**Exhibit 10.33**

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**SECOND IMPLEMENTATION AGREEMENT**

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**TO**

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**OWNER PARTICIPATION AGREEMENT**

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by and between

 

THE COMMUNITY REDEVELOPMENT AGENCY

 

OF THE CITY OF LOS ANGELES

 

 

and

 

 

SL NO HO, LLC

 

 

North Hollywood Redevelopment Project

 

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**SECOND IMPLEMENTATION AGREEMENT**

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This SECOND IMPLEMENTATION AGREEMENT TO OWNER PARTICIPATION AGREEMENT(this “Second Implementation Agreement”) is entered into as of December 12,2003 by and between THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOSANGELES, a public body, corporate and politic (the “Agency”), and SL NO HO,LLC, a California limited liability company (the “Developer”). The Agency andthe Developer are sometimes referred to herein individually as a “Party” andcollectively as the “Parties.”

 

**RECITALS**

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The following Recitals are a substantive part of this SecondImplementation Agreement. Unless otherwise defined herein, capitalized terms inthis Second Implementation Agreement shall have the meaning given to them inthe OPA, as hereinafter defined in Recital A.

 

A.       The Agency and Developer entered into thatcertain Owner Participation Agreement dated as of March 5, 2002, asamended by that certain First Implementation Agreement to Owner ParticipationAgreement dated as of November 18, 2002 (the “OPA”).

 

B.        Pursuant to the OPA, the Developer is obligated to design, finance anddevelop the Project on the Site.

 

C.        Through this Second Implementation Agreement,the Developer and the Agency intend to revise the description of theimprovements to be constructed on Subarea A and Subarea B; create two phasesfor the construction of the Subarea B improvements; revise the Scope ofDevelopment and the Schedule of Performance to make them consistent with theprovisions of this Second Implementation Agreement; clarify the Agency’s obligationregarding the payment of tax increment; and make certain other clarifyingchanges to the OPA.

 

D.        The parties are entering into this SecondImplementation Agreement for good and valuable consideration, the receipt ofwhich is hereby acknowledged.

 

NOW, THEREFORE, the Agency and the Developer agree that the OPA shallbe amended as follows:

 

**AGREEMENT**

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Section 1.      The Development Site. The second and third sentences of Section 102:The Development Site are amended to read as follows: “The Site consists ofSubarea A, Subarea B-l, Subarea B-2 and Subarea C and Subarea D, each of whichis illustrated and designated as such on the Site Map with Subarea B-l andSubarea B-2 specified on the site plan attached to the Second ImplementationPlan as Attachment 1. A Subarea, as used in this Agreement, shall shall meanSubarea A, Subarea B-l, Subarea B-2, Subarea C and/or Subarea D, as the contextrequires.”

 

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Section 2.      Subarea A Improvements. The first sentence of Section 103.1(a) “SubareaA Improvements” is deleted and replaced with the following: “The Developershall construct a residential complex containing approximately 438 units andassociated parking.”

 

Section 3.      Subarea B Improvements. Section 103.1(b) “Subarea BImprovements” is deleted in its entirety and replaced with the following:

 

“Section 103.1 (b) “Subarea B Improvements”. Subarea Bshall be divided into Subarea B-l and Subarea B-2 and the Developer shallconstruct the Subarea B improvements in two phases. The Subarea B-limprovements shall consist of approximately 60,000 square feet of commercial,retail and restaurant space. The Subarea B-2 improvements shall consist ofresidential complex including approximately 278 residential units and approximately14 live/work units and a parking structure providing sufficient parking tocomply with City code requirements for both Subarea B-l and Subarea B-2.Subarea B-l and B-2 are specified on the site plan attached to the SecondImplementation Agreement as Attachment 1.

 

Section 4.      Subarea C Improvements. The first sentence in Section 103.1(c) “SubareaC Improvements” is amended to delete the phrase “42,000 square feet of retailand restaurant space” and to replace the deleted phrase with the phrase “72,000square feet of retail and restaurant space.”

 

Section 5.      Affordable Housing Requirements. A new sentence is added to the firstparagraph of Section 103(e)(l) as follows: “In no event shall theRestricted Units include the live/work units constructed in Subarea B.”

 

Section 6.      Affordable Housing. Section 103.1 is amended to add a new Section 103.1(e)(4) Calculationof Housing Subsidy to read as follows:

 

“(4)     Calculationof Housing Subsidy. Inconsideration of the recordation of the Affordability Covenants, the Agency hasagreed, in Attachment No. 8, Section II, to pay the Developer theHousing Subsidy (defined as the amount required to offset the projectedreduction in revenue resulting from the recordation of the AffordabilityCovenants against the residential units to be constructed on Subareas A andB-2). The amount of the Housing Subsidy shall be determined as follows: On thefirst (1st) day of the sixteenth (16th) full month following Completion of all residential units in aparticular Subarea, the Developer (in conjunction with the Agency), utilizingthe data from the then most recent two (2) months of operation, shallperform the following calculations:

 

(i)         TheDeveloper (in conjunction with the Agency) shall determine the average annualmarket rent per unit being charged for a particular category of occupiedresidential units in a particular Subarea which are not Restricted Units. “Occupied,”as used herein, shall mean any unit that has been occupied during the mostrecent two (2) months of operation for at least one (1) day. Thecategories of residential units to be considered include one bedroom, twobedroom and residential loft units. Once the average annual market rent perunit has been calculated for each category of residential units which are not RestrictedUnits, the Developer (in conjunction with the

 

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Agency) shall multiplythe average annual market rent by a occupancy factor of ninety five percent(95%) and then multiply that number by the total number of Restricted Units inthe corresponding category in the applicable Subarea. The sum of the product ofeach such multiplication shall be the total annual market rent for all of theRestricted Units in that Subarea. Such total annual market rent for theRestricted Units in that Subarea shall hereafter be referred to as the “AnnualMarket Rent for Restricted Units.

 

(ii)        The Developer shallsubtract from the Annual Market Rent for Restricted Units in a particularSubarea, the maximum allowable annual rent for all the Restricted Units, basedon the maximum Affordable Rent allowed to be charged on the Restricted Unitspursuant to Section 1(e)(l) of the OPA, multiplied by a ninety fivepercent occupancy factor (the “Annual Affordable Rent”). The difference shallhereinafter be referred to as the “Annual Rental Shortfall. Since theAffordability Covenants will provide that the Restricted Units must remainavailable at Affordable Rent for not less than forty (40) years fromCompletion, the Developer (in conjunction with the Agency) shall project theAnnual Rental Shortfall for the required forty (40) year period by assumingannual increases in the Annual Market Rent for Restricted Units of three andone-half percent (3-1/2%) and by assuming annual increases in the AnnualAffordable Rent of two and one-half percent (2-1/2%). For each of the forty(40) years in the projection, Developer shall establish an Annual RentalShortfall by subtracting the adjusted Annual Affordable Rent from the adjustedAnnual Market Rent for Restricted Units.

 

(iii)       Once the Annual RentalShortfall is projected for the 40 year period, the Developer (in conjunctionwith the Agency) shall discount such stream of Annual Shortfalls to its presentvalue by utilizing a discount rate of eight and eighty seven one hundredthspercent (8.87%). Such present value shall constitute, for purposes of thisSubsection 103.1(e)(4), the Housing Subsidy.

 

The Agency shallcause the Housing Subsidy to be paid to the Developer, allocated by Subareabased on the total number of Restricted Units in each Subarea, through acombination of (y) a one-time cash payment, in the amount of ElevenMillion Two Hundred Thousand Dollars ($11,200,000) (the “Cash Payment”),consisting of Five Million Dollars ($5,000,000) of “HOME Funds” and Six MillionTwo Hundred Thousand Dollars ($6,200,000) of “Currently Available Housing TrustFunds,” in each case as such terms are defined in Attachment 8, Section II,A and B, respectively, of the OPA, and (z) annual payments within an amortizationperiod that terminates at the end of Agency Fiscal Year 2028-2029, for theprincipal amount of the balance of the Housing Subsidy remaining after the CashPayment has been made, together with interest on such principal amount at therate of six percent (6%) per annum (the “Annual Payments”). A total of onehundred forty three (143) Restricted Units shall be constructed within thecombined areas of Subarea A and Subarea B-2. One hundred fifteen (115)Restricted Units shall be constructed in Subarea A. Twenty eight (28)Restricted Units shall be constructed in Subarea B-2. The Annual Payments shallconsist of an amount equal to the Site-Generated Housing Trust Funds and to theextent necessary from the North Hollywood Housing Trust Funds, in each case assuch terms are defined in Attachment No. 8, Section II, C and D, ofthe OPA. If the Agency elects not to make or elects to reduce the Annual

 

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Payments, then the numberof Restricted Units shall be reduced by calculating the number of RestrictedUnits which must be returned to market rate to replace the Agency’s payment.The Agency shall make a good faith effort to notify the Developer at theearliest practicable time of the Agency’s intention to reduce the AnnualPayments. Once the number of Restricted Units has been reduced due to thefailure to pay the Housing Subsidy, the Developer’s obligation to provide theRestricted Units shall be forever reduced, the Agency obligation to pay theHousing Subsidy shall be recalculated using the procedure set forth in this Section 103.1(e)(4) andthe Developer shall not be required to increase the number of Restricted Unitsthereafter. If after calculating the Housing Subsidy pursuant to this Section 103.(1)(e)(4),the Agency and the Developer determine that the Cash Payment exceeds theHousing Subsidy, the Developer shall reimburse the Agency the amount of theCash Payment in excess of the Housing Subsidy. The Developer shall make thereimbursement within fifteen (15) days following the determination of anyexcess Cash Payment. The Agency obligation to make an Annual Payment under thisSection 103.(l)(e)(4) is subject to the Developer’s timely payment ofproperty tax for the portions of the Site owned by the Developer. To the extentthe Developer fails to pay its required property tax for a particular year inwhich the Housing Subsidy Payment is due, the Agency’s obligation to make aHousing Subsidy Payment shall be reduced by the Site-Generated Housing TrustFunds which would have been received by the Agency for that year.

 

The HOME Fundsshall be allocated to the Restricted Units in Subarea A. The Six Million TwoHundred Thousand Dollars ($6,200,000) of Currently Available Housing TrustFunds shall be allocated across the Restricted Units constructed on Subarea Aand Subarea B. The HOME Funds and the Currently Available Housing Trust Fundsshall be disbursed on the Developer by the Agency as follows. Three MillionDollars ($3,000,000) of the HOME Funds shall be paid to the Developer as of theclose of escrow for the conveyance to the Developer of the Acquisition Parcelsin Subarea A. The remaining Two Million Dollars ($2,000,000) of HOME fundsshall be paid to the Developer as reimbursement for Subarea A costs at the laterof (i) April 1st,2004 or (ii) the date of the issuance of the building permit for theconstruction of Subarea A Improvements. The prorated payment of CurrentlyAvailable Housing Trust Funds for Subarea A in the amount of Three Million NineHundred Sixty Thousand ($3,960,000) shall be paid to the Developer at the laterof (i) the funding of the HUD Loan (or the date the Developer advancesFourteen Million Dollars to the Agency in lieu of the HUD Loan) or (ii) thedate of the issuance of the building permit for the construction of Subarea AImprovements. The prorated payment of Currently Available Housing Trust Fundsfor Subarea B constituting the balance of the Currently Available Housing TrustFunds shall be paid to the Developer at the later of (i) the funding ofthe HUD Loan (or the date the Developer advances Fourteen Million Dollars tothe Agency in lieu of the HUD Loan) or (ii) the date of the issuance ofthe building permit for the construction of Subarea B Improvements. TheAffordability Covenants referenced in Section 103.1(e)(l) shallreflect that Subarea A shall contain no less than thirty six (36) two bedroomunits and four (4) one-bedroom units restricted as HOME assisted units. Nofewer than eight (8) Home assisted two-bedroom units shall be available toVery Low Income Households; no fewer than twenty-eight (28) two bedroom unitsshall be available to household earning no more than sixty percent (60%) of thearea median income for Los Angeles County and

 

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no fewer than four (4) HOMEassisted one bedroom units shall be available to Low Income Households.”

 

An example of theprocedure for the calculation of the Housing Subsidy and the Annual Payments isattached to this Second Implementation Agreement as Attachment 2.

 

Section 7.      Project Phasing. Theparagraphs addressing the Phase 1, Phase 2 and Phase 3 in Section 103.2Project Phasing are deleted in their entirety and replaced with the following:

 

“In Phase 1, theDeveloper shall develop the Subarea A improvements as described in Section 103.1(a) andas further specified in the Scope of Development within Subarea A. Commencementof Construction of the Subarea A improvements shall occur no later than April 1,2004.

 

In Phase 2, theDeveloper shall develop the Subarea B-1 improvements as described in Section 103.l(b) withinSubarea B-1. The Developer shall commence construction of the Subarea B-limprovements not later than January 1, 2005. The Developer shall developthe Subarea B-2 improvements as described in Section 103.l(b) withinSubarea B-2. Commencement of Construction of the Subarea B-2 improvements shalloccur no later than July 1, 2004.

 

In Phase 3, theDeveloper shall develop the Subarea C improvements as described in Section 103.l(c) withinSubarea C. Commencement of Construction of the Subarea C improvements shalloccur no later than April 1, 2005.”

 

Section 8.      Parking Covenants. Anew Section 103.3 Parking Covenants shall be added as follows:

 

“In addition tothe conditions set forth in Section 506.1, as a condition of the close ofescrow on the parcels comprising Subarea B-2, the Developer shall record acovenant as an encumbrance against the Subarea B-2 parcels granting the ownerof the Subarea B-l parcels exclusive use of parking spaces within the parkingstructure to be constructed on the Subarea B-l parcels in such amount whichmeets the City code parking requirement for an approximately 60,000 squareretail development. In the event the Agency exercises its option rights to theSubarea B-l parcels pursuant to Section 1004, the value of the parkingcovenants, if any, shall be included when valuing the Subarea B-l parcels.”

 

Section 9.      Commencement ofConstruction. A new definition of shall be added to Article 2 asfollows in the appropriate alphabetical order:

 

““Commencement ofConstruction” means for each Subarea the commencement of grading and other sitepreparation activity on that Subarea.”

 

Section 10.    Agency Approval of Plans,Drawings, and Related Documents. Section 306 shall be amended to addthe following as the final sentence to the Section: “Once the

 

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Agency has approved aprogressively more detailed set of drawings and specifications for a Subarea,all prior less detailed drawings and specifications submitted for that Subareaupon which the approved subsequent submittal was based shall be deemedapproved, if such previous submittal was not approved in writing by the Agency.”

 

Section 11.    Offsite Improvements. Section 310.1Dedication of Property shall be deleted and replaced with the following:

 

“Section 310.1.  Dedicationof Property. The Developer shall dedicate property required from SubareasA, B and C to allow for the widening of Lankershim Boulevard, ChandlerBoulevard, and Weddington Street. The property to be dedicated is depicted inan approximate manner on the site plan attached to the Second ImplementationAgreement as Attachment 1. The Developer shall construct all publicimprovements along Fair Avenue, Cumpston Street and Weddington Street asrequired by the City within the time specified in the Schedule of Performance.To the extent approved by the City, the Developer shall be entitled to utilizethe dedication of said portions of the Site for any applicable fees, credits,conditions, mitigations, mitigation measures or other City requirementsotherwise allowed by law.”

 

Section 12.    Community Outreach Plan.A new Section 318.2.5. is added as follows:

 

“Section 318.2.5       Community Outreach Plan.

 

A.        Submission of Plan: Notlater than sixty (60) days following the date of this Agreement for purposes ofSubarea A (and at least sixty days prior to the Commencement of Constructionfor Subarea B-l, Subarea B-2 and Subarea C), the Developer shall meet with theAgency’s Office of Contract Compliance to hold a preconstruction meeting.During the preconstruction meeting, the Developer shall be provided with thepolicies and procedures of the Agency regarding the MBE and WBE outreachefforts, including the development of a Community Outreach Plan. The Developershall be provided samples of Community Outreach Plans which have been approvedby the Agency. Prior to commencing construction of the Improvements theDeveloper shall submit the Community Outreach Plan for the Project to theAgency Administrator or his/her designee for approval which shall not beunreasonabley withheld. The Community Outreach Plan shall set forth the methodsthe Developer will use to comply with this Section 318.2.5. Upon receiptof the Community Outreach Plan, the Agency shall, within thirty (30) days,approve or disapprove the Community Outreach Plan, or provide to the Developera statement of actions required to be taken in order for the Community OutreachPlan to be approved. In calculating the percentages in Section 318.2.5.B,all contracts related to the grading and clearance of a Subarea shall beincluded when calculating the applicable percentages. If the Agency fails torespond within such thirty (30) day period, the Community Outreach Plan shallbe deemed approved by the Agency. Except for Subarea A, the Developer shall notCommence Construction in any Subarea unless the Community Outreach Plan hasbeen approved or deemed approved by the Agency.

 

B.        Contents of the CommunityOutreach Plan: The Community Outreach Plan shall include, at a minimum:

 

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1.         Estimated total dollaramount (by trade) of all contracts and subcontracts to be let by the Developeror its prime contractor for the Improvements;

 

2.         List of all proposedM/WBEs that will be awarded a contract by the Developer or the primecontractor(s);

 

3.         Estimated dollar value ofall proposed M/WBE contracts;

 

4.         Provide documentationdemonstrating that reasonable efforts were made by the Developer and/or primecontractor to meet the Agency’s combined goal of twenty-five percent (25%) forMBE and WBE participation ONLY IF COMBINED GOALS ARE NOT MET;

 

5.         Evidence of M/WBECertification of all firms listed as MBE or WBE in the Plan;

 

Firms purportingto be M/WBE do not require M/WBE Certification if their contract amount is lessthan Twenty Five Thousand Dollars ($25,000). Any firm for which the contractamount exceeds Twenty Five Thousand Dollars ($25,000) and which is notcertified by the City of Los Angeles may not be considered an MBE or WBE forpurposes of this Agreement.

 

6.         Description of theactions to be taken to meet the project area resident and business utilizationobjectives.

 

7.         Such other informationand documentation with respect to the foregoing objectives as the Agency mayreasonably deem necessary.

 

C.        General Information.

 

1.         During the constructionof the Improvements, the Developer shall provide to the Agency such informationand documentation as reasonably requested by the Agency.

 

2.         The Developer shallmonitor and enforce the affirmative action and equal opportunity requirementsimposed by this Agreement. In the event the Developer fails to monitor orenforce these requirements the Agency may declare the Developer in default ofthis Agreement (subject to the notice and cure rights provided in thisAgreement) and thereafter pursue any of the remedies available under thisAgreement.

 

Section 13.    Prevailing Wage. Section 318.3(2) is deleted and a new Section 318.3(2) is added as follows:

 

“(2) Failureto provide all reasonably requested records and/or provide access to job siteor worker: Five Thousand Dollars ($5000) per day, or portion thereof.”

 

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Section 14.            HUD Loan. Section 402.1.1.(e) isamended to add the following sentence to the end of the paragraph: “Upon theAgency’s conveyance of the Acquisition Parcels in Subarea A to the Developer,the Developer’s right to terminate this Agreement pursuant to this Section 402.1.1.(e) shallbe terminated.”

 

Section 15.            Developer Advance.Section 402.6.1 Original Letter of Credit is deleted and replaced with thefollowing:

 

“Section 402.6.1                     OriginalLetter of Credit. Provided the Agreement has not theretofore beenterminated pursuant to Section 1003, the Developer shall deliver to theAgency cash or an irrevocable at-sight, standby letter of credit, firstapproved in writing by the Agency as to form, content and issuer, in an amountdetermined in the second paragraph of this Section 402.6.1 and otherwisecomplying with the requirements of this Agreement (the “Original Letter ofCredit”).

 

The Original Letter ofCredit shall be provided in two phases. The first phase of the Original Letterof Credit shall consist of an amount equal to the difference between the amountof the Developer Advance attributable to Subarea A and Subarea B and theimmediately available Acquisition Funds, as established by the Agency based onbudgets prepared by the Agency and reviewed by the Developer. The amount of theOriginal Letter of Credit for the first phase (consisting of Subarea A andSubarea B) shall be an amount equal to the difference between Nineteen MillionDollars ($19,000,000) and the Purchase Price, calculated as Twelve MillionThree Hundred Six Thousand Five Hundred Thirty Nine Dollars ($12,306,539). TheDeveloper shall deliver to the Agency a portion of the first phase OriginalLetter of Credit currently with the purchase from the Agency of the AcquisitionParcels in Subarea A. The Developer shall pay a portion of the Purchase Priceto the Agency at the close of escrow for the purchase of the Subarea AAcquisition Parcels in the amount of Three Million Eight Hundred Thirty TwoThousand Three Hundred Fifty Eight Dollars ($3,832,358). In addition,concurrently with the close of escrow for the Subarea A Acquisition Parcels,the Developer shall advance to the Agency as part of the Original Letter ofCredit the amount of One Million One Hundred Sixty Seven Thousand Six HundredForty Two Dollars ($1,167,642). The balance of the first phase of the OriginalLetter of Credit in the amount of Five Million Five Hundred Twenty FiveThousand Eight Hundred Nineteen Dollars ($5,525,819) shall be provided in theform of the Developer’s assumption of the Section 108 Loan for a totalDeveloper Advance under the first phase of the Original Letter of Credit in theamount of Six Million Six Hundred Ninety Three Thousand Four Hundred Sixty OneDollars ($6,693,461).

 

The second phase of theOriginal Letter of Credit shall consist of an amount equal to the differencebetween the amount of the Developer Advance attributable to Subarea C andSubarea D, if applicable, and any remaining unencumbered Acquisition Funds, asestablished by the Agency based on budgets prepared by the Agency and reviewedby the Developer. The Parties acknowledge that sufficient funds have not beenidentified to cover the costs attributable to Subarea C and Subarea D and thatthe second phase of the Original Letter of Credit may require the Developer toincrease the initial Six Million Six

 

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Hundred Ninety Three Thousand Four Hundred Sixty OneDollars ($6,693,461) amount. The Agency and the Developer shall work togetherto attempt to identify and obtain reasonable alternative funding sources forthe Subarea C and Subarea D costs prior to requiring the Developer to providethe second phase of the Original Letter of Credit. Notwithstanding theforegoing, the Parties agree that in the event reasonable alternative fundingsources cannot be identified and obtained by the Agency, the Developer shallprovide the second phase of the Original Letter of Credit no later than thirty(30) days following the Agency’s written request for such second phase OriginalLetter of Credit. Notwithstanding the foregoing, if the Developer provides thesecond phase of the Original Letter of Credit, the Agency agrees to negotiatein good faith with the Developer a mutually agreeable arrangement by which theDeveloper shall be reimbursed for the funds advanced in the second phase of theOriginal Letter of Credit in a commercially reasonable manner.”

 

Section 16.            Definition ofProject Costs. Subsection 6 of Section 601.2 Definition of ProjectCosts is be amended to add to the end of the sentence: “and imputed interest onDeveloper equity at a rate equal to the rate of interest of the constructionloan for the particular Subarea. For purposes of this Section 601.2,Developer equity for a particular Subarea shall be defined as the differencebetween the total amount of Project Costs as set forth in the approvedCertified Project Cost Statement, as defined below, for that particular Subareaand third party debt encumbering that particular Subarea.”

 

Section 17.            Form ofParticipation. The second paragraph of Section 605.2 Form ofParticipation is amended to add to the end of the paragraph: “Notwithstandingthe Developer’s payment obligations set forth in this Section 605.2 and605.3, below, any amounts owed to the Agency as an Agency Participation Paymentshall first be applied to repayment of the Developer Advance, as calculatedpursuant to Attachment 8, Section I.B., to the extent the DeveloperAdvance has not been fully repaid, and then to the Agency. Pursuant to this Section 605.2for offset of Agency Participation Payments against unpaid Developer Advance,and to the extent unpaid Developer Advance exists at the time of a refinance ora First Sale (as defined in Section 605.3(c) below) in Subarea Aoccurs, an amount equal to the lesser of (i) the amount of the unpaidDeveloper Advance and (ii) Three Million Dollars ($3,000,000) shall beavailable to offset any Agency Participation Payment due from the refinance orFirst Sale in Subarea A. Following a First Sale in Subarea A, any and allremaining unpaid Developer Advance shall be available to offset the amount ofAgency Participation Payment due in Subarea B-l,B-2, and C. If a refinance orFirst Sale occurs in Subarea B-l, B-2, and C prior to a refinance of First Salein Subarea A, an amount sufficient to pay down the unpaid Developer Advance toThree Million Dollars ($3,000,000) shall be available to offset the amount ofAgency Participation Payment due in Subarea B-1, B-2, and C.”

 

Section 18.            Holder’s Right toCure. Section 703.3 is deleted in its entirety and replaced with thefollowing:

 

“Each holder ofmortgages, deeds of trust, and other real property security instrumentsapproved by the Agency pursuant to Section 109, above, shall be referredto as a “Lender” The Developer shall provide to the Agency the appropriatecontact information for each Lender securing its lien by the Subarea, if theLender wishes to

 

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obtain notice from the Agency pursuant to this Section 703.3.The Developer shall provide the appropriate contact information concurrentlywith the close of escrow of each Subarea or at such later time when theapproved Lender records its liens against the appropriate Subarea. Whenever theAgency pursuant to its rights set forth in Article 10 delivers any noticeor demand to the Developer with respect to the commencement, completion, orcessation of the construction of the Development, the Agency shall at the sametime deliver to Lender having a lien upon the Subarea a copy of such notice ordemand affecting such Subarea. Each Lender on a Subarea shall (insofar as therights of the Agency are concerned) have the right, but not the obligation, atits option, within ninety (90) days after the receipt of the notice, to cure orremedy any such default or breach related to that Subarea by the Developerunder this Agreement; provided, however, that in case of a default which cannotwith diligence be remedied or cured within the ninety (90) day period, such Lendershall have such additional time as reasonably necessary to remedy or cure suchdefault as long as the Lender commences to cure within ninety (90) days ofreceipt of the notice and diligently prosecutes the cure to completion. In noevent may the Lender fail to cure within one hundred eighty (180) days from thedate the Lender obtains lawful possession of the Subarea related to the suchbreach. Any Lender who forecloses on its deed of trust or is assigned, in lieuof foreclosure, the Developer’s rights under this Agreement as to any Subarea,shall have the right, but not the obligation, to undertake or to continue theconstruction or completion of the improvements on the Subarea upon execution ofa written agreement with the Agency by which such Lender assumes the Developer’srights and obligations under this Agreement as to the Subarea, approval ofwhich agreement shall not be unreasonably, withheld, delayed or conditioned bythe Agency. Any such Lender properly completing the improvements on suchSubarea shall be entitled, upon written request made to the Agency, to aCertificate of Completion and a Release of the Construction Covenants for theSubarea from the Agency subject to the provisions of Section 319.

 

Section 19.            Agency Option toAcquire. Section 1004 shall be amended to add the following twosentences immediately prior to the last sentence in the Section:

 

“In the event that the Agency exercises the AgencyOption, any proceeds paid by the Agency to the Developer shall first be paid bythe Developer to the Lender (as defined in Section 703.3) holding thefirst lien on the Developer Parcel being purchased by the Agency until suchtime as the lender is repaid all indebtedness owed to lender by the Developer.Any exercise of the Agency Option shall not extinguish or impair the liens,security interests and assignments held by a Lender to any of the DeveloperParcels, it being agreed that the Agency Option shall be subordinate to anyvalid first lien deed of trust or mortgage held by a Lender.”

 

Section 20.            Scope ofDevelopment. Attachment No. 1 Scope of Development is amended toconform the square footages and numbers of units in the revisions to theSubarea B improvements and Subarea C improvements as set forth in Section 2of this Second Implementation Agreement.

 

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Section 21.            Schedule ofPerformance. Attachment No. 7 Schedule of Performance is deleted andreplaced with a new Schedule of Performance attached to this SecondImplementation Agreement as Attachment 3.

 

Section 22.            Public-PrivateFeasibility Agreement. Section I.A and Section I.B. of AttachmentNo. 8 Public-Private Feasibility Agreement are deleted and replaced withthe following:

 

“I.                       Use ofAvailable Site-Generated Property Tax Increment

 

A.                       HUD LoanRepayment. As set out in Section 402.1.1, the Agency intends to obtainthe HUD Loan from the City. As a condition of obtaining the HUD Loan, the Citywill require the Agency to execute a loan agreement and certain relateddocuments to evidence the Agency’s obligation to repay the HUD Loan and tocomply with the HUD Requirements (the “HUD Loan Documents”). If the Agency issuccessful in obtaining the HUD Loan, the Developer shall assume the Agency’sobligations under the HUD Documents concurrently with the conveyance by theAgency of Subarea B-2 to the Developer. In addition, as a condition of theconveyance of Subarea B-2, the Developer shall deliver to the Agency and theCity a Guaranty, in a form reasonably acceptable to the Agency and the City, guarantyingthe Developer’s repayment of the HUD Loan. The Agency shall have the right toobtain payment on the Guaranty upon the Developer’s failure to make any paymenton the HUD Loan required pursuant to the HUD Loan Documents, and with no dutyon the part of the Agency to first enforce any remedy to collect amounts indefault from Developer. The Developer’s assumption of the HUD Loan shallconstitute the partial payment of the Purchase Price in the amount EightMillion Four Hundred Seventy Four Thousand One Hundred Eighty One Dollars($8,474,181) which when combined with the payment of Three Million EightHundred Thirty Two Thousand Three Hundred Fifty Eight Dollars ($3,832,358) madeby the Developer at the close of escrow of Subarea A shall equal a totalPurchase Price of Twelve Million Three Hundred Six Thousand Five Hundred ThirtyNine Dollars ($12,306,539). The remainder of the amount of the HUD Loan in theamount of Five Million Five Hundred Twenty Five Thousand Eight Hundred NineteenDollars ($5,525,819) shall be credited to the Developer as an advance under thefirst phase of the Original Letter of Credit for a total Developer Advance,when added to the One Million One Hundred Sixty Seven Thousand Six HundredForty Two Dollars ($1,167,642), of Six Million Six Hundred Ninety ThreeThousand Four Hundred Sixty One Dollars ($6,693461).

 

1.                            TheAgency will use every reasonable effort to enter into an agreement with theCity whereby the City will provide an EDI Grant to the Agency in the amount ofOne Million Eight Hundred Thousand Dollars ($1,800,000). The EDI Grant proceedswill be applied to the payment of interest accruing on the HUD Loan for theinitial twenty four (24) months and for the payment of loan fees. Any remainingEDI Grant proceeds may be applied to eligible EDI costs, including acquisitionrelated costs, with the prior approval of the City and the Agency.

 

2.                            Subjectto all of the terms and conditions of this Agreement and in consideration forand subject to the condition that the Developer assumes the HUD Loan, as of thedate the Developer assumes the HUD Loan, the Agency agrees to pay to theDeveloper or its Agency approved assignee a total of Six Million Fifty ThousandDollars ($6,050,000) plus

 

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interest, as set forth below. The Agency payment tothe Developer or its Agency approved assignee shall be an amount equal to fiftypercent (50%) of Available Site-Generated Property Tax Increment received bythe Agency during the prior Agency Fiscal Year from Subarea A (the “Subarea A50% Increment”) and fifty percent (50%) of Available Site-Generated PropertyTax Increment received by the Agency during the prior Agency Fiscal Year fromSubarea B and Subarea C (the “Subarea B/C 50% Increment”). Interest on theAgency’s Six Million Fifty Thousand Dollars ($6,050,000) payment obligationshall be equal to the fixed interest rate under the HUD Loan and shall begin toaccrue at the later of (a) the date the HUD Loan converts to a fixed rateor (b) of the first September 30th which follows the Completion Date. The Agency’spayment of the Six Million Fifty Thousand Dollars ($6,050,000) plus interestpursuant to this Section I.A.2 shall be allocated as follows. The Agencyshall pay to the Developer, as the owner of the Subarea A Improvements, or itsAgency approved assignee, a total of Three Million Dollars ($3,000,000) plusinterest accrued thereon (the “Subarea A Increment Payment”). The Agency shallmake the Subarea A Increment Payment set forth in this Section I.A.2. fromSubarea A 50% Increment in annual installments on or before September 30th of each year, beginning with the first September30th which follows the Completion Date of theSubarea A Improvements until such time as the Agency’s Subarea A IncrementPayment obligation is paid in full or October 1st, 2028, whichever is earlier. The Agencyshall pay to the Developer, as the owner of the Subarea B Improvements, or itsAgency approved assignee, a total of Three Million Fifty Thousand Dollars($3,050,000) plus interest accrued thereon (the “Subarea B Increment Payment”).The Agency shall make the Subarea B Increment Payment set forth in this Section I.A.2.from Subarea B/C 50% Increment in annual installments on or before September 30th of each year, beginning with the first September 30th which follows the Completion Date of theSubarea B Improvements until such time as the Agency’s Subarea B IncrementPayment obligation is paid in full or October 1st, 2028, whichever is earlier. In no eventshall the Agency’s total obligation under the Subarea A Increment Payment whenadded to the Subarea B Increment Payment exceed Six Million Fifty ThousandDollars ($6,050,000) plus interest set forth herein. The Agency herebycovenants to refrain from taking any action that would diminish or impair inany way its receipt (and subsequent payment of the Agency obligation) ofAvailable Site-Generated Property Tax Increment.

 

3.                            If theAgency is unable to obtain the HUD Loan and the Original Letter of Creditrequired of the Developer is increased as a result thereof (hereinafter a “TriggerEvent”), the Agency shall thereafter make payments to the Developer in anamount equal to the Available Site-Generated Property Tax Increment in theamounts set forth in this Paragraph I.A.3. The principal amount of the Agencyobligation under this Paragraph I.A.3 shall equal Six Million Fifty ThousandDollars ($6,050,000) on the date of the Trigger Event (the “Unpaid Principal”).The Unpaid Principal shall bear interest at the rate of six percent (6%) perannum from the date of the Trigger Event. The Agency shall make payments in thetime and manner specified in Section I.A.2. The Agency hereby covenants torefrain from taking any action that would diminish or impair in any way itsreceipt (and subsequent payment of the Unpaid Principal and interest thereon)of Available Site-Generated Property Tax Increment.

 

B.                         Repaymentof Developer’s Advance of Costs. Subject to all of the terms and conditionsof this Agreement (including, without limitation, the provisions of ParagraphI.E. below limiting the Agency’s payment obligation hereunder to particularsources of

 

12

----

 

funds), the principal amount payable by the Agency tothe Developer under this Paragraph I.B. of this Attachment No. 8 shall bean amount equal to (i) the amount of the Developer Advance determinedpursuant to Section 402.6 of the Owner Participation Agreement; less (ii) theAcquisition Funds used by the Agency to acquire any portion of the Site; plus (iii) anamount equal to the Purchase Price; which net amount shall bear interest at therate of six percent (6%) per annum from the date of disbursement.

 

1.                            Subjectto all the terms and conditions of this Agreement, on or before September 30th of each year, beginning with the first September 30th which follows the Completion Date, andcontinuing until the Agency obligation under this Paragraph I.B. (and anyaccrued interest thereon) has been paid in full, the Agency shall pay to the Developeran amount equal to forty percent (40%) of Available Site-Generated Property TaxIncrement received by the Agency during the prior Agency Fiscal Year. TheAgency hereby covenants to refrain from taking any action that would diminishor impair in any way its receipt (and subsequent payment of the Agencyobligation and interest thereon) of Available Site-Generated Property TaxIncrement.

 

2.                            TheAgency obligation purusant to this Paragraph I.B shall continue until theAgency obligation is paid in full or October 1st, 2028, whichever is earlier.”

 

Section 23.            HOME Requirements.A new Attachment No. 18 shall be added to the OPA entitled HOMERequirements. The form of the new Attachment 18 is attached to this SecondImplementation Agreement as Attachment 4. As a result of the HOME funding forthe Subarea A Improvements, the Developer shall comply with and shall cause itscontractors and all subcontractors to comply with the requirements of theDavis-Bacon Act (40 U.S.C. 276 etseq.) in the construction of theSubarea A Improvements.

 

Section 24.            No Other Changes,Consistency. Notwithstanding any changes and deletions contained herein,all other provisions of the OPA remain the same. In the event of any conflictbetween the terms of the OPA and this Second Implementation Agreement, theterms of this Second Implementation Agreement shall govern.

 

13

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IN WITNESS WHEREOF, theparties hereby have executed this Second Implementation Agreement as of thedate first above written.

 
| ** **                          | **DEVELOPER****:**                                                         |
|-------------------------------------|----------------------------------------------------------------------------|
|                                |                                                                       |
|                                | SL No Ho, LLC a California limited liability company                       |
|                                |                                                                       |
|                                | By:                                                                        | /s/ Clifford P. Goldstein |
|                                |                                                                       | Clifford P. Goldstein |
|                                |                                                                       |   |
|                                | Its:                                                                       | Authorized Member |
|                                |                                                                       |
| ** **                          | ** **                                                                 |
| ** **                          | **AGENCY****:**                                                            |
|                                |                                                                       |
|                                | THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF  LOS ANGELES, CALIFORNIA |
|                                |                                                                       |
|                                | By:                                                                        | /s/ Robert Ovrum |
|                                |                                                                       | Robert Ovrum |
|                                |                                                                       |   |
|                                | Its:                                                                       | Chief Executive Officer |
|                                |                                                                       |   |
|                                |                                                                       |   |
| APPROVED AS TO FORM:                |                                                                       |   |
|                                |                                                                       |   |
| ROCKARD J. DELGADILLO CITY ATTORNEY |                                                                       |   |
|                                |                                                                       |   |
|                                |                                                                       |   |
| By:                                 | /s/ Authorized Signatory                                                   |   |   |
|                                | Assistant/Deputy City Attorney                                             |   |   |
|                                |                                                                       |   |   |
| APPROVED AS TO FORM:                |                                                                       |   |
|                                |                                                                       |   |
|                                |                                                                       |   |
| By:                                 | /s/ Authorized Signatory                                                   |   |   |
|                                | Agency Special Counsel                                                     |   |   |

 

14

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**TABLE 1**

 

**ANNUAL MARKET RENT FOR RESTRICTED UNITS CALCULATION EXAMPLENOHO COMMONSLOS ANGELES, CALIFORNIA**

 
| ** ** | ** ** | ** **                                                   | ** ** | **Subarea A** | ** **    | **Subarea B-2** | ** ** |
|------------|------------|--------------------------------------------------------------|------------|---------------|---------------|-----------------|------------|
| **I.**     | ** ** | **Project  Description**                                     |       |          |          |            |       |
| ** ** |       | Market Rate Units                                            |       | 323           |          | 250             |       |
| ** ** |       | Restricted Units                                             |       | 115           |          | 28              |       |
| ** ** |       |                                                         |       |          |          |            |       |
| ** ** | ** ** | **Total  Units**                                             | ** ** | **438**       | ** **    | **278**         | ** ** |
| ** ** | ** ** | ** **                                                   | ** ** | ** **    | ** **    | ** **      | ** ** |
| **II.**    | ** ** | **Number  of Occupied Market Units by Category****(1)**      |       |          |          |            |       |
| ** ** |       | One-Bedroom Units                                            |       | 158           |          | NA              |       |
| ** ** |       | Two-Bedroom Units                                            |       | 90            |          | NA              |       |
| ** ** |       | Residential Loft Units                                       |       | NA            |          | 125             |       |
| ** ** |       |                                                         |       |          |          |            |       |
| ** ** | ** ** | **Total  Occupied Market Units**                             | ** ** | **248**       | ** **    | **125**         | ** ** |
| ** ** | ** ** | ** **                                                   | ** ** | ** **    | ** **    | ** **      | ** ** |
| **III.**   | ** ** | **Annualized  Rental Revenue of Occupied Units by Category** |       |          |          |            |       |
| ** ** |       | One-Bedroom Units                                            |       | $             | 2,652,000     |            | NA         |   |
| ** ** |       | Two-Bedroom Units                                            |       | $             | 2,061,000     |            | NA         |   |
| ** ** |       | Residential Loft Units                                       |       | NA            |          | $               | 2,292,000  |   |
| ** ** |       |                                                         |       |          |          |            |       |
| **IV.**    | ** ** | **Average  Annual Market Rent per Unit by Category**         |       |          |          |            |       |
| ** ** |       | One-Bedroom Units                                            |       | $             | 16,800        |            | NA         |   |
| ** ** |       | Two-Bedroom Units                                            |       | $             | 22,900        |            | NA         |   |
| ** ** |       | Residential Loft Units                                       |       | NA            |          | $               | 18,300     |   |
| ** ** |       |                                                         |       |          |          |            |       |
| **V.**     | ** ** | **Occupancy  Factor (2)**                                    |       | 95            | %             | 95              | %          |
| ** ** | ** ** | ** **                                                   |       |          |          |            |       |
| **VI.**    | ** ** | **Average  Effective Gross Income per Unit by Category**     |       |          |          |            |       |
| ** ** |       | One-Bedroom Units                                            |       | $             | 16,000        |            | NA         |   |
| ** ** |       | Two-Bedroom Units                                            |       | $             | 21,800        |            | NA         |   |
| ** ** |       | Residential Loft Units                                       |       | NA            |          | $               | 17,400     |   |
| ** ** |       |                                                         |       |          |          |            |       |
| **VII.**   | ** ** | **Number  of Restricted Units by Category**                  |       |          |          |            |       |
| ** ** |       | One-Bedroom Units                                            |       | 60            |          | NA              |       |
| ** ** |       | Two-Bedroom Units                                            |       | 55            |          | NA              |       |
| ** ** |       | Residential Loft Units                                       |       | NA            |          | 28              |       |
| ** ** |       |                                                         |       |          |          |            |       |
| ** ** | ** ** | **Total  Restricted Units**                                  | ** ** | **115**       | ** **    | **28**          | ** ** |
| ** ** | ** ** | ** **                                                   | ** ** | ** **    | ** **    | ** **      | ** ** |
| **VIII.**  | ** ** | **Annual  Market Rent for Restricted Units (VI x VII)**      | ** ** | **$**         | **2,159,000** | ** **      | **$**      | **487,000** | ** ** |

 

----

(1)                     Illustrativeonly, should be actual number of units occupied at calculation.

(2)                     Establishedin the Second Implementation Agreement to the OPA.

 

Prepared by: KeyserMarston Associates, Inc.

Filename: NoHo Commons_ 929-10% Phase II; Att 2 - Table 1; jlr; 12/18/2003

 

----

 

**TABLE 2**

 

**ANNUAL RENTAL SHORTFALL CALCULATION EXAMPLENOHO COMMONSLOS ANGELES, CALIFORNIA**

 
| ** ** | ** ** | ** **                                             | ** ** | **Subarea A** | ** **    | **Subarea B-2** | ** ** |
|------------|------------|--------------------------------------------------------|------------|---------------|---------------|-----------------|------------|
| **I.**     | ** ** | **Annual Affordable Rent Calculation**                 |       |          |          |            |       |
| ** ** |       | A.  Maximum Allowable Annual Rent for Restricted Units |       | $             | 1,126,100     |            | $          | 229,800 |   |
| ** ** |       |                                                   |       |          |          |            |       |
| ** ** |       | B.  Occupancy Factor (1)                               |       | 95            | %             | 95              | %          |
| ** ** |       |                                                   |       |          |          |            |       |
| ** ** | ** ** | **Annual Affordable Rent (A x B)**                     | ** ** | **$**         | **1,070,000** | ** **      | **$**      | **218,000** | ** ** |
| ** ** | ** ** | ** **                                             | ** ** | ** **    | ** **    | ** **      | ** ** |
| **II.**    | ** ** | **Annual Rental Shortfall Calculation**                |       |          |          |            |       |
| ** ** |       | Annual  Market Rent for Restricted Units               |       | $             | 2,159,000     |            | $          | 487,000 |   |
| ** ** |       | (Less)  Annual Affordable Rent                         |       | (1,070,000    | )             | (218,000        | )          |
| ** ** |       |                                                   |       |          |          |            |       |
| **III.**   | ** ** | **Annual Rental Shortfall**                            | ** ** | **$**         | **1,089,000** |            | **$**      | **269,000** | ** ** |

 

----

(1)                     Establishedin the Second Implementation Agreement to the OPA.

 

Prepared by: KeyserMarston Associates, Inc.

Filename: NoHo Commons_ 929- 10% Phase II; Att 2 - Table 1; jlr; 12/16/2003

 

----

 

**TABLE 3**

 

**HOUSING SUBSIDY CALCULATION EXAMPLE****NOHO COMMONSLOS ANGELES, CALIFORNIA**

 
| ** ** | ** **                                       | **Year 1** | ** ** | **Year 2**     | ** ** | **Year 3** | ** **    | **Year 4** | ** ** | **Year 5**    | ** ** | **Year 6** | ** **    | **Year 7** | ** ** | **Year 8**    | ** ** | **Year 9** | ** **    | **Year 10** | ** ** |
|------------|--------------------------------------------------|------------|------------|----------------|------------|------------|---------------|------------|------------|---------------|------------|------------|---------------|------------|------------|---------------|------------|------------|---------------|-------------|------------|
| **I.**     | **Subarea A: Housing Subsidy**                   | ** ** |       |           |       |       |          |       |       |          |       |       |          |       |       |          |       |       |          |        |       |   |
|       | Annual  Market Revenues for Restricted Units (1) |       | $          | 2,159,000      |       | $          | 2,234,600     |       | $          | 2,312,800     |       | $          | 2,393,700     |       | $          | 2,477,500     |       | $          | 2,564,200     |        | $          | 2,653,900 |   | $ | 2,746,800 |   | $ | 2,842,900 |   | $ | 2,942,400 |   |
|       | (Less)  Annual Affordable Revenue(2)             |       | (1,070,000 | )              | (1,096,800 | )          | (1,124,200    | )          | (1,152,300 | )             | (1,181,100 | )          | (1,210,600    | )          | (1,240,900 | )             | (1,271,900 | )          | (1,303,700    | )           | (1,336,300 | ) |
| ** ** | ** **                                       | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** |
| ** ** | **Annual Rental Shortfall Projection**           | ** ** | **$**      | **1,089,000**  | ** ** | **$**      | **1,137,800** | ** ** | **$**      | **1,188,600** | ** ** | **$**      | **1,241,400** | ** ** | **$**      | **1,296,400** | ** ** | **$**      | **1,353,600** | ** **  | **$**      | **1,413,000** | ** ** | **$** | **1,474,900** | ** ** | **$** | **1,539,200** | ** ** | **$** | **1,606,100** | ** ** |
| ** ** | ** **                                       | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** |
| ** ** | **Subarea A: Housing Subsidy(3)**                | ** ** | **$**      | **21,336,000** | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** | ** ** |
| ** ** | ** **                                       | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** |
| **II.**    | **Subarea B: Housing Subsidy**                   | ** ** |       |           |       |       |          |       |       |          |       |       |          |       |       |          |       |       |          |        |       |   |
|       | Annual  Market Revenues for Restricted Units(1)  |       | $          | 487,000        |       | $          | 504,000       |       | $          | 521,600       |       | $          | 539,900       |       | $          | 558,800       |       | $          | 578,400       |        | $          | 598,600 |   | $ | 619,600 |   | $ | 641,300 |   | $ | 663,700 |   |
|       | (Less)  Annual Affordable Revenue(2)             |       | (218,000   | )              | (223,500   | )          | (229,100      | )          | (234,800   | )             | (240,700   | )          | (246,700      | )          | (252,900   | )             | (259,200   | )          | (265,700      | )           | (272,300   | ) |
| ** ** | ** **                                       | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** |
| ** ** | **Annual Rental Shortfall Projection**           | ** ** | **$**      | **269,000**    | ** ** | **$**      | **280,500**   | ** ** | **$**      | **292,500**   | ** ** | **$**      | **305,100**   | ** ** | **$**      | **318,100**   | ** ** | **$**      | **331,700**   | ** **  | **$**      | **345,700** | ** ** | **$** | **360,400** | ** ** | **$** | **375,600** | ** ** | **$** | **391,400** | ** ** |
| ** ** | ** **                                       | ** ** | ** ** | ** **     | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** |
| ** ** | **Subarea B: Housing Subsidy(3)**                | ** ** | **$**      | **5,175,000**  | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** ** | ** ** | ** **    | ** **  | ** ** | ** ** | ** ** |

 

----

(1)                     The SecondImplementation Agreement establishes the annual increase in market rate unitrental revenue @ 3.50%.

(2)                     The SecondImplementation Agreement establishes the annual increase in restricted unitrental revenue @ 2.50%.

(3)                     The SecondImplementation Agreement establishes the discount rate @ 8.87%.

 

Prepared by: KeyserMarston Associates, Inc.

Filename: NoHoCommons_929 - 10% Phase II; Att 2 - Table 3; jlr; 12/16/2003

 

----

 

**TABLE 3**

 

**HOUSING SUBSIDY CALCULATION EXAMPLENOHO COMMONSLOS ANGELES, CALIFORNIA**

 
| ** ** | ** **                                      | **Year 11** | ** ** | **Year 12**   | ** ** | **Year 13** | ** **    | **Year 14** | ** ** | **Year 15**   | ** ** | **Year 16** | ** **    | **Year 17** | ** ** | **Year 18**   | ** ** | **Year 19** | ** **    | **Year 20** | ** ** |
|------------|-------------------------------------------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|
| **I.**     | **Subarea A: Housing Subsidy**                  | ** **  |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
|       | Annual  Market Revenues for Restricted Units(1) |        | $          | 3,045,400     |       | $           | 3,152,000     |        | $          | 3,262,300     |       | $           | 3,376,500     |        | $          | 3,494,700     |       | $           | 3,617,000     |        | $          | 3,743,600 |   | $ | 3,874,600 |   | $ | 4,010,200 |   | $ | 4,150,600 |   |
|       | (Less)  Annual Affordable Revenue(2)            |        | (1,369,700 | )             | (1,403,900 | )           | (1,439,000    | )           | (1,475,000 | )             | (1,511,900 | )           | (1,549,700    | )           | (1,588,400 | )             | (1,628,100 | )           | (1,668,800    | )           | (1,710,500 | ) |
|       |                                            |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
| ** ** | **Annual Rental Shortfall Projection**          | ** **  | **$**      | **1,675,700** | ** ** | **$**       | **1,748,100** | ** **  | **$**      | **1,823,300** | ** ** | **$**       | **1,901,500** | ** **  | **$**      | **1,982,800** | ** ** | **$**       | **2,067,300** | ** **  | **$**      | **2,155,200** | ** ** | **$** | **2,246,500** | ** ** | **$** | **2,341,400** | ** ** | **$** | **2,440,100** | ** ** |
| ** ** | ** **                                      | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** ** |
|       | **Subarea A: Housing Subsidy(3)**               |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
| ** ** | ** **                                      |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
| **II.**    | **Subarea  B: Housing Subsidy**                 | ** **  |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
|       | Annual  Market Revenues for Restricted Units(1) |        | $          | 686,900       |       | $           | 710,900       |        | $          | 735,800       |       | $           | 761,600       |        | $          | 788,300       |       | $           | 815,900       |        | $          | 844,500 |   | $ | 874,100 |   | $ | 904,700 |   | $ | 936,400 |   |
|       | (Less)  Annual Affordable Revenue(2)            |        | (279,100   | )             | (286,100   | )           | (293,300      | )           | (300,600   | )             | (308,100   | )           | (315,800      | )           | (323,700   | )             | (331,800   | )           | (340,100      | )           | (348,600   | ) |
|       |                                            |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |
| ** ** | **Annual Rental Shortfall Projection**          | ** **  | **$**      | **407,800**   | ** ** | **$**       | **424,800**   | ** **  | **$**      | **442,500**   | ** ** | **$**       | **461,000**   | ** **  | **$**      | **480,200**   | ** ** | **$**       | **500,100**   | ** **  | **$**      | **520,800** | ** ** | **$** | **542,300** | ** ** | **$** | **564,600** | ** ** | **$** | **587,800** | ** ** |
| ** ** | ** **                                      | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** ** |
|       | **Subarea B: Housing Subsidy(3)**               |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |   |

 

----

(1)                     The SecondImplementation Agreement establishes the annual increase in market rate unitrental revenue @ 3.50%.

(2)                     The SecondImplementation Agreement establishes the annual increase in restricted unitrental revenue @ 2.50%.

(3)                     The SecondImplementation Agreement establishes the discount rate @ 8.87%.

 

----

 

**TABLE3**

 

**HOUSINGSUBSIDY CALCULATION EXAMPLE**

**NOHOCOMMONS**

**LOSANGELES, CALIFORNIA**

 
| ** ** | ** **                                      | ** ** | **Year 21** | ** **    | **Year 22** | ** ** | **Year 23**   | ** ** | **Year 24** | ** **    | **Year 25** | ** ** | **Year 26**   | ** ** | **Year 27** | ** **    | **Year 28** | ** ** | **Year 29**   | ** ** | **Year 30** | ** **    |
|------------|-------------------------------------------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|
| **I.**     | **Subarea  A: Housing Subsidy**                 |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | Annual Market Revenues  for Restricted Units(1) |       | $           | 4,295,900     |        | $          | 4,446,300     |       | $           | 4,601,900     |        | $          | 4,763,000     |       | $           | 4,929,700     |        | $          | 5,102,200     |       | $           | 5,280,800     |   | $ | 5,465,600 |   | $ | 5,656,900 |   | $ | 5,854,900 |   |
|       | (Less) Annual  Affordable Revenue(2)            |       | (1,753,300  | )             | (1,797,100  | )          | (1,842,000    | )          | (1,888,100  | )             | (1,935,300  | )          | (1,983,700    | )          | (2,033,300  | )             | (2,084,100  | )          | (2,136,200    | )          | (2,189,600  | )             |
| ** ** | ** **                                      | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    |
| ** ** | **Annual  Rental Shortfall Projection**         | ** ** | **$**       | **2,542,600** | ** **  | **$**      | **2,649,200** | ** ** | **$**       | **2,759,900** | ** **  | **$**      | **2,874,900** | ** ** | **$**       | **2,994,400** | ** **  | **$**      | **3,118,500** | ** ** | **$**       | **3,247,500** | ** ** | **$** | **3,381,500** | ** ** | **$** | **3,520,700** | ** ** | **$** | **3,665,300** | ** ** |
|       | ** **                                      |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | **Subarea  A: Housing Subsidy(3)**              |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
| ** ** | ** **                                      |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
| **II.**    | **Subarea  B: Housing Subsidy**                 |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | Annual Market Revenues  for Restricted Units(1) |       | $           | 969,200       |        | $          | 1,003,100     |       | $           | 1,038,200     |        | $          | 1,074,500     |       | $           | 1,112,100     |        | $          | 1,151,000     |       | $           | 1,191,300     |   | $ | 1,233,000 |   | $ | 1,276,200 |   | $ | 1,320,900 |   |
|       | (Less) Annual  Affordable Revenue(2)            |       | (357,300    | )             | (366,200    | )          | (375,400      | )          | (384,800    | )             | (394,400    | )          | (404,300      | )          | (414,400    | )             | (424,800    | )          | (435,400      | )          | (446,300    | )             |
| ** ** | ** **                                      | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    |
| ** ** | **Annual  Rental Shortfall Projection**         | ** ** | **$**       | **611,900**   | ** **  | **$**      | **636,900**   | ** ** | **$**       | **662,800**   | ** **  | **$**      | **689,700**   | ** ** | **$**       | **717,700**   | ** **  | **$**      | **746,700**   | ** ** | **$**       | **776,900**   | ** ** | **$** | **808,200** | ** ** | **$** | **840,800** | ** ** | **$** | **874,600** | ** ** |
|       | ** **                                      |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | **Subarea  B: Housing Subsidy(3)**              |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |

 

----

(1)          The SecondImplementation Agreement establishes the annual increase in market rate unitrental revenue @ 3.50%.

(2)          The SecondImplementation Agreement establishes the annual increase in restricted unitrental revenue @ 2.50%.

(3)          The SecondImplementation Agreement establishes the discount rate @ 8.87%.

 

----

 

**TABLE 3**

 

**HOUSINGSUBSIDY CALCULATION EXAMPLE**

**NOHOCOMMONS**

**LOSANGELES, CALIFORNIA**

 
| ** ** | ** **                                      | ** ** | **Year 31** | ** **    | **Year 32** | ** ** | **Year 33**   | ** ** | **Year 34** | ** **    | **Year 35** | ** ** | **Year 36**   | ** ** | **Year 37** | ** **    | **Year 38** | ** ** | **Year 39**   | ** ** | **Year 40** | ** **    |
|------------|-------------------------------------------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|-------------|------------|---------------|------------|-------------|---------------|
| **I.**     | **Subarea A: Housinq Subsidy**                  |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | Annual  Market Revenues for Restricted Units(1) |       | $           | 6,059,800     |        | $          | 6,271,900     |       | $           | 6,491,400     |        | $          | 6,718,600     |       | $           | 6,953,800     |        | $          | 7,197,200     |       | $           | 7,449,100     |   | $ | 7,709,800 |   | $ | 7,979,600 |   | $ | 8,258,900 |   |
|       | (Less)  Annual Affordable Revenue(2)            |       | (2,244,300  | )             | (2,300,400  | )          | (2,357,900    | )          | (2,416,800  | )             | (2,477,200  | )          | (2,539,100    | )          | (2,602,600  | )             | (2,667,700  | )          | (2,734,400    | )          | (2,802,800  | )             |
|       | ** **                                      | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    |
|       | **Annual Rental Shortfall Projection**          | ** ** | **$**       | **3,815,500** | ** **  | **$**      | **3,971,500** | ** ** | **$**       | **4,133,500** | ** **  | **$**      | **4,301,800** | ** ** | **$**       | **4,476,600** | ** **  | **$**      | **4,658,100** | ** ** | **$**       | **4,846,500** | ** ** | **$** | **5,042,100** | ** ** | **$** | **5,245,200** | ** ** | **$** | **5,456,100** | ** ** |
|       | ** **                                      | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    |
|       | **Subarea A: Housing Subsidy(3)**               |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | ** **                                      |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
| **II.**    | **Subarea B: Housing Subsidy**                  |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | Annual  Market Revenues for Restricted Units(1) |       | $           | 1,367,100     |        | $          | 1,414,900     |       | $           | 1,464,400     |        | $          | 1,515,700     |       | $           | 1,568,700     |        | $          | 1,623,600     |       | $           | 1,680,400     |   | $ | 1,739,200 |   | $ | 1,800,100 |   | $ | 1,863,100 |   |
|       | (Less)  Annual Affordable Revenue(2)            |       | (457,500    | )             | (468,900    | )          | (480,600      | )          | (492,600    | )             | (504,900    | )          | (517,500      | )          | (530,400    | )             | (543,700    | )          | (557,300      | )          | (571,200    | )             |
|       |                                            |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |
|       | **Annual Rental Shortfall Projection**          | ** ** | **$**       | **909,600**   | ** **  | **$**      | **946,000**   | ** ** | **$**       | **983,800**   | ** **  | **$**      | **1,023,100** | ** ** | **$**       | **1,063,800** | ** **  | **$**      | **1,106,100** | ** ** | **$**       | **1,150,000** | ** ** | **$** | **1,195,500** | ** ** | **$** | **1,242,800** | ** ** | **$** | **1,291,900** | ** ** |
|       | ** **                                      | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    | ** **  | ** ** | ** **    | ** ** | ** **  | ** **    |
|       | **Subarea B: Housing Subsidy(3)**               |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |        |       |          |       |        |          |

 

----

(1)          TheSecond Implementation Agreement establishes**theannual increase in market rate unit rental revenue @ 3.50%.

(2)          TheSecond Implementation Agreement establishes the annual increase in restrictedunit rental revenue @ 2.50%.

(3)          TheSecond. Implementation Agreement establishes the discount rate @ 8.87%.

 

----

 

**TABLE4**

 

**ANNUALPAYMENTS CALCULATION EXAMPLE**

**NOHOCOMMONS**

**LOSANGELES, CALIFORNIA**

 
| ** ** | ** **                                         | ** ** | **SUBAREA A** | ** **          | **SUBAREA B-2** | ** ** |
|------------|----------------------------------------------------|------------|---------------|---------------------|-----------------|------------|
| ** ** | ** **                                         | ** ** | ** **    | ** **          | ** **      | ** ** |
| **I.**     | **Housing Subsidy (Table 2)**                      |       | $             |  21,336,000    |            | $          |  5,175,000 |   |
| ** ** | ** **                                         |       |          |                |            |       |
| **II.**    | **Cash Payment Calculation****(1)**                |       |          |                |            |       |
|       | HOME  Funds                                        |       | $             |  5,000,000     |            | $          |  0 |   |
|       | Currently  Available Housing Trust Funds           |       | 3,960,000     |                | 2,240,000       |       |
|       |                                               |       |          |                |            |       |
| ** ** | **Total Cash Payment**                             | ** ** | **$**         | ** 8,960,000** | ** **      | **$**      | ** 2,240,000** | ** ** |
| ** ** | ** **                                         | ** ** | ** **    | ** **          | ** **      | ** ** |
| **III.**   | **Annual Agency Payment to Developer Calculation** |       |          |                |            |       |
|       | Net  Housing Subsidy (I - II)                      |       | $             |  12,376,000    |            | $          |  2,935,000 |   |
|       | Interest  Rate (1)                                 |       | 6.0           | %                   | 6.0             | %          |
|       | Amortization  Period (FY 2006/07 - FY 2028/29)     |       | 23            |                | 23              |       |
| ** ** | ** **                                         | ** ** | ** **    | ** **          | ** **      | ** ** |
| ** ** | **Annual Payments**                                | ** ** | **$**         | ** 1,006,000** | ** **      | **$**      | ** 239,000** | ** ** |

 

----

(1)          Establishedin the Second Implementation Agreement to the OPA.

 

Prepared by: Keyser Marston Associates, Inc.

Filename: NoHoCommons_929 - 10% Phase II; Att 2 - Table 4; jlr; 12/16/2003

 

----