RecDoc2025-028828 417 Stambaugh Street

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2.2 Initial Determination Regarding Affordable Units. Within six (6) months of the Effective Date of this Regulatory Agreement, the Owner shall survey all tenants residing in the Development to determine the number of Affordable Units that are currently rented to Qualifying Households, and shall submit to the City an initial Annual Report indicating the number of Affordable Units that are leased to Qualifying Households. 2.3 Vacated Units Shall be Made Available as Affordable Units. In the event that the number of Affordable Units rented to Qualifying Households does not meet the requirements set forth in Section 2.5 of this Regulatory Agreement at the time the initial Annual Report is filed, then as units are vacated by Existing Tenants, as defined below, those units shall be made Available and rented as Affordable Units to Qualifying Households until such time that the full required number of Affordable Units are rented to Qualifying Households. Owner shall prioritize making Affordable Units available to the lowest income category of households if there is a shortfall in both categories of units. Notwithstanding anything contained herein or in the Loan Agreement to the contrary, the following shall apply with respect to all tenants occupying an Affordable Unit as of the Effective Date (the "Existing Tenants"): (i) An Existing Tenant which does not qualify as a Qualifying Household (a "Non -Qualifying Existing Tenant") may continue to occupy an Affordable Unit until such Non - Qualifying Existing Tenant vacates such Affordable Unit; the Owner may continue to charge such Non -Qualifying Existing Tenant rent in the amount set forth in such Non -Qualifying Existing Tenant's lease; and if such lease is renewed, Owner may increase such rent by an amount comparable to the rent increases then -applicable to market rate rental units in the Redwood City, California area; (ii) (ii) An Existing Tenant which does not cooperate with the Owner's good faith efforts to determine whether such Existing Tenant is a Qualifying Household (a "Noncompliant Existing Tenant") shall be treated as a Non -Qualifying Existing Tenant and the provisions of subsection (i) above shall apply to such Noncompliant Existing Tenant; and (iii) If a Non -Qualifying Existing Tenant or a Noncompliant Existing Tenant shall subsequently become certified as a Qualifying Tenant, then, effective as the date of such certification, the Affordable Unit rented to such Non -Qualifying Existing Tenant or Noncompliant Existing Tenant shall be treated as having been rented to a Qualifying Household. Further, and notwithstanding anything contained herein or in the Loan Agreement to the contrary, neither the Owner nor any of its affiliates shall be deemed in breach of this Regulatory Agreement, or otherwise penalized by the City, by reason of any Non -Qualifying Existing Tenants or Noncompliant Existing Tenants occupying Affordable Units, provided that Owner makes a good faith effort to certify such Existing Tenants as Qualifying Households within six (6) months of the Effective Date and upon any renewal of such Existing Tenants' leases. 2.4 Term of Affordability for Affordable Units. The Affordable Units that are confirmed to be rented to Qualifying Households in the initial Annual Report shall be rented or Available to Qualifying Households as an Affordable Rent from the date of recordation of this REV: 05-20-25 LF ATTY/AGR.2025.100.3/HEART-SV (417 Stambaugh - Regulatory Agreement) (Page 10 of 35)