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predevelopment costs associated with the Project. As housing successor to the Agency, City shall disburse the remaining balance of the Loan Funds to Developer for the Project upon the terms and conditions set forth in this Agreement. The Parties acknowledge and agree that the sole sources of finds that City shall use to provide such financing shall be (i) funds formerly or. deposit in the Low and Moderate - Income Housing Fund established by the Agency pursuant to Health and Safety Code Section 33334.3 and transferred to the City pursuant to AB26 (and the Developer shall receive first priority to receive such funds, over any other obligations that the City may have with respect to such funds), (ii) property tax revenue provided to fund the loan distributed from the Redevelopment Property Tax Trust Fund established by the Alameda County Auditor - Controller for the Successor Agency to the Agency pursuant to AB26, and (iii) program income (i.e., rental income, lease payments, and loan payments) derived from housing assets transferred to the City from the Agency upon dissolution of the Agency pursuant to AB26 (and the Developer shall receive first priority to receive such funds, over any other obligations that the City may have with respect to such funds), and that City general funds shall not be available for such purpose. In addition, the City shall cause the Successor Agency to the Agency to include the Loan on each Recognized Obligation Payment Schedule that it submits to the Oversight Board and the Department of Finance until such time as the Loan has been fully funded. In the event, the Oversight Board, the Department of Finance, the County, State Controller, or any other party objects to or rejects the Loan as an enforceable obligation payable from the above described funds, the City shall use diligent efforts to seek to such determination so that the Loan may be funded in full in accordance with the other terms and provisions of this Agreement. Moreover, nothing herein shall abrogate, waive, impair or in any other manner affect the rights of the City or Developer to bring a claim against the Oversight Board, Department of Finance, County State Controller, or any other party with respect to the payment of the Loan or any other provision of this Agreement. 4. 1.1 Predevelopment Funds. The Original OPA permits Developer to use Loan Funds in an amount up to Two Million Two Hundred Thousand Dollars ($2,200,000) (the "Original Predevelopment Funds ") for approved predevelopment activities prior to Developer's acquisition of the Property. The Parties acknowledge that as of the Effective Date, Two Million, Ninety -Five Thousand, Seven Hundred Twenty -Three Dollars ($2,095,723) of the Original Predevelopment Funds have been disbursed. Upon satisfaction of the conditions set forth in Section 4.5.1, additional funds (inclusive of the remaining balance of the Original Predevelopment Funds) in the amount of up to Seven Hundred Eighty -Seven Thousand Dollars ($787,000) ( the "Phase 1 Predevelopment Funds ") shall be disbursed for the purposes and in the amounts set forth in the budget attached hereto as Exhibit E -4 or as otherwise approved in writing by City. Upon satisfaction of the conditions set forth in Section 4.5.1.1 additional funds in the amount of up to Five Hundred Seventy -Eight Thousand, Five Hundred Dollars ($578,500) (the "Phase 2 Predevelopment Funds ") shall be disbursed for the purposes and in the amounts set forth in the budget attached hereto as Exhibit E -4 or as otherwise approved in writing by City. 4.1.2 Predevelopment Note; Termination for Infeasibility. (a) Predevelopment Note. Developer's obligation to repay the Original Predevelopment Funds is evidenced by a promissory note in the amount of the Original Predevelopment Funds that Developer executed and delivered in connection with the Original OPA. The outstanding principal balance of the Original Predevelopment Note and the Amended 1865087.6 17