2 - FIRST AMENDMENT TO OPTION AGREEMENT_2020-12-15

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First Amendment to the Option Agreement for the Crossroads at Washington December 15, 2020 Page 2 "County") and the Housing Authority of the City of Santa Ana (the "Authority"). Both parcels are currently vacant and free of building structures or occupants. However, the sites were previously used for agriculture, industrial storage and vehicular services. Various contractors and businesses, including transit agencies, auto repair services, and trucking companies, occupied the Authority parcel from 1966 to 1991. The County parcel was developed with a materials/equipment storage area between 1972 and 1989. The northwestern portion of the entire site was primarily occupied by vehicle service facilities that used onsite gasoline, diesel fuel underground storage tanks and fuel dispensers. Between 2007 and 2019, various contractors and services leased both parcels (e.g., ARB Underground, Christiansen Amusement, etc.). Table 1 — Property Ownership Property Owner Assessor's Parcel Number Acres Housing Authority of the City of Santa Ana 398-092-14 1.456 County of Orange 398-092-13 0.83 Total 2.286 Washington Santa Ana Housing Partners, L.P. (the "Developer"), a California limited partnership formed by The Related Companies of California LLC and A Community of Friends, the County and the Authority entered into an Option Agreement on February 25, 2020, which provided site control for the Developer to apply for funding. The Developer has invested significant staff time and financial resources in this Project to secure funding and compete for Low -Income Housing Tax Credits from the California Tax Credit Allocation Committee ("TCAC") while conducting comprehensive environmental due diligence. To date, the Developer has incurred over $695,000 in third -party predevelopment expenses and over $500,000 in staff overhead costs specific to this project. This includes environmental assessments and $214,772 of non-refundable payments for the required TCAC Allocation Fee ($107,386) and TCAC Performance Deposit ($107,386). The Developer is committed to investing more staff time to the Project. The First Amendment to the Option Agreement provides for reimbursement to the Developer for a portion of the costs should the Project not move forward in the future. While additional investigations are warranted with outside environmental health agency involvement, the Developer will need to request additional reimbursement in the future once further environmental assessment costs have been identified. These costs will be documented in a future Second Amendment to the Option Agreement. Environmental Assessments The Developer retained Altec Testing & Engineering, Inc. ("Altec") during the due diligence period to conduct environmental investigations for the sites. An initial Phase I environmental investigation was conducted on October 19, 2019, indicating the likely presence of hydrocarbon contamination on the site in view of past uses that would require some offsite disposal of soil, a manageable mitigation. A Phase II Environmental Site Assessment ("Phase II ESA") Report was warranted based on the Phase I findings and was prepared by Altec on February 19, 2020. The Phase II ESA Report identified unexpected contaminants (e.g., Tetra chloroethylene, also known as PCE) 2-2