60B - AFFORDABLE HOUSING FUND FOR MERCY HOUSE

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Page 15 Approval of all required entitlements and discretionary actions, to allow the construction of an 85-unit affordable housing complex to be located at 2530 and 2534 Westminster Avenue, Santa Ana, CA 92706, (APNs 198-132-21 and 198- 132-23). The City's obligation to provide the City Assistance is and shall remain subject to all covenants, conditions, and restrictions set forth in the Loan Agreements, and in particular the City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project. Review and approval of the Loan documents evidencing the City Assistance by the City Council including the Loan Agreement(s), Promissory Note(s), Affordability Restrictions and Deed(s) of Trust. $400,000 of the City's financial assistance will be set -aside as a City -controlled contingency allowance. The City must approve any disbursements from this contingency allowance. Any funds remaining in the contingency allowance at the end of construction must be utilized for a surrounding community benefit at the City's sole discretion, within the guidelines for allowable uses pursuant to the funding source. $100,000 of the $2.5 million Developer Fee will be contributed to a surrounding community benefit, within the guidelines for allowable uses pursuant to the funding source. Any additional contribution will be allocated from the remainder of the City - controlled contingency allowance. The City is requiring that any amount of the Developer Fee above $2.5 million to be contributed as Developer Equity. This amount is currently estimated at $1.43 million, or 36% of the total Developer Fee. The Developer Equity should have the following terms: o The Developer Equity will not be secured by a promissory note; o The Developer Equity may only be repaid from the Developer's share of the Project's residual receipts; and o Any portion of the Developer Equity that is not repaid from the Developer's share of the Project's residual receipts may only be repaid upon sale or transfer of the property after the City Loans are repaid in full. Given that HUD severely limits the restructuring that can occur during the HOME affordability period (e.g. refinancing), the Developer's senior permanent loan term should be at least 20 years. The Developer will request a longer term permanent loan from their senior lender. Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176. 60B-13