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HomeMy WebLinkAboutItem 8.6 FairwayRan LoanCommit r . e. CITY CLERK File # D~[l]]~-~[Q] AGENDA STATEMENT CITY COUNCIL MEETING DATE: July 1,2003 / SUBJECT: Loan Commitments and Letters of Support and Commitment of Financial Contribution for the California Debt Limit Allocation Committee (CDLAC) bond allocation applications for Fairway Ranch. Report Prepared By: Julia Abdala, Housing Specialist ATTACHMENTS: 1. Letters of Support for the Fairway Ranch Senior Housing Project. and the Fairway Ranch Multi-Family Project 2. Resolution authorizing two Loan Commitments for the Fairway .Ranch Senior Housing Project and the Fairway Ranch Multi- Family Housing Project 3. Fairway Ranch Financial Spreadsheets for the Senior Housing Project and for the Multi-Family Housing Project and Pro Forma . Assumptions Narrative. RECOMMENDATION: ~ Staff recommends that the City Council: 1. Approve the letters of support for both Fairway Ranch Projects, the Senior Project and the Multi-Family Project, and authorize the Mayor to sign on behalf of the City; 2. Approve the Loan Commitments for the Senior Project and the Multi-Family Project; and (Exhibit A to Resolution) 3. Adopt a resqlution (Attachment 2) approving the Loan Commitmerits and authorizing the Mayor to sign on behalf of the City. FINANCIAL STATEMENT: the letters of support for the CDLAC application and the signed and ,'executed Loan Commitments commit the City to two loans, one for / the Fairway Ranch Senior Housing Project and one for the Fairway Ranch Multi-Family Housing Project. Each loan is not to exceed $2,250,000 of Affordable Housing In-lieu Fee funds. The loans will be paid back to the City 1/3 in year 4, 1/3 in year 5 and the final third in year 6 after the disbursement of the funds for each project; 3% simple interest will be charged for each loan. DESCRIPTION: At the February 18, March 4, and April 1 City Council meetings, the City Council conceptually considered a proposal by the Lin Family to construct a three-phase, 930-unit project in Dublin Ranch Area B consisting of senior, Multi-Family and condominium developments with an aggregate total of 587 \~Y- ITEMNO.-8..6 t affordable units designed to satisfy the Inclusionary Zoning obligation for the development of up to 2,655 units in the remainder of Dublin Ranch. The financial pro formas (Attachment 4), which are subject to the review and approval of bond counsel, the project tax credit accountant, and the provider of credit enhancement for the bonds, show two projects with multiple funding sources. Each project will be financed separately, but the basic financing structure is the same. The funding for these two projects is currently proposed to consist of tax-exempt bonds backed by a Fannie Mae credit enhancement, Low Income Housing Tax Credits, conventional construction loans backed by a letter of credit, loans from CalPERS, and financing from the City of Dublin. The Senior Housing development shows a Total Project Cost of $65,501,000 and Multi-Family Housing development lists a Total Project Cost of $70,078,000. Other features of the pro formas include ground leases for both properties, allowing the current property owners to retain ownership of the property. For the first years no ground lease payments will be due from these projects. The pro formas show that ground lease payments begin in year 8 for the Senior Housing Project and in year 12 for the Multi-Family Housing Project. During the construction period the developer is also deferring receipt of the fees that are usually charged to develop projects. In addition, the pro formas show a supplemental contribution from the developer in years 2, 3 and 4 following construction. These supplemental contributions (which coincide with the repayment schedule for the City's loan) will allow the projects to achieve sufficient cash flow to maintain required debt service coverage. The pro formas show repayment of the supplemental contributions to the developer in years 5-8 for the senior project and in years 8-12 for the Multi-Family project. City Staff has been working with the developers' representatives to come to agreement on various issues relating to the development and affordability of the various projects. These negotiations have been productive, and at this time the developers are preparing to submit two applications for tax-exempt bond allocations. One application is for the Senior Housing Project and the second for the Multi-Family Housing Project.. These applications are due to the California Debt Limit Allocation Committee (CDLAC) by July 16, 2003. To be able to effectively compete for this funding source, the developer has asked the City to provide the following items: 1. A letter of support, one for each project 2. Documents committing the City of Dublin to make a loan to each project ANALYSIS Letters of Support - A letter of support (Attachment 1) is used by the developer to provide the CDLAC reviewers with proof that the City supports development of the projects in the community. The letters further indicate the financial assistance that the City of Dublin is willing to provide. For these two projects the letters describe the City's financial assistance as the loans to support the developments and the waiver of future commercial linkage fees on Dublin Ranch commercial development. The letters of support indicate the amount of the loans that the City of Dublin has agreed to provide ($2,250,000 per each project), the timing of the funding of the loans (at construction loan closing), the interest rate (3% simple interest), and the estimated value of the commercial linkage fee waiver ($1,000,000). Loan Commitment Letters - The City Attorney has drafted two Loan Commitment documents, which describe the conditions under which the City will provide financial assistance to the projects. One commitment letter would serve for the Senior Housing Project and one for the Multi-Family Housing Project. These commitment letters, when executed by both the developer and the City, would commit the City of Dublin to provide a total of $4.5 million in financing - a $2,250,000 loan for each of the two 2 projects. The security for the City of Dublin's loan is property external to the Fairway Ranch development in the Dublin Ranch. The City through a Deed of Trust would hold this collateral property until such time that both of the City's loans are paid back in full. The Loan Commitments describe the following: 1. The loan amounts 2. The loan terms and repayment schedule 3. The interest rate 4. The purpose for which the loan proceeds may be used 5. Description of the collateral property that will secure the loans 6. The documents that will be executed in connection with the loan 7. Description of the Declaration 'of Covenants, Conditions and Restrictions and the Regulatory Agreements for the two projects which will require the very low-, low- and moderate-income units developed as part of the Senior and Multi-Family projects to remain affordable for 55 years. 8. Additional items the developer is required to deliver to the City in connection with the loans. The loan amount - Through negotiations, the City of Dublin agreed to finance the Fairway Ranch projects with a maximum of $4.5 million. Since the first two projects are the two that will be applying for bonds and tax credits, the developer requested that these two projects, the senior phase and the multi-Multi-Family phase, receive the City financing. The total amount was divided into two loans of $2,250,000 each. The loan terms & repayment schedule - The loan will be completely paid back to the City by the sixth year after the funds are provided. The first 1/3 would be due on the 4th anniversary of the fund disbursement for the project, 1/3rd would be due on the 5th anniversary of the fund disbursement and the final 1/3 would be due on the 6th anniversary of fund disbursement. The interest rate - The City of Dublin agreed to charge 3% simple interest on both of these loans. The interest accrued on the outstanding principal balance of each loan will be paid together with the payments of principal due in years 4, 5 and 6 of the loan term. Use of the loan proceeds - The Loan Commitment specifies that the loan proceeds may only be used for third-party construction costs for the very low-, low- and moderate-income units constructed as part of the development. Collateral property - The City's loans will be secured by a first deed of trust on the commercial property along Dublin Blvd. now owned by the Lin Family. Documents - The Commitment Letter describes the additional documents that the developer will be obligated to provide in connection with the loans. These include a Deed of Trust, a Promissory Note for each loan, environmental and general indemnity agreements indemnifying the City against liability arising in connection with breach of developer's representations or violation of environmental laws. Covenants, Conditions and Restrictions and Regulatory Agreements - These documents will require the low-, very-low and moderate-income units developed within the Senior Housing and Multi-Family Housing Projects to remain affordable for 55 years. The documents will be recorded against the property and will be binding on the owner's successors. Additional Deliveries and Conditions - The Loan Commitment Letters describe additional conditions with which the developer must comply, including delivery of title insurance, a survey, and an environmental report for the Collateral Property, proof of project financing, marketing and management plans. CONCLUSION In conclusion, the developers of Fairway Ranch are preparing to apply to the California Debt Limit Allocation Committee for an allocation of tax-exempt bonds to finance the Fairway Ranch Senior Housing Project and the Fairway Ranch Multi-Family Project. This type of financing is highly competitive, and the developer is working toward providing thorough and convincing applications. The City of Dublin has demonstrated a strong interest in affordable housing and is working with the developers of Fairway Ranch to facilitate development at this Dublin Ranch site. It is in the interest of the City of Dublin and the developers of Fairway Ranch to work together in the effort to secure financing for the two first phases of Fairway Ranch. Staff has provided letters of support (Attachment 1) that include the City's financial contribution and the City Attorney has drafted Loan Commitments for the Senior Housing Project and the Multi-Family Project. These documents should assist the developers in producing more competitive funding applications. RECOMMENDATION: Staff recommends that the City Council: 1. Approve the letters of support for both Fairway Ranch Projects, the Senior Project and the Multi-Family Project, and authorize the Mayor to sign on behalf of the City; 2. Approve the Loan Commitments for the Senior Project and the Multi-Family Project; and 3. Adopt a resolution (Attachment 3) approving the Loan Commitments and authorizing the Mayor to sign on behalf of the City. CITY OF DUBLIN 100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.ca.us July 1, 2003 Ms. Laurie Weir, Executive Director California Debt Limit Allocation Committee 915 Capitol Mall, Room 308 Sacramento, CA. 95814 Re: City of Dublin Support Fairway Senior Housing Project, Dublin, CA Dear Ms. Weir: To help maximize the number of affordable units in the Fairway Senior Housing Project, the City of Dublin has agreed to provide financial assistance to the Project by (a) providing a loan to support the development of the Project; and (b) waiving a future commercial linkage fee on Dublin Ranch commercial development. These forms of assistance will enable this much needed Project to provide 50% of its units to very low and low income tenants, and 30% of its units to moderate income tenants. The terms of the City loan and the commercial linkage fee waiver are summarized below. City Loan As documented in the Loan Commitment Letter executed by the Developer and the City of Dublin, the City has agreed to provide financial assistance in the form of a loan from the City's Inclusionary Zoning In-Lieu Fee Fund in the principal amount of $2,225,000 to support the development of the Project and increase and improve the supply of housing available in the community to very low, low and moderate income households. The loan will be funded at construction loan closing and remain in place during the projected construction, lease-up and attainment of stabilized operations and permanent loan funding phases of the project. A below-market rate of three percent simple interest will accrue on the outstanding principal balance. The entire outstanding principal balance and accrued interest are payable in full at maturity. ATTACHMENT lA Commercial Linkage Fee Waiver As documented in the Development Agreement executed by the Developer and approved by the City of Dublin, because the Developer is providing affordable units substantially in excess of those required under the City's Inclusionary Zoning Ordinance, the City of Dublin has agreed to exempt commercial development in Dublin Ranch from the payment of any commercial linkage fee or similar fee that the City may adopt which requires payment of a housing fee in connection with the development of such property for commercial use. This waiver is contingent upon the completion of the Project and compliance with the affordability and other requirements set forth in the Development Agreement. The City's financial consultant, CSG Advisors, has estimated the value of this future fee waiver to be approximately $1,000,000. The City of Dublin strongly supports this important project. Please feel free to call me with any questions you may have regarding this matter. Sincerely, Mayor City of Dublin Area Code (925) · City Manager 833-6650 - City Council 833-6650 · Personnel 833-6605 · Economic Development 833-6650 Finance 833-6640 · Public Works/Engineering 833-6630 · Parks & Community Services 833-6645 · Police 833-6670 Planning/Housing/Code Enforcement 833-6610 - Building Inspection 833-6620 - Fire Prevention Bureau 833-6606 CITY OF DUBLIN 100 Civic Plaza, Dublin, California 94568 Website: http://www.ci.dublin.ca.us July 15, 2003 Ms. Laurie Weir, Executive Director California Debt Limit Allocation Committee 915 Capitol Mall, Room 308 Sacramento, CA. 95814 Re: City of Dublin Support Fairway Family Housing Project, Dublin, CA Dear Ms. Weir: To help maximize the number of affordable units in the Fairway Family Housing Project, the City of Dublin has agreed to provide financial assistance to the Project by (a) providing a loan to support the development of the Project; and (b) waiving a future commercial linkage fee on Dublin Ranch commercial development. These forms of assistance will enable this much needed Project to provide 50% of its units to very low and low income tenants, and 30% of its units to moderate income tenants. The terms of the City loan and the commercial linkage fee waiver are summarized below. City Loan As documented in the Loan Commitment Letter executed by the Developer and the City of Dublin, the City has agreed to provide financial assistance in the form of a loan from the City's Inclusionary Zoning In-Lieu Fee Fund in the principal amount of $2,225,000 to support the development of the Project and increase and improve the supply of housing available in the community to very low, low and moderate income households. The loan will be funded at construction loan closing and remain in place during the projected construction, lease-up and attainment of stabilized operations and permanent loan funding phases of the project. A below-market rate of three percent simple interest will accrue on the outstanding principal balance. The entire outstanding principal balance and accrued interest are payable in full at maturity. ATTACHMENT lB Commercial Linkage Fee Waiver As documented in the Development Agreement executed by the Developer and approved by the City of Dublin, because the Developer is providing affordable units substantially in excess of those required under the City's Inclusionary Zoning Ordinance, the City of Dublin has agreed to exempt commercial development in Dublin Ranch from the payment of any commercial linkage fee or similar fee that the City may adopt which requires payment of a housing fee in connection with the development of such property for commercial use. This waiver is contingent upon the completion of the Project and compliance with the affordability and other requirements set forth in the Development Agreement. The City's financial consultant, CSG Advisors, has estimated the value of this future fee waiver to be approximately $1,000,000. The City of Dublin strongly supports this important project. Please feel free to call me with any questions you may have regarding this matter. Sincerely, Mayor City of Dublin Area Code (925) · City Manager 833-6650 · City Council 833-6650 · Personnel 833-6605 - Economic Development 833-6650 Finance 833-6640 · Public Works/Engineering 833-6630 · Parks & Community Services 833-6645 · Police 833-6670 Planning/Housing/Code Enforcement 833-6610 - Building Inspection 833-6620 - Fire Prevention Bureau 833-6606 RESOLUTION NO. - 03 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AUTHORIZING TWO LOAN COMMITMENTS FOR FAIRWAY RANCH WHEREAS, the City Council finds that there is a severe shortage of housing affordable to lower- income households in the City of Dublin; and WHEREAS, the development of affordable housing in the City of Dublin will serve a public purpose; and WHEREAS, the Fairway Ranch project will provide 162 affordable units in excess of the affordable units required for the site; and WHEREAS, the Fairway Ranch development will now be applying for tax-exempt bond allocations for the Senior project and for the Multi-Family project; and WHEREAS, the developer's application to the California Debt Limit Allocation Committee will receive more favorable consideration if the Committee knows that the City of Dublin will be contributing financially toward this project; and WHEREAS, the City of Dublin is willing and able to provide a loan of up to $2,250,000 for the Fairway Ranch Senior Project from the Inclusionary Housing In Lieu Fund; and WHEREAS, the City of Dublin is willing and able to provide a loan of up to $2,250,000 for the Fairway Ranch Multi-Family Project from the Inclusionary Housing In Lieu Fund. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin, a Municipal Corporation, approves the Loan Commitment letter for the Fairway Ranch Senior Project; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin, Municipal Corporation, approves the Loan Commitment letter for the Fairway Ranch Multi-Family Project. FURTHER RESOLVED, that the City Council authorizes and directs the Mayor to sign both of these letters substantially in the form, attached hereto as Exhibit A1 and A2 and to undertake such further action as may be necessary and desirable to carry out the intent of this resolution. PASSED, APPROVED, AND ADOPTED this 1st day of July 2003. AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: City Clerk DRAFT LOAN COMMITMENT ,2003 RE: Fairway Ranch - Senior Housing Dear : When accepted by Dublin Ranch Holdings, LLC, a Delaware limited liability company ("Dublin Ranch Holdings"), this letter (hereafter "Commitment" or "Commitment Letter"), the terms of which were approved by the City Council of the City of Dublin, California ("City") by Resolution No. __ adopted 2003, shall constitute the commitment of City to make a loan (the "Loan") from City's Inclusionary Zoning In- Lieu Fee Fund in the amount and subject to the terms, conditions, and provisions set forth herein. 1. Borrower, Manager/General Partner; Assignment. Subject to Paragraph 16 hereof, Dublin Ranch Holdings shall be permitted to assign its rights hereunder to Dublin Ranch Senior Apartments, L.P., a limited partnership to be organized under the laws of the State of California (hereafter "Dublin Ranch Senior Project Partnership") for the purpose of developing the Senior Housing Project (as defined below). The Manager/Managing Member of Dublin Ranch Holdings is James Tong. The general partner of Dublin Ranch Senior Project Partnership shall be ., a limited liability company to be formed under the laws of the State of Prior to the assignment described in this Paragraph, the term "Borrower" as used herein shall mean Dublin Ranch Holdings, and the term "General Partner" as used herein shall mean James Tong, in his capacity as Manager/Managing Member of Dublin Ranch Holdings. Following such assignment, the term "Borrower" as used herein shall mean Dublin Ranch Senior Project Partnership, and the term "General Partner" as used herein shall mean the general partner of Dublin Ranch Senior Project Partnership. 2. Loan Amount. The amount of the Loan shall be Two Million Two Hundred and Fifty Thousand Dollars ($2,250,000). 3. Loan Term. The Loan shall be for a term of six (6) years commencing on the date of first disbursement of the Loan ("Initial Disbursement Date"). 4. Repayment. The Loan will be repaid in three equal installments of principal, th th th together With interest accrued thereon, on the 4 , 5 and 6 anniversary of the Initial Disbursement Date. 5. Interest Rate. Three percent (3%) simple interest per annum shall accrue on the outstanding principal balance of the Loan. 633107-5 6. Prepayment. The Loan may be prepaid in whole or in part without penalty or premium. The effectiveness of the Affordable Housing Regulatory Agreement and the CC&Rs (each as described below) shall survive any such prepayment. 7. Use of Proceeds. The Loan proceeds shall be used exclusively to pay for third-party construction costs Borrower incurs to construct very low-, low- and moderate-income units constructed as part of the senior housing development (hereafter referred to as the "Senior Housing Project") that Borrower shall develop on the property (the "Property") that is the subject of that certain Development Agreement - Fairway Ranch Senior Housing Component dated as of ,2003, and executed by and between City and Dublin Ranch Holdings or its predecessor(s) in interest (the "Senior Housing Development Agreement"). 8. Collateral. The Loan shall be secured by a first deed of trust (the "Deed of Trust") on certain real property (the "Collateral Property") commonly known as Parcel 9 of Tract 7148, Dublin, California, together with improvements that may be constructed thereon and all equipment, personal property and fixtures that may be located thereon. The Collateral Property is owned by Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin, each of whom shall execute the Deed of Trust. The Deed of Trust shall also secure any loan the City may provide in connection with the development of multi-family housing on the property that is the subject of that certain Development Agreement - Fairway Ranch Multi-Family Component dated as of _, 2003, and executed by and between City and Dublin Ranch Holdings or its predecessor(s) in interest. The Collateral Property shall be subject to no mortgage, lien or claim other than liens for which the City has provided written consent and which: (a) are subordinate to the Deed of Trust, (b) secure repayment of obligations incurred solely in connection with the financing of the Senior Housing Project, the Multi-Family Project or other purposes approved by City, (c) require notice to the City in the event of default, and (d) do not in the aggregate together with all other outstanding liens result in encumbrance of the Collateral Property in excess of 60% of its fair market value. Borrower may provide substitute collateral reasonably acceptable to City in the form of real property located within the City of Dublin, provided that: (i) in City's reasonable determination, the fair market value of such substitute collateral is at least three times the value of the outstanding balance of Borrower's obligations to City to be secured thereby; (ii) Borrower pays all reasonable expenses City incurs in connection with City's review and investigation of the condition and value of such property; (iii) City's lien securing Borrower's obligations is a first lien on such property; and (iv) any subordinate liens on such property meet the requirements of the second paragraph of this Paragraph 8. 9. Limitation of Liability. The Loan shall be non-recourse as to payment of principal and interest; Borrower's obligation to repay the Loan shall be secured by the Collateral Property. 633107-5 2 10. Documents. City's commitment to make the Loan described in this Commitment Letter is subject to the condition that Borrower and Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin (collectively hereafter, the "Lins" or the "Indemnitors"), as applicable, shall duly execute, acknowledge and deliver to City all documents required to evidence and secure repayment of the Loan, which documents shall be in form and substance satisfactory to the City Manager and the City Attorney, and which shall include, without limitation, the following documents (collectively, the "Loan Documents"): (a) a Development Agreement for Dublin Ranch Area B, executed by City and by Dublin Ranch Holdings or its predecessor(s) in interest as owner of Dublin Ranch Area B ("Development Agreement-Fairway Ranch") which shall describe the conditions of development for such property, including conditions related to compliance with City's Inclusionary Zoning Ordinance and the phasing of development for such property; (b) the Senior Housing Development Agreement, executed by City and by Dublin Ranch Holdings or its predecessor(s) in interest as owner of the Property, which shall describe the conditions of development for the Property including conditions relating to compliance with City's Inclusionary Zoning Ordinance, and which shall be assigned to Borrower prior to the closing of the Loan ("Closing"); (c) an Affordable Housing Regulatory Agreement, executed by Borrower, which shall provide that of the units developed within the Senior Housing Project, 64 shall be made available at affordable rents to very low-income households, 97 shall be made available at affordable rents to low-income households, and 131 shall be made available at affordable rents to moderate-income households (collectively the "Affordability Restrictions"). The Affordable Housing Regulatory Agreement shall be recorded against the Property, shall be binding upon Borrower's successors in interest for a term of 55 years, and shall not be subordinated to any interest, lien, lease, ground lease or mortgage recorded against the Property other than the CC&R's, the Development Agreement-Fairway Ranch, the Senior Housing Development Agreement, and the Master Development Agreement between City and the Lins for the Dublin Ranch Project (Areas A, B, C, D, E, F, G and H) ("Master Development Agreement"); provided however, if CC&Rs (as described below) are recorded against the Property in accordance with all conditions described in subparagraph (d) of this Paragraph 10, the Affordable Housing Regulatory Agreement may be subordinated to the interests and rights of senior lenders providing financing for the Senior Housing Project in a manner customary for a Fannie Mae or Freddie Mac credit enhanced tax-exempt bond transaction if so required; (d) a Declaration of Covenants, Conditions and Restrictions ("CC&Rs") which shall impose the Affordability Restrictions, executed by the owner(s) of the Property for the benefit of City. The CC&Rs: (i) shall be recorded against the Property, (ii) shall be binding upon Borrower's successors in interest for a term of 55 years, (iii) shall provide that City shall have the right to enforce the provisions thereof, (iv) shall provide that any amendments thereto or rescission thereof shall require the consent of City, and (v) shall not be subordinated to any other interest, lien, lease, ground lease or mortgage recorded 633107-5 3 against the Property other than the Development Agreement-Fairway Ranch, the Senior Housing Development Agreement, and the Master Development Agreement; (e) a Loan Agreement, executed by City and Borrower, and approved by the Lins as owners of the Collateral Property, which shall describe the conditions under which the Loan proceeds may be disbursed consistent with the terms of this Commitment Letter; (f) a Promissory Note in the amount of the Loan, executed by Borrower; (g) a Deed of Trust, executed by the Lins as owners of the Collateral Property, which shall secure repayment of the Loan and which shall be recorded as a first lien on the Collateral Property; (h) an Environmental Indemnity Agreement, executed by the Borrower and the Indemnitors, which shall provide for the indemnification of City against all claims or liability arising in connection with the presence of hazardous materials on the Collateral Property or the Property or the violation of any environmental law, rule or regulation applicable thereto; (i) a General Indemnity Agreement, executed by Borrower and the Indemnitors, which shall provide for the indemnification of City against liability arising in connection with the breach of Borrower's or the Indemnitors' representations, warranties and covenants (other than Borrower's payment obligations) made in connection with the Loan. The terms and scope of the General Indemnity Agreement shall be comparable to that required by other lenders or investors providing financing to the Senior Housing Project. 11. Additional Deliveries. City's obligation to make the Loan is subject to the condition that City shall have received each of the following, in form and substance satisfactory to City no later than 30 days prior to Closing unless otherwise specified herein: (a) Evidence of Funding. Evidence of funding commitments sufficient to fully finance the construction and permanent financing of the Senior Housing Project; (b) Senior Housing Project Budget. Borrower shall deliver to City a budget for development of the Senior Housing Project ("Senior Housing Project Budget") which shall show all sources and uses of funds for construction and permanent financing of the Senior Housing Project. (c) Appraisal. At Borrower's expense, if City so elects, City may select and engage an appraiser to provide a valuation of the Collateral Property or any substitute collateral proposed by Borrower. (d) Environmental Reports. Borrower shall deliver to City a Phase I environmental report for (i) the Property, and (ii) the Collateral Property. If such 633107-5 4 environmental reports are not satisfactory to City, City may request further environmental testing to be conducted at Borrower's expense, or may terminate this Commitment. (e) Financial Statements. Borrower shall furnish to City operating pro formas for the Senior Housing Project in such form and detail as City reasonably requests. (f) Title Insurance. Borrower shall provide to City a commitment to issue a CLTA Lender's title insurance policy in the full amount of the Loan (together with all other obligations secured by the Deed of Trust) in form and substance acceptable to City, insuring that the lien of the Deed of Trust, when recorded against the Collateral Property, shall be subject to only such exceptions as approved by City and which shall include such endorsements as requested by City ("Title Insurance Commitment"). The Title Insurance Commitment will be issued by a title insurer approved by City. On the Closing Date, Borrower will provide to City a title insurance policy issued pursuant to the Title Insurance Commitment. (g) Reserved. (h) Plans and Specifications; Building Permits: Licenses. Borrower shall provide a complete set of the final plans and specifications for the Senior Housing Project for approval by City, and Borrower shall obtain all building permits and other approvals necessary for the Senior Housing Project. Borrower shall provide evidence to City that all governmental permits and approvals required for the Senior Housing Project have been obtained from the appropriate agencies. (i) Construction Contract; Bonds. Borrower will provide City with a guaranteed maximum price general construction contract in an amount no greater than the amount indicated by the Senior Housing Project Budget, together with payment and performance bonds with a dual obligee rider in favor of City. The general contractor, the form and content of the general contract and the form and content of the bonds must be acceptable to City. (j) Ground Lease. Borrower shall provide to City a copy of the ground lease for the Property, executed by and between Borrower as lessee and the owner(s) of the Property as lessor. (k) Insurance. City shall be named as an additional insured on all insurance policies required by lenders or investors providing financing for the Senior Housing Project, and all such policies shall provide that City will receive not less than thirty (30) days' written notice prior to cancellation. (1) Management Contract and Management Firm. Borrower shall provide a copy of the proposed management contract for the Senior Housing Project together with such information about the proposed management firm, including without limitation a description of the management firm's experience with similar projects, staffing and qualifications, as City may reasonably request. The management contract shall describe 633107-5 the services to be provided by the management firm, including without limitation, marketing, tenant qualification and certification, maintenance and repairs. (m) Marketing and Management Plan. Borrower shall provide City with a copy of a proposed marketing and management plan for the Senior Housing Project which shall address how Borrower proposes to (1) manage and maintain the Senior Housing Project, (2) market the affordable units in the Senior Housing Project to eligible households in accordance with the selection criteria specified in the City's Inclusionary Zoning Regulations, and (3) certify the eligibility of eligible senior households. (n) Authorizations; Good Standing. Borrower shall provide City with the following: For Borrower: (i) a certified copy of Borrower's partnership agreement together with a Certificate of Good Standing and LP-1 indicating that Borrower is properly organized and authorized to do business in the State of California; (ii) a certified resolution indicating that Borrower has authorized this transaction and that the persons executing the Loan Documents on Borrower's behalf have been duly authorized to do so. If Borrower is organized in a form other than a limited partnership, Borrower shall provide counterpart organizational documents and certificates applicable to such organizational form. For Borrower's General Partner: (i) Certificate of Formation/Articles of Organization certified by the Secretary of State; (ii) operating agreement certified by the Manager/Managing Member of the company; (iii) Certificate of Good Standing issued by the Secretary of State; (iv) certified resolution indicating that the General Partner has authorized this transaction and that the persons executing the Loan Documents on the General Partner's behalf have been duly authorized to do so. If Borrower is organized in a form other than a limited partnership, or if Borrower's General Partner is organized in a form other than a limited liability company, Borrower shall provide counterpart organizational documents and certificates applicable to such organizational forms. (o) Legal Opinion. Borrower shall provide City with an opinion of Borrower's counsel which shall provide that Borrower and Borrower's General Partner are duly organized, validly existing and authorized to do business in the State of California, that each of the Loan Documents has been duly authorized and executed and when delivered shall be the binding obligations of the owner of the Property, Borrower and/or the Indemnitors, as applicable, enforceable in accordance with their respective terms. 12. Adverse Change. This Commitment is made in reliance on information provided by or on behalf of Borrower, Borrower's General Partner, and the Indemnitors. Each such party hereby represents and warrants that such information is accurate and complete in all material respects. If any information which has been or is hereafter supplied to City in connection with the Loan, the Collateral Property or the Senior Housing Project becomes inaccurate or incomplete in any material respect, Borrower shall immediately notify City in writing prior to the Closing Date. City's obligation to close the Loan is conditioned on 633107-5 6 the absence of any material adverse change in the financial condition or prospects of Borrower, Borrower's General Partner, or the Indemnitors or the condition of the Collateral Property. 13. Expiration Date. This Commitment shall be considered accepted by Borrower upon delivery to the City of a signed original of this letter. The executed Commitment Letter shall be delivered to the City no later than September 1, 2003, or this Commitment Letter will be null and void. This Commitment and City's obligation to fund the Loan shall expire on December 31, 2005, if Borrower has not received an allocation for the issuance of tax-exempt bonds for the Senior Housing Project by such date. 14. Closing Date. The Loan shall close and be funded simultaneously with the closing for and funding of construction financing for the Senior Housing Project, the issuance of tax-exempt bonds for the Senior Housing Project, and the pay-in of equity contributions from the tax credit investors pursuant to the approved Senior Housing Project Budget. The Loan must be closed on or before ,20___, or such later date as is mutually approved by City and Borrower. If the Closing Date does not occur prior to such date, City's obligations under this Commitment will terminate automatically and without notice. 15. Entire Agreement. This Commitment, together with the Loan Documents, constitutes the entire agreement between City and Borrower with respect to the subject matter hereof, and no prior discussions, correspondence or documents will be considered to vary or explain the terms of this Commitment. All conditions and requirements set forth in this Commitment are material to City, and except as specified herein, must be satisfied by Borrower prior to the Closing Date. 16. Assignment; Amendment. Neither this Commitment nor the Loan proceeds may be assigned without City's prior written consent, and without such consent there will be no right to designate a payee of the Loan proceeds. Any attempt at assignment without such consent will be void. This Commitment cannot be amended orally, but only by an instrument in writing signed by the party against whom enforcement of any change is sought. 17. Waivers. City, in its sole discretion, may waive, in writing, certain Commitment conditions; however, waiver of any condition or requirement shall not be construed as waiver of any other provision(s) of this Commitment. 18. Default. Failure by Borrower to fully comply with all of the Commitment conditions within the times herein required will constitute a default by Borrower hereunder and, unless waived by City in writing, will automatically cause this Commitment to terminate. In no event will inaction by City be deemed a waiver of any requirement hereunder or any default by Borrower. City reserves the right to cancel this Commitment in the event of any material misrepresentation made in any information furnished to City by or on behalf of Borrower, Borrower's General Partner or the Indemnitors. 633107-5 7 19. Property Inspection. Borrower agrees that, until such time as the Loan is paid in full, City shall have the right to inspect the Senior Housing Project, the Property and the Collateral Property at any time upon reasonable notice. 20. Bankruptcy/Insolvency. In the event of bankruptcy or insolvency of Borrower, Borrower's General Partner, or any Indemnitor, whether voluntarily or involuntarily, this Commitment shall terminate. 21. Legal Actions. Borrower, Borrower's General Partner and the Indemnitors hereby represent and warrant that there is no litigation, prosecution, investigation, or proceeding of any nature whatsoever now pending or overtly threatened in writing against Borrower, the manager or members of Dublin Ranch Holdings, Borrower's General Partner, or any Indemnitor that seeks to affect the enforceability of any of the Loan Documents or is likely to adversely affect the ability of Borrower to pay and perform the obligations of Borrower to City thereunder or the ability of any Indemnitor to perform its obligations thereunder. 22. Property; Collateral Property. Dublin Ranch Holdings and the Manager/Managing Member thereof hereby represent and warrant that Dublin Ranch Holdings is the owner in fee simple of the Property and that it has all due authority to execute the CC&Rs which shall be recorded against the Property subject to no prior claim, lien or interest. The Lins hereby represent and warrant that they are the owners in fee simple of the Collateral Property, that such property has a fair market value of at least $13.5 million, and that they have authority to execute the Deed of Trust which shall be a first lien on the Collateral Property. 23. Costs. Borrower shall be responsible for all costs of Closing including, but not limited to title insurance, recording fees, escrow fees, the cost of appraisals, surveys and other items Borrower is required to deliver to City hereunder. Whether or not the Loan is closed, all expenses incurred by City in connection with the Loan, including without limitation, reasonable expenses of City's legal counsel and financial advisor, shall be paid by Borrower or the Indemnitors. 24. Liability. No member, officer, agent, or employee of City shall be liable personally concerning any matters arising out of or in relation to the undertaking or obligations set forth in this Commitment Letter. Dated as of this day of ., 2003. CITY OF DUBLIN By: City Manager Approved as to Form: City Attorney 633107-5 The attached Loan Commitment Letter dated as of ,2003, executed by the City of Dublin for the Fairway Ranch Senior Housing Project is hereby accepted. Dated: ., 2003. BORROWER DUBLIN RANCH HOLDINGS, LLC, a Delaware limited liability company By: James Tong Its: Manager DUBLIN RANCH SENIOR APARTMENTS, L.P. a California limited partnership By: ., a limited liability company Its: General Partner By: Its: GENERAL PARTNER , a limited liability company By: Its: INDEMNITORS Chang Su-O-Lin Hong Lien Lin Hong Yao Lin 633107-5 9 DRAFT LOAN COMMITMENT ,2003 RE: Fairway Ranch - Multi-Family Housing Dear : When accepted by Dublin Ranch Holdings, LLC, a Delaware limited liability company ("Dublin Ranch Holdings"), this letter (hereafter "Commitment" or "Commitment Letter"), the terms of which were approved by the City Council of the City of Dublin, California ("City") by Resolution No. __ adopted 2003, shall constitute the commitment of City to make a loan (the "Loan") from City's Inclusionary Zoning In- Lieu Fee Fund in the amount and subject to the terms, conditions, and provisions set forth herein. 1. Borrower, Manager/General Partner; Assignment. Subject to Paragraph 16 hereof, Dublin Ranch Holdings shall be permitted to assign its rights hereunder to Fairway Family Community, L.P., a limited partnership to be organized under the laws of the State of California (hereafter "Fairway Multi-Family Partnership") for the purpose of developing the Multi-Family Housing Project (as defined below). The Manager/Managing Member of Dublin Ranch Holdings is James Tong. The general partner of Fairway Multi-Family Parmership shall be Charter Properties, a California corporation. Prior to the assignment described in this Paragraph, the term "Borrower" as used herein shall mean Dublin Ranch Holdings, and the term "General Partner" as used herein shall mean James Tong, in his capacity as Manager/Managing Member of Dublin Ranch Holdings. Following such assignment, the term "Borrower" as used herein shall mean Fairway Multi-Family Partnership, and the term "General Partner" as used herein shall mean the general partner of Fairway Multi-Family Partnership. 2. Loan Amount. The amount of the Loan shall be Two Million Two Hundred and Fifty Thousand Dollars ($2,250,000). 3. Loan Term. The Loan shall be for a term of six (6) years commencing on the date of first disbursement of the Loan ("Initial Disbursement Date"). 4. Repayment. The Loan will be repaid in three equal installments of principal, th th th together With interest accrued thereon, on the 4 , 5 and 6 anniversary of the Initial Disbursement Date. 5. Interest Rate. Three percent (3%) simple interest per annum shall accrue on the outstanding principal balance of the Loan. 6. Prepayment. The Loan may be prepaid in whole or in part without penalty or premium. The effectiveness of the Affordable Housing Regulatory Agreement and the CC&Rs (each as described below) shall survive any such prepayment. 7. Use of Proceeds. The Loan proceeds shall be used exclusively to pay for third-party construction costs Borrower incurs to construct very low-, low- and moderate-income units constructed as part of the multi-family housing development (hereafter referred to as the "Multi-Family Housing Project") that Borrower shall develop on the property (the "Property") that is the subject of that certain Development Agreement - Fairway Ranch Multi-Family Housing Component dated as of ., 2003, and executed by and between City and Dublin Ranch Holdings or its predecessor(s) in interest (the "Multi-Family Housing Development Agreement"). 8. Collateral. The Loan shall be secured by a first deed of trust (the "Deed of Trust") on certain real property (the "Collateral Property") commonly known as Parcel 9 of Tract 7148, Dublin, California, together with improvements that may be constructed thereon and all equipment, personal property and fixtures that may be located thereon. The Collateral Property is owned by Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin, each of whom shall execute the Deed of Trust. The Deed of Trust shall also secure any loan the City may provide in connection with the development of senior housing ("Senior Housing Project") on the property that is the subject of that certain Development Agreement - Fairway Ranch Senior Housing Component dated as of ., 2003, and executed by and between City and Dublin Ranch Holdings or its predecessor(s) in interest. The Collateral Property shall be subject to no mortgage, lien or claim other than liens for which the City has provided written consent and which: (a) are subordinate to the Deed of Trust, (b) secure repayment of obligations incurred solely in connection with the financing of the Multi-Family Housing Project, the Senior Housing Project or other purposes approved by City, (c) require notice to the City in the event of default, and (d) do not in the aggregate together with all other outstanding liens result in encumbrance of the Collateral Property in excess of 60% of its fair market value. Borrower may provide substitute collateral reasonably acceptable to City in the form of real property located within the City of Dublin, provided that: (i) in City's reasonable determination, the fair market value of such substitute collateral is at least three times the value of the outstanding balance of Borrower's obligations to City to be secured thereby; (ii) Borrower pays all reasonable expenses City incurs in connection with City's review and investigation of the condition and value of such property; (iii) City's lien securing Borrower's obligations is a first lien on such property; and (iv) any subordinate liens on such property meet the requirements of the second paragraph of this Paragraph 8. 9. Limitation of Liability. The Loan shall be non-recourse as to payment of principal and interest; Borrower's obligation to repay the Loan shall be secured by the Collateral Property. 647196-1 2 10. Documents. City's commitment to make the Loan described in this Commitment Letter is subject to the condition that Borrower and Chang Su-O-Lin, Hong Lien Lin and Hong Yao Lin (collectively hereafter, the "Lins" or the "Indemnitors"), as applicable, shall duly execute, acknowledge and deliver to City all documents required to evidence and secure repayment of the Loan, which documents shall be in form and substance satisfactory to the City Manager and the City Attorney, and which shall include, without limitation, the following documents (collectively, the "Loan Documents"): (a) a Development Agreement for Dublin Ranch Area B, executed by City and by Dublin Ranch Holdings or its predecessor(s) in interest as owner of Dublin Ranch Area B ("Development Agreement-Fairway Ranch") which shall describe the conditions of development for such property, including conditions related to compliance with City's Inclusionary Zoning Ordinance and the phasing of development for such property; (b) the Multi-Family Housing Development Agreement, executed by City and by Dublin Ranch Holdings or its predecessor(s) in interest as owner of the Property, which shall describe the conditions of development for the Property including conditions relating to compliance with City's Inclusionary Zoning Ordinance, and which shall be assigned to Borrower prior to the closing of the Loan ("Closing"); (c) an Affordable Housing Regulatory Agreement, executed by Borrower, which shall provide that of the units developed within the Multi-Family Housing Project, 63 shall be made available at affordable rents to very low-income households, 90 shall be made available at affordable rents to Iow-income households, and 90 shall be made available at affordable rents to moderate-income households (collectively the "Affordability Restrictions"). The Affordable Housing Regulatory Agreement shall be recorded against the Property, shall be binding upon Borrower's successors in interest for a term of 55 years, and shall not be subordinated to any interest, lien, lease, ground lease or mortgage recorded against the Property other than the CC&R's, the Development Agreement-Fairway Ranch, the Multi-Family Housing Development Agreement, and the Master Development Agreement between City and the Lins for the Dublin Ranch Project (Areas A, B, C, D, E, F, G and H) ("Master Development Agreement"); provided however, if CC&Rs (as described below) are recorded against the Property in accordance with all conditions described in subparagraph (d) of this Paragraph 10, the Affordable Housing Regulatory Agreement may be subordinated to the interests and rights of senior lenders providing financing for the Multi-Family Housing Project in a manner customary for a Fannie Mae or Freddie Mac credit enhanced tax-exempt bond transaction if so required; (d) a Declaration of Covenants, Conditions and Restrictions ("CC&Rs") which shall impose the Affordability Restrictions, executed by the owner(s) of the Property for the benefit of City. The CC&Rs: (i) shall be recorded against the Property, (ii) shall be binding upon Borrower's successors in interest for a term of 55 years, (iii) shall provide that City shall have the right to enforce the provisions thereof, (iv) shall provide that any amendments thereto or rescission thereof shall require the consent of City, and (v) shall not be subordinated to any other interest, lien, lease, ground lease or mortgage recorded 647196-1 3 against the Property other than the Development Agreement-Fairway Ranch, the Multi- Family Housing Development Agreement, and the Master Development Agreement; (e) a Loan Agreement, executed by City and Borrower, and approved by the Lins as owners of the Collateral Property, which shall describe the conditions under which the Loan proceeds may be disbursed consistent with the terms of this Commitment Letter; (f) a Promissory Note in the amount of the Loan, executed by Borrower; (g) a Deed of Trust, executed by the Lins as owners of the Collateral Property, which shall secure repayment of the Loan and which shall be recorded as a first lien on the Collateral Property; (h) an Environmental Indemnity Agreement, executed by the Borrower and the Indemnitors, which shall provide for the indemnification of City against all claims or liability arising in connection with the presence of hazardous materials on the Collateral Property or the Property or the violation of any environmental law, rule or regulation applicable thereto; (i) a General Indemnity Agreement, executed by Borrower and the Indemnitors, which shall provide for the indemnification of City against liability arising in connection with the breach of Borrower's or the Indemnitors' representations, warranties and covenants (other than Borrower's payment obligations) made in connection with the Loan. The terms and scope of the General Indemnity Agreement shall be comparable to that required by other lenders or investors providing financing to the Multi-Family Housing Project. 11. Additional Deliveries. City's obligation to make the Loan is subject to the condition that City shall have received each of the following, in form and substance satisfactory to City no later than 30 days prior to Closing unless otherwise specified herein: (a) Evidence of Funding. Evidence of funding commitments sufficient to fully finance the construction and permanent financing of the Multi-Family Housing Project; (b) Multi-Family Housing Project Budget. Borrower shall deliver to City a budget for development of the Multi-Family Housing Project ("Multi-Family Housing Project Budget") which shall show all sources and uses of funds for construction and permanent financing of the Multi-Family Housing Project. (c) Appraisal. At Borrower's expense, if City so elects, City may select and engage an appraiser to provide a valuation of the Collateral Property or any substitute collateral proposed by Borrower. (d) Environmental Reports. Borrower shall deliver to City a Phase I environmental report for (i) the Property, and (ii) the Collateral Property. If such 647196-1 4 environmental reports are not satisfactory to City, City may request further environmental testing to be conducted at Borrower's expense, or may terminate this Commitment. (e) Financial Statements. Borrower shall furnish to City operating pro formas for the Multi-Family Housing Project in such form and detail as City reasonably requests. (f) Title Insurance. Borrower shall provide to City a commitment to issue a CLTA Lender's title insurance policy in the full amount of the Loan (together with all other obligations secured by the Deed of Trust) in form and substance acceptable to City, insuring that the lien of the Deed of Trust, when recorded against the Collateral Property, shall be subject to only such exceptions as approved by City and which shall include such endorsements as requested by City ("Title Insurance Commitment"). The Title Insurance Commitment will be issued by a title insurer approved by City. On the Closing Date, Borrower will provide to City a title insurance policy issued pursuant to the Title Insurance Commitment. (g) Reserved. (h) Plans and Specifications; Building Permits; Licenses. Borrower shall provide a complete set of the final plans and specifications for the Multi-Family Housing Project for approval by City, and Borrower shall obtain all building permits and other approvals necessary for the Multi-Family Housing Project. Borrower shall provide evidence to City that all governmental permits and approvals required for the Multi-Family Housing Project have been obtained from the appropriate agencies. (i) Construction Contract; Bonds. Borrower will provide City with a guaranteed maximum price general construction contract in an amount no greater than the amount indicated by the Multi-Family Housing Project Budget, together with payment and performance bonds with a dual obligee rider in favor of City. The general contractor, the form and content of the general contract and the form and content of the bonds must be acceptable to City. (j) Ground Lease. Borrower shall provide to City a copy of the ground lease for the Property, executed by and between Borrower as lessee and the owner(s) of the Property as lessor. (k) Insurance. City shall be named as an additional insured on all insurance policies required by lenders or investors providing financing for the Multi-Family Housing Project, and all such policies shall provide that City will receive not less than thirty (30) days' written notice prior to cancellation. (1) Management Contract and Management Firm. Borrower shall provide a copy of the proposed management contract for the Multi-Family Housing Project together with such information about the proposed management firm, including without limitation a description of the management firm's experience with similar projects, staffing and qualifications, as City may reasonably request. The management contract shall describe 647196-1 5 the services to be provided by the management firm, including without limitation, marketing, tenant qualification and certification, maintenance and repairs. (m) Marketing and Management Plan. Borrower shall provide City with a copy of a proposed marketing and management plan for the Multi-Family Housing Project which shall address how Borrower proposes to (1) manage and maintain the Multi- Family Housing Project, (2) market the affordable units in the Multi-Family Housing Project to eligible households in accordance with the selection criteria specified in the City's Inclusionary Zoning Regulations, and (3) certify the eligibility of eligible households. (n) Authorizations; Good Standing. Borrower shall provide City with the following: For Borrower: (i) a certified copy of Borrower's partnership agreement together with a Certificate of Good Standing and LP-1 indicating that Borrower is properly organized and authorized to do business in the State of California; (ii) a certified resolution indicating that Borrower has authorized this transaction and that the persons executing the Loan Documents on Borrower's behalf have been duly authorized to do so. If Borrower is organized in a form other than a limited partnership, Borrower shall provide counterpart organizational documents and certificates applicable to such organizational form. For Borrower's General Partner: (i) Articles of Incorporation certified by the Secretary of State; (ii) bylaws certified by the Secretary of the corporation; (iii) Certificate of Good Standing issued by the Secretary of State; (iv) certified resolution indicating that the General Partner has authorized this transaction and that the persons executing the Loan Documents on the General Partner's behalf have been duly authorized to do so. If Borrower is organized in a form other than a limited partnership, or if Borrower's General Partner is organized in a form other than a corporation, Borrower shall provide counterpart organizational documents and certificates applicable to such organizational forms. (o) Legal Opinion. Borrower shall provide City with an opinion of Borrower's counsel which shall provide that Borrower and Borrower's General Partner are duly organized, validly existing and authorized to do business in the State of California, that each of the Loan Documents has been duly authorized and executed and when delivered shall be the binding obligations of the owner of the Property, the Borrower and/or the Indemnitors, as applicable, enforceable in accordance with their respective terms. 12. Adverse Change. This Commitment is made in reliance on information provided by or on behalf of Borrower, Borrower's General Partner, and the Indemnitors. Each such party hereby represents and warrants that such information is accurate and complete in all material respects. If any information which has been or is hereafter supplied to City in com~ection with the Loan, the Collateral Property or the Multi-Family Housing Project becomes inaccurate or incomplete in any material respect, Borrower shall immediately 647196-1 6 /? [ notify City in writing prior to the Closing Date. City's obligation to close the Loan is conditioned on the absence of any material adverse change in the financial condition or prospects of Borrower, Borrower's General Partner, or the Indemnitors or the condition of the Collateral Property. 13. Expiration Date. This Commitment shall be considered accepted by Borrower upon delivery to the City of a signed original of this letter. The executed Commitment Letter shall be delivered to the City no later than September 1, 2003, or this Commitment Letter will be null and void. This Commitment and City's obligation to fund the Loan shall expire on December 31, 2005, if Borrower has not received an allocation for the issuance of tax-exempt bonds for the Multi-Family Housing Project by such date. 14. Closing Date. The Loan shall close and be funded simultaneously with the closing for and funding of construction financing for the Multi-Family Housing Project, the issuance of tax-exempt bonds for the Multi-Family Housing Project, and the pay-in of equity contributions from the tax credit investors pursuant to the approved Multi-Family Housing Project Budget. The Loan must be closed on or before , 20__, or such later date as is mutually approved by City and Borrower. If the Closing Date does not occur prior to such date, City's obligations under this Commitment will terminate automatically and without notice. 15. Entire Agreement. This Commitment, together with the Loan Documents, constitutes the entire agreement between City and Borrower with respect to the subject matter hereof, and no prior discussions, correspondence or documents will be considered to vary or explain the terms of this Commitment. All conditions and requirements set forth in this Commitment are material to City, and except as specified herein, must be satisfied by Borrower prior to the Closing Date. 16. Assignment; Amendment. Neither this Commitment nor the Loan proceeds may be assigned without City's prior written consent, and without such consent there will be no right to designate a payee of the Loan proceeds. Any attempt at assignment without such consent will be void. This Commitment cannot be amended orally, but only by an instrument in writing signed by the party against whom enforcement of any change is sought. 17. Waivers. City, in its sole discretion, may waive, in writing, certain Commitment conditions; however, waiver of any condition or requirement shall not be construed as waiver of any other provision(s) of this Commitment. 18. Default. Failure by Borrower to fully comply with all of the Commitment conditions within the times herein required will constitute a default by Borrower hereunder and, unless waived by City in writing, wilt automatically cause this Commitment to terminate. In no event will inaction by City be deemed a waiver of any requirement hereunder or any default by Borrower. City reserves the right to cancel this Commitment in the event of any material misrepresentation made in any information furnished to City by or on behalf of Borrower, Borrower's General Partner or the Indemnitors. 647196-1 7 19. Property Inspection. Borrower agrees that, until such time as the Loan is paid in full, City shall have the right to inspect the Multi-Family Housing Project, the ProPerty and the Collateral Property at any time upon reasonable notice. 20. Bankruptcy/Insolvency. In the event of bankruptcy or insolvency of Borrower, Borrower's General Partner, or any Indemnitor, whether voluntarily or involuntarily, this Commitment shall terminate. 21. Legal Actions. Borrower, Borrower's General Partner and the Indemnitors hereby represent and warrant that there is no litigation, prosecution, investigation, or proceeding of any nature whatsoever now pending or overtly threatened in writing against Borrower, the manager or members of Dublin Ranch Holdings, Borrower's General Partner, or any Indemnitor that seeks to affect the enforceability of any of the Loan Documents or is likely to adversely affect the ability of Borrower to pay and perform the obligations of Borrower to City thereunder or the ability of any Indemnitor to perform its obligations thereunder. 22. Property; Collateral Property. Dublin Ranch Holdings and the Manager/Managing Member thereof hereby represent and warrant that Dublin Ranch Holdings is the owner in fee simple of the Property and that it has all due authority to execute the CC&Rs which shall be recorded against the Property subject to no prior claim, lien or interest. The Lins hereby represent and warrant that they are the owners in fee simple of the Collateral Property, that such property has a fair market value of at least $13.5 million, and that they have authority to execute the Deed of Trust which shall be a first lien on the Collateral Property. 23. Costs. Borrower shall be responsible for all costs of Closing including, but not limited to title insurance, recording fees, escrow fees, the cost of appraisals, surveys and other items Borrower is required to deliver to City hereunder. Whether or not the Loan is closed, all expenses incurred by City in connection with the Loan, including without limitation, reasonable expenses of City's legal counsel and financial advisor, shall be paid by Borrower or the Indemnitors. 24. Liability. No member, officer, agent, or employee of City shall be liable personally concerning any matters arising out of or in relation to the undertaking or obligations set forth in this Commitment Letter. Dated as of this __ day of ,2003. CITY OF DUBLIN By: City Manager Approved as to Form: City Attorney 647196-1 8 .... ~,. ,. 6118/2003 11:36 AM Dublin Apartments Pro Forma vadable June 17, 2003 Family(City).xls Data ~'-' -~:'~ ' KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL ' Fairway Ranch Apartments, Dublin CA Phase I Project Data - Total Project 000's Omitted from $ Amounts) PROJECT DATA Acres Sq Ft Building Ar~ea Gross Site Area (estimated) 7.50 326,700 Public Dedications Rentable 244,180 Total Net Site Area 7.50 326,700 Load 10,915 4.28% I Gross SF 255,095 Start of Projection Jan-04 Jan-04 ~Number of Apartments 304 Residential I Preconstruction / Bond Closing Pedod 6 months Construction Pedod 15 months Lease-up Period 9 months Project Seasoning Period 6 months Renl Concession Period 0 months Total Period 36 FINANCING ASSUMPTIONS Hous!nq Bond (~er es iA) Bonrt Costs: % Thou $$ % Thou $$ NOI $ 2,943 Issuance ' 1.17%' ' ' ~,06 Cap Repl. RETAIL 0.75% 0 Stated Amount of Credit Enhancement 12.00% $ 35,251 interest Rate (construction cap) I Variable I 1.700% Legal & Expenses 0.460% 160 CAP REPL APTS $200 (61 Interest Rate (on escrowed bonds) 1.700% Credit Enhancement (excludes liquidity fee) (during Construction Lender) 1.00% Credit Enhancement (excludes liquidity fee) (after Construction Lender) 0.900% ~ond Term 33 Interest Rate Cap Purchase 0 Annual Bond Admin: nterest Only Period 3 Negative Arbitrage 0.000% 0 Issuer 0.125% (-t41 Maortization Period 30 Perm Loan Fee 1.22% 423 Rating Agency 0.000% 0 ~,mort. Sinking Fund Sch. rate (Variable undenvriting) 6.314% a App. & Consult. 0.09% 30 Trustee 0.014% (5.0) SIC Investment Rate 1.250% Loan Constant (Variable underwriting) 0.0747 Financial Advisor 1.0% 348 Loan Constant (swap rate) 0.0666 Other 0.269% .94 Total Bond Admit Debt Service Coverage Ratio (Minimum) 1.20 Total Issuance Costs 1,461 Loan Amount - With CaLPERS Standby 1.20 . 34,819_ Initial Earnout Loan Amount - Variable Underwriting I . 32,819 ' 34,862~ Var ab e Underwr~tin9 Rate Summary Bond Rate 5.00% THIS PRO FORMA IS BASED UPON PRELIMINARY INFORMATION THAT MUST BE CONFIRMED Remarketing 0.125% WITH THE CITY OF DUBLIN, Liquidity 0.15°/o issuer Fee 0.125% Tax Exempt Bonds 30,000 Trustee 0.014% Taxable Bonds 4,819 Credit Enhancement 0.90% Total 34,819 Sub-Total (underwriti~ 6.314% a Int. Rate Cap Contrib 0.200% Total Rate 6.51% Initial Funding Amount 34,819 Memo: Amount of escrowed bonds held until perm loan 0 ..... , b/] ~/ZUUJ '1'1 :~b PdVI LJUDIIn ApartmenTs I-'ro Po[ma Variable June 1/, Zuu3 bamily(g;ity).xls Data "· KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUN, SEL APPROVAL Fairway Ranch Apartments, Dublin CA Phase I Project Data - Total Project (000% Omitted from $ Amounts) I Construction Financing Financing Costs: % Thou Interest Rate 1.70% Origination fee 1.0% 353 Stated Amount of Credit Enhancement 12.00% $ 35,251 Credit Enhancement (first 36 months) 1.00% Credit Fees During Constr & LU 881 Credit Enhancement (37 to 60 months) 1.00% Term of Construction Financing (years) 33 Other - Title & CIosin 0.1% 40 Number of Years of Term used 3 Total Closing Costs 1,274 Total Loan Amount 34,819 City A~sistance Interest Rate 3.000% Loan Term 55 Financing Costs: % Thou $$ Years of no payments N/A Other 0 Assistance Amount 2,250 Total Closing Costs 0 IF MORE THAN 50% OF THE LOW,INCOME UNIT DEVELOPER FEE IS DEFERRED THEN THAT POTION OF THE DEVELOPER FEE THAT IS BEING DEFERRED THAT ES ABQVE 50% MAY HAVE TO BE PAID AND THEN ADVANCED AS CAPITAL PURSUANT TO POTENTIAL TCAC REQUIREMENTS, BOND COUNSEL NEEDS TO APPROVE PROJECT COST CLASSIFICATIONS, THE TAX CREDIT CPA NEEDS TO APPROVE THE TAX CREDIT COST CLASSIFICATIONS, THE CREDIT ENHANCER NEEDS TO APPROVE THE CASH FLOW AND UNDERWRITING ASSUMPTIONS, THE TAX CREDIT ESTIMATES CONTAINED IN THESE PROJECTIONS ARE ROUGH ESTIMATES TO BE USED ON AN INTERIM BASIS FOR INTERNAL USE ONLY UNTIL THE TAX CREDIT CPA HAS DONE THEIR ANALYSIS AND PROJECTIONS. THESE ROUGH ESTIMATES ARE NOT TO BE RELIED ON, DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES iN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT CONSIDERIN(~ ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT. This schedule is pad of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this Project Data schedule. 2 ' , 6/16/2003 11:36 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xls Dp CF KLEIN FINANCIAL CORPORATION Fairway Ranch Apartments, Dublin CA Phase I Cash Flow from Operations LALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL J (000's Omitted from $ Amounts) 63.00 90  61 Market Market 90 120% Med. 120% Med. VLI VLI VLI LI LI Ll 2004 2005 2006 Market RENTS RENTS Moderate RENTS RENTS Affordable RENT RENT Affordable RENT RENT 304 TotalStabilized Stabilized20.07% 2005 2004 29.61% 2005 2004 20.72% 2005 2004 29.61% 2005 2004 CASH FLOW FROM OPERATIONS Total Unitssi/Unit($000's) 3~otal Total of Units $ per Unit $ per Unitof Units $ per Unit $.l~er unit .Df Units $ per Unit $ per Unitof Units $ per IJpit $ per Unit Consolidated: Rental lncome- PLAN A: I Bed 68 575 662 601 701 0 1,2351,200 3 1,173 1,140 31 $ 739$ 718 34 893 868 Rental Income - PLAN B: t Bed 36 650 545 561 577 0 1,3671,328 36 1,298 1,262 0 $ 739$ 710 0 893 865 Rentallncome* PLAN B2: t Bed 24 710 389 400 412 24 1,3891,350 0 1,320 1,283 0 $ 739$ 715 0 893 868 RentaIIncome- PLAN C: 2 Bed 40 825 430 443 455 0 1,492t,,150 0 1,4t7 t,378 32 $ 885$ 890 8 1,070 1,040 Rental Income - PLAN C2:2 Bed 44 867 803 826 850 1 1,6581,61 t 42 1,575 1,530 0 $ 885$ 860 I 1,070 1,040 Rentallncome- PLAN D: 2 Bed 36 987 754 776 798 36 1,7961,745 0 1,706 1,658 0 $ 885$ 860 0 1,070 1,040 Rental Income- PLAN E: 3 Bed 56 1,035 866 691 917 0 1,9091,855 9 1,813 1,762 0 1,019 990 47 1,233 1,198 Rental Income- Other (Real Estate Related 304 10! 104 107 29 $ 28 Gross Scheduled Income 4.550 4,952 4,8't0' 275 1,073 Vacancy / Credit Loss 500% (228) (~34) (241.) 5.00% 5.00% Effective Gross Income (ECl) 4,323 4,448 4,577 Operating Expenses' 304 (973) (1,001) (1,030) 3,200 unit Capital Replacement Reserve (61) (61) (64) Taxes and Assessments , . . 347 . (~5~)., i76/) Total Operating Expenses {1,380) (1,4t5) (t,451) Net Operating Income (NOI) 2.943 3,033 3,126 Debt Service (Series A) (2,g02i (2,602) (2:602) Cash Flow After Debt Service 341 431 524 Interest Rate Cap Contribution 0.200% (70) (70) (70) Tax Credit Investor Admin Fee (20} (20) 120} Net Cash Flow 251 342 434 Underwritten DSCR 1,20 DISCLAIMER'. THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS. AND/OR ESTIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETrER OR WORSE THAN THESE PROJECTIONS. INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BE'Fi'ER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THiS INVESTMENT. This schedule is part of an integrated document and no one page should be read wilhout reading the olher pages and lhe disclaimer cdntained on the last page of this schedule. ';- .... 3 KLEIN FINANCIAL CORPORATION ALL SCHEDULES ARE SUBJE~b~is'~l~Pl~EE~r~Vi~b~eLJune 17, 2003 Family(City).xls Cost 6/1§12003 11:36 AM Fairway Ranch Apartments, Dublin CA Phase I Project Costs & Equity (000's Omitted from $ Amounts) $ per sf Total sf/Unlt or Unit ($000's) Acquisition Costs: Land & Demo 326,700 48,975 16,000 * Title Insurance, Recording Fees, etc. 80 Subtotal - Acquisition Costs 16,080 Contingency - Acquisition Costs 0.00% 0 Total Acquisition Costs 326,700 49.22 16,080 Production Costs: Parking Garage & Drives 476 $ 9,975 4,748 Appraisal, Market Study & Expense Analysis 75 Sitework 2,275 Professional Services Fees 80 Construction Costs 244,180 $ 100.33 24,499 Feasibility Analysis Consultation 95 Construction Management 3.20% 1,009 Construction Analysis / Physical Needs Assess. 80 Entitlements and Govern. Profess. Services 115 Tax Credit Consulting 85 Architecture & Engineering 304 $ 2,467 750 JV Partner / Tax Credit Counsel 25 TCAC Fees 75 Permits, Fees 304 $ 31,000 9,424 Construction Pedod Financial Services 95 Subtotal - Production Costs 43,429 Contingency - Production Costs 4.00% 1,261 Total Production Costs 44,690 Financing Costs: Housing Bond Issuance Costs (Series A) 2.52% 878 Housing Bond Legal & Expenses Costs (Series A) 0.46% 160 permanent Loan Fees & Costs 1.22% 423 Series A Bond Adminstration (dudng Constr, LU, Seasoning) 82 Sedes A Bonds (Int Rate Cap impounds dudng Constr & LU) 0.88% 305 CalPers Trans. Fee & Construction Put Foes 602 Interest - City Assistance/Loan 174 Interest ~ CaIPERS 684 Construction Loan Fees & Costs 1.13% 393 Construction Lender Credit Enhancement Fees 1.00% 881 Series A Bond Interest 0 1.70% 1,776 Subordinate Ground LeaSe 808 Sedes A Bond Investment Earnings 1.25% (256) Subtotal - Financing 6,§10 Contingency - Financing 4.00% 276 Total Financing 7,187 · - Land Value Before Restrictions This schedule is part of an integrated document and no one page shoutd be read without reading the other pages and the disclaimer contained on the last page of this schedule. 4 KLEIN FINANCIAL CORPORATION [ALL SCHEDULES ARE SUBJE~¥b~is'~(~[~;~LJPI'[§EF~rA't~P~a~t June 17, 2003 Family(City).xls Cost 6/18/2003 11:36 AM Fairway Ranch Apartments, Dublin CA Phase I Project Costs & Equity (000's Omitted from $ Amounts) $ per sf Total si/Unit or Unit ($000's) Indirect Costs: Advisory Services and Other Prof Services 233 Insurance 255,095 0.60 153 Legal &Accounting 255,095 $ 2.21 565 Marketing Budget (including Oper Deficit) 75 R.E. Taxes 255,095 $ 0.59 150 Subtotal - Indirect Costs 1,176 Contingency * Indirect Costs 5.00% 59 Total Indirect Costs 1~,235 Subtotal - Project Costs 69,192 Deve!oper Fee Very Low Income Unit Development Fee 3.61% 2,500 Total Project Costs 71~692 Lease-up Costs (Income) . (~1,614) Net Project Costs 70,078 Sources of.Funds (durin,q Construct!on and Lease-up) Series A Bond Financing (initial Funding Amount) 34,819 City Assistance 2,250 Accrued Interest - City Assistance/Loan 174 Accrued Interest - CalPERS 166 Accrued Subordinate Ground Lease 808 Deferred Developer Fee 1,300 CalPERS Mezz. Loan 2,000 Tax Credits - Admission Funding 2,706 Tax Credits - 75% Complete Funding 2,706 Tax Credits - Full Project Completion Funding 2,706 Additional Developer Equity 4,441 Subtotal Developer Equity 16,835 Equity -Via Land Value In Ground Lease 16,000 Total Developer Equity (Includes Tax Credit Equity) 32,835 Total Sources of Funds 70,078 Sources of Funds (at s~abilization, Final Bond Funding, and Final Tax Credit Fundin.q) Series A Bond 34,819 Cash Flow Required To Fund Project Costs 1 ,t99 City Assistance 2,250 Accrued interest - City Assistance/Loan 174 Accrued Interest - CalPERS 168 Accrued Subordinate Ground Lease 808 Deferred Developer Fee 1,300 CalPERS Mezz. Loan 2,000 Tax Credits - Admission Funding 2,706 Tax Credits - 75% Complete Funding 2,706 Tax Credits - Full Project Completion Funding 2,706 Tax Credits - Final Funding 902 Tax Credit Investor Operating Reserve (197) Developer Equity 2,537 Subtotal Developer Equity 15,468 Equity -Via Land Value In Ground Lease 16,000 This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 5 KLEIN FINANCIAL CORPORATION ALL SCHEDULES ARE SUBJE~b~)'~O~t~.~l~l'§~:~r~r~pV~~/~eLJune 17, 2003 Family(City),xls Cost 6/18/2003 11:36 AM Fairway Ranch Apartments, Dublin CA Phase I Project Costs & Equity (000's Omitled from $ Amounts) $ per sf Total sflUnit or Unit ($000's) Total Developer Equity (Includes Tax Credit Equity) 31.468 Total Sources of Funds 70,078 This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 6 ' ' KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJE~I~is'~]~O"~[~'I:~PNi'§EF~rAq'~P"J~I~j~eLJune 17, 2003 Family(City).xls Cost 6/18/2003 11:36 AM Fairway Ranch Apartments, Dublin CA Phase I Project Costs & Equity (000% Omitted from $ Amounts) $ per sf Total sf/Unit or Unit ($000's) Tax Credit Calculation: Total Eligible E~asis Threshold Basis Limitation adjustment: Permits & Fees High Cost Area Factor 30.00% Total Adjusted Eligible Basis 62,825 Applicable Fraction 481680//0 30,706 Applicable Percentage 0.0338 1,038 lO Yearso, Tax Cred.s l0 Amount of Credits Sold Sales Price per $1.00 of Credits $ 0,870 Applicable Fraction includes 0 additional affordable units as a cushion Tax Credit Fundinq Sqhedule: Construction Loan Closing (Admission) ~ 75% Completion 100% Complete . Stabilization (110% Debt Service Coverage, 8609%) This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contair~ed on the last page of this schedele. 7 6/18/2003 11:36 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xis 15 yr KLEIN FINANCIAL CORPORATION Fairway Ranch Apartments, Dublin CA Phase 15 Year Cash Flow I ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I (000's Omitted from $ Amounts) Rent Bumps 2.50% * Operating Expense CPI 3,50% * Property Tax CPI 2.00% Stabilized Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Beginning Jan~7 Jan-05 Jan-09 Jan-10 Jan-11 Jan-t2 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Rental Income -Apartments 4,829 4,949 5,073 5,200 5,330 5,463 5,600 5,740 5,883 6,030 6.181 6.336 6,494 6,656 6,823 Rental Income - Other (Real Estate Related) 110 112 115 118 121 124 127 130 134 137 140 144 148 151 155 Gross Scheduled Income 4,938 5,062 5,188 5,318 5,451 5,587 5,727 8,870 6,017 6,167 6,322 6,480 6,642 6,808 6,978 Vacancy/Credit Loss 5.00% (247) 1253) (259) (266) (273) (279) (286) (2941 (301) . (308) (316) (324) (~32) .~.~)_. (349) Effective Gross Income (EGI) 4~692 4~809 4~929 5~052 5,179 5~308 5,441 5 577 5 716 5,850 6~006 6~156 6~310 6 467 6~629 Operating Expenses* (t.06~) (l',ib3i ' (t,1~2~ (1,182) (1,223) (1,26'6) (1,3i0) ' (1,356) 1,40~,) (1,'453)' (1,504) (1 556) ~1,611) (1,667) (1,726) Capital Replacement Reserve $200 (61} (63) (65) (67) (70) (72) (75) (77) (80) (83) (86) ¢9) (92) (95) (98) Taxes and Assessments .(36~) (37.5) (383) (390) {398) (406) (.414) (422 431.t .(4¢0) (448) (457) __.{466) (476) (485) Total Operating Expenses (1,495) (1,541) (!,5_90) (1,640) (1,691) (1,744) (1,790) (I,856) (1,915} . (1,975) (2,038) (2,193) (2,169) (2 23.__8) (2,309) Net Operating Income (NOI) 3,197 3,267 3,339 3,413 3,487 3,564 3,641 3,721 3,801 3,884 3,968 4,053 4,140 4,229 4,320 Debt Service (Series At1 (2,602) (2,602) (2,602) (2,U02) (2,602) (2,602) (2,602) (2,602) (2,602) (2,602) (2.602) (2,6('12) (2,602) (2,602) (2,602) Interest Rate Cap Contribution 0.20% (70) (70) (70) (70) (70) (70) (70) (70) t70) (70) (70) (70) (70) (70) (70) Tax Credit Investor Administrative Fee (22) (23) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) Partnership/Acct./Tax Retums/Admin. (2~') (28) (29) (38) (30) (31) (32) (33) (34) (35) (36) (37) (39) (40) (4 I) Subordinate Management Fee ~_6_0 )_ 60 (60) (60) (60) (60) (106) (109) (112) (114'1. (117) (120), (123) (1~6) (129), (133) 4~6 556 628 701 729 802 877 953 1,030 1,109 1,190 t,271 1,355 1,440 Net Cash Flow City Assistance Payment 0 (853) (876) (898) 0 0 0 0 0 0 0 0 0 0 - 0 CaIPERS Interest PaymentJReturn of Principal (313) (364) (417) (471) (526) (547) (602) (383) 0 0 0 0 0 0 0 Owller Contribution 0 853 876 898 0 0 0 0 0 O O 0 0 0 0 Owner Contribution Repyament 0 0 0 0 0 0 0 (275) (715) (773) (832) (33) 0 0 0 Deferred Developer Fee Payment (104) (121) (139) (157) (1'75) (182) (201) (219) (1) 0 0 0 0 0 0 Subordinale Ground Lease Payment 0 0 0 0 0 0 0 0 0 0 0 (880) (954) (1,018) (1,080) Net Cash Flow 0 (0) 0 0 0 0 0 0 237 258 277 297 318 339 360 DSCR 1.229 1.256 1.284 1.312 t.341 1.370 1.400 1.430 1.461 1.493 1.525 1.558 1.591 1.626 1.660 CalPERS Mezz. Loan Beginning Balance 2,168 2,115 2,005 1,828 1,577 1,240 842 342 Interest Accrual 12.00% 260 254 241 219 189 149 101 41 Interest Payments/Return of Principal (313) (364) (417) (471) {5261 (547) (602) (3~3) Ending Balance '2.1'15 2,005 ' 1,828 1,577 1,240 842 ~42 City Assistance Beginning Balance 2.424 2,492 1,706 876 Interest Accrual 3.000% 68 68 45 23 Payments - Principal ,~:' "'~ 0.0% (750) (750) . (750) - Payments-Interest (103) . (126) (148) Ending Balance 2,492 1,706 876 Deferred De¥eloper Fee Beginning Balance 1,300 1,196 1,074 935 778 603 421 220 1 Interest Accrual Payment (104) (121) (139) (157) (175) (182) (.201) (219) (.~1~ Ending Balance 1,196' 1,074 935 778 603 ' 421 '220 I - Debt service for 15 yr. Cash flow is calculated based on an assumed 5.0% variable rate plus the stack including issuer and trustee f{ This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this schedule. 8 ,6/18t2003 11:36 AM Dublin Apadmenis pro Forma vedable June 17, 2003 Family(City).xls Rentroll KLEIN FINANCIAL CORPORATIOI~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL ~ Faiiw'ay Ranch Apartraents, Dublin CA Phase Residential Apartment Rent RD 1 200! 200,~ 2005 2004 200~ 200~ 200! 2004 50~/ 50°/ 60°/, 60% 120°/, 120°/ MEDIAl, MEDIAl, MEDlAr, MEDIAN MEDIA~ MEDIAl' VERY 120% VERY LOV~VERY LO~.LOW LOW LOW LOV~ NON NON- LOW LOW MEDIAN MARKET iNCOME; INCOM; iNCOME iNCOME iNCOME iNCOME RESTRICTED RESTRICTED INCOME iNCOME INCOME RATE # OF TOTAL RENT! REN~' RENT RENT RENT RENT RENT RENT UNIT TYPE pLAN BEDS SQ. FT. UNITS UNITS UNITS UNITS UNITS SQ. FT. PER UNIT PER UNI~IPER UNITPER UNITPER UNI'i' PER UNiT PER UNIT PER UNIT 1/1 A 1 575 31 34 3 0 68 39,100 22.37% $ 739$ 718 $ 893 $ 868 1,173 $ 1,140 $ 1,235 $ 1,200 1/t B 1 650 0 0 36 0 36 23,400 11.84% $ 739~ $ 718 $ 893 $ 868 1,298 $ 1,262 $ 1,367 $ 1,328 1/I 82 1 710 0 0 0 24 24 17,040 7.89% $ 739$ 718 $ 893 $ 868 1,320 $ 1,283 $ 1,389 $ 1,350 2/1 C 2 825 32 8 0 0 40 33,600 13.16% $ 865: $ 860$ 1,070 $ 1,040 t,417 $ 1,378 $ 1,492 $ 1,450 2/2 C2 2 867 0 1 42 I 44 38,146 14.47% $ 685$ 860$ 1,070 $ 1,040 1,575 $ 1,530 $ 1,658 $ 1,611 2/2 D 2 987 0 0 0 36 36 35,532 11.84% $ 885$ 660 $ 1,070~ 1,040 1,706 $ 1,658 $ 1,790 $ 1,745 3/2 E 3 1,035 0 47 9 0 56 57,960 18.42% $ 1,019 990, $ 1,233 1,198 1,613 $ 1,762 1,909 $_._. 1,=85.~5 TOTALS 63 90 90 61 304 244,180 100.00% Average S,F. per unit 863 $ 1,200 Comparison of Very L_ow~locome Restri_cted Un I Renl Gu de nee 2004 Non 2004 2004 projected Restricted Maximun' assumed TCAC Issuer Bond Net rents VLI Family Gross Restricted Gross utility Restrictive pre net PLAN BEDS Size rents rents rents allow Rents construct rents A 1 1.5 751 801 33.00 716 1,200 718 B 1 1.5 751 601 33.00 718 1,328 716 82 1 1.5 751 601 33.00 718 1,350 718 C 2 3.0 901 901 41.00 860 1.450 860 C2 2 3.0 901 901 41.00 860 1,611 860 D 2 3.0 901 901 41.00 860 1,745 860 E 3 4.5 1,041 1,001 51.00 990 1,855 990 estimate ef Very Low income Tax Exempt MulO-fam0y Bond Rent Restrictions 2004 30,00% assuraed 50.00% Bond Fatally IDcorae Gross PLAN BEDS Size Level rents A 1 2 32.050 801 B 1 2 32.050 801 82 I 2 32,650 661 C 2 3 36,050 901 C2 2 3 36.050 901 D 2 3 36,050 901 E 3 4 40.050 1.001 This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 10 ' 6/19/2003 11:36 AM Dublin Apartments Pro Forma variable Jbne 17, 2003 Family(City).xls Rentroll KLEIN FINANCIAL CORPORATIO~ IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I Fairway Ranch Apartments, Dublin CA Phase Residential Apartment Rent Re 1 -~omearison of Low income Rest~Lctsd Unit Rent Guideli~nea 2004 Non 2004 2004 projected Restricted Maximum assumed TCAC issuer Bond Net rents LI Family Gross Restricted Gross utility Restrictive pre net PLAN BEDS Size rents rents rents a0ow Rentsconstrucl rents A 1 1.5 901 962 33.00 860 1,200 666 B 1 1.5 901 962 33.00 868 1,328 866 62 1 1.5 901 962 33.00 868 1,350 806 C 2 3.0 1,081 1,082 41.00 t,040 t,4~0 1,040 C2 2 3.0 1,081 1,062 41.00 1,040 1,611 1,040 D 2 3.0 1,081 1,082 41.00 1,040 1,745 1,040 E 3 4.5 1,249 1,202 51.00 1,198 1,855 1,198 ~stimats of Low Income Tax Exempt Multi-family Bond Re_ut Restrictions 2004 30.00% assumed 60.00% Bond Family Income Gross PLAN BEDS Size Level rents A 1 2 38,460 962 B I 2 38,460 962 62 1 2 36,460 962 C 2 3 43,260 1,082 C2 2 3 43,260 1,082 D 2 3 43,260 1,082 E 3 4 49,060 1,202 Comparison of 120% Moderate Inc0mP R~strictsd Unit Rent Guidelines 2004 2004 assumed Maximum City rent 35% 95% of 2003 use Net Fam~y Income of Income Non Rest. lowest utility Restrictive PLAN BEDS Size Level routs Rents Rents allow Rents A I 2.0 76,920 2,244 1,140 1,140 0.00 1,140 Assumes no utility allow, req, B 1 2.0 76,920 2,244 1,262 1,262 0.00 1,262 Assumes no utility allow, req. 02 1 2.0 76,920 2,244 1,283 1,283 0.00 1,283 Assumes no utility allow, req. C 2 3.0 86,520 2,524 1,378 1,378 0.00 1,378 Assumes no utility allow, raq. C2 2 3.0 86,520 2,524 1,530 1,530 0.00 1,530 Assumes no utility allow, req. D 2 3.0 86,520 2,524 1,656 1,658 0.00 1,658 Assumes no utility allow, req. E 3 4.0 96,120 2,804 1,762 1,762 0.00 1,762 Assumes no utility allow, req, This schedule is part of an integrated documedt and no erie page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 6/18/2003 11:38 AM Dublin Apartments Pro Forma variable June 17, 2003 Famiiy(City).xls Other Income KLEIN FINANCIAL CORPORATION Fairway Ranch Apartments, Dublin CA Phase I IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL Estimate of Other Income (Includes Cable & Communication Revenue) Annual Account Name Total LAUNDRY/VENDING 304 $ 6.00 $ 21,888 OTHER MISCELLANEOUS INCOME $ 18,000 PARKING INCOME [garages) 85 $ 60.00 $ 61,200 TOTAL OTHER RENTAL INCOME $101,088 DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT. This schedule is part of an intergrated document and no one page shoutd be read without reading the other pages and the disclaimer contained on the last page of this schedule. 1 6/18/2003 11:44 AM Dublin Apartments Pro Forma vadable Juno 17, 2003 Senior(City).xls Data KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL Fairway Ranch Apartments, Dublin CA Phase II - Senior Project Data - Total Project (000's Omitted from $ Amounts) PROJECT DATA Acres Sq Ft IBuildin~] Area Gross Site Area (estimated) 7.50 326,700 I I Public Dedications ~ Rentable 227,640 Total Net Site Area 7.50 326,700 ~ Load 30,000 ~ 11.64% ~ Gross SF 257,640 ~ Start of Projection Jan-04 Jan-04 lNumber of Apadments 322 ~ Residential I I =reconstruction / Bond Closing Period 6 months 3onstruction Period t5 months .ease-up Period 9 months Project Seasoning Period 6 months Rent Concession Period 0 months Total Period 36 FINANCING ASSUMPTIONS HousinR Bond (Series A) Bond Costs: % Thou $$ % Thou $$ NOI $ 2,728 Issuance 1.20% 389 Cap Repl. RETAIL 0.75% 0 Stated Amount of Credit Enhancement 12.00% $ 32,828 Interest Rate (construction cap) I Variable I 1,700% Legal & Expenses 0.493% 160 CAP REPL APTS $200 (64) interest Rate (on escrowed bonds) 1.700% Credit Enhancement (excludes liquidity fee) (during Construction Lender) 1.00% Credit Enhancement (excludes liquidity fee) (after Construction Lender) 0.900% Interest Rate (Until Permanent) 1.70% Reserves 0.00% 0 Band Term 33 Interest Rate Cap Purchase 0 Annual Bond Admin: interest Only Period 3 Negative Arbitrage 0.000% 0 Issuer 0.125% (41 Amortization Period 30 Perm Loan Fee 1,23% 399 Rating Agency 0.000% 0 Amort. Sinking Fund Sch. rate (Variable underwriting) 6.315% a App. & Consult. 0.09% 30 Trustee 0.015% (5,0) GIC investment Rate 1.250% Loan Constant (Variable underwriting) 0.0747 Financial Advisor 1.0% 324 Loan Constant (swap rate) 0.0666 Other 0,271% 88 Total Bond Admir 0.140% Debt Service Coverage Ratio (Minimum) 1.20 Total Issuance Costs 1,391 Loan Amount - With Earn-Out 1~20 32,425 Initial Earnout Loan Amount - Variable Underwriting I 30,425 32,467 ........ Variable Under~vritin_,.q_~ate Summary ~ond Rate 5.00% THIS PRO FORMA IS BASED UPON PRELIMINARY INFORMATION THAT MUST BE CONFIRMED ~emarketing 0.125% WITH THE CITY OF DUBLIN. Liquidity 0.15% Issuer Fee 0.125% -rustee 0.015% ~'ax Exempt Bonds 30,000 I ;redit Enhancement 0.90% Taxable Bonds 2,425I Sub-Total (underwritil 6.315% a Total 32,425 Iht. Rate Cap Contrib 0.200% Total Rate 6.52% Initial Funding Amount ;~2,425 Memo: Amount of escrowed bonds held until perm loan 0 ~'~ .~ 6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17, 2003 Senior(City).xls Data KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL Fairway Ranch Apartments, Dublin CA Phase 11 - Senior Project Data - Total Project (000's Omitted from $ Amounts) IConstructionFinancin,q Financing Costs: % Thou $$ Interest Rate ' 1.70% Origination fee 1.0% 328 Stated Amount of Credit Enhancement 12.00% $ 32,828 Credit Enhancement (first 36 months) 1.00% Credit Fees During Constr & LU 821 Credit Enhancement (37 to 60 months) 1.00% Term of Construction Financing (years) 33 Other - Title & Closin 0.1% 40 Number of Years of Term used 3 Total Closing Costs 1,189 Total Loan Amount 32,425 City Assistance Inierest Rate 3.000% Loan Term NA Financin~l Costs: % Thou $$ Years of no payments N/A Other 0 Assistance Amount 2,250 Total Closing Costs 0 Deferred Impact Fees IF MORE THAN 50% OF THE LOW,INCOME UNIT DEVELOPER FEE IS DEFERRED THEN THAT POTION OF THE DEVELOPER FEE THAT tS BEING DEFERRED THAT IS ABOVE 50% MAY HAVE TO BE PAID AND THEN ADVANCED AS CAPITAL PURSUANT TO POTENTIAL TCAC REQUIREMENTS. BOND COUNSEL NEEDS TO APPROVE PROJECT COST CLASSIFICATIONS. THE TAX CREDIT CPA NEEDS TO APPROVE THE TAX CREDIT COST CLASSIFICATIONS. THE CREDIT ENHANCER NEEDS TO APPROVE THE CASH FLOW AND UNDERWRITING ASSUMPTIONS. THE TAX CREDIT ESTIMATES CONTAINED IN THESE PROJECTIONS ARE ROUGH ESTIMATES TO BE USED ON AN INTERIM BASIS FOR INTERNAL USE ONLY UNTIL THE TAX CREDIT CPA HAS DONE THEIR ANALYSIS AND PROJECTIONS. THESE ROUGH ESTIMATES ARE NOT TO BE RELIED ON. DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES iN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. INVESTMENT iN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED tN THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER tS APPLICABLE TO SUMMARY AND ALL DETAiLED.PROJECTiONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT. This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on this Project Data schedule. "' 2 0118/2003 tt:44 AM Dublin Apartments Pro Forma variable June 1 ?, 2003 Senior(City).xla Op CF KLEIN FINANCIAL CORPORATION Fair'way Ranch Apartments, Dublin CA Phase ii - Senior Cash Flow from Operations IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL (000's Omitted from $ Amounts) 65.00 97 ~ 29 Market Market 131 120% Med. 120% Mod, VLI VLI VLI LI LI LI 2004 2005 2006 Market RENTS RENTS ModerateRENTS RENTS Affordable RENT RENT Affordable RENT RENT 322 Total StabilizedStabilized9.0t% 2005 2004 40.68% 2005 2004 20.19% 20[}5 2084 30,12% 2005 2004 CASH FLOW FROM OPERATIONS Total Unitssf/Unlt($000's) Total Total of Units $ per Unit $ per Unitof Units $ per Unit $ per Unitof Units $ per Unit $ per Unit of Units $ per Unit $ per Unit Consolidated: Rentallncome-PLAN F: 1 B=d 102 575 945 975 1,005 0 1,2371,200 0 1.175 t,140 65 $ 740$ 718 37 895 008 Rentalincome- PLAN F2:1 Bed 80 673 1.173 1.209 1,246 25 1,3041,265 55 1,239 1,202 0 $ 740$ 718 O 895 858 Rental Income - PLAN G: 2 Bed 60 787 749 772 796 0 1,4431,400 0 t,371 1,330 0 $ 887$ 860 60 1.072 1,040 Rental Income - pLAN 02:2 Bed 80 846 1,394 1,438 t,482 4 t,5721,525 76 1,494 1,449 0 $ 887$ 860 0 1,072 1,040 Rental Income- Other (Real Estate Related 322 101 104 108 27 $ 26 Gross Scheduled Income 4,363 4,498 4,637 577 397 Vacancy / Credit Loss 5.00% (218) (225) (£32) 5.00% 5.00% Effective Gross Income (EGI) 4,144 4,273 4,405 Operating Expenses 322 (1,030) (1,062) (1,0,~5) 3,200 unit Capi[al Replacement Reserve (64) (64) (64) Taxes and Assessments (321) ~328} (334) Total Operating Expenses (t,416) (1,454) (1,494) Net Operating Income (NOI) 2,728 2,818 2,911 Debt Service (Series A) (2,423) .(2,42;3) Cash Flow After Debt Service 305 395 488 Interest Rate Cap Contribution 0,200% (65) (05) Tax Credit Investor Admin Fee (20) (20) {20) Net CashFIow ' ' 220 31~1 ' 404 Underwritten DSCR t.20 DISCLAIMER: THE PROFORMA OPERATING STATEMENTS. DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON iNVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WiLL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. iNVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND iNVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNiFiCANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS, THIS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT. This schedule is part of an integrated decoment and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 3 KLEIN FINANCIAL CORPORATION [ALL SCHEDULES ARE SUBJECT Tol~)'~°~0~§~t~ PAr~l~JD~y-ariable June 17, 2003 Senior(City).xls Cost 6/18/2003 11:44 AM Fairway Ranch Apartments, Dublin CA Phase II - Senior Project Costs & Equity (000's Omitted from $ Amounts', $ per sf Total sf/Unit or Unit ($000's) ,Acquisition Costs: Land & Demo 326,700 48,975 16,000 * Title Insurance, Recording Fees, etc. 80 Subtotal - Acquisition Costs 16,080 Contingency - Acquisition Costs 0.00% 0 Total Acquisition Costs 326,700 49.22 16,080 Prod.u,¢tion Co,ts: Parking Garage & Drives 129 $ 14,620 1,886 Appraisal, Market Study & Expense Analysis 70 Sitework & Landscaping 2,125 Professional Services Fees 80 Construction Costs 227,640 $ 104.41 23,768 Feasibitity Analysis Consultation 95 Construction Management 3.65% 1,014 Construction Analysis / Physical Needs Assess. 80 Entitlements and Govern. Profess. Services 115 Tax Credit Consulting 85 Architecture & Engineering 322 $ 2;329 750 JV Partner/Tax Credit Counsel 25 TCAC Fees 78 Permits, Fees 322 $ 27,859 8,971 Construction Period Financial Services 95 Subtotal - Production Costs 39,236 Contingency - Production Costs 4.00% 1,111 Total Production Costs 40,347 Fina.ncin.q Costs: Housing Bond issuance Costs (Sedes A) 2.56% 832 Housing Bond Legal & Expenses Costs (Sedes A) 0.49% 160 Permanent Loan Fees & Costs 1~23% 399 Series A Bond Adminstration (dudng Constr, LU, Seasoning) 70 Series A Bonds (Int Rate Cap impounds during Constr & LU) 0.88% 284 CalPem Trans. Fee & Construction Put Fees 602 Interest - City Loan 174 Interest - CaIPERS 684 Subordinate Ground Lease - 808 Construction Loan Fees & Costs 1.14% 368 Construction Lender Credit Enhancement Fees 1.00% 821 Series A Bond Interest 0 1.70% 1,654 Series A Bond Investment Eamings 1.25% Subtota~- Financing 6,621 Contingency - Financing 4.00% 265 Total Financing 6,886 · - Land Value Before Restrictions This schedule is part of an integrated document and no one page should be mad without reading the other pages and the disclaimer contained on the last page of this schedule. 4 [ALL SCHEDULES ARE SUBJECT TO li~l~)'~[J~ ~rlgpr:k¢(~lt~[ariable June 17, 2003 Senior(City),xla Cost 6/18/2003 11:44 AM KLEIN FINANCIAL CORPORATION Fairway Ranch Apartments, Dublin CA Phase II - Senior * · Project Costs & Equity , (000's Omitted frorn $ Amounts', ' $ per sf Total al/Unit or Unit ($000's) Indire?t Costs: Advisory Services and Other Prof Service.- 193 Insurance 257,640 0.60 155 Legal&Accounting 257,640 $ 2.19 565 Marketing Budget (including Oper Deficit) 75 R, E. Taxes 257,640 $ 0.58 150 Subtotal- Indirect Costs 1,138 Contingency - Indirect Costs 5,00% 57 Total Indirect Costs 1,195 Subtotal - Project Costs 64,508 Deyel0per Fee Very Low Income Unit Development Fee 3.88% 2,500 Total Project Costs 67,008 Lease-up Costs (income) (1,50'7) Net Project Costs 65,50'1 Sources of Funds (d,urin.q Co~structl.on and. Lease-up) Series A Bond Financing (initial Funding Amount) 32,425 City Assistance 2,250 Accrued Interest - City Loan 174 Accrued Interest - CalPERS 168 Deferred Developer Fee 1,400 Accrued Subordinate Ground Lease 608 CaIPERS Mezz. Loan 2,000 Tax Credits - Admission Funding 2,383 Tax Credits - 75% Complete Funding 2,383 Tax Credits - Full Project Completion Funding 2,383 Additional Developer Equity 3,127 Subtotal Developer Equity 14,651 Equity - Via Land Value in Ground Lease 16,000 Total Developer Equity (Includes Tax Credit Equity) 30,651 Total Sources of Funds 65,50'1 Sources of Funds (at stabilizatlon~ Final Bond Funding, and Final Tax Credit Fundin.q) Sedes A Bond 32,425 Cash Flow Required To Fund Project Costs 1,082 City Assistance 2,250 Accrued Interest - City Loan 174 Accrued Interest - CalPERS 168 Accrued Subordinate Ground Lease 808 Deferred Developer Fee 1,400 CalPERS Mezz. Loan 2,000 Tax Credits - Admission Funding 2,383 Tax Credits - 75% Complete Funding 2,383 Tax Credits - Full Project Completion Funding 2,383 Tax Credits - Final Funding 794 Tax Credit Investor Operating Reserve (197) Developer Equity 1,447 Subtotal Developer Equity 13,401 Equity - Via Land Value hr Ground Lease 16,000 Total Developer Equity (Includes Tax Credit Equity 29,401 Total Sources of Funds 65,501 This schedule is part of an integrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. 5 KLEIN FINANCIAL CORPORATION IALL SCHEDULES ARE SUBJECT TO I~d~[~§i~- ~,r~l~:r~'J~[ariable Juno 17, 2003 Senior(City).xls Cost 6/18/2003 11:44 AM Fairway Ranch Apartments, Dublin CA Phase II - Senior Project Costs & Equity (000% Omitted from $ Amounts; $ per sf Total sf/Unit or Unit ($000's) Tax Credit Calculation: Total Eligible Basis 144,9261 Threshotd Basis Limitation adjustment: Permits & Fees High Cost Area Factor 30.00% Total Adjusted Eligible Basis Applicable Fraction 46.30%t 27,039 I Applicable Percentage 0.0338 [ 914 I 10 Years of Tax Credits 10 I 9,139~ Amount of Credits Sold Sales Price per $1.00 of Credits $ 0.870 Applicable Fraction includes 0 additional affordable units as a cushion Tax Credit Fundinq Schedule: Construction Loan Closing (Admission) ~ 75% Completion 100% Complete Stabilization (110% Debt Service Coverage 8609's This schedule is pad of an integrated document and no one page should be road without reading the other pages and the disclaimer contained on the last page of this schedule. 7 6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17, 2003 Senior(City).xts 15 yr KLEIN FINANCIAL CORPORATION FairwaY15 Year CashRanChFIowApartments' Dublin CA Phase 11 - SentoI ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I I (000'a Omitted from $ Amounts) Rent Bumps 2.50% * Operating Expense CPI 3.50% * Property Tax CPI 2.00% Stabilized Year I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Beginning Jan-07 Jan-08 Jan-06 Jan-10 Jan-Il Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan.17 Jan-18 Jan-19 Jan-20 Jan-21 Rental Income - Apartments 4,643 4,759 4,878 5,000 5.125 5,253 5,384 5,519 5,657 5,798 5,943 6,092 6,244 6.400 6,560 Rental Income - Other (Real Estate Related) t10 113 116 119 122 125 126 131 134 138 141 145 148 152 156 Gross Scheduled Income 4,753 4,872 4,994 5,119 5,247 5,378 5,5t2 5,650 ' 5,791 5,936 6,0a4 6,237 6,392 6,552 8,716 Vacancy / Credit Leas 5.00% 123~) (244) (250) (256) 1262) (269~ (2/'6) (282) (290) (297) ($0,1) (~ 12) {320) (328) (336) Effective Gross Income (EGI) 4~516 4~628 4,744 4~863 4;984 5~109' 5~237 5~367 5~502 5~639 5~780 ~ 925 6~073 6,225 6~380 Operating Expenses (1,13,1) i~,173) (1,214) (1.257) (1,30t) (1,3'46) ('t~393) (1,'442) (1,4~3) (1',545) (1,599) (1,655) (1,713) (1,773) (1,835) Capital Replacement Reserve $200 (64) [67) (89) (71) (74) (76) (79) (82) (85) (88) (9~) (94) (97) (101) (104) Taxes and Assessments (341) (346) (355) (362) (369) 376) (384) 302) (400). (408 (4~6) (424) (432) (441) (450) TotaIOperating Expenses '-(1;~39) (1,586) ' (1,638) (1,690) (1,744) (1,799) (1.857) (?,918) (1,977) (2,046) (2,1'06)' (2,173) (2,243) (2,315) (2,389) Net Operating income (NOI} 2,977 3,041 3,106 3,t73 3,240 3,310 3',380 3,452 3,525 ' 3,599 3,675 3,752 3,830 3,910 3,991 Debt Service (Series A)I (1,938) (1 944) (1,950) (1,957) (1,96.1) (I,971) (1,979) (t,987) (1,996) (2,006) (2,016) (2.027) (2,038) (2,051) (2,064) Interest Rate Cap Contribution 0.20% (85) (65) (55) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65) (65) Tax Credit Investor Administrative Fee (22) (23) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) Partnership/Acct./Tax Returus/Admin, (24) (25). (25) (26) (27) (28) (28) (29) (30) (31) (32) (33) (34) (35) (36) Subordinate Management Fee (60) (60) (60) (60) (60) (102) (105) (I0'?) (110) (t131 (116) (118) (121) (124) (126 Net Cash Flow 868 92~.~ 983 1,041 1,100 1,118 1,176 1,235 1,294 1,355' 1,4t5 1,477 1,539 1,601 1,664 City Assistance Payment 0 (653) (876) (898) 0 0 0 0 0 0 0 0 0 0 0 CarPERS Interest Payment/Return of Principa[ (651) (694) (737) (781) (22) 0 0 0 0 0 0 0 0 0 0 Owner Contribution ' 0 853 876' 898 0 0 0 0 0 0 0 0 0 0 0 O~nei'Cofltribution Repayment ~ 0 0 0 0 (803) (839). (6~82) (10.4) 0 0 0 0 0 0 0 -~)'eferred Develope~: Fee P~y~hent (2t7) (231) (246) (260) (275)- (1'71) 0 0 0 0 0 0 0 0 0 Subordinate Ground Lease 0 0 0 0 0 0 0 (823) (971) (1,016) (1,062) (!,I0_7) (1,154) (1.201) (1,_24.~L Net Cash Flow (0) 0 0 0 0 109 294 309 324 339 354 .~69 385 400 416 Debt Service Coverage 1.536 1.564 1.593 1.621 1.650 1.679 1.708 1.737 1.765 1.794 1.823 1.851 1,879 1,907 1.934 CalPERS Mezz. Loan Beginning Balance 2,168 1,777 1,296 715 20 Interest Accrual 12.00% 260 213 156 86 2 Interest Payments/Return of Principal (651) (69_~. (737) (781) (22) ~ Ending Balance 1,777 1,296 715 20 City Assistance* Beginning Balance 2,424 2,492 1,706 876 Interest Accrual 3,000% 68 68 45 23 Payments - Principal (750) (750) (750) Payments - Interest (103) (126) (148) Ending Balancs · , 2,492 ~,706 876 ' Deferred Deve!oper Fee Beginning Balance 1,400 1,183 952 706 446 171 Interest Accrual (;17)~ (231) ' (;46) (;60) (275) (171) ~ Payment Ending Balance 1,183 952 766 446 171 ' Debt service for 15 yr. Cash flow is calculated based on an assumed 5.0% variable rate plus the stack including issuer and trustee fee. This schedule is pad of an integrated document and no one page should be read without reading the ether pages and the disclaimer contained on this schedule. 8 6/18/2003 11:44 AM Dublin Apartments Pro Forma variable June 17. 2003 Senior(Clty).xls Rentmll KLEIN FINANCIAL CORPORATIOI~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL I Fairway Ranch Apartments, Dublin CA Phase tl - Seni~ Residential Apartment Rent Ro 1 2005 2004 200.~ 2004 200~ 2004 2005 2004 50% 50% 60"/, 60"/, 120°/~ 120% MEDIAN MEDIAN MEDIAi~ MEDIAN MEDIAI~ MEDIAN VERY 120% VERY LOW VERY LOW LOV~ LOW LOV~ LOW NON- NON- LOW LOW MEDIAN MARKET INCOME INCOME INCOME INCOME INCOME INCOMERESTRICTED RE$¥RIC~aD INCOME INCOME INCOME RATE # OF TOTAL RENT RENT RENT RENT RENT RENT RENT RENT UNIT TYPE PLAN BEDS SQ. FT. UNITS UNITS UNITS UNITS UNITS SQ. FT. PER UNITPER UNIT PER UNITPER UNiT PER UNIT PER UNITPER UNIT PER UNIT 111 F t 575 65 37 0 0 102 58,650 31.66% $ 740 $ 716 $ 895 $ 860 1,175 $ 1,140 $ 1,237 $ 1,200 111 F2 1 673 0 0 55 25 80 53,640 24.64% $ 740 $ 718 $ 095 $ 668 1,239 $ 1,202 $ 1,304 $ 1,265 2/2 G 2 767 0 60 0 0 60 47,220 10.63% $ 687 $ 860 $ 1,072 $ 1,040 1,371 $ 1,330 $ 1,443 $ 1,400 2/2 G2 2 846 0 0 76 4 60 67,600 24.84% $ - 607 $ 860 $ 1,072 $ 1,046 1,494 $ 1,449 $ 1,572 $ t,525 TOTALS 65 97 131 , ~9, 322 ' 227,,390, 100.00% Average S.F. per unit 706 $ 1,200 3omr~arison of Very Low Income Restricle~l Unit Rent Guidelines 2004 Non 2004 2004 projected Restricted Maximu~ assumed TCAC Issuer Bond Net rents VLI Family Gross Restricted Gross ut0ity Restrictive pre net PLAN BEDS Size rents rents rents allow Rents construct rents F I 1.5 751 801 33.00 710 1,200 718 F2 1 1.5 751 801 33.00 718 1.265 718 G 2 3.0 901 901 41.00 660 1.400 860 G2 2 3.0 901 901 41.00 860 1,525 860 eslimal~ o~ V~ry L~v~ !n!:0me Tax Exempt Multi-family Igond Rent Reslrictions 2004 30.00% assumed 50.00% · Bond Family Income Gross PLAN BEDS Size Level rents F I 2 32,050 801 F2 t 2 32,050 501 G 2 3 36,050 901 G2 2 3 36.050 901 This schedule is part of an integrated documeht and no one page should be read without reading the other pages and tho disclaimer contained on the last page of this schedulo. (~-~'~ 10 6/18/2003 11;44 AM Dublin Apariments Pro Forma variable June 17, 2003 Senior(CibJ).xls Rentroll KLEIN FINANCIAL CORPORATIOI', AL[. SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL Fairway Ranch Apartments, Dublin CA Phase II - Seni, 1 Residential Apartment Rent Ro C~mDarison of Low Income Restricted Unit Rent G,~idelines 2004 Non 2004 2004 projected Restricted Maximum assumed TCAC Issuer Bond Net rents Family Gross Restricted Gross ut[lilt Restrictive pre uet PLANBEDS Size rel~Ls rents rents allow Rentsconstrucl rents F 1 1.5 901 902 33.00 868 1,200 868 F2 1 · 1.5 901 962 33.00 868 1,265 G 2 3.0 1,0§1 1,082 41.00 1,040 1,400 1,040 G2 2 3.0 1,081 1,082 41.00 1,040 1,525 1,040 ~stimate of Low Income Tax Exemot Multi-family Bond Rent Restrictions 2004 30.00% assumed 60.00% Bond Family Income Gross PLAN BEDS Size Level rents F 1 2 38,460 962 F2 I 2 38,460 962 0 I 2 38,460 962 O 2 3 43,260 1,082 G2 2 3 43,260 1,082 0 2 3 43,260 1,082 0 3 4 48,060 1,202 Comparison of 120% Moderate Income Restricted Unit Rent Guidelines 2004 2004 assumed Maximum City rent 30% 95%of2003 use Net Family income of Income Non Rest. lowest utility Restrictive PLANBEDS Bize Level rents Rents Rents a0ow Rents F 1 2.0 78,920 1,923 1,140 1,140 0.00 1,140 Assumes no utility atlow, req. F2 1 2.0 76,920 1,923 1,202 1,202 0.00 1,202 Assumes no utility allow, req. G 2 3.0 86,520 2,163 1,330 1,330 0.00 1,330 Assumes no uflgty allow, req. G2 2 3.0 86,520 2,163 1,449 1,449 0.00 1,449 Assumes no utility allow, req, This schedule is part of an integrated document and Ilo one page should be read wilhout reading the other pages and the disclaimer contained on the last page of this schedule. 11 G/18/2003 11:44 AM Dublin Apadmenls Pro Forma variable June 17, 2003 Senior(City).xls Rentroll KLEIN FINANCIAL CORPORATIOt~ ~ALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL ~ Fallway Ranch Apartments, Dublin CA Phase II - Seni~ 1 Residential Apartment Rent Re ~te of Utility Allowances for Restricted Units: Per Gas Other County Gas Water Air Gas Electric Garbage &Schedule Proposed PLANBEDSCooking Heath]g Condition Heat&Lighls Water Sewer Total~ TDtal F t te~nl owner tenant tenant tenant owner owner 33.00 33.00 1 tenant tenant tenanttenant 33.0g 33.00 F2 owner owner owner G 2 tenant owner tenant tenanttenant owner owner 41,00 41.00 G2 2 tenant owner tenant tenanttenant owner owner 41.00 41.00 DISCLAIMER: THE PRO~ORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR {~STIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WiLL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULAT[VE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATI'ER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BE1TER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THiS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSS[ONS ON THIS iNVESTMENT. This schedule is part of an integrated document and no one page should be read without reading the ether pages and the disclaimer contained on the last page of this schedule. 12 6/18/2003 11:38 AM Dublin Apartments Pro Forma variable June 17, 2003 Family(City).xls Other Income KLEIN FINANCIAL CORPORATION Fairway Ranch Apartments, Dublin CA Phase 1 IALL SCHEDULES ARE SUBJECT TO BOND COUNSEL APPROVAL Estimate of Other Income (includes Cable & Communication Revenue) Annual Account Name Total LAUNDRY/VENDING 304 $ 6.00 $ 21,888 OTHER MISCELLANEOUS INCOME $ 18,000 PARKING INCOME (garages) 85 $ 60.00 $ 61,200 TOTAL OTHER RENTAL INCOME $10t,088 DISCLAIMER: THE PROFORMA OPERATING STATEMENTS, DEVELOPMENT BUDGETS, AND/OR ESTIMATES OR RETURNS ON INVESTMENT CONTAINED HEREIN ARE BASED UPON PROJECTIONS AND ASSUMPTIONS WHICH ARE SUBJECT TO CHANGES IN MARKET AND/OR ECONOMIC CONDITIONS OR OPERATIONAL REQUIREMENTS SPECIFIC TO THE PROJECT AND/OR THE LENDERS OR OWNERS. NO REPRESENTATIONS OR WARRANTY IS MADE THAT THE PROJECTIONS OR ESTIMATES CONTAINED HEREIN WILL REFLECT ACTUAL RESULTS. ACTUAL RESULTS MAY BE SIGNIFICANTLY BETTER OR WORSE THAN THESE PROJECTIONS. INVESTMENT IN REAL ESTATE OF THIS NATURE IS SPECULATIVE AND CARRIES A SUBSTANTIAL DEGREE OF RISK AND INVESTORS SHOULD OBTAIN INDEPENDENT RESEARCH AND CONSULTATION AS TO THE SUBJECT MATTER PRESENTED HEREIN AND NOT UTILIZE THE INFORMATION CONTAINED IN 'THESE PROFORMAS WITHOUT CONSIDERING ALTERNATIVE OUTCOMES CREATING SIGNIFICANTLY BETTER RESULTS OR A MAJOR AND/OR COMPLETE LOSS. THIS DISCLAIMER IS APPLICABLE TO SUMMARY AND ALL DETAILED PROJECTIONS AS WELL AS ALL CORRESPONDENCE AND DISCUSSIONS ON THIS INVESTMENT. This schedule is part of an intergrated document and no one page should be read without reading the other pages and the disclaimer contained on the last page of this schedule. ~ ..... 1