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3.2I Performance and Payment Bonds. <br />Prior to commencement of construction work on the Project, Developer shall cause its <br />general contractor to deliver to the Agency copies of payment bond(s) and performance bond(s) <br />issued by a reputable insurance company licensed to do business in California, each in a penal <br />sum of not less than one hundred percent (I 00%) of the scheduled cost of construction of the <br />Project. The bonds shall name the Agency and the City as co-obligees. In lieu of such <br />performance and payment bonds, subject to Agency's approval of the form and substance <br />thereof, Developer may submit evidence satisfactory to the Agency of the contractor's ability to <br />commence and complete construction of the Project in the form of an irrevocable letter of credit, <br />pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or <br />other financial institution, with signature authority of the Agency required for any withdrawal, or <br />a completion guaranty in a form and from a guarantor acceptable to Agency. Such evidence <br />must be submitted to Agency in approvable form in sufficient time to allow for Agency's review <br />and approval prior to the scheduled construction start date. <br />3.22 Insurance Requirements. Developer shall maintain and shall cause its contractors <br />to maintain all applicable insurance coverage specified in Article X. <br />ARTICLE IV <br />AGENCY FINANCIAL ASSISTANCE <br />4. ] Agency Loan. In order to increase the affordability of the Project, Agency agrees <br />to provide a Loan to Developer in the maximum aggregate amount of Nine Million One hundred <br />Thousand Dollars ($9, ] 00,000) ("Agency Funds") upon the terms and conditions and for the <br />purposes set forth in this Agreement. <br />4.1.1 Predevelopment Funds. Subject to the conditions set forth in this Section, <br />Developer shall be permitted to use Agency Funds in an amount up to Two Million Two <br />Hundred Thousand Dollars ($2,200,000) (the "Predevelopment Funds") for approved <br />predevelopment activities prior to Developer's acquisition of a leasehold interest in the Property_ <br />Upon satisfaction of the conditions set forth in Section 4.S.I, Predevelopment Funds shall be <br />disbursed for the purposes and in the amounts set forth in the budget attached hereto as Exhibit <br />E__-_4 or as otherwise approved in writing by Agency. The last One Million Dollars ($],000,000) <br />of the Predevelopment Funds will be available only following: (i) Developer's delivery to <br />Agency of confirmation that Developer has been awarded M_I-IP funds, or has received an <br />allocation of 9% federal low-income housing tax credits for the Project, (ii) Agency's <br />determination that Agency has cash on hand in such amount, and (iii) Developer's provision of <br />evidence satisfactory to Agency that it is necessary to expend such funds prior to Developer's <br />acquisition of a leasehold interest in the Property. <br />4.1.2 Predevelopment Note; Termination for Infeasibility. <br />(a) Predevelopment Note. Developer's obligation to repay the Predevelopment <br />Funds shall be evidenced by a promissory note in the amount of the Predevelopment Funds <br />substantially in the form attached hereto as Exhibit E-I (the "Predevelopment Nofe"). The <br />outstanding principal balance of the Predevelopment Note shall bear simple interest at the rate of <br />7 17R9RG-R ] 5 <br />