3 - LOAN AGREEMENT FOR AMCAL_2018-01-16 (2)

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EXHIBIT 2 AMCAL 1440 Santa Ana Fund, L.P. June 20, 2017 Page 2 revised development proformas and projected cash flows for the Project; provided, however, that the Agency Assistance is not materially increased or extended. In relation to this Agency Loan, the City Council approved a conditional, pre -commitment letter of up to $8,795,000 on April 19, 2016, to be funded exclusively from inclusionary housing in - lieu fee payments made pursuant to the City's Housing Opportunity Ordinance (Article XVIII.I of Chapter 41 of the Santa Ana Municipal Code) by the market rate developer of that certain mixed-use development to be located at 2001 East Dyer Road, Santa Ana, California (the "In -Lieu Fee"). The Developer and the City agree that the issuance of this pre -commitment letter from the Agency for a loan of up to $8,522,740 from the LMIHAF held by the Housing Successor Agency hereby releases the City of its commitment of the $8,795,000 in the conditional, pre -commitment letter approved by City Council on April 19, 2016, from funds to be received by the City from the In -Lieu Fee at a future date. As such, the conditional, pre -commitment letter of up to $8,795,000 approved by City Council on April 19, 2016, is hereby terminated by all parties and made null and void. The Developer's Project is intended to serve, in part, a target population of Very -Low and Extremely -Low Income persons using LMIHAF from the Agency, pursuant to California Health and Safety Code Section 34176.1. Section 34176. 1 (a)(3)(B) requires that the Agency must require at least 30% of the LMIHAF to be expended for development of rental housing affordable to and occupied by households earning 30% or less of the Area Median Income ("AMI"). If the Agency fails to comply with the Extremely -Low Income requirement in any five-year reporting period, then the Agency must ensure that at least 50% of the funds remaining in the LMIHAF be expended in each fiscal year following the latest fiscal year following the report on households earning 30% or less of the AMI until the Agency demonstrates compliance with the Extremely -Low Income requirement. In order for the Agency to meet this five-year Extremely -Low Income Test, the Agency and the Developer have mutually agreed that at least 50% of the units in the project, 34 of 68 total affordable Housing Units, will be affordable to and occupied by households earning 30% or less of the AMT. The Agency Loan, should it be issued, will have the following terms: • $8,522,740 principal amount, or as much thereof as is disbursed for acquisition costs and hard and soft costs in constructing the Project; • 3% simple interest per annum; • Repayment from 50% of Residual Receipts (after payment of operating expenses, debt service, any deferred developer fee, and partnership fees to be described in the Agency Loan Agreement) with the remaining 50% to be disbursed to the Developer; • Remaining principal and accrued interest due upon the 55th amniversary of the issuance of Certificate of Occupancy and/or final building permits or earlier upon sale, refinancing or default. On that date, the Agency agrees to review the performance of the property and consider in good faith any reasonable request by AMCAL to modify the terms or extend the term of the Agency Promissory Note. Additionally, the 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 establislunent of any reserves and transaction costs; and MQ