REPORT TO THE HOUSING AUTHORITY DATE ISSUED: May 30, 2013 REPORT NO: HAR13-019 ATTENTION: Chair and Members of the Housing Authority of the City of San Diego

For the Agenda of June 25, 2013 SUBJECT: Parker-Kier Ground Lease and Operation Agreement COUNCIL DISTRICT: 3 REQUESTED ACTION That the Housing Authority of the City of San Diego approve a Ground Lease between the San Diego Housing Commission and Housing Development Partners of San Diego for the occupancy and operation of the Parker-Kier Building, to continue its use for permanent supportive and very low income housing. STAFF RECOMMENDATION 1) That the Housing Authority of the City of San Diego (Housing Authority) take the following actions

for the occupancy and operation of the Parker-Kier Building (Property), located at 2172 Front Street:

a. Authorize the San Diego Housing Commission (Housing Commission) to enter into a lease with Housing Development Partners of San Diego (HDP) as the ground lessee and operator of the Property for a term of 10 years;

b. Authorize the President & Chief Executive Officer (President & CEO), or designee, to substitute

the funding sources with other available funding sources so long as the total program/project budget amount after substitution does not exceed the approved total budget, should the operational need arise or should such actions be to the benefit of the Housing Commission and its mission. Funding substitutions will be memorialized in an Informational Report at the next scheduled Housing Commission Board Meeting; and

c. Authorize the President & CEO, or designee, to execute all documents and instruments that are

necessary and/or appropriate to implement these approvals, in a form approved by General Counsel, and to take such actions as are necessary and/or appropriate to implement these approvals.

SUMMARY Project Background The Housing Commission acquired the Parker-Kier Building, formerly Del Mar Apartments, from the Port of San Diego in 1991. The Property is a three-story structure containing 33 units (19 studios and 14 one-bedroom units), plus one manager’s unit. It is believed to have been built around 1908 and is located west of Balboa Park, at 2172 Front Street, in the Uptown Community.

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 2 On or about 1992, the Housing Commission completed essential rehabilitation to correct safety hazards and repair basic systems utilizing an interest-free forgivable loan from the then-Redevelopment Agency of the City of San Diego (RDA). As a condition of the RDA loan, the Housing Commission recorded an Agreement Affecting Real Property (AARP), which requires 34 units at the Property be restricted to individuals with drug, alcohol, and substance abuse issues, or others in need of services-enriched housing, earning at or below 50 percent of Redevelopment Law Area Median Income (AMI). The AARP restricts the Property until March 31, 2022. Title 25, section 42 of the California Code of regulations requires property owners of apartment buildings with 16 or more units to have an on-site resident manager living on the property. Accordingly, the Commission is reserving one of the 34 units for a property manager, reducing the total number of rent and population restricted units to 33. Housing Commission has discussed this with both the City Attorney’s Office and Civic San Diego staff. All parties agree that the amendment can be made administratively, and are currently working on the drafting and final recording of an amended AARP to reflect a reduction of rental and population restrictions at the Property from 34 units to 33 units. In 2010, the Housing Commission planned a rehabilitation of the Property to correct deficiencies that were postponed in earlier rehabilitation efforts, bring the Property into compliance with current codes and regulations, upgrade all units and common areas to current standards, provide meeting facilities, and improve energy efficiency. The City of San Diego (City) provided a federal Community Development Block Grant (CDBG) to the Housing Commission in 2010 in the amount of $1,097,478 to fund a portion of the rehabilitation. The CDBG agreement requires that the Property “serve a total of 32 formerly homeless persons living with mental illness and other very low-income adults within the City of San Diego.” Housing Authority approval of the rehabilitation work required the Housing Commission to lease the property for permanent supportive services and affordable housing for a minimum of 10 years. In 1996, The U.S. Department of Housing and Urban Development (HUD) issued a determination that the Housing Commission must not allow occupancy of the third floor units (11 units) by mentally ill residents subsidized by Shelter Plus Care funds, due to the effects of noise from overflying aircraft on residents with mental illness. The Property was operated as supportive housing by a non-profit organization utilizing federal Shelter Plus Care funds until 2009. Due to this HUD determination, in April 2013, the City approved reduction of the restricted units under the CDBG Agreement from 32 to 22 as it applies to the demographics of the residents. In 2012, the City made an additional grant for rehabilitation work at the Property in the amount of $2,477,765 using federal HOME Program funds. The HOME Program Grant Agreement and Declaration of Covenants, Conditions and Restrictions (CC&Rs) recorded against the Property restrict occupancy of 24 units at HUD AMI levels, as follow: 3 studios at 50 percent AMI, 10 studios at 60 percent AMI, 2 one-bedroom units at 50 percent AMI, 9 one-bedroom units at 60 percent AMI. The remaining 10 units are unrestricted under the HOME CC&Rs. The HOME Program restrictions are in place for 15 years, until July 19, 2027. Operation of the Property The Housing Commission Procurement Policy authorizes the Housing Commission to sole source contracts in certain instances and situations. The Housing Commission issued a Request for Proposals (RFP) for operation of Parker Kier in late 2011, but was unable to come to an agreement with respect to the terms of the ground lease with the entity selected from the two RFP respondents. The Housing Commission issued another RFP in late 2012, but received no bids, which indicated that it was infeasible

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 3 for any entity to provide both affordable housing plus supportive services at 50 percent AMI rent levels, even with the availability of 22 Project Based Vouchers for the 33 affordable units. There is no reason to believe that issuance of an additional RFP would yield a different result. In addition, Procurement Policy, Section 9.4, et. seq., allows the Housing Commission to enter into a sole source contract with a nonprofit organization under the following terms: where the compensation to be paid to the nonprofit organization is less than $500,000 per year, the contract furthers a specific public policy and is in the public interest, the nonprofit organization will supervise its employees and provide workers compensation insurance, and the nonprofit organization will indemnify the San Diego Housing Commission, the Housing Authority and the City of San Diego, all of which are present in this case. To help make the proposal economically feasible, the Housing Commission will allocate Project Based and/or Sponsor Based Vouchers to the operation of the Property, and will ground lease the Property to HDP for a modest annual ground rent. HDP’s operating proforma is Attachment 1 to this staff report. The Housing Commission recommends entering into a 10-year ground lease with HDP, a non-profit affiliate of the Housing Commission. HDP proposes to lease up the building with tenants that are attached to prefunded service programs. Specifically, 22 units will be occupied by mental health resident under the Mental Health Services Act (MHSA) program, via two service providers described below. The remaining 11 units will be occupied by senior residents under Saint Paul’s Program of All-inclusive Care for the Elderly (PACE). All residents will qualify at the proposed rent restrictions. If the actions requested in this report are approved, HDP expects to begin lease-up of the property in late July, 2013. A Letter of Intent between the Housing Commission and HDP is Attachment 2. HDP will be contributing $14,000 to the Property, for the installation of grab bars in the 11 units on the third floor that will be occupied by PACE participants. The Housing Commission will also provide a Tenant Improvement Allowance of no more than $36,500 to HDP for provision of a security system. The expenditure of these funds was approved in Fiscal Year 2012 in the Parker-Kier modified rehabilitation budget, but they were not expended. As such, the unused amounts were transferred into HOME Reserve and Local Reserve Funds. This action would transfer the $36,500 in previously allocated HOME and Local Funds out of the respective reserve funds, into a Tenant Improvement Allowance. MHSA Target Program 1 IMPACT Program Intensive Mobile Psychosocial Assertive Community Treatment (IMPACT) is a model of care providing treatment and rehabilitation, as well as case management services for people with mental illness. IMPACT provides assistance for individuals with a range of identified needs including basics such as taking medications, finding appropriate housing, applying for benefits, assistance with education or employment, and managing activities of daily living. IMPACT works towards preventing hospitalization, improving quality of life, and improving client functioning. A Letter of Intent between the County of San Diego and HDP regarding a Memorandum of Understanding (MOU) with Community Research Foundation is Attachment 3.

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 4 Individuals referred to IMPACT meet the following requirements:

• Between the ages 25-59 • Homeless or at-risk of becoming homeless • Have a serious mental illness • Have a history of high utilization of psychiatric services

MHSA Target Program 2 Center Star ACT Program The Center Star Assertive Community Treatment (ACT) program offers 24-hour community-based treatment for individuals with a criminal justice background who have been diagnosed with a severe and persistent mental illness. All clients of Center Star ACT are eligible to receive medication management and monitoring, therapy, drug and alcohol counseling, case management, vocational rehabilitation, peer counseling and support, and housing services. A Letter of Intent between the County of San Diego and HDP regarding an MOU with Mental Health Systems, Inc. is Attachment 3. Center Star ACT serves individuals who need services that are more intensive than those provided by traditional outpatient mental health services and who meet the three following requirements:

• Between the ages of 25 to 59 • Diagnosed with a serious mental illness • Incarcerated sometime during the last year

St. Paul’s Senior Homes & Services – PACE 11 Units St. Paul’s Program of All-inclusive Care for the Elderly (PACE) is a health program designed to help frail seniors with chronic illnesses continue living safely and successfully in their own home, versus having to move into a skilled nursing facility. The program provides social and medical services at St. Paul’s PACE locations or in the home of the senior. Services include (but are not limited to) primary care doctors and medical specialists, medications and medication management, physical and occupational therapy, adult day program, and home care (bathing, cleaning, shopping and meal preparation). An MOU with St. Paul’s Senior Homes & Services is Attachment 4. Enrollment in St. Paul’s PACE is voluntary and individuals qualify if they are:

• 55 years of age or older • Living in the designated service area (includes most of San Diego) • Determined by the Department of Health Care Services as needing nursing home services

(determination coordinated by PACE) • Able to live in a community setting without jeopardizing health or safety

Proposed Population The Property will provide 11 units specifically to residents qualified under the St. Paul’s PACE. The remaining 22 units will be split amongst the two MHSA target programs. Upon approval, both MHSA program administrators will review their waiting list and choose residents according to the qualifications listed above and the rental restricts described in the table below.

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 5 The Property is currently subject to the following rental restrictions as a result of financing utilized for rehabilitation of the Property:

DOCUMENT/PROGRAM NO. UNITS RESTRICTED

RESTRICTED TO HOUSEHOLDS EARNING:

SUPPORTIVE SERVICES REQUIRED: EXPIRATION

AARP with RDA 34 units * 50% RDA AMI

Transitional Housing for Those in Need of Services-Enriched Housing

3/31/2022

CDBG Contract for Rehabilitation with City 32 units ** 50% HUD AMI

Formerly Homeless Living with Mental Illness and other Very Low Income Adults

HOME Program Grant for Rehabilitation

5 units 19 units

50% HUD AMI 60% HUD AMI 7/19/2027

* To be reduced to 33 units to account for non-rent restricted manager’s unit. ** To be reduced to 22 units to comply with HUD determination as described above. FISCAL CONSIDERATIONS The proposed funding sources and uses were partially approved by the Housing Authority in the Fiscal Year (FY) 2013 Housing Commission budget, and are not included in the proposed FY 2014 Housing Commission budget, which is scheduled for approval by the Housing Authority on June 11, 2013. Approving these actions will house a total of 33 individuals in permanent supportive housing at a maximum cost of $942 per studio per month and $1,074 per one-bedroom per month, or a total of $395,208 per year. The proposed actions will use $395,208 of Moving to Work funds to support units in FY 2014, and in each of the nine (9) following years covered by the proposed ground lease between the Housing Commission and HDP, provided that the Housing Authority approves budgets in each of the subsequent years as proposed. Funding sources approved by this action will be as follows: Fiscal Year 2013: HOME Reserve Funds - $ 34,735.38 Local Reserve Funds - $ 1,764.62 Fiscal Year 2014: Moving to Work - $ 395,208.00 Funding uses approved by this action will be allocated as follows: Fiscal Year 2013: Tenant Improvement Allowance - $ 36,500.00 Fiscal Year 2014: Housing Assistance Payments - $395,208.00

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 6 EQUAL OPPORTUNITY/CONTRACTING HDP is not a certified Disadvantaged, Woman-Owned or Disabled Veteran Business Enterprise. This vendor is in compliance with the Housing Commission Equal Opportunity Program. Vendor shall comply with Section 3 program regulations and requirements. PREVIOUS COUNCIL and/or COMMITTEE ACTION This item was unanimously approved by the Housing Commission Board on June 7, 2013. In 2012, the City made an additional grant for rehabilitation work at the Property in the amount of $2,477,765 using federal HOME Program funds. On July 20, 2010, the City made a grant to the Housing Commission in the amount of $1,097,478 using federal Community Development Block Grant funds to fund a portion of the rehabilitation. The motion was amended to request that the Housing Commission come back to the Housing Authority for the approval of lease terms and conditions. COMMUNITY PARTICIPATION and PUBLIC OUTREACH EFFORTS Housing Development Partners, upon approval of these recommendations, will immediately implement a public outreach plan to identify and contact parties affected by its proposal, and to schedule appropriate times and venues for informational presentation and community feedback. Representatives of HDP and the Housing Commission will attend and respond to questions and concerns. KEY STAKEHOLDERS and PROJECTED IMPACTS Key stakeholders are the City of San Diego as the Successor Agency to the Redevelopment Agency, the residents and businesses in the Bankers Hill neighborhood, the Community Research Foundation, Mental Health Systems, Inc., St. Paul’s PACE, the Housing Commission, and HDP. CONFLICTS OF INTEREST DISCLOSURE Housing Development Partners (HDP) is a 501(c)(3) non-profit corporation, created to support the functions of the Housing Commission in developing affordable housing in the City of San Diego. Commissioners Gary Gramling and Roberta Spoon and the President & CEO, Mr. Richard Gentry, all serve as non-compensated directors of HDP. Commissioners Gramling and Spoon are not compensated for their service on the Housing Commission’s Board of Commissioners. Commissioners Gramling and Spoon and Mr. Gentry are subject to certain federal, state and local conflict of interest regulations that govern decisions and contracts made by public officials. The California Political Reform Act generally prohibits public officials from making governmental decisions in which they have certain enumerated financial interests. No member of the HDP Board of Directors or the Housing Commission Board of Commissioners is financially interested in HDP, pursuant to the Political Reform Act, because they are not compensated for their services on any of these bodies and because HDP is not operated for-profit. (Gov. C. §87103(d); §82005.) California Government Code Section 1090 prohibits public officials from being financially interests in any contracts made by them in their official capacity or by any body or board of which they are members. In enacting Section 1090, the California Legislature recognized certain interests in which the public official is deemed not interested. (Gov. C. §1091.5.) Non-compensated members of non-profit organizations who disclose their interest in the non-profit organization are not prohibited from making a

May 30, 2013 Parker-Kier Ground Lease and Operation Agreement Page 7 contract in their official capacity as public officials. (Gov. C. §1091.5(a)(7) and (a)(8).) The interests of Commissioners Gramling and Spoon in HDP is considered a “non-interest” for purposes of Section 1090, and, therefore, Section 1090 does not prohibit them from making any contract between the Housing Commission and HDP. Mr. Gentry also has a non-interest in HDP under Section 1090 as a non-compensated director of HDP. (Gov. C. §1091.5(a)(7) and (a)(8).) None of the members of HDP’s Board of Directors have a financial interest in Parker Kier that would legally preclude their participation under the provisions of the HUD Regulations, Government Code §1090 et seq., Government Code §87100 et seq., and/or the San Diego Housing Commission’s Conflict of Interest Code. Furthermore, Commissioners Gramling and Spoon are legally entitled to vote and be counted for quorum purposes at any meeting of the Board of Commissioners discussing the Parker Kier. Mr. Gentry does not vote on matters before the Board of Commissioners, although he too has no conflict of interest under federal, state or local law. ENVIRONMENTAL REVIEW This activity is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) under Section 15301 because Parker-Kier is an existing facility and the proposed actions do not involve expansion of the existing use. The activity is also determined to be categorically excluded from the National Environmental Policy Act (NEPA) pursuant to 24 CFR 58.35(b)(2) for supportive services. Respectfully submitted, Approved by,

Jerry Lohla Jeff Davis

Jerry Lohla Jeff Davis Director Interim Executive Vice President & Portfolio Management Chief Operations Officer San Diego Housing Commission Attachments:

1) HDP Operating Proforma 2) Housing Commission Letter of Intent with HDP 3) County of San Diego Letter of Intent with HDP for MHSA 4) HDP MOU with St. Paul’s Senior Homes & Services

Hard copies are available for review during business hours in the main lobby of the San Diego Housing Commission offices at 1122 Broadway, San Diego, CA 92101 and at the Office of the San Diego City Clerk, 202 C Street, San Diego, CA 92101. You may also review complete docket materials on the San Diego Housing Commission website at www.sdhc.org.

Parker Kier - Supportive Housing (MHSA,PACE,PBV) Supportive Housing (MHSA,PACE,PBV)PROJECT SUMMARY Last Modified 5/29/2013

GENERAL PROJECT INFORMATION UNIT MIX AND AFFORDABILITY COMMITMENTS

PROJECT NAME Parker Kier UNIT MIXPROJECTED OWNER Housing Development Partners Total Unrct. Rentable Total Avg Unit GrossPROJECT DESCRIPTION Supportive Housing (MHSA,PACE,PBV) Units Manager Units LI Units Size (sf) Res. (sf)PROJECT TYPE 0 SRO/STUDIO 19 0 19 19 500 9,500 DRAFT VERSION Draft 4 - April 26, 2013 1 BEDROOM 15 1 14 14 650 9,750 ACQUISITION PRICE $0 2 BEDROOM 0 0 0 0 0 - EMPTY $0 3 BEDROOM 0 0 0 0 0 - ADDRESS 2172 Front St., Diego, CA 4 BEDROOM 0 0 0 0 0 - YEAR BUILT 1908 TOTAL/AVG 34 1 33 33 566 19,250 SITE ACERAGE 0.23TOTAL UNITS 34 ( aproximately 148 units/acre) AFFORDABILITYMSA San Diego County Units @ Proj Based Extreamly Low Very Low Low AREA MEDIAN INCOME $80,600 Market Voucher* <30% <50% <60%LAST AMGI INCREASE 12/4/2012 0% 100% 0% 0% 0%

SRO/STUDIO 0 19 0 0 01 BEDROOM 0 14 0 0 02 BEDROOM 0 0 0 0 03 BEDROOM 0 0 0 0 0

BUILDING AREA 4 BEDROOM 0 0 0 0 0TOTAL AVG - 33 - - -

RESIDENTIAL RENTABLE SF 19,250 sf *Voucher qualification assumed at 30% AMICOMMON AREA 4,813 sfSUBTOTAL RESIDENTIAL SF 24,063 sf AVERAGE RENTAL RATESCOMMERCIAL/RETAIL/OFFICE SF - sf Current Market Voucher Avg Rent: Avg AMI: Avg AMI:EFFICIENCY LOSS - sf Rents Rents Rents LI Units* LI Qual LI Rent LevelsSUBTOTAL COMMERCIAL SF - sf SRO/STUDIO $253 $942 $942 $942 30% 67%RESIDENTIAL SUPPORT AREA (Basement) 6,000 sf 1 BEDROOM $253 $1,074 $1,074 $1,002 30% 66%APPROXIMATE GROSS BUILDING AREA 30,063 sf 2 BEDROOM $0 $0 $0 $0 0% 0%

3 BEDROOM $0 $0 $0 $0 0% 0%4 BEDROOM $0 $0 $0 $0 0% 0%TOTAL/AVG $253 $1,000 $1,000 $968 30% 67%

PROJECT SCHEDULE *Net of utility allowance

FINANCING MILESTONES DateHDP BOARD MEETING 05/09/13 EQUITY ASSUMPTIONSSDHC BOARD MEETING 06/07/13 LIHTC PAY-IN SCHEDULE % of TotalCITY COUNCIL/HOUISING AUTHORITY 06/25/13 INVESTOR NA CONSTRUCTION LOAN CLOSING 0.00%EMPTY 01/00/00 CREDIT PRICE $0.00 25% COMPLETION 0.00%EMPTY 01/00/00 DDA/QCT N/A 50% COMPLETION 0.00%EMPTY 01/00/00 TAX CREDIT FACTOR 0.00% as of NA 75% COMPLETION 0.00%TARGET OCCUPANCY DATE 09/15/13 100% COMPLETION 0.00%

CONVERSION/8609s 100.00%

CONSTRUCTION MILESTONES Months Date DEBT ASSUMPTIONSCONSTRUCTION LOAN CLOSING 0 9/15/1325% COMPLETION 0 9/15/13 CONST. LOAN Amount Rate Payment50% COMPLETION 0 9/15/13 $0 $0 0.0% $075% COMPLETION 0 9/15/13100% COMPLETION 0 9/15/13 AMORTIZING LOANS Amount DSCR Rate Term PaymentFULL OCCUPANCY 2 11/15/13 $0 $0 0.00% 0.00% 0 $0CONVERSION/8609s 5 2/15/14 $0 $0 0.00% 0.00% 0 $0

TOTAL/AVG $0 #DIV/0! #DIV/0! #DIV/0! $0

RESIDUAL LOANS Amount Rate Term Ann. Interest Hard Ptm % Hard PMTEMPTY $0 0.00% 55 $0 0.00% $0.00SDHC SECURITY SYSTE $36,500 0.00% 55 $0 0.00% $0.00EMPTY $0 0.00% 0 $0 0.00% $0.00EMPTY $0 0.00% 0 $0 0.00% $0.00EMPTY $0 0.00% 0 $0 0.00% $0.00EMPTY $0 0.00% 0 $0 0.00% $0.00TOTAL/AVG $36,500 0.00% 55 - - -

CASHFLOW SUMMARY SOURCES AND USES OF FUNDS

Total Per Unit % of EGI SOURCES Total Per Unit % of TotalGROSS RENTAL INCOME $395,208 $11,624 0% EMPTY $0 $0 0.0%

OTHER INCOME $2,448 $72 0% EMPTY $0 $0 0.0%(LESS) VACANCY @ 10% ($39,766) ($1,170) 0% EMPTY $0 $0 0.0%

EFFECTIVE GROSS INCOME $357,890 $10,526 0% EMPTY $0 $0 0.0%COMMERCIAL INCOME $0 $0 0% EMPTY $0 $0 0.0%(LESS) VACANCY @ 0% $0 $0 0% SDHC SECURITY SYSTEM CONTRIBUTION $36,500 $1,074 22.5%

TOTAL GROSS INCOME $357,890 $10,526 0% EMPTY $0 $0 0.0%(LESS) OPERATING EXPENSES ($307,360) ($9,040) 0% EMPTY $0 $0 0.0%

NET OPERATING INCOME $50,530 $1,486 0% EMPTY $0 $0 0.0%(LESS) OBLIGATED DEBT SERVICE $0 $0 0% EMPTY $0 $0 0.0%

NET CASH FLOW $50,530 $1,486 0% HDP LOAN TO PARKER KIER $125,827 $3,701 77.5%TOTAL SOURCES $162,327 $4,774 100%

DEVELOPER FEE INSTALLMENTSUSES Total Per Unit % of Total

DEVELOPER FEE INSTALLMENTS Amt % of Total ACQUISITION COSTS $0 $0 0.0%CONSTRUCTION LOAN CLOSING 9/15/13 0 CONSTRUCTION COSTS $51,100 $1,503 31.5%25% COMPLETION 9/15/13 0 PERMITS & FEES $0 $0 0.0%50% COMPLETION 9/15/13 0 A&E/FF&E $20,000 $588 12.3%75% COMPLETION 9/15/13 0 DUE DILIGENCE $0 $0 0.0%100% COMPLETION 9/15/13 0 FINANCING $0 $0 0.0%STABILIZATION 2/15/14 (125,827) RESERVES $51,227 $1,507 31.6%DEFERRED From CF 125,827 BOND AND TAX CREDIT $0 $0 0.0%

TOTAL DEVELOPER FEE 0 0% OTHER SOFT COSTS $40,000 $1,176 24.6%DEVELOPER FEE* (See Footnote) $0 $0 0.0%

DEVELOPER FEE PAID IN CASH (125,827) #DIV/0! TOTAL USES $162,327 $4,774 100.0%*HDP Is requesting $175 per unit per month Management Fee for the MHSA units in lieu of a Developer Fee

Parker KierExhibit 1(a) - GENERAL PROJECT ASSUMPTIONS

1 SECTION 1: PROJECT INFORMATION AND ACQUISITION ASSUMPTIONS23 GENERAL PROJECT INFORMATION4 PROJECT NAME Parker Kier5 PROJECTED OWNER Housing Development Partners6 PROJECT DESCRIPTION Supportive Housing (MHSA,PACE,PBV)7 PROJECT TYPE8 DRAFT VERSION Draft 4 - April 26, 20139 ACQUISITION PRICE $010 EMPTY $011 ADDRESS 2172 Front St., Diego, CA12 YEAR BUILT 190813 SITE ACERAGE 0.2314 TOTAL UNITS 34 ( aproximately 148 units/acre)15 MSA San Diego County16 AREA MEDIAN INCOME 80,60017 LAST AMGI INCREASE 12/4/20121819 SECTION 2: UNIT MIX & AFFORDABILITY202122 Total Unrct. Rentable Avg Unit Gross23 UNIT MIX Units Manager Units Size (sf) Res. (sf)24 SRO/STUDIO 19 0 19 500 9,500 25 1 BEDROOM 15 1 14 650 9,750 26 2 BEDROOM 0 0 0 0 - 27 3 BEDROOM 0 0 0 0 - 28 4 BEDROOM 0 0 0 0 - 29 TOTAL/AVG 34 1 33 566 19,250 30313233 LIHTC UNITS34 Units @ Proj Based Units @ Units @ Units @ Units @ Units @ Units @ Units @35 Market Voucher 30% 35% 40% 45% 50% 55% 60%36 AFFORDABILITY 0.0% 100.0% 100% 0% 0% 0% 0% 0% 0%37 SRO/STUDIO 0 19 0 0 0 0 0 0 038 1 BEDROOM 0 14 0 0 0 0 0 0 039 2 BEDROOM 0 0 0 0 0 0 0 0 040 3 BEDROOM 0 0 0 0 0 0 0 0 041 4 BEDROOM 0 0 0 0 0 0 0 0 042 TOTAL AVG 0 33 0 0 0 0 0 0 043444546 SECTION 3: CALCULATION OF BUILDING AREA474849 RESIDENTIAL BUILDINGS50 RESIDENTIAL RENTABLE SF 19,250 sf51 COMMON AREA 4,813 sf52 SUBTOTAL RESIDENTIAL SF 24,063 sf5354 COMMERCIAL BUILDINGS55 COMMERCIAL/RETAIL/OFFICE SF - sf56 EFFICIENCY LOSS - sf57 SUBTOTAL COMMERCIAL SF - sf5859 RESIDENTIAL SUPPORT AREA (Basement) 6,000 sf6061 APPROXIMATE GROSS BUILDING AREA 30,063 sf6263646566676869707172737475

Parker KierExhibit 1(b) - INCOME AND EXPENSE ASSUMPTIONS

1 SECTION 4: PROJECT INCOME23 Current Market Voucher Default Rents4 RENTAL RATES Rents Rents Rents Market Rents5 SRO/STUDIO $253 $942 $9426 1 BEDROOM $253 $1,074 $1,0747 2 BEDROOM $0 $0 $0 Voucher AMI8 3 BEDROOM $0 $0 $0 30%9 4 BEDROOM $0 $0 $010 TOTAL/AVG $253 $1,000 $1,0001112 Per unit/ Total Total 13 OTHER INCOME Month Monthly Annual14 PARKING INCOME $0.00 $0 $015 STORAGE INCOME $0.00 $0 $016 LAUNDRY INCOME $6.00 $204 $2,44817 SERVICE FEE $0.00 $0 $018 RUBS $0.00 $0 $019 TOTAL $6 $204 $2,4482021 Total Total22 COMMERCIAL INCOME (NNN) Total SF $/SF/Month Monthly Annual23 COMMERCIAL SUITE 1 0 $0.00 $0 $024 COMMERCIAL SUITE 2 0 $0.00 $0 $025 0 $0.00 $0 $026 0 $0.00 $0 $027 0 $0.00 $0 $028 TOTAL $0 $0 $0 $02930 UTILITY ALLOWANCE SRO/Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom31 HEATING (GAS)32 HEATING (ELECTRIC)33 COOKING (GAS)34 COOKING (ELECTRIC)35 WATER (GAS)36 WATER ELECTRIC)37 OTHER ELECTRIC38 TOTAL UTILITY ALLOWANCE $0 $0 $0 $0 $03940 SECTION 5: OPERATING EXPENSES4142 Unit Cost Cost Driver Total Per Unit % of Total4344 PROFESSIONAL MANAGEMENT $600 per unit $20,400 $600 6.6%45 ADMINISTRATIVE46 ACCOUNTING/AUDIT $250 per unit $8,500 $250 2.8%47 ADVERTISING $0 per unit $0 $0 0.0%48 SECURITY $1,500 per unit $51,000 $1,500 16.6%49 LEGAL $150 per unit $5,100 $150 1.7%50 OFFICE/GENERAL $450 per unit $15,300 $450 5.0%51 PAYROLL AND BENEFITS52 ONSITE STAFF (MGR & MAINT.) $1,925 per unit $65,450 $1,925 21.3%53 PAYROLL TAXES $275 per unit $9,350 $275 3.0%54 BENEFITS $375 per unit $12,750 $375 4.1%55 UTILITES56 GAS $200 per unit $6,800 $200 2.2%57 ELECTRICITY $775 per unit $26,350 $775 8.6%58 WATER/SEWER/GARBAGE $500 per unit $17,000 $500 5.5%59 MAINTENANCE60 REPAIRS AND SUPPLIES $450 per unit $15,300 $450 5.0%61 LANDSCAPING AND GROUNDS $250 per unit $8,500 $250 2.8%62 TURNOVER AND DECORATING $250 per unit $8,500 $250 2.8%63 RESIDENT SERVICES $0 per unit $064 INSURANCE $350 per unit $11,900 $350 3.9%65 REAL ESTATE TAXES $175 per unit $5,950 $175 1.9%66 REPLACEMENT RESERVES $500 per unit $17,000 $500 5.5%67 COMPLIANCE MONITORING $65 per unit $2,210 $65 0.7%68 TOTAL EXPENSES $307,360 $9,040 100%69707172737475

Parker KierExhibit 2(a) - DEVELOPMENT COSTS

Unit Cost Total Per Unit % of Total Acq Basis New Con/Rehab Non-Basis1 ACQUISITION & CLOSING COSTS2 LAND 0% of Acq Price $0 $0 0.0% $03 RESIDENTIAL BUILDINGS $0 Fixed (calc) $0 $0 0.0% $04 COMMERCIAL BUILDINGS $0 $0 $0 0.0% $05 PREPAYMENT PENALTY $0 Total $0 $0 0.0% $06 BROKER FEE/COMMISSION 0.00% of Acq. price $0 $0 0.0% $07 INSURANCE PROCEEDS $0 Total $0 $0 0.0% $08 TOTAL ACQUISITION & CLOSING COSTS $0 $0 0.0% $0 $0 $0910 CONSTRUCTION COSTS11 FF&E $0 per unit $0 $0 0.0% $012 DEMOLITION $0 total $0 $0 0.0% $0 $013 SITE WORK $0 total $0 $0 0.0% $014 OFF SITE IMPROVEMENTS $0 total $0 $0 0.0% $015 VERTICAL CONSTRUCTION (RESIDENTIAL) $0 total $0 $0 0.0% $016 SECURITY $25,000 total $25,000 $735 15.4% $25,00017 ACCESSIBLE GRAB BARS $10,000 total $10,000 $294 6.2% $10,00018 GENERAL REQUIREMENTS 6% total $2,100 $62 1.3% $2,10019 GENERAL CONTRACTOR FEE (OHP) 8% total $2,800 $82 1.7% $2,80020 BONDING & INSURANCE 2% total $700 $21 0.4% $70021 HARD COST CONTINGENCY 10% total $3,500 $103 2.2% $3,50022 PREVAILING WAGE ADJUSTMENT 20% total $7,000 $206 4.3% $7,00023 TOTAL CONSTRUCTION COSTS $51,100 $1,503 31.5% $0 $51,100 $02425 PERMITS & FEES26 PLAN CHECK FEES $0 total $0 $0 0.0% $027 BUILDING PERMINTS $0 total $0 $0 0.0% $028 SPECIAL INSPECTIONS (Structural) $0 total $0 $0 0.0% $029 FF&E $0 per unit $0 $0 0.0% $030 TOTAL PERMITS & FEES $0 $0 0.0% $0 $0 $03132 ARCHITECTURE & ENGINEERING33 ARCHITECTURE $0 total $0 $0 0.0% $034 FF&E MHSA UNITS $0 total $0 $0 0.0% $035 FF&E COMMON AREA $16,000 total $16,000 $471 9.9% $16,00036 INTERIOR DESIGN CONSULTANT $4,000 total $4,000 $118 2.5% $4,00037 TOTAL ARCHITECTURE & ENGINEERING $20,000 $588 12.3% $0 $20,000 $03839 DUE DILIGENCE COSTS40 APPRAISAL $0 total $0 $0 0.0% $041 MARKET STUDY $0 total $0 $0 0.0% $042 PRECONSTRUCTION CONSULTANT (AHG) $0 total $0 $0 0.0% $043 FINANCING CONSULTANT $0 total $0 $0 0.0% $044 PHASE I & PHASE II $0 total $0 $0 0.0% $045 PHYSICAL NEEDS ASSESSMENT $0 total $0 $0 0.0% $046 RELOCATION STUDY $0 total $0 $0 0.0% $047 ALTA SURVEY $0 total $0 $0 0.0% $048 HISTORICAL $0 total $0 $0 0.0% $049 DUE DILIGENCE CONSULTANT $0 total $0 $0 0.0% $050 TOTAL DILIGENCE COSTS $0 $0 0.0% $0 $0 $0

Cost Driver

Parker KierExhibit 2(b) - DEVELOPMENT COSTS CONTINUED

Unit Cost Total Per Unit % of Total Acq Basis New Con/Rehab Non Basis

1 FINANCING COSTS2 CONSTRUCTION LENDER ORIGINATION FEE 0.00% of loan amount $0 $0 0.0% $0 $03 MHSA TAX SERVICE FEE $0 total $0 $0 0.0% $0 $04 MHSA ORIGINATION FEE 0% of loan amount $0 $0 0.0% $0 $05 PERMANENT LENDER LEGAL $0 total $0 $0 0.0% $0 $06 LENDER CONSULTANTS $0 total $0 $0 0.0% $0 $07 BANK INSPECTION FEES $0 total $0 $0 0.0% $0 $08 INTEREST DURING CONSTRUCTION $0 Fixed (calc) $0 $0 0.0% $0 $09 TOTAL FINANCING COSTS $0 $0 0.0% $0 $0 $01011 RESERVES12 REPLACEMENT RESERVE - INITIAL DEPOSIT $0 Per Unit $0 $0 0.0% $013 OPERATING RESERVE 2 months of OPEX $51,227 $1,507 31.6% $51,22714 DEBT SERVICE RESERVE 0.00% total $0 $0 0.0% $015 TOTAL RESERVES $51,227 $1,507 31.6% $0 $0 $51,2271617 BOND/TAX CREDIT RELATED COSTS18 TCAC RESERVATION FEE 0.00% of credit req $0 $0 0.0% $019 TCAC APPLICATION FEES $0 total $0 $0 0.0% $020 COMPLIANCE MONITORING FEE $0 per unit $0 $0 0.0% $021 CDLAC FEE 0.0000% of loan amount $0 $0 0.0% $022 CDIAC FEE 0.0000% of total issuance $0 $0 0.0% $023 ISSUER FEE 0.000% of total issuance $0 $0 0.0% $024 TRUSTEE FEE $0 total $0 $0 0.0% $025 BOND COUNSEL & FINANCIAL ADVISOR $0 total $0 $0 0.0% $026 PUBLIC ISSUANCE FEES $0 total $0 $0 0.0% $027 TOTAL BOND/TAX CREDIT RELATED COSTS $0 $0 0.0% $0 $0 $02829 OTHER SOFT COSTS30 LEGAL - PARTNERHIP $20,000 total $20,000 $588 12.3% $20,000 $031 LEGAL - LOCAL COUNSEL $0 total $0 $0 0.0% $0 $032 LEGAL - YEAR 15 CONSULTANT $0 total $0 $0 0.0% $0 $033 AUDIT $0 total $0 $0 0.0% $0 $034 MARKETING & LEASEUP $5,000 total $5,000 $147 3.1% $5,000 $035 PREVAILING WAGE MONITORING $0 per unit $0 $0 0.0% $036 TAX EXEMPTION FEE $0 total $0 $0 0.0% $0 $037 PREPAID INSURANCE $0 total $0 $0 0.0% $0 $038 TITLE/ESCROW/RECORDING $0 total $0 $0 0.0% $039 REAL ESTATE TAXES $0 total $0 $0 0.0% $040 TAX CREDIT SYNDICATION $0 total $0 $0 0.0% $041 SOFT COST CONTINGENCY $15,000 total $15,000 $441 9.2% $7,500 $7,50042 TOTAL OTHER SOFT COSTS $40,000 $1,176 24.6% $0 $32,500 $7,5004344 DEVELOPER FEE45 DEVELOPER FEE ON ACQUISITION $0 total $0 $0 0.0% $0 $046 DEVELOPER FEE ON REHAB/NEW CONST. $0 total $0 $0 0.0% $047 TOTAL DEVELOPER FEE $0 $0 0.0% $0 $0 $04849 GRAND TOTAL DEVELOPMENT COSTS $162,327 $4,774 100% $0 $103,600 $58,72750

Cost Driver

Parker KierExhibit 5(a) - CASH FLOW ANALYSIS

Year Year Year Year Year Year Year Year Year Year1 2 3 4 5 6 7 8 9 10

1 GROSS RENTAL INCOME 395,208 405,088 415,215 425,596 436,236 447,142 458,320 469,778 481,523 493,561 2 OTHER INCOME 2,448 2,509 2,572 2,636 2,702 2,770 2,839 2,910 2,983 3,057 3 (LESS) VACANCY @ 10% (39,766) (40,760) (41,779) (42,823) (43,894) (44,991) (46,116) (47,269) (48,451) (49,662) 4 EFFECTIVE GROSS INCOME 357,890 366,838 376,009 385,409 395,044 404,920 415,043 425,419 436,055 446,956 56 COMMERCIAL INCOME - - - - - - - - - - 7 (LESS) VACANCY @ 0% - - - - - - - - - - 8 TOTAL GROSS INCOME 357,890 366,838 376,009 385,409 395,044 404,920 415,043 425,419 436,055 446,956 910 (LESS) OPERATING EXPENSES (307,360) (318,118) (329,252) (340,776) (352,703) (365,047) (377,824) (391,048) (404,734) (418,900) 11 NET OPERATING INCOME 50,530 48,720 46,757 44,633 42,341 39,873 37,219 34,371 31,320 28,056 1213 (LESS) OBLIGATED DEBT SERVICE MHSA - - - - - - - - - - 14 NET CASH FLOW 50,530 48,720 46,757 44,633 42,341 39,873 37,219 34,371 31,320 28,056 1516 - - - - - - - - - 17 RESERVE RELEASE (At Stabilization) 51,226.67 - - - - - - - - - 1819 ASSET MGMT FEE TO NA20 BEGINNING BALANCE - - - - - - - - - - 21 INTEREST ON BALANCE - - - - - - - - - - 22 ASSET MGMT FEE - - - - - - - - - - 23 (LESS) PAYMENT - - - - - - - - - - 24 ACCRUED BALANCE - - - - - - - - - - 2526 REMAINING CASH FLOW 101,757 48,720 46,757 44,633 42,341 39,873 37,219 34,371 31,320 28,056 2728 PARTNERSHIP MANAGEMENT FEE TO Housing Development Partners29 PRIOR YEAR BALANCE - - - - - - - - - - 30 INTEREST ON BALANCE - - - - - - - - - - 31 PARTNERSHIP MANAGEMENT FEE 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 32 (LESS) PAYMENT (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) (10,000.00) 33 ACCRUED BALANCE - - - - - - - - - - 3435 REMAINING CASH FLOW 91,757 38,720 36,757 34,633 32,341 29,873 27,219 24,371 21,320 18,056 3637 HDP LOAN TO PARKER KIER38 BEGINNING BALANCE 125,826.67 34,069.60 - - - - - - - - 39 INTEREST ON BALANCE - - - - - - - - - - 40 (LESS) PAYMENT (91,757.07) (34,069.60) - - - - - - - - 41 HDP LOAN BALANCE 34,069.60 - - - - - - - - - 4243 REMAINING CASH FLOW - 4,650 36,757 34,633 32,341 29,873 27,219 24,371 21,320 18,056 4445 (LESS) GROUND LEASE PAYMENT - (4,650.46) (16,920.39) (17,343.40) (17,776.98) (18,221.41) (18,676.94) (19,143.86) (19,622.46) (18,055.94) 4647 REMAINING CASH FLOW - - 19,836 17,290 14,564 11,651 8,542 5,228 1,698 - 4849 CASH FLOW TO RESIDUAL LENDERS - - - - - - - - - - 5051 REMAINING CASH FLOW - - 19,836 17,290 14,564 11,651 8,542 5,228 1,698 - 5253 RESIDUAL CASH FLOW TO PARTNERSHIP54 CASH TO HDP @ 100% - - (19,836.50) (17,289.89) (14,564.39) (11,651.47) (8,542.28) (5,227.60) (1,697.81) - 55 CASH TO LP @ 0% - - - - - - - - - - 56 TOTAL RESIDUAL CASH TO PARTNERSHIP - - (19,836.50) (17,289.89) (14,564.39) (11,651.47) (8,542.28) (5,227.60) (1,697.81) -

Housing Collaboration Agreement Between

Housing Development Partners of San Diego and

St. Paul’s PACE

This Housing Collaboration Agreement (the “Agreement”) is made and entered into as of May 28, 2013, by and between Housing Development Partners of San Diego, a California nonprofit public benefit corporation (“HDP”), located at 1335 Fifth Avenue, San Diego, CA 92101 and St. Paul’s PACE, a California nonprofit public benefit corporation (“St. Paul’s” and together with HDP, the “Parties”), located at 328 Maple Street, San Diego, CA 92103.

RECITAL:

A. HDP intends to enter into that certain ground lease (the “Ground Lease”) by and between HDP, as ground lessee, and the San Diego Housing Commission (“SDHC”), as ground lessor, for Parker-Kier Building, also known as Del Mar Apartments, located at 2172 Front Street, San Diego, California (the “Project”).

B. The Project is a three-story structure containing nineteen (19) studios and fourteen

(14) one bedroom unit. C. Upon execution of the Ground Lease, HDP desires to provide St. Paul’s with

exclusive use of eleven (11) Housing Units (as defined below) located on the third floor of the Project subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual covenants and agreements set forth herein, the Parties hereto agree as follows:

AGREEMENT:

1. Definitions.

a. “Housing Unit” shall mean an apartment unit located on third floor of the Project and occupied by an individual Tenant meeting the requirement of Target Population.

b. “Target Population” shall mean individuals, 55 years of age or older,

determined by the Department of Health Care Services as needing nursing home services and able to live in a community setting without jeopardizing health or safety.

c. “Tenants” shall mean individuals living in the Housing Unit and meeting the definition of Target Population.

2. Use. St. Paul’s agrees that the occupancy and use of the Housing Units shall be

restricted to Tenants, and St. Paul’s shall provide services (“Services”) to such Tenants, at its own costs and expenses, which services include but are not limited to, primary doctors and

medical specialists, medications, and medication management, physical and occupational therapy, adult day program, home care (bathing, cleaning, shopping, and meal preparation), as required under the Program for All-inclusive Care for the Elderly.

3. Rent. The Rent for the Housing Units shall be $0. St. Paul’s acknowledges that

HDP’s sole obligation to St. Paul’s under this Agreement shall be to provide the Housing Units. St. Paul’s shall be responsible for determining if an applicant for a Housing Unit is an eligible Tenant. Within five (5) days after lease-up, St. Paul’s shall provide HDP and its property manager (the “Property Manager”) with a copy of eligibility certification in the form to be approved by HDP in its sole discretion.

4. Compensation. St. Paul’s shall receive no compensation from HDP for providing

Services to the Tenants. St. Paul’s shall be solely responsible for the costs and expenses relating to Services to the Tenants, and equipping and furnishing of the Housing Units.

5. Personnel.

a. Coordination. HDP and St. Paul’s shall each designate an individual who shall have authority to represent such party in all matters concerning this Agreement. All communications related to this agreement should be addressed to the appropriate designated individual. If either party replaces its designated individual that party shall promptly notify the other in writing of such replacement.

b. Supervision. Each party will be responsible for the supervision, direction and control of its own personnel.

c. Independent Contractors. St. Paul’s acknowledges that it is an independent

contractor and it shall control the manner in which the Services are to be accomplished. St. Paul’s is not and will not represent itself to any third party as an employee, partner or agent of HDP or its affiliates. St. Paul’s recognizes that HDP will not withhold any Federal or State Taxes from the compensation payable to St. Paul’s (if any) pursuant to this Agreement. St. Paul’s agrees that its officers, agents and employees are not employees of HDP or its affiliates, nor are they entitled to any employee benefit of HDP or its affiliates as a result of the execution of this Agreement.

6. Access to Information and Records. Subject to applicable State and Federal

laws and rules, HDP and St. Paul’s shall have full and complete rights to use all reports, information, data and material prepared by HDP or St. Paul’s in the performance of this Agreement. The use and disclosure of confidential protected health information will require a signed release of information from HDP or St. Paul’s tenants.

7. Communication Among Parties. The Parties shall use diligent efforts to

communicate with each other to ensure mutual accountability in carrying out each of the separate roles and functions of each party under this Agreement. The Parties agree that coordination and communication throughout a resident’s tenancy is the best way to prevent problems from developing and to address them quickly as they occur. The Parties will work to create sufficient

opportunities for St. Paul’s, HDP and the Property Manager to share information for problem solving, and for all parties to support community building among tenants to generate a strong working relationship within the Project.

8. Communication among HDP, Property Manager and St. Paul’s. HDP, Property Manager and St. Paul’s shall establish a mutually convenient regular schedule of communication to discuss issues, including, but not limited to, providing an update of anticipated vacancies and move-ins, issues with property management and tenant service coordination, any tenant behavioral issues and concerns, and housing quality standard issues. Such communication shall be held at least one time per month, unless the parties agree to another schedule.

9. Insurance. Without limiting St. Paul’s indemnification obligation to HDP, St. Paul’s shall provide at its sole cost and expense and maintain for the duration of this Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of this Agreement by St. Paul’s, its agents, representatives, employees or contractors. St. Paul’s agrees to purchase and maintain policies for insurance for:

a. Commercial General Liability. Occurrence form, Insurance Services

Office form CG0001. Commercial General Liability including, Premises, Operations, Products and Completed Operations, Contractual Liability, and Independent Contractors Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. The General Aggregate limit shall be $2,000,000.

b. Worker’s Compensation. Worker’s Compensation as required by State of

California and Employer’s Liability Insurance. St. Paul’s will provide HDP with certificates of such insurance, and the policy of insurance shall provide for thirty (30) days prior written notice to HDP of cancellation or of any material change in coverage.

10. Term and Termination.

a. Term. This Agreement shall be effective as of the effective date of the Ground Lease (the “Effective Date”) and shall continue to 10 years from the Effective Date.

b. Termination. HDP and/or St. Paul’s may termination this Agreement upon

sixty (60) days prior written notice to the other party; provided, however, in the event that this Agreement is terminated the Parties shall work together to bring forth a smooth transaction to relocate Tenants to other housing as needed.]

c. Effect of Termination. After the termination of this Agreement, neither

HDP nor St. Paul’s shall have any further obligation hereunder, except that Sections 10 and 12 of this Agreement shall survive the termination of this Agreement for any reason.

11. Compliance with Laws and Regulations, Permits and Licenses. St. Paul’s shall

comply with all applicable Federal, State and local laws, codes, ordinances, rules and

regulations, and any and all political subdivisions and regulatory authorities that apply to St. Paul’s performance hereunder.

12. Indemnification.

a. St. Paul’s shall at all times indemnify, defend and save harmless HDP, and any of their agents, officials, and employees (the “HDP Indemnified Parties”) from and against any and all claims, demands, suits, actions, proceedings, loss, cost and damages of every kind and description including any attorney’s fees and litigation expenses brought or made against or incurred by any of the HDP Indemnified Parties on account of loss or damage to any property or for injuries to or death of any person, caused by or arising out of or by reason of any alleged act, omission, professional error, fault, mistake or negligence of St. Paul’s, its employees, agents, officials or representatives in connection with or incidental to the performance of this Agreement or arising out of worker’s compensation claims of employees of St. Paul’s and its subcontractors or claims under similar such laws or obligations.

b. HDP shall at all times indemnify, defend and save harmless St. Paul’s, and

any of their agents, officials, and employees (the “St. Paul’s Indemnified Parties”) from and against any and all claims, demands, suits, actions, proceedings, loss, cost and damages of every kind and description including any attorney’s fees and litigation expenses brought or made against or incurred by any of the St. Paul’s Indemnified Parties on account of loss or damage to any property or for injuries to or death of any person, caused by or arising out of or by reason of any alleged act, omission, professional error, fault, mistake or negligence of HDP, its employees, agents, officials or representatives in connection with or incidental to the performance of this Agreement or arising out of worker’s compensation claims of employees of HDP and its subcontractors or claims under similar such laws or obligations.

In the event that any staff hired by St. Paul’s is sued as a result of any Housing Unit provided to a Tenant pursuant to this Agreement, St. Paul’s shall immediately notify HDP. St. Paul’s shall notify HDP, in writing, within twenty-four (24) hours of becoming aware of any occurrence of a serious nature, which may expose HDP to liability. Such occurrences shall include, but not be limited to deaths, accidents or injuries to any tenant, or acts of negligence of St. Paul’s or one of its staff, employee, agent or official.

13. Publicity. St. Paul’s and HDP agrees to provide acknowledgement of their mutual involvement in any and all public information releases regarding housing under this Agreement. All public announcements, including those issued on St. Paul’s letterhead, and materials distributed to the community shall identify HDP and SDHC as a funding source for the Housing Units identified in this Agreement. Copies of publicity materials related to the Housing Units identified in this Agreement shall be provided to HDP to be filed with the Contracting Officer’s Technical Representative (“COTR”). HDP is to be notified in such a time needed so that it may advise SDHC at least 24 hours in advance of all locally generated press releases and media events regarding the Housing Units identified in the Agreement. Such releases shall contain a credit substantially as follows: “This program is collaboration among St. Paul’s, Housing Development Partners of San Diego, and San Diego Housing Commission.

14. Jeopardy. In the event the performance by either party hereto of any term, covenant, condition or provision of this Agreement should: (1) jeopardize (a) the licensure of either party, any employee or any individual providing services hereunder or any provider owned and/or operated by either party or any corporate affiliate of such party (“Covered Party”), (b) any Covered Party’s participation in or reimbursement from any reimbursement or payment programs; or (c) any Covered Party’s full accreditation by any accrediting agency, or (2) if the continuation of this Agreement should be in violation of any statute, ordinance or otherwise deemed illegal or be deemed unethical by any recognized body, agency, or association in behavioral health care fields (collectively, the “Jeopardy Event”), then the parties shall use their best efforts to meet forthwith in an attempt to negotiate an amendment to this Agreement to remove or negate the effects of the Jeopardy Event. In the event the parties are unable to negotiate such an amendment within thirty (30) days following written notice by either party of the Jeopardy Event, then either party may request that the issue be submitted for binding arbitration.

15. General.

a. Amendment and Waiver. This Agreement may not be amended except by written agreement signed by an authorized representative of each party who has authority to bind the party in contract. The failure of either party to enforce any provision hereunder is not a waiver of such provision or any other provision. The waiver by either party of any of its rights hereunder shall not be construed as a waiver of any subsequent breach.

b. Notice. All notices, requests, demands and other communications under

this Agreement shall in writing and shall be deemed to have been given on the date of service when personally served on the party to whom notice is to be given or the third business day after mailing if placed in the United States mail, postage prepaid, and properly addressed as follows:

If to HDP: Housing Development Partners of San Diego 1335 5th Avenue San Diego, CA 92101 Attention: Marco Vakili, Executive Director If to St. Paul’s: St. Paul’s PACE 328 Maple Street San Diego, CA 92103 Attention: C.A. Wilson, CEO

Either party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above.

c. Assignment and Binding Effect. St. Paul’s may not assign or delegate its responsibilities or obligations hereunder or otherwise transfer this Agreement, without the prior written consent of HDP. Such consent shall not be unreasonably withheld. HDP shall not be required to honor or recognize any such unpermitted assignment or transfer. All subcontracts must comply with requirements of this agreement. No subcontract shall relieve St. Paul’s from

any of its obligations hereunder. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties respective successors and assigns.

d. Entire Agreement. This Agreement sets forth the entire understanding of

the Parties and supersedes all prior agreements and understandings, whether written or oral, with respect to its subject matter. No terms, conditions, covenants, or warranties, other than those contained herein, and no amendments or modifications hereto shall be binding unless made in writing and signed by the Parties.

e. Governing Law and Jurisdiction. This Agreement shall be governed and

construed in accordance with the laws of the State of California (“State”).

f. Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way, so long as the economic effect on either party is not thereby materially altered.

g. Attorney’s Fees. Should either party bring an action or cross-action

against the other to resolve any controversy arising hereunder or enforce any of the terms hereof, or for breach of this Agreement, the prevailing party at both the trial court level and, if applicable, the appellate court level shall be entitled to recover from the other party its reasonable attorney’s fees and expenses, in addition to costs of any such action.

[Signature page follows]