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<br />PREDEVELOPMENTLOANAGREEMENT <br /> <br />This Predevelopment Loan Agreement (this "Agreement") is entered into <br />effective as of June 5, 2006 ("Effective Date") by and between the Redevelopment <br />Agency of the City of San Leandro, a public body corporate and politic (the "Agency"), <br />and Mercy Housing California XXXIII, a California Limited Partnership (the "Borrower"). <br />Agency and Borrower are hereinafter collectively referred to as the "Parties." <br /> <br />RECITALS <br /> <br />A. Agency and Borrower are negotiating the terms of a Disposition and <br />Development Agreement ("DDA") and Ground Lease ("Ground Lease") pursuant to <br />which Borrower will (i) lease the real property (the "Property") known as Alameda <br />County Assessor's Parcel No. 077E-1525-003-04Iocated at 2398 East 14th Street in <br />City of San Leandro, and (ii) rehabilitate the motel currently located on the Property as <br />a 68-unit affordable multi-family housing development with related improvements (the <br />"Project"). <br /> <br />B. Borrower has requested, and Agency has agreed to provide, a loan (the <br />"Loan") pursuant to the terms and conditions set forth herein for the purpose of <br />providing financing for predevelopment activities for the Project as more specifically <br />described in Exhibit A attached hereto. <br /> <br />C. The Agency has determined that (i) provision of the Loan pursuant to the <br />terms of this Agreement is consistent with the redevelopment plan for the Project Area, <br />(ii) is in the interests of the health, safety and welfare of the residents of the Project <br />Area and the City of San Leandro ("City"), and (iii) the Loan is necessary to make the <br />Project economically feasible and affordable to very low- and extremely low-income <br />households. <br /> <br />D. Pursuant to that certain Third Amendment to Exclusive Negotiating Rights <br />Agreement by and between Agency and Mercy Housing California, a California <br />nonprofit public benefit corporation ("Mercy") dated as of March 1, 2006 (the "ENRA <br />Amendment"), Agency agreed to advance the sum of $25,000 for architectural <br />services rendered in connection with the Project on the condition that such sum be <br />repaid to Agency pursuant to the terms of this Agreement. <br /> <br />E. Concurrently herewith: (i) Borrower shall execute a promissory note in the <br />amount of the Loan, and (ii) Borrower and Mercy shall execute an assignment <br />agreement (the "Assignment Agreement") which shall provide Agency with a security <br />interest in the plans, specifications and studies financed by the Loan. <br /> <br />809163-1 <br /> <br />1 <br />