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II -C. The Inclusionary Unit will not necessarily appreciate in value during the duration of its ownership, and the Affordable Sales Price may decrease from the amount the Owner paid to acquire the Inclusionary Unit. Thus, when the Owner resells the Inclusionary Unit, the sales proceeds received by the Owner may be less than the amount the Owner paid to acquire the Inclusionary Unit. II -D. In the event that the Inclusionary Unit is sold for the Fair Market Value, either through an Extraordinary Sale or pursuant to a foreclosure sale, the Owner must pay to the City the City Share of Excess Proceeds, which is set at fifty percent (50 %) of the difference between the Affordable Sales Price and the Net Resale Proceeds received from the sale of the Inclusionary Unit. III. Refinancing Limits Ill -A. The Owner is not permitted to refinance a Senior Loan for more than the outstanding principal amount of the Senior Loan, plus the cost of Qualified Capital Improvements, plus the customary fees and costs associated with obtaining the new Senior Loan. However, in no event can the refinanced Senior Loan be set at an amount that exceeds the then current Supportable Mortgage. III -B. If an Owner refinances the Senior Loan in violation of the requirements imposed in the Administrative Procedures Manual and this Inclusionary Housing Covenants Declaration, the City may declare the Owner in Default pursuant to Article I - Section III of this Inclusionary Housing Covenants Declaration, and exercise any or all of its rights and remedies hereunder. IV. Project CC &Rs The Inclusionary Unit is subject to the Project CC &Rs. The Homebuyer acknowledges and agrees that the Homebuyer is obligated to comply with all of the terms, conditions, covenants and restrictions set forth in the Project CC &Rs. Inclusionary Housing Covenants Declaration Page 14 City of Santa Ana January 2015