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Meta Housing Corporation Santa Ana Arts Collective November 3, 2015 Page 2 federal funds as defined under the HOME Program as the term commitment is defined therein, Santa Ana intends that this letter evidence the City's and Authority's preliminary award of the Santa Ana Assistance to the Developer for the Project subject to the conditions described below. Further, Santa Ana states its objective for the Developer to satisfy the provisions of the California Tax Credit Allocation Committee ("TCAC") Regulations, in particular Section 10325, albeit there is no intention to violate HOME Program requirements, in particular 24 CFR 92.2. The amount of the HOME Loan to be provided to the Project has been determined based upon Santa Ana's review of the Developer's proposal for the Santa Ana Assistance and the development proforma and projected cash flows for the Project submitted by the Developer to Santa Ana as of August 21, 2015 ("Proforma"). The Unit Mix is an important part of the Developer's proposal to Santa Ana because the Project is intended to serve a target population of Very Low and Extremely Low Income persons. The project will also provide a preference for artist working families, which is consistent with the federal regulations at 24 CFR Part 92 and the City's adopted Consolidated Plan. The Community Development Agency's Executive Director has authority to approve revised development proformas and projected cash flows for the Project; provided, however, that the Santa Ana Assistance is not materially increased or extended. The HOME Loan will have the following terms: • $2,260,000 principal amount, or as touch thereof as is disbursed for hard and soft costs in constricting the Proj ect; • 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 Agreement) with the remaining 50% to be disbursed to the Developer; • Remaining principal and accrued interest due upon the 55" anniversary of the issuance of Certificate of Occupancy and/or final building permits or earlier upon sale, refinancing or default. Additionally, Santa Ana 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; • Cost savings from the Project, if any, will be applied first to pay down the HOME Loan, subject to compliance with the TCAC Regulations. The City's obligation to provide the HOME Loan and additional assistance to the Project are subject to each of the following conditions: 1. Approval of the HOME Loan Agreement by the City Council of the City of Santa Ana. 2. Compliance with the HOME Program, and applicable federal regulations set forth in 24 CFR Part 92 and 24 CFR Part 983. 3. Compliance with and completion of environmental review of the Project pursuant to the California Environmental Quality Act ("CEQA") and the National Environmental Protection Act ("NEPA") and approval thereof (the NEPA clearance for the Project is currently not under review by HUD). 29A-10