Common use of Replacement Reserve Account Clause in Contracts

Replacement Reserve Account. Owner shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 per unit per year. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.5% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.5% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 per unit per year plus the 3.5% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Prior to a Transfer Event, Owner shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Project, (2) the sale or assignment of a partnership interest in Owner and/or (3) the refinancing of secured debt on the Project. The following shall not be deemed a Transfer Event: (1) the transfer of the Project or a partnership interest in Owner in which reserves remain with the Project and the debt encumbering the Project is not increased, refinanced or otherwise modified, (2) the refinancing of Project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project lender and third parties as transaction costs, provided that reserves remain with the Project, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the Owner, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Distributions of Residual Cash Flow Owner shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully and properly funded; 3. The most recent annual audit of the Project has been received by the City and shows no material weaknesses or unresolved findings; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen (15) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City. This will include but is not limited to: 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest in the Owner among affiliates of the Investor. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periods, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City. Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company as the property manager for the Project.

Replacement Reserve Account. Owner shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 per unit per yearunit. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.5% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.5% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 per unit per year plus the 3.5% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Proposed Term Prior to a Transfer Event, Owner shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Projectproject, (2) the sale or assignment of a partnership interest in Owner and/or (3) the refinancing of secured debt on the Projectproject. The following shall not be deemed a Transfer Event: (1) the transfer of the Project project or a partnership interest in Owner in which reserves remain with the Project project and the debt encumbering the Project project is not increased, refinanced or otherwise modified, (2) the refinancing of Project project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project project lender and third parties as transaction costs, provided that reserves remain with the Projectproject, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the Owner, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Proposed Term Distributions of Residual Cash Flow Owner shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully and properly funded; 3. The most recent annual audit of the Project has been received by the City and shows no material weaknesses or unresolved findings; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen thirty (1530) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City. This will include but is not limited to: 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest in the Owner among affiliates of the Investor. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Proposed Term Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periodsat any time, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City. Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company Aperto Property Management, Inc. as the property manager for the Project.

Replacement Reserve Account. Owner shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 per unit per yearunit. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.5% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.5% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 per unit per year plus the 3.5% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Prior to a Transfer Event, Owner shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Projectproject, (2) the sale or assignment of a partnership interest in Owner and/or (3) the refinancing of secured debt on the Projectproject. The following shall not be deemed a Transfer Event: (1) the transfer of the Project project or a partnership interest in Owner in which reserves remain with the Project project and the debt encumbering the Project project is not increased, refinanced or otherwise modified, (2) the refinancing of Project project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project project lender and third Proposed Term parties as transaction costs, provided that reserves remain with the Projectproject, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the Owner, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Distributions of Residual Cash Flow Owner shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully and properly funded; 3. The most recent annual audit of the Project has been received by the City and shows no material weaknesses or unresolved findings; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen thirty (1530) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City. This will include but is not limited to: Proposed Term 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest in the Owner among affiliates of the Investor. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periodsat any time, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City. Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company Aperto Property Management, Inc. as the property manager for the Project.

Replacement Reserve Account. Owner shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 per unit per yearunit. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.5% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.5% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 per unit per year plus the 3.5% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Prior to a Transfer Event, Owner shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: Proposed Term 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Project, (2) the sale or assignment of a partnership interest in Owner and/or (3) the refinancing of secured debt on the Project. The following shall not be deemed a Transfer Event: (1) the transfer of the Project or a partnership interest in Owner in which reserves remain with the Project and the debt encumbering the Project is not increased, refinanced or otherwise modified, (2) the refinancing of Project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project lender and third parties as transaction costs, provided that reserves remain with the Project, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the Owner, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Proposed Term Distributions of Residual Cash Flow Owner shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully and properly funded; 3. The most recent annual audit of the Project has been received by the City and shows no material weaknesses or unresolved findings; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen thirty (1530) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City. This will include but is not limited to: 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest in the Owner among affiliates of the Investor. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Proposed Term Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periodsat any time, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City. Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company Aperto Property Management, Inc. as the property manager for the Project.

Replacement Reserve Account. Owner Borrower shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 500 per unit per year. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.5% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.5% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 per unit per year plus the 3.5% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Prior If not otherwise independently required by TCAC, prior to a Transfer Event, Owner Borrower shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Project, (2) the sale or assignment of a partnership interest in Owner Borrower and/or (3) the refinancing of secured debt on the Project. The following shall not be deemed a Transfer Event: (1) the transfer of the Project or a partnership interest in Owner Borrower in which reserves remain with the Project and the debt encumbering the Project is not increased, refinanced or otherwise modified, (2) the refinancing of Project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project lender and third parties as transaction costs, provided that reserves remain with the Project, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner Borrower shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. If the City does not respond to any request within such ten (10) business day period, City’s approval shall be deemed to have been granted. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the OwnerBorrower, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Distributions of Residual Cash Flow Owner Borrower shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully have been initially funded and properly funded; 3. The most recent annual audit replenished in accordance with the terms of the Project has been received by the City and shows no material weaknesses or unresolved findingsloan documents; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen (15) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City. This will include but is not limited to: 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest in the Owner among affiliates of the Investor. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periods, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City. Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company as the property manager for the Project.Term

Replacement Reserve Account. Owner shall fund a Replacement Reserve Account with annual deposits in the first year following construction completion (which may be prorated based on the actual date of completion) equal to $250 350 per unit per year. In subsequent years, the deposit to the Replacement Reserve shall be increased by 3.53% annually. To the extent that other Project lenders require higher annual deposits to the Replacement Reserve Account, the 3.53% inflator will not be required so long as the total aggregate amount of annual deposits is equal to or greater than $250 350 per unit per year plus the 3.53% annual inflator compounded annually. Disbursements from this Replacement Reserve Account shall be for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for other similar purposes for the benefit of the Project. Prior to In the event TCAC no longer requires completion of a “transfer questionnaire” or a capital needs assessment at the time of any Transfer Event, then prior a Transfer Event, Owner Borrower shall submit to the City a Qualified Capital Needs Assessment. The entity which shall own the Project subsequent to the Transfer Event (the “Post Transfer Owner”) shall covenant to the City that the Post Transfer Owner (and any assignee thereof) shall: 1. Set aside at the closing of the Transfer Event adequate funds to perform the Short Term Work; 2. Perform the Short Term Work within three years from the date of the Transfer Event; 3. Make monthly deposits to reserves as are necessary to fund the Long Term Work, taking into account any balance in replacement reserve accounts upon the conclusion of the Transfer Event beyond those required by Section 1 of this clause; and 4. Complete the long term work when required, or prior thereto, pursuant to the Qualified Capital Needs Assessment. Proposed Term For purposes of this section, the following terms shall have the following meanings: 1. “Qualified Capital Needs Assessment” shall mean a capital needs assessment for the property dated within one hundred eighty (180) days of the proposed Transfer Event which is prepared by an independent third- party architect, engineer, or other qualified firm approved by the City and clearly sets forth (1) the capital needs of the Project for the next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (2) the capital needs of the Project for the subsequent twelve (12) years (the “Long Term Work”) and the projected contributions to reserves that will be needed to accomplish that work. 2. “Transfer Event” shall mean (1) a transfer of the ownership of the Project, (2) the sale or assignment of a partnership interest in Owner Borrower and/or (3) the refinancing of secured debt on the Project. The following shall not be deemed a Transfer Event: (1) the transfer of the Project or a partnership interest in Owner Borrower in which reserves remain with the Project and the debt encumbering the Project is not increased, refinanced or otherwise modified, (2) the refinancing of Project debt which does not increase the outstanding principal balance of the debt other than in the amount of the closing costs and fees paid to the Project lender and third parties as transaction costs, provided that reserves remain with the Project, (3) the replacement of a general partner by a limited partner upon the occurrence of a default by a general partner in accordance with partnership agreement of the Project owner, or (4) a transfer pursuant to a foreclosure or deed in lieu of foreclosure to a non-related party. Operating Budget Oversight Prior to the beginning of its fiscal year, Owner shall submit a proposed operating budget to the City for review and approval. The City shall respond to such requests for approval within ten (10) business days of receipt of said request and shall not withhold approval unreasonably. The proposed budget must i) identify any identity of interest or related party costs if the management company is an affiliate of the Owner, ii) compare the proposed budget to the prior year’s (or trailing 12 month) actual operating costs, and iii) provide explanations of substantive changes in the budget. Distributions of Residual Cash Flow Owner shall not make distributions of Residual Cash Flow to any Controlling Entity or related parties, other than for normal operating costs in the annual budget approved by the City, without written approval by the City based on a determination by the City that: 1. No default in the terms of the City’s loan or related documents exists and is continuing; 2. All required Reserve Accounts and escrows are fully and properly funded; 3. The most recent annual audit of the Project has been received by the City and shows no material weaknesses or unresolved findings; and 4. Making a distribution of Residual Cash Flow will not require the property to access Operating Reserve Accounts. Proposed Term To obtain approval to make a Residual Cash Flow distribution, Owner shall submit to the City a request at least fifteen thirty (1530) business days prior to any anticipated distribution together with a current financial statement for the Project that will enable the City to assess criteria above. Owner shall provide a prompt response to the City’s requests for additional documentation, if needed. Unauthorized distributions of Residual Cash Flow will result in liquidated damages of $1,000 per day, provided that Owner fails to return any unauthorized distributions within three (3) business days of written notice from City. Other The City’s willingness to make the loan as anticipated herein is contingent upon and made with specific reliance on the evaluation of the specific individuals and entities making up the Owner. Owner agrees that no sale or transfer of general or limited partnership interests, member interests, managing member interest, or other controlling interest in the Owner will be made without the prior written consent of the City, which shall not be unreasonably withheld. City shall review and provide a written determination on the sale or transfer within 60 calendar days of receipt of written notice of the potential sale or transfer. This right of review will include but is not limited to: 1. The voluntary or involuntary re-assignment of the role of general partner, managing member, or other controlling entity or individual (collectively the “Controlling Entities”) to another entity or individual; and 2. Sale or transfer of the interest of any owner of a Controlling Entity; 3. Sale or transfer of any other interests in Owner, including but not limited to a limited partner interest, special limited partner interest, or member interest. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the City consents to the transfer of the Investor limited partner’s interest or Investor member’s interest partnership interests in Owner and the Owner among affiliates removal of the Investorgeneral partner of Owner by the investor limited partner for cause, and the replacement of the general partner with an affiliate of the investor limited partner in accordance with the terms of the partnership agreement. Owner must provide notice of such transfer to the City at least 30 days prior to the transfer. Additionally, the City’s willingness to make the Loan as anticipated herein is also contingent upon and made with specific reliance on the evaluation of the planned property manager for the Project. Initially, and throughout the term of this Agreement, the City must approve of any property management company, or another similar agent, employed by the Owner. The City’s approval of a specific property management company or agent for the Project may be withdrawn only for cause, and with applicable cure periodsat any time, and upon notice of same the Owner will identify and contract with a property manager otherwise acceptable to the City, relevant agencies and investors. Proposed Term Initially, the City has approved The ▇▇▇▇ ▇▇▇▇▇▇▇ Company Mutual Housing Management as the property manager for the Project.