approval of the report and condition of title including, but not limited to, requiring the Borrower to take action to address any environmental conditions or related title matter indicated by the reports and/or title documents. If at any time prior to Permanent Loan closing the Borrower becomes aware of any environmental condition or related title conditions potentially affecting the Development, it shall immediately notify the Agency. 7. L] date of Environmental lie orts. All environmental reports shall be required to be updated prior to the acquisition of the Property if they are dated more than one hundred eighty (180) days before the expected acquisition of the Property. The updated reports -5- CaIHFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) NIP) Sarah's Court Apts. - CWHFA No. 22-013-A/X/N 09/12/2022.TWUcic-Doc #HF&T-665445913-1 shall be prepared by a qualified environmental professional and shall include a review of the ASTM standard federal and state environmental record sources to determine whether there have been any changes in the environmental condition or classification of the Development or any adjacent properties since the initial report was issued. 8. Information regarding the previous participaiion of the principals (HUD farm 2530 Clearance) of the Borrower, consultant and management agent, which information shall be submitted to the Agency and shall be subject to HUD/FHA review and approval. bu:it;et. 9. The construction lender's approved construction line item development 10. Construction schedule approved by Agency. 11. Plans and Specifications approved by the Agency for renovation, construction, repair and/or rehabilitation work and/or set forth in the architectural conditions letter. Prior to Loan closing, Borrower shall provide Agency with a Development Scope of Work, containing all of the Agency -approved documents described in Exhibit A ("Development Scope of Work"). The Development Scope of Work shall be incorporated in the Plans and Specifications for the work, if Agency requires Plans and Specifications. Any deviation from it or the Plans and Specifications shall require the advance written approval of Agency. B. Construction Period. During the construction of the Development, the Borrower shall comply with each of the following provisions. 1. Borrower shall provide the Agency, at its request, with such information as shall be required by the Agency during the construction period including but. not limited to information relative to income, expenses, occupancy, relocation expenses, contracts, operations and conditions of the Development. Such requests for information shall be made in a reasonable manner. 2. The Development shall be constructed to completion in accordance with the Agency -approved final Plans and Specifications and/or architectural conditions letter, as applicable. Any material deviation from the Plans and Specifications and/or architectural conditions letter shall require the advance written approval by the Agency. 3. The Agency and any representative of the Agency shall have the right, during construction and thereafter, to enter upon and inspect the construction of the Development. Such right to inspect shall include, but shall not be limited to, the right to inspect all work done and all materials and equipment used or to be used. Such right of inspection shall be exercised in a reasonable manner. The Agency shall have no affirmative duty to inspect the Development and shall incur no liability for failing to do so. Once having undertaken any inspection, neither the Agency, nor any representative of the Agency shall incur any liability for failing to make any such inspection properly, or for failing to complete any such inspection. The fact that such inspection may or may not have occurred shall not relieve the Borrower, the contractor, the construction lender, the architect, the structural engineer, the locality or anyone else of any obligation to inspect the Development they might otherwise have. -6- CaIHFA Final.Commitment1tr. (Pcrmanent Financing -HUD Risk Sharing Program/FFB) (NU) Sarah's Court Apts. - CaIHFA No. 22-013-A/XJN 09/12/2022.TWVcic-Doc #HFNE-665445913-1 4. Borrower shall promptly notify the Agency if at any time it becomes aware of (a) any event that could give rise to a loss or claim against Borrower or Borrower's insurance company or bonding company that affects, or could affect, the Development, could adversely affect the Development's insurability or cause the imposition of extraordinary premiums or charges thereon; or (b) any termination of any policy of insurance or bond covering the Development. C. Fees. The Borrower shall pay Agency the fees as stated on the Commitment Summary and as further provided below: 1. Loan Fee. On or before its acceptance of this commitment, the Borrower shall pay to the Agency a Loan Fee in the amount stated on the Commitment Summary. When paid, this fee shall be deemed earned and non-refundable. 2. Application Fee. On or before its acceptance of this Commitment, the Borrower shall pay to the Agency a Ca1HFA Application Fee in the amount stated on the Commitment Summary. When paid, this fee shall be deemed earned and non-refundable. 3. Annual Monitoring Fees. Borrower shall pay monitoring fees annually in advance in the amount(s) stated on the Commitment Summary. 4. Construction Inspection Fees. Borrower shall pay construction inspection fees in the amount as stated on the Commitment Summary, or a lesser amount if there is a joint agreement between the Agency and the construction lender regarding inspection services by a qualified inspector acceptable to the Agency. Borrower agrees that the Agency shall use those fees to purchase inspection reports on which the inspector permits the Agency to rely and/or other related expenses. Borrower also agrees that the amounts collected as indicated on the Commitment Summary may be adjusted to reflect changes in the time assumptions of completion of construction. D. Reserves and Guarantees. 1. Reserves. Borrower agrees to establish the reserves or collateral accounts described in the amounts specified on the Commitment Summary and as further provided in the Regulatory Agreement (defined below). 2. Letters of Credit. If required, for fees or reserves identified in the Commitment Summary as approved to be secured by a letter of credit, Borrower must provide to Agency an irrevocable letter of credit meeting the requirements of, and substantially in the form as stated in Exhibit N. Letters of credit must be issued by a bank acceptable to Agency in its sole discretion, in the principal amounts as stated in the Commitment Summary. A letter of credit for a percentage of the Permanent Loan amount must have an initial expiration date, or be renewable until, not earlier than two (2) years from the date of Permanent Loan closing date. E. Loan Documents. Borrower shall enter into a regulatory agreement with Agency in connection with the First Lien Loan, substantially in the form of Exhibit D hereto (the "Regulatory Agreement"), and the Subsidy Loan, substantially in the form of Exhibit F hereto -7- Ca1HFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) (MIIP) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/1212022.TMH/cic-Doc #HFMF-665445913-1 (the "Subsidy Regulatory Agreement'), governing matters related to the use and operation of the Development. The Regulatory Agreement shall be prior to Agency's Deed of Trust and Subsidy Deed of Trust, as defined below. In addition to the Regulatory Agreement, the First Lien Loan shall be evidenced by a loan agreement in the form of Exhibit E (the "Loan Agreement'), by a promissory note, substantially in the form of Exhibit G hereto (the "Promissory Note"), which Promissory Note shall be secured with the Deed of Trust, substantially in the form of Exhibit I hereto (the "Deed of Trust'). In addition to the Subsidy Regulatory Agreement, the MIP Subsidy Loan shall be evidenced by a promissory note, substantially in the form of Exhibit H hereto (the "Subsidy Promissory Note"), and a deed of trust, substantially in the form of Exhibit J hereto (the "Subsidy Deed of Trust" and collectively with the Deed of Trust, the "Deeds of Trust'). . By accepting this Commitment, Borrower acknowledges that it has received, reviewed and approved such forms which may be modified as required by Agency. In the event of any conflict between this Commitment and such forms, the terms of this Commitment will govern. Except as approved in writing by Agency or as provided in the Special Conditions, the Regulatory Agreement and the Deeds of Trust shall be recorded as encumbrances on the Development superior and prior to any other mortgage, deed of trust, lease, service contract, security interest in the Development, or other covenant, condition, restriction, limitation or agreement affecting the Development. Borrower shall also provide Agency with an Assignment of Housing Assistance Payments Contracts, Tri-Party Agreements or Estoppel Certificates, if applicable, from other lenders and investors certifying that all of the conditions in their loan documents, loan commitments or equity commitments have been satisfied; and that they are not aware of any fact or circumstance that would be an event of default under their loan documents or equity commitment, such Subordination Agreements substantially in the form of Exhibit O from other lenders as Agency shall require, and a UCC-1 Financing Statement in the form of Exhibit P. In addition, Borrower agrees that Agency shall have a first lien priority over the Development Account, as defined in the Regulatory Agreement, (and any other accounts as applicable). Accordingly, Agency may require Borrower and Borrower's bank to execute a Deposit Account Control Agreement. F. Ft_epayment. Borrower shall not prepay the First Lien Loan, or any part thereof, before the First Optional Prepayment Date (as defined in the Permanent Loan Agreement (referenced below)). Subject to Agency's prior written approval, Borrower may prepay the Loan upon or following an Optional Prepayment Date (as defined in the Promissory Note), pursuant to the terms of the Promissory Note. Any prepayment of the First Lien Loan may be subject to a yield maintenance fee as set forth in the Promissory Note. G. Loan Closing Requirements. On or before the Loan closing, the Borrower shall fulfill all loan closing requirements provided for herein or listed on its Closing Checklist for the Loan attached hereto as Exhibit C and incorporated herein by this reference, and any other requirements reasonably required by the Agency (collectively, the "Closing Requirements"), so as to enable the Loan to close on or before the Loan Closing Deadline. The following Closing Requirements are of particular importance and are listed herein for purposes of clarity and emphasis: Current Preliminary Report acceptable to Agency, with copies of all listed exceptions to title. -8- Ca1HFA Final.Commitment Ltr (Permanent Financing -HUD Risk Sharing Program/FFB) (MIP) Sarah's Court Apts. - Ca1HFA No, 22.013-AJXIN 09/12/2022. I'Mcic-Doc #HFMF-665445913-1 2. Current ALTA as -built survey acceptable to the Agency (required for title insurance also). 3. "As-built'_plans and speciLeations. 4. The Borrower's W-9 showing taxpayer identification information. 5. OrggqLzational documents of Borrower and Borrower's general partner (and sponsor or parent company, if sponsor or parent company will be guaranteeing the Permanent Loan in whole or in part). 6. Non -A ent, Financing. If this commitment is subject to and conditioned upon Borrower receiving other financial assistance, Borrower shall qualify for and obtain the non -Agency financial assistance, including tax credits if applicable, described in the Application and Project Summary ("Non Agency Financing"). Agency shall have the right to review and approve the Non -Agency Financing arrangements, including all documents pertaining thereto. All encumbrances, conditions, restrictions, liens and operating and service contracts affecting the Development must have their terms approved by Agency and be made subordinate to the Agency Regulatory Agreement and Deed of Trust. In the event of any conflict between Agency requirements and non -Agency imposed requirements, Agency requirements shall prevail. Agency reserves the right to modify, revise or terminate this commitment in the event there are any material changes in the Non -Agency Financing arrangements or in the projected operating expenses for the Development from the projections set forth in the Project Summary (Exhibit B) and not otherwise approved, in writing, by the Agency. 7. Loan Documents. Borrower shall have signed and delivered all of the Loan Documents described above. 8. Reserve Accounts. Borrower shall establish and maintain the reserve accounts as stated on the Commitment Summary and as further provided in the Regulatory Agreement. In addition, Borrower shall pay the cost of a tax service contract for the Development. 9_ Title Insurance. Borrower shall arrange for the issuance to Agency of an ALTA Lender's policy of title insurance for the Permanent Loan. The condition of title, insurer, liability amount and endorsements must be acceptable to Agency. The Agency may require such endorsements as it may reasonably request. Except as approved in writing by Agency or as set forth in the Special Conditions, the policies must insure that Borrower holds a good and marketable title to the fee interest and that Agency holds a first priority lien on the fee interest in the Development, free 'and clear of all encumbrances, encroachments, other interests and exceptions to title other than as previously approved in writing by Agency. Borrower shall submit a pro forma title insurance policy to Agency for review and approval at the earliest possible time prior to closing of the Permanent Loan. 10. Opinion of Counsel. Borrower shall deliver to Agency a satisfactory attorney opinion letter, in substantially the form of Exhibit Q which shall address the authority of the Borrower to own property, conduct its business and perform its obligations under the Loan -9- Ca1HFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) MP) Sarah's Court Apts. - Ca11FA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doe #HFMF-665445913-1 Documents, and the enforceability of the Permanent Loan and the Loan Documents. The Agency may require the opinion to address additional issues, if the Agency deems necessary. 11. UCC Filing. Borrower hereby authorizes Agency to file a Financing Statement (UCC-1) (Exhibit P) on the Development with the California Secretary of State upon closing the Loan. Such Financing Statement must be a first priority security interest on personal property related to the Development. 12, Management Arrangements. a) Borrower shall deliver to Agency, and obtain Agency's approval of, a signed management contract, management plan, marketing plan, updated rent schedule, and operating budget for the Development. Such management contract shall provide that the Borrower and/or the Agency have the right to terminate the contract on reasonable notice without liability. Agency may require a fidelity bond with respect to manager's employees. The management agreement shall include the following provision, with the Development -specific information inserted: [Manager/_____j hereby acknowledges that the Owner/Borrower of the development known as Sarah's Court Apartments has entered into a Regulatory Agreement that requires the development to be managed in accordance with the terms specified in the CalHFA Regulatory Agreement attached hereto as [Exhibit/Attachment 1 and hereby made part of this management agreement/contract. [Manager/] agrees to abide by the requirements of the CalHFA Regulatory Agreement stated therein and specifically acknowledges that this management agreement/contract may be terminated by the California Housing Finance Agency in accordance with the terms of the CalHFA Regulatory Agreement. b) The Borrower and/or its management agent shall comply with the Tenant Grievance Procedure (Exhibit AA) and the Eviction Hearing Procedure (Exhibit BB) attached hereto (collectively the "Procedures"), will incorporate the Procedures into any leases for the units rented to Affordable Tenants and shall ensure the Affordable Tenants separately receive copies of the Procedures or notification informing the Affordable Tenants that the procedures are included in their lease. 13. Insurance. Borrower shall obtain insurance for the Development in accordance with Agency's requirements. Upon certification satisfactory to Agency of completion of the improvements in compliance with Agency's seismic requirements for waiver of earthquake insurance, Agency may waive the requirement for earthquake insurance. Borrower shall provide Agency with original certificates and amendatory endorsements for all required insurance coverage, in a form and substance acceptable to Agency prior to the closing of the Permanent Loan. Agency reserves the right to require complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications at any time. -10- CalHFA Final. Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) (NU) Sarah's Court Apts. - CalHFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFN'-665445913-1 14. Earthquake Insurance. If applicable, Borrower shall satisfy all requirements for the earthquake insurance waiver. Failure to meet the requirements may result in reduction of the Permanent Loan amount so that earthquake premium may be paid. 15. Security Deposits. Borrower shall provide Agency with evidence satisfactory to Agency that Borrower holds or will hold all security deposits obtained from tenants of the Development plus any interest accrued upon these amounts. 16. NEPA/Environmental Review. This commitment is conditioned on completion of an environmental review pursuant to 24 CFR Part 58, indicating that the Development shall not have an adverse effect under the National Environmental Policy Act of 1969 and related laws and authorities. Borrower understands and agrees that it must reimburse Agency for the cost of such review and must not take any physical or other action on the Development site that could limit its choice of reasonable alternatives, if deemed appropriate by the NEPA/Environmental Review, until Agency has received a Firm Approval Letter from HUD indicating its approval of the environmental review, and subject to any related mitigation measures approved by the Agency. 17. Update of Environmental Reports. All environmental reports shall be required to be updated prior to the Permanent Loan closing if they are dated more than one hundred eighty (180) days before the expected Permanent Loan closing. The updated reports shall be prepared by a qualified environmental professional and shall include a review of the ASTM standard federal and state environmental record sources to determine whether there have been any changes in the environmental condition or classification of the Development or any adjacent properties since the initial report was issued. 18. Environmental impact report or negative declaration, if required. 19. Cultural Heritage Discoveries. Borrower shall comply, and shall ensure that its general contractor complies, with all applicable local, state and federal requirements regarding the discovery of historic properties or cultural or religious artifacts and remains, including but not limited to: California Health and Safety Code § 7050.5; California Public Resources Code § 5097.98; and 36 C.F.R 800.13, as may be applicable pursuant to federal programs such as the HUD Risk Sharing Program. 20. Remediation. Evidence of remediation of environmental conditions, if required. 21. Relocation. If relocation assistance is required, Borrower shall comply with all federal, state, and local relocation requirements applicable to the Development. Prior to the Loan Closing Deadline, Borrower shall provide a certification by the locality which oversees the relocation that all requirements have been complied with. 22. Completion Agreements. Any agreements related to completion of improvements. 23. Permits/Authorization. Copies of all building permits, licenses and other governmental authorizations, to the extent not previously provided. -11- Ca1HFA Final.Commitment.Ltr. (PeRnanent Financing -HUD Risk Sharing Program/FFB) (MT) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/ l2/2022.TMOcic-Doc #HFMF-665445913-1 24. Reports/COO. Copies of building inspection reports and final Certificate of Occupancy (if required for occupancy at such time). 25. Recorded Notice of Completion. 26. Cost certification, audited by an independent public accountant in accordance with the requirements of Agency and the Tax Credit Allocation Committee ("TCAC"), if applicable. Borrower and the developer or builder (if there is an identity of interest with Borrower) will keep and maintain records of all construction costs not representing work done under the general contract and make such records available to Agency. 27. Assignment of construction warranties to Agency. 28. Updated projections for permanent sources and uses of funds, operating income and expenses and cash flow. 29. HUD/FHA Insurance Requirements. The Permanent Loan must qualify for and receive mortgage insurance under HUD/FHA's Housing Finance Agency Risk -Sharing Program, pursuant to Section 542(c) of the Housing and Community Development Act of 1992, as amended, implementing regulations at 24 CFR Part 266 and HUD Housing Handbook 4590.1 (the "HUD Risk -Sharing Program"), as well as the program implemented by HUD and the Federal Financing Bank, a body corporate and instrumentality of the United States of America ("FFB") pursuant to which the FFB may acquire beneficial ownership of mortgage loans originated by the Agency and insured under the HUD Risk -Sharing Program (the "HUD Risk - Sharing Program/FFB"). In the event of conflict between this subparagraph and other provisions of this commitment, this subparagraph shall govern. The Borrower shall provide the Agency with a signed "Mortgagor's Certificate" in substantially the form attached hereto as Exhibit R and incorporated herein by this reference. By accepting this commitment, Borrower acknowledges that it has received, reviewed and approved such form. 30. HUD Finn Approval Letter. The HUD Firm Approval Letter approving the HUD/FHA Insurance for the Permanent Loan, together with any necessary waivers, exemptions, or exceptions under the HUD Risk -Sharing Program must have been received by Agency. Borrower shall execute and provide to Agency a copy of the HUD Firm Approval Letter as required by the HUD Risk -Sharing Program. 31. Sing le Asset Mortgagor. Borrower shall be a single asset, sole purpose mortgagor. 32. Approvals. To obtain and provide to Agency evidence satisfactory to Agency in its sole discretion that Borrower has obtained all necessary consents, approvals, exemptions, and/or waivers from all local, state or federal entities with respect to any financing, subsidies, affordability restrictions, tenant restrictions, or similar restrictions affecting the Development. Notwithstanding the foregoing, Agency shall use its best efforts to assist Borrower in obtaining any approvals, exemptions or waivers from HUD required under the HUD Risk -Sharing Program with respect to the Development. -12- Ca1HFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) (MIP) Sarah's Court Apts. - Ca1HFA No. 22-013-A/X/N 09/12/2022.TMWc1c-Doc #HFNE-665445913-1 33. Stabilization. Ninety percent (90%) stabilized rental housing occupancy for 90 days must be obtained for the Development which shall be evidenced by rent rolls provided by the Borrower to the Agency. 34. lnvestmelit. If applicable, ninety percent (90%) of tax credit investor equity shall have been paid into the Development. 35. Cash -flow. Development income shall be sufficient to pay operating expenses, required debt service, reserves and monitoring fees. V. SPECIAL CONDITIONS Borrower shall comply with all special conditions set forth in Exhibit A hereto. VI. ASSIGNMENT PROHIBITED. This Commitment shall not be assignable by Borrower in whole or in part without the prior written approval of Agency. Borrower acknowledges that federal laws pertaining to the Bonds impose limits on the transferability of this Commitment. Borrower is the only beneficiary of this Commitment. VII. SURVIVAL OF OBLIGATIONS. The obligations of Borrower as set forth in this Commitment shall survive the Loan closing, and Borrower will continue to cooperate with Agency and perform acts and provide documents as provided herein. VIII. INTEGRATION. This Commitment, together with all attachments, exhibits hereto, and enclosures herewith, set forth the complete agreement of the parties hereto with respect to the Loan, and supersedes all prior or contemporaneous promises, agreements, or understandings, oral or written, express or implied, other than as specifically set forth herein. IX. COMPLIANCE WITH LAWS. The Borrower and the Development shall comply with any and all federal, state, and local laws, rules, ordinances, regulations and orders, and obtain any and all necessary permits, authorizations and approvals (collectively, "Laws"), now or in the future applicable to any work on this Development, including any Laws requiring Borrower to perform additional work to address Environmental Conditions prior to or as a condition of rehabilitating the Development. Borrower hereby warrants such legal compliance and agrees to indemnify Agency against any damages, costs, or attorneys' fees incurred by Agency as a result of any noncompliance. Such indemnity will be provided in a form satisfactory to Agency, in its sole discretion. -13- CalHFA Final.CommitmenLLtr. (Permanent Financing -HUD Risk Sharing Program/FFB) (MIP) Sarah's Court Apts, - CaWA No. 22-013-A/X/N 09112/2022.TMH/cic-Doc #HFMF-665445913-1 X. ATTORNEY FEES, COSTS. In any dispute arising from or relating to this Commitment, the prevailing party shall be entitled to recover from the other party its costs and expenses including attorney fees, whether or not the matter is reduced to judgment. The term "costs and expenses" as used herein includes all costs and expenses actually and reasonably incurred including but not limited to attorney's fees; filing, motion, and jury fees; juror food and lodging; taping, videotaping, and transcribing depositions and travel expenses to attend depositions; service of process by a public officer, registered process server, or other means; expenses of attachment including keeper's fees; premiums on surety bonds; ordinary witness fees pursuant to Section 68093 of the Government Code; fees of expert witnesses whether or not ordered by the court; transcripts of court proceedings whether or not ordered by the court; court reporters fees as established by statute; investigation expenses in preparing the case for trial; postage, telephone and photocopying charges; costs in investigation of jurors or in preparation for voir dire; models, blowups and photocopies of exhibits; and, any other item that is required to be awarded to the prevailing party pursuant to statute as an incident to prevailing in the action at trial or on appeal. Such costs and expenses will be recoverable whether the services were rendered by a salaried employee of the party or by an independent contractor. XI. GOVERNING LAW. This Commitment shall be construed in accordance with and be governed by the laws of the State of California. XII. AUTHORITY/BORROWER REPRESENTATIONS. Borrower represents and warrants that as of the date of this Commitment it is a duly organized and validly existing under California law and that it has the authority to execute this Commitment. Borrower further represents and warrants that as of the date of this Commitment, the person(s) executing this Commitment has full authority to act on behalf of and bind Borrower in accordance with the terms of this Commitment. XIII. INDEMNIFICATION. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS AGENCY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEY FEES AND EXPENSES), EXCEPT ARISING SOLELY FROM AGENCY'S GROSS NEGLIGENCE OR WIELLFUL MISCONDUCT, WHICH AGENCY MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (A) THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS COMMITMENT; (B) ANY FAILURE AT ANY TIME OF ANY OF BORROWER'S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT; (C) ANY ACT OR OMISSION BY BORROWER, CONSTITUENT PARTNER OR MEMBER OF BORROWER; OR (D) THE TERMINATION OF THIS COMMITMENT BY AGENCY. -14- CaIHFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) (MEP) Sarah's Court Apts. - CaIHFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFMF-665445913-I BORROWER SHALL IMMEDIATELY PAY TO AGENCY UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST APPLICABLE TO LOAN. BORROWER'S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS AGENCY SHALL SURVIVE THE PERMANENT LOAN CLOSING. XIV. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may not be amended, changed, modified, altered or terminated without the prior written consent of the Agency. Any amendment, change, modification or alteration of this Agreement without Agency's prior written consent, shall render this Agreement null and void. CALIFORNIA HOUSING FINANCE AGENCY, a public instrumentali political subdivision of the State of C i' ornia By: Name:0'��OnAldcavfey- Title: Chief Oeputy Director California Housing Finance Agency -15- Ca1HFA Final.Commitment.Ltr. (Permanent Financing -HUD Risk Sharing Program/FFB) W) Sarah's Court Apts. - CaIHFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFNff-665445913-1 By its signature below Borrower acknowledges its understanding and acceptance of all of the foregoing. Executed by Borrower on Uqabek 19 , 201, FCTC FAMILY, LP, a California limited partnership By: Community Revitalization and Development Corporation, a California non-profit public benefit corporation Its: Managing General Partner By:� David Rutledge Its: President By: Dominus Consortium Family, LLC, a California limited liability company Its: Administrative General Partner By: Negocios De Familia, LLC, a California limited liability company Its: Member By: Kashian Enterprises, a Limited Partnership Its: Managing Member By: Lance-Kashian & Company, a California coggorat' on Its: General Partsfer 1 By: Its: By: Essayons, a Limited Partnership, a California limited partnership Its: Member By: Pentori, a California corporal a Its: General Partner By: iNW T omas G. Ri (lards Its: President -16- CAHFA Final.Commitment.Ur. (Permanent Finnncing-HUD Risk Sharing Progrmn/FFB) MP) Sarah's Court Apia. - Cn1HFA No. 22-013-A/X/N 09/12/2022.71AWde-Doc NI-IFMF-665445913-1 INDEX OF EI IMITS Exhibits Descri Lion I Notes A. Special Conditions �^ B. Project SgLnm C. Closing Document Checklist -Loan D. Re ulatar�greement E. Loan A reement F. Subsidy Re ulata reement _ G. Promissmy Note f H. Subsidy P€omisso Note I I. Deed of Trust I J. Subsidy Deed of Trust 1 K. F-s!Rppel Certificates L. Assignment of Construction Contract Warranties I M. Assignment of Mana ement Agreement N. Letter of Credit I If applicable O. Subordination Agreements I, P. UCC-1 Financing Statement 3 Q. Opinion of Counsel 1 R. Mortgagor's Certification [if Risk Share _ S. Unrelated Parties Transaction Certificate T. Declaration of Official Intent U. Borrower's Tax Certificate V. Good Costs Certificate _ W. X. Breakage Fee Note I I Breakage Fee Deed of Trust I _ - Y. Z. Tri-P ITake Out Agreement Prioxity of Payments AA. Tenant Grievance Procedure BB. Eviction Hearing Procedure -17- CaIHFA Final.Commitmentltr. (Permanent Financing -HUD Risk sharing Program/FFB) W) Sarah's Court Apts. - Ca1HFANo. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFMF-665445913-1 EXHIBIT A SPECIAL CONDITIONS SARAH'S COURT APARTMENTS 22-013-A/X/N (Permanent Financing - HUD Risk Sharing Program/FFB) and (Mixed -Income Program/Residual Receipts) I. General Provisions Lien Priority. The lien priority shall be as follows: During Construction: 1st Banner Bank loan in the approximate amount of$18,149,352.00 ("Banner Acquisition Costs Tax Exempt Loan"); 1st Banner Bank loan in the approximate amount of $438,022.00 ("Banner Construction - Rehabilitation Tax Exempt Loan"); 2nd Banner Bank loan in the approximate amount of $5,667,947.00 ("Banner Soft Costs Taxable Loan"); 3rd City of Fresno loan in the approximate amount of $3,169,034.00 ("City HOME Loan"); 4th City of Fresno loan in the approximate amount of $2,480,000.00 ("City CDBG Loan"); 5th City of Fresno loan in the approximate amount of $530,966.00 ("City PLIIA Loan"); Upon Permanent Loan Ciosin: 1st California Housing Finance Agency loan in the approximate amount of $6,364,866.00 ("Permanent Loan"); 2nd California Housing Finance Agency loan in the approximate amount of $3,450,000.00 (including a $600,000.00 increase to the original MIP Loan of $2,850,000 amount, the "MIP Supplemental Allocation") (collectively, the "MIP Subsidy Loan"); 3rd City of Fresno loan in the approximate amount of $3,169,034.00 ("City HOME Loan"); 4th City of Fresno loan in the approximate amount of $2,480,000.00 ("City CDBG Loan"); 5th City of Fresno loan in the approximate amount of $530,966.00 ("City PLHA Loan"); 1 Ca1HFA Special Conditions Final Commitment Ur Permanent Financing (ETM-RS/FFB)W) Sarah's Court Apartments - Ca]HFANo. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFiVT-665445913-2 Estoppel Certificate Requirement. Subordination. If applicable, prior to the closing of the construction financing for the Development, the Agency shall receive an Estoppel Certificate, in form and substance acceptable to the Agency, executed by all lenders which shall have active loans and/or related covenants upon Permanent Loan Closing, including loans or covenants that closed prior to the Permanent Loan Closing. The Estoppel Certificate shall affirm the first- lien/senior status of the Agency Loans and related covenants, over the lenders' loans and related covenants, upon Permanent Loan Closing, as set forth above. Additionally, each of these lenders shall approve the Agency's form of subordination agreement, which shall be executed by the lenders prior to, and recorded in the Official Records of the County of Fresno (the "Official Records"), substantially contemporaneously with, the Permanent Loan Closing. Real PropeM Tax Exerription. The Agency has underwritten the Permanent Loan based on the assumption the Development will qualify for a real property tax exemption under Section 214(g)(1) of the California Revenue and Taxation Code. To the extent that the development fails to do so, the Agency may re -underwrite and reduce the size of the Permanent Loan, as necessary to reflect the increased tax burden on the Development. CaIHFA Bond Regulatoa Agreement-, Termination upon Permanent Loan Closing. In connection with the issuance of tax-exempt bonds (the "Bonds") by the Agency for the purpose of financing the Construction Loan, Borrower, US Bank, as fiscal agent/trustee, and Agency shall enter into that certain Regulatory Agreement and Declaration of Restrictive Covenants to be recorded at or before the Construction Loan Closing (the "CaIHFA Bond Regulatory Agreement") in the Official Records. The CaIHFA Bond Regulatory Agreement shall be recorded as an encumbrance on the Development superior and prior to any other mortgage, deed of trust, lease, service contract, security interest in the Development, or other covenant, condition, restriction, limitation or agreement affecting the Development and shall encumber the Development until the earlier of the termination of the Qualified Project Period (as that term is defined in the CaIHFA Bond Regulatory Agreement) or Permanent Loan Closing. At the Permanent Loan Closing, Borrower and Agency shall enter into an agreement terminating the CaIHFA Bond Regulatory Agreement, which agreement shall be recorded against the Development substantially concurrently with the CaIHFA Permanent Loan Regulatory Agreement. CaIHFA Permanent Loan Revulatory A reement. The CaIHFA Permanent Loan Regulatory Agreement shall be recorded against the Development in connection with the Permanent Loan until the latest of: (a) the end of the Qualified Project Period, as defined in the Permanent Loan Regulatory Agreement; (b) payment in full of the Permanent Loan; (c) ffty-five (55) years from the effective date of the CaIHFA Permanent Loan Regulatory Agreement; or (d) termination of the CDLAC Conditions, as defined in the Permanent Loan Regulatory Agreement. The CaIHFA Permanent Loan Regulatory Agreement shall be recorded as an encumbrance on the Development superior and prior to any other mortgage, deed of trust, lease, service contract, security interest in the Development, or other covenant, condition, restriction, limitation or agreement affecting the Development. CaIHFA_ MIP Subsidy Loan Regulatory Agreement. A MIP Subsidy Loan Regulatory Agreement shall be recorded against the Development in connection with the MIP Subsidy Loan for fifty- five (55) years. The CaIHFA MIP Subsidy Loan Regulatory Agreement shall be recorded as an 2 CaIHFA Special Conditions Final Commitment Ltr Permanent Financing( HUD-RS/FFB)(MIP) Sarah's Court Apartments - CaIHFA No, 22-013-A/X/N 09/12r2022.T1411kic-Doc #HFMF-665445913-2 encumbrance on the Development superior and prior to any other mortgage, deed of trust, lease, service contract, security interest in the Development, or other covenant, condition, restriction, limitation or agreement affecting the Development. Pre a meet of Permanent Loan-, Subsidy Loan Due and Payable Upon prepayment of the CalHFA Permanent Loan, the MIP Subsidy Loan shall become due and payable. Income Re uirements. The CalHFA Regulatory Agreement shall require that at least thirty percent (30%) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose income does not exceed sixty percent (60%) of Area Median Income (the "60% Tenants"); and ten percent (10%) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose income does not exceed fifty percent (50%) of Area Median Income (the "50% Tenants"), as adjusted for family size pursuant to Section 142(d) of the Code (tenants at or below 60% Area Median Income shall be referred to as the "Qualified Tenants," tenants above 60% shall be referred to as the "LMI Tenants."). In no event, shall the occupants of a unit be considered to be Qualified Tenants if such occupants are students (as defined under Section 151(e)(4) of the 1954 Internal Revenue Code), no one of whom is entitled to file a federal joint return under the Code. Collectively, Qualified Tenants, Mixed -Income Tranche Tenants (defined below), and LMI Tenants shall be referred to as "A, fordable Tenants"). Units rented to Affordable Tenants must be of comparable quality and offer a range of sizes and munber of bedrooms comparable to those units which are available to other tenants in the Development. The CalHFA Subsidy Regulatory Agreement shall require that at least ten percent (10%) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose income does not exceed thirty percent (30%) of Area Median Income (the "30% MIP Subsidy Tenants") and twenty percent (20%) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose income does not exceed fifty percent (50%) of Area Median Income (the "50% MIP Subsidy Tenants"). Additionally, ten percent (10%) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose incomes are not less than sixty percent (60%) nor exceed eighty percent (80%) of Area Median Income (the "Mired -Income Tranche Tenants") as adjusted for family size pursuant to Section 142(d) of the Code and sixty percent (60%) (excluding one (1) managers unit) of the completed dwelling units in the Development shall be occupied or reserved for occupancy, on a continuous basis, by individuals or families whose incomes are less than one hundred twenty percent (120%) of Area Median Income as adjusted for family size pursuant to Section 142(d) of the Code (the "120% MIP Subsidy Tenants"). Affordable Tenant units which are assisted by Section 8 assistance shall be rented at approved Section 8 rents. Units which are not assisted by Section 8 but are occupied by Qualified Tenants or LMI Tenants, that are not Mixed -Income Tranche Tenants, shall be rented at rents (including an allowance for utilities) which shall not exceed one -twelfth (1/121) of thirty percent (30%) of the applicable Area Median Income with adjustments for household size as identified above. Twelve (12) units which are occupied by Mixed -Income Tranche Tenants shall be rented at monthly rents 3 CalHFA Special Conditions Final Commitment Ltr Permanent Financing ( HUD-RS/FFB)(MIP) Sarah's Court Apartments - CaIHFA No. 22-013-A/X/N 09/1212022.TWYcic-Doc #HFMF-665445913-2 (including an allowance for utilities) of one -twelfth (1/12') of thirty percent (30%) of seventy percent (701/6) of Area Median Income with adjustments for household size (the "Mired -Income Tranche Tenant Rents"). The rents for the units reserved for the Affordable Tenants shall not be less than the initial amount of rent required for the unit as of the date of this Agreement. Take-[]ut agreement. Prior to the Construction Loan Closing, Borrower, Ca1HFA and Banner Bank, as construction lender, shall have entered into a Take -Out Agreement, in the form attached hereto, regarding funding of the Permanent Loan to replace the Construction Loan. City of Fresno Development Agreement. Prior to Construction Loan Closing, CalHFA approval shall be required for the Development Agreement recorded July 30, 2010, and the Declaration of Restrictive Covenants for the Development and Operation of Housing recorded on February 2, 2016. Additionally, prior to Construction Loan Closing, Borrower shall provide evidence, satisfactory to Ca1HFA, in its sole and absolute discretion, of compliance with that certain "Development Agreement" dated July 21, 2010, between Fancher Creek Properties, LLC and the City of Fresno. HCD Development Agreement. Prior to Construction Loan Closing, Borrower shall provide evidence, satisfactory to CaWA, in its sole and absolute discretion, of compliance with, and necessary extensions to, that certain "Declaration of Restrictive Covenants for the Development and Operation of Housing" dated January 1, 2013, between Fancher Creek Properties, LLC and the California Department of Housing and Community Development ("HCD" ). Other Lenders' Approval of Repayment of Deferred Developer Fee. Prior to the Construction Loan Closing, Borrower shall provide evidence satisfactory to CalHFA of all other lenders' approval of the deferral of residual receipt payments until year fifteen (15) or the repayment of the deferred developer fee. Flood Certificate. Prior to the Construction Loan Closing, Borrower shall provide a flood certification verifying the Flood Zone X designation, satisfactory to Ca1HFA in its sole and absolute discretion. _HCD JIG _Affordability Requirements. Prior to Construction Loan Closing, Borrower shall provide evidence, to Ca1HFA, in its sole and absolute discretion, the HCD IIG affordability requirements are compatible with the Ca1HFA MIP affordability requirements. Parking. Deck Easement. Prior to Construction Loan Closing, Ca1HFA, in its sole and absolute discretion, must review and approve the residential parking deck easement agreement between Fancher Creek Town Center, LLC and Borrower. II. Permanent Loan. Loan Principal Amount and Interest Rate. Interest rates shall be based on the interest rate formula described in the Commitment Summary ("Interest Rate Formula"). Both the maximum principal amount and interest rate of the Permanent Loan stated on the Final Commitment Summary are subject to change and will not be locked until a date that is at least five (5), but not more than thirty (30), days prior to the anticipated Construction Loan Closing (the "Rate Lock"). 4 Ca1HFA Special Conditions Final Commitment Ltr Permanent Financing ( HUD-RS/FFB)(MIP) Sarah's Court Apartments - Ca1HFA No. 22-013-AWN 09/12/2022.T&"cic-Doc #HFMF-665445913-2 The Rate Lock must be confirmed in writing by the Agency and signed by Borrower (the "Rate Lock Letter"). If Borrower closes the Construction Loan by the Construction Loan Closing Deadline stated on the Commitment Summary, as may be amended by the Rate Lock Letter, the Rate Lock shall expire on the Permanent Loan Closing Deadline stated on the Commitment Summary, subject to any approved extensions provided in accordance with the terms of this Final Commitment Letter (the "Rate Lock Expiration"). If Borrower fails to close the Construction Loan by the Construction Loan Closing Deadline, or within thirty (30) days of the date of the Rate Lock Letter, the Rate Lock shall expire (the "Early Rate Lock Expiration"). The Rate Lock Expiration and the Early Rate lock Expiration dates shall also be specified in the Rate Lock Letter. Failure to close Construction Loan by Construction Loan Closing Deadline and Re lacement Rate Lock. If the Borrower fails to close the Construction Loan by the Construction Loan Closing Deadline causing an Early Rate Lock Expiration, and the Final Commitment is still in effect, the following terms shall apply: (a) The Borrower must request a new Replacement Rate Lock ("Replacement Rate Lock") by sending a request no less than five (5) calendar days prior to the Construction Closing. (b) The decision to issue the Replacement Rate Lock will be subject to the Agency's sole and absolute discretion and approval. The interest rate for the Replacement Rate Lock and the amended date for the Constniction Loan Closing Deadline ("Early Replacement Rate Lock Expiration") and the Permanent Loan Closing Deadline, as may be amended ("Replacement Rate Lock Expiration"), shall be determined by the Agency in its sole discretion. (c) The Replacement Rate Lock interest rate, Early Replacement Rate Lock Expiration and Replacement Rate Lock Expiration must be confirmed in writing by the Agency and signed by Borrower (the "Replacement Rate Lock Letter"). (d) The Construction Loan may not close until the fully executed Replacement Rate Lock Letter is received and accepted, as confirmed by the Agency. (e) Closing the Construction Loan prior to requesting a Replacement Rate Lock, or confirmation by the Agency regarding receipt and acceptance of the Replacement Rate Lock Letter, shall terminate the Final Commitment and any Replacement Rate Lock. Rate Lock Ex #ration: Extension of Permanent Loan Closing Deadline Final Commitment and Original &!g Lack. If the Permanent Loan fails to close by the Rate Lock Expiration, and Borrower requests and CaWA agrees to approve an extension of the Permanent Loan Closing Deadline and this Commitment pursuant to the terms set forth in the Final Commitment Letter, Agency, in its sole and absolute discretion, may agree to extend the Original Rate Lock for a period not to exceed six (6) months from the Rate Lock Expiration. Breakage Fee N to and Breakage Fee Deed of Trust; Priority. If Borrower fails to close the Permanent Loan or fails to borrow ninety percent (90%) or more of entire amount of the Permanent Loan after Agency has locked the interest rate, Agency may incur substantial fees and 5 CalHFA Special Conditions Final Commitment Ltr Permanent Financing ( HUD-RS/FFl3)(M1P) Sarah's Court Apartments - Ca1HFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFMF-665445913-2 costs to break the rate lock (the "Breakage Fee"). To mitigate this risk, the Borrower shall execute that certain Promissory Note (Breakage Fee) in the principal amount of the Breakage Fee payable to Agency (the "Breakage Fee Note"), which Breakage Fee Note will be secured by the Breakage Fee Deed of Trust (the "Breakage Fee Deed of Trust"), both attached hereto, the latter of which to be recorded substantially concurrently with the recording of the deed of trust securing the Construction Loan. The Breakage Fee Deed of Trust shall be subordinate in lien priority only to the CalHFA Bond Regulatory Agreement and the deed of trust securing the Construction Loan. California Tax Credit Allocation Committee ` TCAC" Allocation. This Commitment is subject to the Borrower acquiring an allocation of four percent (4%) tax credits from CTCAC prior to Construction Loan Closing. The Project must additionally meet the readiness requirements of TCAC and the California Debt Limit Allocation Committee ("CDLAC") typically one hundred eighty (180) days from allocation. Limited Partnership A eement• Admission of General Partners and Tax Credit Investor. Prior to the Construction Loan Closing, the Borrower shall have provided Ca1HFA with a final, approved limited partnership agreement ("LPA"), providing for the admission of a general partner(s) acceptable to CalHFA in its reasonable discretion, and admission of a limited partner/tax credit investor to the partnership. The limited partnership agreement shall be acceptable to CalHFA and provide CalHFA with evidence satisfactory to it that the tax credit investor will contribute capital to Borrower in an amount and on a pay -in schedule sufficient to meet the Development's financial needs. The tax credit investor's obligations shall be in full force and effect and are conditions to the initial and all subsequent disbursements of the Permanent Loan. The LPA must include evidence that any outstanding deferred developer fee remaining in year fifteen (l 5) shall be treated as a developer contribution. Bond Recycling. Pursuant to Section 146(i)(6) of the Internal Revenue Code of 1986, the Agency may, in its sole and absolute discretion, recycle all or a portion of any Bond volume cap related to a paydown of the Bond financed loans, at the conversion of the construction financing to permanent financing and payoff of the Construction Loan (the "Bond Recycling"). The Bond documents and any loan documents related to the Development shall contain any necessary approvals and permit all actions necessary to accomplish a Bond Recycling. Option to Split the Permanent Loan. Prior to the Permanent Loan Closing, Agency, at no cost to Borrower, shall have the right to split the Permanent Loan into one or more separate notes (the "Separate Notes"), mortgages, deeds of trust and other security documents (the "Split Loan Documents") in such denominations, interest rates and priorities as Agency shall determine in its sole and absolute discretion; provided, however, that the terms and provisions of the Split Loan Documents shall, in the aggregate, be financially equivalent to those contained in this Commitment and there shall be no additional obligations of Borrower. The Separate Notes may have different interest rates, so long as, in the aggregate, the principal and interest payments under the Separate Notes equals those resulting from the interest rate as locked by the Agency in accordance with the terms of this Commitment. The deeds of trust securing the Split Loan Notes shall be recorded as encumbrances on the Development superior and prior to any other mortgage, 6 CaiHFA Special Conditions Final Commitment Ur Permanent Financing( HUD-RS/FF13)(MIP) Sarah's Court Apartments - CalHFA No. 22-013-A/X1N 09/12/2022.TMH/cic-Doc #HFW-665445913-2 deed of trust, lease, service contract, security interest in the Development, or other covenant, condition, restriction, limitation or agreement affecting the Development other than the Permanent Loan Regulatory Agreement. Subordination of Leases Service Contracts etc. Prior to the Permanent Loan Closing, lessees and parties to leases, service contracts for laundry services, cable providers, etc., and the like, and their successors, shall execute subordination agreements to ensure the lien priority of the Agency Deed of Trust and Regulatory Agreement. Oi2erating Exnerise Reserve. Borrower shall establish an Operating Expense Reserve (the "OER") in the amount stated on the Commitment Summary which shall be used to fund any Operating Expenses not covered by Gross Income. Borrower shall fiend the OER to be used for such purposes and shall deposit the OER with Agency at or prior to Permanent Loan Closing. To the extent that there is insufficient income generated by the Development, Agency, in its sole discretion, may require the OER funds be applied to Borrower's debt service obligations on the Permanent Loan and/or approved operating expenses as they come due. CalHFA will hold this reserve for the life of the permanent first lien loan term and in the event the OER is drawn down during the term of the loan, the OER shall be replenished over a 12-month period to the initial amount of the OER. III. Acquisition/Rebabilitation/Construction: Development Manual/Scope of Work. Prior to the Permanent Loan Closing, Borrower shall provide CalHFA with an electronic copy of a development manual, containing all the CalHFA approved documents listed below (the "Development Manual'). The Development Manual will include a table of contents, the Plans and Specifications, and constitute the CalHFA-approved scope of work. The Development shall be constructed/rehabilitated in accordance with the Development Manual and any material deviation from it, or the Plans and Specifications, shall require the advance written approval of Agency. Completion of Rehabilitation/Constructlon. Upon the completion of the rehabilitation/ construction, Borrower shall provide to CalHFA each of the following, in form and content acceptable to CalHFA in its sole discretion: (a) Certification acceptable to Agency that the rehabilitation work has been completed in accordance with the Agency -approved Development Manual; and (b) Copies of all building inspection reports and a Substantial Notice of Completion (AIA format is acceptable), the recorded Notice of Completion and the Certificate of Occupancy (or equivalent). (c) Certification acceptable to CalHFA from the engineer on record that project was built to current seismic code prior to Permanent Loan Closing. 7 CaIHFA Special Conditions Final Commitment Ltr Permanent Financing ( HUD-RS/FF13)(MiP) Sarah's Court Apartments - CalHFA No. 22-013-A/X/N 09/12/202271 Ycle-Doc#BFW-665445913-2 Change Orders. On a monthly basis, Borrower shall provide Agency with copies of all monthly reports from the architect or contractor and all change order requests or potential change orders. At the construction lender's or Borrower's request, Agency will (at Borrower's sole cost and expense) review all documents, evidence of compliance, or other information relating to the rehabilitation/construction, including, without limitation, change orders or potential change orders delivered to Agency by the construction lender or Borrower. Agency may take a reasonable amount of time to evaluate the information provided and the proposed changes and Borrower agrees any such delay will not affect Borrower's obligation to complete the rehabilitation work by the completion date set forth in the approved construction schedule. M Subsidy Loan. Residual Receipts. The terms of this Commitment require Borrower to be limited in the annual amount of revenues to which it will be entitled as distributions. Any excess development revenues after payment of Agency -approved operating expenses are considered surplus cash ("Surplus Cash"). fifty percent (50%) of Surplus Cash is to be paid to the Borrower as a distribution and the other fifty percent (50%) of Surplus Cash is considered residual receipts ("Residual Receipts"), which shall be remitted to Agency and other approved residual receipts lenders on a pro rata basis. Lenders' Underwriting Assumptions/SubsidyAssumptions/Sub;Ldy Amount. CaIHFA will require a copy of the construction and permanent lenders' proforma evidencing consistent underwriting assumptions prior to construction loan closing. The CaIHFA subsidy will be, in the Agency's sole discretion, the lesser of a) the principal amount as stated hereto or b) an amount as determined by the Agency in the event the financial assumptions change prior to construction loan and/or Permanent Loan Closing, Final Limited Partnership Agreement ("LPA"). This Commitment requires that, upon the closing of construction financing, the assumptions of the final LPA are substantially consistent with the draft LPA and information provided to CaIHFA at the time of Ca1HFA's issuance of this Commitment, and that the final LPA is acceptable to CalHFA. CaIHFA MIP Subsidy Regulatory- Agreement Priority. The CaIHFA MIP Subsidy Regulatory Agreement/affordability covenants shall be recorded in senior lien position ahead of any foreclosable debt and any existing debt shall be subordinated to the CaIHFA MIP Subsidy Regulatory Agreement/affordability covenants. Reduction of CaIHFA MIP Subsidy. The MIP Subsidy Loan is intended to be gap assistance not to exceed the amount needed to bridge the gap between the total acquisition and development costs and the maximum loans, grants, tax credit equity, and other financing sources obtainable by Borrower plus developer equity and Deferred Developer Fee ("DDF ') (as defined in the CaIHFA MIP Subsidy Loan Regulatory Agreement), but in any event not to exceed the respective dollar amounts set forth in the Project Summary. The MIP Subsidy Loan shall be subject to reduction: (a) at Conversion and (b) not later than six (6) months following completion of the construction and/or rehabilitation of the Development as follows: 8 CaIHFA Special Conditions Final Commitment Ltr Permanent Financing ( HUD-RS/FFB)(MIP) Sarah's Court Apartments - CaIHFA No. 22-013-A/X/N 09/122022.T1v"cic-DocOR MF-665445913-2 (a) If the actual acquisition and development costs, as determined by a draft cost certification, performed at Borrower's expense, by an independent, certified public accountant in accordance with the requirements of Agency upon the completion of constructionfrehabilitation of the Development, and not later than thirty (30) days prior to Conversion, are less than the sources of financing determined at such time, and/or other financing sources increase, the Agency's share of the resulting cost savings/subsidy needs reduction ("Cost Savings") shall be used as follows: (i) One hundred percent (100%) of such Cost Savings shall be paid on a pro rata basis to Ca1HFA with regard to the MIP Subsidy Loan and other approved residual receipts lenders. The Cost Savings shall first be applied to reduce or repay the principal amount of the portion of the MIP Subsidy Loan provided by the MIP Supplemental Allocation and the respective residual receipts loans, however, if a residual receipts lender declines its pro rata share, such pro rata share shall be applied to the remaining residual receipts loans); (ii) If the MIP Supplemental Allocation shall be paid in full from the percentage of Cost Savings allocated as set forth above, any amount remaining shall be applied as set forth in subclause (iii)-(v) below; (iii) fifty percent (50%) of such Cost Savings shall be distributed to Borrower, all of which shall be applied to pay the DDF; (iv) If the DDF shall be paid in full from the percentage of Cost Savings allocated to the Borrower, as set forth above, any amount in excess of the DDF shall be added to the amount and applied as set forth in subclause (v) below; and (v) The remaining fifty percent (50%) of such Cost Savings shall be paid to the Agency on a pro rata basis with other approved residual receipts lenders to reduce or repay the principal amount of the respective residual receipts loans, however, if a residual receipts lender declines its pro rats share, such pro rata share shall be applied to the remaining residual receipts loans. The allocation of the Cost Savings described in this section shall not apply in favor of the Agency, and shall be adjusted as reasonably necessary, to the extent that such allocation is prohibited by the California Debt Limit Allocation Committee ("CDLAC" ), or any established federal or state law, regulation or policy governing the use of any sources of financing issued by federal or state agencies. (b) If the actual acquisition and development costs, as determined by a final cost certification, performed at Borrower's expense by an independent certified public accountant in accordance with the requirements of Agency, not later than six (6) months after completion of the construction and/or rehabilitation of the Development, are less than the total amount of acquisition and development costs set forth in the final Agency -approved Development budget, and/or other financing sources increase, then: 9 CaIHFA Special Conditions Final Commitment Ltr Permanent Financing ( END-RS/FFl3)(M1P) Sarah's Court Apartments - CaIHFA No. 22-013-A/X/N 09/12/2022.TMH/cic-Doc #HFW-665445913-2 (i) One hundred percent (1001/o) of such Cost Savings shall be paid on a pro rata basis to Ca1HFA with regard to the MIP Subsidy Loan and other approved residual receipts lenders. The Cost Savings shall first be applied to reduce or repay the principal amount of the portion of the MIP Subsidy Loan provided by the MIP Supplemental Allocation and the respective residual receipts loans, however, if a residual receipts lender declines its pro rata share, such pro rata share shall be applied to the remaining residual receipts loans); (ii) If the MIP Supplemental Allocation shall be paid in full from the percentage of Cost Savings allocated as set forth above, any amount remaining shall be applied as set forth in subclause (iii)-(v) below; (iii) fifty percent (50%) of such Cost Savings shall be distributed to Borrower, all of which shall be applied to pay the DDF; (iv) If the DDF shall be paid in full from the percentage of Cost Savings allocated to the Borrower, as set forth above, any amount in excess of the DDF shall be added to the amount and applied as set forth in subclause (v) below; and (v) The remaining fifty percent (50%) of such Cost Savings shall be paid to the Agency on a pro rats basis with other approved residual receipts lenders to reduce or repay the principal amount of the respective residual receipts loans, however, if a residual receipts lender declines its pro rata share, such pro rata share shall be applied to the remaining residual receipts loans. 10 Ca1HFA Special Conditions Final Commitment Utr Permanent Financing (HUD-RS/FFB)W) Sarah's Court Apartments - CalHFA No. 22-013-A/X/N 09/l212022.T1NH/cic-Doc #HFMF-6654459 [3-2 Final Commitment Letter Exhibits. Perm and Mixed Income Program Sarah's Court=CaIHFA No. 22-093=A/X/N MULTIFAMILY LENDING PROGRAMS DIVISION Final Senior Loan Committee Approval Senior Loan Committee Meeting on 09/07/2022 Project Name, City, County Sarah's Court Apartments, Fresno, Fresno County CaIHFA Project Number: 22-103 — A/X/N Requested Financing by Loan Program: $18,149,3S2 CaIHFA Tax -Exempt Bond — Conduit Issuance Amount $457,159 CaIHFA Tax -Exempt Supplemental Bond — Conduit Issuance Amount Up to $6,000,000 CaIHFA Taxable Bond — Conduit Issuance Amount (includes 10% cushion) which may include recycled bonds $6,364,866 CaIHFA Tax -Exempt or FFB Permanent Loan with HUD Risk Sharing ^ $2,8S0,000 CaIHFA MIP Subsidy Loan $600,000 CaIHFA MIP Supplemental Subsidy loan (refer to section S for further information) FINANCING RECOMMENDED BY NAME TITLE SIGNATURE DATE Jennifer Bearwood Loan Specialist _Email Approval 09/12/2022 CaIHFA SENIOR STAFF APPROVAL NAME TITLE SIGNATURE DATE Director, Kate Ferguson MF Programs Email Approval 09/12/2022 Sheena Kho Credit Officer Email Approval 09/08/2022 Assistant General Marc victor Counsel Email Approval 09/08/2022 Director, Erwin Tam Finance Email Approval 09/08/2022 Chief Deputy & 9/13/2022 Don Cavier Director Senior Staff - w Conditions of Approval: Attached: Staff Report, Financial Analysis, Term Sheets 1 SENIOR STAFF LOAN APPROVAL This is to memorialize that on September 7 2022 Senior Staff approved the following action for the project described as follows: Sarah's Court Apartments - CaIHFA# 22-013-A13CIN $18,149,352 (Tax _Exem t - Conduit 457 159 (Tax -Exempt — Supplemental - Conduit fi 000 000 Taxable — Conduit — which may include recycled bonds 6 64,866 (Tax -Exempt or FFB Permanent Loan — HUD Risk Sharing 2 850 000 Mixed -Income Program — Subsidy Loan 600 000 Mixed- Income Program — Sunl2lemental Subsidy Loan ❑ Initial Commitment approval; or ❑ Recommendation to the Board of Directors that it authorize the issuance of a final commitment; or ® Issue a final commitment pursuant to Board Resolution No. 20-16, authorizing Senior Staff to approve loan commitments under $15,000,000; or ❑ Issue a modified final commitment for an increase of less than 7% pursuant to Board Resolution No. 20-16; ❑ Issue a final commitment under the guidelines of the Non -Profit Predevelopment Loan Program pursuant to Board Resolution No. 13-13; or ® Issue an approval for bond Issuance under the guidelines of the Conduit Issuer Program pursuant to Board Resolution No. 22-10. Issue a final commitment under the guidelines of the CaIHFA Mixed Income Program pursuant to Board Resolution No. 19-02. Tiena Jol son Hall Executive Director SOURCE OF HAT OR NON -HAT FUNDS: ❑ FAF Dollar Amount: ❑ Earned Surplus (Pre-80) ❑ Earned Surplus (Post-80) ❑ Agency Funds Dollar Amount: Dollar Amount: Dollar Amount: ❑ Other: Dollar Amount: Julissa Garcia From: Jennifer Beardwood Sent: Monday, September 12, 2022 12:25 PM To: Sheena Kho Cc: Julissa Garcia Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] I approved Sarah's Court staff report. Thank you, Jennifer Beardwood Loan Administrator California Housing Finance Agency 916.326.8805—Direct / 916-326-8800—Main Mailing address and OvemlghVCourter address: 500 Capitol Mall, STE 400, MS 990, Sacramento, CA 95814 ti+.4.v.• a hia-ca. ou I Sign up for our cnews .1 r xncom- n!s Follow us on Twltler: wvha.lwi ler.�m caih'a Like us on Facebook:kvr-T2caheaxsQ�h�cal fa Our Water This message and any attached documents contain information from the California Housing Finance Agency that may be confidential and/or privileged if you are not the Intended recipient, you may not read, copy, distribute, or use this information. If you have received this transmission in error, please notify the sender immediately by reply e-mail and then delete this message. Thank you. From: Sheena Kho <skho@CaIHFA.ca.gov> Sent: Monday, September 12, 202212:20 PM To: Jennifer Beardwood <JBeardwood@CaIHFA.ca.gov> Cc: Julissa Garcia <jgarcia@CaIHFA.ca,gov> Subject: FW: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Hi Jennifer, can you please provide your approval for Sarah's Court (attached for ease of reference). Thank you, Sheena Kho Credit Officer Multifamily Division - California Housing Finance Agency Office:916-326-8814 Mobile: 916-508-5642 Fax: 916-326-6430 Email: skho@calhfa.ca.gov Julissa Garcia From: Kate Ferguson Sent: Monday, September 12, 2022 3:50 PM To: Sheena Kho Subject: Re: 9/7 Final Revised SLC Packages [Seeking Approvals] Approved. From: Erwin Tam <etam@CaIHFA.ca.gov> Sent: Thursday, September 8, 2022 3:43:13 PM To: Marc Victor <MVictor@CaIHFA.ca.gov>; Sheena Kho <skho@CaIHFA.ca.gov>; Kevin Brown <KBrown@CalHFA.ca.gov>; Kate Ferguson <kferguson@CaIHFA.ca.gov> Cc: Douglas Kincaide <DKincaide@CaIHFA.ca.gov>; Pratixa Desai <pdesai@CaIHFA.ca.gov>; Steve K. Gallagher <skgallagher@calhfa.ca.gov>; Jennifer Beardwood <JBeardwood@CaIHFA.ca.gov>; Julissa Garcia <jgarcia@CaIHFA.ca.gov>; Torin Heenan <theenan@Ca1HFA.ca.gov>; Amara Harrell (aharrell@kmtg.com) <aharrell@kmtg.com>; Paul Steinke <PSteinke@CaIHFA.ca.gov>; Melissa Flores <MFlores@CaIHFA.ca.gov>; Courtney Pond <cpond@CaIHFA.ca.gov> Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Approved. Thanks, Erwin Erwin J. Tam (916) 326-8653 etam@calhfa.ca.eov From: Marc Victor <MVictor@CaIHFA.ca.gov> Sent: Thursday, September 8, 2022 2:48 PM To: Sheena Kho <skho@CaIHFA.ca.gov>; Kevin Brown <KBrown@CaIHFA.ca.gov>; Erwin Tam <eta m@Ca IHFA.ca.gov>; Kate Ferguson <kferguson@CaIHFA.ca.gov> Cc: Douglas Kincaide <DKincaide@CaIHFA.ca.gov>; Pratixa Desal <pdesai@CaIHFA.ca.gov>; Steve K. Gallagher <skgallagher@calhfa.ca.gov>; Jennifer Beardwood <JBeardwood@CaIHFA.ca.gov>; Julissa Garcia <jgarcia@CaIHFA.ca.gov>; Torin Heenan <theenan @Cal H FA.ca.gov>; Amara Harrell (aharrell@kmtg.com) <aharrell@kmtg.com>; Paul Steinke <PSteinke@CaIHFA.ca.gov>; Melissa Flores <MFlores@CaIHFA.ca.gov>; Courtney Pond <cpond@CaIHFA.ca.gov> Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Greatl Approvedl Marc J. Victor Assistant General Counsel California Housing Finance Agency Office of General Counsel 500 Capitol Mall, Suite 1400, MS 1440 Sacramento, CA 95814 Tel: 916-326-8480 Fax: 916-326-6432 Julissa Garcia From: Erwin Tam Sent: Thursday, September 8, 2022 3:43 PM To: Marc Victor; Sheena Kho; Kevin Brown; Kate Ferguson Cc: Douglas Kincaide; Pratixa Desai; Steve K. Gallagher, Jennifer Beardwood; Julissa Garcia; Torin Heenan; Amara Harrell (aharrell@kmtg.com); Paul Steinke; Melissa Flores; Courtney Pond Subject: RE: RE:9/7 Final Revised SLC Packages [Seeking Approvals] Approved. Thanks, Erwin Erwin J. Tam (916) 326-8653 etam @caihfa.ca.gov From: Marc Victor <MVictor@CaIHFA.ca.gov> Sent: Thursday, September 8, 2022 2:49 PM To: Sheena Kho <skho@CaIHFA.ca.gov>; Kevin Brown <KBrown@CaIHFA.ca.gov>; Erwin Tam <etam @Cal H FA.ca.gov>; Kate Ferguson <kferguson@CaIHFA.ca.gov> Cc: Douglas Kincaide <DKincaide@CaIHFA.ca.gov>; Pratixa Desai <pdesai@CaIHFA.ca.gov>; Steve K. Gallagher <skgallagher@calhfa.ca.gov>; Jennifer Beardwood <JBeardwood@CaIHFA.ca.gov>; Julissa Garcia <jgarcia@CaIHFA.ca.gov>, Torin Heenan <theenan@CaIHFA.ca.gov>; Amara Harrell (aharrell@kmtg.com) <aharrell@kmtg.com>; Paul Steinke <PSteinke@CaIHFA.ca.gov>; Melissa Flores <MFlores@CaIHFA.ca.gov>; Courtney Pond <cpond@CaIHFA.ca.gov> Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Great! Approved! Marc J. Victor Assistant General Counsel California Housing Finance Agency Office of General Counsel 500 Capitol Mall, Suite 1400, MS 1440 Sacramento, CA 95814 Tel: 916-326-8480 Fax: 916-326-6432 This message and any attached documents contain information from the California Housing Finance Agency that may be confidential and/or privileged. If you are not the intended recipient, you may not read, copy, distribute, or use this Information. If you have received this transmission in error, please notify the sander immediately by reply e-mail and then delete this message. Thank you. From: Sheena Kho <skho QCaIHFA.ca. ov> Sent: Thursday, September 8, 2022 2:06 PM To: Marc Victor <MVictor@CalHF�v>; Kevin Brown <KBrown@CaIHFA.ca.sov>; Erwin Tam <etam @CaIHFA.ca.gov>; Kate Ferguson <kferguson@Cal HFA.c"ov> Cc: Douglas Kincaide <DKincaide CaIHFA.ca. ov>; Pratixa Desal <ydesai CaIHFA.ca.gov>; Steve K. Gallagher Julissa Garcia From: Marc Victor Sent: Thursday, September 8, 2022 2:48 PM To: Sheena Kho; Kevin Brown; Erwin Tam; Kate Ferguson Cc: Douglas Kincaide; Pratixa Desai; Steve K. Gallagher; Jennifer Beardwood; Julissa Garcia; Torin Heenan; Amara Harrell (aharrell@kmtg.com); Paul Steinke; Melissa Flores; Courtney Pond Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Greatl Approvedl Marc J. Victor Assistant General Counsel California Housing Finance Agency Office of General Counsel 500 Capitol Mall, Suite 1400, MS 1440 Sacramento, CA 95814 Tel: 916-326-8480 Fax: 916-326-6432 This message and any attached documents contain information from the California Housing Finance Agency that may be confidential and/or privileged. If you are not the intended recipient, you may not read, copy, distribute, or use this information. If you have received this transmission in error, please notify the sender immediately by reply e-mail and then delete this message, Thank you. From: Sheena Kho <skho@CaIHFA.ca.gov> Sent: Thursday, September 8, 2022 2:06 PM To: Marc Victor <MVictdr@CaIHFA.ca.gov>; Kevin Brown <KBrown@CalHFA.ca.gov>; Erwin Tam <etam@CaIHFA.ca.gov>; Kate Ferguson <kferguson@Ca1HFA.ca.gov> Cc: Douglas Kincaide <DKincaide@CaIHFA.ca.gov>; Pratixa Desai <pdesa!@CaIHFA.ca.gov>; Steve K. Gallagher <skgallagher@calhfa.ca.gov>; Jennifer Beardwood <1Beardwood@CaIHFA.ca.gov>; Julissa Garcia <jgarcia @Cal HFA.ca.gov>; Torin Heenan <theenan@CaIHFA.ca.gov>; Amara Harrell (aharrell@kmtg.com) <aharrell@kmtg.com>; Paul Steinke <PSteinke@CaIHFA.ca.gov>; Melissa Flores <MFlores@CaIHFA.ca.gov>; Courtney Pond <cpond@CaIHFA.ca.gov> Subject: RE: RE: 917 Final Revised SLC Packages [Seeking Approvals] Hi Marc, see below for updated language that allows for pro rata split with other residual receipt lenders, which is consistent with current policy, does that work? In the event of cost savings at permanent loan conversion,100% of cost savings will be used to reduce the supplemental portion of the MIP loan amount first l;1ay i3eSh J+i1[th,tler.e9(i%1�iictel�jSti�gfifers rri_ap�a eta ;�iai -;i� app1). Once the supplemental portion of the MIP loan amount is fully reduced, the remaining cost savings will be split 50% between reducing the original MIP loan amount (iffy ge _sFiar_ i'ill#r�[eldual i'Is+�`.ira? 3"itj�8 effip and reducing the Deferred Developer Fee. Thank you, Sheena Kho Credit Officer Multifamily Division - California Housing Finance Agency Julissa Garcia From: Sheena Kho Sent: Thursday, September 8, 2022 3:52 PM To: Julissa Garcia Cc: Kevin Brown Subject FW: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Approved. Thank you, Sheena Kho Credit Officer Multifamily Division - California Housing Finance Agency Office:916-326-8814 Mobile: 916-508-5642 Fax: 916-326-6430 Email: skho@calhfa.ca.gov CA CENSU 202 S From: Erwin Tam <etam@CaIHFA.ca.gov> Sent: Thursday, September 8, 2022 3:43 PM To: Marc Victor <MVictor@CaIHFA.ca.gov>; Sheena Kho <skho@CaIHFA.ca.gov>; Kevin Brown <KBrown@Ca1HFA.ca.gov>; Kate Ferguson <kferguson@CaIHFA.ca.gov> Cc: Douglas Kincaide <DKincaide@CaIHFA.ca.gov>; Pratixa Desai <pdesai@CaIHFA.ca.gov>; Steve K. Gallagher <skgallagher@calhfa.ca.gov>; Jennifer Beardwood <JBeardwood@CaIHFA.ca.gov>; Julissa Garcia <jgarcia@CalHFA.ca.gov>; Torin Heenan <theenan@CaIHFA.ca.gov>; Amara Harrell (aharrell@kmtg.com) <aharrell@kmtg.com>; Paul Steinke <PSteinke@CaIHFA.ca.gov>; Melissa Flores <MFlores@CaIHFA.ca.gov>; Courtney Pond <cpond@CaIHFA.ca.gov> Subject: RE: RE: 9/7 Final Revised SLC Packages [Seeking Approvals] Approved. Thanks, Erwin Erwin J. Tam (916) 326-8653 efam@calhfa.ca.goy From: Marc Victor <MVictvr@CaIHFA.c3.go_v> Sent: Thursday, September 8, 2022 2:48 PM To: Sheena Kho <skho a2CalHFA.ca.eov->; Kevin Brown <ICBrown0!CaIFIFA.ca.gov>; Erwin Tam <etam@CalHFA.ca.gov>; Kate Ferguson <kfereuson@Ca_1HFA.ca.gov> Cc: Douglas Kincaide <QKincaicleg Cal HFA.ca.gov>; Pratixa Desai < desai CalHFA,ca. ov>; Steve K. Gallagher SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N 5LC Date:09/07/2022 CaIHFA MULTIFAMILY PROGRAMS DIVISION Final Commitment Staff Report & Request for Loan Approval of Permanent Take -Out Loan for Tax Exempt financing with Mixed Income Program Subsidy Financing Senior Loan Committee "Approval": September 7, 2022 Project Name, County: Sarah's Court Apartments, Fresno County Address: 200 N. Salma Avenue, Fresno, CA 93727 Type of Project: New Construction CaIHFA Project Number: 22-013-A/X/N Total Units:120 (family) Requested Financing by Loan Program: . $18,149,352 CaIHFA Tax -Exempt Bond —Conduit Issuance Amount Up to $457,159 CaIHFA Tax -Exempt Supplemental Bond — Conduit Issuance Amount Up to $6,000,000 CaIHFA Taxable Bond — Conduit Issuance Amount (which may Include recycled bonds) (includes 10% cushion) $6,364,866 CaIHFA Tax -Exempt or FFB Permanent Loan with HUD Risk Sharing CaIHFA MIP Subsidy Loan $2,850,000 $600,000 CaIHFA Supplemental MIP Subsidy Loan (refer to section 5 for further information) DEVELOPMENT/PROJECT TEAM Developer: Dominus Consortium Family LLC Borrower: FCTC Family, LP Permanent Lender: CaIHFA Construction Lender: Banner Bank Equity Investor: WNC Associates Management Company: GSF Properties, Inc. Contractor: West Coast Community Builders Architect: Scott Beck Loan Officer: N/A Loan Specialist: Jennifer Beardwood Asset Manager: Jessica Doan Loan Administration: Courtney Ide Legal (internal): Tonn Heenan Legal (External): Orrick`Herrington & Sutcliffe LLP Concept Meeting Date: 8/10/2022 Approval Expiration Date: 180 days from Approval LOAN TERMS 1 CaIHFA MIP SUBSIDY CONDUIT ISSUANCE/ (Banner CaIHFA PERMANENT LOAN AND Bank) CONSTRUCTION LOAN LOAN SUPPLEMENTAL MIP $6,364,866 LOAN Original MIP: $2,850,000 Total Loan Amount $18,149,352 (t/e) + $438,022 (t/e supplement) + Supplemental MIP: $600,000 $5,667,947 (taxable)(which may Total CaIHFA MIP Subsidy include recycled bonds) Loan: $3,450,000 Page 1 of 13 Multifamily Staff Report Version Date: April 2021 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 )2/restricted unit) Loan Term & Lien 30 months- interest only. One 40 year— partially 17 year -Residual Receipts; Position conditional six-month extension amortizing due in year 17; 2nd Lien Position during available. 11t Lien Position during 1st Lien Position during permanent loan term construction permanent loan term Interest Rate T/E:1-month SOFR + 275 bps Underwritten Rate 6.65% (subject to change and Underwritten at 1.98 + 275 bps = (Fixed Rate locked) Greater of 1% Simple Interest locked 30 days prior to 4.73% fixed or the Applicable Federal loan closing) Estimated rate based on a Rate (AFR) at time of MIP Taxable: 1-month SOFR+ 300 bps 36 month forward closing (3%Simple was used Underwritten at 1.98 + 300 bps = commitment for underwriting purposes) 4.98% fixed Loan to Value (LTV) 55% of investment value 66% of restricted value N/A Loan to Cost 21% 17% N/A "Tire all -infixed rate of 6.65% is the final rate locked far the loan closing. PROJECT SUMMARY 2. Legislative Districts Congress: 22 Connie Conway Assembly: 32 1 State 1 8 Rudy Salas I Senate: Andreas Borgeas Brief Project Description Sarah's Court Apartments (the "Project") is a new construction family mixed Income Project. It consists of 4 residential buildings of 3 stories (walk-up) and one community building. There will be 120 total units, 119 of which will be restricted between 30% and 700% of the Fresno County Area Median Income (AMI). There will be 60 one -bedroom units (610 s.f.), 30 two -bedroom units (875 s.f.), and 30 three -bedroom units (1,140 s.f.). One one -bedroom unit will serve as the manager's unit. The site is currently vacant. The project will have 120 parking spaces in the existing 495 space parking structure funded by HcD's Infill Infrastructure Grant that was completed in 2020. The structure will be shared with a future planned 120-unit project, Sarah's Court Apartments Phase II, which is still In a predevelopment stage with an expected completion in 2026 will be allocated 120 parking spaces. The remaining 183 parking spaces are expected to be reserved for future commercial development.. The Borrower will enter into a Residential Parking Deck Easement Agreement with Fancher Creek Town Center, LLC for the parking structure. The Project is part of the 90+acres Fancher Creek Master Plan development. Once completed, it will be home to approximately 970,000 square feet of commercial and retail businesses, a senior housing development, a multifamily housing development, a plaza, recreational space, and approximately 1.5 miles of trail along the canal. Brand Haven Senior Apartments (formerly known as Fancher Creek Senior Apartments), an 180 total units project, is a part of master development plan and has received MIP, TCAC, and CDLAC awards and is currently under construction. The same developer is involved in Brand Haven Senior Apartments and the subject Project. Financing Structure: The ProjecVs financing structure includes financing from tax-exempt bonds, 4% Federal Tax Credit equity (4% Federal LIHTC allocation), state housing tax credits, City of Fresno (HOME, CDBG and PLHA) and Agency's permanent and Mixed- Income Program (original and supplemental). The project will be income averaging, pursuant to TCAC regulations. Page 2 of 13 11,iultifamily Staff Report Version Date: April 2021 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 Tax Credits and/or CDLAC Status: The developer received an allocation for 4%tax credits and bond cap from TCAC/CDLAC on 6/15/2022 and received a supplemental bond allocation on 8/29/2022. The supplemental allocation was requested to add a cushion to the project's 50% aggregate basis requirement (the "50% test") which was at approximately 50% and now will increase to approximately 52%. The supplemental allocation is necessary to accommodate a potential cost Increase during construction. Ground Lease: Not applicable. Project Amenities: The Project includes a community room, fitness room, swimming pool, business center, mail room, and structured play areas. There will, also be on -site service programs provided by LifeSTEPS, (approximately 5 hours per week) offering adult education classes, financial literacy, health and wellness programs, counseling and emotional support, and other services. Unit amenities will Include central heating, central air, in -unit washer and dryer, microwave, dishwasher, garbage disposal, range, and refrigerator. Local Resources and Services: For TCAC/CDLAC purposes, the Project Is located within a High resource area per TCAC/HCD's Opportunity Area Map. The Project is in close proximity to the following local amenities and services: • Grocery stores —0.75miles • Public Library-1 mile • Public transit —0.5miles • Park and recreation — 0.75 miles Non -displacement and No Net Loss: To the extent feasible, it is the Agency's priority to mitigate the overall effects upon affordable housing availability that may arise from multifamily developments that may result in permanent displacement of existing affordable housing residents and/or net loss of existing affordable housing units. The Project is a new construction project on vacant land, with no related demolition of existing affordable housing, hence no existing affordable housing units will be lost nor will existing residential households be displaced as a result of this development. and/or Other (i.e. Parking) Space: The Project does not include commercial MISSION 3. CaIHFA Mission/Goals This Project and financing proposal provide 119 units of affordable housing with a range of restricted rents between 30% of AMI and 70% of AM] which will support much needed rental housing that will remain affordable for 55 years. ANTICIPATED PROJECT MILESTONES & SCHEDULE 4. CDLAC/TCAC Award Date: 6/15/2022 CDLAC/TCAC Closing Deadline- 12/12/2022 Estimated Construction Start: 12/2022 Est. Construction Loan Closing: 12/2022 Estimated Stabilization and Conversion to Perm Loan(s): 12/2025 SOURCES OF FUNDS Page 3 of 13 Multifamily Staff Report Version Date: April 2021 S. *The estimated NOI During Construction is based on 6 months offull occupancy. ** CaIHFA Supplemental MIP loan repayment will have priority over the Original MIP Loan in the repayment priority. **Gap Funding Explanation and request for supplemental MIP subsidy loan funding: The Sources of Funds chart shown above includes information related to each financing and/or equity source during the construction and permanent periods of development as well as the "Uses" or costs related to the construction and permanent loan periods. At the time of CaIHFA's initial commitment (March of 2022), the developer estimated the total development cost (TDC) to be $33,886,068 or $282,384/unit. CaIHFA Issued an Initial commitment based on these initial costs ConStrurNon Sources and Uses Details (Lien Sources Amount Position/Rate/Debt Type) Uses Amount CaIHFA Conduit -Banner Bank T/E $18,149,352 1st / 4.73% /Interest Only Total Acquisition costs $2,400,000 CaIHFA Conduit -Banner Bank TIE Sup lemental $438,022 1st/4.73%/Interest Only Construction/Rehab Costs $22,871,614 CaIHFA Conduit -Banner Bank Taxable (which may include recycled bonds) $5,667,947 2nd / 4.98% /Interest Only _ Soft Costs $1,159,000 City of Fresno -HOME $3,169,034 3rd / 3.00% /Residual Receipt Hard Cost contingent $1,635,922 Ci of Fresno -CDBG $2,480,000 4th / 3.00% /Residual Receipt Soft Cost contingency $200,000 City of Fresno -PLHA $530,966 5th / 3.00% /Residual Receipt Financing Casts $2,042,157 NO[ (pre -conversion) $293,000 N/A Local Impact Fees $1,275,541 Deterred Developer Fee $3,104,419 Payable from Cashflow Developer Fees $3,825,000 Investor Equity Contribution $1,873,906 N/A Other Costs $817,908 Deferred Reserves $520,496 TOTAL $36,227,142 $36,227,142 TOTAL PER UNIT $301,893 Permanent Sources and Uses Sources: Amount Details (Lien Position/Rate/Debt Type) Uses Amount CaIHFA Perm Loan $6,364,666 1st/6.65%/40yr amortization due by yr 17 Total Loan Payoffs and Equity $36,227,142 CaIHFA MIP Loan $2,850,000 2nd / 3.00%/Interest Only Financing costs $154,546 CaIHFA supplemental MIP Loan** $600,000 2nd / 3.00% 1 Interest Only Soft costs $17,500 City of Fresno -HOME $3,169,034 3rd / 3.00% /Residual Receipt Operating Reserves $548,535 City of Fresno -CDBG $2,480,000 4th / 3.00% /Residual Receipt CI of Fresno -PLHA $530,966 5th / 3.00%/Residual Receipt Ngi(pre-conversion)' $293,000 N/A Deferred Developer Fees $1,920,798 Payable from Cashflow Investor Equity Contribution $18,739,059 N/A TOTAL $36,947,723 $36,947,723 TOTAL PER UNIT $307,895 Page 4 of 13 ?,IuL.1i �[nih; Star Repo.•? ersion Da.2' :1pri1 =0_1 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 estimates for the developer to use to apply to CDLAC for tax exempt bond cap and to CTCAC for both federal and state tax credits. On Junes 15, 2022, the Borrower received the related allocations from CDLAC and CTCAC. Generally, the project's total costs Increased from March through July In Construction Costs, Hard Cost Contingency, Developer Fee and other line items by a total of 3,061,654. The developer was successful in achieving a 4.86% increase to the Equity Investor Contribution for $869,347 and an Increase to the CaIHFA Permanent Loan of 11.66% for 1$664,866, Increases to interest rates from the Construction Lender also resulted in a $809,159 increase to costs related to construction period debt service and loan fees. The Borrower has requested a $600,000 increase to the MIP Subsidy Loan in an effort to offset cost increases and loan reductions outlined above and below. The summary of changes in sources and uses between initial commitment vs. current proposed are outlined below: Summary of changes in Sources/Uses since the Initial Commitment approval SOURCES - Major Initial Current Proposed Increase/ Per Unit Cost % Adjustment of Changes Description Commitment Amount $ Reduction $ Adjustment IC Amount Amount $ 1- CaIHFA Perm Loan $5,700,000 $6,364,866 $664,866 $5,541 11.66% 2 - Deferred developer's fee $1,286,356 $1,920,798 $634,442 $5,287 49.3291. 3 - Construct/Rehab Net Oper.Inc. $0 $293,000 $293,000 $2,442 100.00% 4- Investor Equity Contribution $17,869,712 $28,739,059 $869,347 $7,245 4.86% Total Changes in Sources (A) $24.856,068 1 $27,317,723 $2,461,655 1 $20,514 J 9.90% USES - Major Cost Changes Description Initial Commitment Amount $ Current Proposed Amount $ Increase/ Reduction $ I Per Unit Cost Adjustment % Adjustment of IC Amount 1- Construction hard cost $2> 828,667 $22,871,614 $1,042,947 $8,691 4.78% 2 - Hard cost contingency $1,091,432 1 $1,635,922 9544,490 $4,537 49.89% 3 - Construction loan cost $1,162,983 $1,972,142 $809,159 $6,743 69.58% 4—Construction and Permanent Costs/Fees $373,200 $284,561 -$88,639 -$739 -23.75% 5 - Developer Fee $3,200,000 $3,825,000 $625.000 $5,208 19,53% 6—Operating Reserve $413,787 $548,535 $134,748 $1,123 32.56% 7-Other $2,099,500 $2,093,449 -56,051 -$50 -0.29% Total Changes in Uses (B) $30,169,569 $33,231,223 $3,061,654 525.514 10.15% Net Funding Gap (A-B) $600,000 Gap Funding Sources: Increase in CaIHFA Perm loan (at rate locked rate): $0 Supplemental MIP Request: $600,000 Remaining Funding Gap Total : $o Remaining Funding Gap: $0 Hard Cost/Soft Cost changes: The Project experienced significant increases in the cost of construction due to COVID, labor shortages and supply chain issues that resulted in the construction costs budget increasing by $1.042M. As Page 5 of 13 Multifamily Staff Report Version Date: April 2021 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 reflected on the above chart, most other budget line Items increased as a result of loan financing costs related to macroeconomic factors, such as inflation, Deferred Developer Fee: The current budget also reflects an Increase of the total developer's fee by $625K, and the current deferred developer's fee (DDF) is approximately $635K higher than the original budget (original developer fee $3,200,000 with $1,286,356 deferred/current developer fee $3,825,000 with $1,920,798 deferred). Through the projects final underwriting prior to construction and permanent loan conversion, efforts shall be made to mitigate a portion of the financing gap through restructuring of the Developer fee or direct equity contribution by the Developer. Perm Loan Increase & Equity Contribution Adjustment: During final underwriting, the original CaIHFA permanent loan of $5.7 million was increased by $664,866 to $6,364,866. The Investor Equity Contribution increased by $869,347 from $17,869,712 to $18,739,059. The estimated funding gap after exhausting all resources available to the project totals approximately $600,000. The Borrower has requested an increase to the MIP Subsidy Loan of $600,000. Pursuant to the TCAC/CDLAC requirements this project must begin construction by December 2022. A $600,000 increase in the MIP supplemental subsidy ($5,000/unit) results in an overall MIP Regulated Unit amount of $28,992 per restricted unit. The original MIP and Supplemental MIP total $3,450,000. Subsidy Efficiency: Initial MIP commitment was $2,850,000 ($23,950 per MIP restricted units). Current proposed: $3,450,000 ($28,992 per MIP restricted units). Tax Credit Type(s), Amount(s), Pricing(s), and per total units: 4% Federal Tax Credits: $12,239,530 ($102,853 per TCAC restricted unit). State Tax Credits: $9,179,645 ($77,140 per TCAC restricted unit). Rental Subsidies: The Project will not be subsidized by project -based vouchers. Other State Subsidies: The Project will not be funded by other state funds. Other Locality Subsidies: The Project will be funded with $6,180,000 from the City of Fresno; a HOME loan of $3,169,034, CDBG loan of $2,480,000 and PLHA loan of $530,966. Cost Containment Strategy: The developer is using West Coast Community Builders as its General Contractor. The developer had established cost.containment strategies that include: 1) encouraging early team collaboration between the general contractor and architect to reduce potential change orders and schedule delays, 2) requiring that the General Contractor competitively bids all major subcontractor trades, 3) conducting value engineering throughout the design process with the architect, civil engineer, general contractor, energy consultant and all related consultants participating in the development of the project. High Cost Explanation: Not applicable. 6. `Equity — Cash Out (estimate): Not Applicable TRANSACTION OVERVIEW I 7. I Proposal and Project Strengths The Project has received 4% federal and state tax credits which Is projected to generate equity representing 51% of total financing sources. The Project will serve low-income families ranging between 30% to 70% of AMI. On average, the rents are between 35%to 76% below market rents based on current appraisal. Page 6 of 13 Multifamily Staff Report Version Date: April 2021 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 • The Loan -to -Value will be 66%, which is well below the Agency's minimum requirements of 90%. This results in less risk to the Agency. • The locality has invested in the success of the Project as demonstrated by loans totaling $6,180,000 from the City of Fresno. • The projected portion of the developer's fee that will be collected at or prior to permanent loan conversion is $1,904,202, which could be available to cover cost overruns and/or unforeseen issues during construction. Project Weaknesses with Mitigants: • The total estimated deferred developer's fee is not anticipated to be fully repaid by year 15. The developer has confirmed that they will forgo any outstanding developer fee In year 15 and treat the amount as a developer's contribution. This condition will be documented in the Investor commitment letter and/or LPA. • The exit analysis assumes 2% increase to the appraisal cap rate (resulting In 7.5%) and a 3% Increase of the underwriting interest rate at loan maturity (resulting in 9.65%). Based on these assumptions, the Project will have the ability to fully repay the balance of the Agency's permanent first lien loan but may only have the ability to repay a portion of the Agency's supplemental MIP in the estimated amounts of $145,206, leaving an outstanding balance of $789,574 (principal and accrued interest) plus the full amount of the original MIP subsidy loan in the estimated amount of $4,440,207 (principal and accrued Interest). Total combined estimated MIP balance at refinance Is $5,229,781. This is expected by CaIHFA given the requirement that the MIP loan be co -terminus with the permanent first mortgage. The primary source of repayment for both the first mortgage and the MIP subsidy loan is refinance of the project's first mortgage. To the extent such a refinance Is insufficient to fully repay the MIP loan, it is contemplated that any remaining balance will be paid from a general partner contribution as part of the final close out of partnership obligations to allow re -syndication. ■ The Project budget indicates a deficit of approximately $600,000. The Borrower has requested an increase to the initially committed MIP subsidy loan to facilitate the progression of this shovel ready project to construction. Refer to section 5 for detailed explanation. ■ The proposed Project's managing general partner, Community Revitalization and Development Corporation (CRDC), is also a managing general partner for one of CaIHFA's portfolio projects, Bel Vue Apartments. Bel Vue Apartment is currently facing challenges in leasing the existing commercial space and is proposing to convert the existing commercial space to 8 additional market rate residential units, which is expected to improve lease -up demands and revenue to the project. The conversion of commercial space to residential unit will be subject to CaIHFA, other lender, locality, and Investor approvals. Per the Borrower's counsel, there are no other material performance issues with CRDC's portfolio. 1 9. 1 Underwriting Standards or Term Sheet Variations Pursuant to the MIP loan term sheet, no project may receive more than the lesser of (1) $8 million project cap, (ii) the aggregate MIP loan amount based on up to $60k per MIP regulated unit for a project located within the high/highest resource area per TCAC/HCD opportunity map, or (III) MIP loan not to exceed 50% of the CaIHFA perm loan. This project is ocated in a high resource area. Based on the project economics, the total MIP loan percentage is approximately 5491. of the CaIHFA perm loan, which exceeds the 50% threshold. This is an exception to the MIP term sheet and is recommended by Multifamily Underwriting and Credit Staff for approval to facilitate the progression of a shovel ready project without delay; the project received tax credit and bond cap allocations from TCAC/CDLAC on June 15, 2022 and is ready to proceed to ,onstruction loan closing by December 2022. Project Speck Conditions of Approval Approval is conditioned upon: • No site work or construction commenced prior to the issuance of a HUD Firm Approval Letter. • The final appraisal will be subject to Agency's review and approval prior to construction loan closing. • CaIHFA requires that MIP affordability covenants be recorded in senior position to all foreclosable debt. • The CaIHFA subsidy (including the supplemental MIP subsidy loan, if any) will be, in the Agency's sole discretion, the lesser of 1) the principal amount as stated on hereto or 2) an amount as determined by the Agency In the event the financial assumptions change prior to construction loan closing and/or permanent loan closing. Page 7 of 13 ✓Multifamily Staff Report Version Date: April 2021 SLC Final Staff Report for: Sarah's Court Apartments CalHFA Project Number: 22-013-A/X/N SLC Date:09/07/2022 All MIP Loan principal and interest will be due and payable at maturity. Outstanding Supplemental MIP loan funds will have first repayment priority whether the source of repayment is cash flow during the term of the loan or repayment via refinance, partner contribution, or other source at loan maturity. Receipt of a Lien Priority/Position Estoppel in form and substance acceptable by CaIHFA from all local (city and HCD) lenders. Receipt of LPA and investor written approval evidencing that any outstanding deferred developer fee remaining in Year 15 will be treated as a developer contribution. The owner must provide evidence of investor and City approval of the total deferred developer's fee structure. The Borrower has requested that 1001% of surplus cash be available for the repayment of the deferred developer's fee (DDF) until the earlier of year 1S of operations Is complete or full repayment of the DDF. Thereafter, the surplus cash split shall be 50% to Borrower and 50% to Residual Receipt lender(s). Asa condition of this approval, the Borrower must provide evidence that the DDF repayment structure is required pursuant to the Limited Partnership Agreement (LPA). In addition, the owner must provide evidence of investor and all residual receipt lender(s) approvals of the total deferred developer's fee structure and residual receipt split. Residual receipt lenders must also agree to defer the payments on their loans. • Any default as to any loan by the Agency for the Development shall constitute a default under all other loans by the Agency for the Development. ■ Receipt of flood certification verifying Flood Zone X designation will be required prior to construction loan closing. ■ Subject to final HCD IIG affordability restrictions that are compatible with the MIP program requirements. ■ Subject to CalHFA's approval of the Residential Parking Deck Easement Agreement between Fancher Creek Town Center, LLC and FCTC Family, LP for the parking structure. ■ Subject to CaIHFA approval of the Development Agreement recorded July 30, 2010 and the Declaration of Restrictive Covenants for the Development and Operation of Housing recorded on February 2, 2016. • In the event of cost savings at permanent loan conversion, 100% of cost savings will be used to reduce the supplemental portion of the MIP loan amount first (may be shared with other residual receipt lenders on a pro rata basis, If applicable). Once the supplemental portion of the MIP loan amount is fully reduced, the remaining cost savings will be split 50% between reducing the original MIP loan amount (or may be shared with other residual receipt lenders on a pro rata basis, if applicable) and reducing the Deferred Developer Fee. 11. 1 Staff Conclusion/Recommendation: The Multifamily Lending Division supports approval of the described financing in the amount(s) requested, subject to the above proposed terms and conditions. As noted earlier, the supplemental MIP subsidy loan of $600,000 was not part of the Initial Commitment approved by the SLC, and hence approval Is being sought for this financing through the subject Final Commitment Approval. AFFORDABILITY 1 12. 1 CaIHFA Affordability (Occupancy and Rent) Restrictions I CaIHFA Permanent Financing Regulatory Agreement will restrict a minimum of 30% of the total units (36 units) at or w 60%AMI and an additional 10% of the total units (12 units) at or below 50% of AMI for 55 years. CaIHFA MIP Subsidy Regulatory Agreement requires 20% of total units (12 units) be restricted at or below 30% of AMI, �a of total units (24 units) be restricted at or below 50% of AMI,10% of total units (12 units) be restricted between 60% and K. of AMI be restricted with a minimum average of 70% of AMI for a term of 55 years. The rents for the 60%to 80% tranche I be determined by the minimum income limit of 70% of AMI, not to exceed 80% of AMI. The remaining 71 restricted is will be restricted at or below 120% of AMI. For underwriting purposes, the initial rents at permanent loan closing must no less than the underwriting rent levels outlined on the "Unit Mix and Rent Summary" enclosed as part of the project's ff report package. The CaIHFA permanent loan agreement will require minimum underwriting rent levels as outlined in Rent Limit Summary Table Below. In addition, the Project will be restricted by the following jurisdictions as described below: Page 8 of 13 Multifamily Staff Report Version Date: April 2021 �.i" ;soo-,•ri for 3-1, i' • The City of Fresno - HOME will restrict 11 units at or below 80% of AMI for a term of 55 years. a The City of Fresno — CDBG will restrict 7 units at or below 60% of AMI for a term of 55 years. • The City of Fresno — PLHA will restrict 11 units at or below 80% of AMI for a term of 55 years • The California Department of Housing and Community Development (HCD) is expected to restrict 119 units at or below 80% AMI under the existing Infill Infrastructure Grant Program (HCD IIG) agreement recorded 2/2/2016, which aligns with the proposed affordability restrictions as outlined below. This affordability restriction is a result of HCD IIG funding that was previously used to construct the parking structure. Rent Limit SuM to Table AMI Total - Studio 1 bdrm 2-bdrnn 34)drm 4-Il % of Total 12 - 6 3 3 10.0% 4 i{d -.• . 0 - - - 010% ,l8fi 24 - 12 6 6 20.0% 71 - 35 18 18 59.2% „ft ,. .,. 12 - 6 3 3 10 0% 0.0% :13 fi 0 - - - - O.m. + 0 - - - 0.0% Manager's Unit 1 - - 1 - - 0.8% Total 120 0 59 31 30 0 100.0% average affordability restriction is 55.97% of AMI based on 119 TCAC-restricted units. Recordation Regulatory Priority of Source Recorded Term of Agrmt Document (years) Number of Units Restricted For Each AMI Units Ca1HFA ist--s.-:- „-..,..I - . Bond/RiakShare 55Oi,�:,$:= !) i2 ,3I3: -0�� .aa..- ..--0�_ 48 40% n s^ ° •• CalHFAMIP 55 :`f-24r:+OM:(ii'224_::-:0,d, A2i3 71 119 99% Tax Credit 3� 55 °u12 i � 12 I li '8 d2 ','0 ' ,� y .� 119 99% City of Fresno - 41" k t>:•.-�-^zT '' ' 1 HOME 55 �6:`0 City of Fresno - CW313 55 0' ''0- 7 6% City of Fresno - 6'" -..0;'' "„ r• i " PLHA 55 HCD 4113 7u' 55 , "Q_f Q „' .. 'Q Q • s - 7 i8 -- 0.. 119 1 94% 13. Geocoder Information Central City: Yes Underserved: No Low/Mod Census Tract: Low Below Poverty line: 51.12% Minority Census Tract: 84.89% Rural Area: No FINANCIAL ANALYSIS SUMMARY 14. Capitalized Reserves: Replacement Reserves (RR): N/A Page 9 of 13 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 Operating Expense Reserve $548,535 ~ (DER), OER amount is sized based on 6 months of operating expenses, first lien debt service, and annual replacement reserves deposits. CaIHFA will hold this reserve for the term of the CaIHFA permanent loan and in the event the OER is drawn down during the term of the loan, the OER must be replenished over a 12-month period to the original level. Y Transitional Operating Reserve j N/A (TOR): 15. Cash Flow Analysis V Year DSCR: 1.15 Project -Based Subsidy Term: N/A End Year DSCR: 1.45 Annual Replacement Reserve Per Unit: $300/unit Residential Vacancy Rate: 5% Rental Income Inflation Rate: 2.50% Subsidy Vacancy Rate: N/A Subsidy Income Inflation Rate: N/A Non-residential Vacancy Rate: N/A Project Expenses Inflation Rate:1 3.50% Property Tax Inflation Rate: 11.25% 16. Loan Security The CaIHFA loan(s) will be secured by a first lien deed of trust against the above described Project site and improvements. 17. 1 Balloon Exit Analysis Applicable: ® Yes [] No _ 4 The exit analysis assumes 2% Increase to the appraisal cap rate (resulting in 7.5%) and a 3% Increase of the underwriting interest rate at loan maturity (resulting in 9.65%). Based on these assumptions, the Project will have the ability to fully repay the balance of the Agency's permanent first lien loan but may only have the ability to repay a portion of the Agency's supplemental MIP in the estimated amounts of $145,206, leaving an outstanding balance of $789,574 (principal and accrued interest) plus the full amount of the original MIP subsidy loan in the estimated amount of $4,440,207 (principal and accrued interest). Total combined estimated MIP balance at refinance is $5,229,781. This Is expected by CaIHFA given the requirement that the MIP loan be co -terminus with the permanent first mortgage. The primary source of repayment for both the first mortgage and the MIP subsidy loan Is refinance of the project's first mortgage. To the extent such a refinance is insufficient to fully repay the MIP loan, it is contemplated that any remaining balance will be paid from a general partner contribution as part of the final close out of partnership obligations to allow re -syndication. APPRAISAL AND MARKET ANALYSIS 19. 1 Appraisal Review Dated:7/14/2022 • The Appraisal dated 8/25/2022, prepared by Integral Realty Resources, values the land at $1,920,000. • The cap rate of 5.5% and projected $530,355 of net operating income, which is generally aligned with the proposed Project net operating income, were used to determine the appraised value of the subject site. • The proposed operating expense is consistent with and is reasonable based on the appraisal report. • The as -restricted stabilized value is $9,640,000, which results in the Agency's permanent first lien loan to value (LTV) of 66%. The combined LTV, including MIP subsidy loan is 102%. ■ The capture rate of 0.9% is slightly lower than the market study. The appraisal projects that all units will be pre - leased before the completion of construction. • The appraisal report indicates an unemployment rate of approximately 6.9%, which is slightly lower than the market study that was completed earlier in February 2022. I ! Market Study:I M.E. Shay & Co. I Dated: 2/4/2022 I • The Primary Market Area ("PMA") is approximately 79 square miles In the southeast section of Fresno County, California. It includes 42 Census Tracts and a few small CPDs (population of 58,000). The Secondary Market Area ("SMA") is Fresno County (population of 310,842). Page 10 of 13 Multifamily Staff Report Version Date: April 202 L SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N SLC Date: 09/07/2022 The general population in the PMA is anticipated to increase by 0.5% per year over the next 5 years. Unemployment in the SMA has dropped from 15.5% in March 2020 to 8.5% In May 2021 and the Employment Development Department projects there will be 43,200 new jobs created by 2024. Median income In the PMA is $45,739, about 20% below the SMA ($57,143). Local Market Area Analysis • Supply: o There are currently 16 affordable project(s) in Fresno and they are 100% occupied with long wait lists. o There are 0 multi -family residential projects currently in planning or development in the City of Fresno. • Demand/Absorption: o The project will need to capture 1.6% of the total demand for family units In the PMA and the penetration rate is 15.7%. The affordable units are anticipated to lease up at a rate of 15-20 units per month and reach stabilized occupancy within 5-7 months of opening (assuming 20% preleased). DEVELOPMENT SUMMARY 19. Site Description Requires Flood Insurance: ❑ Yes ® No • The site is part of a larger 35.33-acre open-air parcel on North Salma Avenue in the City of Fresno, Fresno County. • The site Is currently vacant, with level topography at street grade, measuring approximately 2.60-acres and Is generally irregular in shape. • The site is zoned CR+OS with permitted multifamily residential use. • The subject is located in Flood Zone X (shaded) which indicates a recent decreased (designation change by FEMA) from Flood Zone AD to X, which Is an area outside of 500 year floodplain. Therefore, the Project will not be subject to flood insurance. Flood certification verifying Flood Zone X designation will be required prior to construction loan closing. 20. Form of Site Control & Expiration Date The site was conveyed between related parties, from Fancher Creek Town Center, LLC to FCTC Family, LP, on August 5, 2022, In the amount of $2,400,000. The sales price was determined by the value of the property from an appraisal prepared by James G. Palmer Appraisals Inc. dated May 10, 2021 and purchased with City of Fresno loan funds. The last unrelated entity land transfer between Fancher Creek Town Center, LLC and Edward M. Kashian and Jeanne C. Kashian was completed in April 2003 for $905,000. For purposes of underwriting, the proposed acquisition budget/cost is reasonable given that 1) the unrelated land transfer occurred more than 10 years ago, 2) the land purchase transfer between related entities on August 5, 2022, was supported by an appraisal dated May 10, 2021, and 3) the land purchase transfer was approved and funded by the City's loan. The site is governed by a development agreement executed by the City of Fresno and Fancher Creek Properties LLC dated July 21, 2010 (and extends for 20 years) and a Declaration of Restrictive Covenants for the Developer and Operation of Housing recorded on February 2, 2016. 21. Current Ownership Entity of Record Title is currently vested in FCTC Family, LP, the Borrower, as the fee owner. 22. Envlronmental Review Findings Dated: 1/7/2022 A Phase I Environmental Site Assessment performed by Technicon Engineering Services, Inc, dated January 27, 2022, revealed no evidence of recognized environmental conditions, so no additional investigation was recommended. 23. Seismic Requires Earthquake Insurance: ❑ Yes ® No This new Project will be built to State and City of Fresno Building Codes so no seismic review is required. 24. Relocation Requires Relocation: ❑ Yes ® Not Applicable The Project is new construction on vacant land, therefore, relocation is not applicable. Page 11 of 13 Multifamily Staff Report Version Date: %pril 2021 SLC Final Staff Report for: Sarah's Court Apartments CaIHFA Project Number: 22-013-A/X/N PROJECT DETAILS SLC Date:09/07/2022 25. 1 Residential Areas: Residential Square Footage: 97,050 Residential Units per Acre: 46.15 Community Area Sq. Ftg: 22,039 Total Parking Spaces: 120 Supportive Service Areas: 0 Total Building Sq. Footage: 119,089 26. Mixed -Use Project: ❑ Yes ® No Non -Residential Sq. Footage: I N/A Number of Lease Spaces: N/A Master Lease: ❑ Yes ® No Number of Parking Spaces: N/A 27. Construction Type: The subject will consist of four, three-story residential buildings and one central community building. The building exteriors will be plaster with reveals and accent features consisting of stone, wood, and metal. 28. Construction/Rehab Scope Requires Demolition: ❑ Yes ® No • The subject site Is new construction. • The contract will be structured as a Guaranteed Maximum Price (GMP) contract with an approximate 11% for builder overhead, profit, and general requirements, which aligns with TCAC's allowable limit. TCAC's allowable limit is 14%. 29. Construction Budget Comments: • CaIHFA will require an Independent review of the costs by a 3rd Party consultant prior to construction loan closing. • The developer has established cost containment strategies, which are outlined in Section 5 above. ADDITIONAL DEVELOPMENT/ PROJECT TEAM INFORMATION Borrower Affiliated Entities • Managing General Partner (MGP): Community Revitalization and Development Corporation, a California limited liability company; 0.005% Interest • Administrative General Partner (AGP): Dominus Consortium Family LLC; 0.005% interest o Member: ESSAYONS, a Limited Partnership, 50% Interest o Member: NEGOCIOS DE FAMILIA, LLC, 50% interest ■ Investor Limited Partner: WNC & Associates, Inc.; 99.99% interest 31. Developer/Sponsor • Dominus Consortium ("AGP") and Community Revitalization and Development Corporation (CRDC) ("MGP") together serve as the general partner of this project. • CRDC has extensive experience developing affordable housing through mixed -financing including LIHTC. They have developed or assisted in the development of over 4,000 affordable housing units. They served as general partner on 5 LIHTC projects between 2003 to 2008, totaling 711 units. CRDC has completed three affordable projects that are in the CaIHFA portfolio (combined -168 affordable units). Two of the projects (Susanville Garden Apartments and Market Center) are operating as expected, the other (Bel-Vue Apartments) is experiencing challenges in leasing the existing commercial space. The Borrower for Bel Vue Apartments (22 total units) is proposing to convert the existing commercial space to 8 additional residential market rate units and is currently in the process of seeking approvals from CaIHFA, soft lender, locality, and investor. Per the Borrower's counsel, there are no other material performance issues with CRDC's portfolio. ■ Dominus Consortium consist of 2 members (Essayons, a Limited Partnership and Negocios De Familia, LLC) with a range of development experience including construction of multifamily rental housing. Lance-Kashian & Company is the Managing Member of one of the members and will serve as the developer of the project and is an affiliate of Dominus Consortium. Dominus Consortium Family LLC, has two projects in the pipeline within the CaIHFA portfolio, the subject property and Brand Haven Senior (combined — 300 affordable units). Page 12 of 13 Multifamily Staff Report Version Date: April2021 SLC Final Staff Report for: Sarah's Court Apartments CalHFA Project Number: 22-013-A/X/N SLC Date:09/07/2022 • An individual in Pentori, GP for one of the AGP, intends to execute a personal guaranty for the construction completion and to fund operating deficits for a period after permanent loan conversion. 32. 1 Management Agent The Project will be managed by GSF Properties, Inc., which has extensive experience in managing similar affordable housing projects in the area and manages four projects in CaIHFA's portfolio—Ashwood Village, Regency Court Seniors — Salinas, San Luis Bay (Nipomo), and Sequoia Knolls. All projects are performing as expected. 33. Service Provider Required by TCAC or other funding source? ® Yes ❑ No LifeSTEPS will provide supportive services for the residents through a 15-year contract that is funded by property operations in a budget amount of $21,200 per annual. The provided services will include instructor led adult education classes for health and wellness/skill building including financial literacy, computer training, home -buyer education, GED, resume building ESL, nutrition, exercise, health information/awareness, art, parenting, on -site food cultivation and preparation and smoking cessation for no less than 84 hours per year. They will also provide individualized health and wellness services and programs such as crisis intervention, practical counseling and emotional support, cleanliness and hygiene assessment, eviction prevention, government and insurance entitlements and physical and mental health assessment for no less than 126 hours per year. 34. Contractor Experienced with CaIHFA? ® Yes ❑ No The general contractor (GC) is West Coast Community Builders, which has extensive experience In constructing similar affordable housing projects in California and is familiar with CaIHFA. The GC and the developer have worked on one project that has been completed and are working on one project that is in development stage. 35. Architect Experienced with CaIHFA? ® Yes ❑ No The architect is Scott Beck Architect, which has extensive experience in designing and managing similar affordable housing projects in California through the locality's building permit process and is familiar with CaIHFA. The architect and the developer have worked on 127 tenant improvement projects and 17 shell buildings that have been completed and is working on 5 tenant improvement projects and 21 shell buildings that are in development stage. 36. 1 Local Review via Locality Contribution Letter The locality, City of Fresno, returned the local contribution letter stating they strongly support the project. EXHIBITS: Detailed Financial Analysis and applicable Term Sheets Page 13 of 13 Multifamily Staff Report Version Date: April 2021 PROJECT utsItlon, Rehab, Construction S Pairmanent Loans Proact Number 22 013•Af)tIH Project Full Name Sarah's Court Apartments Borrower Name: FCTC Family, LP Project Address 200 N. Salma Avenue Managing GP: Community Revitalization and Development Project City Fresno Developer Name: Dominus Consortium Family LLC Project County Fresno Investor Name: WNC & Associates Project Zip Code 93727 Prop Management: GSF Propertles, Inc. Tax Credits: 4 Project Type: Permanent Loan Only Total Land Area (acres): 2.60 Tenancy/Occupancy: Individuals/Families Residential Square Footage: 97,050 Total Residential Units: 120 Residential Units Per Acre: 46.15 Total Number of Buildings: 5 Number of Stories: 3 Covered Parking Spaces: 0 Unit Style: Flat Total Parking Spaces: 120 Elevators: Loan Loan Amort. Starting Acq/Construction/Rehab Financing CaIHFA Conduit -Banner Bank TIE Amount Loan Term Period M Fees (Mo.) (Yr.) 18,149.352 1.000% 30 — Interest Rate 4.730°% Ca1HFA Conduit .8annor Bank TIE Syppieman 438,022 1.000°% 30 — 4.730% CeIHFA Conduit -Benner Bank Taxable 5,667,947 1.000% 30 — 4.980°% City of Fresno - HOME 3.169.034 — 660 — 3.000% City of Fresno - CL)BG 2,480,000 _ 860 — 3.000% CI . of Fresno - PLHA 530,966 — 660 3.000% 0 aferred Developer Fee 3.104,419 Deferred Reserves 620,498 Construct/Rehab Net Oper. Inc. 293,000 Investor Ecuity Contribution 1.873.906 Total 39-227.142 Permanent Financing Perm Loan Loan Amort. Amount Loan Term Period 6,364.868 f 1.000°% 17 40 Starting Interest 6.6500 10113 2.850,000 1 1.000% 17 NA 3.000% Supplemental MIP 600,000 1 1.000% 17 N/A 3.000% City of Fresno - HOME 3.169.034 — 55 - 3.000% Clty of Fresno - CDBG 2,480,000 — 55 3.000% City of Fresno - PLHA 530.966 — 55 — 3.000% ❑ eferred Developer Fees 1.920.798 Construcl/Rshab Not O er. Inc. 293,000 Investor Equity Contributions 18.739.059 Total: 36,947,723 Appraliq4valuss''Upon Appraisal Date: 8/25122 Completion of RehablConstruction Capitalization Rate: 5.50% Investment Value (S) 34,060.000 Restricted Value (;) 9,640,000 ConstructlRehab LTC N/A CaIHFA Permanent Loan to Cost 17% Construct/Rehab LTV N/A CaIHFA let Permanent Loan to Value 56% Loan Cambined CaIHFA Perm Loan to Value 102' Co.nditions &Comments Additional CunntructionlRohab Loan Terms, Payment/Performance Bond Required Completion Guarantee Letter of Credit Required Permanent Lunn Operating Expense Reserve Deposit $548,535 Cash Initial Replacement Reserve Deposit $0 Cash Annual Replacement Reserve Per Unit $300 Cash Date Prepared 8111122 Son Ior Staff Date: 9r7122 REVIEWED Name: Title- LLL Date:.'' •i me__ � UNIT WX AND RENT SUMMARY Final Corrimitmeni Sarah's Court Apartments Project Number 22.013-AWN Und Type of Style Number of Bedrooms Number of Baths Average Slze 18q,, Ft. Number of Units Est. No. of Tenants Flat 1 1 610 60 90 Flat 2 1 875 30 90 Flat 3 2 1,140 30 136 - 0 0 a 120 1 315 Agency NUMBER OF • a BY EACH AGENCY Number of UrMs Restrfr wd For AM ACate ry 33% 40% 50% 60% 70% 80% 120% A BondfMakShare •0 0, 2- 36.•.-,. O. 0 0 _ CaIHFAMiP ' _ 12 0 - "24' ",-_, D 12 i . .0: Ti Tax Credit 124 470 _12 - .. F. _ .63. _...... '12 of Fresno • HDINE 0 : ` 0. 3 - 0- 0 8"" ' ", . 0 of Fresno • CDBG ---•;0..:.-... _. .. 0 ".0"'7 —7 .0 D 4. of Fresno-P. A .0 .0 3 ! 0 0, 6 0' He IIG p 0 0 0 0 i19 Unit Type •COMPARISON OF Restricting on, . c 14 of AreaI Average Restricted Median I Number Income of Units Rents Average Market Rents Average Monthly Savingm % of Market Rents Unit Rent CTCAC say, ri :rr CTCAC 80% CTCAC 701/ _ HCD 100% - CTCAC 50% CTCAC 80% O%. 12 - $665 $835 44% 0% 35 $811 $689 540/6 0% 6 $957 $543 64°I 00% - 4CTCAC 0% 0% i ir 0% 6 $786 77ir $1.014 44% 0% 18 $962 $838 53% 0°/ 3 $1.137 $663 63% HCD 100% CTCAC 80% - CTCAC CTCAC 15016 1 6 $895 51,105 45% CTCACLea 1$ $1.097 $903 55% CTCAC 3 $1,300 $700 65% HCD CTCAC CTCAC CTCAC Say. CTCAC 60% CTCAC 70 HCD 100% CTCAC 60% CTCAC 60 % _ CTCAC 50% CTCAC 60% CTCAC 7011, HCD 100% - CTCAC I 60% CTCAC 80% - Date Prepared: 8111122 Senior Staff Date: ON= SOURCES 6 USES OF FUNDS Final Commitment Sarah's Court Apartments Pro ect Number 22-013-A/X/N CONSTIREHAS PERMANENT TOTAL PROJECT SOURCES OF FUNDS SOURCES OF FUNDS $ SOURCES 5) PER UNIT (11 % CaIHFA Conduit -Banner Bank WE 18,149.352 �t 0.0% CaIHFAConduit-Banner Bank TIE Supplemental 438,022 / 0.0% CaIHFA Conduit -Banner Bank Taxable 5,667.947 0.0% City of Fresno - HOME 3,169,034 0.0% City of Fresno - CDBG 2,480,000 '- 0.0% City of Fresno - PLHA 530,966 0.0% Deferred Reserves 520,496 0.0% ConstructlRehab Net Oper. Inc. 293,000 0.0% Deferred Developer Fee 3,104,419 D.()% Developer Equity Contribution �3,z� 0.0% 0.0% Investor Equity Contdbutlon 1,873.05 „�'1 Perm 6,364,S86 6;364,868 53,041 17.2% MIP 2,850,000 2,850,000 23,750 7.7% Supplemental MIP 800,000 600,000 5,000 1.6% - 0.0% 0.0% l 0.0% City of Fresno - HOME 3,169,034 3,169.034 26,409 8.6% City of Fresno -CDBG 2,480,000 2,480,000 20,667 6.7% Clty of Fresno - PLHA 530,966 530,966 4,425 1.4 % _ - 0.0% 0.0% 0.0% Construct/Rehab Net Oper. Inc. 293,000 293,000 2.442 0.8% Deferred Developer Fees !, 1,920,798 1,920.798 16.007 6.2% Developer Equity Contribution �+fi-� - - 0.0% lnyeslor EaWly Conbibutioris 4^Ai:a3�L 18.739.059 18.739059 156159 50.7% O 9 R OF FUND 1 36,227,1•2 35,947,723 1 36,947,723 307,89E 100.0% TOTAL USES OF FUNDS (BELO 36,227,142 1 35.947,723 1 36,947.723 307.098 100.0°% FUNDING SURPLUS (DEFICIT) 0 0) I 0 CONST/REHAB PERMANENT TOTAL PROJECT USES OF FUNDS USES OF FUNDS $ USES (_) PER UNITS % ONSTRUCTION/REHAB SOURCES OF FUNDS 36,227,142 _ ) ACOUISM-014 COSTA Lesser of Lend Cost orAppraised Value (purchasi 2,400,000 - 2,400,000 20,000 6.6% Demolition Costs - 0.0% Legal & Other Closing Costs - 0.0% Escrow & other closing costs - - 0.0% Verifiable Carrying Costs - - 0.0% Exsting Improvements Value - - 0.0% Delinquent Taxea Paid @ Closing - - 0.0% CalHFA Yleld Maintenance Paid @ Closing • - - 0.0% Existing Replacement Reserve 0.0% Broker Fees Paid to Related Party 0.0% Other (Specify) - 0.0% Other (Specify) - 0.0% TOTAL ACQUISITION COSTS 2,400,000 2.400.000 20,000 6.5% CQ1j jMUCTIONIREHA0 COSTS Ofisite Improvements - 0.0% Environmental Remedlatlon (Hard Costs) - - 0.0% Site Work (Hard Cost) 1.504.385 1,504,385 12,537 4.1% Structures (Hard Cast) 18,696,025 18,696,025 155,800 50.6% General Requirements 1,1D4,000 1.104,000 9,200 3.0% Contractor Overhead - - - 0.0% Contractor Profit 1,147.704 1.147,704 9,564 3.1% Contractor Bond 251,000 251,000 2,092 0.7% Contractor LlabllityInsurance 168,500 168.500 1,404 0.5% Personal Properly - 0.0% HVAC/Resident Damage ' 0.0% TOTAL CONSTRUCTIREHAB COSTS 22,871,614 22,871.614 190.697 61.9% Date Prepared: 9/812022 1 of 4 SOURCES & USES OF FUNDS Final Commitment Sarah's CourMpartments Pro ect Number 22-013-AWN USES OF FUNDS CONSTIREHAB f PERMANENT f TOTAL PROJECT USES OF FUNDS USES f PER UNIT f •% ffl- CATION COSTS Relocation Expense - - 0.0% Relocation Compliance Monitoring Other (Specify) - 0.0% TOTAL RELOCATION COSTS ARCHITECTURAL FEES Design 906.000 905,000 7,542 2.4% Supervision 0.0% TOTAL ARCHITECTURAL FEES 90S.000 205,000 7,642 2.4% $SPRYE &MINEERIN4 FEES Engineering 175.000 175.000 1,45E 0.5% Supervision, - - 0.0% ALTA Land Survey 0.0% TOTAL SURVEY & ENGINEERING FEES 175,000 175,000 1,45E 0.5% CONTINGENCY RESERVES Hard Cost Contingency Reserve 1,635,922 1,635,922 13,533 4.4% Soft Cost Contingency Reserve 200.000 200.000 1,667 0.5% TOTAL CONTINGENCY RESERVES 1,835,922 1,835,922 15,299 5.0% CON5TRUMrREHAB PE•3iOD COSTS Lazn lntaresE Resorvo CaIHFAconduit-BannerBankT/E 1,484.961 1,464,961 12,208 0.0396496 CaIHFA Conduit -Banner Bank TIE Suppl - - - 0 CaIHFA Conduit -Banner Bank Taxable 0.0°% City of Fresno - HOME - 0.0% City of Fresno - CDBG - 0.0% City of Fresno - PLHA 0.0% Loan Fees CaIHFA Conduit -Banner Bank TIE 181,494 181,494 1,612 0.5% CaIHFA Conduit -Banner Bank T/E Suppli 4.380 4,380 37 0.0% CaIHFA Conduit -Banner Bank Taxable 56,679 56,679 472 0.2% City of Fresno - HOME - - - 0.0% City of Fresno - COB - 0.0°% City of Fresno - PLHA 0.0°% Other Const/Rehab Period Costs Deficit Const/Reheb NOI (Net Operating Ir 0.0% Credit Enhancement & Application Fees - 0.0°% Owner Paid Bonds/Insurance 0.0% CaIHFA Inapecdon Fees 15,000 15.000 125 0.0% Real Estate Taxes During Rehab 120,000 120,000 1,000 0.3% Completion Guaranty Fee - - - 0.0°% Wage Monitoring Fee (Davis Bacon, PrevE - - 0.0% Insurance During Rehab 50.000 50,000 417 0.1% Title & Recording Fees 40.000 - 40,000 333 0.1% Construction Management & Testing 0.0% Predevelopment Interest Expense - - - 0.0% Bond Issuer Fee 39,628 39.628 330 0.1% 0.0% TOTAL CONSTIREHAB PERIOD COSTS 1.972,142 1,972,142 18,435 6.3% Date Prepared: 9/8/2022 2 of 4 SOURCES & USES OF FUNDS Final Commitment Sarah's Court Apartments Proect Number 22-013-AWN CONST/REHAB PERMANENT TOTAL PROJECT USES OF FUNDS USES OF FUNDS $ = USES ; PER UNIT i V, PERMANENYWAN COSTS Loan Foes CaIHFA AppllceOon Fee 0.0% Penn 35.395 28,254 03,649 530 0.2% MIP 14,250 14,250 28,500 238 0.1% Supplemental MIP 4,958 1,042 6,000 50 0.0% _ 0.0% 0.0 % - 0.0% City of Fresno - HOME 0.0% City of Fresno -CDBG - - 0.0% Perm Loan Funding Fee 110.000 110.000 917 0.3 % Credit Enhancement & Application Fees 0.0% Title & Recording (closing costs) 0.01/1 Year 1 - Taxes & Special Assessments and Insur 0.0% CeIHFA Fees 1,000 1.000 8 0.0% Other - budget contingency prior to perm conversl - - 0.0% Other (Cost of Issuance, Credit Enhancement. 00 15.412 0 15.412 128 0.0% TOTAL PERMANENT LOAN COSTS 70,015 1S4,546 224,5611 1.871 0.6% LEGAL FEES CeIHFA Construction/Rehab Loan Legal Fees 17,500 17.500 35,000 292 0.1 % Other Construction/Rehab Loan Legal Fees - - 0.0% CaIHFA Permanent Loan Legal Fees - 0.0% Other Permanent Loan Legal Fees - 0.0% Sponsor Legal Fees 0.0% Organizational Legal Fees 0.0% Syndication Legal Fees - 0.0% Borrower Legal Fee 25,000 25,000 208 0A% CeIHFA Bond Counsel - 0.0% TOTAL LEGAL FEE5 42,500 17,500 60.000 5a0 0.2% OPERATING RESERVES Operating Expense Reserve Deposit 548,535 548,535 4,571 1.5% Initial Replacement Reserve Deposit - 0.0% Transition Operating Reserve Deposit - 0.0% Rent -Up Reserve Deposit 0.0% HOME Program Replacement Reserve 0.0% Investor Required Reserve 0.0% Other(Specify) 0.cl% TOTAL OPERATING RESERVES 0 545,535 548.535 4,671 1.5% REPORTS & STUDIES Appraisal Fee 15,000 15,000 125 0.0% Market Study Fee 6,500 6,500 54 0.0% Physical Needs Assessment Fee - - 0.0% Environmental Site Assessment Reports 15,000 15,000 125 0.0% HUD Risk Share Environmental / NEPA Review I - - - 0.0% CeIHFA Earthquake Waiver Review Fee 0.0% Relocation Consultant 0.0% Soils Reports 0.0% Acousticat Reports - 0.0% Termite/Dry Rot - 0.0% Consutiant/Processing Agent - 0.0% Other (Specify) I - I a.0 % TOTAL REPORTS & STUDIES 36,509 3G,500 304 0.1 14 Date Prepared: 9/8/2022 3 o(4 SOURCES & USES OF FUNDS Final Commitment Sarah's Court Apartments Project Number 22.013-A[M USES OF FUNDS CONSTIREHAS S PERMANENT S TOTAL, PROJECT USES OF FUN135 USES (i) PER UNIT S1 % OTHER COSTS TCAC Application, Alloratlon & Monitor Fees 57,622 57,622 480 0.2% COLAC Fees 6,508 6.506 54 0.0% Local Permits & Fees 413,780 413,780 3.448 1.1% Local Impact Fees 1,275,641 1.275,541 10.630 3.5% Other Local Fees 0.0% Syndlcator/Investor Fees & Expenses - - 0.0% Furnishings 60,000 60,000 500 0.2% Accounting & Audits 25.000 25,000 208 0.1% Advertising & Markeflng Expenses 60,000 60.000 500 0.2% Financial Consulting 120,000 - 120,000 1.000 0.3% Interior Design 75,000 75,000 625 0.2% HUD Risk Share Insurance (First Year Prepaid) - 0.0% Other (Specify) - 0.0% Other (Specify) D.0% TOTAL OTHER COSTS 2,093,449 093,449 17.445 5.7% SUBTOTAL PROJECT COSTS 32.402.142 36,947,723 33,122,723 276.023 89.E DEVELOPER F-LzES_6 COSTS Developer Fees, Overhead & Profit 3,825,000 3,825.000 31,875 10.4% Consultant Processing Agent - 0.0% Project Administration 0.0% Syndicator Consultant Fees - 0.0% Guarantee Fees - D.0% Construction Oversight & Management 0.0% Other Adminstrallon Fees - - 010 % Other (Specify) correction to balance - - 0.0% CASH EQUITY OUT TO DEVELOPER 0.0% TOTAL DEVELOPER FEES & COSTS 3,825,000 3,82'i,000 31,875 10.4E TOTAL PROJECT COSTS 36,227,142 1 36,947,723 1 36,947,723 307898 f00.GY Date Prepared: 9/8/2022 4 of 4 PROJ ECTE • IN ITIA L AN N UAL R EN TAL ■ P ERATIDG ET Final Commitment Sarah's Court Apartments Project Number 22-013- IIX�N INCOME AMOUNT PER UNIT % Rental Income '�th � - ?• � _ - -- %-�^�`• $ 1,218,840 $� 10.167 104.634% Restricted Unit Rents Unrestricted Unit Rents - 0.00% Commercial Rents - - 0.00% f Rental & Operating Subsidies - - 0.00% Project Based Rental Subsidy Other Project Based Subsidy - - 0.00% Income during renovations - 0.00% Other Subsidy (Specify) - 0.00% Other Income 7.201 60 0.62% Laundry Incame/Vending Income Parking & Storage Income - - 0.00% Miscelfanecus Income - - 0.00% GROSS POTENTIAL INCOME (GPQ S 1,226,041 $ 10.217 105.26% Less: Vacancy Loss $ 61,302 $ 511 5.26% EFFECTIVE GROSS INCOME (EGI S 1 194 739 $ 10,7281 100,00°% OPERATING EXPENSES AMOUNT PER UNIT % Administrative Expenses $ 116,560 $ 971 $ 0 Management Fee 70,461 587 6.05% Social Programs & Services 21,200 177 1.82% Utilities 145,000 1.208 12.45% Operating & Maintenance 169.400 1,412 14.54% Ground Lease Payments 0.00% Ca1HFA Monitoring Fee - 0.00% Other Monitoring Fees - 0.00% Real Estate Taxes 600 5 0.05% Other Taxes & Insurance 75,000 625 6.44% Assisted Living/Board & Care - - 0.00% SUBTOTAL OPERATING EXPENSES $ 598,221 S 4,985 51.36■/. Replacement Reserve $ 43,500 $ 363 3.73% TOTAL OPERATING EXPENSES $ 641,721 $ 5,348 65.10% NET OPERATING INCOME (NOI) $ 523,018 $ 4.358 44.20% DEBT SERVICE PAYMENTS AMOUNT PER UNIT % Perm $ 455,349 $ 3,795 39.09% Supplemental MIP $ - - 0.00% $ - 0.00% $ - 0.00% $ - 0.00% City of Fresno - HOME $ - - 0.00% $ 0.00% MIP Annual Fee (applicable for MIP only deals) $ - 0.00% TOTAL DEBT SERVICE & OTHER PAYMENTS S 455,349 $ 3,795 39.09% EXCESS AFTER DEBT SERVICE & MONITORING FEES $ 67,669 I S DEBT SERVICE COVERAGE RATIO (OSCR) 1.15 to 1 Date: 8111122 Senior Staff Date: 09/07/22 Fa10B+YwwtT a a v w P..u+3W UN111eM. 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P.y�vh n,Je;am n,iN,tm u,n49ea uszs.e9e MIXED -INCOME LOAN dal !A- PROGRAM (2022) C a 0 California Housing Finance Agency The California Housing Finance Agency ("CaIHFA" or "Agency") Mixed -Income Program ("MIP") provides competitive, long-term, subordinate financing for new construction multifamily housing projects restricting units (tax credit or CaIHFA) between 30% and 120% of county Area Median Income ("AMI"). The MIP must be paired with CaIHFA's Conduit Bond Issuance Program and a CaIHFA Mixed -Income Qualified Construction Lender (defined below), Additionally, the program must be paired with Ca]HFA's Permanent Loan product. The MIP resources will take the form of a subordinate loan to incentivize newly developed multifamily housing projects that serve a range of extremely low to moderate income renters. Eligible projects must create newly constructed regulated units that meet the income and occupancy requirements reflected below. APPLICATION- Sponsors/developers must submit a complete application package which includes all items listed on the application, the application addendum and the checklist. Incomplete application packages will not be considered. The application and checklist can be found at+�ww,calhja_�a.ggv/multjiamtly/�xedincomq/i,gd_0e. h,vey If the sponsor/developer is not able to meet the readiness timeline referenced below, MIP funds may be rescinded and reallocated. AVAILABILITY Available to for -profit, nonprofit, and public agency sponsors. Development teams must meet CaIHFA experience requirements, as defined in the CaIHFA Development Team Qualifications section below. USES: MIP subsidy loans must be used in; conjunction with CaIHFA's Conduit Bond Issuance Program and a construction loan from a CaIHFA Mixed -Income Qualified Construction Lender. MIP subsidy loans must also be used in conjunction with CaIHFA's permanent first -lien mortgage financing. CaIHFA Mixed -Income Qualified Construction Lender is defined in that section below. FINANCING STRUCTURE: Projects accessing the MIP subsidy loan funds must be structured as one of the following: Tax-exempt bond and 4% tax credit project where at least 51% of the units in the project must be tax - credit -financed OR Qualified mixed -income project through income averaging pursuant to Internal Revenue Code Section 42 (9)(1)(C)• Kevin Brown, Housing Finance Specialist Jennifer Beardwoodr Housing Finance Specialist 500 Capitol Mall, Suite 1400, MS-990 500 Capitol Mall, Suite 1400, MS-990 Sacramento, CA 95814 Sacramento, CA 95814 916.326.8808 916.326.8805 kbrown@calhfa.ca.gov jbeardwood®calhfa.ca.gov 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1 916.326.6800 MIXED -INCOME LOAN PROGRAM (2022) READINESS: Projects must have site control and be prepared to submit for a bond and tax credit allocation and will only receive funds if bonds are issued within the issuance timefremes specified in the California Debt Limit Allocation Committee's (CDLAC) Regulations Section 5100. 1. Site: The site must be ready for construction (all potential environmental issues have been identified, mitigation plan is in place, and costs associated with the mitigation plan have been incorporated in the development budget). Environmental issues may include, but not be limited to, receipt of clearances for CEOA, NEPA, and applicable tribal land environmental reviews. Pursuantto HUD -Risk Sharing requirements, sponsor is expected to start the NEPA process shortly after CalHFA verifies application completeness and determines that the project is ready to move forward with an initial commitment ("notification date"). The NEPA clearance and HUD's firm approval letter will be required prior to construction loan closing. 2. General Contractor and/or Third Party Construction Services Engagement: At the time of application, applicant must provide evidence that the applicant or developer has engaged a general contractor or third -party construction services company to provide construction services including, but not limited to, value engineering, bid/budget services, and constructability review of plans and designs. In addition, the proposed construction budget is based on the general contractor's or third -party construction services company's preliminary bid estimates pursuant to the current plans and designs. 3. Disposition and Development Agreement: Applicant must provide a copy of the disposition and development agreement, if applicable. 4. Construction Start: All projects must commit to begin construction 180 days from the earlier of the date of the tax-exempt bond allocation or 4% federal/state tax credit reservation, unless an extension has been approved by California Tax Credit Allocation Committee (CTCAC), CDLAC, and CalHFA, as applicable. Within the 180-day period, the following items must be submitted to CaIHFA in their final form: a. A complete, updated application form along with a detailed explanation of any changes from the initial application, b. An executed construction contract, C. Recorded deeds of trust for all construction financing (unless a project's location on tribal trust land precludes this), d. Binding commitments for any other financing required to complete project construction, e. Copy of a limited partnership agreement executed by the general partner/sponsor and the investor limited partner/equity provider, f. Payment of all construction lender fees, g. Copies of buildings permits (a grading permit does not suffice to meet this requirement, except if the city or county as a rule does not issue building permits prior to the completion of grading, then a grading permit shall suffice; if the project is a design build project in which the city or county does not issue building permits until designs are fully complete, the city or county shall have approved construction to begin) or the applicable tribal documents, h. Copy of the notice to proceed delivered to the contractor, i. If no construction lender is involved, evidence must be submitted within 180 days, as applicable, that the equity partner has been admitted to the ownership entity, and that an initial disbursement of funds has occurred, j. Other documentation and information required by CalHFA to close construction financing. 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1916.326.8800 2 MIXED -INCOME LOAN PROGRAM (2022) MIP ALLOCATION LIMITS: (Exceptions may be considered by Agency in its sole discretion) 1. Project Cap: No project may receive more than the lesser of $B million, orthe aggregate MIP loan amount calculated based an up to $50,000 per MIP regulated units or up to $60,000 per MIP regulated units for a Project located within the Highest or High Resource areas pursuant to CT -CAC regulations designated on the CTCAC/HCD (California Department of Housing and Community Department) Opportunity Area'Map. 2. Sponsor Cap: No sponsor (any individual, entity, affiliate and related entity) may receive more than 20% of total MIP allocation or Funding of two projects, whichever is less, for the respective year. 3. County Cap: No one county may receive more than 25% of total MIP allocations for the respective year. 4. Age -Restricted Cap: No more than 25% of total MIP funds for the respective year may be received by age -restricted projects (units that are restricted to residents who are 62 years of age or older under the applicable provisions of California Civil Cade Section S1.3 and the federal Fair Housing Act), unless a waiver of the minimum age requirement has been granted by U.S. Department of Housing and Urban Development ("HUD"). EVIDENCE OF COST CONTAINMENT: A Cost Containment Certification must be provided at the time of Construction Loan Closing in a form acceptable to CaIHFA in its sole discretion. The certification acceptable to CaIHFA may be found at vyww ralhb_sa.aalmujtifarLtily mixedipcame�forms sinc.cpst�Qn�j�pmerst certl icp�on,p�f. The developer/sponsor must certify that cost containment measures have been implemented to minimize construction costs. These measures should include, but may not be limited to, 1) competitively bidding out all major subcontractor and self -performing trades and 2) engaging a value engineer/consultant during the design process. EVIDENCE OF SUBSIDY EFFICIENCY: A Subsidy Efficiency Analysis will be completed as part of the application review. The analysis will be completed again prior to construction loan closing and closing of the MIP subordinate loan. The MIP loan amount may be reduced based on the final analysis. Parameters of the analysis may include, but are not limited to, the following: • A maximum of 1.20 Debt Service Coverage Ratio ("DSCR") at year 1 ("Initial DSCR"). CaIHFA may allow an initial DSCR higher than 1.20 on a case -by -case basis, if deemed necessary. The year 1 DSCR underwritten at the time of final loan approval and final commitment must be maintained through the term of the CalHFA permanent first lien loan, • A project cash flow that supports the residential component of the project based on the required CaIHFA permanent first lien annual debt service coverage ratio, ' • A separate project cash flow that supports any commercial component of a mixed -use project, • A cash flow after debt service shall be limited to the higher of 25% of the anticipated annual must pay debt service payment or B% of gross income, during each of the first three years of project operation, • Inflation factors and vacancy rates consistent with the Agency's Underwriting Standards, • Developer Fee requirements matching those required underthe 4% federal and/or state tax credit reservation, • Capitalized reserves subject to approval by Agency for reasonableness consistent with the Agency's Underwriting Standards and the Investor Limited Partnership Agreement (ILPA), 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1 916.326.6000 3 MIXED -INCOME LOAN PROGRAM (2022) • Review of Excess Sources over final Uses as approved by CalHFA resulting from any of the following: An increase in tax credit equity, An increase in permanent loan debt due to a combination of permanent loan rate reduction and/or reduction to operating expense assumptions; ■ Construction Cost Savings as evidenced by final cost certification, funds shall be used to reduce the MIP loan prior to CalHFA MIP loan closing or if required by other subordinate lenders, funds may be split on a pro rata basis between CalHFA and other subordinate lenders, State tax credit request is expected to be within a range of $50,000 to $75,000 per unit. The projects that evidence the most efficient use of bond cap, state tax credits, and MIP per adjusted unit shall be prioritized for MIP funding considerations. The bond cap, state tax credits, and MIP per adjusted unit calculation shall be consistent with CDLAC Regulation Section 5231(g)(1) and 5231(g)(2). MIP final commitment shall be subject to evidence of project's receipt of CDLAC's preliminary tax-exempt bond allocations and CTCAC's tax credits reservations within the respective year, • Acquisition cost shall be the lesser of 1) the purchase price pursuant to a current purchase and sales agreement between unrelated parties, 2) the purchase price of an arm's length transaction executed within the past 10 years plus reasonable carrying costs, or 3) the appraised "as -is" value based an an Appraisal acceptable to CalHFA in its sole discretion. The appraised value of the real estate may be considered ifthe arm's length transaction exceeds 10 years. A CalHFA Qualified Construction Lender is defined as a Construction Lender that has closed at least five construction loans using tax-exempt bonds and 4% federal and/or state tax credits in California within the last three years and satisfies the requirement set forth within the application. The Developer/Co-Developer/General Partner must be registered to do business and in good standing in the state of California. A CalHFA Qualified Developer/Co-Developer/General Partner must have developed at least three comparable projects within the past five years or meet the requirements to receive a minimum of 7 points under the CDLAC General Partner Experience category pursuant to CDLAC Regulations Section 52300. The proposed Project Manager must have personally managed the development of at least two comparable projects within the past five years. Financial Consultants hired to assist the Developer in meeting the minimum experience requirements must be able to provide details regarding at least three comparably financed projects over the last five years_ Architects new to CaIHFA must provide information for three comparable projects they designed that were built and occupied within the past five years in California. General Contractor (GC) must be licensed by the State of California. GCs new to CaIHFA must provide information related to three comparable (In design) projects built in the past five years. Similar information will be required for the proposed on -site construction supervisor, The on -site construction supervisor must have overseen three comparable projects built in the past five years, and they must have overseen the projects from construction start to final completion. Tax Credit Investors must have closed/executed at least five investor limited partnership agreements for a comparable deal structure using tax-exempt bonds and 4% federal and/or state tax credits in California within the last three years. 2093 CALIFORNIA MOUSING FINANCK AGENCY WWW.CALHFA.CA.GOV 1 916.326.8000 0 MIXED -INCOME LOAN PROGRAM (2022) Management Company must have a local presence or a field office in Northern or Southern CA (depending on the location of the Project) and have experience managing at least 10 low- to moderate -income, rent - restricted comparable (size and tenant types) projects. Also required is a resume for the proposed on -site Property Manager, reflecting prior experience during the past five years managing onsite project operations and compliance with rent -restricted units or meetthe requirements to receive a minimum of 3 points under the CDLAC Management Company Experience category pursuant to CDLAC Regulations Section 5230ft Must be provided by CaIHFA. The permanent loan must meet an initial minimum DSCR of at least 1.15 and must maintain the year 1 DSCR underwritten at the time of final loan approval and final commitment through the term of the CaIHFA permanent first lien loan. The Initial DSCR must not exceed 1.20. Must be provided by a CaIHFA Mixed -Income Qualified Construction Lender. All parties shall permit the Agency to, in its sole and absolute discretion, recycle all or a portion of any bond volume cap related to a paydown of the bond -financed loans, at the conversion of the construction financing to permanent financing and payoff of the construction loan, pursuant to the authority provided in Section 146(i)(6) of the Internal Revenue Code of 1986 and CDLAC Regulation Section 5060 (the "Bond Recycling"). The bond documents, loan documents and any other documents related to the financing of the Development shall contain any necessary approvals and permit all actions necessary to accomplish a Bond Recycling. 1. MIP cannot be combined with the CTCAC 9% program. 2. MIP cannot be combined with other state subordinate debt and/or subsidy programs (this does not include state tax credits) with the exception of the Infill Infrastructure Grant (IIG), Affordable Housing and Sustainable Communities (AHSC) and Transit Oriented Development (TOD) housing programs. Inclusion of these programs is contingent upon restrictions that are compatible with the MIP program requirements outlined herein. Inclusion of other subordinate debt and subsidy will be allowed at CaIHFAs sole discretion so long as any restrictions of subordinate debt or subsidy are compatible with MIP program requirements outlined herein. 3. Projects that have a below market rate component resulting from an inclusionary obligation or are 1007. below market as a result of an inclusionary obligation must demonstrate master developer commitment through a dollar -for -dollar match of CaIHFAs subsidy resources. Match can be obtained through a monetary match or equivalent in -kind contributions (e.g., land donation, land use fee concessions.) 4. At the time of MIP application, a project must not have already received an allocation of 4% federal and/ or state tax credits from CTCAC or a tax-exempt bond allocation from CDLAC. 5. Projects will not be eligible for other subsidy resources from CaIHFA in addition to MIP. BOND REGULATORY AGREEMENT REQUIREMENTS (ALL PROJECTS): Must maintain either (a) 20% of the units must be rent restricted and occupied by individuals whose incomes are 50% or less of AMI with adjustments for household size ("20% @ 50% AMI"), OR (b) 40% or more of the units must be both rent restricted and occupied by individuals whose incomes are 60% or less of AMI with adjustments for household size ("40% @ 60% AMI"): in the latter case, CDLAC requires a minimum of 10% of the unit types must be at 50% or less of AMI ("10% @ 50% AMI"). 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV ) 916.326.6800 5 MIXED -INCOME LOAN PROGRAM (2022) MIXED INCOME REGULATORY AGREEMENT REQUIREMENTS (ALL PROJECTS): Affordability Requirements: To qualify, a project must meet the following affordability restrictions, which are based on the HUD and locality (as applicable) income and rent limits which are current at the time of MIP application, for a term of 55 years: a. 30% of total units at or below 50% of AMI. Of these, a minimum of 10% of total units must be at or below 30% of AMI, b. 10% of total units between 60% and 80% of AMI with an average of 70% of AMI or greater, subject to the Maximum Allowable Rents outlined below, and C. Remaining 60% of total units at or below 120% of AMI (with the exception of any non -restricted manager's unit(s)) OR at the affordability restrictions consistent with CTCAC requirements. d. The minimum range between the lowest and highest occupancy target levels must be at least 409%. (Deviations from the above requirements will only be considered if Market Study supports such deviations.) 2. If applicable, tax credit transactions that are income -averaged must have a maximum average affordability up to 60% of AMI across all CTCAC restricted units. MAXIMUM ALLOWABLE RENTS: Rents for all restricted units must be at least 10% below market rents for the MIP affordability term as evidenced by a current market study or appraisal. This threshold will be analyzed at time of application and again at CaIHFAs final commitment approval and may be monitored on an ongoing basis for the MIP affordability term. The report shall be current within 180 days of Agency's final commitment and may be subject to required updating if the report expires prior to construction loan closing. For underwriting purposes, CTCAC and locality maximum rents forthe respective target income limits must be used. Any proposed rent adjustments above 5% of the approved rents subsequent to construction loan closing may be considered if supported by a recent or updated market study or appraisal that is dated within 180 days of MIP loan closing, at CaIHFA's sole discretion, Any units restricted by the Agency pursuant to this program, including those units restricted in addition to the minimum requirements set Forth above, shall be rented at rents not to exceed 30% of the applicable income restriction required in the Agency's Regulatory Agreement. Maximum loan amount for each project shall not exceed the lesser of $8 million or the aggregate MIP loan amount calculated based on up to $60,000 per MIP regulated units, unless an exception is approved by Agency in its sole discretion. a. Maximum loan per restricted (tax credit or CaIHFA) units between 30%-120% AMI shall be up to $50,000. b. Projects located within the Highest or High Resource areas pursuant to CTCAC regulations designated on the CTCAC/HCD Opportunity Area Map shall be eligible for an additional amount up to $10,000 per MIP regulated unit. Opportunity Map Home Page: wv+vv,..reasiarar.�a_gov_/ctcac/eppoRuniry,5p 2. Loan size based on project need but cannot be more than 50% of the permanent loan amount. 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1916.326.aaoo MIXED -INCOME LOAN PROGRAM (2022) 1. Interest Rate: Greater of 1 % simple interest or the applicable federal rate (AFR) at time of MIP closing. 2. Loan Term: The MIP loan term shall be coterminous with the CaIHFA permanent first lien loan. 3. Lien Position: Second lien position, after CalHFA permanent first lien loan. 4. Loan Payment Residual receipt repayment based on cash flow analysis and split 50% to Owner and 50% to CalHFA and other residual receipt lenders. Residual receipt is defined as 50% of surplus cash which is determined as net operating income minus total debt service and other Agency approved payments. Payments shall be applied to the current and/or accrued interest and then principal of the MIP loan. Deviation from the net cash flow split may be granted 1) to meet equity investor's deferred developer's fee requirement as evidence by the limited partnership agreement, and 2) is subject to approval(s) by other residual receipt lender(s), as applicable. 5. Affordability Term: 55 years. b. Prepayment: May be prepaid at any time without penalty. 7. Subordination: A subordination and/or extension of MIP maturity request in conjunction with a re - syndication, refinance, or ownership transfer ("capitalization event(s)") will be considered. If MIP loan is outstanding at time of the capitalization event(s) and requires subordination at the time of such event, the surplus cash split between borrower and CaIHFA and other residual receipt lenders may be altered to reflect an increased percentage of residual receipts to CaIHFA out of Borrower's share until such time as the MIP loan is paid in full. The remaining residual receipts may be split between other residual receipt lenders. 8. Funded: Only at permanent loan conversion. For more information on CaIHFA's Conduit Issuer Program and the fees associated with it, visit CaIHFA's website: rowwcalhfa pp,goiiniu1tLtarWW.*.FjrXn {grrr /term t gndui,S,gr)f For more information on CaIHFA's Permanent Loan Program and the fees associated with it, visit CaIHFP:s website: ryNrN_caf}tfa_ra.c�q„v,/mull iam ly/progrpmylfpt@�rpshgG�R rm_ _a 5_gxar! pLpgf Loan Fee: 1.00% of the loan amount (50% due at final commitment and 50% due at CaIHFA MIP loan closing). Conduit Bond Program Fees: Refer to CaIHFA Conduit Bond Program v,W_vi.calh(a,sa:9Pv1_V0kAofamijy/pro9rarnS/fgrrp!L4 mrmstQ9S,EQ4-Ch4it, P_df CDLAC Fees: Refer to CDLAC regulations for all applicable fees. Other Fees: Refer to CaIHFA First Lien Permanent Rates & Terms for first mortgage loan fees, credit enhancements, trustee fees, legal fees, inspection fees, administrative fees. 't4.s5t!r.?.�hia. ra,go��jmulLfamily/progLams/'a�n/tenpsf7QeS=perm-1ax�,s�mpt.p_cf; Last revised: 01/25/2022 The information provided in this program description is for guidance only, While we have taken care to provide accurate information, we cannot cover every circumstance nor program nuance. This program description is subject to change from time to time without prior notice. The California Housing Finance Agency does not discriminate on any prohibited basis in employment or in the admission and access to its programs or activities. Not printed at taxpayer expense. 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALKFA.CA.GOV 1 916.326.8600 7 TAX-EXEMPT PERMANENT Cal HFA w LOAN PROGRAM California Housing Finance Agency CaIHFA's Tax -Exempt Permanent Loan Program ("Perm Loan") provides competitive tax-exempt long-term financing for affordable multifamily rental housing Projects. Eligible projects include newly constructed or acquisition/rehabilitation developments that provide affordable housing opportunities for individuals, families, seniors, veterans, and special needs tenants ("Project"). • Available to for -profit, non-profit, and public agency sponsors. • Tax-exempt bond authority must be obtained from the California Debt Limit Al location Committee (CDLAC) or through a 501(c)(3) exemption. • The Tax -Exempt Permanent Loan may be used with or wlthout 4% low income housing tax credits. • If a lender other than CaIHFA is providing short-term, first -lien debt, CaIHFA shall be used as the bond issuer (for mare information, review the Conduit Issuer Program Term Sheet). • For Section 8 Projects, a final commitment is conditioned upon review and acceptance by CaIHFA of the HAP or AHAP contract. • The Perm Loan will be credit -enhanced through CaIHFAs HUD/FHA Risk Sharing Program. • For existing CaIHFA portfolio loans, the current owner is required to pay off all outstanding CaIHFA debt. Visit www.calhfa.ca.gov for the aIHFA P rtiyiiCt Won f'.repaynles E1__ icy. • Minimum Perm Loan amount of $5,000,000. • Minimum 1.15x for initial debt service coverage ratio Qnclude any financing with amortizing debt). If a Project includes CaIHFAs subsidy loan, the maximum DSCR atyear 1 shall not exceed 1.20, unless CalHFA approves a higher DSCR at its own discretion. The year 1 DSCR underwritten at the time of final loan approval and final commitment must be maintained as the minimum DSCR through the term of the Perm Loan. CaIHFA may require the initial DSCR to be higher than the minimum 1.15x, if deemed necessary to meet the Agency's underwriting requirements. • Lesser of 90% of restricted value or 100% of development costs. For Projects with equity being cashed out, the Perm Loan amount will be restricted to no more than 80% of the restricted value. • Application Fee: $10,000 non-refundable, due at time of application submittal, and is credited toward the CaIHFA Legal Fee at Penn Loan closing. The applicant may be subject to a new Application Fee if the CaIHFA commitment expires prior to construction loan closing. • Perm Loan Fee: 1.00%, half due at final commitment, with balance due at Perm Loan closing. • Credit Enhancement Fee: included in the interest rate. • Annual Monitoring Fee: $7,500 annually (not to be duplicated if used in conjunction with CaIHFA's Conduit Program). • Inspection fees should be estimated at $500 per month for the term of the construction (reports and fees can be shared with other construction lenders) + Legal Fee: $35,000, half due atfinal commitment, with balance due at Perm Loan closing. • Penn Loan Funding Fee: $110,000 at Perm Loan closing. • Administrative Fee: $1,000 at Perm Loan closing. • Letter of Interest Fee: $5,000 at LOI request, and is credited toward the CaIHFA Perm Loan Fee See CaIHFA standard arldErie Issuer Piogram Ten.ShgQS for information on conduit issuance fees. Kevin Brown, Housing Finance Officer Jennifer Beardwood, Housing Finance Specialist 500 Capitol Mall, Suite 1400, MS-990 500 Capitol Mall, Suite 1400, MS-990 Sacramento, CA 95814 Sacramento, CA 95814 916.326.8808 916.326.8805 kbrown®calhfa.ca.gov jbeardwood®calhfa.ca,gov 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1 916.326.8000 TAX-EXEMPT PERMANENT LOAN PROGRAM Interest Rate: • 17-Year Balloon Loans: 15-Year "AAA" Municipal Market Data (MMD) plus CalHFA spread 30-Year Balloon and Fully Amortizing Loans: 30-Year "AAA" MMD plus CalHFA spread Estimated CalHFA Spread: 2.00`Y• to 3.00% • Rate may be locked up to 30 days prior to the construction loan closing. Rate may be locked for the term of the construction period, not to exceed 3 years. AmortizationfTerm: • Amortization: Up to 40 Year Amortization • Term: Fully Amortizing, and 17- or 304ear Balloons availablel • Perm Loan Reduction: up to 10% reduction at Perm Loan closing permitted at no cost. • Up to two, three-month extension(s) permitted upon payment of a fee equal to 0.25% of the Perm Loan amount for each three-month extension. • Breakage Fee (if applicable): due between construction loan closing and Perm Loan closing and calculated based on hedge termination cost. 1. Balloon loans subject to agency approved exit strategy. • 90% stabilized rental housing occupancy for 90 days as evidenced by rent rolls. • 90% of tax credit investor equity shall have been paid into the Project. Project income is sufficient to pay operating expenses, required debt service, reserves and monitoring fees. • For mixed -use Projects, 100% non-residential occupancy as evidenced by executed leases or guarantees. • Deposit Account Control Agreement between CalHFA, the Borrower and lending institution is in form and substance acceptable to all parties and ready to be executed at Perm Loan closing. The Perm Loan maybe prepaid at par after 15 years of the Perm Loan period. However, the Perm Loan maybe prepaid after 10 years of the Perm Loan period subject to a yield maintenance calculation of. • 5% of the principal balance after the end of year 10 • 4% of the principal balance after the end of year 11 • 3% of the principal balance afterthe end of year 12 • 2% of the principal balance afterthe end of year 13 • 1%of the principal balance afterthe end of year 14 All prepayments require a prior written 120-day notice to CaIHFA. Financing or grants are encouraged from local governments and third parties to achieve project feasibility. All financing, leases, development and regulatory agreements must be coterminous (or have a longer term than the combined terms of any CaIHFA Acq/Rehab Loan and Penn Loan) and be subordinate to CaIHFA financing_ A Lien Priority/Position Estoppel in form and substance acceptable to CaIHFA will be required prior to construction financing closing, if applicable, Must maintain the greater of (A) existing affordability restrictions, or (B) either (i) 20% ofthe units must be rent restricted and occupied by individuals whose incomes are 50% or less of the area (county) median gross income as determined by HUD ("AMI") with adjustments for household size ("20•% 8 50% AMI"), or (ii) 40% or more of the units must be both rent restricted and occupied by individuals whose income is 60% or less of the AMI, with adjustments for household size ("40% ® 60% AMI "): however in the latter case, a minimum of 10% of the units must be at 50% or less of AMI (i.e., 30°% @ 60°% AMI; 10% ® 50°% AM1). 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1 916.326.8800 2 TAX-EXEMPT PERMANENT LOAN PROGRAM Any units restricted by the Agency pursuant to this program, including those units restricted in addition to the minimum requirements set forth above, shall be rented at rents up to 30% of the applicable income restriction using the occupancy assumptions required in the Agency's Regulatory Agreement. Rents for all restricted units must be at least 10% below market rents as evidenced by current market study or an appraisal. CaIHFA's regulated units must represent a comparable share of the available unit sizes (by bedroom count and square feet) and be disbursed throughout the project. The following due diligence is required to be provided at the Owner/Borrower's expense (referto the program's document checklist for a full list): • Appraisal* (a construction lender's appraisal may be acceptable). • HUD-2530 previous participation clearance. • Construction Costs Review for new construction loans (other construction lender's review is acceptable). • Physical Needs Assessment* ("PNA") for rehabilitation projects with a Replacement Reserve Needs Analysis ("RRNA") overtime for the first 20-year term (other lender's PNA/RRNA maybe acceptable). A RRNA for a longer time period may be required if the Perm Loan term is greater than 20 years. • Phase I and Phase II (if applicable) Environmental Site Assessment* including, but not limited to, impact reviews that meetfederal environmental requirements (such as historic preservation and noise remediation). The Purpose section of Phase I must state "a purpose of the Phase I is to document compliance with HUD policy pursuant to 24 CFR §58.5(i)(2) or §50.3(l)". • Market Study* satisfactory to CaIHFA. • NEPA Review. • Termite/Dry Rot reports* by licensed company. • Seismic review* and other studies may be required at CaIHFA's discretion. *Note: Third party reports shall be within 180 days prior to the CalHFA's final commitment approval and may be subject to a new or updated report if the report(s) was completed more than 180 days prior to construction loan closing, in CaIHFA's sole discretion. • Replacement Reserve: Initial cash deposit required for existing Projects with annual deposits between $250 and $500 per unit/per year depending on the Project type and PNA/RRNA findings. • Operating Expense Reserve ("OER"): 3-6 months of operating expenses, reserves, debt service, and monitoring fees due at Penn Loan closing (letter of credit or cash) and held forthe life of the CaIHFA Perm Loan by CaIHFA. In the event OER funds are drawn down during the term of CaIHFA Perm Loan, it must be replenished over a period of 12 months to the original level. • Impounds held by CaIHFA: One year's prepaid earthquake, hazard and liability insurance premiums, and property tax assessments are collected at loan closing. An earthquake insurance waiver is available for Projects which have met CalHFA earthquake waiver standards during rehabilitation or construction. • Transition Operating Reserve (TOR): required for Projects with state or locally administered rental subsidy contracts with contract terms that are less than 20 years or the CaIHFA Perm Loan term. • Other reserves as required (at CaIHFAs discretion). Last revised: 5/2022 The information provided in this program description is for guidance only. While we have taken care to provide accurate information, we cannot cover every circumstance nor program nuance. This program description is subject to change from time to time without prior notice. The California Housing Finance Agency does not discriminate on any prohibited basis in employment or in the admission and access to its programs or activities. Not printed at taxpayer expense, 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1 716.326.8500 3 CONDUIT ISSUER PROGRAM Cal HFA W MULTIFAMILY HOUSING BONDS California Housing Finance Agency Term sheet effective for applications submitted after March 1, 2022 The CaIHFA Conduit Issuer Program is designed to facilitate access to tax-exempt and taxable bonds ('Bond") by developers that seek financing for eligible projects that provide affordable multifamily rental housing for individuals, families, seniors, veterans or special needs tenants ("Project"). The conduit Bonds may be used to finance the acquisition, rehabilitation, and/or development of an existing Project, or they can be used for the construction of a new Project. • Available to for -profit, nonprofit or public agency sponsors. • Nonprofit borrowers may be eligible for 501(c)(3) bonds. ■ If bond proceeds are utilized to pay off an existing CaIHFA portfolio loan visit www.calhfa.ca.gov for the Cap �Rf4�is lP.an Prepay rneLrl; �1Fy. Bond amount is determined by the loan amount of the selected construction lender. Application Fee: $5,000 non-refundable, due at time of application submittal (covers the cost of the TEFRA required for tax-exempt issuances) and is credited toward the CaIHFA Issuer Fee, Issuer Fee: 1. The greater of $15,000 or 18.75 basis points of the Bond amount if lesser than or equal to $20 million. 2. If more than $20 million: $37.500 + 5 basis points for the amount above $20 million_ Annual Administrative Fee: 5 bps of the tax-exempt bond issuance amount due at construction loan closing and due annually thereafter until permanent loan conversion. After permanent loan conversion, billed annually in advance, 5 bps of unpaid principal balance amount of tax-exempt bond financed loan(s) until bonds are fully redeemed, Minimum Annual Administrative Fee shall be $4,000 through both the Qualified Project Period and the CDLAC compliance period. For taxable only issuances, annual administrative fees above will be charged based on the taxable bond financed loan(s) forthe term of the CaIHFA affordability restrictions. If used in conjunction with a CaIHFA permanent loan product, the annual administrative fee will not be duplicated. Please refer to the applicable permanent loan term sheet for the annual administrative fee. Public Sale: Additional fee of $5,000 to $10,000 applies when Bonds are sold to the public. CDLAC Allocation Fee. 0,035% of the Bond amount, $1,200 of which is due at time of CDLAC application submittal with the remaining fee due at construction loan closing and payable to CDLAC. CDLAC Performance Deposit: 0.50% of the requested Bond amount, not to exceed $100,000, due at time of CDLAC application submittal. Deposit to be refunded after the Bond closing, upon receipt of authorization letter from CDLAC. The Borrower shall be responsible for all other costs of Bond issuance including fees of the underwriter, trustee, rating agencies, lender, compliance administrator, all Bond counsel legal fees, and any other parties required to complete the transaction. Kevin Brown, Housing Finance Officer 500 Capitol Mall, Suite 1400, MS-990 Sacramento, CA 95814 916.326.8808 kbrown@calhfa.ca.gov 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV 1916.326.8600 CONDUIT ISSUER PROGRAM • Either (A) 20% of the units must be rent restricted and occupied by individuals whose incomes are 50% or less of the area median income as determined by HUD ("AMI") with adjustments for household size ("20% 50% AMI"), or (B) 46% or more of the units must be rent restricted and occupied by individuals whose income is 60`Yo or less of AMI, with adjustments for household size ("40% ® 60% AMI"); however in the latter case, a minimum of 10% of the units must be at 50% or less of AMI. • Any units restricted by the Agency pursuantto this program, including those units restricted in addition to the minimum requirements set forth above, shall be rented at rents up to 30% of the applicable income restriction using the occupancy assumptions required in the Agency's Regulatory Agreement. Rents for all restricted units must be at least 10% below market rents as evidenced by a current market study or an appraisal. • Borrower will be required to enter into a Regulatory Agreement which will be recorded against the Project for the Qualified Project Period (as defined in the CaIHFA Regulatory Agreement). This includes the later of the federally -required qualified project period, repayment of the Bond funded loan, redemption of the Bonds, the full term of the CDLAC Resolution requirements or 55 years. Last revised: 03/2022 The information provided in this program description is for guidance only. While we have taken care to provide accurate information, we cannot cover every circumstance nor program nuance. This program description is subjectto change from time to time without prior notice. The California Housing Finance Agency does not discriminate on any prohibited basis in employment or in the admission and access to its programs or activities. Not printed at taxpayer expense. 2022 CALIFORNIA HOUSING FINANCE AGENCY WWW.CALHFA.CA.GOV j 916-326.0800 EXHIBIT B FORM SUBORDINATION AGREEMENT Locality Estoppel Certificate (City of Fresno) Sarah's Court Apartments - Ca1HFA No. 22-013-A/X/N 12/19/2022.TM14/cic.HFMF-943598018-2 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 Recording requested by and when recorded return to: CALIFORNIA HOUSING FINANCE AGENCY Office of General Counsel 500 Capitol Mall, Suite 1400, MS 1440 Sacramento, CA 95814 (space above this line for Recorder's use) SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN(S) OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS AGREEMENT dated as of 1, 202 for informational purposes, is entered into by and among the City of Fresno, a municipal corporation (the Locality), FCTC Family, LP, a California limited partnership (Borrower), and the California Housing Finance Agency, a public instrumentality and political subdivision of the State of California (Ca1HFA) in connection with a loan by CaIHFA to Borrower to finance a multifamily residential rental housing project on real property located in the City of Fresno, County of Fresno, California and more particularly described on Exhibit A attached hereto and incorporated herein by this reference (Project). Unless otherwise noted, references to instruments recorded in "Official Records" refer to instruments recorded in the Office of the County Recorder of the County of Fresno. RECITALS A. WHEREAS, Borrower and the Locality have encumbered or will encumber the Project with the following documents related to the financing and/or development of the Development: 1. that certain HOME Investment Partnerships Program Agreement dated July 28, 2022, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099558 (HOME Agreement); 2. that certain Deed of Trust Assignment of Rents dated July 28, 2022, securing a loan in the amount of $3,169,034, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099559 (HOME Deem, 3. that certain Community Development Block Grant Program Agreement dated July 28, 2022, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099561 (CDBG Agreement); -I- Ca1HFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - CaIHFA No. 22-013-A/X/N 12/20/2022.TMH/cic-HFMF-665445913-22 4. that certain Deed of Trust dated July 28, 2022, securing a loan in the amount of $2,480,000, and recorded in the Official Records on August 5, 2022, as Instrument No. 2022-0099562 (CDBG Deed); 5. that certain Permanent Local Housing Allocation Program Agreement dated November 22, 2022, and recorded in the Official Records on November 23, 2022, as Instrument No. 2022-0142275 (PLHA Agreement); and 6. that certain Deed of Trust Assignment of Rents dated November 21, 2022, securing a loan in the amount of $530,966, and recorded in the Official Records on December 16, 2022, as Instrument No. 2022-0149137 (PHLA Deed and, collectively with the HOME Agreement, HOME Deed, CDBG Agreement, CDBG Deed, and PHLA Agreement, the Locality Documents). B. WHEREAS, CaIHFA is making, substantially contemporaneously with the making of this Agreement, a permanent first mortgage loan to Borrower (CaIHFA Loan). The CaIHFA Loan is evidenced by a promissory note from the Borrower to CaIHFA in the face amount of and No/100s Dollars ($ .00) secured by a deed of trust. The deed of trust was executed by Borrower, as trustor, to First American Title Company, as trustee, in favor of CaIHFA, as beneficiary, and is entitled "California Housing Finance Agency, Permanent Deed of Trust With Assignment of Rents, Security Agreement and Fixture Filing, CaIHFA Development No. 22-013-A/X/N (Permanent Financing)(HUD Risk Sharing Program/FFB)" dated 1, 202_ (the CaIHFA Deed of Trust) to be recorded in the Official Records substantially contemporaneously with this Agreement. The Project shall also be regulated and encumbered by a regulatory agreement executed by Borrower and CaIHFA entitled "California Housing Finance Agency, Regulatory Agreement, CaIHFA Development No. 22-013-A/X/N (Permanent Financing) (HUD Risk Sharing Program/FFB)" dated as of 1, 202_ (the Ca1HFA Regulatory Agreement) to be recorded in the Official Records substantially contemporaneously with this Agreement. In addition, CaIHFA has or will be filing a UCC Financing Statement with the Secretary of State evidencing Borrower's granting a security interest in the Project (UCC Statement). The CaIHFA Regulatory Agreement, CaIHFA Deed of Trust and related documents, and the UCC Statement shall hereafter be collectively referred to herein as the "CaIHFA Loan Documents",- C. WHEREAS, it is a condition precedent to CaIHFA making the CaIHFA Loan that the CaIHFA Documents have priority over the Locality Documents; and D. WHEREAS, it is beneficial to all parties that CaIHFA make the CaIHFA Loan, and the parties are willing to subordinate the Locality Documents in order that the CaIHFA Loan be made. NOW THEREFORE, in consideration of the foregoing and other consideration the receipt and sufficiency of which are hereby acknowledged and in order to induce CaIHFA to make the CaIHFA Loan, the parties hereto agree as follows: Subordination of Locality Documents. (a) The Locality and Borrower hereby unconditionally subordinate the Locality Documents to the CaIHFA Documents, including all extensions, modifications or additional advances made thereunder. Hereafter, the CaIHFA Documents shall unconditionally be, and remain at all times, liens and encumbrances on the Project prior and superior to the encumbrances of the Locality Documents and to all rights and privileges of the parties thereunder, and the liens and encumbrances of the Locality -2- Ca1HFA.SUBORDINATION.Oty of Fresno Sarah's Court Apartments - Ca1HFA No 22-013-A/X/N 12/20/2022 TMH/c1c-HFMF-665445913-22 Documents together with all rights and privileges of the parties thereunder shall hereby be subject to and made subordinate to the liens and encumbrances of the CaIHFA Documents. (b) CaIHFA shall provide Locality with a copy of all initial notices of default provided to Borrower under the CaIHFA Documents, provided, CaIHFA shall have no liability to Locality and/or Borrower for its failure to do so, nor shall failure to do so constitute grounds for any restraining order, injunction, or other prohibition against or delay in CaIHFA's exercise of its remedies under the CaIHFA Documents. CaIHFA shall not record a Notice of Default related to such initial notice during the period ninety (90) days after the date of such initial notice if such notice relates to a nonmonetary default or defaults under the CaIHFA Documents. CaIHFA shall not record a Notice of Default related to such initial notice during the period thirty (30) days after the date of such initial notice if such notice relates to a monetary default or defaults under the CaIHFA Documents. During the term of such applicable period, Locality shall have the right, but not the obligation, to cure the default(s) under such notice(s). (c) Unless Locality otherwise agrees, CaIHFA shall not amend the CaIHFA Documents to do any of the following: (i) extend the scheduled maturity date of Borrower's obligations to CaIHFA, unless the CaIHFA Documents are in default at the time of such extension; (ii) increase the interest rate on Borrower's obligations to CaIHFA resulting from a modification of the CaIHFA Documents subsequent to the date hereof; (iii) increase the principal amount of Borrower's obligations to CaIHFA beyond the original principal amount, except for increases resulting from advances made by CaIHFA to preserve and protect CaIHFA's security, including taxes, insurance, and costs of collection and or enforcement of the CaIHFA Documents; and (iv) change the amortization of Borrower's obligations to CaIHFA by which scheduled payments of principal and interest are increased, unless such changes are a result of a default on the CaIHFA Documents and/or advances made by CaIHFA to preserve and protect CaIHFA's security including taxes, insurance, and costs of collection and enforcement of the CaIHFA Documents. (d) CaIHFA further agrees that it shall not accelerate the CaIHFA Loan by reason of any foreclosure by Locality (or acquisition of the Project by Locality in lieu of any such foreclosure) under the terms of the Locality Documents; provided: (i) There shall not occur or be continuing any default in the payment of any amount owed CaIHFA or any obligations required to be performed under the CaIHFA Documents; and (ii) Locality shall not unreasonably delay to proceed to conclusion of such foreclosure or acquisition. (e) Locality acknowledges and consents to the CaIHFA Documents and agrees to be bound thereby in the event of its foreclosure or acquisition of the Project. (f) In the event that prior to foreclosure by CaIHFA, the Locality acquires title to the Property, the Locality may assume and succeed to Borrower's obligations under the CaIHFA Documents on the terms and conditions set forth in the CaIHFA Documents and CaIHFA will recognize the Locality as Borrower, on condition that the Locality assumes and agrees to perform all of Borrower's obligations under the CaIHFA Documents and timely cures all outstanding defaults of Borrower under the CaIHFA -3- Ca1HFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - CaIHFA No 22-013-A/X/N 12/20/2022.TMH/cic-HFMF-665445913-22 Documents, and pays the reasonable administrative and/or legal cost CaIHFA may actually incur in connection with such assumption and succession. In connection with curing all defaults under the CaIHFA Documents, the Locality must pay: (i) all outstanding principal due and owing under the CaIHFA Note (including all unpaid monthly principal installments); (ii) all outstanding interest due and owing under the CaIHFA Note, calculated in accordance therewith; and (iii) all reasonable costs and expenses, including, without limitation, attorneys' and trustee's fees, incurred in connection with such outstanding defaults. If the Loan is insured by the U.S. Department of Housing and Urban Development State Agency Risk -Sharing Program (HUD Risk -Sharing Program) (24 CFR Part 266), then before Locality can assume and succeed to Borrower's rights and obligations under the CaIHFA Documents pursuant to the above, the Locality must comply with the requirements of the HUD Risk -Sharing Program applicable at the time of such assumption. The requirements may include, but are not limited to, a requirement that a borrower under the HUD Risk -Sharing Program be a single asset entity approved by HUD pursuant to the previous participation requirements found at 24 CFR §§ 200.210 - 200.222. CaIHFA agrees that a single asset entity owned solely by the Locality is acceptable to CaIHFA under such circumstances, subject to all other requirements of the HUD Risk Sharing Program. 2. Representations. Locality hereby represents and warrants to CaIHFA that at the time of execution of this agreement, to the best of Locality's knowledge, the Borrower is in substantial compliance with its obligations to the Locality under the terms of the Locality Documents, acknowledges that Locality has received the CaIHFA Documents and has had an opportunity to review them, and agrees that in the event the Borrower's obligations to CaIHFA conflict with the Borrower's obligations to the Locality, the Borrower's obligations to CaIHFA shall prevail, provided that this clause shall not relieve the Borrower of its responsibility to the Locality.. 3. Amendments. Amendments to this Agreement shall be in writing and signed by all the parties hereto. 4. Governing Law. This Agreement shall be construed in accordance with and be governed by the laws of California. 5. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 6. SeverabilitY. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, it shall not invalidate or render unenforceable any other part of this Agreement. -4- Ca1HFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - Ca1HFA No. 22-013-A/X/N 12/20/2022 TMH/cic-HFMF-665445913-22 NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. LOCALITY: CITY OF FRESNO, a municipal corporation 0 Georgeanne A. White City Manager APPROVED AS TO FORM ANDREW JANZ City Attorney Tracy N. Parvanian Date Supervising Deputy City Attorney ATTEST: TODD STERMER, CMC City Clerk By Date Deputy Ca1HFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - Ca1HFA No. 22-013-A/X/N 12/20/2022 TMWc1c-HFMF-665445913-22 BORROWER FCTC FAMILY, LP, a California a California limited partnership By — Name Title: By Name Title: CaIHFA: CALIFORNIA HOUSING FINANCE AGENCY, a public instrumentality and political subdivision of the State of California By. Name Title: -5- EXHIBIT A Le al Description -6- Ca1HFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - CalHFA No. 22-013-A/X/N 12/20/2022.TMH/cic-H FMF-665445913-22 ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ss. County of On before me, a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature -7- CaIHFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - Ca1HFA No. 22-013-A/X(N 12/20/2022 TMH/cic-HFMF-665445913-22 (Seal) ACKNOWLEDGEMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ss. County of [or, before me, a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature -8- CaIHFA.SUBORDINATION.City of Fresno Sarah's Court Apartments - Ca1HFA No 22-013-A/X/N 12/20/2022 TMH/cic-HFMF-665445913-22 (Seal)