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EXHIBIT B PROMISSORY NOTE Secured by a Deed of Trust (This Note contains an acceleration clause) $258,974.00 Redwood City, California December/~7,2002 FOR VALUE RECEIVED, MP Redwood Court Associates, a California Limited Partnership of Redwood City, ("Payor") promises to pay to the City of Redwood City ("Payee"), a Municipal Corporation of the State of California, or order, at 1017 Middlefield Road, Redwood City, California, or any place Payee may designate from time to time in writing, the sum of Two Hundred, Fifty Eight Thousand, Nine Hundred seventy Four and No/100 Dollars ($258,974.00), as provided in that certain "AGREEMENT WITH MP REDWOOD COURT ASSOCIATES FOR FUNDING TO REHABILITATE REDWOOD COURT APARTMENTS"("Agreement"), between the CITY OF REDWOOD CITY and MP Redwood Court Associates dated December /~., 2002. The parties hereto acknowledge that the interest rate set forth herein is lower than prevailing market rates in order to encourage the rehabilitation of affordable rental housing, and that the loan for which this Note is written is being made for the purpose of assisting MP Redwood Court Associates with the rehabilitation of an existing affordable multifamily housing development (the "Property") at 622 Chestnut & 635 Spruce Street, Redwood City, containing 27 residential units, of which 11 units will be assisted under the Agreement - 20% or five (5) of the 27 units are designated as HOME units affordable to households earning 50% or less of Area Median Income (AMI) and the remaining 6 units shall be affordable to households earning 60% or below AMI under this agreement. The loan amount, $258,974.00, is from the City's HOME entitlement funds from program years 2002-2003. This Note is secured by a deed of trust (the "Deed of Trust") of even date with Power of Sale encumbering the Property and is for a term of Thirty (30) Years from the date of recordation of the Deed of Trust. The Note and Deed of Trust shall be executed prior to any disbursement of funds under the Agreement. The principal amount under this Note shall bear no (0%) interest. The term of this loan shall be for the earlier of (a) 30 years from the date of recordation fo the Deed of Trust; (b) when the eligible use specified in the Agreement is no longer provided; (c) upon sale or transfer of the Property or any part or portion thereof, or interest therein. Principal shall be deferred for the full thirty year term. F:Atty/Agr/Agr. 083 121002 18