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Loan Agreements with Tiny Tim LP April 16, 2019 Page 3 • $6,000,000 principal amount: o $4,700,000 from LMIHAF o $1,300,000 from Inclusionary Housing Fund s 3% simple interest per annum; • Repayment from 50% of Residual Receipts (pro -rata with payments due in connection with other financing provided by the City/Agency) (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees to be described in the Agreement) with the remaining 50% to be disbursed to the Developer; • Remaining principal and accrued interest due upon the 55th anniversary of the issuance of Certificate of Occupancy and/or final building permits or earlier upon sale, refinancing or default. On that date, the City/Agency agrees to review the performance of the property and consider in good faith any reasonable request by Community Development Partners to modify the terms or extend the term of the City/Agency Promissory Notes. Additionally, the City/Agency will receive 50% of the net proceeds received from any sale or refinancing of the Project, after payment of outstanding debt and payment in full of any deferred developer fee and establishment of any reserves and transaction costs; and • Cost savings from the Project, if any, will be applied first to pay down the Loans, subject to compliance with the Tax Credit Allocation Committee ("TCAC") Regulations and California Health and Safety Code. Regarding the two Subordination Agreements with Citibank, N.A., the City's / Agency's total loan for this project is approximately 19.2% of the total Project cost. As a subordinate loan for a large affordable housing project such as this, it is not uncommon for a senior lender to request a Subordination Agreement for the City and Housing Authority's smaller Loan Agreements that allow the senior lender to complete their underwriting and commit their private market financing. As such, the two Subordination Agreements will allow Citibank to commit their private market financing for the Project. The Subordination Agreement for the Housing Successor Agency's Loan Agreement is attached as Exhibit 5 and the Subordination Agreement for the City's Inclusionary Housing Loan Agreement is attached as Exhibit 6. If the two Loan Agreements are not approved by City Council and the Housing Authority, the Developer will have to decline their award of 9% Tax Credits and the Project will not move forward. Project Description The Tiny Tim Plaza redevelopment provides a prototypical example of revitalizing the suburban style strip retail center in order to serve the surrounding community. The project retains and provides fagade improvements to the two primary, existing commercial buildings and creates community serving uses including outdoor common areas, and the new construction of a residential building providing 51 -units of affordable housing, including a residential courtyard, fitness space, and large ground floor spaces for nonprofit partners and supportive services. • U1 .