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Judson Brown, City of Santa Ana <br />Cornerstone Apartments: Updated Resyndication Proposal <br />2. <br />3 <br />4. <br />The following should occur concurrent with the Bond closing: <br />EXHIBIT 2 <br />August 26, 2019 <br />Page 7 <br />a. The $2,204,000 City Loan prepayment should be due and payable; and <br />b. The outstanding principal and interest balance of the City Loan should be <br />established. <br />The outstanding principal balance of the City Loan should continue to carry 3% <br />simple interest. <br />The City Loans should continue to be repaid from 50% of the residual receipts <br />generated by the Project. <br />a. Residual receipts should be defined as cash flow remaining after payment <br />of approved cash operating expenses: <br />i. Bond debt service; <br />ii. Repayment of the $243,889 in deferred Developer Fee; and <br />Ill. Payment of approved Limited and General Partner asset <br />management fees which are set at $7,500 and $20,000 per year, <br />respectively. <br />b. To comply with IRS timing regulations, 100% of the Project's cash flow <br />after payment of operating expenses and Bond debt service will need to <br />be allocated to repaying the deferred Developer Fee. <br />C. The repayment of the seller carryback loan should not be treated as a <br />Project cost. Instead, the repayment should be derived solely from JHC's <br />50% share of the Project's residual receipts. <br />1908006.SNA:KHH <br />19190.017.003 <br />80A-19 <br />