1 SHELLEY S. BUCHANAN Attorney At Law

Case5:10-cv-01087-JW Document46 Filed08/12/10 Pagel of 47

1 SHELLEY S. BUCHANANAttorney At Law

2 912 Cole Street, PMB #120San Francisco, CA 94117

3 State Bar Number 178779Tel. (415) 566-3526

4 Fax. (415) 566-3548email: [email protected]

5Attorney for Plaintiffs

6 FRANCISCAN RESIDENT ADVISORY COMMITTEE (formerly known asFRANCISCAN MOBILE HOME OWNERS FOR JUSTICE);

7 ROSENDO QUINIQUINI; RORY MORDINOIA;ROBERT QUINN; SANDRA HOLMAN and MAMIE ZHU

8

9 IN THE UNITED STATES DISTRICT COURT

10 FOR THE NORTHERN DISTRICT OF CALIFORNIA

11 SAN JOSE DIVISION

12FRANCISCAN RESIDENT ADVISORY ) Case No. CV 10 1087 SW HRL

13 COMMITTEE, (formerly known asFRANCISCAN MOBILE HOME OWNERS ) FIRST AMENDED COMPLAINT

14 FOR JUSTICE); ROSENDO QUINIQUINE ) FOR DAMAGES, RESTITUTION,RORY MORDINOIA; ROBERT QUINN; ) INJUNCTIVE RELIEF, DISSOLUTION

15 SANDRA HOLMAN; and MAMIE ZHU, ) OF CORPORATION, SPECIFICAnd on behalf of all others similarly situated, ) PERFORMANCE

16Plaintiffs, ) DEMAND FOR JURY TRIAL

17VS. ) CLASS ACTION

18LINC HOUSING CORPORATION; ) 1. Securities & Exchange Act of 1934,

19 CORPORATE FUND FOR HOUSING; ) Section 10(b), Rule 10(b)(5)LINC FRANCISCAN LIMITED PARTNERSHIP; ) 2. Fraud and Deceit

20 FRANCISCAN PARK, LLC; ) 3. Conspiracy to Commit FraudHUNTER JOHNSON; FRANCISCAN ) 4. Negligent Misrepresentation

21 HOUSING CORPORATION; ) 5. Breach of Fiduciary DutyRICHARD BERGER; ) 6. Breach of Contract

22 DALY CITY HOUSING DEVELOPMENT ) 7. NegligenceFINANCE AGENCY; PACIFIC WEST ) 8. Unfair Competition Law, Bus. & Prof

23 MANAGEMENT; FRANCISCAN ACQUISITION) Code § 17200 et seq.CORPORATION; DAVID KENYON; and ) 9. Involuntary Dissolution of Corporation,

24 DOES 1 through 50, Inclusive, ) Corp. Code §§ 6510 et seq.) 10. Constructive Trust

25 Defendants. ) 11. Specific Performance) 12. Elder Abuse, W & Inst. Code § 15610

26 ) 13. Violation of Health & Safety) Code § 34377.6

27 ) 14. Retaliation-First Amendment Violation

28

First Amended Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance;Demand for Jury TrialCase No. CV 10 1087 JW HRL

Case5:10-cv-01087-JW Document46 Filed08/12/10 Page2 of 47

1 Plaintiffs Franciscan Resident Advisory Committee (formerly known as Franciscan

2 Mobile Home Owners for Justice), Rosendo Quiniquini, Rory Mordinoia, Robert Quinn,

3 Sandra Holman, and Mamie Zhu individually and on behalf of all others similarly situated,

4 filed their First Amended Complaint pursuant to FRCP Rule 15(a)(1)(B), and allege as follows:

5 1. This is an action arising under the anti-fraud provisions of Section 10(b) of the

6 Securities and Exchange Act of 1934, 15 U.S.C. §78a et seq. and the rules and regulations

7 promulgated thereunder, including Rule 10b-5 which makes it unlawful for any person to

8 employ any device, scheme, or artifice to defraud or to engage in any act, practice, or course of

9 business which operates or would operate as a fraud or deceit upon any person in connection

10 with the purchase or sale of any security. Municipal securities are not exempt from the basic

11 anti-fraud provisions of the federal securities laws although they are exempt from registration

12 requirements and from the Securities Litigation Uniform Standards Act (SLUSA) of 1998

13 requirements. 15 U.S. C. § 78bb(f)(5(E). This is also an action arising under California Health

14 & Safety Code section 34377.6 which authorizes a private right of action for violations of

15 Section 145 of the Internal Revenue Code of 1986, as amended (26 U.S.C. Sec. 145) pertaining

16 to requirements for qualified Section 501(c)(3) tax-exempt bond financing. This Court is vested

17 with original jurisdiction pursuant to 28 U.S.C. § 1331. The action arises out of acts or

18 omissions of defendants within the geographical boundaries of the United States District Court

19 in and for the Northern District of California.

20 2. Plaintiff Franciscan Resident Advisory Committee (hereinafter "FRAC") is a soon-

21 to-be incorporated California corporation whose articles of incoiporation were submitted for

22 filing to the California Secretary of State on August 6, 2010. Plaintiff FRAC was formerly

23 known as Franciscan Mobile Home Owners for Justice, an unincorporated association of

24 mobile home owners at the Franciscan Mobile Home Park (hereinafter "Park") consisting of

25 501 spaces located in Daly City, California. Plaintiffs Rosendo Quiniquini, Rory Mordinoia,

26 Robert Quinn, Sandra Holman and Mamie Zhu are all competent adult individuals who are

27 mobile home owners who have all resided at the Park from various times from 1996 to the

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1 present. (all collectively referred to herein as "Plaintiffs"). Through the actions of Defendants

2 as alleged herein, and as set forth below, Plaintiffs have all indirectly or directly purchased and

3 sold municipal securities, or have had municipal securities purchased and sold on their behalf,

4 that are subject to the anti-fraud provisions of Section 10(b) of the Securities and Exchange Act

5 of 1934, 15 U.S.C. §78a et seq. and the rules and regulations promulgated thereunder,

6 including

7 Rule 10b-5.

8 3. Defendant Line Housing Corporation (hereinafter "Defendant Line") is a nonprofit

9 public benefit corporation organized and operated under the laws of the State of California.

10 Plaintiffs are informed and believe and on that basis allege that Defendant Line's assets have a

11 market value of more than $1 billion and total annual untaxed revenues of nearly $32 million.

12 Defendant Line does business in the County of San Mateo. Defendant Line is an Internal

13 Revenue Code section 501(c)(3) tax-exempt entity. Defendant Line paid Defendant Kenyon

14 with tax-exempt bonds issued by the City of Daly City Housing Development Finance Agency

15 "for the benefit of' Park residents.

16 4. Defendant Hunter Johnson (hereinafter "Defendant Johnson") is an individual who

17 resides in Los Angeles County and does business in the County of San Mateo.

18 5. Defendant Corporate Fund for Housing (hereinafter "Defendant CFH") is a

19 California nonprofit public benefit corporation. Defendant CFH is an Internal Revenue Code

20 section 501(c)(3) tax-exempt entity that does business in the County of San Mateo. Defendant

21 CFH owns the Park. Attached hereto as Exhibit "A" is a true and correct copy of CFH's Form

22 990 for the period January 1, 2008 through December 31, 2008. CFH reports that it owns the

23 Franciscan Mobile Home Park and reports all of the Park's financial information on CFH's tax

24 return. Schedule "K" to the Form 990 reports Defendant CFH as acting on behalf of the issue

25 in issuing tax-exempt bonds. Defendant CFH acts "for the benefit of' the Park residents.

26 6. Defendant LINC Franciscan Limited Partnership (hereinafter "Defendant Line

27 Franciscan LP"), a limited partnership organized under the laws of the State of California on

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1 August 27, 2001, and dissolved and cancelled with the California Secretary of State on

2 December 26, 2007, but which continues to own real property in the County of San Mateo and

3 continues to do business in the County of San Mateo. Defendant Line Franciscan LP claims to

4 have transferred its interest in real property in March 2010.

5 7. Defendant Franciscan Park LLC, is a limited liability corporation organized under

6 the laws of the State of California on December 5, 2007, which does business in the County of

7 San Mateo.

8 8. Defendant Franciscan Housing Corporation (hereinafter "Defendant FHC"), a

9 nonprofit public benefit corporation organized under the laws of the State of California on July

10 15, 2002, which is owned and controlled by Defendants Johnson, Line and CFH, and does

11 business in the County of San Mateo. Pursuant to the First Amended and restated Articles of

12 Incorporation signed by Defendants Johnson and Berger and filed September 5, 2003, the

13 corporation is empowered to own real property and it "shall" have members effective

14 September 5, 2003. It has never accomplished either of those objectives.

15 9. Defendant Pacific West Management (hereinafter "Defendant PWM") is an

16 organization form unknown which does business in the County of San Mateo.

17 10. Defendant Franciscan Acquisition Corporation (hereinafter "Defendant FAC I"), a

18 nonprofit public benefit corporation organized under the laws of the State of California on March

19 15, 1996, which purported to represent all residents of the Park, has been suspended by the

20 California Secretary of State.

21 11. Defendant Richard Berger, is an individual defendant who is a Daly City employee

22 who is the managing agent for Defendant Daly City Housing Development Finance Agency and

23 who was appointed by Defendant Johnson to be a purported officer of the FT-IC and to be an

24 absentee director of Defendants Line and CFH.

25 12. Defendant Daly City Housing Development Finance Agency is an agency within

26 the City of Daly City, State of California.

27 13. Defendant David Kenyan is an individual defendant who was attorney for

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1 Defendant FAC I and is a bondholder of the Series "D" tax-exempt bonds issued as part of the

2 initial tax-exempt bond financing.

3 14. The true names and capacities of the defendants, DOES 1 through 50, whether

4 individual, corporate, associate or otherwise, are unknown to Plaintiffs at the time of filing this

5 Complaint and Plaintiffs, therefore, sue said defendants by such fictitious names and will ask

6 leave of court to amend this Complaint to show their true names or capacities when the same

7 have been ascertained.

8 15. Plaintiffs are informed and believes, and therefore alleges, that each of the said

9 defendants is, in some manner, responsible for the events and happenings herein set forth and

10 proximately caused injury and damages to the Plaintiffs as herein alleged.

11 16. Plaintiffs are informed and believe and upon such information and belief allege, that

12 at all times herein mentioned, each of the defendants whether specifically named or designated

13 herein as a Doe, was the alter ego, agent, representative, servant, employee, principal, joint

14 venturer, co-conspirator, management company and/or representative of the remaining co-

15 defendants, and at all times herein mentioned, was acting within the course and scope of said

16 agency, employment, joint venture, conspiracy, agreement, management company agreement

17 and/or service with the approval, knowledge, authority, permission and/or consent of the

18 remaining defendants.

19 17. Plaintiffs are informed and believe and thereon allege that at all times mentioned

20 herein, Defendant Johnson was employed by Defendants Line, CFH, Line Franciscan, LP,

21 Franciscan Park, LLC and FHC as Chief Executive Officer and managing agent and exercised

22 control and direction of Defendants Line, CFH, Line Franciscan, LP, Franciscan Park, LLC and

23 FHC, and personally directed and financially benefitted from the wrongdoings set forth in this

24 Complaint herein. Plaintiffs are also informed and believe and thereon allege that at all times

25 mentioned herein, there existed a unity of interest and ownership between Defendants Johnson

26 and Defendants Line, CFH, Line Franciscan, LP, Franciscan Park, LLC and FHC such that they

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28 First Amended Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance;Demand for Jury TrialCase No. CV 10 1087 JW HRL


1 were the alter egos of each other and knowingly did acts and omitted to act to cause damage to

2 Plaintiffs or contributed to the matters and things of which Plaintiffs complain herein, and had

3 legal responsibility therefore.

4 18. Plaintiffs are informed and believe and thereon allege that Defendants [Inc

5 Franciscan, LP, Franciscan Park LLC and FHC were shams and shell entities that were

6 underfunded, inadequately capitalized and did not follow state-mandated corporate formalities,

7 formed by individual Defendant Johnson who used such entities to perpetrate a fraud on

8 Plaintiffs and other similarly situated and to then circumvent liability for said fiaudulent conduct

9 by insulated themselves with a corporation that was unable to payjudgment creditors. Thus,

1 0 even if Plaintiffs prevail on this complaint, there would be an inequitable remedy available to

11 Plaintiffs unless they were allowed to pierce the corporate veil and collect any judgment against

12 individual Defendant jointly and personally.

13 19. On or about September 2001, individual Defendant Johnson of Defendant Line

14 solicited and represented to the residents of the Park that if they consented to Defendant Line

15 purchasing the Park with the proceeds of tax-exempt bond issues from the City of Daly City

1 6 Housing Development Finance Agency, then the residents would control the Park via

17 ownership in their mobile home spaces and/or membership interests in a new non-profit

1 8 corporation that was to be formed to hold title to the Park. The Park residents already owned

1 9 their own mobile homes. Defendant Johnson promised the residents that if they would agree to a

2 0 large monthly space rent increase of $90 to $100 per month, then they could participate in the

21 initial acquisition, and that if they also paid $1,000, then they could acquire

2 2 ownership/membership interests in the Park.

23 20. A majority of the Park residents - approximately 363 homeowners - agreed to

24 become participating residents and they commenced paying increased monthly rents from $90 to

25 $100 per month so that Defendant [Inc could purchase the Park on their behalf. Defendants

2 6 Johnson and Line did not explain to the Park residents how the rent and occupancy restrictions of

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1 the Regulatory Agreement as a condition of obtaining tax-exempt bond financing would be

2 applicable to them or how they could participate or benefit from the rent restrictions, but instead

3 encouraged all of the residents to agree to commit to paying increased rent. Furthermore, for

4 every $10 rent increase, the equity value of the resident's mobile home decreases by $1,000.

5 Thus, effectively, each Park resident who agreed to increased rent suffered a corresponding

6 decrease in $9,000 to $10,000 in equity in their mobile home in exchange for his or her

7 "participation" in the initial acquisition. By agreeing to increased rent, the residents effectively

8 reduced the value of their mobile homes in exchange for the Park to be purchased for their

9 benefit, on their behalf and so that they could have an ownership interest in land.

10 21. In April 2002 the Daly City Housing Development Finance Agency issued Mobile

11 Home Park Revenue Bonds - Franciscan Mobile Home Park Acquisition Project tax-exempt

12 bonds in the amount of $53 2 million dollars, comprised of an A- rated $37 million dollar limited

13 obligation revenue bond issue and several other non-rated bond series in the amount of $11.5

14 million (B series), $2.8 million (series C), and $1.9 million (series D) (hereinafter collectively

15 referred to a "initial tax-exempt bond financing"). The commonly understood purpose of the

16 bond issue was to help mobile home residents buy land in Daly City. Attached hereto as Exhibit

17 "B" is a true and correct copy of an article dated January 26, 2002 from the San Mateo Times

18 entitled "Daly City likely to help mobile home residents buy land" which describes the proposed

19 bond issue. Park residents are quoted in the newspaper article as agreeing to a rent increase to

20 avoid losing their homes and to have "their first opportunity at owning a piece of land."

21 22. In or about April 2002, the Daly City Housing Development Finance Agency loaned

22 the bond proceeds to Defendant [Inc to purchase the Park. Of the $53 2 million bond proceeds,

23 Defendant Line paid $18 5 million to purchase a fee simple interest in a 50-acre parcel of land,

24 APN 011-331-150, underlying a large part of the Park. The owner of the other 20-acre parcel

25 declined to sell the land to Defendant Line but instead transferred the ground lease to Defendant

26 Line. As part of the purchase, the prior operator of the Park also transferred its interest in the

277.



1 existing lease that was set to expire in 2016 and additional Park improvement. The fee simple

2 interest, the ground lease and the improvements are all collectively referred to hereinafter as the

3 "Park."

4 23. As a condition of the initial tax-exempt bond financing, on April 1, 2002, Defendant

5 Linc and the Daly City Housing Development Finance Agency entered into a Regulatory

6 Agreement and Declaration of Restrictive Covenants ("Regulatory Agreement") which set

7 minimum rent and occupancy restrictions by which twenty percent (20%) of the spaces would be

8 dedicated to very low income residents as defined by the Depaitment of Housing and Urban

9 Development for the County of San Mateo. The Regulatory Agreement was recorded on April

10 18, 2002, with the San Mateo County Recorder's Office, document number 2002-075989, as

1 1 covenants, conditions and restrictions running with the land. Attached hereto as Exhibit "C" are

12 pages 6-7 and 11-15 of the recorded Regulatory Agreement that set forth the required rent and

13 occupancy restrictions for the Park.

14 24. On August 27, 2001, Defendant [Inc organized Defendant Linc Franciscan LP to

15 own and operate the Park. Defendant Linc was designated the general partner and Defendant

16 CFH was designated the sole limited partner of Defendant Linc Franciscan LP. On or about

17 April 18, 2002, Defendant Johnson caused a grant deed to be recorded transferring title to the

18 $18 5 million parcel of land underlying the Park, APN 011-331-150, from Defendant Linc to

19 Defendant Linc Franciscan LP.

20 25. On April 18, 2002, Defendant Johnson, Defendant Linc, Defendant Linc Franciscan

21 LP and a now-defunct resident's organization, Defendant Franciscan Acquisition Corporation

22 ("FAC I"), entered into a written contract for the transfer of ownership of the Park to an entity

23 controlled by the Park residents who were the intended beneficiaries of the written contract.

24 Attached hereto as Exhibit "D" is a true and correct copy of the Franciscan County Club Mobile

25 Home Park Cooperation and Advisory Agreement dated April 18, 2002 (hereinafter

26 "Cooperation Agreement"). Paragraph 5 of the Cooperation Agreement promises to transfer the

278.



1 Park to a new 501(c)(3) corporate entity to be called the Franciscan Housing Corporation

2 (Defendant FHC). However, Defendants Johnson, Line and [Inc Franciscan LP have breached

3 the written contract and have refused to transfer the Park to Defendant FHC or even to apply for

4 a determination letter from the Internal Revenue Service or the Franchise Tax Board for Section

5 501(c)(3) tax-exempt status for Defendant FHC. As alleged above, Defendant CFH — not

6 Defendant FHC — is the owner of the Park. (See Ex. "A," CFH's 2008 Form 990, Schedule 0,

7 Part III, Line 1) Furthermore, Note 5 to the 2004 Financial Statements of Defendant CFH

8 discloses, "The Organization has no financial obligation related to the HNC Franciscan and it is

9 the intention of the Organization to transfer their 99 percent limited partnership interest to an

10 unrelated non-profit organization within the next 12 months. As a result, the Organization has

11 not consolidated the accounts of the LINC Franciscan as of and for the year ended December 31,

12 2004. Attached hereto as Exhibit "E" is a true and correct copy of the CFH's 2004 Audited

13 Financial Statements. Instead, of CFH transferring the Park to FHC, the Park was transferred to

14 an LLC in December 2007. Since CFH was the sole member of the LLC, by 2008, CFH had

15 consolidated all of the accounts of the Park into CFH. (See Ex. "A," CFH's 2008 Form 990, Part

16 X, Balance Sheet, at page 11)

17 26. On July 15, 2002, Defendant Johnson organized Defendant FHC and represented to

18 Park Residents and to the Daly City Housing Development Finance Agency that Defendant FHC

19 would have some advisory role in the management of the Park and appointed Defendant Berger

20 as an officer of Defendant FHC. Pursuant to the FHC's First Amended and restated Articles of

21 Incorporation signed by Defendants Johnson and Berger and filed September 5, 2003, the

22 corporation is empowered to own real property and "shall" have members effective September

23 5, 2003. Attached hereto as Exhibit "F" is a time and correct copy of certified copies of Articles

24 of Incorporation and Amended Articles for FHC. Article VI requires the FHC directors to adopt

25 bylaws defining the class and authorities of members. In actual practice, Defendant FHC is

26 nothing but a sham entity that Defendant Johnson solely controls. The puipose of the formation

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1 of Defendant FHC has been merely to create an illusion of resident participation in the

2 management of the Park. Defendant Berger and Defendant Daly City Housing Development

3 Finance Agency have not performed their oversight role that they assumed by permitting

4 Defendant Berger to be an officer of Defendant FHC. Defendants Johnson and Berger remain as

5 officers and directors of FHC, but have failed to adopt bylaws defining the classes of members as

6 required by the FHC Articles of Incorporation. Defendant FHC has never issued membership

7 interests to any Park residents. Furthermore, by permitting Defendant Berger to be an officer of

8 Defendant FHC, Defendant Daly City Housing Development Finance Agency has created a

9 conflict of interest as it is required to investigate complaints of violations of the rent and

10 occupancy restrictions that are a condition of the tax-exempt bond financing pursuant to Health

11 and Safety Code section 34377.6. Park resident have repeatedly complained to Defendants

12 Berger and Daly City Housing Development Finance Agency about violations of the rent and

13 occupancy restrictions at the Park, including at Daly City Council Meetings, particularly the June

14 6, 2009 Council Meeting and the Mobile Home Rent Review Commission Hearings, particularly

15 the March 29, 2010 session. None of the Defendants have ever investigated these complaints.

16 27. Defendants Johnson, Linc, CFH, Linc Franciscan LP and Franciscan Park LLC

17 retained the services of Defendant Pacific West Management (PWM) to act as the property

18 manager for the Park without consulting with the Park residents as required by the Cooperation

19 Agreement (See Exhibit "D" at If 7). The rate of compensation was disclosed in the 2007 bond

20 issuance documents as 2% of the "Project revenue." However, Defendants Johnson, Linc, CFH,

21 Linc Franciscan LP and Franciscan Park LLC, and each of them, have failed to disclose to Park

22 residents that Defendant Linc receives kickbacks from Defendant PWM via other revenue

23 sharing agreements that have never been disclosed to Park residents. Another "informal"

24 revenue sharing agreement entitled "bookkeeping fees" with the prior property manager

25 Community Housing Management Service is well-documented in Note 4 to CFH's 2004

26 Financial Statements. (See Ex. "E") Furthermore, Defendants failed to disclose that PWM

27 10.


Case5:10-cv-01087-JW Document46 Filed08/12110 Pagel 1 of 47

1 charges an additional 2% of interest income that the Park earns on reserve accounts maintained at

2 the Park in spite of the fact that they are only entitled to charge a fixed percentage of rents

3 collected at the Park. Defendant Johnson pays the salary of Defendant PWM employees from the

4 Park budget and permits them to live at the Park without paying any rent, thereby unnecessarily

5 increasing the operating expenses of the Park. Defendant PWM personnel routinely respond in

6 an abusive manner and refuse to answer Park resident's questions about eligibility to participate

7 in the mandatory rent and occupancy restrictions set forth in the Regulatory Agreement. Many of

8 the Park resident are elderly and frail.

9 28. From April 2002 through April 2007, Defendant Johnson exercised complete control

10 over Defendant Line, Defendant Line Franciscan LP, Defendant Corporate Fund for Housing,

11 and Defendant FHC. Throughout that time, Defendant Johnson intentionally refused to pay the

12 property tax accruing on the largest parcel of land underlying the Park, APN 011-331-150, and

13 incurred large penalties as a result. Defendant Johnson controls the selection of Defendant FHC

14 board members, as well as the selective information that is carefully disseminated from the FHC

15 to Park residents and the City of Daly City to suit his own purposes. Park residents were not told

16 about the material issue of unpaid property taxes that were accruing penalties and interest

17 payable to the County of San Mateo until March 15, 2007, when Defendants Johnson, Line, Line

18 Franciscan LP and FHC disclosed this issue in order to justify a rent increase and to justify an

19 additional tax-exempt bond financing to further overleverage the Park. Defendant Johnson did

20 not tell the Park residents or the City of Daly City that the property taxes were accruing unpaid

21 year after year until he called a meeting of the Park residents on March 15, 2007 that there was a

22 fiscal crisis at the Park due to the unpaid property tax and deferred maintenance issues.

23 Defendant Johnson informed the Park residents that he was refinancing the Park's debt and that

24 the initial tax-exempt bond financing would be retired and that a subsequent tax-exempt bond

25 financing would be required to save the Park. The Park residents had not participated in the

26 management of the Park in any effective way from April 2002 through April 2007, and it was a

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1 complete surprise to them that there was any issue of unpaid property tax and penalties accruing.

2 Defendant Berger, a Daly City employee appointed by Defendant Johnson to be a purported

3 officer of the FHC did not even learn of the unpaid property tax issue until late 2006. Defendant

4 Johnson routinely blames the Park residents for the nonpayment ofproperty taxes claiming that if

5 the residents were truly low-income then they should qualify for the welfare exemption from

6 property tax administered by the County of San Mateo Tax Assessor's Office. However,

7 pursuant to Revenue & Taxation Code section 62.2, if the Park had been transferred to the

8 FHC and membership interests actually issued to the residents after the FHC's restated

9 Articles were filed September 5, 2003 as promised, the Park would not have been reassessed

10 for property tax putposes and could have retained the much lower property tax basis of the

11 prior owner. Attached hereto as Exhibit "G" is a true and correct copy ofthe State Board of

12 Equalization letter to County Assessors dated December 31, 1999 which sets forth the conditions

13 under which transfers of mobilehome parks to tenants is excluded from the change in ownership.

14 See page 2, "Transfers to Non-Tenant-Owned Entities." Defendants had 36 months from April

15 2002 through April 2005 to transfer the Park to resident ownership in order to qualify for the

16 property tax exclusion from the change in ownership reassessment. It is astonishing that

17 Defendants failed to transfer the Park to apply for tax-exempt status for the FHC, transfer the

18 Park's property to the FHC, issue membership interests to the residents, and benefit from a

19 much lower property tax based upon the prior assessed value. Defendants have never disclosed

20 to the Park's residents this opportunity to significantly lower the Park's annual operating costs

21 prior to its expiration in April 2005. Instead, Defendants chose to keep the Park in its own

22 control — owned by Defendant CFH — and away from any effective control of the residents so that

23 they could over-leverage the Project by burdening it with excessive debt, bankrupt it, and use the

24 land for other "low income" "affordable housing" projects they intend to develop in the future.

25 Park residents frequently hear rumors in and around Daly City about the Park being "for sale" or

26 about private investors being solicited for the purposes of putting together a project to develop

2712.



1 the site where their mobile homes are located. Plaintiffs are informed and believe that

2 Defendants intend to use their mobile home park land as an "affordable housing" mixed-use

3 project development. In 2008, Defendants expended $104,395 to remove the trees at the site.

4 (See Ex. "A," CFH's 2008 Form 990, Part VII.B., "Independent Contractors", at page 8,

5 "architecture services $424,814")

6 29. In December 2007, the Daly City Housing Development Finance Agency issued the

7 Mobile Home Park Senior Revenue Refunding Bonds - Franciscan Mobile Home Park

8 Acquisition Project which amounted to $61 million in tax-exempt bonds to refinance the 2002

9 bonds (2002 Series A through C -- but not the 2002 Series D bonds owned by the project

10 promoters including Defendant Kenyan, which Series D bonds are still outstanding at 9% interest

11 and on which principal payments have recently been deferred) The 2007 bonds were issued in

12 the amounts of $45,725,000 for the Series A bonds, $5,175,000 for the Series B bonds, and

13 $8,110,000 for the Series C bonds. The 2002D bonds in the amount of $1,923,00 were not

14 repaid. Attached hereto as Exhibit "H" is a true and correct copy of the Official Statement dated

15 December 5, 2007 for the bond issue. Defendants increased the principal amount of the debt and

16 incurred additional costs to refund the 2002 bonds and additional transaction costs. The 2007

17 bonds were issued to pay unpaid property taxes to the County of San Mateo, and to make

18 improvements to the Franciscan Mobile Home Park. As of January 2007, the principal amount

19 outstanding of the 2002 issue was $49.7 million. By December 2007, Defendants' decision to

20 refinance the 2002 bonds resulted in the Park being burdened with an additional $11 million in

21 bond debt. CFH reported on Schedule K of its 1998 Form 990 that it acted on behalf of the

22 issuer Daly City Housing Development Finance Agency to issue $57,239,830 in tax exempt

23 bonds for the stated purpose of "Afford Housing in Daly City." See Ex. "A" attached hereto. As

24 of December 31, 2006, the total assets of the Park (in the name of Linc Franciscan LP) were

25 $51,790,784 (with land stated at $38,377,652). As of December 31, 2007, the total assets of the

26 Park (in the incorrect name of "Linc Franciscan, LLC") were $55,186,695 (with land stated "at

2713.



1 cost" of $38,388,652 in spite of the fact that the land actually cost $18.5 million) As of

2 December 31, 2008, the total assets of the Park (still in the incorrect name of "Linc Franciscan,

3 LLC") were $54,583,131. At no time from December 31, 2006 through December 31, 2008 did

4 the asset level of the Park justify issuing $57,239,830 in tax exempt bond financing as of the

5 December 13, 2007 issue date. Furthermore, the $57,239,830 amount did not even include the

6 $1.9 million outstanding 9% Series D bonds which were not refinanced as part of the

7 December 2007 refinance because the Series D bonds were held by the original promoters of

8 the Project Defendants used the December 2007 tax-exempt bond refinance to over leverage the

9 Park and made the material misrepresentation in the Official Statement dated December 5, 2007

1 0 that "The Borrower does not expect any significant changes on an armual basis in operating

11 receipts or disbursements." (See Ex. "H," "Management's Discussion," p. 52) The paragraph

12 preceding the Management's Discussion section asserts that there will be no rent increases except

13 for the 3% rent increase for the 125 non-participating residents. This was also a material

1 4 misrepresentation.

15 30. As part of the 2007 bond issue, the title to the property constituting the Park was to

1 6 be transferred to Defendant Franciscan Park, LLC. The sole member of Defendant Franciscan

17 Park LLC is Defendant CFH. Plaintiffs did not discover that the Park was to be transferred from

18 Defendant Linc Franciscan LP to Defendant Franciscan Park LLC until they obtained

1 9 documentation about the Park from the Daly City Clerk's Office. Neither Defendants Johnson,

2 0 Linc, CFH, FHC, Linc Franciscan LP, nor Franciscan Park LLC advised the Park residents about

21 the purported change of ownership in December 2007, and they did not receive any notice of the

22 transfer of ownership to Franciscan Park LLC in December 2007 or at any time thereafter.

23 Furthermore, Defendant Linc did not obtain the consent of the Franciscan Acquisition

24 Corporation (FAC I) before transferring the Park to Defendant Franciscan Park, LLC as required

25 (although this was impossible since FAC I no longer exists).

2 6 31. In November 2009, Plaintiffs discovered that Defendants have caused the assessed

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2 8 First Amended Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance;Demand for Jury TrialCase No. CV 10 1087 JW HRL


1 value of the $18 5 million parcel of land underlying the Park, APN 011-331-150, to be overstated

2 at the amount of $33.5 million in spite of the fact that the purchase price of the parcel was $18.5

3 million. As a result of this excessive valuation of the largest parcel, Plaintiffs have been

4 overpaying property taxes for the $18.5 million parcel of land underlying the Park, APN 011-

5 331-150 from 2002 to the present. For purposes of the bond refinance in December 2007,

6 Defendants caused the financial statements of the Park to be restated such that the land account

7 was increased from $18.5 million to $33 5 million in spite of the fact that the cost of the land was

8 $18.5 million and not $33.5 million. Defendants restated the financial statements to make the

9 Park appear more valuable as part of the reappraisal process in May2007 and the 2007 bond

10 issue to enable the debt levels of the Park to be substantially increased. However, pursuant to

11 Revenue & Taxation Code section 62.2, if the Park had been transferred to the FHC and

12 membership interests actually issued to the residents after the FHC's restated Articles were

13 filed September 5, 2003 as promised, the Park would not have been reassessed for property tax

14 purposes and could have retained the much lower property tax basis of the prior owner of

15 approximately $11 million — and not the $33.5 million amount that Defendants have allowed

16 the County of San Mateo Assessor's Office to use. This has resulted in the Park residents

17 being overcharged for property tax expense.

18 32. From April 2002 through April 2009, Defendant Johnson failed to advise the Park

19 residents that the Regulatory Agreement executed and recorded in April 2002 as a condition of

20 the tax-exempt bond financing created a system of mandatory rent control for twenty percent

21 (20%) of the spaces in the Park. Plaintiffs are informed and believe and on that basis allege that

22 none of Defendant Johnson, Defendant Line, Defendant CFH, Defendant Line Franciscan, LP or

23 Defendant Franciscan Park LLC have ever implemented the mandatory rent control in the actual

24 operation of the Park. Plaintiffs have repeatedly requested information about implementation of

25 the mandatory rent control program and information about how to participate in the mandatory

26 rent control program only to be advised by said Defendants and their agents that there is no such

2715.



1 program. This lack of compliance is a violation of the restrictions recorded against the property

2 in April 2002, and a violation of the occupancy and rent restrictions set forth in Health & Safety

3 Code section 34377.2. Plaintiffs did not even discover the existence of the Regulatory

4 Agreement and the mandatory rent control until they requested documentation pertaining to the

5 Park from the Daly City Clerk's office in May2009. Plaintiffs are not aware of any Park

6 residents who benefit from reduced rent as a result of the Regulatory Agreement.

7 33. Defendant Johnson formed Defendant Franciscan Park, LLC on December 5, 2007,

8 to own and operate the Park according to statements made as part of the 2007 tax-exempt bond

9 issue. However, In or about November 2009, Plaintiffs discovered that Defendants had only

10 transferred small portions of the Park to Defendant Franciscan Park LLC. In fact, Defendant

11 Johnson transferred only the long-term lease agreement for the 20-acre parcel, but retained title to

12 the largest 50-acre parcel, APN 011-331-150, in the Defendant [Inc Franciscan LP entity.

13 However, Plaintiffs also discovered that Defendant Johnson had caused Defendant [Inc

14 Franciscan LP to be dissolved and cancelled on December 26, 2007, after changing the identity

15 of the general partner of Line Franciscan LP from Defendant Line to Defendant CFH on the same

16 date of December 26, 2007. Plaintiffs are informed and believe and on that basis allege that

17 Defendants Johnson, Line, CFH, Line Franciscan LP and Franciscan Park LLC have

18 circumvented the security for the loan from the Daly City Housing Development Agency to

19 Defendant Franciscan Park LLC by retaining the title to the 50-acre parcel of land underlying the

20 Park, APN 011-331-150, in the name of a cancelled limited partner whose general partner was

21 changed to Defendant CFH on the same date that limited partnership was cancelled and

22 dissolved. Defendant Franciscan Park LLC's articles of organization specifically appoint an

23 independent manager for the purposes of instituting bankruptcy proceedings. Defendant Johnson

24 never advised Park residents at any time that there would be a new third-party "independent

25 manager" making decisions on behalf of Park residents or that he was contemplating bankruptcy

26 proceedings for the Park.

2716.



1 34. In or about November 2009, Plaintiffs discovered that Defendants Johnson, Line and

2 CFH have established a prior pattern and practice of obtaining control of senior and low-income

3 housing developments by refinancing them by means of tax-exempt financing issued by local

4 redevelopment agencies and housing authorities. The refinancing results in the properties

5 becoming highly leveraged. Defendant Johnson causes the projects to be transferred to

6 Defendant CFH which entity then disposes of the projects by selling them to private for-profit

7 purchasers and repaying the remaining outstanding tax-exempt bonds. Attached hereto as

8 Exhibit "I" is a true and correct copy of Defendant CFH's request to liquidate five senior and

9 low-income housing projects obtained via tax-exempt municipal financing. Attached hereto as

10 Exhibit "J" is a true and correct copy of meeting minutes by the City of Palm Springs

11 Community Redevelopment Agency to transfer CFH's Tahquitz Apartment project to a for-profit

12 owner.

13 35. Plaintiffs are informed and believe and on that basis allege that Defendants, and each

14 of them, have conspired to operate the Park in such a manner that it would ultimately force its

15 closure as a mobile home park so that it could be sold to private developers. As part of the plan,

16 Defendants and each of them have caused the Park to be operated in a grossly negligent manner

17 that has unnecessarily increased its operating costs from 2002 to the present. In 2002 Defendants

18 paid over $26 million to the prior operator of the Park for ground leases that they themselves

19 stated would be worthless in 14 years. From 2002 through 2007 Defendants intentionally refused

20 to pay the property taxes on the 50-acre parcel of land, APN 011-331-150, for which they had

21 paid $18.5 million in 2002. As a result, Defendants unnecessarily caused the Park residents to

22 incur more than $500,000 in penalties as a result of the extended nonpayment which were not

23 disclosed until March 15, 2007. Furthermore, Defendants have permitted the San Mateo County

24 Assessor's Office to assess the value of APN 011-331-150 based on $33 million rather than the

25 $18.5 million purchase price. Defendants then caused the financial statements for the Park to be

26 restated in 2007 so that the land account would reflect the $33.5 million value rather than the

2717.

28First Amended Complaint for Damages, Restitution, Injunctive Relief, Dissolution of Corporation and Specific Performance;Demand for Jury TrialCase No. CV 10 1087 JW HRL


1 historical cost of the land which is $18.5 million. Defendants have used the unpaid property tax

2 issue as a justification to refinance the bonds and incur even greater amounts of debt in

3 December 2007. In spite of the fact that the existing lease on the 20-acre parcel of land still

4 subject to a ground lease did not expire until 2016, Defendants paid the owner of the land

5 $500,000 and prematurely doubled the annual rental payment immediately in exchange for

6 extending the lease term an additional 30 years. Defendants have failed to disclose all of the

7 sources of payment paid from the Park either directly or indirectly to Defendant Line. Defendant

8 Line received additional fees as a result of the December 2007 bond refinance as well as fees

9 from the first tax-exempt bond issue in 2002. Defendant [Inc has revenue sharing agreements

10 with Defendant PWM which it does not disclose to Park residents. Defendant Line's

11 compensation is based on the gross revenue of the Park and as such has an interest in maximizing

12 Park rents by subjecting residents to excessive rent increases while failing to abide by the rent

13 and occupancy restrictions set forth in the Regulatory Agreement. Defendant Line refuses to use

14 any tax-exempt funds that it receives from donations or from any other sources to provide

15 financial assistance or to coned the operating deficits that it has caused at the Park by its

16 mismanagement. Defendants have caused services to be drastically curtailed and furthermore,

17 Plaintiffs are informed and believe and on that basis allege that the Park budget is actually being

18 used to clear the site for development. The Series D bonds were not retired as part of the 2007

19 bond issue in spite of the fact that they bear interest at 9%.

20 36. Defendant Kenyan purported to act as attorney for Defendant FAC Ito advise the

21 Park Residents throughout the purchase process. As such, Defendant Kenyan had a fiduciary

22 duty to explain to the Park Residents how the rent and occupancy restrictions as part of the tax-

23 exempt bond financing would affect each of them individually and the Park as a whole. Instead,

24 Defendant Kenyan advised the Park residents to commit to paying $90 to $100 of increased

25 monthly rent until 2007, with additional increases thereafter. Attached hereto as Exhibit "K" is a

26 true and correct copy of a letter dated March 27, 2002 from Defendant Kenyan to Park residents.

2718.



1 Defendant Kenyan failed to advise the Park residents that some of them should not commit to

2 paying any increased rent and that at least twenty percent (20%) of the Park residents would be

3 subject to mandatory rent control. Plaintiffs are informed and believe and on that basis allege

4 that many of the Park residents who committed to paying increased rent by $90 to $100 per

5 month in order to "participate" in the purchase of the Park by Defendant Line should have been

6 paying less rent pursuant to the terns of the mandatory rent and occupancy restrictions in the

7 Regulatory Agreement.

8 37. As compensation, Defendant Kenyan received a portion of the $2 4 million dollars

9 that was paid to the promoters of the project and he received a portion of the 2002 Series D

10 bonds paying interest at 9%, which bonds were not repaid or retired as part of the December

11 2007 refinance and are still outstanding. Defendant Kenyan's compensation in the form 9%

12 Series D bonds was not disclosed to Park residents until they obtained information about the

13 compensation of the promoters of the initial tax-exempt bond financing from the Daly City

14 Clerk's office in May 2009. Defendant Kenyan's compensation is and was excessive. Although

15 Defendant Kenyan continues to receive attorney's fees from the Park residents in the form of

16 debt service payments on the 9% Series D bonds that are still outstanding. However, there is no

17 indication that Defendant Kenyan ever advised the original Franciscan Acquisition Corporation,

18 or any subsequent Park residents' organization, about the importance of structuring the

19 transaction to obtain an exclusion nom property tax reassessment. Pursuant to Revenue &

20 Taxation Code section 62.2, ([the Park had been transferred to the FHC and membership

21 interests actually issued to the residents after the FHC's restated Articles were filed September

22 5, 2003 as promised, the Park would not have been reassessed for property tax purposes and

23 could have retained the much lower property tax basis of the prior owner of approximately

24 $11 million — and not the $33.5 million amount that Defendants have allowed the County of

25 San Mateo Assessor's Office to use. This has resulted in the Park residents being overcharged

26 for property tax expense.

2719.


Case5:10-cv-01087-JW Document46 Filed08/12110 Page20 of 47

1 38. Furthermore, Defendants Johnson, Line, Linc Franciscan LP and Franciscan Park

2 LLC have purposefully failed to repay the Series D bonds held by Defendant Kenyan in the

3 December 2007 refinance in spite of the fact that the Series D bonds accrue interest at the rate of

4 9%. Defendants and each of them and have failed to pay the principal payments required to

5 create the impression of a fiscal crisis to alarm the Park Residents in order to justify further rent

6 increases at the Park. Effective June 1, 2009, Defendants raised the monthly space rents at the

7 Park by $50 per month for every resident — without regard for the rent and occupancy restrictions

8 in the Regulatory Agreement. Defendants claimed that interest income on reserve accounts had

9 decreased which required a rent increase. A majority of the Park residents petitioned the City of

10 Daly City Rent Review Commission seeking to rescind the rent increase. Commission hearings

11 were held on March 23, March 29, April 1, May 25, June 3 and July 7, 2010. Attached hereto as

12 Exhibit "L" is a true and correct copy of the Commission hearing transcript from July 7, 2010,

13 containing the findings of the Commissioners. Of the five Commissioners, one (Rebecca Clark)

14 was an employee of Line Housing Corporation and the other (Jean Haynor) was a Park resident,

15 but not a representative of any resident organization. The other three Commissioners were not

16 affiliated with the Park. Two of the three at-large Commissioners (George Mockridge and Jonah

17 Chew) found that the $50 rent increase should be eliminated. (July 7, 2010 transcript at 434:25-

18 435:8; 441:1-443:19) The third at-large Commissioner (Mary Ellen Scherer) found that Park

19 resident testimony that management did not even have money for a bucket of paint justified

20 keeping the rent increase in place as "this project is barely standing on its own here." (July 7,

21 2010 transcript at 457:8-14) Commissioner Hayner noted that the park management could not

22 even afford to paint the gazebo. (July 7, 2010 transcript at 458:9-11) Commissioner Mockridge

23 noted, "Make no mistake, I've looked through the financials and this park has financial troubles.

24 And you know, without — without the substantial portion of the rent increase being maintained,

25 there is going to be a significant cutback in services or even it's possible that the bond could be

26 defaulted upon." (July 7, 2010 transcript at 459:20-460:2) The budget information submitted by

2720.



1 Defendants Linc, Johnson, CFH, CFH, Franciscan Park LLC, and Linc Franciscan LP, and

2 presumably Defendant PWM to the Rent Review Commission for the May 25, 2010 and June 2,

3 2010 hearings is attached hereto as Exhibit "M". Defendants' budget information represents to

4 the Commission that without the rent increase there will be no funds to pay the 9% Series D

5 bonds principal or interest. However, when asked by Park Residents if the 9% Series D bonds

6 can be refinanced to a more reasonable rate in line with current interest rates in order to reduce

7 the operating expenses of the Park, Defendant Johnson replies, "No" — with no explanation.

8 39. Defendants and each of them are conspiring to operate the Park in a fiscally unsound

9 manner to justify a sale of the Park to a third-party for profit developer to use the 50-acre parcel

10 of land for purposes other than a mobile home park. On or about November 2009, Plaintiffs

11 discovered that Defendants Johnson, Linc, and CFH have sold many of their other senior and

12 low-income projects to for-profit entities after causing them to be over leveraged from repeated

13 tax-exempt bond issues. As of December 31, 2004, December CFH owned 6 projects which

14 included five senior housing projects and a project called Tahquitz in Palm Springs. (See Exhibit

15 "E," CFH's 2004 Financial Statements at p. 17) Each project's debt level greatly exceeded the

16 value of its assets. Combined, the total assets of the project were $41,980,468 and the total

17 liabilities were $73,071,194. Defendant CFH had refinanced the senior housing projects in 1999

18 with tax-exempt bond financing which resulted in excessive debt for each project. (See Ex. "E,"

19 Note 3 to the CFH 2004 Financial Statement) In October 2005, as a result of being over-

20 leveraged, Defendant CFH sold the five senior housing projects. (See Ex. "I") Defendant CFH

21 profited from the sales transaction and profited nom the retirement of the bonds associated with

22 the projects. Thereafter, in November 2008, Defendant CFH sold the Tahquitz in Palm Springs

23 project to a for-profit entity. (See Ex. "J") In 2008, Defendant CFH gave $521,681 of its tax-

24 exempt resources to the Tahquitz Court Housing Partners LP to offset the project's debt level

25 before it transferred to a for-profit entity in November 2008. (See Ex. "A," Schedule Ito CFH

26 Form 990 for 2008) Yet, Defendant CFH apparently had no funds available to offset the June 1,

2721.



1 2009, $50 rent increase that has burdened Plaintiffs. On July 7, 2010, Commissioner and Line

2 Housing employee Rebecca Clark stated on the record that "this is a business. Even though it's

3 not [sic] run by a nonprofit, it has to stand on its own. And anyone who's in the ownership and

4 management industry will tell you the same thing And so I do believe that the $50 rent increase

5 is justified, because without which the property will be insolvent." "So the question that I have

6 is: Without the rent increase, does this property go into bankruptcy or become insolvent? I

7 believe that that's what we're being asked to consider. I know it's a very difficult pill." (Ex. "L,"

8 July 7, 2010 transcript at 438:21-439:2 & 440:9-13) Defendants and each of them failed to

9 disclose in the official Statement dated December 5, 2007, that future rent increases would be

10 required at the Park in order to avoid insolvency and bankruptcy.

11 40. The 2008 Form 990 for CFH for the period January 1, 2008 through December 31,

12 2008 consolidates the Park's finances into its books. (See, Ex. "A," Part X "Balance Sheet", p.

13 11) However, the Park's balance sheet for the period ending December 31, 2008 shows the cash

14 account at $67,126, while CFH's balance sheet for the period ending December 31, 2008 shows

15 CFH's cash account to be $1,852,373. Attached hereto as Ex. "N" is a true and correct copy of

16 the Franciscan Park, LLC Balance Sheets for December 31, 2009 and 2008. CFH uses all of the

17 Park's numbers from its balance sheet and consolidates and incorporates them into CFH's

18 Balance Sheet on its Form 990. The savings and temporary cash investments amount for CFH is

19 the exact amount of trust funds and replacement reserves reported by the Park in its Balance

20 Sheet. As of December 31, 2008, CFH had ample funds available to ensure that the Park could

21 operate in a solvent manner without unduly burdensome rent increases. Defendants refuse to

22 provide a detailed accounting of the reserve accounts with the supporting bank statements, and as

23 such, Plaintiffs are informed and believe, on the basis of discrepancies in the sources and uses of

24 funds from the 2007 Official Statement with the amounts reported on the Park's financial

25 statements, that Defendants freely transfer the Park's funds into CFH accounts and then claim

26 that the Park does not have sufficient funds to buy a can of paint to paint the Gazebo at the Park.

2722.



1 (See Ex. "L" Jean Haynor comments in July 7, 2010 transcript)

2 41. Furthermore, in 2008 Defendant CFH chose to use its tax-exempt funds to reduce the

3 debt levels of the Tahquitz project that was being transferred to a for-profit owner, rather than

4 fulfill its obligation to use its tax-exempt funds for affordable housing at the Park. CFH instead

5 chose to impose a $50 monthly rent increase to all of the Residents at the Park, without regard to

6 the rent and occupancy restrictions in the Regulatory Agreement that are a condition of obtaining

7 tax-exempt bond financing and that have been recorded as restrictive covenants against the Park

8 property. Attached hereto as Ex. "0" is a true and correct copy of the calculations for

9 determining the maximum rental levels for very low income Park residents. The June 1, 2009

10 $50 rent increase caused the monthly rental income of many of the Park's very low income

11 residents to exceed the limit imposed by the Regulatory Agreement. In spite of repeated

12 complaints by Plaintiffs and other Park residents to Defendants Daly City Housing Development

13 Finance Agency & Berger and Defendants Line (including at City Council meetings, particularly

14 June 6, 2009, and in meetings with Berger and the other Defendants in December 2009 and

15 January 2010, as well as at each and every rent review commission hearing in 2010), CFH, FHC,

16 Johnson, Franciscan Park LLC, and Line Franciscan, LP, all of the aforementioned Defendants

17 completely ignore the continuing violation by Defendants of the Regulatory Agreement. Instead

18 Defendants propose to implement further rent increases at the Park — further violating the

19 Regulatory Agreement.

20 42. Plaintiffs seek damages and restitution including amounts for excessive property

21 taxes and property tax penalties and interest paid to the County of San Mateo for the unpaid

22 property tax accruing from 2002 through 2006; fo excessive rents paid by Park residents to

23 Defendants from 2002 through the present in an amount to be determined according to proof, for

24 excessive fees paid to Defendants for project management fees, promotion fees, asset

25 management fees; for reduction of services suffered by the Park residents; and for diminution in

26 value of each Park residents' mobile home as a result of Defendant's wrongful actions, all in an

2723.



1 amount according to proof Furthermore, as a direct, legal and proximate result of Defendants

2 intentional and fraudulent conduct alleged herein below, Plaintiffs are entitled to punitive

3 damages. Plaintiffs' seek cancellation of the 2002 Series "D" bonds that were issued to

4 Defendant Kenyan. Plaintiffs' seek removal of Defendants Johnson, Line and CFH from any

5 management role of the Park and a refund of all fees, disclosed and undisclosed, paid to said

6 Defendants from 2002 to the present. Plaintiffs' seek appointment of a receiver to manage the

7 property pending establishment of and transfer of the Park to a resident-owned and managed

8 501(c)(3) entity. See Seal Beach Shores, Inc. announcement attached hereto as Exhibit "P."

9 CLASS ACTION ALLEGATIONS

10 43. Plaintiffs bring this class action pursuant to Federal Rules of Civil Procedure 23 on

11 behalf of a class consisting of all current and former residents of the Franciscan Mobile Home

12 Park ("Park") residing at the Park from April 1, 2002 to the present. The initial delineation of the

13 subclasses of the class include all residents defined as "very low income" pursuant to the

14 Regulatory Agreement governing the rent and occupancy restrictions mandated for the Park as a

15 condition of the tax-exempt bond financing. These "very low income" had a right to occupy at

16 least twenty percent (20%) of the spaces at the Park and to receive reduced rent pursuant to the

17 terms of the Regulatory Agreement. Another subclass is all residents who paid $1,000 for an

18 ownership interest in the Park and whose money was never refunded. The class definition will

19 be further defined in Plaintiffs' motion for class certification, in which Plaintiffs may establish

20 the need for additional or fewer subclasses based on information obtained through discovery.

21 44. The wrongful acts or omissions were and are a uniform practice that affected all

22 putative class members in substantially similar ways. Defendants, by their practices and policies,

23 have violated the rights of the Park residents by violating the terms of the occupancy and rent

24 restrictions set forth in the Regulatory Agreement as well as by urmecessarily increasing Park

25 expenses in order to justify rent increases. The questions raised are therefore of common or

26 general interest to the class members, and they have a well-defined community of interest in the

2724.



1 questions of law and fact raised in this action. The only recognizable difference between class

2 members will be the amounts owed to each individual member.

3 45. There are 501 spaces in the Park that are continuously rented to individuals and

4 family who lease their spaces and either own or rent their mobile homes that occupy the space.

5 The occupancy rate has been nearly 100% since the beginning of the Class Period. These

6 individuals have been subject to Defendants' unlawful and wrongful practices, and their

7 numerosity makes it impractical to bring them all before this forum, and disposition oftheir

8 claims in a class action is a benefit to the parties and to the court.

9 46. A class action is superior to other available means for the fair and efficient

10 adjudication of this controversy. Individual joinder of all class members is not practicable, and

11 questions of law and fact common to the class predominate over any questions affecting only

12 individual members of the class. Each member of the class has been damaged and is entitled to

13 recover. Class action treatment will allow those similarly situated persons to litigate their claims

14 in the marmer that is most efficient and economical for the parties and the judicial system.

15 47. A class action is appropriate because Plaintiffi' and class members' damages,

16 although by no means inconsequential, do not rise to the level to make prosecution of individual

17 claims economically feasible for Plaintiffs and the large number of class members. The burden

18 and expense of individual litigation makes it economically unfeasible, for both the parties and the

19 Court, for the members of the class to seek redress other than through a class action.

20 Consequently, there would be a failure of justice but for the maintenance of the present class

21 action.

22 48. Plaintiffs know of no difficulty that will be encountered in the management of this

23 litigation that would preclude its maintenance as a class action.

24 49. Plaintiffs have incurred and, during the pendency of this action, will incur attorneys'

25 fees and costs. Such attorneys' fees and costs are necessary for the prosecution of this action and

26 will result in a benefit to the class.

2725.



1 50. Defendants were aware of the facts herein alleged at the time they failed to perform

2 the duties alleged herein.

3 51. The names and addresses of the persons who are members of the class are available

4 from Defendants' records and are therefore known to Defendants. Notice can be provided to the

5 members of the class by mail, or by techniques and a form of notice similar to those customarily

6 used in class actions under California law, with the costs of any notice to be borne by

7 Defendants.

8 52. The Defendants' unlawful acts and unfair trade practices have affected all members

9 of the Class in a similar manner. Among the questions of law and fact common to the Class are

10 whether Defendants have committed actual fraud through misrepresentations, false promises and

11 tortious concealment of material facts with respect to the class; and whether Defendants have

12 violated California law, including California's unfair competition laws, Business and Professions

13 Code §§ 17200 et seq. based on their violations of California law.

14 53. Plaintiffs' claims are typical of those of the Class they seek to represent because

15 Plaintiffs and all members of the Class were injured and/or continue to be injured in the same

16 manner by Defendants' illegal acts and practices, and other wrongful conduct complained of

17 herein.

18 54. Plaintiffs will fully and adequately protect the interests of all members of the Class.

19 Plaintiffs have no interests that are adverse to or in conflict with other members of the Class with

20 respect to any of the claims asserted herein.

21 FIRST CAUSE OF ACTION

22 (Securities & Exchange Act of 1934, Section 10(b), Rule 10(b)(5))

23 55. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though fully

24 set forth herein and further alleges as follows.

25 56. The anti-fraud provisions of Section 10(b) of the Securities and Exchange Act of

26 1934, 15 U.S.C. §78a et seq. and the rules and regulations promulgated thereunder, including

2726.



1 Rule 10b-5 make it unlawful for any person to employ any device, scheme, or artifice to

2 defraud or to engage in any act, practice, or course of business which operates or would

3 operate as a fraud or deceit upon any person in connection with the purchase or sale of any

4 security. Municipal securities are not exempt from the basic anti-fraud provisions of the

5 federal securities laws.

6 57. Material misrepresentations and omissions: Defendants and each of them, acting

7 individually and pursuant to a scheme and conspiracy, directly and indirectly, caused the Park on

8 behalf of the Park residents to cause to be purchased and sold tax-exempt, municipal securities

9 based upon Defendants' false representations about the ownership and management of the Park.

1 0 Defendants circulated or disseminated information that falsely described Defendants' intentions

1 1 in relation to the Park and its residents. Defendants knew or had reason to believe that their

12 statements were false or misleading in light of the circumstances under which they were made.

13 Plaintiffs relied on the misrepresentations in supporting Defendants' purchase of the Park

1 4 ostensibly on their behalf These material misrepresentations and omissions, include, but are not

15 limited to:

1 6 Misrepresentations by Defendants Johnson, on behalf of himself and on the other

17 Defendants Line, CFH, Line Franciscan LP, FHC, Franciscan Park LLC in the form of signing a

1 8 Cooperation Agreement, made statements that made in CFH's 2004 financial statements,

1 9 statements made to the Park resident at Park meetings; Misrepresentations by Defendants Daly

2 0 City Housing Development Finance Agency and Berger, Misrepresentations by Defendants

2 1 Kenyon and Franciscan Acquisition Corporation:

22 a. That Plaintiffs would have ownership rights in the Park (See Exs. "F," "B" "D" "E");

23 b. That Plaintiffs would have management rights in the Park (See Exs. "F," "B" "D"

24 "E");

25 c. That Defendants would operate the Park in a fiscally prudent manner (See Exs. "F,"

26 "B" "D"

2727.



1 d. That Defendants would pay the Park expenses in a timely manner, including but not

2 limited to the annual property taxes on the 50-acre parcel of land, APN 011-331-150 (See Exs.

3 "A" -

4 e. That Defendants would ensure that the assessed value for property tax purposes on the

5 50-acre parcel of land, APN 011-331-150 would be accurate (See Exs. "A" - "0");;

6 f. That Defendants would ensure that the Park financial statements would be accurate and

7 not incorrectly restate and inflate the historical cost of the 50-acre parcel of land, APN 011-331-

8 150 from the $18 5 million purchase price to a higher arbitrary value and that is not in

9 accordance with generally accepted accounting principles (See Exs. "A" - "0");

10 g. That Defendants would not overburden the Park with debt based upon false pretenses

11 (See Exs. "A" - "0");

12 h. That Defendants would use fiscally sound methods in negotiating the extension of the

13 groundlease on the 20-acre parcel and not spend Park money frivolously (See Exs. "A" - "0");

14 i. That Defendants would disclose to the Park residents all sources of income Defendants

15 earn from the Park and would not participate in hidden kickback schemes (See Exs. "A" - "0");

16 j. That Defendants would endeavor to keep the Park budget in check by having the

17 property manager pay the salaries of its employees and not forcing the Park to pay the salaries of

18 the property manager's employees (See Exs. "A" - "0");

19 k. That Defendants would scrupulously abide by the terms of the Regulatory Agreement

20 including but not limited to the rent and occupancy restrictions so that low income residents

21 could actually benefit from the program (See Exs. "C"& "0");;

22 1. That Defendants would not withhold donated funds for low-income housing projects

23 from the Park residents because the Park isn't making enough money (See Ex. "A");

24 m. That Defendants would not cut services to pay for their own mismanagement of the

25 Park budget (See Exs. "A" - "O");

26 n. That Defendants would not plan to develop the Park for other for-profit uses and use

2728.



1 the Park budget for actual site development activities (See Exs. "A" - "0");

2 o. That Defendants would not purposefully over-leverage the Park for their own

3 prospective for-profit future uses. (See Exs. "A" - "0");

4 Omissions: At the time of making the statements and committing the acts alleged above,

5 Plaintiffs are informed and believes that Defendants, and each of them, failed to disclose to

6 Plaintiffs numerous material facts, including, but not limited to, the following -

7 a. That Defendants actually had no intention of permitting Plaintiffs to have any

8 ownership rights in the Park at any time in the future;

9 b. That Defendants actually had no intention of permitting Plaintiffs to have any

10 management rights in the Park, but if Defendants had accomplished the transfer of the Park to

11 FHC and issued membership interests in a timely manner, the Park's property could have been

12 excluded from property reassessment, thereby saving hundreds of thousands of dollars each year

13 from the Park's budget and alleviating the need for any rent increase. Defendant Johnson failed

14 to disclose this fact; Defendants Line, CFH, Line Franciscan LP, Franciscan Park, LLC & FHC

15 failed to disclose this fact; Defendant Berger failed to disclose this fact; Defendant Daly City

16 Housing Development Finance Agency failed to disclose this fact; Defendant Kenyon failed to

17 disclose this fact and Defendant Franciscan Acquisition Corporation failed to disclose this fact;

18 c. That Defendants intended to operate the Park in such a fiscally improvident manner

19 that a bankruptcy filing was planned in conjunction with the 2007 bond issue;

20 d. That Defendants actually intended to not pay the property taxes on the 50-acre parcel

21 of land, APN 011-331-150 in order to create a fiscal crisis to justify loading the Park with $11

22 million in additional bond debt;

23 e. That Defendants were loading Park with debt and additional property tax bills from

24 inflated assessed values would further this purpose;

25 f. That Defendants would manipulate the Park financial statements to suit their purposes,

26 including reporting the land account at an arbitrary amount;

2729.



1 g. That Defendants would use false pretenses to overburden the Park with debt for their

2 own purposes;

3 h. That Defendants did not care about costs in operating the Park or in negotiating the

4 lease extension on the 20-acre parcel;

5 i. That Defendants would intentionally hide from the Park residents all sources of income

6 Defendants earn from the Park including the hidden kickback schemes;

7 j. That Defendants would load the Park budget with excessive and duplicative

8 management and asset management fees and ensure that the property manager passed on its

9 salary expense to the Park residents;

1 0 k. That Defendants would ignore the rent and occupancy restrictions in the Regulatory

1 1 Agreement so that low income residents would not actually benefit from the program;

12 1. That Defendants would not abide by its tax-exempt purposes and would instead

13 withhold donated funds that might otherwise benefit Park residents;

1 4 m. That Defendants would drastically cut services to pay for their own mismanagement

15 of the Park budget;

1 6 n. That Defendants would blatantly pursue site development activities using the Park

17 budget;

1 8 o. That Defendants want the Park to fail so they can sell it for development and/or

1 9 develop it for other "affordable housing."

2 0 58. Defendants and each of them have knowingly provided substantial assistance to the

2 1 other Defendants.

22 59. Seienter Plaintiffs have only recently discovered the wrongful state of mind of

23 Defendant Johnson in permitting the costs of the Park to be needlessly excessive to justify adding

2 4 additional tax exempt bond debt to the Park budget, adding further unnecessary costs, and failing

25 to control the property tax costs at the Park by pursuing means of exclusion from reassessment,

26 insuring that the assessed value of the real property is based on actual cost of the property and not

2730.



1 an improper amount. Defendants Line, CFH, Line Franciscan LP, and Franciscan Park, LLC

2 have shown the same wrongful intentions to the Park residents by taking all of the actions alleged

3 in this entire First Amended Complaint so that they could control the Park property to the

4 exclusion and to the detriment of the Park residents. Defendants have exhibited their wrongful

5 intent by raising the space rents of the Park residents to pay for the unnecessary costs and by

6 announcing further future rent increases. Defendants have exhibited their wrongful intent by

7 passing themselves off as a non-profit dedicated to preserving and maintaining affordable

8 housing, but their true intention is to run the mobile home park out of business and then

9 redevelop the land for their own development projects — all to the detriment of the Park residents.

10 Defendants Berger and Defendant Daly City Housing Development Finance Agency have

11 exhibited their wrongful intent by facilitating the tax-exempt bond financing, with full

12 knowledge that the December 13,2007 refinance was causing the Park to take on too much debt,

13 and with the intention that the Park would fail so the land could be used for other development

14 projects. They have also exhibited their wrongful intent by repeatedly failing to investigate and

15 take appropriate action against the violations of the rent and occupancy restrictions in the

16 Regulatory Agreement which are a prerequisite to the tax-exempt bond financing used and which

17 are covenants and restrictions against the Park property. Defendant Kenyon has exhibits his

18 wrongful intent by charging excessive compensation, and allowing the 9% Series D bonds to be

19 used as a pawn by the other Defendants to create the impression of a fiscal crisis at the Park in

20 order to justify the rent increases imposed by the other Defendants. Defendant Franciscan

21 Acquisition Corporation had wrongful intent by not protecting the interests of the Park residents

22 and instead permitting its successor resident's groups to be manipulated by Defendants Johnson,

23 Line, CFH, Line Franciscan LP, Franciscan Park LLC, CFH, Berger, Daly City Housing

24 Development Finance Agency and Kenyon.

25 60. Connection with purchase or sale of a security: Defendants' scheme is directly

26 connected with the issuance of the tax exempt bonds by Defendant Daly City Housing

2731.



1 Development Finance Agency in April 2002 and again on December 13, 2007. Defendant

2 Corporate Fund for House, which is the effective owner of the Park, worked on behalf of

3 Defendant Daly City Housing Development Finance Agency to issue the tax exempt bonds.

4 Defendant Line used the Series D 9% bonds to compensate the attorney for Defendant Franciscan

5 Acquisition Corporation on behalf of the Park residents. The scheme to take over the Park

6 property as alleged in the entirety of this First Amended Complaint is directly connected with the

7 issuance of these tax exempt bonds.

8 61. Reliance: The Park residents relied on the material misrepresentations and omissions

9 made by Defendants and each of them in their decision to "participate" in the initial acquisition

10 which enabled Defendants to effectuate their tax-exempt bond financing scheme.

11 62. Economic Loss: The Park residents have suffered economic loss because the current

12 state of the Park budget requires rent increases to make the project sustainable which directly

13 depresses the value of each Park resident's mobile home investment.

14 63. Loss Causation: There is a causal connection between the actions ofDefendants in

15 misrepresenting themselves as working towards preserving affordable housing in Daly City in

16 terms of purchasing the land underlying the Park and using it to create a non-profit corporation

17 with Park resident membership and the actual result of Defendants retaining control of the Park,

18 grossly mismanaging the Park's assets, incurring excessive costs, and raising the rent, and

19 creating a financial structure that will likely require future rent increases.

20 64. As a direct and proximate result of the wrongful conduct of Defendants and each of

21 them, Plaintiffs have sustained economic losses and other general and special damages, as set

22 forth in Paragraph 42 above, and in an amount to be determined according to proof at the time of

23 trial.

24 SECOND CAUSE OF ACTION

25 (Fraud and Deceit)


2732.




2 66. Defendants, and each of them, made material misrepresentations and omissions to

3 Plaintiffs which were false and misleading, including those contained in public statements,

4 financial statements, registration statements, offering documents and other disclosures made by

5 Defendants, described above. Commencing in or about September 2001 and continuing through

6 the present, Defendants, and each of them, have made numerous untrue statements regarding

7 material facts including, but not limited to, the following:

8 a. That Plaintiffs would have ownership rights in the Park;

9 b. That Plaintiffs would have management rights in the Park;

10 c. That Defendants would operate the Park in a fiscally prudent manner;

11 d. That Defendants would pay the Park expenses in a timely manner, including but not

12 limited to the annual property taxes on the 50-acre parcel of land, APN 011-331-150;

13 e. That Defendants would ensure that the assessed value for property tax purposes on the

14 50-acre parcel of land, APN 011-331-150 would be accurate;

15 f. That Defendants would ensure that the Park financial statements would be accurate and

1 6 not incorrectly restate and inflate the historical cost of the 50-acre parcel of land, APN 011-331-

1 7 150 from the $18 5 million purchase price to a higher arbitrary value and that is not in

1 8 accordance with generally accepted accounting principles;

19 g. That Defendants would not overburden the Park with debt based upon false pretenses;

20 h. That Defendants would use fiscally sound methods in negotiating the extension of the

2 1 groundlease on the 20-acre parcel and not spend Park money frivolously;

22 i. That Defendants would disclose to the Park residents all sources of income Defendant

23 earn from the Park and would not participate in hidden kickback schemes;

24 j. That Defendants would endeavor to keep the Park budget in check by having the

25 property manager pay the salaries of its employees and not forcing the Park to pay the salaries of

2 6 the property manager's employees;

2733.



1 k. That Defendants would scrupulously abide by the terms of the Regulatory Agreement

2 including but not limited to the rent and occupancy restrictions so that low income residents

3 could actually benefit from the program;

4 1. That Defendants would not withhold donated funds for low-income housing projects

5 from the Park residents because the Park isn't making enough money;

6 m. That Defendants would not cut services to pay for their own mismanagement of the

7 Park budget;

8 n. That Defendants would not plan to develop the Park for other for-profit uses and use

9 the Park budget for actual site development activities;

1 0 o. That Defendants would not purposefully over-leverage the Park for their own

11 prospective for-profit future uses.

12 67. At the time of making the statements and committing the acts alleged above,

13 Plaintiffs are informed and believes that Defendants, and each of them, failed to disclose to

1 4 Plaintiffs numerous material facts, including, but not limited to, the following:

15 a. That Defendants actually had no intention of permitting Plaintiffs to have any

1 6 ownership rights in the Park at any time in the future;

17 b. That Defendants actually had no intention of permitting Plaintiffs to have any

1 8 management rights in the Park;

1 9 c. That Defendants intended to operate the Park in such a fiscally improvident manner

20 that a bankruptcy filing was planned in conjunction with the 2007 bond issue;

2 1 d. That Defendants actually intended to not pay the property taxes on the 50-acre parcel

22 of land, APN 011-331-150 in order to create a fiscal crisis to justify loading the Park with $11

23 million in additional bond debt;

2 4 e. That Defendants were loading Park with debt and additional property tax bills from

25 inflated assessed values would further this purpose;

2 6 f. That Defendants would manipulate the Park financial statements to suit their purposes,

2734.



1 including reporting the land account at an arbitrary amount;

2 g. That Defendants would use false pretenses to overburden the Park with debt for their

3 own purposes;

4 h. That Defendants did not care about costs in operating the Park or in negotiating the

5 lease extension on the 20-acre parcel;

6 i. That Defendants would intentionally hide from the Park residents all sources of income

7 Defendants earn from the Park including the hidden kickback schemes;

8 j. That Defendants would load the Park budget with excessive and duplicative

9 management and asset management fees and ensure that the property manager passed on its

1 0 salary expense to the Park residents;

1 1 k. That Defendants would ignore the rent and occupancy restrictions in the Regulatory

1 2 Agreement so that low income residents would not actually benefit from the program;

1 3 1. That Defendants would not abide by its tax-exempt purposes and would instead

1 4 withhold donated finds that might otherwise benefit Park residents;

1 5 m. That Defendants would drastically cut services to pay for their own mismanagement

1 6 of the Park budget;

1 7 n. That Defendants would blatantly pursue site development activities using the Park

1 8 budget;

1 9 o. That Defendants want the Park to fail so they can sell it for development.

20 68. When Defendants, and each of them, made the representations and failed to

2 1 disclose and suppressed information they had a duty to disclose, as set forth herein, Defendants

22 had knowledge of the falsity of their statements and representations and knew that they were

23 failing to disclose material facts which they had a duty to disclose.

2 4 69. Defendants made the misrepresentations and omitted the material facts with the

25 intent to defraud Plaintiffs and to induce Plaintiffs to consent to the issuance of the tax-exempt

2 6 bonds to purchase the land underlying the Park.

2735.



1 70. When Defendants, and each of them, made the representations and failed to

2 disclose and suppressed information they had a duty to disclose, as set forth herein, Defendants

3 had knowledge of the falsity of their statements and representations and knew that they were

4 failing to disclose material facts which they had a duty to disclose.

5 71. Defendants made the misrepresentations and omitted the material facts with the

6 intent to defraud Plaintiffs and to induce Plaintiffs to consent to the issuance of the tax-exempt

7 bonds and to retain Defendants to own and operate the Park on behalf of Park residents.

8 72. At the time these misrepresentations were made hand the material facts not

9 disclosed and at the time that Plaintiffs took the actions herein alleged, Plaintiffs were ignorant

10 of the true facts. If Plaintiff had known the true facts, they would not have done business with

11 Defendants.

12 73. Plaintiffs reasonably relied on these representations and their reliance was justified

13 since the Defendants concealed the true facts.

14 74. Defendants knew that a fraud was occurring in the representations about the

15 purchase of the Park. Notwithstanding their knowledge of this improper and unlawful conduct,

16 these Defendants, and each of them, engaged in conduct herein described which rendered

17 substantial assistance to, encouraged and/or aided and abetted the fraud.

18 75. With knowledge of the unlawful purpose of the fraud, Defendants, and each of

19 them, entered into an agreement to accomplish the aforesaid scheme, and by their actions took

20 steps to further that scheme.

21 76. As a direct and proximate result of the wrongful conduct of each of the Defendants,

22 Plaintiffs have suffered and will continue to suffer economic losses and other general and

23 specific damages, all in an amount as set forth in Paragraph 42, above and to be determined

24 according to proof at trial.

25 77. The aforementioned acts of Defendants, and each of them, were done maliciously,

26 oppressively, and with intent to defraud, and Plaintiffs are entitled to punitive and exemplary

2736.



1 damages in an amount to be shown according to proof at the time of trial.

2 THIRD CAUSE OF ACTION

3 (Conspiracy to Commit Fraud)



6 79. Defendants, and each of them, engaged in conduct, herein described above which

7 rendered substantial assistance to, encouraged and/or aided and abetted the others' conduct.

8 80. As a direct and proximate result of the wrongful conduct of each of the Defendants,

9 Plaintiffs have suffered and will continue to suffer economic losses and other general and


11 according to proof at trial.

12 FOURTH CAUSE OF ACTION

13 (Negligent Misrepresentation)



16 82. Defendants negligently made the aforementioned statements and omissions and

17 acted in the marmer described above without reasonable grounds for believing that said

18 statements, omissions and conduct were truthful.

19 83. As a direct, foreseeable and proximate result of each of Defendants' wrongful acts,

20 Plaintiffs have been damaged and will continue to suffer economic losses and other general and


22 according to proof, and as set forth hereinabove.

23 FIFTH CAUSE OF ACTION

24 (Breach of Fiduciary Duty)



2737.



1 85. At all times mentioned herein, Defendant Johnson, Defendant Berger and

2 Defendant Kenyan were fiduciaries with respect to Plaintiffs and they owed a fiduciary duty to

3 Plaintiffs not to do anything that would injure the interests of Plaintiffs.

4 86. Defendant Johnson, Defendant Berger and Defendant Kenyan breached their

5 fiduciary duties to Plaintiffs. Defendant Johnson breached his fiduciary duties by so

6 controlling Defendants Line, CFH, Line Franciscan LP, Franciscan Park, LLC, and FHC to

7 overleverage the Park and cause the Park to incur excessive and unnecessary penalties to the

8 County of San Mateo and by causing the Park to pay excessive and duplicative property

9 management, asset management, and financing fees, by causing the Park residents to pay

1 0 excessive rent, and by preventing the Park residents from having any ownership interest in the

11 Park or any influence in management of the Park. Defendant Berger breached his fiduciary

12 duty to Plaintiffs but permitting Defendant Johnson to operate without any oversight, in spite

13 of the fact that Defendant Johnson appointed Defendant Berger to be a director of Defendant

14 Line and an officer of Defendant FHC. Defendant Berger did not even discover the unpaid

15 property tax issue until the fall of 2006.

16 87. Defendant Kenyan breached his fiduciary duty to Plaintiffs by encouraging them to

17 commit to increased rental payments without consideration of the mandatory rent and

18 occupancy restrictions imposed as a condition of the tax-exempt bond financing, by

19 encouraging Plaintiff to participate in an "ownership" scheme in which the Park residents

20 would not end up owning anything and would be saddled with ever increasing debt, and by

21 overcharging for his services without frilly disclosing the nature and extent of said

22 compensation to Park residents.

23 88. As a direct and proximate result of said breach of fiduciary duty on the part of

24 Defendant Johnson, Defendant Berger and Defendant Kenyan, Plaintiffs have sustained

25 damages, costs and expenses in ways and means not completely known, but which will be

26 established according to proof at the time of trial, and as described in paragraph 42, above.

2738.



1 SIXTH CAUSE OF ACTION

2 (Breach of Contract)



5 90. Plaintiffs had a written contract with Defendants, (see Exhibit "D" attached) and/or

6 were third party beneficiaries of a written contract with Defendants that Defendants would

7 transfer legal title to the Park to an entity controlled by Park residents immediately, and that

8 would permit Park residents to manage the Park. Defends entered into a Regulatory Agreement

9 and agreed to abide by the terms of the rent and occupancy restrictions set forth in the Regulatory

10 Agreement (see Exhibit "C" attached).

11 91. Defendants breached that agreement by refusing to transfer legal title to the Park to

12 an entity controlled by Park residents and has refused to permit Park residents to manage the

13 Park. Defendants breached the agreement by refusing to abide by the rent and occupancy

1 4 restrictions set forth in the Regulatory Agreement.

15 92. As a result of the breach of the written contract, Plaintiffs have been damaged in an

1 6 amount as set forth above in Paragraph 42, and as to be proven at triaL

17 SEVENTH CAUSE OF ACTION

1 8 (Negligence)


2 0 set forth herein and further alleges as follows.

21 94. Defendants, and each of them, owed a duty to Plaintiffs and Park residents to

22 operate the Park in a fiscally prudent manner and to not make material misrepresentations and

23 omissions to Plaintiffs and Park residents which were false and misleading, including those

2 4 contained in public statements, financial statements, registration statements, offering

25 documents and other disclosures made by Defendants, described above.

26 95. Defendants breached their duty as alleged herein in a manner that rises to the level

2739.



1 of gross negligence and that deviates from their authorized purposes.

2 96. As a direct, foreseeable and proximate result of each of Defendants' wrongful acts,

3 Plaintiffs have been damaged and will continue to suffer economic losses and other general and


5 according to proof, and as set forth hereinabove.

6 EIGHTH CAUSE OF ACTION

7 (Unfair Competition Law, Bus. & Prof. Code § 17200 et seq.)



10 98. Plaintiffs are informed and believe and on that basis alleges that Defendants, and

11 each of them, engaged in a pattern of unlawful activities, including violation of all applicable

12 laws, treaties and conventions of international trade, and including violations prohibiting false

13 advertising, all in furtherance of their business activities and in violation of Business and

14 Professions Code Section 17200 et seq.

15 99. As the conduct of Defendants is in violation of numerous statutes, regulations, public

16 policies and is immoral, unethical, oppressive, unscrupulous and substantially injurious to the

17 general public, such conduct amounts to unlawful, unfair and/or fraudulent business acts or

18 practices as those terms have been defined in and interpreted to apply to Business and

19 Professions Code section 17200 et seq.

20 100. The officers, directors and/or managing agents of Cross-Defendants had actual

21 knowledge that the conduct, practices and policies alleged above were illegal, against public

22 policy, immoral, unethical, oppressive, unscrupulous and substantially injurious to the general

23 public and in violation of the unfair business practices under the Business and Professions Code

24 section 17200, et seq., but nevertheless authorized and/or ratified the conduct, practices and

25 policies with conscious disregard of the rights of Plaintiffs, and knowing that Plaintiffs would be

26 severely injured (financially and otherwise) as a result thereof

2740.



1 101. As a direct and proximate result of Defendants' actions, Plaintiffs have suffered

2 damages in an amount to be determined according to proof, and as described in paragraph 40,

3 above, and they are entitled to restitution, disgorgement of profits, and injunctive relief, as well

4 as recovery of attorney's fees pursuant to Code of Civil Procedure section 1021.5 under the

5 private attorney general theory for the enforcement of an important right affecting the public

6 interest.

7 NINTH CAUSE OF ACTION

8 (Dissolution of Corporation, Corp. §§ 6510 et seq.)

9 102. Plaintiffs incorporate and reallege each of the foregoing paragraphs as though

10 fully set forth herein and further alleges as follows.

11 103. As alleged above, Defendant Franciscan Housing Corporation ("Defendant FHC")

12 is a nonprofit public benefit corporation that was organized under the laws of the State of

13 California on July 15, 2002. Pursuant to the First Amended and restated Articles of

14 Incorporation field September 5, 2003, the corporation is empowered to own real property and

15 to have members as provided in the bylaws.

16 103. Plaintiffs are informed and believe and on that basis alleged that Defendant FHC

17 is nothing but a sham entity to enable Defendant Johnson and Defendant Line to appear to Park

18 Residents that they have an interest in the Park. However, Defendant Johnson is the President

19 and Defendant Berger of the City of Daly City is the Secretary and there are no Park members

20 who are officers or on the board of directors.

21 105. California Corporations Code section 6410(b)(5) authorizes involuntary dissolution

22 of a nonprofit public benefit corporation when those in control of the corporation have been

23 guilty of or have knowingly countenanced persistent and pervasive fraud, mismanagement or

24 abuse of authority or persistent unfairness toward any member or the coiporation's property is

25 being misapplied or wasted by its directors or officers.

26 106. All of the Park residents should have membership interests in Defendant FHC or

2741.



1 alternatively at a minimum all of the initial "participating tenants" who agreed to a $90-$100

2 rent increase at the inception should have been granted membership interests in Defendant

3 FHC. In fact, the title to the Park has never been transferred to Defendant FHC and

4 Defendants Johnson, Linc and Berger have made no effort to obtain a determination letter from

5 the Internal Revenue Service or the Franchise Tax Board that Defendant FHC is a 501(c)(3)

6 tax-exempt entity that would be qualified to hold title to the Park. Furthermore, membership

7 interests have never been offered to any residents of the Park. Plaintiffs have standing under

8 the Corporations Code to seek involuntary dissolution of Defendant FHC since Defendants'

9 fraudulent conduct has prevented them from benefitting from the voting rights they would have

10 obtained if they had been given membership interests in the nonprofit entity that would own

11 the Park as initially promised by Defendant.

12 107. Defendant FHC should be ordered dissolved and it should be ordered to cease

13 doing business and to cease holding meetings.

14 TENTH CAUSE OF ACTION

15 (Constructive Trust)



18 109. By reason of the fraudulent and otherwise wrongful manner in which the

19 Defendants, or any of them, obtained their alleged right, claim or interest in and to the property

20 comprising the Park, Defendants and each of them, have no legal or equitable right, claim or

21 interest therein, but instead Defendants and each of them are involuntary trustees holding said

22 property and profits therefrom in constructive trust for Plaintiffs individually and on behalf of

23 all others similarly situated, with the duty to convey the same to Plaintiffs forthwith.

24 110. Plaintiffs, individually and on behalf of all others similarly situated, claim a

25 present right to title and possession of the real property comprising the Park.

26

2742.



1 ELEVENTH CAUSE OF ACTION

2 (Specific Performance)



5 112. Plaintiffs seek and order enforcing the terms of the Cooperation Agreement

6 attached hereto as Exhibit "B" and fully incorporated herein by reference such that the Park is

7 transferred to an entity qualified under Internal Revenue Code section 501(c)(3) as a tax-

8 exempt nonprofit owned by the Park residents to hold title to and operate the Park for the

9 benefit of the Park residents. Plaintiffs seek an order that due to the wrongful conduct of

1 0 Defendants Johnson, Line, Line Franciscan L.P., Franciscan Park, LLC, or Pacific West

11 Management that they have no further involvement or management over any aspect of the

12 Park.

13 TWELFTH CAUSE OF ACTION

1 4 (Financial Elder Abuse - California Welfare and Institutions Code § 15610.30)


1 6 set forth herein and further alleges as follows.

17 114. Many of the Park residents are elderly and are over the age of 65.

18 115. As alleged above, Defendants' fiscal abuse and failure to abide by the rent and

1 9 occupancy controls set forth in the Regulatory Agreement have caused the elderly Park residents

2 0 to suffer financial injury and emotional distress. Defendants' conduct was done with malice,

21 oppression, fraud and recklessness within the meaning of Welfare and Institutions Code section

22 15657.

23 116. As a legal and proximate result of the acts and omissions alleged herein, Plaintiffs

2 4 have incurred damages as alleged in Paragraph 42, above.

25

26

2743.



1 THIRTEENTH CAUSE OF ACTION

2 (Violation of California Health and Safety Code § 34377.6)



5 118. California Health & Safety Code section 34377.6 requires the Defendant Daly City

6 Housing Development Finance Agency to promptly investigate complaints concerning violations

7 of the restrictions imposed pursuant to Section 34377.2, and make a report to the complaining

8 party on whether the violation existed and whether it persists, and if it persists, what action the

9 authority will take to remedy the violation. When the authority determines that a violation exists,

1 0 whether determined upon an investigation of a complaint or on its own motion, the authority

11 shall take all appropriate action, including necessary legal action, to promptly eliminate the

12 violation.

13 119. Defendant Daly City Housing Development Finance Agency and Defendant Berger

1 4 who is head of said Agency have received repeated complaints from Plaintiffs and others

15 concerning violations of the restrictions imposed pursuant to Section 34377.2, but have failed to

1 6 take any action.

17 120. Plaintiffs and each of them have been aggrieved by violations of the restrictions

18 imposed pursuant to Section 34377.2 and they seek a judicial remedy pursuant to section 34377.2

1 9 which authorizes a private right of action without regard to whether a complaint has been made

2 0 to the agency or whether the agency is then taking any action to remedy the violation.


22 have incurred damages as alleged in Paragraph 42, above.

23 FOURTEENTH CAUSE OF ACTION

2 4 (Retaliation - Violation of First Amendment)


2 6 fully set forth herein and further alleges as follows.

2744.



1 123. As a consequence of Plaintiffs complaining about management's abuses at the

2 Franciscan Mobile Home Park as set forth in the complaint and challenging the rent increases

3 imposed by Defendants Line Housing Corporation, Corporate Fund for Housing, Franciscan

4 Housing Corporation, Line Franciscan Limited Partnership, and Pacific West Management,

5 said Defendants have engaged in a course of retaliatory actions designed to further intimidate

6 and financially oppress the Park residents.

7 124. These actions include recently serving seven-day notices to resident to perform

8 expensive repairs on their mobile homes or face eviction. Many of the residents are low-

9 income or seniors who are not able to afford these upgrades. Furthermore, residents desiring to

10 sell their mobile homes are now required by Defendants to make costly upgrades to their

11 mobile homes prior to the sale. This effectively traps lower income residents who want to

12 leave due to the high rents, but now can not afford the upgrades that Defendants now

13 arbitrarily impose as a condition of approving a transfer of the space, but instead face

14 foreclosure and eviction.

15 125. Management has even forced residents to remove religious emblems and the

16 American flag from their homes in violation of the First Amendment to the United States

17 Constitution.


19 have incurred damages as alleged in Paragraph 42, above.

20 WHEREFORE, Plaintiffs pray for relief against Defendants, and each of them, as set

21 forth below:

22 1. Certifying this action to proceed as a class action pursuant to Federal Rules of Civil

23 Procedure 23 and designating Plaintiffs as the representatives of the Class and their legal

24 counsel as counsel for the Class;

25 2. Compensatory and general damages according to proof;

26 3. Special damages according to proof;

2745.



1 4. Restitution according to proof;

2 5. Injunctive relief;

3 6. For a declaration that Defendants hold the Park as constructive trustees for the

4 benefit of Plaintiffs, individually and on behalf of all others similarly situated;

5 7. Order dissolving corporate entity as to Defendant FHC;

6 8. Appointment of a receiver;

7 9. Order enforcing the terms of the Cooperation Agreement to transfer the Park to an

8 entity qualified under Internal Revenue Code section 501(c)(3) as a tax-exempt nonprofit

9 owned by the Park residents to hold title to and operate the Park for the benefit of the Park

1 0 residents and removing Defendants Johnson, Line, Line Franciscan L.P., Franciscan Park,

11 LLC, and Pacific West Management from the management and operation of the Park;

12 10. Order enforcing the rent and occupancy restrictions of the regulatory agreement;

13 11. Prejudgment interest at the maximum legal rate;

14 12. Punitive and exemplary damages according to proof;

15 13. Costs of suit;

16 14. Reasonable attorney's fees;

17 15. Order cancelling 2002 Series "D" bonds; and

18 16. Such other and further relief as the court deems proper.

19

20 DATED: August 10, 2010 /s/ Shelley S. Buchanan

21 SHELLEY S. BUCHANAN,Attorney for Plaintiffs,

22 FRANCISCAN RESIDENT ADVISORYCOMMITTEE, et al.

23

24

25

26

2746.



1 DEMAND FOR JURY TRIAL

2

3 Plaintiffs, FRANCISCAN RESIDENT ADVISORY COMMITTEE (formerly known

4 as FRANCISCAN MOBILE HOME OWNERS FOR JUSTICE), ROSEND 0 QUINIQUINI,

5 RORY MORDINOIA, ROBERT QUINN, SANDRA HOLMAN, and MAMIE ZHU hereby

6 demand a jury trial as provided by Rule 38(a) of the Federal Rules of Civil Procedure.

7

8 DATED: August 10, 2010 /s/ Shelley S. Buchanan

9 SHELLEY S. BUCHANAN,Attorney for Plaintiffs,

10 FRANCISCAN RESIDENT ADVISORYCOMMITTEE, et al.

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2747.


Ca se5:10-cv-01087-JW Document46-1 Filed08/12/10 Pagel of 37

EXHIBIT "A"

_„.. _os&,21.6-

990 Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page2 1 f 37n_ . _ —MB No 1545.0047Form

Return of Organization Exempt From Income Tax 2008 _Under section 501(c), 527, or 4947(aX1) of the Internal Revenue Code

(except black lung benefit trust or private foundation) KL,..;,-Lni,;;OnS12W;WW1Department of the Treasury tlkIltint. Ppirlw-cx : ATFA,Tyttil.,k+ sktliInternal Revenue Service • The organization may have to use a copy of this return to satisfy state reporting requirements. Open4oc.taiiblit Inspection“..;.tstAime,.t.n.kvax.asvalri

For the 2008 calendar year, or tax year beginning , 2008, and endingB Check if applicable: D Employer Identification Number

Address change %Mean°1

Initial return

CORPORATE FUND FOR HOUSING=,",:. 110 PINE AVENUE #500

so* LONG BEACH, CA 90802specificinstruc-

Termination lions,

Amended return

95-3935881 Name change E Telephone number

562-684-1100

G Gross receipts $ 13 798,374. Application pending F Name and address of principal officer: HUNTER L. JOHNSON H(a) Is this group return for affiliates? Yes X No

SAME AS C ABOVE

H(b) Are all affiliates included? Yes— NoIf 'No; attach a list. (see instructions)

I Tax-exempt status X 501(c) ( 3 ) 4ii (insert no.) 4947(a)(1) or 527 J Website: • WWW . LINCHOUSING . ORG H(c) Group exemption number • K Type of organization: XI Corporation r Trust 1 Association I - Other • I L Year of Forma ion: 1984 j m State of legal domicile: CA [fa del Summary

I Briefly describe the organization's mission or most significant activities: PROVISION OF SENIDR AND LOW INCOME _ _O AFEQ_IWAFIE _HOLISDID _19_ MEDI it gal_Viaaloa,_ _CQ.REQSATE JIM Ea liQU,S.111G_ IS. AN _Qw.NEE._ _ _c _OE _A.140.2.1-LE _HOU, 211,131C. MD_ IS_ A_RARTNER_III_EARMIERSELIRS_EROVIDING_ AEF_ORDARLE, _?O 110 USING _Ilg _FifIRTHERANCE _OF_ ITS_ EUREGSE... IQ. LESSON. _TBE _BDP,DENS. _OF _GOVT. -

2 Check this box n if the organization discontinued its operations or disposed of more than 25% of its assets.o 3 Number of voting members of the governing body (Part VI, line la) RECEVED 3 16 eaO 4 Number of independent voting members of the governing body (Part VI, line 113),Itiney nsnares.ofm.. 4 16 0,...- 5 Total number of employees (Part V, line 2a) 5 0 i 6 Total number of volunteers (estimate if necessary) NOV 1 8-2009 6 0 < 7a Total gross unrelated business revenue from Part VIII, line 12, column (C) 7a 0.

b Net unrelated business taxable income from Form 990-T, line 34n '' .,Z7 , -4' 7b 0. Chard! ile .tnPar Year Current Year

O 8 Contributions and grants (Part VIII, line 1h)2 9 Program service revenue (Part VIII, line 2g) 6,811,947. 7,055,537. 0.,r, 10 Investment income (Part VIII, column (A), lines 3, 4, and 7d) 307,082. 2,514,723. cc 11 Other revenue (Part VIII, column (A), lines 5, 6d, 8c, 9c, 10c, and 11e)

12 Total revenue — add lines 8 through 11 (must equal Part VIII, column (A), line 12) 7,119,029. 9,570,260. 13 Grants and similar amounts paid (Part IX, column (A), lines 1-3) 1,521,681. 14 Benefits paid to or for members (Part IX, column (A), line 4)

O 15 Salaries, other compensation, employee benefits (Part IX, column (A), lines 5-10) 344,418. CD'2 16a Professional fundraising fees (Part IX, column (A), line 11e)m

°- b IXTotal expenses (art , column (), line 25) n6 tl fd P l D laAglitMalgartarM17 Other expenses (Part IX, column (A), lines ha-lid, llf-24f) 13,293,559. 8,357,759. 18 Total expenses. Add lines 13-17 (must equal Part IX, column (A), line 25) 13,293,559. 10,223,858. 19 Revenue less expenses. Subtract line 18 from line 12 —6, 174, 530 . -653,598.

si Beginning of Year End of Year II 20 Total assets (Part X, line 16) 64,591,721. 63,572,931.

21 Total liabilities (Part X, line 26):I 70,887,296. 70,458,293.

2U. 22 Net assets or fund balances. Subtract line 21 from line 20 -6,295,575. -6,885,362. Ifla MIMI Signature Block

Vcg, revellisticic8,11044 1.6:g122 ttiot i hf igeD:xrer (other this rn egrcnArr gta accompanyingalt informationagoctrgexighnc statements, :V kg t

ottV of my knowledge and belief, it is

Sign nI

Here Signature of officer Date

ll"" HUNTER L. JOHNSON PRESIDENT & CEOType or print name and title.

Date Check if Preaarer's identifying number(see instructionS)

Paid Self.Preparer's t k I (3S 09 employed • X

Pre- signature 1" CHERI L. BOGGELN N/A

barers fum'snameOr BOGGELN & COMPANY, CPAse yours if self-

Only vcfprigsed ind 0.- 215 1/2 MAIN STREET ON • N/A ZIP + 4 ' HUNTINGTON BEACH CA 92648-5127 Phone no. f'' (714) 374-7434

May the IRS discuss this return with the preparer shown above? (see instructions) X Yes No BAA For Privacy Act and Paperwork Reduction Act Notice, see the separate instructions. 'MUCH& 12322/06 Form 990 (2008)

Fprm 990 (2008) CO ga§faki 905- it ge 70 'Kook tip o cum ent 46-1 Fi led08/1 2/10 Pa 8"-r04947.8 81 Page 2littffillINI Statement of Program Service Accomplishments (see instructions)

1 Briefly describe the organization's mission:SEE SCHEDULE 0

2 Did the organization undertake any significant program services during the year which were not listed on the priorForm 990 or 990-EZ ? Eli Yes X NoIf 'Yes, describe these new services on Schedule 0.

3 Did the organization cease conducting, or make significant changes in how it conducts, any program services L Yes El NoIf 'Yes,' describe these changes on Schedule 0.

4 Describe the exempt purpose achievements for each of the organization's three largest program services by expenses. Section 501(c)(3)and 501(c)(4) organizations and section 4947(a)(1) trusts are required to report the amount of grants and allocations to others, the totalexpenses, and revenue, if any, for ear)program service reported.

4a (Code: (Expenses $ 10,174,289, including grants of $ 1,521,681 . ) (Revenue $ 7 0 5 5 637 • )PROVISION OF SENIOR AND LOW INCOME AFFORDABLE HOUSING TO NEEDY INDIVIDUALS CORPORATE FUND FOR HOUSING IS AN OWNER OF A MOBILE HOME PARK AND IS A PARTNER IN PARTNERSHIPS . PROVIDING AFFORDABLE HOUSING IN FURTHERANCE OF ITS PURPOSE TO LESSON THE BURDENS OF GOVT

4b (Code: .cr:1.4) (Expenses $ including grants of $ ) (Revenue $

4c (Code: ) (Expenses $ including grants of $ ) (Revenue $

4d Other program services. (Describe in Schedule 0.)(Expenses $ including grants of $ ) (Revenue $

4e Total program service expenses n $ 10, 174,289. (Must equal Part IX, Line 25, column (a))

BAA TEEA0102L 12124/08 Form 990 (2008)

ICase5:10-cv-01087-JW Document46-1 Filed08/12/10 Page4 of 37 s

Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 3liFfaidlYakil Checklist of Required Schedules

Yes No

1 Is the organization described in section 501(c)(3) or 4947(a)(1) (other than a private foundation)? If 'Yes, complete 1111Schedule A.

2 Is the organization required to complete Schedule B, Schedule of Contributors' MIMI X

3 Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidatesfor public office? If 'Yes,' complete Schedule C, Part I X

4 Section 501(c)(3) organizations. Did the organization engage in lobbying activities? If Yes,' complete Schedule C, Part II SIM x5 Section 501(cX4), 501(cX5), and 501(cX6) organizations. Is the organization subject to the section 6033(e) notice and

reporting requirement and proxy tax? if 'Yes,' complete Schedule Co Part III .6 Did the organization maintain any donor advised funds or any accounts where donors have the right to provide advice

on the distribution or investment of amounts in such funds or accounts? If Yes, 'complete Schedule D, Part I X

7 Did the organization receive or hold a conservation easement, including easements to preserve open space, theenvironment, historic land areas or historic structures? If 'Yes,' complete Schedule D, Part II IIIII X

8 Did the organization maintain collections of works of art, historical treasures, or other similar assets? If 'Yes.'complete Schedule D, Part Ill 11111 X

9 Did the organization report an amount in Part X, line 21; serve as a custodian for amounts not listed in Part X;or provide credit counseling, debt management, credit repair, or debt negotiation services? If 'Yes,' completeSchedule Do Part IV III X

10 Did the organization hold assets in term, permanent, or quasi-endowments? If 'Yes,' complete Schedule D, Part V 10 MN X

11 Did the organization report an amount in Part X, lines 10, 12, 13, 15, or 25? If 'Yes,' complete Schedule D, Parts VI,VII, VIII, IX, or X as applicable

12 Did the organization receive an audited financial statement for the year for which it is completing this return that wasprepared in accordance with GAAP? If 'Yes,' complete Schedule D, Parts XI, XII, and XIII X

13 Is the organization a school described in section 170(b)(1)(A)(ii)? If 'Yes,' complete Schedule E MIN X14a Did the organization maintain an office, employees, or agents outside of the US 7 IrEl. X

I, Did the organization have aggregate revenues or expenses of more than $10,000 from grantmaking, fundraising,business, and program service activities outside the 1133 If 'Yes,' complete Schedule Fo Part I 111111 X

15 Did the organization report on Part IX, column (A), fine 3, more than $5,000 of grants or assistance to any organizationor entity located outside the United States? If 'Yes,' complete Schedule F, Part II X

16 Did the organization report on Part IX, column (A), line 3, more than $5,000 of aggregate grants or assistance toindividuals located outside the United States? If 'Yes, complete Schedule F, Part ill POI X

17 Did the organization report more than $15,000 on Part IX, column (A), line 11e? If 'Yes,' complete Schedule G, Part I . nom X18 Did the organization report more than $15,000 total on Part VIII, lines lc and 8a? If 'Yes,' complete Schedule G, Part II. Ella x19 Did the organization report more than $15,000 on Part VIII, line 9a? If 'Yes,' complete Schedule G, Part III Ell= x20 Did the organization operate one or more hospitals? If 'Yes,' complete Schedule H 20 Ell X21 Did the organization report more than $5,000 on Part IX, column (A), line 1? If 'Yes,' complete Schedule I, Parts land ll MEI22 Did the organization report more than $5,000 on Part IX, column (A), line 2? he 'Yes/ complete Schedule I, Parts land III MEI x23 Did the organization answer 'Yes' to Part VII, Section A, questions 3, 4, or 5? If 'Yes,' complete

Schedule _I 1111

24a Did the organization have a tax-exempt bond issue With an outstanding principal amount of more than $100,000as of the last day of the year, and that was issued after December 31, 2002? If 'Yes,' answer questions 246-24d andcomplete Schedule K. If 'No, 'go to question 25

b Did the organization invest any proceeds of tax-exempt bonds beyond a temporary period exception" 24b 1111 xc Did the organization maintain an escrow account other than a refunding escrow at any time during the year to defease

any tax-exempt bonds? Xd Did the organization act as an 'on behalf of' issuer for bonds outstanding at any time during the year" 24d Mil

25a Section 501(cX3) and 501(cX4) organizations. Did the organization engage in an excess benefit transaction with adisqualified person during the year? If Yes, complete Schedule L, Part I PEI X

b Did the organization become aware that it had engaged in an excess benefit transaction with a disqualified person froma prior year? If 'Yes,' complete Schedule L, Part I X

26 Was a loan to or by a current or former officer, director, trustee, key employee, highly compensated employee, ordisqualified person outstanding as of the end of the organization's tax year? If 'Yes,' complete Schedule L, Part ll INN X

27 Did the organization provide a grant or other assistance to an officer, director, trustee, key employee, or substantialcontributor, or to a person related to such an individual? If 'Yes,' complete Schedule 1, Part III 27 X

BAA Form 990 (2008)

TEEA0103L 10113/08

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page5 of 37Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 4rflaitiriq Checklist of Required Schedules (continued)

Yes No28 During the tax year, did any person who is a current or former officer, director, trustee, or key employee: ' Ksf- i v • .g"

gr" 0. ita Have a direct business relationship with the organization (other than as an officer, director, trustee, or employee),or an indirect business relationship through ownership of more than 35% in another entity (individually or collectively •with other person(s) listed in Part VII, Section A)? If 'Yes,' complete Schedule L, Part IV X

b Have a family member who had a direct or indirect business relationship with the organization? If 'Yes,' completeSchedule L, 'Part IVC serve as an officer, director, trustee, key employee, partner, or member of an entity (or a shareholder of a professionalcorporation) doing business with the organization? If 'Yes,' complete Schedule L, Part IV X

29 Did the organization receive more than $25,000 in non-cash contributions? If 'Yes,' complete Schedule M NI X

30 Did the organization receive contributions of art, historical treasures, or other similar assets, or qualified conservationcontributions? If 'Yes,' complete Schedule M 30 111 X

•

31 Did the organization liquidate, terminate, or dissolve and cease operations? If 'Yes,' complete Schedule N, Part I 1111 X

32 Did the organization sell, exchange, dispose of, or transfer more than 25% of its net assets? If 'Yes,' completeSchedule IV, Part II FIE X

33 Did the organization own 100% of an entity disregarded as separate from the organization under Regulations sections301.7701-2 and 301.7701-3? If 'Yes,' complete Schedule 12, Pad I

34 Was the organization related to any tax-exempt or taxable entity? If 'Yes,' complete Schedule R, Parts II, III, IV, and V,line I

35 Isart V,any re

lilne 2ated organization a controlled entity within the meaning of section 512(b)(13)? If 'Yes,' complete Schedule R,

P X

36 Section 5O1(c3)1 organizations. Did the organization make any transfers to an exempt non-charitable relatedorganization? If Yes, complete Schedule R, Part V. line 2 111111 X

37 Did the organization conduct more than 5% of its activities through an entity that is not a related organization and that istreated as a partnership for federal income tax purposes? If 'Yes,' complete Schedule F2, Part VI 37 X

BAA Form 990 (2008)

• •

TEEA01041 12118/08

_

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page6 of 37, .Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 5

h. Rik: :1V 1 1 Statements Regarding Other IRS Filings and Tax Compliance Yes No

I1 la Enter the number reported in Box 3 of form 1096, Annual Summary and Transmittal of US.1 Information Returns. Enter -0- if not applicable la 100 T.:4. ,..,. Ft, ‘:.

b Enter the number of Forms W-2G included in line 1a. Enter -0- if not applicable b t• ' ''' 44C Did the organization comply with backup withholding rules for reportable payments to vendo $ and reportable gaming A. 1 - , ‘ •

(gambling) winnings to prize winners ? lc2,1M. t A1 itvri2a Enter the number of employees reported on Form W-3, Transmittal of Wage and Tax Statements, filed for the

rilicalendar year ending with or within the year covered by this return I 2 a 0 E Ml

2b If at least one is reported on line 2a, did the organization file all required federal employment tax returns? 2 bNote. If the sum of lines 1a and 2a is greater than 250, you may be required to e-file this re urn, see instructions) P.A 2t!'..T,74

3a Did the organization have unrelated business gross income of $1,000 or more during the year covered bythis return ? X

1

b If 'Yes' has it filed a Form 990•T for this year? If 'No, provide an explanation in Schedule 0 3b11.14a At any time during the calendar year, did the organization have an interest in, or a signature or other authority over, a

financial account in a foreign country (such as a bank account, securities account, or other financial account)" X1 b If 'Yes,' enter the name of the foreign country: of ,4*-7

--:arI See the instructions for exceptions and filing requirements for Form TD F 90421, Report of Foreign Bank and . :?6, T44 1 5: " t•Financial Accounts. IC.,,eu ',i'kef-p.

5a Was the organization a party to a prohibited tax shelter transaction at any time during the tax year? r xb Did any taxable party notify the organization that it was or is a party to a prohibited tax shelter transaction' 5411 Xc If 'Yes,' to question 5a or 5b, did the organization file Form 8886-T, Disclosure by Tax-Exempt Entity Regarding IIIProhibited Tax Shelter Transaction?

6a Did the organization solicit any contributions that were not tax deductible" EMI xb If 'Yes,' did the organization include with every solicitation an express statement that such contributions or gifts were not

deductible' ....7 Organizations that may receive deductible contributions under section 170(c). nacte

a Did the organization provide goods or services in exchange for any quid pro quo contribution of more than $75" 7a Xb If 'Yes,' did the organization notify the donor of the value of the goods or services provided ? 7bas

, C Did the organization sell, exchange, or otherwise dispose of tangible personal property for which it was required to file nui Form 8282" X

d If 'Yes,* indicate the number of Forms 8282 filed during the year I 7d1 titf 111‘)TaL1111137,111

e Did the organization, during the year, receive any funds, directly or indirectly, to pay premiums on a personal1 benefit contract ? 7e Xf Did the organization, during the year, pay premiums, directly or indirectly, on a personal benefit contract' EOM xg For all contributions of qualified intellectual property, did the organization file Form 8899 as required" MIN X

Xh For all contributions of cars, boats, airplanes, and other vehicles, did the organization file a Form 1098-C as required? rim, 8 Section 501(cX3) and other sponsoring organizations maintaining donor advised funds and section 509(a)(3) ,tx, ,i'yt Vs *..1 supporting organizations. Did the supporting organization, or a fund maintained by a sponsoring organization, have

excess business holdings at any time during the year?9 Section 501(c)Q) and other sponsoring organizations maintaining donor advised funds.

a Did the organization make any taxable distributions under section 4966? r

b Did the organization make any distribution to a donor, donor advisor, or related person? 91Mi,t ,ei.,...t10 Section 501(cX7) organizations. Enter: f1A..,,,

f,44 it* afro tr'-liit.a Initiation fees and capital contributions included on Part VIII, line 12 10a 1A —4

xl.i re ;IS

b Gross Receipts, included on Form 990, Part VIII, line 12, for public use of club facilities.... 10 b l' eiv - Iti4,

e-f t t-- . , *

11 Section 501(cX12) organizations. Enter: 11,r 11;4- l'ff-.111.1.; . 4 1-. 1 ' p3 <a Gross income from other members or shareholders 11 a „tA

. b Gross income from other sources (Do not net amounts due or paid to other sources against IIamounts due or received from them.) 144 ' i , 't 'elif--

12 a Section 4947(aX1) non-exempt charitable trusts. Is the organization filing Form 990 in lieu of Form 1041 ? 1 2ab If 'Yes,' enter the amount of tax-exem • t interest received or accrued durin g the ear 12b rea:„11.•xxiiizix.'1'

BAA Form 990 (2008)

,,1,

I1

• , TEEAOI 051. 04/08/09

1 .

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page7 of 37Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 6VRaftWIM Governance, Management and Disclosure (Sections A, B, and C request information about policies not

required by the internal Revenue Code.) Section A. Governing Body and Management

Yes NoFor each 'Yes' response to lines 2-7b below, and for a 'No' response to lines 8 or 9b below, describe the circumstances,processes, or changes in Schedule a See instructions.

la Enter the number of voting members of the governing body la 16 44 •

b Enter the number of voting members that are independent lb 16VnkiS i2 Did any officer, director, trustee, or key employee have a family relationship or a business relationship 'with any other fr-fif-

officer, director, trustee or key employee ? 2 X

3 Did the organization delegate control over management duties customarily performed by or under the direct supervisionof officers, directors or trustees, or key employees to a management company or other person? X

4 Did the organization make any significant changes to its organizational documents a MI Xsince the prior Form 990 was filed?

5 Did the organization become aware during the year of a material diversion of the organization's assets? X6 Does the organization have members or stockholders ? MIN x7a Does the organization have members, stockholders, or other persons who may elect one or more members of the

governing body? Ell Xb Are any decisions of the governing body subject to approval by members, stockholders, or other persons? 7bli X

8 Did the organization contemporaneously document the meetings held or written actions undertaken during the year by )the following:

a The governing body? Ba Xb Each committee with authority to act on behalf of the governing body?

9a Does the organization have local chapters, branches, or affiliates ? xb If 'Yes,' does the organization have written policies and procedures governing the activities of such chapters, affiliates,

and branches to ensure their operations are consistent with those of the organization?10 Was a copy of the Form 990 provided to the organization's governing body before it was filed? All organizations must

describe in Schedule 0 the process, if an y, the organization uses to review the Form 990, SEE. SCHEDULE .0 10 11111 Is there any officer, director or trustee, or key employee listed in Part VII, Section A, who cannot be reached at the

organization's mailing address? If 'Yes,' provide the names and addresses in Schedule 0 11 X Section B. Policies

Yes No12a Does the organization have a written conflict of interest policy? If 'No,' go to line 13

b Are officers, directors or trustees, and key employees required to disclose annually interests that could give riseto conflicts?

c Does the organization regularly and consistently monitor and enforce compliance with the policy? If 'Yes,' describe inSchedule 0 how this is done SEE SCHEDULE Q X

13 Does the organization have a written whistleblower policy ?SEE SCHEDULE 0 14 Does the organization have a written document retention and destruction policy? ...5E.E SCREPULE.Q 14 X

15 Did the process for determining compensation of the following persons include a review and approval by independent ip4 ral Kinpersons, comparability data, and contemporaneous substantiation of the deliberation and decision: sali "SILL>

a The organization's CEO, Executive Director, or top management iSa Xb Other officers of key employees of the organization?..SEE.SCHEDULE 0 15b

Describe the process in Schedule 0. (see instructions)N _typt,

16a Did the organization invest in, contribute assets to, or participate in a joint venture or similar arrangement with a taxable a- -entity during the year? 6a X

f4(b If 'Yes,' has the organization adopted a written policy or procedure requiring the organization to evaluate its participation 4in joint venture arrangements under applicable federal tax law, and taken steps to safeguard the organization's exempt wes - =lawstatus with respect to such arrangements? 16b x

Section C. Disclosures 17 List the states with which a copy of this Form 990 is required to be filed h. CA 18 Section 6104 requires an organization to make its Forms 1023 (or 1024 if applicable), 990, and 990 .7 (501(c)(3)s only) available for public

inspection. Indicate how you Make these available. Check all that apply. Own website E Another's website ig Upon request

19 Describe in Schedule 0 whether (and if Scb_ hoiA the organ ization makes its governing documents, conflict of interest policy, and financialstatements available to the public. SEE SCHEDULE 0

20 State the name, physical address, and telephone number of the person who possesses the books and records of the organization:-KAREN MAESHIMA 110 PINE AVE#500 LONG BEACH CA 90802 562-684-1107

BAA Form 990 (2008)

TEEA01061 12118108

_

Case5:10-cv-01087-JW Document4611 Filed08/12/10 Page8 of 37•,

.Form 990 (2008) CORPORATE FUND FOR HOUSING 95-39 358 8 1 Page 7• PRItItYlltil Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated

Employees, and Independent Contractors Section A. Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees

1 a Complete this table for all persons required to be listed. Use Schedule J-2 if additional space is needed.

• List all of the organization's current officers, directors, trustees (whether individuals or organizations), regardless of amount ofcompensation, and current key employees. Enter -Of- in columns (D), (E), and (F) if no compensation was paid.

• List the organization's five current highest compensated employees (other than an officer, director, trustee, or key employee) whoreceived reportable compensation (Box 5 of Form W-2 and/or Box 7 of Form 1099-MISC) or more than $100,000 from the organization and anyrelated organizations.

• List all at the organization's former officers, key employees, and highest compensated employees who received more than $100,000 ofreportable compensation from the organization and any related organizations.

• List all of the organization's former directors or trustees that received, in the capacity as a former director or trustee of theorganization, more than $10,000 of reportable compensation from the organization and any related organizations.List persons in the following order: individual trustees or directors; institutional trustees; officers; key employees; highest compensatedemployees; and former such persons._

Check this box if the organization did not compensate any officer, director trustee, or key employee. (A) (8) (c) (D) (E) (F) .,

Name and Title Average Position check all that app y) Reportable Reportable Estimatedhours compensation from compensation from amount of other

per week 9, gf p,- ,, 1 . i the organization related organizations compensation.p., K . = a -c ta t& (W:2/1099.MISC) (W-2/10994AISC) Porn theh g: 4 g tyn a manizalion.qa P. R. 68

andmWedorganizationsg i 1 ig t ga

K YVONNE BRATHWAITH BURKEDIRECTOR 0.01 X 0. 0. 0. RICHARD N. BERGERDIRECTOR 0.01 X 0. 0. 0. EILEEN POLLLACK ERICKSONDIRECTOR 0.01 X 0. 0. O.

RICHARD L. GARCIADIRECTOR - 0.01 X 0. 0. 0. DEAN V. AMBROSESECRETARY 0.01 X O. 0. 0. PAUL M. NOWATKADIRECTOR 0.01 X X 0. O. 0. DEE HARDISONVICE PRESIDENT 0.01 X X O. 0. 0. ROBERT J NORRIS JR.TREASURER 0.01 X X 0. 0. 0. MARK PISANODIRECTOR 0.01 X 0. O. 0. MICHAEL GREYNALDDIRECTOR 0.01 X 0. 0. O. KIMBERLY SENTOVICHDIRECTOR 0.01 X 0. 0. 0. KENNETH J. SOFGEDIRECTOR 0.01 X 0. 0. 0. ELAINE M. WINERDIRECTOR 0.01 X 0. 0. JAMES R. WALTHERCHAIRMAN 0.01 X X O. 0. 0. ALTA DUKE .DIRECTOR 0.01 X O. O. 0. JAMES HEIMLERPAST CHAIR 0.01 X 0. O. 0. SUNY LAY CHANGVICE PRESIDENT 10 X 0. 160,696. 9,999. BAA MEA0107L Oa/WO Form 990 (2008)

•

• . Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page9 of 37

Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 8ilgatiV116 Section A. Officers Directors Trustees Ke Em . lo ees and Hi • hest Corn .ensated Em .lo ees cont.

(A) (B) (c) (D) (E) (F)Name and Title Average Posi ion (chec all that apply) Reportable Reportable Estimatedhours compensation from compensation from amount of other

per week 1 k a: R i IE g the organization related organizations coTrgrneton=

5 1 (Wi2/1099iMISE) (Wi2/1099iMISE)TT e 0, 0 organizationai § 4.1 and related9!.organizations

1 I i4 g

"g.

NINA DOOLEY VICE PRESIDENT 10 X 0. 143,096. 18,818. HUNTER L. JOHNSON PRESIDENT & CEO 10 X O. 265,015. 29,427.

lbTotal ... ... .. 0. 568,807. 58,244. 2 Total number of individuals (including those in la) who received more than $100,000 in reportable compensation from the

organization n 0 Yes No

3 Did the organization list any former officer, director or trustee, key employee, or highest compensated employeeon line la? If 'Yes,' complete Schedule J for such individual 3 X

4 For any individual listed on line la, is the sum of reportable compensation and other compensation from 4n"Sit , ht. ? , 4the organization and related organizations greater than $150,000? If 'Yes' complete Schedule J for suchindividual 4 X

-4 FM EfgA5 Did any person listed on tine la receive or accrue compensation from any unrelated organization for servicesrendered to the organization? If Yes,' complete Schedule J for such person 5 X

Section B. Independent Contractors 1 Complete this table for your five highest compensated independent contractors that received more than $100,000 ofcompensation from the organization.

(A) (B) (C)Name and business address Description of Services Compensation

NORTH AMERICAN PROTECT SERV 1445 E FOXWORTHY AVE 50-180 SAN JOSE, CA SECURITY 153,390.

NARDI ASSOCIATES LP 122 S VINE AVE ONTARIO, CA 91762 ARCHITECTURE 424,814.

COSTELLO'S TREE SERV 450 TARAVAL ST RMB 292 SAN FRAN, CA 94116 TREE REMOVAL 104,395.

CITY OF DALY 333-90TH STREET DALY CITY, CA 94015 WATER & TRASH 266,529.

PACIFIC WEST MANAGEMENT 15771 ROCKFIELD BLVD., SUITE 200 IRVINE, CA PROPERTY MANAGEMENT 526,133.

2 Total number of independent contractors (including those in 1) who received more than $100,000 in att,erki ., 4 ,..,. ncompensation from the organization I, 5

BAA TEEA0108t. 10/13/08 Form 990 (2008)

1

.

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Pagel 0 of 37• •

Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 9eliffliVIID Statement of Revenue

7( :7 ":4 (A) 03)(ted RC) (D)

ue11 114fri-- ;4 felts4 eS''' it M1 E 4 Unrt,Tr5)41'91 v*:#111.1-'•tiU:‘1" "M41. 4 t Total revenue Related or elaevenlc,s ttwfk =.` o:4 li triker ?al? 1. '4, jOE , . .. ', k* * .11,45.&:, if4 ''' exempt business excluded from taxNu/ r4.1p,,,,s, „ie.*: , ,,,, A T 1 r. q. 4 ,.., 4,44,4%,Hdr.i.,4.4arfril function revenue under sectionsVg*; - fir Altfa.' " v. '. ys ,`, ti , 4!:: , •:4-41-c-i. rfwv,..,:f 512, 513, or 514 revenuer , la Federated campaigns Eln 4 'citi!).*:rtlf ; ;74' ftl;M:ilt:.:P.,, . '"it}:442.40in ftn taxrAtA< = b Membership dues 0 SliAlkOrft74fiegtrffe Iii0fljr.C4Pitnacc R'IN c Fundraising events Er 1;....tRfit,49.Arelettt keeSitramiti :a.- -kykt ".:1-.1.1: 1.. tagfd Related t

ofiril9nG

E : eae organizations da u.04.4tlo,‘,;etro key-J*4zA

44o Silm..tiALs-:41-9-, it 4.4. go, a

gicS e Government grants (contributions) 1101 'L.).„,,..-.;thrsi-yektit. ,Inftti-wr:en" iksfr. :. (.454,f...e:rj_tiwAto-;;, r. m firt.474#41Vila 744;RIATtftfi.Maf '49*,idliffa W-4.04.03.41,0ii

.;:fIltal***.ill itt 44.34-3401 !.t.fa34 1̀/41,114a. ` T- 1 :).*.tA'S'et.ipi' f All other contributions gifts rants and_ similar amounts not Inc uded above ...5 w • • 1 ? s

grants Ill ...iii.aeLhAq„m .-, -,....,0,... :Atm i.. .r . a 110.4,--.-Lg-t- -/- . . Itt.:iv'tploNfivzofin

.fi

4 ..4i.* ..,.v1-c_e4i, ; ' v:v ..10.. -- .,..;. . 4 - ,zitI g g Noncash contribns included in Ins la if $ 'illVialt;?ai 11}4,411 ',‘°,' hiNfill ,•St1/4:.):c A' - ..'so ..A0 Er; ...- •;',:itt.::::-:lo b:.:„ -4.. t=-C. ,«mcn a h Total. Add lines la-if P. ,.

w Business Code i.M1111‘57.12 ?flat:VV. '?'.: ' .1.1"".?•41'.: t '41 --' 44' "k"3ZE 2a RENTAL INCOME 531110 7 055 537. 7 055 537.tu bid„ c59, d z e gg f All other program service revenue.... . . .• . Total. Add lines 2a-21 lo^ 7 055 537 . itt.. .7 +12M,; 1,"" ::'s A 4 ,.• *:fo,J ... rF.., 1.,tri-,

3 Investment income (including dividends, interest andother similar amounts) o. 11,688. 11,688.

4 Income from investment of tax-exempt bond proceeds • 138 138,184.,184 . 5 Royalties n

0) Real (11) Perwnal _ -../ .. ) TM' ..YEci,ti-,,fr6a Gross Rents

, ro,,,,, .4 . t,4 - ; w t v., u Tnv, ....zest. rir',.:,14 M, 4,. .t. .f 4 1.7 ' ' 1) --b Less: rental expenses. .4.?Ce -.7 . 7 :n44 7 '5,- ,.T.c.'..r1.41,../C ‘.:. ,ftitf:- ':i it: ,Al . 1.,ni....-9,

..-nmA , rk.:-.43, 1/4. . ... .c.. , i 3f., :,.sc-,44' - t -,:...jekf;r: i,ekvirokey%c Rental income or (loss) .... %yr smal.04: •;,,,c ,, ii,v, ha ,,. 4,.:4.4.. ,‘4,..z.t.-.:‘ ..mr,i As.... -ca uad Net rental income or (loss .

*.7PF*

e• YAWT:41%,, t,‘-.1 z:::::fr '0o=54.t4,?-= .7a Gross amount from sales of 01.1.1 ,c-cv , - tir. A17,1-tr sitc-'...fr,te.:- Czlikthe-At'IW ifi3O:i0V;W :thaassets other Nan inventory.. 6,592 965 . ,t_efe i*:f f.1.44".ki;fr;215S11 vstt Aiw, klitticriAb Less: cost or other basis . '..rfiti',4"1:14* i,Ziffecse tryazi; ott#44341

and sales expenses

4 , 228, 114 . trf,c,fswiev4).,- trit ioi:Ar ..f.m.‘ :f• 4'''' ta h '131i..14;4--1/4'--)g-' MOTTToWT-4-40tTk% 11...2enk..41 .:/lnig4t 'Aka. enatainli .1.rli..Cfefectilc Gain or (loss)... 2 364 851 . 71-4.4Q110.tht urwikfc-incd Net gain or (loss) IIP: 2 364,851. 2 364 851.

.„...... i. 4.. .. LT. I. , ":. ±.:„...' re c.4,4: }1:44 :::,:,„,8a Gross income from fundraising events , ifytiotrct rp, .46 fr3/4 qtnkliW- t4.9s:,, :.- leinnIciV. 4" . .fififfifpr. -41wo:1542 ,.. , 9 ,accinit vi .m. S.eAto° .o.,-.2.1-..*e

of contgN (not including. $ '''.."M`tic• .,:tz,:v5e,% ..;f.e-c,:4;;itk,,,4 40.,t.-•' :r.i.:*.t.a overt< wAnrt,,,v,,,,,*.. i5.1.4,o-tit*:41-4, .a f* siej4it": tirsr .7-4,4.; 4:41,10-ati;E contributions reported on line 1c) . I., 1,;:p..,.?...-r,,,,,,.. , .-4 .t..-14CrASI 4 r iti —"WA"'

cc See Part IV, line 18 a ,44-teitrodliv: "tr, '''''': k..itgin: 1'1,4719 -TitMj eltE . .'cavg:IT 4221.9EF. b Less: direct expenses b i4, ctsme-stfer:3: fto.:..mc,...rttg wait trr. threyii,trizes&rx.,0 .C Net income or (loss) from fundraising events ‘Sit.2 . .4.1in.r<s{c .4 5.;44, 44,‘;',.0.1,,t7.4 -42-4,:47.1 75. .1,.. #1/4 4,,t WiriP c49a Gross income from gaming activities. -;tril?:;.4.j.,, pV4 areAr4 h ,et4; m' WPWAcipt$See Part IV, line 19 a ,1'.4.',74,012:±..'2,..*:. :tt ..11,7:j a 4r '—'-‘,0 -0„ ,.-,

b Less: direct expenses b ziNalc'4faiifil; i-ii"...11titvitorg - tt,fif,- 121: A ahrfat ail tc Net income or (loss) from gaming activities n

*- 444., ; 7.;C,:o . . of.J;i4kiret- ' ..... r - ' '‘ICti.: 4 ±,,, ' Y ' rgzc,.., Q. rer. ,,P*..110a Gross sales of inventory, less returns rf , r.. .̀ Allf,n nenr.frf - f±-Inn... 1/41:-..04-=.&V,N,..00r7q.ot . A ..1. ' ' .7 f..,*,4 -*Sr - 1.4

h40c1and allowances a 'clf-,t'iSct-tit-t: 4-4-',4,"5"1":tri, '',11-,..)-14

itfr,co, ". l'=;4,'..°:"...)`-i9J.11-6'‘,t-i;O Less: cost of goods sold b rig...1,r‘4.4.:*.iv..Ctlesist, . MtPleki.W.,..hr2h? y. , "efrl. Tr '''' k7F**=4.:1-oaoth.,

c Net income or loss from sales of inventor P.

Miscellaneous Revenue Business C°d° 5.1±4i...tr112:11n.-2; '.4; iri..).z....t4fit..;'A"1/4 ek...464-tr, Sift/ P. n'To.t . te:4:1C,r.,11a

allb C d All other revenue e Total. Add lines 11a-11d n MrietacAii.g.tetalixie7/ it-41-Wilrei.'

12 Total Revenue. Add lines 1h, 2g, 3, 4, 5, 6d, 7d, Sc, 9c,10c, and lle 01" 9 570 260. 9 420 388. 0. 149,872.

BAA TEEA0109L 12/18/2008 Form 990 (2008)

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Pagel 1 of 37Fcfrm 990 (008) CORPORATE FUND FOR HOUSING 95-3935881 Page 10 IMMIX!' Statement of Functional Expenses

Section 501(cX3) and 501(cX4) organizations must complete all columns.All other organizations must complete column (A) but are not required to complete columns (B), (C), and (D).

(A) (B) (C) (D)Do not Include amounts reported on fines Total expenses Program service Management and Fundraising66, 76,86, 96, and 106 of Part WI expenses general expenses expenses

.rr "Init1 Grants and other assistance to governmentsS.and organizations in the U See Part IV, k'4, t , St* r:line 21 1 521 681. 1 521 681. vr, 4.11; M`6

t

. 2 Grants and other assistance to individuals in In , tlf% AWRraiWift

the U.S. See Part IV, line 22 ,3 Grants and other assistance to governments, sit,1*ot..,

organizations, and individuals outside the .n.J. -41,44111

e0444.614la`A:54;:ioU.S. See Part IV, lines 15 and 16 k,v•-*

4 Benefits paid to or for members .51 -4%.,..4,-t4.4444;:t4,t7-4,43;5 Compensation of current officers, directors,

trustees, and key employees 0 . 0. 0 . 0. 6 Compensation not included above, to

disqualified persons (as defined undersection 4958(0(1) and persons described insection 4958(c)(3)(B)

° • ° °0.

7 Other salaries and wages 281 610. 281 610: •8 Pension plan contributions (include section

401(k) and section 403(b) employercontributions)

9 Other employee benefits 47 490. 47 490. 10 Payroll taxes 15 318 . 15 318. 11 Fees for services (non-employees)

a Management 305 385. 305 385. b Legat 51 617. 51 617. c Accounting •9 181. 19 612. 49 569. d Lobbying e Prof fundraising svcs. See Part IV, In 17 /14,1:117M-r. I Investment management fees g Other 48 000. •8 000 .

12 Advertising and promotion 11 815. 11 815 . 13 Office expenses. 87 420. 87 420. 14 Information technology15 Royalties 16 Occupancy 1 528 858. 1 528 858. 17 Travel is Payments of travel or entertainment

expenses for any federal, state, or localpublic officials

19 Conferences, conventions, and meetings 20 Interest 3 569 647. 3 569 647. 21 Payments to affiliates 22 Depreciation, depletion, and amortization .... 794 294 . 794 294 . 23 Insurance •8 197. •68 197.24 Other expenses. Itemize expenses not V.Irr cierrijCwn."04< "e. ty.ivt:t ,... .t44-"1"----44. 4,44 . 4a9i,--‘15r--. 'c.v.-11 (4i ;14 v.4.4" 4"4 Vee r ie jarci,n'tA4.41**

0/14covered above. (Expenses grouped together nt.Itt ,Ififti..50N4‘I..0.311.60. ,iltaairk.t V.,r4-:.fl--;01...PAp .' sivtile-n- ttleaand labeled miscellaneous may not exceed 05.-iAl'aIE5Assmi.;11t' -44.".',P.selAristeac. Irt:"---?P.-29115% of total expenses shown on line 25 Kit..44A4,44tretreilt. .4-4.a.sektki#42444... "it4t*Sit ...eat4w...-11.

below ) 74'..Aska k .kkifttk' k 441 k 4 j SC.rt111;^a UTILITIES 884,064. 884,064. b OPERATIONS & MAINTENANCE 784,435. 784,435. c EARLY EXTINGUISHMENT OF DEBT 112,374. 112,374. d PERMITS & FEES 21,887. 21,887. e MISCELLANEOUS 20,585. 20,585. f All other expenses

25 Total functional expenses. Add lines 1 through 241 10,223,858. 10,174,289. 49,569. 0.

26 Joint Costs. Check here • L if followingSOP 98-2. Complete this line only if theorganization reported in column (B) jointcosts from a combined educationalcampaign and fundraising solicitation

BAA Form 990 (2008)

TEEA0110L 12119/08

,Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page12 of 37,

Form 990 (2008) CORPORATE FUND FOR HOUSING 95-3935881 Page 11 OAR; xiil Balance Sheet

(A) 010Beginning of year End of year

1 Cash - non-interest-bearing 379,952. 1 1,852,373. 2 Savings and temporary cash investments 6,901,154. 2 4,654,365. 3 Pledges and grants receivable, net 3 4 Accounts receivable, net 37,689. 4 31,157. 5 Receivables from current and former officers, directors, trustees, key employees,

. or other related parties. Complete Part II of Schedule L 5 6 Receivables from other disqualified persons (as defined under section 4958(0(1)) rar,`, 10 A:Z1 WIAT-g8wit:VAN

Aand persons described in section 4958(c)(3)(13). Complete Part II of Schedule L 6

S 7 Notes and loans receivable, net 7 SE 8 Inventories for sale or use 8 T$ 9 Prepaid expenses and deferred charges 521,523. 9 495,600. 10a Land, buildings, and equipment: cost basis 10a 56, 660, 667.

b Less: accumulated depreciation. Complete Part VI of';,t,..44;.:Schedule D 10b 3,401,982. 53,358,461. 10c 53,258,685.

11 Investments - publicly-traded securities 11 12 Investments - other securities See Part IV, line 11 12 13 Investments - program-related. See Part IV, line 11 13 14 Intangible assets 3,383,905. 14 3,271,714. 15 Other assets. See Part IV, line 11 9,037, 15 9,037. 16 Total assets. Add lines 1 through 15 (must equal line 34) 64,591,721. 16 63,572,931. 17 Accounts payable and accrued expenses 145,792. 17 601,852. 18 Grants payable 18 19 Deferred revenue 81,926. 19 71,355.

L1 20 Tax-exempt bond liabilities 60,915,000. 20 60,401,000. AEt 21 Escrow account liability. Complete Part IV of Schedule D 21 L 22 Payables to current and former officers, directors, trustees, key employees,1 highest compensated employees, and disqualified persons. Complete Part II V . licr: ."- a,

e..E. IL

tzTi of Schedule L 22 Es 23 Secured mortgages and notes payable to unrelated third parties 8,354,826. 23 4,937,915.

24 Unsecured notes and loans payable 24 25 Other liabilities. Complete Part X of Schedule D 1,389,752. 25 4,446,171. 26 Total liabilities. Add lines 17 throulih 25 70 887 296. 26 70 458 293.

P organizations that follow SFAS 117, check here n 13 and complete lines ,ii:et.ifro-..7 Aulic.ki,."T 27 through 29 and lines 33 and 34. U6kL.iicA00;:-.:47 4,19*1.*st,TP:t1J,,17,A 27 Unrestricted net assets -6,295,575. 27 -6,885,362. I 28 Temporarily restricted net assets 28

29 Permanently restricted net assets 29o -17m7771777;R Organizations that do not follow SFAS 117, check here 1,- 0 and complete ..;,:ai:r ,,,,,,v.„ E. 1412,,(4,, 52,rit frt. v

lines 30 through 34. --g,e-:144%.t?.; '.i..,60,1K.Z.X.AZ;114ga: ..atifilalk,3,444,,

i 30 Capital stock or trust principal, or current funds 30 2 31 Paid-in or capital surplus, or land, building, and equipment fund 31 k 32 Retained earnings, endowment, accumulated income, or other funds 32 NF 33 Total net assets or fund balances -6,295,575. 33 -6,885,362. g 34 Total liabilities and net assets/fund balances 64,591,721. 34 63,572,931.

1Frateexitil Financial Statements and Reporting Yes No

1 Accounting method used to prepare the Form 990: E Cash X Accrual E Other 04 ,P7,71 Vii2a Were the organization's financial statements compiled or reviewed by an independent accountant ? 2a X

h Were the organization's financial statements audited by an independent accountant' 2b1111 X

c If 'Yes' to 2a or 2b, does the organization have a committee that assumes responsibility for oversight of the audit, PIMreview, or compilation of its financial statements and selection of an independent accountant? 3a As a result of a federal award, was the organization required to undergo an audit or audits as set forth in the Single ism, Audit Act and OMB Circular A-133 7 X

b If 'Yes/ cid the undergo the required audit or audits ? 3bBAA Form 990 (2008)

TEEA01111 12122108

. , Dase5:10-cv-01087-JW Document46-1 Filed08/12/10 Pagel 3 of 37• 0Ma No. 1545-0047

(FSCHEDULE

990-EZ)A Public Charity Status and Public Support 2008 orm 990 or

1 To be completed by all section 501 (cX3) organizations and section 4947(a)(1)t'''''2(.•:.ti '' 'el ''';''''.';'' ' ' '?I tnonexempt charitable trusts. ,...:. ,0*.efu4o PafibIld r f

Department of the Treasury viszb inspectioInternal Revenue Service " Attach to Form 990 or Form 990-EZ. 0.- See separate instructions. •-e

'`4' Name of the organization Employer Identification number

CORPORATE FUND FOR HOUSING 95-3935881 ItralieRI Reason for Public Charity Status (All organizations must complete this part.) (see instructions) The 0 ganization is not a private foundation because it is: (Please check only one organization.)

1 A church, convention of churches or association of churches described in section 170(bX1XA)6).2 A school described in section 170(b)(1XA)(ii). (Attach Schedule E.)3 A hospital or cooperative hospital service organization described in section 170(b)(1XAX01). (Attach Schedule H.)4 A medical research organization operated in conjunction with a hospital described in section 170(bX1)(AXii1), Enter the hospital's

name, city, and state: 5 p An organization operated for the benefit of a college or university owned or operated by a governmental unit described in section

" 170(b)(1XAXiy). (Complete Part II.)6 A federal, state, or local government or governmental unit described in section 170(b)(1XAXv).7

An organization that normally receives a substantial part of its support from a governmental unit or from the general public describedin section 170(13X1XA)(yg. (Complete Part II.)

8 [ A community trust described in section 170(bX1XAXvi). (Complete Part II.)9 X An organization that normally receives: (1) more than 33-1/3 % of its support from contributions, membership fees, and gross receipts

from activities related to its exempt functions — subject to certain exceptions, and (2) no more than 33-1/3% of its support from grossinvestment income and unrelated business taxable income (less section 511 tax) from businesses acquired by the organization afterJune 30, 1975. See section 509(aX2). (Complete Part III.)

10

An organization organized and operated exclusively to test for public safety. See section 509(aX4). (see instructions)Ed11 An organization organized and operated exclusively for the benefit of, to perform the functions of, or carry out the purposes of one or

more publicly supported organizations described in section 509(a)(1) or section 509(a)(2). See section 509(aX3). Check the box thatdescribes the type of supporting organization and complete lines 11 e through 11h.a [Type I b [Type II , [ Type III — Functionally integrated d 0 Type III— Other

e9 By checking this box, I certify that the organization is not controlled directly or indirectly by one or more disqualified persons otherthan foundation managers and other than one or more publicly supported organizations described in section 509(a)(1) or section509(a)(2).

f If the organization received a written determination from the IRS that is a Type I, Type II or Type III supporting organization, Ercheck this box g Since August 17, 2006, has the organization accepted any gift or contribution from any of the following persons?

En No0) a person who directly or indirectly controls, either alone or together with persons described in (ii) and (iii) rim

below, the governing body of the supported organization'(ii) a family member of a person described in (i) above' Era0n) a 35% controlled entity of a person described in (i) or 01) above' CM=

h Provide the following information about the organizations the organization supports. rfi Name of Supported (ii)EIN Oil) Type of organization (iv) Is the (v) Did you notify (y1) Is the (vii) Amount of Su port

Organization (described on lines 1 . 9 organization in col the organization in organization in coi.above or IRC section (I) listed in your 1:01- 0) Of (1) organized in the(see instructions))

document?your s pport? U.S.?

Yes No Yes No Yes No

- ' -

_

4,-.....M' . .,,V :Cc.;., „ . '''; 'h -,40 i .., ' ' 9f 4., rvosg?-17: S75CI7:744S-CI WA: : , fttitgii., it& -5 a ti$." . ,,0 f * ," r t xi 'it pr '

Total .n, 1. 4Arp -$,Ak tr-sert44„ —ttittl . ;,tV, ‘Lesia:, , 411 .,,, Wrikal 4 wi :i

BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Schedule A (Form 990 or 990-EZ) 2008

TEEA04011 12/17/08

5

Case5:10-cv-01087 :JW Document46-1 Filed08/12/10 Pagel 4 of 37Schedule A (Form 990 or 990 -EZ) 2008 CORPORATE FUND FOR HOUSING 95-3 93 5 8 81 Page 2Fre0121Su pport Schedule for Organizations Described in Sections 170(bX1XAXiv) and 170(bX1)(AXvi)

(Complete only if you checked the box on line 5, 7, or 8 of Part I.) Section A. Public Support Calendar year (or fiscal yearbeginning In) 0. (a) 2004 (b) 2005 (c) 2006 (d) 2007 (e) 2008 (f) Total

1 Gifts, grants, contributions andmembership fees received. (Donot include 'unusual grants.')

2 Tax revenues levied for theorganization's benefit andeither paid to it or expendedon its behalf

3 The value of services orfacilities furnished to theorganization by a governmentalunit without charge. Do notinclude the value of services orfacilities generally furnished tothe public without charge

4 Total. Add lines 1-3 5 The portion of total :AI- • Iilii'fAnfr•aka 4 04 flit ' . AftW:dirsr :?1,0 .:341e,.. .22 ' ,fra-m

ktvrt ; t,"contributions by each person 74347±1.4. F(other than a governmental . 14te m.45.1.0 .2."4,At4- "r1:1:01444a 818,834 At. ,44"*r,

unit or publicly supported 4601,7c.tes- 44,,ftrz 0444

of the amount

-organization) included on line 1 1.,..,„,:.,:dtt„i.inyttr,..3"-kt,; ..A.5.i...44.4054.: 14'04 V' tdk . 'that exceeds 2% 7,r,fir.c,rassi; "4"5-c.,:epee.c; 444E*,shown on line 11, column (f) -t;a:

a/Vr';': '1 'Y-444 Wa8. 441* . - P .r.; 11/4'44 rellra8x4/2? 40,08 44 44'6 Public support. Subtract line 5 4,,,,,k9;,.;,f0,,,ieft.,

from line 4 4.7 88,7C/44-174.4:.;I:itn4a.M.4/4F); .trot,147'74,14qSection B. Total Support Calendar year (or fiscal year (a) 2004 (b) 2005 (c) 2006 (d) 2007 (e) 2008 (f) Totalbeginning in) •

7 Amounts from line 4 8 Gross income from interest,

dividends, payments receivedon securities loans, rents,royalties and income form

• similar sources 9 Net income form unrelated

business activities, whether ornot the business is regularlycarried on

10 Other income. Do not includegain or loss form the sale ofcapital assets (Explain inPart IV.)

1/".47.. 7-t -4; 7,17 14'4 41.,1•1",047^cne Vijit W.„11 Total support. Add lines 7 through 1Q .0,•;,•ifiliNnitlt" • Ifies:1-gett

12 Gross receipts from related activities, etc. (see instructions) I 12 13 First five years. If the Form 990 is for the organization's first, second third, fourth, or fifth tax year as a section 501(c)(3)

organization, check this box and stop here nSection C. Computation of Public Support Percentage 14 Public support percentage for 2008 (line 6, column (f) divided by line 11, column (f) 14 15 Public support percentage for 2007 Schedule A, Part IV-A, line 26f 15

16a 33-1/3 support test - 2008. If the organization did not check the box on line 13, and the line 14 is 33-1/3% or more, check this box•and stop here. The organization qualifies as a publicly supported organization

b 331/3 support test - 2007. If the organization did not check a box on line 13, or 16a, and line 15 is 33 - 1/3% or more, check this boxand stop here. The organization qualifies as a publicly supported organization E

174 10%-facts-and-circumstances test - 2008. If the organization did not check a box on line 13, 16a, or 16b, and line 14 is 10%or more, and if the organization meets the 'facts-and-circumstances' test, check this box and stop here. Explain in Part IV howthe organization meets the 'facts-and-circumstances' test. The organization qualifies as a publicly supported organization. E

b 10%-facts-and-circumstances test -2007. If the organization did not check a box on line 13, 16a, 16b, or 17a, and line 15 is 10%or more, and if the organization meets the 'facts-and-circumstances' test, check this box and stop here. Explain in Part IV how theorganization meets the 'facts-and-circumstances' test. The organization qualifies as a publicly supported organization

18 Private foundation. If the organization did not check a box on line, 13, 16a, 16b, 17a, or 17b, check this box and see instructions BAA Schedule A (Form 990 or 990-EZ) 2008

TEEA0402L 12117/08

- - -

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Pagel 5 of 37

Schedule A (Form 990 or 990-EZ) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 3PRAVIIM Support Schedule for Organizations Described in Section 509(aX2)

(Complete only if you checked the box on line 9 of Part I.) Section A. Public Support Calendar year (or fiscal yr beginning in) fr (a) 2004 (b) 2005 (c) 2006 (d) 2007 (e) 2008 (f) Total

1 Gifts, grants, contributions andmembership fees received. (Donot include 'unusual grants.') 0 .

2 Gross receipts fromadmissions, merchandise soldor services performed, orfacilities furnished in a activitythat is related to theorganization's tax-exemptpurpose 9,354,686. 11851634. 5,659,883. 6,725,907. 7,045,480. 40,637,590.

3 Gross receipts from activities that arenot an unrelated trade or businessunder section 513 O.

4 Tax revenues levied for the• organizations benefit and

either paid to or expended onits behalf O.

' 5 The value of services orfacilities furnished by agovernmental unit to theorganization without charge O.

6 Total. Add lines 1-5 9,354,686. 11851634. 5,659,883. 6,725,907. 7,045,480. 40,637,590. 7a Amounts included on lines 1,

2, 3 received from disqualifiedpersons O. O. O. O. O. O.

b Amounts included on lines 2and 3 received from other thandisqualified persons thatexceed the greater of 1% ofthe total of lines 9, 10c, 11,and 12 for the year or $5,000 O. O. O. O. O. O.

c Add lines 7a and 7h O. 0. O. O. 0. O.

8 Public support (Subtract line7c from line 6.) Zy.:Hrr.t?„;iy.)- - 41; 1' i-A r t,ejz. TIP4 40,637,590•

Section B. Total Support —Calendar year (or fiscal yr beginning in) • (a) 2004 (b) 2005 (c) 2006 (d) 2007 (e) 2008 (1)Total

9 Amounts from line 6 9,354,686. 11851634. 5,659,883. 6,725,907. 7,045,480. 40,637,590. 10a Gross income from interest,

dividends, payments receivedon securities loans, rents,royalties and income formsimilar sources 106,952. 506,877. 266,591. 304,274. 149,872. 1,334,566.

b Unrelated business taxableincome (less section 511taxes) from businessesacquired after June 30, 1975 0.

c Add lines 10a and 10b 106,952. 506,877. 266,591. 304,274. 149,872. 1,334,566. 11 Net income from unrelated business

activities not included inline 10b,whether or not the business isregularly carried on 0 .

12 Other income. Do not includegain or loss from the sale ofcapital assets (Explain inPart IV.) O.

13 Total support odd Ins 9, 10c, 11, and 129 camseich V=4704 MeaSaYg ,a4lia 41,972,156. 14 First five years. If the Form 990 is for the organization's first, second, third, fourth, or fifth tax year as a section 501(c)(3)

organization, check this box and stop here nSection C. Computation of Public Support Percentage 15 Public support percentage for 2008 (line 8, column (f) divided by line 13, column (0) 15 96.8%

16 Public support percentage from 2007 Schedule A, Part IV-A, line 27g 16 97.3 %

Section D. Computation of Investment Income Percentage 17 Investment income percentage for 2008 (line 10c, column (0 divided by line 13, column (0) 17 3.2 %

18 Investment income percentage from 2007 Schedule A, Part W-A, line 27h 18 2.7 %

19a 33-1/3 support tests —2008. If the organization did not check the box on line 14, and line 15 is more than 33-113%, and line 17 is notmore than 33-1/3%, check this box and stop here. The organization qualifies as a publicly supported organization

b 33-1/3 support tests —2007. If the organization did not check a box on line 14 or 19a, and line 16 is more than 33-1/3%, and line 18is not more than 33-1/3%, check this box and stop here. The organization qualifies as a publicly supported organization

20 Private foundation. If the organization did not check a box on line 14 19a or 19b check this box and see instructions BAA TEEA0403L 01/29/09 Schedule A (Form 990 or 990-EZ) 2008

Case5:10-cv-01087-JVV Document46-1 Filed08/12/10 Page16 of 37

Schedule A (Form 990 or 990-E7) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 4

*MIMI Supplemental Information. Complete this part to provide the explanation required by Part II, line 10;Part II, line 17a or 17b; or Part Ill, line 12. Provide any other additional information. (see instructions)

•

BAA TEEA0404 10/07/08 Schedule A (Form 990 or 990-EZ) 2008

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page17 of 3711

SCHEDULE D OMB No. 1545-0047

(Form 990) Supplemental Financial Statements 2008 Department or the Treasury Attach to Form 990. To be completed by organizations that felitliiMabiielInternal Revenue Service answered *Yes; to Form 990, Part IV, lines 6, 7, 8, 9, 10, 11, or 12. kirtsrre.etionvall* Name of the organization Employer Identification number

CORPORATE FUND FOR HOUSING 95-3 93588 1

ligaTtlXIOrganizations Maintaining Donor Advised Funds or Other Similar Funds or Accounts Complete ifthe organization answered 'Yes' to Form 990, Part IV, line 6.

(a) Donor advised funds (b) Funds and other accounts 1 Total number at end of year 2 Aggregate contributions to (during year) 3 Aggregate grants from (during year) 4 Aggregate value at end of year 5 Did the organization inform all donors and donor advisors in writing that the assets held in donor advised

funds are the organization's property, subject to the organization's exclusive legal control ? Eyes E No6 Did the organization inform all grantees, donors, and donor advisors in writing that grant funds may be

used only for charitable purposes and not for the benefit of the donor or donor advisor or otherimpermissible private benefit?? [—Yes IT No

PRAWN! Conservation Easements Complete if the organization answered 'Yes' to Form 990, Part IV, line 7. 1 Purpose(s) of conservation easements held by the organization (check all that apply).

{]

Preservation of land for public use (e.g., recreation or pleasure) Preservation of an historically important land areaProtection of natural habitat Preservation of certified historic structurePreservation of open space

2 Complete lines 2a-2d if the organization held a qualified conservation contribution in the form of a conservation easement on the last dayof he tax year.

tift Held at the End of the Year a Total number of conservation easements 2a b Total acreage restricted by conservation easements 2b c Number of conservation easements on a certified historic structure included in (a) 2c d Number of conservation easements included in (c) acquired after 8/17/06 2d

3 Number of conservation easements modified, transferred, released, extinguished, or terminated by the organization during the taxableyear 1,-

4 Number of states where property subject to conservation easement is located 1,-

5 Does the organization have a written policy regarding the periodic monitoring, inspection, violations, andenforcement of the conservation easement it holds ? Ei Yes E No

6 Staff or volunteer hours devoted to monitoring, inspecting, and enforcing easements during the year 1,- 7 Amount of expenses incurred in monitoring, inspecting, and enforcing easements during the year o.$ 8 Does each conservation easement reported on line 2(d) above satisfy the requirements of section

170(h)(4)(13)(i) and 170(h)(4)(B)(ii) 7 E Yes 5 No9 In Part XIV, describe how the organization reports conservation easements in its revenue and expense statement, and balance sheet, and

include, if applicable, the text of the footnote to the organization's financial statements that describes the organization's accounting forconservation easements.

liglittallAl Organizations Maintaining Collections of Art, Historical Treasures, or Other Similar AssetsComplete if the organization answered 'Yes' to Form 990, Part IV, line 8.

la If the organization elected, as permitted under SFAS 116, not to report in its revenue statement and balance sheet works of art, historicaltreasures, or other similar assets held for public exhibition, education, or research in furtherance of public service, provide, in Part XIV,the text of the footnote to its financial statements that describes these items.

b If the organization elected, as permitted under SFAS 116, not to report in its revenue statement and balance sheet works of art, historicaltreasures, or other similar assets held for public exhibition, education, or research in furtherance of public service, provide the followingamounts relating to these items:(i) Revenues included in Form 990, Part VIII, line 1 (ii) Assets included in Form 990, Part X. 1.$

2 If the organization received or held works of art, historical treasures, or other similar assets for financial gain, provide the followingamounts required to be reported under SFAS 116 relating to these items:

a Revenues included in Form 990, Part VIII, line 1 ..$b Assets included in Form 990, Part X .-$

BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Schedule D (Form 990) 2008

TEEA3301L 12/23/08

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page18 of 37•

Schedule D (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 2iffattlIM Or. anizations Maintainin • Collections of Art Historical Treasures or Other Similar Assets continued

I3 Using the organization's accession and other records, check any of the following that are a significant use of its collection items (check all

, that apply):a [1 Public exhibition d Loan or exchange programsb Scholarly research e Other c Preservation for future generations

4 Provide a description of the organization's collections and explain how they further the organization's exempt purpose inPa t XIV.

5 Du ing the year, did the organization solicit or receive donations of art, historical treasures, or other similarassets to be sold to raise funds rather than to be maintained as part of the organization's collection? El Yes El No

IIRMitilMil Trust, Escrow and Custodial Arrangements Complete if organization answered 'Yes' to Form 990, PartIV, line 9, or reported an amount on Form 990, Part X, line 21.

1 a Is the organization an agent, trustee, custodian, or other intermediary for contributions or other assets not — —included on Form 990, Part X 7 Yes No...... ....._

b If 'Yes,' explain the arrangement in Part XIV and complete the following table:111.1 Amount

c Beginning balance MEId Additions during the year 1 de Distributions during the year WII Ending balance En

2a Did the organization include an amount on Form 990, Part X, line 21 7 • Yes n Nob If 'Yes,' explain the arrangement in Part XIV.

IIRettWA Endowment Funds Complete if organization answered 'Yes' to Form 990, Part IV, line 10. a Current ear b Prior ear c Two ears back d Three ears back e Four ears back

1 a Beginning of year balance . '7,/..4411W tiaThisP.. r.' ell M'' 'Iv1W4•7. l ' - ' Varl.rAt *Lk':b Contributions ti."..-:!:,; ....4-tirdrAi 41!7:t:':',-,,,;', .c.i,7to ...i.e. 4 1V714T/C.:11:1

c Investment earnings or losses f -tipat?wis:t. Mat Amami= avows d Grants or scholarships ' teaWaM ‘4,•%. 4:‘. -ate tater' 'ir ' it 's,::::.:221ta.e Other expenditures for facilities '7* 'flt.?id r.: ria 'it ?•;,,;w; •- •titatie,": ;',$,.1,:?! Ma.' ..- c 710t.:;‘ ,14 .*`-- :;:.4,--rA0 il

and programs x:-.4%,,tittavi, .,;erbb ay 4:, ,:. r.act .t. =„ --„,!:ifc, irt1/4 moo. :siF :,.:Aii..1f Administrative expenses IIIIIIIIIIIMa f0Iii.:7.2, :.:. :," ' ..: :.. ":- : ',..?`..h::,...c. ,!i,,tain.:.,ty,F4.0±.g End of year balance r:44.181fitt., CF:' 1 In. A 0- VI 1'. ' % alhe ,.... ”1 Y.NO: liTtiej taTalrA fr . --.;').;'..31,:(

2 Provide the estimated percentage of the year end balance held as:a Board designated or quasi-endowment • b Permanent endowment • C Term endowment •

3a Are there endowment funds not in the possession of the organization that are held and administered for theorganization by: in No(I) unrelated organizations 06100 related organizations OM=

b If 'Yes' to 3a(ii), are the related organizations listed as required on Schedule R7 3b I=4 Describe in Part XIV the intended uses of the organization's endowment funds.

11FAVVIII Investments—Land, Buildings, and Equipment. See Form 990, Part X, line 10. Description of investment (a) Cost or other basis (b) Cost or other (c) Depreciation (d) Book Value

(investment) basis (other) 1 a Land 41,574,652. Artt: J.'s-S., g 41,574,652.

b Buildings 3,978,824. 3,978,824. c Leasehold improvements 9,442,028. 3,016,743. 6,425,285. d Equipment e Othe r 1,665,163. 385,239. 1,279,924.

Total. Add lines la-1e (Column (d) should equal Form 990, Part X, column (B), line 10(c).) 10- 53,258,685. BAA Schedule D (Form 990) 2008

TEEA3302L 12123/08

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page19 of 37• •

Schedule D (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 31 ilivettiVIlfil Investments—Other Securities See Form 990, Part X, line 12. N/A

(a) Description of security or category (b) Book value (c) Method of valuation(including name of security) Cost or end-of-year market value

, Financial derivatives and other financial products Closely-held equity interests Other

,,

Total. (Column (b) should equal Form 990 Part X, col. (5) line 12) o" r-ltili-kec41,e3rVigeftgfiheffilgstrat41.1t;i7,tekl

IIPSTAVIN Investments—Program Related (See Form 990, Part X, line 13) N/A (a) Description of investment type (b) Book value (C) Method of valuation

Cost or end-of-year market value

Total. Columryb)(should equal Form 990 Part X Col. (B)line 11) 'I' 'Arin:Ate t‘sar 1,;:::', '',i.4", ratMeat IranIV5114)02110ther Assets (See Form 990 Part X line 15) N/A

(a) Description (b) Book value

I

Total. Column (b) Total (should equal Form 990, Part )C col,(13), line 15) 10.

P,Ratflati Other Liabilities (See Form 990, Part X, ine 25) (a) Description of Liability * (b) Amount .• ...,.: ±'',4.-,,I, 'a v .414,Vii.r<t . , :V,C :. ;tikiig 44r)rc.44 frvi;c14:""

Federal Income Taxes um`Pit.MInest-, Iturltet-4S+ : ' -riiier- 4 4 .''t --ACCRUED GROUND LEASE .1:--"S 'I ' ,11(if "1 enkbas - ,-*Cf 4,11 f-„„ {'et ...s.,.....,556 732 . ..-tk-, , i4r6Orta?..r 5 sigifertaACCRUED INTEREST PAYABLE 374 526.DUE TO AFFILIATE 3,484,201. ,..,...a.- Slim rt. , -(4,41 ' S,,- 4A,PREPAID RENT 3,367 . 4,74‘‘,1,k , JiltSECURITY DEPOSITS . 27 345. le t i.:, v.-I 1 iitity - ' ki •• n . -k, .- :..7",,,,s...• :-.4,4 ":W.11!:•%,-,114-0.t .f4504.4 • '71•"F,` „hats .

4 )111v/Alti te%'4,*r-4, -''')%--'44'n>410';„p 4cot-41--TIIP.

I

e- 4ens.,T4tY7.-r-,(....y..,,,— ..t.. -4.--i`4' ,

:.!)1*--'kr-tfir-,P41)** tw-I

Total. Column (b) Total (should equal Form 990, Part X, col. (6) hue 25) 00- 4,446,17 1. t,W,,; -7 .,

A,-

' ' ,:li -4' 4 'tivaIROF '- ' t % -, ),54.'1- -.,....-„,,,,,,4,,...,, , :, ,,,;J,-...st .,.7.. In Part XIV, provide the text of the footnote to the organization s financial statements that reports the organization's liability for uncertain taxpositions under FIN 48. BAA TEEA3303L 10/29/08 Schedule D (Form 990) 2008


Schedule D (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 49TIMXIffg Reconciliation of Change in Net Assets from Form 990 to Financial Statements N/A

1 Total revenue (Form 990, Part VIII,column (A), line 12)2 Total expenses (Form 990, Part IX, column (A), line 25) 3 Excess or (deficit) for the year. Subtract line 2 from line 1 4 Net unrealized gains (losses) on investments 5 Donated services and use of facilities 6 Investment expenses 7 Prior period adjustments 8 Other (Describe in Part XIV) 9 Total adjustments (net). Add lines 4-8

10 Excess or (deficit) for the year per financial statements. Combine lines 3 and 9 ['UMW' Reconciliation of Revenue per Audited Financial Statements With Revenue per Return N/A

1 Total revenue, gains, and other support per audited financial statements 1 3- 3a2 Amounts included on line 1 but not on Form 990, Part VIII, line 12:

a Net unrealized gains on investments 2a b Donated services and use of facilities 2b . 3

C Recoveries of prior year grants 2c d Other (Describe in Part XIV) 2d e Add lines 2a through 2d 2e

3 Subtract line 2e from line 1 3 4 Amounts included on Form 990, Part VIII, line 12, but not on line 1: tk 4,

a Investments expenses not included on Form 990, Part VIII, line 7b 4a •b Other (Describe in Part XIV) 4b c Add lines 4a and 4h 4c

5 Total revenue. Add lines 3 and 4c. (This should equal Form 990, Part I, line 12.) 5 illattOXBUIReconcillation of Expenses per Audited Financial Statements With Expenses per Return N/A

1 Total expenses and losses per audited financial statements 1 2 Amounts included on line 1 but not on Form 990, Part IX, line 25:

a Donated services and use of facilities 2a b Prior year adjustments 2b frc Losses reported on Form 990, Part IX, line 25 2c d Other (Describe in Part XIV) 2d e Add lines 2a through 2d 2e

3 Subtract line 2e from line 1 3 4 Amounts included on Form 990, Part IX, line 25, but not on line 1:

a Investments expenses not included on Form 990, Part VIII, line 7b 4a Li Other (Describe in Part XIV) 4b c Add lines 4a and 4b 4c

5 Total expenses. Add lines 3 and 4c (This should equal Form 990, Part I, line 18.) 1Pard1X10 Supplemental Information Complete this part to provide the descriptions required for Part II, lines 3, 5, and 9; Part III, lines la and 4; Part IV, lines lb and 2b; Part V,line 4; Part X; Part XI, lines; Part XII, lines 2d and 4b; and Part XIII, lines 2d and 4b.

•

BAA TEEAnou /W3M8 Schedule D (Form 990) 2008

•

Case5:10-cv-01087-JW Document46-1 Filec108/12/10 Page21 of 37

I

Schedule D (Form 990) 2008 Page 5iiRaPVXMI Supplemental Information (continued)

BAA TEEA3305L 07124108 Schedule D (Form 990) 2008

Case5:10-cv-01087-JW Coco ment46-1 Filed08/12/10 Page22 of 37OMB No 1545-0047

SCHEDULE I Grants and Other Assistance to Organizations,(Fonn 990) Governments and Individuals in the U.S. 2008

• Complete if the organization answered 'Yes,' on Form 990, Part IV, lines 21 or 22. ::(1,..tat-pirtarar4r,Department of the Treasury Attatch to Form 990.Internal Revenue ServiceName of the organization Employer Identification number

CORPORATE FUND FOR HOUSING 95-3935881 PaiWJ?d General Information on Grants and Assistance

1 Does the organization maintain records to substantiate the amount of the grants or assistance, the grantees' eligibility for the grants or assistance, andthe selection criteria used to award the grants or assistance' Yes No

2 Describe in Part IV the organization's procedures for monitoring the use of grant funds in the United States. SEE PART IV 1.Patra4 Grants and Other Assistance to Governments and Organizations in the United States. Complete if the organization answered 'Yes' on Form

990, Part IV, line 21 for any recipient that received more than $5,000. Check this box if no one recipient received more than $5,000. UsePart IV and Schedule 1-1 (Form 990) if additional space is needed

1 (a) Name and address of organization 0:0 EIN rp5sceabctli:n (d) Amount of cash grant (e) Amount ppraisal, nof non-cashMethod of valuation

non-cash oonaoi f "Prunistaieotefcgrantor government

LINC HOUSING CORPORATION 33-0578620 501(c) (3) 1,000,000. O. PROVIDE

110 PINE AVENUE #500 AFFORDABLE HSG

LONG BEACH, CA 90802 TO NEEDY INDIVS

TAHQUITZ COURT HOUSING PARTNERS LP 56-2528780 521,681, O. ASSIST LP WITH

110 PINE AVENUE #500 DEBT FOR AFFORD

LONG BEACH, CA 90802 HSG DEVELOPMENT

2 Enter total number of section 501(c)(3) and government organizations 1 3 Enter total number of other organizations 1

BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. TEEA3901L 1209/08 Schedule I (Form 990) 2008

_

Ca se5:10-cv-01087-JW Document46-1 Filed08/12/10 Page23 of 37

Schedule! (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 2 •

IfeitiallA Grants and Other Assistance to Individuals in the United States. Complete if the organization answered 'Yes on Form 990, Part IV, line 22.Use Schedule I-1 (Form 990) if additional space is needed.

(a) Type of grant or assistance (6) Number of (c) Amount of (d) Amount of (e)Method of valuation (book, (1) Description al non-cash assstancerecipients Cash giant non-cash assistance FMV, appraisal, other)

111111.11.11111.11111111MMIll1.11.11111a=11111IIMMIII1111.11.1111.11.1.1

11111.1111111111111==leartSli c eN Su' ' lemental Information. Comslete this 'art to I rovide the informa ion ree uired in Part I line 2 and an other additional information.

PART L LINE 2- GRANTMAKER'S DESCRIPTION OF HOW GRANTS ARE USED

THE GRANTEE IS RESUIFtED TO DEPOSIT THE FUNDS IN A SEPARATE ACCOUNT. CORPORATE FUND

FOR HOUSING' S BOARD MEMBERS MUST GIVE APPROVAL BEFORE FUNDS ARE WITHDRAWAN FROM THE

ACCOUNT.

BAA Schedule I (Form 990) 2008

TEEA_M102L I 01021013

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page24 of 37,

SCHEDULE J Compensation Information OMB No 1545-0047(Form 990) For certain Officers, Directors, Trustees, Key Employees, and Highest 2008 Compensated Employees

Attachto Form 990. To be completed by organizations that '.'..';iiin rilitreargalInternaml ServiceurDepartent of the Treasy tairDeataW1Revenue answered 'Yes to Form 990, Part IV, line 23.Name of the organization Employer identification number

CORPORATE FUND FOR HOUSING 95-3935881 IgaltIA Questions Regarding Compensation

Yes No1 a Check the appropriate box(es) if the organization provided any of the following to or for a person fisted in Form 990, Part 4kr i, r

VII, Section A, line la. Complete Part III to provide any relevant information regarding these items. , a . , E = N4‘

N't e ..-.'rFirst-class or charter travel Housing allowance or residence for personal useTravel for companions Payments for business use of personal residenceTax indemnification and gross up payments Health or social club dues or initiation fees rk '4...,1 z, ' 5=Il j.6.1Discretionary spending account Personal services (e .g., maid, chauffeur, chef) e l tallyrtl--

SI P :kWb If line la is checked, did the organization follow a written policy regarding payment or reimbursement or provision of allof the expenses described above? If 'No,' complete Part III to explain lb

2 Did the organization require substantiation prior to reimbursing or allowing expenses incurred by all officers, directors,trustees, and the CEO/Executive Director, regarding the items checked in line la'

illi5,-.A ;Zig stq i`F;3 Indicate which, if any of the following organization uses to establish the compensation of the organization's .plir II'S ,t,?'.. -k.CEO/Executive Director. Check all that apply. 4-A $?qt.qt{] :let qt.*:Compensation committee Written employment contract W. s'.ct 4. AtIndependent compensation consultant Compensation survey or study

Form 990 of other organizations Ii."1:Approval by the board or compensation committee *;.* .t34,.

4 During the year, did any person listed in Form 990, Part VII, Section A, line la:af • 31-4i6a Receive a severance payment or change of control payment? 4a X

b Participate in, or receive payment from, a supplemental nonqualified retirement plan? 4bll. xc Participate in, or receive payment from, an equity-based compensation arrangement' 110•11 x

If 'Yes' to any of 4a -c, list the persons and provide the applicable amounts for each item in Part III. l- t . ..lt :le;if P- f'..,*tra:-Tt tOnly 501(cX3) and 501(cX4) organizations must complete lines 5-8. -,raP J' R.,.W.l*

5 For persons listed in Form 990, Part VII, Section A, line la, did the organization pay or accrue any compensation • jir- ,rx, .. ,,W,'', -)ll %-:'-'''.contingent on the revenues of:

a The organization' 5a Xb Any related organization' 5bIIN X

If 'Yes''Yes' to line 5a or 5b, describe in Part Ill, 0) 5'M .a4't*6 For persons listed in Form 990, Part VII, Section A, line la, did the organization pay or accrue any compensation 4.1contingent on the net earnings of:

a The organization' 6a Xb Any related organization? 6bIMI X

If 'Yes' to line 6a or 6b, describe in Part III. Vd2 O'I‘

7 For person listed in Form 990, Part VII, Section A, line la, did the organization provide any non-fixed payments notdescribed in lines Sand 6? If 'Yes,' describe in Part III 7 X

8 Were any amounts reported in Form 990, Part VII, paid or accrued pursuant uant to a contract that was subject to the initialcontract exception described in Regs. section 53.4958-4(a)(3)? If 'Yes, describe n Part III 8 X

BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Schedule J (Form 990) 2008

TEER4101L 12123(08

-- -

Case5:10-cv-01087-JVV Document46-1 Filed08/12/10 Page25 of 37Schedule .1 (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 2 .FPRVIrt1 Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees. Use Schedule J-1 if additional space is needed. For each individual whose compensation must be reported in Schedule J, report compensation from the organization on row (i) and from related organizations described in the instructions onrow (ii). Do not list any individuals that are not listed on Form 990, Part VII. •

Note. The sum of columns (B)()-(iii) must equal the applicable column (D) or column (E) amounts on Form 990, Part VII, line la, .

(8) Breakdown of W-2 and/or 1099-MISC compensation (C) Deferred (D) Nontaxable (t) Total of columns (F) Compensation

(A) Name (11"==gt co cii) Other compensation benefits (B)0)-(D) repoorrtmed4opcfriormpeesaeon

Form 990-EZSONY LAY CHANG 0 0. 0. 0. 0. 0. 0. 0 .

00 139,653. 21,043. 0. 5 211. 4,788. 170,695. 0.

NINA DOOLEY Ill 0. 0. 0. 0.

4. 18,022. 0.

4 514.

0 . 0 .14,304.

161,914.0 .

125,07 0.

HUNTER L. JOHNS. II 0. 0. 0. 0. 0. 0. 0.

224,145. 40,870. •0. 9 530. 19,897. 294,442. 0.

111111=1=111111==MIIIIE=11=111=11=1111=11 Ea= =111111==CIIIIII======Ii1=========11=1111=1=11=111111=1 1111111=1111=11 11=11=1=11 1111111=11111=1 1=1111=11=1: 09)1111111=1=1 =1111= 131=========El 11=111=1=1 11111111111====all111111=1111111=111==

BAA TEEA4102L 08/11/08 Schedule J (Form 990) 2008

•

1

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page26 of 37Schedule.! (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 3 -

lea-mill Supplemental Information Complete this part to provide the information, explanation, or descriptions required for Part I, lines la, 1 b, 4-c, 5a, 5b, 6a, 6b, 7, and 8. Also complete

•this part for any additional information.

BAA Schedule .1 (Form 990) 2008

MEMMX 0600(0.9

• Case5:10-cv-01087-JW Dow ment46-1 Filed08/12/10 Page27 of 37' OMR No. 1545-0047 •

SCHEDULE K Supplemental Information on Tax Exempt Bonds 2008 (Form 990)

0- Attach to Form 990.7 To be completed by organizations that answered Tee to Form 990, Part IV, 11;604001 sDepartment of the Treasury line 24a. Provide descriptions, explanations, and any additional information In Schedule 0. ,AaigitiectidiiW,LiInternal Revenue Service iolactboSio-reciVV`i

Name of the organization Employer identification number

CORPORATE FUND FOR HOUSING 95-3935881

iPaltIltS Bond Issues Reauired for 2008

(a)Issuer Name (b) Issuer EIN (c) CUSIP # (d) Date issued (e) Issue price (I) Description of purpose (g) (h) OnDef eased behalf of

issuer

In 0 IIM NoA DALY CITY hiss DEV FINANCE AGENCY_ , 94-2991394 !!!!!!!!!12/I3/2007 57,239,830. AFFORD HOUSING IN DALY CIT NamD SIIIIIIIIIIIISIn1lMISIIIMISIIIIIIIIIIIIMIIIMIIIMIIHIIIIIIIIIIc 11=111111•1111111111•1111111111 1111n11111•MIISIENIMID n111111111•1111111111 MIIIIIIIIII=ISIIIIIIIIIIIIIIIIII

i E SIIIIIIIISIIIIIIIMIIIIIIIN Mill=RMIlir Proceeds Oitional for 2008 1

IISIIMIIIIIIIIIIIIIIIIFIIIIIIIIIIIMIIIIIMOIIMII 0 E1 Total g roceeds of issue IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIMIIIII2 Gross proceeds in reserve funds SIIIIIIISIIIMIIIISIIIIIIIIIIISMIIIIIII3 Proceeds in refundin g or defeasance escrows 111111111n111n 111111n111111n111111114 Other unssent •roceeds N1111111111111111111111111n111111111n1111111111111a1111111111111111115 Issuance costs from troceeds IIIIINIIIIIIIIIIIIIIMIIIIIIIIIIIIIIIIIIIIIISIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII6 Working ca @Rai ex•enditures from proceeds MIIIMIIIIIIIIISIIIIIIIIIIIIMIIIIIIIIIIIIMIIIIIIIIIIIIIIIIIIIIIIIIII i7 Ca g ital expenditures from proceeds IIIIIIMIIIIIIIIIIIIIIIMIIIIIIIIIIMIIIIIII8 Year of substantial comgletion

MIIIII1111111111111n111n1111111111111111 .COI No COI No CM No CM No MN No n

9 Were the bonds issued as 'art of a current refundin. issue? 1111111111111•111111•1111111111fl1111111111111111111111111M11111111=11110 Were the bonds issued as 'art of an advance refunding issue' 1=1111•1111111allallIall111111 Has the final allocation of •roceeds been made? 111•111111n11n1=111.11111•1111111•1111111M111•1111111111111111111112 Does the organization maintain adequate books and records to

sutport the final allocation of groceeds? IIIIIIIIIIIIIIIIIIIMIIIIIIIIIMIIIIIIII::.Part1,11SIY, Private Business Use Ostional for 2008

nil B ni D Erill No Irn No n No n No rill No

1 Was the organization a partner in a partnership, or a member of an IMMIIIIMIIIIIIIIIIIIIIIIIIMLLC, which owned * roger financed b tax-exem st bonds? IIII .

2 Are there any lease arrangements with respect to the financed IIIMIIIIIIIIMIIIIIIIIIIIIIIIIIIMIIII :

pro•er which ma result in g rivate business use?BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. Schedule K (Form 990) 2008

TEEA44011. 12/19108. .


Schedule K (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 2

Ibitini Private Business Use (Continued) A B C I)

Yes No Yes No Yes No Yes No Yes No

3a Are there any management or service contracts with respect to thefinanced property which may result in private business use"

3b Are there any research agreements with respect to the financedproperty which may result in private business use?

3 cDoes the organization routinely engage bond counsel or other outsidecounsel to review any management or service contracts or researchagreements relating to the financed property?

4 Enter the percentage of financed property used in a private businessuse by entities other than a 501(c)(3) organization or a state orlocal government

5 Enter the percentage of financed property used in a private businessuse as a result of unrelated trade or business activity carried on byyour organization, another 501(c)(3) organization, or a state orlocal government

6 Total of lines 4 and 5

7 Has the organization adopted management practices and procedures• to ensure the post-issuance compliance of its tax-exempt

-bond liabilities? IiPaitIVA Arbitrage (Optional for 2008)

A Yes No Yes No Yes No Yes No Yes No

1 Has a Form 8038-T been filed with respect to the bond issue? 2 Is the bond issue a variable rate issue?

3a Has the organization or the governmental issuer identified a hedgewith respect to the bond issue on its books and records'

b Name of provider c Term of hedge 4a Were gross proceeds invested in a GIC'

b Name of provider c Term of GIC

d Was the regulatory safe harbor for establishing the fair market valueof the GIC satisfied?

5 Were any gross proceeds invested beyond an availabletemporary period?

6 Did the bond issue qualify for an exception to rebate' BAA Schedule K (Form 990) 2008

movma morum

Case5:10-cv-01087-JW Dow ment46-1 Filed08/12/10 Page29 of 37OMB No. 1545-0047 u

SCHEDULER .(Form 990)

'

. Related Organizations and Unrelated Partnerships 2008 1,- Attach to Form 990. To be completed by organizations that answered 'Yee to Form 990, Part IV, lines 33, 34, 35, 36, or 37. L 71.00PlagidiliT6011 '

Department of the TreasuryInternal Revenue Service • See separate instructions. 1.;,:. ,oittsPectctat. Name of the organization Employer Identification number


Itagti Identification of Disregarded Entities

(A)(B) (C) ()) (E) (F)Name, address, and EIN of disregarded entity Primary activity Legal domicile (state Total income End-of-year assetsDirect controlling

or foreign country) entityFRANCISCAN PARK, LLC .110 PINE AVENUE, SUITE 500 LONG BEACH, CA 92802 LOW INCOME

' 26-1530909 HOUSING CA 6,560,604. 54,583,131. N/A !

! ,

-

, itimildentification of Related Tax-Exempt Organizations •

(A) (B) (C) (0) (F)Name, address, and EIN of related organization Primary activity Legal domicile (state Exempt Code section Public charity status Direct controllingor foreign country) (if section 501(c)(3)) entity

LINE HOUSING CORPORATION PROVIDE 1

: 110 PINE AVE., SUITE 500 AFFORDABLE HSG

! LONG BEACH, CA 90802 TO NEEDY

' 33-0578620 INDIVIDUALS CA 501(C) (3) 9 N/A LINC REDONDO BEACH SENIORS INC PROVIDE110 PINE AVE., SUITE 500 AFFORDABLE HSG LONG BEACH, CA 90802 TO NEEDY33-0677510 INDIVIDUALS CA 501(C) (3) 11A N/A

! I1I

BAA For Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Form 990. IDEA5001L 12123/08 Schedule R (Form 990) (2008)

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page30 of 37Schedule R (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 2 •

loaTtiim Identification of Related Organizations Taxable as a Partnership 1

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)Name, address, and EIN of Primary Activity Legal Direct Predominant Share of total income Share of end-of-year Dispropor- Code V-UBI General or

related organization domicile controlling entity income (related, assets tionate amount in Box managing(state or investment, allocations? 20 of Schedule partner?foreign unrelated) K-1country) Yes No (Form 1065) Yes No

COLUMBUS AVENUE HOL SING PARTNEF S LP

110 PINE AVE, SUITE 500

LONG BEACH, CA 908[2

13-4316373 LOW INC HSG CA N/A RELATED 0. 0. X 0. X

COMPTON SENIOR HOUEING LP

110 PINE AVE, SUITE 500

LONG BEACH, CA 908[2

13-4280643 LOW INC HSG CA N/A RELATED 0. 0. X 0. X

i

Illifani1WIldentification of Related Organizations Taxable as a Corporation or Trust,

(A) (B) (C) (D) (E) (F) (G) (H) .Name, address, and EIN of related organization Primary Activity Legal domicile Direct Type of entity Share of total income Share of end-of-year Percentage .

(state or foreign controlling entity (C corp, S corp, assets ownershipcountry) or trust)

1I

,,, .I

BAA TEE45002L 12123/08 Schedule R (Form 990) (2008)

Case5:10-cv-01087-JVV Docurnent46-1 Filed08/12/10 Page31 of37Schedule R (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 3.

leaftkVa Transactions With Related Organizations

Note. Complete line 1 if any entity is listed in Parts II, Ill, or IV. Yes No1 During the tax year did the organization engage in any of the following transactions with one or more related organizations listed in Parts II-1V: '24 kif:4,1 -1A,U

a Receipt of (i) interest (ii) annuities (iii) royalties (iv) rent from a controlled entity la Xb Gift, grant, or capital contribution to other organization(s) 1 bc Gift, grant, or capital contribution from other organization(s) nal Xd Loans or loan guarantees to or for other organization(s) 1 a IN Xe Loans or loan guarantees by other organization(s) EMIR

Te•,__1/4L.3tI Sale of assets to other organization(s) it Xg Purchase of assets from other organization(s) flIIIII Xh Exchange of assets MIN xi Lease of facilities, equipment, or other assets to other organization(s) na X

fraA.,j Lease of facilities, equipment, or other assets from other organization(s) V Xk Performance of services or membership or fundraising solicitations for other organization(s) fl xI Performance of services or membership or fundraising solicitations by other organization(s) 111111131m Sharing of facilities, equipment, mailing lists, or other assets LEM xn Sharing of paid employees 11111= x

OReimbursement paid to other organization for expenses 10 Xp Reimbursement paid by other organization for expenses 11111MI x

q Other transfer of cash or property to other organization(s) Ei Xr Other transfer of cash or property from other omanization(s) lr X

2 If the answer to any of the above is 'Yes, see the instructions for information on who must complete this line, including covered relationships and transaction thresholds. (A) (8) (C)

Name of other organization Transaction Amount involvedtype (a-r)

(1) LINC HOUSING CORPORATION 1,000,000.

c0 LINC HOUSING CORPORATION E 880,000.

(3)LINC HOUSING CORPORATION L 685,814.

(4)

(5)

(6) BAA TEEA5003L 07/02t08 Schedule R (Form 990) (2008)

•


Schedule R (Form 990) 2008 CORPORATE FUND FOR HOUSING 95-3935881 Page 4 a

iieVINIOI Unrelated Organizations Taxable as a Partnership

Provide the following information for each entity taxed as a partnership through which he organization conducted more than five percent of its activities (measured by total asset or grossrevenue) that was not a related organization. See Instructions reqa ding exclusion for certain investment partnerships.

(A) (G) (C) (D) (E) (F) (G) (H)Name, address, and EIN of entity Primary activity Legal Domicile Are all partners Share of end-of-year Dispropor- Code V-UBI amount General or

(State or Foreign section assets tionate in Box 20 of managingCountry) 501(0(3) allocations? Schedule K-1 partner?

organizations? Form (1065)Yes No Yes No Yes No

•

BAA TEEA5004/ 01/21/09 Schedule R (Form 990) (2008)

Ca se5:10-cv-01087-JW Document46-1 Filed08/12/10 Page33 01 37• - t.SCHE

990)DULE 0 Supplemental Information to Form 990

OMB No 1545-0047

(Form 2008 .a:ctititcohnatriFjormnr9AnTioorberecsopmotseet:dobipoerNrclicialteiN:nt:/30roree

Department f 0::tomoatibiklo Ihe Treasury

Internal Revenue Service Form 990 or to provide any additional information. rUeS *zt. Name of the organization Employer identification number


SCH J PARTIQUESTIONS RE COMPENSAIION

N/A BECAUSE CORPORATE FUND FOR HOUSING DOES NOT HAVE COMPENSATION. THE COMPENSATION

INCLUDED IN PART VII SECTION A IS COMPENSATION FROM RELATED ORGANIZATIONS.

FORM 990, PART XL LINE 2B -AUDITED F/S

AT THE TIME OF FILING THE TAX RETURN, THE AUDITED FINANCIAL STATEMENTS HAD NOT BEEN

COMPLETED.

FORM 990, PART VIL LINE 12A - POLICIES

CORPORATE FUND FOR HOUSING DID NOT HAVE A WRITTEN CONFLICT OF INTEREST POLICY IN

PLACE AS OF THE END OF THE TAX YEAR. THE GOVERNING BOARD INTENDS ON ADOPTING A

POLICY AT THE NEXT BOARD MEETING.

FORM 990, PART VI, LINE 13- POLICIES

CORPORATE FUND FOR HOUSING DID NOT HAVE A WRITTEN WHISTLEBLOWER POLICY IN PLACE AS

OF THE END OF THE TAX YEAR. THE 'GOVERNING BOARD INTENDS ON ADOPTING A POLICY AT THE

NEXT BOARD MEETING.

FORM 990, PART VI, LINE 14- POLICIES

CORPORATE FUND FOR HOUSING DID NOT HAVE A WRITTEN DOCUMENT RETENTION AND DESTRUCTION

POLICY IN PLACE AS OF THE END OF THE TAX YEAR. THE GOVERNING BOARD INTENDS ON

ADOPTING A POLICY AT THE NEXT BOARD MEETING.

FORM 990, PART V, QUESTION 2A

THE COMPENSATION AND EMPLOYEE BENEFITS SHOWN IN SCHEDULE IX, STATEMENT OF FUNCTIONAL

EXPENSES, REPRESENTS REIMBURSEMENTS TO THE PROPERTY MANAGEMENT COMPANY FOR

COMPENSATION PAID BY THE PROPERTY MANAGER. CORPORATE FUND FOR HOUSING HAS NO

EMPLOYEES.

FORM 990, PART III, LINE 1 - ORGANIZATION MISSION

PROVISION OF SENIOR AND LOW INCOME AFFORDABLE HOUSING TO NEEDY INDIVIDUALS.

CORPORATE FUND FOR HOUSING IS AN OWNER OF A MOBILE HOME PARK AND IS A PARTNER IN

BAA For Privacy Act and p openwork Reduction Act Notice, see the instructions lor Form 990. MEA4901L 12/19/08 Schedule 0 (Form 990) 2008


- I.

Schedule 0 (Form 990) 2008 Page 2Name of the organization Employer identification number


_______ 990, PART III, LINE 1 :ORGANIZATION MISSION (CONTINUED) , _______________________ _

PARTNERSHIPS PROVIDING AFFORDABLE HOUSING IN FURTHERANCE OF ITS PURPOSE TO LESSON

THE BURDENS OF GOVT.

FORM 990, PART VI, LINE 10- FORM 990 REVIEW PROCESS

FOR TAX YEAR 2008, THE BOARD OF DIRECTORS DID NOT PERFORM A DETAILED REVIEW OF THE

FORM 990 . ALTHOUGH THE BOARD OF DIRECTORS DID NOT REVIEW THE TAX RETURN PRIOR TO

ISSUANCE, EACH OF THE BOARD MEMBERS RECEIVED A COPY OF THE 2008 FORM 990. EFFECTIVE

NEXT TAX YEAR, CORPORATE FUND FOR HOUSING WILL IMPLEMENT A COMPREHENSIVE REVIEW

PROCESS FOR THE FORM 990 BY THE BOARD OF DIRECTORS.

FORM 990, PART VI, LINE 158 - COMPENSATION REVIEW & APPROVAL PROCESS FOR OFFICERS & KEY EMPLOYEE!

N/A BECAUSE CORPORATE FUND FOR HOUSING DOES NOT HAVE COMPENSATION. THE COMPENSATION

INCLUDED IN PART VII SECTION A IS COMPENSATION FROM RELATED ORGANIZATIONS.

FORM 990, PART VI, LINE 19 - OTHER ORGANIZATION DOCUMENTS PUBLICLY AVAILABLE

UPON REQUEST, DOCUMENTS ARE COPIED AND PROVIDED TO INTERESTED PARTIES.

BAA Schedule 0 (Form 990) 2008MEA4902L 12111/2008

Ca se5:10-cv-01087-JW Document46-1 Filed08/12/10 Page35 01 37

. 2008 FEDERAL SUPPLEMENTAL INFORMATION PAGE 1

CLIENT CORPFND2 CORPORATE FUND FOR HOUSING 95-393588111106/09 04:10PM

FORM 990 SCHEDULE D PART XI:

THE AUDITED FINANCIAL STATEMENTS HAVE NOT BEEN COMPLETED AS OF THE DUE DATE OF THERETURN.

FORM 990, PAGE 1, LINE 22:

RECONCILIATION OF NET ASSETS OR FUND BALANCES:

PRIOR YEAR BALANCE $(6,295,575)CURRENT YEAR REVENUE LESS EXPENSE ( 653,598)CURRENT YEAR MINORITY INTEREST 63,811CURRENT YEAR BALANCE (6,885,362)

Case5:10-cv-01087-JW Document46-1 Filed08/12/10 Page36 of 37, . .Form 8868 (Rev 4-2008) Page 2• If you are filing for an Additional (Not Automatic) 3-Month Extension, complete only Part II and check this box. 0- X

Note. Only complete Part II if you have already been granted an automatic 3-month extension on a previously filed Form 8868.• If ou are film, for an Automatic 3-Month Extension, com 'tete onl Part I (on • a•e 1 .

C - '‘ 93,VBE Additional Not Automatic 3-Month Extension of Time. You must file ori g inal and one co. .Name of Exempt Organization EmployerEmployer identification number

alsro;;;;:i3v-A4Type or Ssc..1--5,-;tec-1-20pnnt CORPORATE FUND FOR HOUSING 95 -393588195-3935881

Number. street. and room or suite number If a P.O. box, see instructions. .04,;twyr.i...prv For IRS use onlyFile by the !4rifre--.ACritittiit4.extendeddue date for

110 PINE AVENUE #500 r•-.17:•-..C.Wirriiniiiejtiffinii--ainWTR.-aar22-47.3.72-Zi437.filing the ri::-.!-L;e-14-419.:s4.==.,2-23,--tqe-a.41-wir...157:4...*return. SeeinsUuctions. City, town or post office, state, and ZIP cede. For a foreign address, see instructions.

LONG BEACH, CA 90802 tyr.s.17::::kwi.•-•.:4-&-f.K2--2.*--.•-7?44....:4;e:z.i...i-4.12:4-...lei

Check type of return to be filed (File a separate application for each return):El Form 990 II Form 990-PF III Form 1041-A El Form 6069IN Form 990-8L III Form 990-T (section 401(a) or 408(a) trust) IIIII Form 4720 Form 8870IN Form 990-EZ II Form 990-T trust other than above II Form 5227STOP! Do not complete Part III you were not already granted an automatic 3-month extension on a previously filed Form 8868. • The books are in care of . 11- HUNTER JOHNSON

Telephone No. 0- 562 -684 -1100 FAX No. 0- • If the organization does not have an office or place of business in the United States, check this box o. 0• If this is for a Group Return, enter the organization's four digit Group Exemption Number (GEN)... . If this is for the

whole group, check this box... 11- 0 . If it is for part of the group, check this box... 1.- 0 and attach a list with the names and EINs of allmembers the extension is for. 4 I request an additional 3-month extension of time until 11/15 ,20 92-S For calendar year 2008 , or other tax year beginning _ , 20 , and ending_6 If this tax year is for less than 12 months, check reason: El - Initial return fl Finalreturn 13Change in accounting period7 State in detail why you need the extension .. THE TAXPAYER REQUIRES ADDITIONAL TIME TO GATHER THE ___ _

INFORMATION NECESSARY TO FILE A COMPLETE AND ACCUItATE TAX RETURN._______ __

8a If this application is for Form 990-BL, 990-PF, 990-T, 4720, or 6069, enter the tentative tax, less anynonrefundable credits. See instructions 8a $

b If this application is for Form 990-PF, 990-T, 4720, or 6069, enter any refundable credits and estimated tax ..2iZipayments made. Include any prior year overpayment allowed as a credit and any amount paid previously 1.-----;with Form 8868 8b $

c Balance Due. Subtract line 8b from line 8a Include your payment with this form, or, if required, depositwith FTD cou , on or, if re, uired b usi • EFTF'S lectronic Federal Tax Pa ment $ tem See instrs 8c $

Signature and VerificationUnder penalties of • r ' .1 declare that I have examined this form, including accompanying schedules and statements, and to the best of my knowledge and belief, it is truecorrect, and can • , i d that I a Authorized repare this form.

Signature 1.- .,

IL,A,.Mk i Title 0- C,f) A- Date ... 1 /Mt

, •iBM FIFZ05021. 04/1E408 Form 8868 (Rev 4-2008)

'

EOGGELN & COMPANY, CPA

i \ j 215 1/2 MAIN STREET

HUNTINGTON BEACH, CA 92648-5127

-SrCase5:10-cv-01087-JW Document46-1 Filed08/12/10 Page37 c f 37

. ltot:;8868 Application for Extension of Time To File an(Rev April 2008) Exempt Organization Return OMB No. 1545-1709,,Department of the TreasuryInternal Revenue Service .." File a separate application for each return.

,e-11, If you are filing for an Automatic 3-Month Extension, complete only Part I and check this box 11- 12S.f If you are filing for an Additional (Not Automatic) 3-Month Extension, complete only Part II (on page 2 of this form)..._

Do not complete Part llunlessyou have already been granted an automatic 3-month extension on a previously filed Form 8868. F llEatitti:1::::d Automatic 3-Month Extension of Time. Only submit original (no copies needed).

A corporation required to file Form 990-T and requesting an automatic 6-month extension — check this box and complete Part I only b.- 9

All other corporations (including 1120-C filers), partnerships. REM/CS, and trusts must use Form 7004 to request an extension of time to fileincome tax returns.

Electronic Filing (e-file). Generally, you can electronically file Form 8868 if you want a 3-month automatic extension of time to file one of thereturns noted below (6 months for a corporation required to file Form 990-_i . However, you cannot file Form 8868 electronically if (1) you wantthe additional (not automatic) 3-month extension or (2) you file Forms 990- L, 6069, or 8870, group returns, or a composite or consolidatedForm 990-T. Instead, you must submit the fully completed and signed page 2 (Part II) of Form 8868. For more details on the electronic filing ofthis form, visit www.irs.goviefile and click on e-file for Charities & Nonprofits.

Name of Exempt Organization Employer identification number

Type orpnnt

CORPORATE FUND FOR HOUSING 95-3935881 File by the Number, street, and room or suite number. If a P.O. box, see instructions,due crate forfirelitiuMter e 110 PINE AVENUE #500 Instructions. city, town of post office, state, and ZIP code, For a foreign address, see instructions.

LONG BEACH, CA 90802 I .

Check type of return to be tiled (file a separate application for each return):

N Form 990

Forth 990-PF • .

Form 990-T (corporation)Form 990-T (section 401(a) or 408(a) trust)

-Form 1041-A

.

Form 4720Form •990 -BLForm 990-EZ • Form 990-T (trust other than above) • Form 6069

Form 5227

Form 8870

.

• -,

. . .• . •. .. .. . . .

•. The books are in the care of Is HUNTER JOHNSON, .•0

1.- Telephone No.. s' 56'2-684-1100 ' FAX No. 1" • If the organization does not have an office or place of business in the United States, check this box ro• ID• If this is for a Group Return, enter the organization's four digit Group Exemption Number (GEN) . If this is for the whole group,

check this box.. Is 9 . If it is for part of the group, check this box. Is El and attach a list with the names and EINs of all members, the extension will cover, , 1 I request an automatic 3-month (6 months for a corporation required to file Form 990-T) extension of time

until _ 8/15____, 20 09_, to file the exempt organization return for the organization named above.The extension is for the organization's return for: .1.- E3 calendar year 20 08_ ors- Ill tax year beginning _ _ _ _ _ _, 20 _ _ _ , and ending _ _ _ _ _ _, 20

, 2 If this tax year is for less than 12 months, check reason'. E Initial return E Final return E Change in accounting period

3a If this application is for Form 990-BL, 990-PF, 990-T, 4720, or 6069, enter the tentative tax, less anynonrefundable credits. See instructions 3a $ 0 .

b If this application is for Form 990-PF or 990-T, enter any refundable credits and estimated tax paymentsmade. Include any prior year overpayment allowed as a credit 3b$ 0 .

tIMI;ic Balance Due. Subtract line 3b from line 3a. Include your payment with this form, or if required,

deposit with FTD coupon or, if required, by using EFTPS (Electronic Federal Tax Payment System).

See instructions 3c $ 0. Caution. If you are going to make an electronic fund withdrawal with this Form 8868, see Form 8453-EO and Form 8879 EC forpayment instructions,BAA For Privacy Act and Paperwork Reduction Act Notice, see instructions. Form 8868 (Pev. 4-2008)

, .....t

FIF70501L 04/16/08

!

Case5:10-cv-01087-JW Document46-2 Filed08/12/10 Pagel of 3

EKED:BIT "B"

Case5:10-cv-01087-JW Document46-2 Filed08/1 211 0 Page2 of 3

1

,

•

_1sATutioAy, januart. 26, 2002 . „ ., ,, , ) 'SAN MATE0 COldril INES

arcel t

eease p

,.e to

a , City likelyD: :, . m ,. . .. . ...... . .. „...,,,„.....„___, _. . t orporati:: . ,buy I

isit., h„4„„n ot,ii,in iewinei d esire t o te ttetir the lit ca ligl. r.-it----, -y,,-):-,,,„ , - 1 isplit.__Aefillfsilld4t Con, . yesitttils Ititat/Illg, a ,fifiuti , cluil at etimit, .ri,tfiY MedCity to `-`1 ' t"."" 'a exPiraliciAT - - )---:-; ' " .',..1! ' ' S.F.s. - ,,,-

;#w". i attatilNe, tie said. welt not. able leoOng the nwnerS'to.,tio some , totem Just a dillft ,rtrArititi ipond F eatibl of being % t to . roo ' ! , t.- r .., • r*,,„:„ . - - : to boy park'sk's Pcidesta. piling pitivose." he sa id . " And it i s Inne n , she Said.xt---t . ' ,,,„vg, ihe re tiidents forMted die l'aja;41.6„iiiv oiej. ." ,fi ln . i., tusU were jot; able to purchase its a atfitil to the owners and or 3 'A$ rat, tis I'mnt, ity„.., 4,4iatAtii, , . Franrisotn ActIttlratort Callao- i ki : fp , _ , , , ti tv,,, i: tease .. , , „ =, city to none to the aid of pie refit , 1/01 luterefited atFrAw—wrizz-7 — - lion lit w law: the. 10$e :4 p,- az' ' - , 4o fe, till --fill4_ = \AIM lltal. ',Infalliis,' KellYnti Mafia aWbe a mediator? ' sttiii. "Why siamdk

fi om Child-Oa WIMAIlis and .§hee..- ' l. till " 4 i'v, ti. :e.: 47: .*titZttil `at& is thttl 111.- Pottelaas : lout Fat resideills at fife park,. red itty throttle is rivDALY l

lal.T.--lAill7 alone dm , wood, a NoWPOrt Beadl'basnd , " islt '4 ofil'll 'fil,a4Wel dine Insidollll in area still have Pitts will InCeeaSe ahold $90 a tilne."alYeal. af .6419"jolas '' Ibc cltY is ''''ealt'PanY' ifiat 'fn aniministting ' '"'S -/ St I/ ", alfi!') '' ';k Cnnl:At dift..,sytion: Pl. kildPing the "Illid ' month ro sOftPott ,the park's It'. : , - : But (tic ilmiori

.: , ,,pected, 10, wow:Issuing tato aro . teases for the 'payptp "anylatifs ofinr.. 20113. till sal di wilt-so , nant-log, mall& to paying a 36-' Wholeramel losfr

L..

free, egveiMe bolds. thaf would -- Tom Atwood, .3t-, of Colmid 's1 l', : I ,' e. 'icleal, .... t n: 'n,dgtayft , igefRAS taken hetween now and year mortgage Joan Oil a home ,fi'iid. they wouldagol,m*iltti 01 a Pnlinle hum& °Dens Abbey Coll1PallY1 will di "I l....it ., ,.`1„. H. ' eik> -41catt . 41teit to tlegptiate.,:a tOtie extol, said -Phillip tioont a pented. mam tile :lent raise. Wh3.1Wititiarete stay Vb. ' holds SO arms,. al0 the 1 ,odesta .1 ", cl alt,ttS,Vgi.„, Or-04; stun with the Pcidexta or pos. ager and financial manager lbe "aVerage leat I

Grit 'MtattlaY) Hie rOatte11. family I) C. winen:ovais t. KA - 'tit , ' *SC( %ta,n; -Cirl 'ably a Sear land . worMilgurith the resMents, ' to l=l7.65.- Minullillding as liaa''Masiag Elenn/sP- 20 acres ' ' ' ." ' ' I linfrEritUcistim ll mllotf;' -. ' 1 Hind er Johnson . lilNe Those living at the gun Sic said *mid alas

tent gitunwegOiwy, Will Voice TiwotOont the last year; l.eal= l cfd Mobjte fitimir 1, , ' ' 44: :1 tiousoto exeenove dirersor , saw have expressed suPfinel kw the first' bpptniwknytotwo yesotutin /ha would ofieti dente: have worked With. ''t,,iNC .1 tii ,. in -., al le lie Mottil€. :Hoare .Sale will hegin l)aying Me liwteased .Pefle Ofl land,

lhe Slit, 01%5 n$111.°I1 ill llOrlds - Housing- a tatilgtratatti 11011Prohlt i'%\,- .1-1!- - --At ,' ---' Aoe , . k;: Piirk will heroine the filth Manic in March, s6 tar. about 75 fiel"-: , IrenePal.. it)eto -help residents st ate Fiall- inn ioactioa Oat iv,0 Iniancv 'fadmewl tled LINC will own once the ynn of the r ctidents haw agreed ' #W,, ittric. loi 18 :

y

Sem Mobile Home Park at quire menage tilt pan once the trans- . t : ‘1,-- ca '',t.s. ' '"'aV 'a Ilansartion elos-gs, MC, also to pay the increase, said Dons tltougli she mayItte'00.year=old part action closes. .1 280. = la „...,- closed O denl recently With I tin- Bill president of the acquisition hide g eni us, fli

The rues1 rec,in f hgpi to ett - thr coy %vo; nef nesinne ally t tt,A . ` , Lt. Ono 110111e. park in Seal fiwftiti, coeporatfon. The remnant: 25 weedlirrilin on 11-147, jaw corners alter sflt. gametal vesponseelay en filiefitig --al' "".. lax lln all &Ise faced = in (mitring gement who have Oppose& the 'lac Malt ll'atcal wriailectssfut ifflairipti by die It;identa Ira oali fluffily egg . _ it:Ise, KIM sale will likily see theft is going dirofeile`residelips ftypetifiee.e f ge 70,..fiere aff, ci 0013(1Vit ' to pAro, ;he 130,1i15. It-s- I' entS PP IOW -wail ---',. sm(li l NV ,COLOSCUTILan Sal TOM'S letils raise about 3 16 5 pueent a- : ',park and keep meld( tits hoin DO bc11011 of IANil , f Muitiet, dim ltv ul nle land "'nal cn'"' min° said the oupeothbb allk iailithOi- seat . ) 'I 'r r'n 31 . tW r

Ince* onr „ice the )),irk ,e, inn the res idents,, ,,, 11.7:11t ii 11 tOCIf des I mu., ft,,. coopin Moil k7 141ten Lir in ,AnderSon, RI. is One CI; (k rail ,e, tuititIeases expire in 201 G. The paelds !Attic' Komi, fin in rOMOY iturci3d sc 01 die Pales two leases f Fanull m residents flie l'esid en Ls Wile eMeSt el Mee 111 (if' zu lital ! 13 1 r la, ,.Iwo owners hav"(n emnessed a Jr„,, eeI hn ,,yorkpip, .alip tile wacidic aiwoodtfiweel The Fr ii - ' Tow en o c ' ”. y = i. • = = a = ...' I '''g. 0 i t a 'nil I. SIR! 1333, r'.(ups


NEWS-3

. m e... to t residents,. . ,., , .. ,.... ., i., i ..,„„. , .: ... . Sd

,

I Wilt 1'1

of the respe

iwouldthking wiland.

ale the Pod tas posrebut

•I see

the list

,0He

not nerated

ce,,,twto mom the lease Met its " --1 1--3•; ."---44----4r,„ 4- 4;kt - eisean Acquisition conyjentityn resuletiis . fount/1g A teami . et, „Set i, itt. p,, „, n

, 1Ili 100(.11119 , '' ' aid LIN( ' l ie sato were not attle angst* th e <Malta's Itt do some- opt. tut,' A 1111)e vii, L''; tou,„:„„..4T.,1..„ NA ni t irith, re ,

fo d , ,, I i. .,; e t at,, ,,c4,ttrii „,,..,„&„..,,, to bay the, part; 5 POCICSta parcel thing pOntnee.t sa

. e a , , t ninth. - • . , , 4. ., .yitu . i -al— - --ii" ----i-- (k) --i • --7- '' - ' ' ' ' 'IS-446i WI able o purchase S rrt A e,titt to the othiers and ew a Af' s '''s fat a s [to em lama d, lin.,mene. the reside/Oa lortoml Iitc ' It ' ni P bl taittlilist ' i . .......1 . env ea corn

the ant af e eta nne at apt. ik,uperann_. tp,,,,The i&eni, Aennistii&K, (tumors ,s . , . ts, • • ,, , . .4 . esse, ..... .. . . cO. , , ..,, 4.4.. . , ,„ , , $h si i I ,,, E ana.,,h,t,d-- 11,; -Pit ' ty .313)4 - .1iie. a ti 3 ' 1 13, 'S ' -,...,„*i.313`=3 -, WiliL MA' means, &myna dannandbe"Ermediator. , .' -.. said- V411.1 • ts• r 1.4 - ttan

lfritonlITI'CIll' OH! °n8VI'dilirlli aid SielIcII:kl: ; ill TN' -1' AbC' ,. 44,-Sis. ..:114:-. th. thth thin Pedestas,, long For t ea/len:sr stat the p

too Mk. ' ,rail! H 11137 Irani' is (Nati-tiling all the

i I a: OM . a seado y - i !ii,i;,), ' ' J.L i ;..r,' t: ,,,,v..k .,..• 8,,,,447, . Wit' Pitadents area, stillilt ve pukes w intrta. alt. .3699 4 , dine. i. . , 1s.4:.1:e's,r. li-C°re i 1 \iffrooLit.ia;tist.

Nih.Vn rfrihi 'aiinnoisieasi Ca

todk kT, , I, I -4' - ttc ' t &T": 41 option or Tiaroli the land InOnth to support the pales o,,, Nit the laSicdt it 0 result I t

911 l' 3 Ile re'Y Is --L."' 3- ' '''3-7-731 4. " t: f 3 43 ''.-. 'r3-'m '''.IT-I... fie ' 044/143.. Sagit will mikeire M ou lug, similar /0 114.311.14. 0 O who ear oin Stet m .

'S -. fed lsg " hotis.-VrK Sdng ;(- the lealm'ith lite P"ris' tulers '. '' r 4 ' ' li c' ' ." N'a '.1/24,-: ' VI ' ia— bete (.,406:and year . mortgage loan (a t ' a h ome ?: 'sa id they w o uld callter 14-1,s1. 1i

.thal wa-iti -- Tom At Jr- .30/3 Cams's ' 41 ' 0, ; -, 4.4-4 . ''S ..-44- iv ht . t c,ficals ell 4 vy • . , id Pita I-loon a trotter man- die rem 'Oise, Nelda"' weui(thnakefie home c .,35 6 '0 inpai y 1(41 ''' ' :., , 1,' , ty, \TI N:I th at negotiate1:0 'tiate a l etalm eXten- aid P , project . a lea a. • o ma 104411, - ypre.. Abb _ o i , wb . 4 . . . .„&t.. 1/4ti,,,,,,. IF/ Ts% TIT„it te,,,,I with the oco - tiger and financial , in anagei i tie averag e co j. front oh ,

aL'' ' '''' 1161e14150 ixeles' City, the rodesla ' Iion vd

'-- ': ' ' l'et1 - 47•T‘ttia'a 3Mitliv a s of . ' woth e ot cm% to .765. mo, rfahly rulanc ing so=• 1114'' ' r:d'ul ildit thinq di DPIY 011,Yi which owns ..'. ' '' ' ..' ""li „77,-.-,, , ii ter joinsob INCL Those hygin at the park who said, 'atao gve ta4rig ;Petrel e

T49.11''' 2° ata:et. , ' franaiscart -"i",,, ..,..,... i :. ,;,. in' i

,d have exrssied nu°sa et the the fist oppothhany at owning a ,hro—in limn d 1: is 44-w rest- '' 1 1-u , w3e Honnu exeuti direct saidcve or; t. pen :(CV wf- vajs, thl — -4- -- _n: -A- ,..,-?-. , - —3" Ili mobilo Homo , is. „, ,,, ,„,,„„e , . iitionois an mobile , Horne sale will b .. n paying ti e ,in6,.ease wee of landat would open isa us, a. i ea with I IMP iden a`"je 'th'i'" VthA -: - '' 3 t.1.1ni

Park "4-1‘4,' ''' ' ' e l/ ra h ' the hiltI n Salle In arch, .So .far , about 74'r- Irene P as d. who, i ha 1s 030 at 'titian in bonds finnan* o Loncettraril ,nonprorit .ht ..... _ .. .1- . e4.• 4,t , ' Par. a %kmt wee°111c 0 1 I Mdderas d ad dddddd the .,a1.1% for tp \pa th, &E d [ha;' T - - . t N .. ..4,.. . artA cent t haw agreed , i ,

. Ii ,e . ,o e,i

,at the Fran' corPun'at°13 that will 11"altut'and ic ''' \s'sts ' 741

p t that INC will own once the,,'' 3' ' ' 1 i - the Increase said Doltn• lite* sbc playo , in „

Ek ne ,ilait ;')(11111re tan

tince. 1, 11e• l'' s ' ow, i '' , ' .,„. ,T .2.• closed, a deal pteendy with a up). 'Nil, president of die, acquisition , , more penniesi the 0011 II stilt Ist---- - ' .y, i ' i'nn" AO - '010' ':,- hie borne it ark i n Seal Bette}i, corporation. The remaining 2 5,- "'worth .ill 1)4 " l'I' vt'' The ellY will d'M.- as'sult.ItC ..."”Y -. ' 4- \-`, AT '.ot• -: ' . 4. 4 nick isd so . faced ax % expiring percent Who have opposed the. ' - ' The fawn thi il3 Finng 4•Flar ii

tille5 aftersett' linaildal res1"18113ffilY"* 1161Arig ''' 'I - !L-72r- ' ' ';'-- ' - \ -----a k ' ' ''' I (I . their M th * hpoing em" Se said.hiliLli'M'ts "Y. the reside.'" Inii Wi ''' in 13' 4(1 4 xstdolls tot rbair YearS in, en aneih nan Sal eves reins t-atse shout ;3 to 5 Potent a

e---------- - -----, -

lestliln ieis7ena<enct; nast 411x7:adritt otill LiaiNits:silei 'tI ll'eal:Said the t

Illatt 4 c o f Alm Fult boutd Will eos a e ii.i/ ilk, impending &de. symbol- year, (.nL , one

t f ,, 1)..10.1;ii.c.trit4,,drirrenot,int.:?/,.rit7f•h tip.40,I, he - intlitn. icWhh l tincudes he nes the ration lietween the Myra Ander son . - Is lla 0 (1 , , ,

Trielcptsarlt Cs I Sa'svit(disiKise.nyon. an$45 o

attorney Putenatte Of the parlea IWO leasetit

eity4 and 411oresida eainp

ents ...e o j. u - dct‘t,rititsidheiiticr,is thsher),8d(oileistni tttxwetoTtsoot TTierpfnitisti.4„,[;;_ch,stritt,staTh e it

ntett•-nt cotpossd a .ndtp __lots littfl Wfltking wh thr. and the Atwood parent, "the Fran T s a- , his i gnt sit itt t.i., , -it , . ,- ' . .. , ..„,„ ,,,, ,,,,„,,,,,,__,,„ _...... ., • ...___


EXHIBIT "C"


DOC it 'a-402-07598904/18/2052 11:55A AG Fee:127.00

Page 1 of 41Recorded in Official Records

County of San MateoRECORDING REQUESTED BY Warren S oeim

AND WHEN RECORDED MAIL TO: Assessor—County_c_salffiderRecorded By NORTH Arthrtac

KUTAK ROCK LLP

11E111 II 1111 III I717 17th StreetSuite 2900

-Denver, CO 80202Attention' Scott H. Beck

• e tREGULATORY AGREEMENT

AND DECLARATION OF RESTRICTIVE COVENANTS 1 pby and among

DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY,as Issuer

UNION BANK OF CALIFORNIA, N.A.,as Trustee

•

and

LINC FRANCISCAN LIMITED PARTNERSHIP,as Borrower

Relating to:

437,135,000 $2.865.000

Daly City Housing Development Finance Agency Daly City Housing Development Finance AgencyMobile Home Park Senior Revenue Bonds Mobile Home Park Subordinate Revenue Bonds

(Franciscan Mobile Home Park Acquisition Project) (Franciscan Mobile Home Park Acquisition Project)Series 2002A Series 20028

$11,535,000 S1.923.000

Daly City Housing Development Finance Agency Daly City Housing Development Finance AgencyMobile Home Park Third Tier Revenue Bonds Mobile Home Park Fourth Tier Revenue Bonds

(Franciscan Mobile Home Park Acquisition Project) (Franciscan Mobile Home Park Acquisition Project)Series 2002C Series 20020

Dated as of April I, 2002

•

02-83296.13

_7-, 7L / , /7.4


•

"City" means the City of Daly City, California.

"City Fee" means an annual fee equal to $33,411.25.

"County" means the County of San Mateo, California.

"Income Certification" means the Income Computation and Certification attached heretoas Exhibit B.

"Median Income for the Area" means the median gross income for the Area asdetermined by the Secretary of the Treasury (which determination is required by the Code to beconsistent with determinations of the area median gross income under section 8 of the UnitedStates Housing Act of 1937, or, if such program is terminated, under such program as in effectimmediately before such termination).

"Nonparticipating Residents" means those residents of the Project who are notParticipating Residents.

"Parcel" means the Cypress Abbey Parcel or the Podesta Parcel, as the context requires.

"Participating Residents" means those residents of the Project who, on or prior to thedate of issuance of the Bonds, have entered into new leases with the Borrower for their Spaceswhich provides in part that such residents agree to a higher monthly rent not to exceed $100 permonth.

"Program Administrator" means the Program Administrator appointed under theAdministration Agreement, which initially shall be Rosenow Spevacek Group Inc.

"Program Administrator's Fee" means the administrative fee of the ProgramAdministrator set forth in the Administration Agreement.

"Qualified Project Period" means the longer of 30 years from the date hereof or the termof the Bonds; provided such period is subject to extension in accordance with Section 5(g)hereof.

"Qualified Residents" means Very. Low Income Residents.

"Qualified Space" means a Very Low Income Space.

"Space" means a mobile home space within the Cypress Abbey Parcel and, so long as theBorrower has an interest, either leasehold, purchase option or other ownership interest, in thePodesta Parcel, the Podesta Parcel upon which a mobile home may be placed.

"Tax Certificate" means the certificate as to arbitrage of the Issuer and Borrower. datedas of the Closing Date, with respect to the Bonds.

"Very Low Income Residents" means individuals or families with an Adjusted Incomewhich does not exceed the amount promulgated by the U.S. Department of Housing and Urban

02-83296 13 -

3111111111111111111111111131111111[11111

2002 —0-759/390411612002 71:66AAG Pao.: 6 of 41

•

Case5:10-cv-01087-JW Document46-3 Filed08/12110 Page4 of 9

Development for very low income households for the Area as adjusted for household size as setforth below. In no event, however, will the occupants of a Space be considered to be Very LowIncome Residents if all the occupants are students, as defined in Section 151 (c)(4) of the Code,as such may be amended, no one of which is entitled to file a joint federal income tax return.Currently, Section 151(c)(4) defines a student as an individual enrolled as a full-time studentduring each of five calendar months during the calendar year in which occupancy of the unitbegins at an educational organization which normally maintains a regular faculty and curriculumand normally has a regularly enrolled body of students in attendance or is an individual pursuinga full-time course of institutional on-farm training under the supervision of an accredited agent ofsuch an educational organization or of a state or political subdivision thereof "Household Size"Adjustment for 1 = 70%; Adjustment for 2 = 80%; Adjustment for 3 -= 90%; Adjustment for 4= 100%; Adjustment for 5 = 108%; Adjustment for 6 = 116%; Adjustment for 7 = 124%;Adjustment for 8 = 132%; and assuming one person will occupy a recreational vehicle, twopeople will occupy a single-wide mobile home, and three persons will occupy a multisectionalmobile home. In adjusting rents for household size as described in Section 5(a) herein, it shall beassumed that one person will occupy a studio mobile home, two persons will occupy a one-bedroom mobile home, three persons will occupy a two-bedroom mobile home, four persons willoccupy a three-bedroom mobile home and five persons will occupy a four-bedroom mobilehome.

"Very Low Income Spaces" means the Spaces in the Project designated for occupancy byVery Low Income Residents pursuant to Section 5(a) of this Regulatory Agreement

Such terms as are not defined herein shall have the meanings assigned to them in theIndenture. Unless the context clearly requires otherwise, as used in this Regulatory Agreement,words of the masculine, feminine or neuter gender shall be construed to include each othergender when appropriate and words of the singular number shall be construed to include theplural number, and vice versa, when appropriate. This Regulatory Agreement and all the termsand provisions hereof shall be construed to effectuate the purposes set forth herein and to sustainthe validity hereof. The defined terms used in the preamble and recitals of this RegulatoryAgreement have been included for convenience of reference only, and the meaning, constructionand interpretation of all defined terms shall be determined by reference to this Section 1notwithstanding any contrary definition in the preamble or recitals hereof The titles andheadings of the sections of this Regulatory Agreement have been inserted for convenience ofreference only, and are not to be considered a part hereof and shall not in any way modify orrestrict any of the terms or provisions hereof or be considered or given any effect in construingthis Regulatory Agreement or any provisions hereof or in ascertaining intent, if any question ofintent shall arise.

•

Section 2. Representations and Warranties -of the Borrower. The Borrower herebyrepresents, as of the date hercot and covenants, warrants and agrees as follows:

(a) The Borrower has incurred a substantial binding obligation to acquire theProject pursuant to which the Borrower s obrga ed to expend at least 5% of the principalamount of the Bonds.

•

11111111111E IIIIIINIIII11111111111111111111/1

aocaz — esszse049/2002 11:550plc Page: 7 of 41

02-83294.13 5 •

Case5:10-cv-01087-JW Document46-3 Filedde)12/10 Page5 of 9

formed all such acts and work necessary to cure the default. Pursuant to such right ofA the issuer shall be permitted (but is not required) to enter upon the Project and

perform all acts and work necessary to protect, maintain and preserve the improvementsand landscaped areas on the Project, and to attach a lien on the Project, or to assess theProject, in the amount of the expenditures arising from such acts and work of protection,maintenance and preservation by the Issuer and/or costs of such cure, including a 15%administrative charge, which amount shall be promptly paid by the Borrower to theIssuer, upon written demand.

To the extent financially feasible, the Borrower shall use good faith effortsto either purchase the Podesta Parcel or extend or renew the existing lease for the PodestaParcel prior to the stated expiration date thereof. The Borrower shall notify the Issuer inwriting upon the earlier of (i) at least twelve months prior to the stated expiration date ofsuch lease setting forth the current state of negotiations with respect to the Podesta Parcelor (ii) at least thirty days prior to entering into a purchase contract or new lease withrespect to the Podesta Parcel setting forth the basic terms contained therein. Issuer mayrequest periodic updates as to progress initiated or made in securing ownership or longertenancy as to the Podesta Parcel during the term of this Agreement.

(g) The increased rent contained in the leases of the Participating Residentswill not exceed $90 per month. The Borrower shall honor the existing leases of theNonparticipating Residents. Future increases in rent by the Borrower shall beimplemented only in compliance with such leases. To the extent a NonparticipatingResident desires to enter into a new lease on terms substantially the same as the leaseswith Participating Residents, the Borrower shall negotiate with such NonparticipatingResidents to enter into such new lease on terms substantially the same as such leases withthe Participating Residents. Future increases in rent may be subject to local mobilehomerent control ordinances and administration.

(h) The Borrower shall apply amounts on deposit in the Rental AssistanceFund to reduce rents on Qualified Spaces occupied by Very Low Income Residents or, inthe alternative, to purchase mobile homes for sale within the Project in order to preservehousing for Very Low Income Residents. The Borrower shall notify in writing theProgram Administrator and the Tssuer at least once each calendar year (and in no eventlater than January 31 of each year commencing January 31, 2003) with respect to themanner in which such funds have been applied during the prior calendar year to reducesuch rents. In addition, the Borrower agrees to use good faith efforts to implement aprogram, if and to the extents funds are available therefor, to purchase mobile homeslocated on Qualified Spaces that are for sale within the Project in order to permit suchSpaces to retain their designation as Qualified Spaces. The Borrower, with the assistanceof the Issuer if applicable, shall use good faith efforts to apply for grants and low interestrate loans that may be available to implement such a program.

Section 5. Qualified Residents. Pursuant to the requirements of the Code and the Act..the Borrower hereby represents, as of the date hereof, and warrants, covenants and agrees asfollows:

02-83296 n111111111 11111111 1111111111111111 1111

2 00 2-0-798.904 / 18 2002 11 :551:1AG Pa ge- 11 of 41


(a) During the Qualified Project Period.

(i) not less than 20% of the Spaces in the Project shall be designatedas Very Low Income Spaces and shall be continuously occupied by Very LowIncome Residents. The monthly rent charged for one-half of the Very LowIncome Spaces (i.e.,.10% of the Spaces) shall be not greater than the lesser of (x)the monthly rent permitted under any lease then in effect and any restrictionsunder applicable law or (y) the amount calculated as follows:

• (A) Where a Very Low Income Resident is both the registeredand legal owner of the mobile home and is not making mortgage paymentsfor the purchase of that mobile home, the total rental charge for occupancyof the Space (exciuding a reasonable allowance for other related housingcosts determined at the time of acquisition of the Project by the Borrowerand excluding any supplemental rental assistance from the State, thefederal government, or any other public agency to the Very Low IncomeResident or on behalf of the Space and the mobile borne) shall not exceed1/12 of 30% of 50% of Median Income for the Area, adjusted forhousehold size. Calculated as a monthly rent which does not exceed theamount produced by (I) beginning with the Median Income for the Area(which figure, as established by the U.S. Department of Housing andUrban Development assumes a four-person household), (II) establishingthe number of persons in the Space for purposes of this calculation usingthe assumed standard household sizes set forth in definitions, Very LowIncome Residents, (III) multiplying by the relevant Family SizeAdjustment Factor, (IV) multiplying by 50%, (V) multiplying by 30%.and (VI) dividing by twelve.)

(B) Where a Very Low Income Resident is the registeredowner of the mobile home and is making mortgage payments for thepurchase of that mobile home, the total rental charge for occupancy of theSpace (excluding any charges for utilities and storage and excluding anysupplemental rental assistance from the State, the federal government, orany other public agency to the Very Low Income Resident or on behalf ofthe Space and mobile home), shall not exceed 1112 of 15% of 50% ofMedian income for the Area, as adjusted for household size. Calculated asa monthly rent which does not exceed the amount produced by (1)

beginning with the Median Income for the Area (which figure, asestablished by the U.S. Department of Housing and Urban Developmentassumes a four-person household), (II) establishing the number of personsin the Space for purposes of this calculation using the assumed standardhousehold sizes set forth in definitions, Vely Low Income Residents, (III)multiplying by the relevant Family Size Adjustment Factor, (IV)multiplying by 50%, (V) multiplying by 15%, and (VI) dividing bytwelve.)

•

111111111111111111111111111111111111RE R/2002-07595904/120412 11.55R

02-143296.13 RG Page 12 or 41


(C) Where a Very Low Income Resident rents both the mobilehome and the Space occupied by the mobile home, the total rentalpayments paid by the Very Low Income Resident on the mobile borne andthe Space occupied by the mobile home (excluding any supplementalrental assistance from the State, the federal government, or any otherpublic agency to that Very Low Income Resident or on behalf of thatSpace and mobile home) shall not exceed 1/12 of 30% of 50% of MedianIncome for the Area adjusted for household size. Calculated as a monthlyrent which does not exceed the amount produced by (I) beginning with theMedian Income for the Area (which figure, as established by the U.S.Department of Housing and Urban Development assumes a four-personhousehold), (II) establishing the number of persons in the Space forpurposes of this calculation using the assumed standard household sizesset forth in definitions, Very Low Income Residents, (III) multiplying bythe relevant Family Size Adjustment Factor, (IV) multiplying by 50%, (V)multiplying by 30%, and (VI) dividing by twelve.)

The monthly rent charged for the remaining one-half of the Very Low IncomeSpaces (i.e., 10% of the Spaces) shall not be greater than as set forth above in clauses(A), (B) and (C); provided however that the Borrower shall in all such cases consideronly the rent for the Spaces (and not any other payments, including without limitation,rent for the mobile home or any mortgage payments) in determining the maximummonthly rental to be charged regardless of whether the Very Low Income Resident ismaking mortgage payments or renting both the Space and the mobile home.

(b) In the event a recertification of such tenant's income in accordance withSection 5(d) below demonstrates that such tenant no longer qualifies as a QualifiedResident the Space occupied by such Resident shall continue to be treated as a QualifiedSpace unless and until any Space in the Project thereafter is occupied by a new tenantother than a Qualified Resident. Moreover, a Space previously occupied by a QualifiedResident and then vacated shall be considered occupied by a Qualified Resident untilreoccupied, other than for a temporary period, at which time the character of the Spaceshall be redetermined. In no event shall such temporary period exceed 31 days.Notwithstanding anything herein to the contrary, if at any time the number of QualifiedResidents falls below the number required by subparagraph (a)(i) of this Section, the nextavailable vacant Space shall be rented to a Qualified Resident.

(c) Immediately prior to a Qualified Resident's occupancy of a QualifiedSpace (or prior to the Closing Date with respect to Very Low Income Spaces previouslyoccupied), the Borrower will obtain and maintain on file an Income Certification fromeach Qualified Resident occupying a Qualified Space, dated immediately prior to theinitial occupancy of such Qualified Resident in the Project (or prior to the Closing Datein the case of existing Very Low Income Residents). In addition, the Borrower willprovide such further information as may be required in the future by the State ofCalifornia, and by the Act, as the same may be amended from time to time, as requestedby the Issuer Or the Program Administrator. The Borrower shall verify that the incomeprovided by an applicant with respect to a Space to be occupied after the Closing Date is

$1111111111111111111111111 zeta:Da-457'59am• 04/19/2002 11 55P

0243296.13 AG Pa ger 13 of 41


accurate by taking one or more of the following steps as a part of the verification process:(i) obtain a federal income tax return for the most recent tax year; (ii) obtain a writtenverification of income and employment from applicant's current employer; (iii) if anapplicant is unemployed or did not file a tax return for the previous calendar year, obtainother verification of such applicant's income reasonably satisfactory to the Issuer orProgram Administrator; or (iv) such other information as may be reasonably requested bythe Issuer or Program Administrator.

Within 10 days after the last day of each calendar quarter during the term of thisRegulatory Agreement commencing with the quarter ending June 30, 2002, the Borrowershall advise the Program Administrator or in the absence of a Program Administrator, theIssuer, of the status of the occupancy of the Project by delivering to the ProgramAdministrator or the Issuer, as the case may be, a Certificate of Continuing ProgramCompliance; provided, however, with the prior written approval of the issuer or theProgram Administrator, as the case may be, such Certificate need be filed onlysemi-annually. Copies of the most recent Income Certifications for Qualified Residentscommencing or continuing occupancy of a Qualified Space shall be made available to theIssuer or the Program Administrator upon request.

• (d) On the first anniversary date of the issuance of the Bonds, and on eachanniversary date thereafter, the Borrower shall certify the income of the occupants ofsuch Qualified Spaces by obtaining a completed Income Certification based upon thecurrent income of each occupant of the Space. The Borrower shall verify the income oftenants in connection with any such recertification. In the event the recertificationdemonstrates that such household's income exceeds 140% of the income at which suchhousehold would qualify as Qualified Residents, such household will no longer qualify asa Qualified Resident, and the Borrower either (i) will designate another qualifying Tenantand Space in the Project as a Qualified Resident and a Qualified Space, respectively; or(ii) will rent the next available vacant Space to one or more Qualified Residents.

(e) The Borrower will maintain complete and accurate records pertaining tothe Qualified Spaces, and will permit any duly authorized representative of the Issuer, theProgram Administrator, the Trustee (who shall have no duty to inspect), the Departmentof the Treasury or the Internal Revenue Service to inspect during normal business hours

• and with prior notice the books and records of the Borrower pertaining to the Project,including those records pertaining to the occupancy of the Qualified Spaces.

(0 Each lease pertaining to a Qualified Space occupied after the Closing Dateshall contain a provision to the effect that the Borrower has relied on the IncomeCertification and supporting information supplied by the Qualified Resident indetermining qualification for occupancy of the Qualified Space, and that any materialmisstatement in such certification (whether or not intentional) may be cause forimmediate termination of such lease. Each lease will also contain a provision that failureto cooperate with the annual recertification process reasonably instituted by the Borrowerpursuant to Section 5(d) above will disqualify the Space as a Qualified Space and providegrounds for termination of the lease. The Borrower agrees to provide to the Program

02-83296.13 1 '1 9-4tirseasNINERIRWINI rear!


Administrator and the Issuer, a copy of the form of application and lease to be providedto prospective Qualified Residents and any amendments thereto.

(g) In the event, despite Borrower's exercise of best efforts to comply with theprovisions of Section 5 of this Regulatory Agreement, thc Borrower shall have been outof compliance with any of. the restrictions of Section 5 hereof relative to QualifiedResidents, for a period in excess of six months, then at the sole option of the Issuer the

' term of the Regulatory Agreement shall be automatically extended for the period ofnoncompliance upon written notice to the Borrower, the Program Administrator and theTrustee from the Issuer, such extension to relate to the Qualified Spaces and QualifiedResidents as to which such noncompliance relates.

Section 6. Tax Status of the Tax-Exempt Bonds. The Borrower and the Issuer eachhereby represent, as of the date hereof, and warrants, covenants and agrees that:

(a) it will not knowingly take or permit, or omit to take or cause to be taken,as is appropriate, any action that would adversely affect the exclusion from gross incomefor federal income tax purposes of the interest on the Tax-Exempt Bonds or theexemption from California personal income tax or the interest on the Bonds and, if itshould take or permit, or omit to take or cause to be taken, any such action, it will take alllawful actions necessary to rescind or correct such actions or omissions promptly uponobtaining knowledge thereof;

•(b) it will take such action or actions as may be necessary, in the written

opinion of Bond Counsel filed with the Issuer, the Trustee and the Borrower, to complyfully with the Act and an applicable rules, rulings, policies, procedures, Regulations orother official statements promulgated, proposed or made by the Department of theTreasury or the Internal Revenue Service to the extent necessary to maintain theexclusion from gross income for federal income tax purposes of interest on the Tax-Exempt Bonds; and

(c) it will file of record such documents and take such other steps as arenecessary, in the written opinion of Bond Counsel filed with the Issuer, the Trustee andthe Borrower, in order to ensure that the requirements and restrictions of this RegulatoryAgreement will be binding upon all owners of the Prciject, including, but not limited to.the execution and recordation of this Regulatory Agreement in the real property records

• of the County.

The Borrower hereby covenants to include the requirements and restrictions contained inthis Regulatory Agreement in any document transferring any interest in the Project (other thanleases of Spaces in the Project to individual tenants) to another person to the end that suchtransferee has notice of, and is bound by, such restrictions, and to obtain the agreement from anytransferee to abide by all requirements and restrictions of this Regulatory Agreement.

Section 7. Modification of Special Tax Covenants. The Borrower, the Trustee and theIssuer hereby agree as follows:

•

02-33296.13 INIEHERMAIIIIHR4 Ercilli!9a9


EXHIBIT "D"


Franciscan County Club Mobile Home ParkCooperation and Advisory Agreement

This Cooperation and Advisory Agreement (the "Agreement') is made between LINCFranciscan Limited Partnership, a California Limited Partnership, ("LINC Franciscan"),LINC Housing Corporation, a 'California Public Benefit Corporation, ("LINC") and theFranciscan Acquisition Committee, an Unincorporated Association, (''FAC") dated as ofApril 18, 2002.

Whereas on April 18, 2002 LINC Franciscan purchased the existing leasehold interestin the Franciscan Country Club Mobile Home Park (the "Park") and the fee simpleinterest in a portion of the Park with the proceeds of certain bonds (the "Bonds") issuedby the Daly City Housing Development Finance Agency (the "Agency"); and,

Whereas the documents related to the Bonds, (collectively the "Financing Documents"),impose certain affordability requirements on the owner of the Park; and,

Whereas, the ability of LINC Franciscan to purchase its interest in the Park andsubsequently transfer it to another organization which qualifies for tax-exempt financingwith resident-homeowner representation is predicated on LINC's experience andfinancial stability; and,

Whereas, FAC represents the homeowner residents of the Park; and

Whereas, LINC, LINC Franciscan and FAC all desire to enable the residents of the Parkto participate in the govemance of the Park and the establishment of park policies,budgets, and community guidelines; and

Whereas, it is the intent of the parties to create, through this Agreement, a managementstructure for the Park to cover budget, capital improvements, community guidelines, andthe selection of the Property Manager, that is first established upon LINC Franciscan'sacquisition of the Park, and preserved upon transfer of the Park to a subsequent entity,where such management decisions are made with input from LINC, FACrepresentatives, and City representative(s) as set out below.

It is therefore agreed:

1. LINC, LINC Franciscan, and FAC will endeavor to form a 501(c)(3) non-profitcorporation to be known as Franciscan Housing Corporation (FHC). In the eventthis name is not available, another similar name shall be chosen.

2. The FHC by-laws shall provide that FHC shall have seven (7) directors, three (3)of which shall be appointed by FAG, three (3) of which shall be appointed byLINC, and one (1) of which shall be appointed by the City of Daly City and shallbe an elected, management or appointed official of the City. The term of officefor directors and term-limns (if any) shall be described in the by-laws of FHC. Tothe extent required for IRS approval of the 501(cX3) status of the FHC, thenumber of resident directors or their voting rights, or both, may be reducedsubject to the approval as to any such restructure by the City of Daly City and the

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Franciscan Country Club Mobile Home Park Cooperation AgreementApril 18, 2002Page 2

FAC. FAC acknowledges that in order to qualify for 501(c)(3) status and thusassume ownership of the Park from LING Franciscan, the ability of residents ofthe Park to serve as directors of FHC or otherwise participate in the managementof the Park may be restricted or limited.

3. FAG agrees that it will continue to be an association of resident-owners with thepurpose of promoting and protecting the general welfare of the residents andowners of mobile homes within the Park. Only those households that both ownand occupy a home in the Park will be eligible for voting membership in FAG.FAG will hold Park-wide elections of its directors in a time and manner specifiedin its by-laws. Such elections shall be monitored by a qualified, neutral third-party entity. FAG will determine a process for selecting their appointments to theFHC Board of Directors and amend its by-laws to describe and require thisprocess as well as owner-occupancy membership. FAG shall provide FHC andLINC Franciscan with a written certification of both the election and theappointments.

4. The director representative of the City of Daly City shall be that person as theDaly City City Manager so informs the FAG, LING Franciscan and, if applicable,FHC. The City of Daly City representative director may change, unresbicted byterm, and shall be as designated by the City Manager, subject to the limitationset forth in paragraph 2 above.

5. This agreement shall serve as LINC Franciscan's non-revocable commitment totransfer the Park to FHC upon receipt by FHC of Federal and State tax-exemptstatus, including without limitation receipt of a determination letter from theInternal Revenue Service that FHC qualifies as a 501(c)(3) corporation with thepurpose of owning the Park. LINC Franciscan and LING shall pursue formationand tax exemption with reasonable diligence. Transfer shall be subject toapprovals by the City, the Agency and meeting each of the requirements for suchtransfer as detailed in the Financing Documents.

6. In the event that conditions prevent the establishment of Fl-IC as a 501(c)(3)corporation meeting the necessary approvals and requirements as described inparagraph 5 above, LING Franciscan and FAG each shall use its best efforts toaffect the intent of this agreement through the entity that holds title to the Park.

7. FAG shall establish a Resident Advisory Committee (RAC) to review and adviseLING Franciscan on such issues as operating budgets, capital improvements,community guidelines, selection and performance of the Property Manager, andother items, as may be deemed appropriate. In addition, the City shall have theright to appoint an elected, management or appointed official of the City toparticipate with RAC (the "City Representative"). LING Franciscan shall provideRAC and the City Representative with budget, program, financial information andsuch other information as may be reasonably requested by RAC and the CityRepresentative. LING Franciscan shall also meet with the RAC and the City

02412516103

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Representative at least quarterly (and more often, as may be reasonablyrequested by RAC) and give serious consideration to RAC recommendations. Inproviding and considering advice, RAC and L1NC Franciscan shall be mindful ofrequirements to operate, maintain; and control the Park in accordance with theterms of the Financing Documents and in accordance with all applicable law. TheRAC shall continue to provide advice to FHC after transfer of the Park to FHC,and in the event it is not possible to make such transfer, to LINC Franciscanthroughout its ownership of the Park.

8. Upon the transfer of the Park to FHC, LING shall be retained to provide assetmanagement services under a separate agreement that shall run for the term ofthe Bonds LINC shall receive compensation equal to 1.5% of the gross rentalreceipts of the Park as specified in the Financing Documents. CommunityHousing Management Services, a LINC affiliate, shall be the initial PropertyManager.

9. Upon repayment of the Bonds and any other financing related to the Park, andupon request by a majority of the households in the Park, LING irrevocablycommits to relinquish its right to appoint its three (3) directors of FHC.Replacement directors shall be selected by the remaining four (4) directors.

10.Current rules and regulations shall remain in effect until changed. Newcommunity guidelines supplanting the existing rules and regulations will beestablished jointly with LINC Franciscan and FAG.

11.FAC will use its best efforts to obtain the cooperation of all residents of the Parkin providing information required to document compliance with the FinanceDocuments. FAC will convene regular meetings of all residents to disseminateinformation and report on progress. Copies of documents shall be provided tothe City of Daly City upon request and without cost to the City.

12.The operation of the Park will be consistent with a regulatory agreement and theIndenture, included as part of the Financing Documents specifying affordabilityand other obligations arising from the utilization of tax-exempt financing for theacquisition by LING Franciscan of the Park.

13.Rents shall be increased in accordance with the contingent lease amendment forthose residents of the Park who have signed the contingent lease amendment,and consistent with existing rental agreements or leases for those who have notsigned the contingent lease agreement.

14.Approximately 363 homeowners have executed contingent lease amendmentsthat become effective upon acquisition of the mobilehome park by LINC or itsaffiliate. These contingent lease amendments provide for a $90 per monthincrease in rents, then a stabilized rent for a period of five years, then increasesas necessary to maintain the park, pay the financing and maintain reserves. In

02-112516.03

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the event that homeowners wish to execute such leases after close of escrow forpurchase of the park the monthly increase shall be $100. The rent increase inthe contingent lease amendment will commence in the first month afteracquisition of the park. If a homeowner signs a contingent lease amendmentafter close of escrow for purchase of the park, that homeowner shall be requiredto pay a lease commencement fee equal to the difference between the rentalready paid by such homeowner or his or her predecessor, and the increasedrent under the lease amendment (using the $100 per month starting increase).For instance, if three months have accrued, the homeowner would pay $300upon execution of the lease amendment to "catch up" to those executing prior toacquisition.

Rents under the existing, non-amended leases will increase over time. The"Buy-in" amount for homeowners signing the lease amendments will bemeasured from the actual rent paid to the rent that would have been paid underthe lease amendment had it been signed. After July 1, 2002, any homeownersigning a lease amendment hereunder shall pay no less than $500 at the time ofsigning the lease amendment, even if the cumulative rents under the "old lease"have exceed those under the lease amendment.

15. New leases will be available to all residents who signed up for the contingentlease amendment and will be for a term of up to 34 years if they so desire, or ifon the Podesta property, for the balance of the Podesta lease term, but not Inexcess of 34 years if the Podesta lease term is extended beyond that period.

16.Leases will require owner occupancy except in certain hardship cases and willprovide for the minimum income certification required for ensuring:

a. Compliance with the Financing Documents;b. Property tax exemption for the Park;c. Compliance with the Park Rules and Regulations.

17. No sub-leases will be permitted except in the case of hardship. Hardship will bedefined as:

a. Illness or unemployment of a family/household member with a loss ofincome that makes it impossible to pay housing costs existing prior tosuch illness or unemployment; or

b. A transfer of employment more than 100 miles from the Park.

18. Hardship subleases shall be for a maximum of one year, but may be reviewedand renewed for one additional year.

19. New long-term leases will remain in effect upon any sale or transfer of the Parkand, upon transfer of a home, will be fully assumable by a qualified buyer of thathome in the Park. Long-tern leases shall also be assumable by heirs of theHomeowner-Lessee, provided they meet all regular requirements for owner-

02-112516.03 •

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occupancy. Should an heir not choose to live in the Park, the long-term leaseshall remain in effect upon the sale of the home to a qualified buyer.

20.No legal resident of the Park shall be displaced because of their income levelabsent some other breach of lease or rules such as a failure to pay rent whendue or falsifying income certification information.

21.Park Management Staff are employees of the Property Manager. As such, theywill not expect to receive direction or supervision from resident directors of FHCor FAC and they will not follow such direction or supervision if it is given.

22.The primary point of contact between residents and the Park Management is tobe the resident manager. In the event a resident is dissatisfied with the residentmanager's actions, an appeal should be directed to the resident manager'ssupervisor by telephone or in person. Further appeals shall be in writing anddirected first to the local or regional manager of the Property Manager, then tothe President of LINC. If, following this procedure, the resident is stilldissatisfied, a written appeal may be directed to the Chairman of the Board OfFHC who will convene a grievance committee of Directors to consider the matter.

23.This Agreement may be amended from time to time by unanimous mutualagreement of all parties. Although not a party to this Agreement, no amendment,modification or cancellation of any portion or all of this Agreement, or otherchange to this Agreement can be made without the prior written consent of theCity of Daly City to the extent such amendment, modification or change affectsthe -City of Daly City or any of its rights herein, as expressed through acommunication from the Daly City City Manager, which consent shall not beunreasonably withheld and shall be deemed to have been given if not receivedwithin 10 days of receipt by the City of such proposed amendment, modificationor change.

24. LINC and LINC Franciscan shall each be bound by the actions of the other in allmatters related to management of the Park.

25.As long as homes in the park meet the requisite standards under state and citycodes, they can continue to be sold in place. New homes proposed to beinstalled in the Park shall be subject to Park standards as established from timeto time.

26. Reference to °the City" or "City of Daly City" within this Agreement does notestablish the City of Daly City as an owner of any interest in the Park, or in anycomponent part, facility, or unit of the Park. Neither does such reference reflectthe City's participation in routine policies, daily management decisions, orpractices of the parties to this Agreement, the Path Manager, or any employeesor representatives of the Park, LINC, LINC Franciscan, the FAC, the proposedFHC, or any other such entity. The parties to this Agreement, jointly and

02-112518.03



severally, agree to indemnify and defend the City of Daly City, its officers andemployees, from and against all claims and legal actions, costs, penalties andfines, damages and liabilities arising from operating, management and injuryrelating to any activity concerning the Park. Such duty to indemnify and defendextends to claims for civil rights violations, actual or threatened release ordischarge of hazardous materials, claims of negligence or willful misconduct.

•

02-112516.03


F anciscan Country Club Mobile Home Park Cooperation Agreement2002

P ge 7 .

Agreed

11LINC F ancis :n Limited PartnershipBy L Housing Corporation,Its General PartnerBy Hunter L. JohnsonIts President,

LIN rer

H ing orporationBy Hunter L. JohnsonIts President •

711ill _tit A, AFranciscan A qiisition ommitteeBy Don TullIts President

02-112518A3

Ca se5:10-cv-01087-JW Document46-5 Filed08/12/10 Pagel of 22

EXHIBIT "E"


CORPORATE FUND FOR HOUSING(A NONPROFIT CALIFORNIA CORPORATION)

FINANCIAL STATEMENTS,SUPPLEMENTAL SCHEDULES

ANDAUDITORS' REPORTDECEMBER 31, 2004


HCVT I Holthouse Carlin & Van Trigt LLP

Certified Public Accountants

Independent Auditors' Report

To the Board of Directors ofCorporate Fund for Housing:

We have audited the accompanying statements of financial position of Corporate Fund forHousing, a nonprofit California corporation, as of December 31, 2004 and 2003, and therelated statements of activities, functional expenses and cash flows for the years then ended.These financial statements are the responsibility of the Organization's management. Ourresponsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in theUnited States of America. Those standards require that we plan and perform the audits toobtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes consideration of internal controls over financial reportingas a basis for designing audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the Organization's internalcontrol over financial reporting. Accordingly, we express no such opinion. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and thesignificant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of Corporate Fund for Housing, as of December 31, 2004 and2003, and the changes in net assets and its cash flows for the years then ended in conformitywith accounting principles generally accepted in the United States of America. •

Our audits were conducted for the purpose of forming an opinion on the basic financialstatements taken as a whole. The information included in the accompanying Schedules I, II,ifi and IV are presented for purposes of additional analysis and are not a required part of thebasic financial statements. Such information has been subjected to the auditing proceduresapplied in the audit of the basic financial statements and, in our opinion, is fairly stated in allmaterial respects in relation to the basic financial statements taken as a whole.

VC 7; SifiC.,PWestlake Village, CaliforniaApril 18, 2005

1601 Cloverfield Boulevard, Suite 300 South — Santa Monica, California 904044550 East Thousand Oaks Boulevard, Suite 200— Westlake Village, California 91362

100 Oceangate, Suite 800 Long Beach, California 90802

Case5:10-cv-01087-JW Document46-5 Filed08/12/10 Page4 of 22• •


STATEMENTS OF FINANCIAL POSITION -DECEMBER 31, 2004 AND 2003

Assets2004 2003

Property, at costLand $ 14,130,653 $ 14,130,653Building and improvements 36,841,846 36,767,936

• Furniture, fixtures and equipment 3,095,603 2,890,992

54,068,102 53,789,581Accumulated depreciation (16,396,8781 (15,476,613)

Property, net • 37,671,224 38,312,968

Cash 548,778 416,616Tenant receivables, net 14,701 15,918Accounts receivable - affiliate- 36,343Due from affiliate 225 225Restricted cash:

Reserves 2,138,549 2,005,749Tenant security deposits 309,899 270,623Bond interest receivable 7,000 7,000

Property tax receivable 8,145Prepaid expenses 29,496 34,378Intangible assets, net 1,260,596 1,326,204

Total assets $ 41,980,468 $ 42,434,169

Liabilities and Net Assets

Notes payable $ 66,536,947 $ 66,905,019Accounts payable and accrued expenses 114,677 107,031Accrued interest payable 6,145,962 4,693,668Security deposits 265,692 233,835Prepaid rents , 7,916 10,927Deferred income 40,000

Total liabilities 73,071,194 71,990,480

Net assets (31,090,726) (29,556,311)

Total liabilities and net assets $ 41,980,468 $ 42,434,169

See notes to financial statements.

2

Case5:10-cv-01087-JW Document46-5 Filed08/12/10 Page5 of 22CORPORATE FUND FOR HOUSING

(A NONPROFIT CALIFORNIA CORPORATION)STATEMENT OF ACTIVIIIES

FOR THE YEAR ENDED DECEMBER 31, 2004(WITH SUMMARIZED INFORMATION FOR 2003)

2004 Temporarily

Unrestricted restricted Total 2003 Revenue:

Rental incomeRental income $ 8,246,234 $ - $ 8,246,234 $ 8,045,269Vacancy loss (642,205) (642,205) (324,374) Total rental income 7,604,029- 7,604,029 7,720,895

Other incomeMiscellaneous tenant income . 109,303- 109,303 119,470Interest income 27,14227142 20,917

- , .Contract signing bonus 40,000- 40,000 40,000 Total other income 176,445 - 176,445 180,387

Net assets released from restrictions . - -

Total rental income and other support 7,780,474 - 7,780,474 7,901,282 •

Expenses:Program services 9,259,556 - 9,259,556 9,269,259Supporting services 75,000 - 75,000 75,000

Total expenses 9,334,556 - 9,334,556 9,344,259

Forgiveness of debt (Note 3) 19,667 - 19,667 19,667 Net expenses 9,314,889 - 9,314,889 9,324,592

Change in net assets (1,534,415) - (1,534,415) (1,423,310)

Net assets at beginning of year (29,556,311) (29,556,311) (28,133,001)

Net assets at end of year $ (31,090,726.00) $ - $ (31,090,726) $ (29,556,311)


3

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SCHEDULE OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED DECEMBER 31, 2004

(WITH SUMMARIZED INFORMATION FOR 2003)

2004

. Program Supporting

Services Services Total 2003

Salaries and personnel $ 641,969 $ - $ 641,969 $ 616,075Administrative expenses 101,958 75,000 176,958 191,837Marketing expense 146,961- 146,961 148,624

Repairs and maintenance 291,062- 291,062 318,248Cleaning and decorating costs 38,970_ 38,970 35,985Contract services 327,650 - 327,650 312,780Professional fees 48,910- 48,910 64,098Management fees 382,823 - 382,823 389,169Utilities 396,797 - 396,797 359,549Taxes and insurance 514,309 - 514,309 434,655Financial expenses 5,380,983 - 5,380,983 5,281,994Amortization 66,899 66,899 66,683Depreciation 920,265 - . 920,265 1,124,562

$ 9,259,556 $ 75,000 $ 9,334,556 $ 9,344,259

See notes to financial statements,

4

Case5:1 0-cv-01 087-JW Document46-5 F iled08/1 2110 Page 7 of 22


STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

2004 2003

Reconciliation of changes in net assets to netcash provided by operating activities:

Changes in net assets $ (1,534,415) $ (1,423,310)Adjustments to reconcile changes in net assets tonet cash provided by operating activities:

Depreciation 920,265 1,124,562Amortization 66,899 66,683Debt forgiveness (19,667) (19,667)Changes in operating assets and liabilities:

Tenant security deposits (39,276) (30,564)Tenant receivables 1,217 22,577Accounts receivable - affiliate 36,343 (36,343)Prepaid expenses 4,882 4,086Property tax receivable 8,145 (8,145)Accounts payable and accrued expenses 7,646 (23,848)Accrued interest payable 1,452,294 1,316,248Security deposits - liability 31,857 19,576Prepaid rents (3,011) (720)

•Deferred income (40,000) (40,000)

Net cash provided by operating activities 893,179 971,135

Cash flows from investing activities:Building and equipment additions (278,521) (335,750)Payment for intangibles (1,291) (21,775)Net, deposits to reserves (132,800) (400,893)

Net cash used in investing activities (412,612) (758,418)

Cash flows from financing activities:Letter-of-credit redemption (repayment)- (3,380,000)Proceeds from notes payable- 3,200,000Repayment of notes payable (48,405) (23,311)Repayment of bonds payable (300,000) (285,000)

Net cash used in financing activities (348,405) (488,311)

Net change in cash 132,162 (275,59a)

Cash at beginning of year 416,616 692,210

Cash at end of year $ 548,778 $ 416,616


5

Case5:10-cv-01087-JW Document46-5 Filed08/1211 Q Page8 of 22CORPORATE FUND FOR HOUSING

(A NONPROFIT CALIFORNIA CORPORATION)NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004

Note 1. Organization and Summary of Significant Accounting Policies

Organization

Corporate Fund for Housing (the Organization), a non-profit California corporation, wasincorporated to acquire, develop and operate affordable housing in Southern California. TheOrganization includes SEASONS at Whittier, SEASONS at Diamond Bar, SEASONS at LaVerne, SEASONS at Monrovia, and SEASONS at Lakewood (the Five SEASONS) andTahquitz (collectively referred to as the Projects), which are involved in the ownership andoperations of six multifamily housing projects (953 units) located in Los Angeles and SanBernardino Counties.

Basis of Presentation

The accompanying financial statements include summarized comparative information fromthe prior year (2003) presented in total, but not by net asset class. Accordingly, the prioryear information does not include enough detail to constitute a presentation in accordancewith accounting principles generally accepted in the United States of America. Therefore,the comparative information should be read in conjunction with the financial statements forthe year ended December 31, 2003, from which the summarized information was extracted.

Classification and Reporting of Funds

In accordance with Statement of Financial Accounting Standards (SFAS) No. 117, "FinancialStatements of Not-For-Profit Organizations," the Organization presents its net assets underthree separate classifications: Unrestricted, Temporarily Restricted and PermanentlyRestricted. Temporarily restricted and permanently restricted funds are those funds that maybe used only in accordance with the purposes established by the donor and are distinguishedfrom unrestricted or Board designated funds in which the Organization retains full control withrespect to the use thereof. The Organization had no temporary or permanently restricted assetsduring 2004.

In addition, SFAS No. 117 requires that the Organization report all of its expenses in theunrestricted fund, regardless of the source of the funds for the expenditures. A transfer of netassets from the restricted fund to the unrestricted fund is reported upon satisfaction of programrestrictions to match the restricted revenue with the restricted expenses.

Public Support and Revenue Recognition •

In accordance with SFAS No. 116, "Accounting for Contributions Received and ContributionsMade", revenues from contributions are recognized pursuant to the terms specified by thedonor. Contributions are recognized at the earlier of the date of receipt of funds or the date ofa formal, unconditional pledge from known donors. Rental income is reflected when it isearned.

6

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DECEMBER 31, 2004

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

Income Taxes

Under applicable law and regulations, the Organization has been determined to be exemptfrom Federal income and California franchise taxes. In addition, the Organization does nothave any income, which it believes would subject it to unrelated business income taxes.Accordingly, there is no provision for income taxes in these financial statements.

Donated Services

The value of donated services has not been recorded in the accompanying financial statementssince the Organization does not believe these services are enhancing non-financial assets orwould normally have to be purchased if volunteers were not available.

Reserves

In connection with the financing of the Five SEASONS, the Organization is required tomaintain a repair and replacement fund with an initial deposit of $338,000 upon closing of theSeries A, Series A-T, Series B-1, Series B-2, Series C-1, and Series C-2 Bonds (the Bonds)and $169,000 payable in twelve equal monthly installments annually. In addition, a deficit-operating fund with an initial deposit of $100,000, and other various funds with the Trustee ofthe Bonds are required. Summaries of the Organization's various reserves are as follows:

January 1, Interest and December 31,2004 Additions . Withdrawals 2004

General fund - $ 6,804,539 $ (6,788,947) $ 15,592Taxes and insurance find 216,760 1,313 (47,025) 171,048Administration fund 21,874 264,573 (262,922) 23,525Bond interest fimd 304,496 3,420,297 (3,501,024) 223,769Principal redemption fund 25,456 359,463 (300,537) 84,382Deficit operating fund 106,763 931 (907) 106,787Repair and replacement

fund-Five SEASONS 146,547 155,797 (326) 302,018Repair and replacement

fund — Tahquitz 97,290 60,463 (18,000) 139,753Debt service reserve fund 1,086,542 258,936 (273,832) 1,071,646Miscellaneous finds 21 8- 29

$ 2,005,749 $ 11,326,320 $ (11,193,520) 5 2,138,549

7


-(A NONPROFIT CALIFORNIA CORPORATION)NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004

Note 1.

Organization and Summary of Significant Accounting Policies (Continued)

Reserves (Continued)

January 1, Interest and December 31,2003 Additions Withdrawals 2003

General fund• $ 3,416 $ 6,951,750 $ (6,955,166) $ -Taxes and insurance Rind 216,108 652- 216,760Administration fund 21,534 258,295 (257,954) 21,875Bond interest fund 292,687 3,527,054 (3,515,245) 304,496Principal redemption fund 113,750 287,169 (375,464) 25,455Deficit operating fund 106,667 930 (834) 106,763Repair and replacement

fund - Five SEASONS 409,948 164,487 (427,888) 146,547• Repair and replacement

fund — Tahquitz 97,290 97,290Debt service reserve fund 440,737 649,569 (3,764) 1,086,542Miscellaneous funds 9 12 21

$ 1,604,856 $ 11,937,208 $ (11,536,315) $ 2 005,749

Property Management Fee

The Projects are managed by Community Housing Management Service (CHMS). Propertymanagement fees of $382,823 and $389,169 were paid to CHMS Property Management in2004 and 2003, respectively.

Concentrations of Business and Credit Risk

The Organization rents to people with qualifying levels of income. The tenants workprimarily in the Los Angeles and San Bernardino County areas. The Organization is subject .•to business risks associated with the economy, the level of unemployment in Los Angelesand San Bernardino Counties and changes in public assistance payments, which affectsoccupancy as well as the tenant's ability to make rental payments.

The Organization's cash and cash equivalents are maintained in various banks. TheOrganization has exposure to credit risk to the extent that its cash and cash equivalents exceedamounts covered by federal deposit insurance. The Organization believes that its credit risk isnot significant.

8

Case 5:10-cv-01087-JW Coco me nt46-5 Filed 08/12/10 Pagel 1 of 22•CORPORATE FUND FOR HOUSING

•(A NONPROFIT CALIFORNIA CORPORATION)NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2004

Note 1.

Organization and Summary of Significant Accounting Policies (Continued)

Intangible Assets

Intangible assets are amortized over the life of the bonds and as of December 31, 2004 and2003, are as follows:

2004 2003

Bond cost of issuance $ 1,779,495 $ 1,778,204Less accumulated amortization (518,899) (452,000)

Net intangible assets $ 1,260,596 $ 1,326,204

Estimates

The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenues and expenses,and the disclosure of contingent assets and liabilities at the date of the financial statements.Actual results may differ from those estimates.

Statement of Cash Flows

For purposes of the statement of cash flows, the Organization considers all highly liquidunrestricted investments with an original maturity of three months or less to be cashequivalents.

Cash paid for the following:

2004 2003 Interest $ 3,928,689 $ 3,965,746Income taxes

Functional Expenses

The costs of providing the Organization's programs and other activities have been summarizedon a functional basis in the statement of functional expenses. Accordingly, certain costs havebeen allocated either to direct programs or supporting services. The functional classificationsare defined as follows:

• Program service expenses consist of costs incurred in connection with providing servicesand conducting programs.

9

Case 5: 10-cv-01087-JW Docu me nt46-5 F iled 08/12/10 Pagel 2 of 22CORPORATE FUND FOR HOUSING


DECEMBER 31, 2004-

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

Functional Expenses (Continued)

• Supporting service expenses consist of costs incurred in connection with the overallactivities of the Organization, which are not allocable to another functional expensecategory.

• Fundraising expenses consist of costs incurred in connection with activities related toobtaining grants and activities designed to generate revenue. There were no fimdraisingexpenses incurred during 2004 and 2003.

Property

Depreciation and amortization of building and furniture, fixtures and equipment are providedusing the straight-line method over the following estimated useful lives:

Description LifeBuilding and improvements 40 yearsFurniture, fixtures and equipment 5-12 years

The Organization capitalizes expenditures or betterments that materially increase asset livesand charges ordinary repairs and maintenance to operations as incurred. When assets are soldor otherwise disposed of, the costs and related reserves are removed from the accounts and anyresulting gain or loss is included in operations.

The Organization is subject to the provisions of Statement of Financial AccountingStandards No. 144, Accounting for the Impairment or Disposal ofLong-Lived Assets (SFASNo. 144) which requires impairment losses to be recorded on long-lived assets whenindicators of impairment are present and the undiscounted cash flows estimated to begenerated by those assets (excluding interest) are less than the carrying amount of the assets.In such cases, the carrying value of assets to be held and used are adjusted to their estimatedfair value and assets held for sale are adjusted to their estimated fair value less sellingexpenses. No impairment losses were recognized in 2004 and 2003.

10

Case5:10-cv-01087-JW Document46-5 RU 08 Page13 of 22CORPORATE FUND FOR HOUSING


DECEMBER 31, 2004

•Note 2. Related Party Transactions

Administrative Fee

LINC Housing, Inc. (LINC), an affiliate of the Organization, is entitled to receive a fee of$75,000 for administrative, refinance consulting and development services rendered onbehalf of the Organization, which is included in administrative expenses on the schedule offunctional expenses.

Note 3. Notes Payable

A summary of the notes payable related to the Five SEASONS at December 31, 2004 and2003 are as follows:

2004 2003 The California Statewide Communities DevelopmentAuthority (the Issuer) Multifamily Housing RevenueRefunding Bonds, 1999 Series A (Series A Bonds) securedby a pledge and assignment of the revenues and Borrower,as defined, loan documents, including certain revenuesfrom the Five SEASONS and funds held under theIndenture between the Issuer and the Trustee. Interest ispayable semi-annually to the Trustee at 6.50 percent. TheSeries A Bonds are subject to annual mandatory sinkingfund redemption on December 1, ranging from $680,000to $3,085,000, commencing December 2005. The SeriesA Bonds mature December 2029. $ 40,000,000 $ 40,000,000

The Issuer Multifamily Housing Revenue RefundingBonds, 1999 Series B-1 (Series B-1 Bonds) secured by apledge and assignment of the revenues and Borrower, asdefined, loan documents, including certain revenues fromthe Five SEASONS and funds held under the Indenturebetween the Issuer and the Trustee. Interest is payablesemi-annually to the Trustee at 7.25 percent. The SeriesB-1 Bonds are subject to annual mandatory sinking fundredemption on December 1, ranging from $75,000 to$600,000, commencing December 2005. The Series B-1Bonds mature December 2034. 7,600,000 7,600,000

11

Case5:10-cv-01087-JW Document46-5 Filed08/12/10 Pa ge14 of 22CORPORATE FUND FOR HOUSING


DECEMBER 31, 2004

Note 3. Notes Payable (Continued)

2004 2003

The Issuer Multifamily Housing Revenue RefundingBonds, 1999 Series B-2 (Series B-2 Bonds) secured by apledge and assignment of the revenues and Borrower, asdefined, loan documents, including certain revenues fromthe Five SEASONS and funds held under the Indenturebetween the Issuer and the Trustee. Interest is payablesemi-annually to the Trustee at 7.50 percent. The SeriesB-2 Bonds are subject to annual mandatory sinking fundredemption on December 1, ranging from $60,000 to$315,000, commencing December 2010. The Series B-2Bonds mature December 2034. 4,000,000 4,000,000

The Issuer Multifamily Housing Revenue RefundingBonds, 1999 Series A-T (Series A-T Bonds) secured by apledge and assignment of the revenues and Borrower, asdefined, loan documents, including certain revenues fromthe Five SEASONS and funds held under the Indenturebetween the Issuer and the Trustee. Interest is payablesemi-annually to the Trustee at 5.00 percent. The SeriesA-T Bonds are subject to annual mandatory sinking fundredemption on December 1, ranging from $245,000 to$325,000, commencing December 2000. The Series A-TBonds mature December 2006. 640,000 940,000

The Issuer Multifamily Housing Revenue RefundingBonds, 1999 Series C-1 (Series C-1 Bonds) secured by apledge and assignment of the revenues and Borrower, asdefined, including certain revenues from the FiveSEASONS and funds held under the Indenture betweenthe Issuer and the Trustee. Interest accrues at 9.00 percentcompounded semi-annually. The Series C-1 Bonds matureDecember 2035. 6,000,000 6,000,000

The Issuer Multifamily Housing Revenue RefundingBonds, 1999 Series C-2 (Series C-2 Bonds) secured by apledge and assignment of the revenues and Borrower,including certain revenues from the Five SEASONS andfunds held under the Indenture between the Issuer and theTrustee. Interest accrues at 10.00 percent compoundedsemi-annually. UNC, a related party, is the holder of thebond and did not require payment of interest during 2004or 2003. The Series C-2 Bonds mature December 2035. 4,360,000 4,360,000

Total Five SEASONS notes payable 62,600,000 62,900,000

12

Case5:10-cv-01-140;„ 5/RRtisknieditsilfriokivepeitgb Pa ge15 of 22


DECEMBER 31, 2004


A summary of notes payable related to Tahquitz at December 31, 2004 and 2003 are as

follows:

2004 2003 Note payable to Citibank (Citibank Loan #2), FSB,secured by a deed of trust, interest accrues at 5.0 percentwith monthly payments of principal and interest of$17,178 and the loan matures June 1, 2006. 3,128,284 3,176,689

Federal Home Loan secured by a deed of trust, zerointerest and will be forgiven in September 2023. 435,000 435,000

Note payable to the Community Redevelopment Agencyof the City of Palm Springs, (CRA loan), secured by deedof Trust with assignment of rents and fixture filing, nointerest will accrue, a portion of the principal will beforgiven in equal installments over thirty years of $19,667,in the event of any material breach of any other promise orobligation the note will become due and payableSeptember 30, 2023. 373,663 393,330

Total Tahquitz notes payable 3,936,947 4,005,019

Total notes payable $ 66,536,947 $ 66,905,019

In connection with the financing of the Five SEASONS, the Organization is required to file anannual report, including audited financial statements, no later than June l st of each year.

As of December 31, 2004, required sinking fluid and principal payments on notes payable areas follows:

Year Ending FiveDecember 31, • Total Tahquitz SEASONS

2005 $ 1,175,548 $ 105,548 $ 1,070,000. 2006 4,267,070 3,137,070 1,130,000

2007 924,667 64,667 860,0002008 984,667 69,667 915,0002009 1,049,667 74,667 975,000

Thereafter 58,135,328 485,328 57,650,000

$ 66,536,947 $ 3,936,947 $ 62,600,000

13



DECEMBER 31, 2004


The Organization as part of the bond financing must pay interest, an Issuer fee,. a letter-of-credit fee, a trustee fee, a fee to Century Housing and a county fee. The Issuer fee is anadministthive fee paid to the Issuer in the amount of $159,900 payable semiannually ininstallments of $79,950. The Century Housing fee is $50,000 payable annually on December .1, and the county fee which is interest on the outstanding portion of the fixed amount($489,000) at 6.55 percent is paid annually on December 1 in accordance with the IndentureAgreement schedule.

An analysis of accrued interest and fees are as follows for 2004 and 2003:

January 1, Interest Interest December 31,2004 Expense Paid 2004

Series A Bonds $ - $ 2,600,000 $ (2,600,000) $ -Series B-1 Bonds 551,000 (551,000)

Series B -2 Bonds- 300,000 (300,000) -

Series A-T Bonds- 47,000 (47,000) -Series C - 1 Bonds 2,595,475 804,033 -. 3„399 508Series C-2 Bonds 2,053,953 636,462 2,690,415Citibank Loan #2 13,236 157,735 (157,936) 13,035Issuer Fee 159,900 (159,900) -

Trustee Fee- 37,853 (37,853) -Century Fee - 50,000 (50,000) -County Fee 31,004 37,000 (25,000) 43,004

$ 4,693,668 $ 5,380,983 $ J3,928,689) $ 6,145,962

January 1, Interest Interest December 31,2003 Expense Paid 2003

Series A Bonds $ - $ 2,600,000 $ (2,600,000) $ .Series B - 1 Bonds - 551,000 (551,000) -Series B-2 Bonds - 300,000 (300,000) -Series A-T Bonds - 61,250 (61,250) -Series C-1 Bonds 1,871,134 724,341 - 2,595,475Series C-2 Bonds 1,451,891 602,062 - 2,053,953Citibank Loan #2 - 92,994 (79,758) 13,236Citibank Loan #1 31,894 75,121 (107,015)issuer Fee - 159,900 (159,900) -Trustee Fee - 31,823 (31,823) -Century Fee - 50,000 (50,000), -County Fee 22,501 33,503 (25,000) 31,004

$ 3,377,420 $ 5,281,994 $ (3,965,746) $ 4,693,668

,

14

• Case5:10-cv-01087-JW Document46-5 Filed08/12/10 Page17 of 22CORPORATE FUND FOR HOUSING


DECEMBER 31, 2004

Note 4. Commitments and Contingencies

Regulatory Agreements

The Organization has entered into various regulatory agreements that govern the ownership,occupancy, management, maintenance and operations of the Projects.

Unauthorized Bookkeeping Charges

In accordance with an informal agreement between LINC and CHMS, bookkeeping fees ofapproximately $98,000 were to be charged to the Projects in the event CHMS met certain2004 operating objectives. CHMS believes they have earned 100 percent of the bookkeepingfees as of December 31, 2004 and subsequent to yearend, paid themselves approximately$98,000. LINC does not believe the 2004 objectives were met. In addition, subsequent toyearend, LlNC replaced CHMS as the property manger and is using all available means topursue reimbursement from CHMS for what they believe is an unauthorized payment ofbookkeeping fees. As a result, the 2004 financial statements do not reflect any expense forbookkeeping fees and LINC believes they will be successful in recovering the unauthorizedpayment.

Note 5. LINC Franciscan, L.P.

The Organization has been assigned a 99 percent limited partnership interest in the HNCFranciscan, L.P.(the LINC Franciscan) that owns a 501-unit mobile home park (the Park)located in Daly City, California. The Park was financed with $53,458,000 of variable rateRevenue Bonds issued by the Daly City Housing Development Finance Agency. A summaryof the UNC Franciscan's 2004 (unauditedyfinancial condition and activity is as follows:

AssetsCurrent assets 37,974Restricted funds 5,551,597Property and equipment, net 23,012,599Land 18,700,000Other assets 2,447,250

Total assets $ 49,749,420

15

Case5:1 0-cv-Cebligii/Ricargicitn,oirilliddg,./WGPagel 8 of 22


DECEMBER 31, 2004

Note 5. LINC Franciscan, L.P. (Continued)

Liabilities and Partners' DeficitCurrent liabilities $ 1,901,088Long-term liabilities 50,643,000

Partners' deficit - general partner(369,114)

Partners' deficit - limited partner (2,425,554)

Total Partners' deficit (2,794,668)

Total liabilities andPartners' Deficit $ 49,749,420

Revenues $ 5,799,876Expenses (7,060,632)

Net loss (1,260,756)

The Organization has no fmancial obligation related to the LINC Franciscan and it is theintention of the Organization to transfer their 99 percent limited partnership interest to anunrelated non-profit organization within the next 12 months. As a result, the Organization hasnot consolidated the accounts of the L1NC Franciscan as of and for the year ended December31, 2004.

16

Case 5:1 0 -cv-01 87 -JW Dow me nI46 -5 Filed 08/1 211 Pagel 9 of 2SCHEDULE I


COMBINING STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2004

AssetsFive

Tahquitz SEASONS Total Property, at cost:

Land $ 1,412,351 $ 12,718,302 $ 14,130,653Building and building improvements 2,473,356 34,368,490 36,841,846Furniture, fixtures and equipment 276,164 2,819,439 3,095,603

4,161,871 49,906,231 54,068,102Accumulated depreciation (745,738) (15,651,140) (16,396,878)

Property, net 3,416,133 34,255,091 37,671,224

Cash 42,966 505,812 548,778Tenant receivables 2,262 12,439 14,701Due from affiliate 225 225Restricted cash 164,333 1,974,216 2,138,549Tenant security deposits 38,455 271,444 . 309,899Bond interest receivable 7,000 7,000Prepaid expenses 6,255 23,241 29,496Intangible assets, net 105,766 1,154,830 ' 1,260,596

Total assets $ 3,776,170 $ 38,204,298 $ 41,980,468 -

Liabilities and Net Assets

Bonds payable $ 3,936,947 $ 62,600,000 $ 66,536,947Accounts payable and accrued expenses 14,615 100,062 114,677Accrued interest payable 13,035 6,132,927 6,145,962Security deposits 29,064 236,628 265,692Prepaid rents 405 7,511 7,916

Total liabilities 3,994,066 69,077,128 73,071,194

Unrestricted net assets (217,896) (30,872,830) (31,090,726)Temporarily restricted net assets -

Net assets (217,896) (30,872,830) (31,090,726)

Total liabilities and net assets $ 3,776,170 $ 38,204,298 $ 41,980,468

See auditors' report

17


CORPORATE FUND FOR HOUSINGSCHEDULE II .

(A NONPROFIT CALIFORNIA CORPORATION)COMBINING STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2004

Unrestricted Temporarily restricted Five Five

Tahquitz SEASONS Tahquitz SEASONS Total Changes in unrestricted net assets:

Revenue:Rental income

Rental income $ 747,994 $ 7,498,240 $ - $ - $ 8,246,234Vacancy loss (12,028) (630,177) (642,205) Total rental income 735,966 6,868,063 - - 7,604,029

Other incomeMiscellaneous tenant income 54,164 55,139 - - - 109,303Interest income 530 26,612 - - 27,142Contract signing bonus 40,000 - - 40,000 Total other income 54,694 121,751 - - 176,445

Net assets released from restrictions- - - - -

Total rental income and other support 790,660 6,989,814 - - 7,780,474

Expenses:Program services 692,888 8,566,668- - 9,259,556Supporting services 75,000- - 75,000

Total expenses 692,888 8,641,668 - - 9,334,556

Net assets released from restrictions- - - - -

Forgiveness of debt (Note 3) (19,667)- - - (19,667)

Change in net assets 117,439 (1,651,854)- - (1,534,415)

Net assets at beginning of year (335,335) (29,220,976) - (29,556,311)

Net assets at end of year $ (217,896) $ (30,872,830) $ - $ - $ (31,090,726)

See auditors' report.'

18

Case5:10-cv-01087-JW Document46-5 Filed08/12/10 Pa ge21 of 22SCHEDULE III


COMBINING SCHEDULE OF FUNCTIONAL EXPENSESFOR THE YEAR ENDED DECEMBER 31, 2004

Tahquitz Five SEASONS Program Supporting Program Supporting. TotalServices Services Total Services Services Total Expenses

Operating Fund

Salaries and personnel $ 96,521 $ - $ 96,521 $ 545,448 $ - $ 545,448 $ 641,969Administrative expenses 17,104- 17,104 . 84,854 75,000 159,854 176,958Marketing expense 39,616- 39,616 107,345 - 107,345 146,961Repairs and maintenance 32,647- 32,647 258,415 - 258,415 291,062Cleaning and decorating costs 1,894- -1,894 37,076 37,076 38,970Contract services 64,721- 64,721 262,929 - 262,929 327,650Professional fees 56,237- 56,237 375,496 - 375,496 431,733Utilities 60,790- -60,790 336,007 336,007 396,797

. Taxes and insurance 104,253- -104,253 410,056 410,056 514,309Financial expenses 157,533- -157,533 5,223,450 5,223,450 5,380,983Amortization -- -- 66,899 66,899 . 66,899Depreciation 61,571- 61,571 858,694 - 858,694 920,265

$ 692,887 $ - $ 692,887 $ 8,566,669 $ 75,000 $ 8,641,669 $ 9,334,556

•See auditors' report

Case5:10-cv-01087-JW Document46-5 Filed08/12110 Page22 of 22•


DEBT SERVICE COVERAGE RATIO - FIVE SEASONS

FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

• 2004 2003

Revenue:Rental income

Rental income $ 7,498,240 $ 7,326,643Vacancy (630,177) (298,49QTotal rental income 6,868,063 7,028,152

Other incomeMiscellaneous tenant income 55,139 62,327Contract signing bonus 40,000 40,000 Total other income 95,139 102,327

Total rental income and other support 6,963,202 7,130,479

Expenses:Operating expenses 3,002,154 2,935,653

Total expenses 3,002,154 2,935,653

Total operating income $ 3,961,048 $ 4,194,826

Annual debt service (Series A, and Series A-T) $ 2,932,000 $ 2,946,250

Annual debt service (Series A, A-T, B-1 and B-2) $ 3,783,000 $ 3,797,250

Series A and Series A-T Bonds Coverage RatioDebt Service Coverage Ratio Calculated 1.35 1.42Debt Service Coverage Ratio Required 1.30 1.30 Excess 0.05 0.12

Series A, A-T, B-1 and B-2 Bonds Coverage RatioDebt Service Coverage Ratio Calculated 1,05 1.10Debt Service Coverage Ratio Required 1.03 1.03 Excess 0.02 0.07

See auditors' report

20

.Case5:10-cv-01087-JVV Document46-6 Filed08/12/10 Pagel of 9

EXHIBIT "F"

Case5 10-cv-01087-JW Document46-6 Alec108/12/10 Page2 of 9

,AcE0p),_

1-rw_deS,wy.,4k vi4.,

State of California SAN. -_ -- y- limy de

Secretary of State

I, DEBRA BOWEN, Secretary of State of the State of California,hereby certify:

That the attached transcript of --R .- page(s) was prepared by andin this office from the record on file, of which it purports to be a copy, andthat it is full, true and correct.

1

r IN WITNESS WHEREOF, I execute this

---c{i;.r..7.!:‘.1!A,N, certificate and affix the Greatfre.c ..-- '' ".-...e‘'0•,.fr-4,2" • tuge;-.SA••• St

Seal of theate of California this day of

- cti 0:* --etalair arkiii •i tui. 0-__01y4,7-_- 35 x I <Eva ,,,„*.oppcii0%rt stc, -,,,,,,,,,isiow wit mg NOV 2 0 ajog

I. ***-Z. , ).1 Otir ) / „Iay*

rit' It,-_,- _7 rrA ../: i• :

•kb, •••••041.).,* _-... 01. .... .t.:: ............ xta__-...............................

DEBRA BOWENSecretary of State

Sec/State Form CE 108 (REV 1/2007) 4',...i0 as!. 08 111444

n.nCase5 . 10-cv-01087-JW Doct2nipg4PaDu iled08/12/10 Pa ge3 of 9

m oitiptikt " di*am ate

ARTICLES OF INCORPORATIONOF JUL I 5 2002

LINC - FRANCISCANa California nonprofit public benefit corporation

80.1.10NISts, Wry of tab

ARTICLE I

The name of this corporation is LINC - Franciscan (the "Corporation").

ARTICLE II

a. This Corporation is a nonprofit public benefit corporation and is not organizer/ forthe private gain of any person. It is organized under the California Nonprofit Public BenefitCorporation Law for the charitable and public purposes.

b. The specific charitable and public purposes for whim this Corporation isorganized include: (I) lessening the burdens of government, and in particular, the governmentalburdens of the City of Daly City; (2) providing affordable housing for very low, low andmoderate income persons in Daly City, California, where an inadequate supply of housing existsfor such groups; (3) increasing, improving or preserving the supply of very low, low andmoderate income housing in Daly City, including maintaining the community's supply of mobilehomes; and (4) lessening neighborhood tensions and combating neighborhood deterioration.

ARTICLE HI

The name and address in the State of California of this Corporation's initial agent forservice of process is:

Hunter L. Johnsondo LINC Housing Corporation110 Pine Avenue, Suite 525Long Beach, CA 90802

ARTICLE IV

The property of the Corporation is irrevocably detested to charitable purposes set forthin Article II, above. No part of the net-income earnings or assets of the Corporation shall inureto the benefit of, or be distributable to its directors or officers thereof, or to any private persons,except that the Corporation shall be authorized and empowered to pay reasonable compensationto private persons (other than its directors) for services actually rendered and to make paymentsand distributions in furtherance of its exempt purposes.

C: windows\ TEPARFORMATION Articles of Incorporation - LINC Franciscan (501711 ;2).DOCPage I of 3

ARTICLES OFINCORPORATION

Case5:10-cv-01087-JW Docu me nt46-6 Filed08/12/10 Page4 of 9

ARTICLE V

a. No substantial part of the activities of the Corporation shall consist of the carryingon of propaganda or otherwise attempting to influence legislation, and the Corporation shall notparticipate or intervene in (including the publishing or distribution of statements) any politicalcampaign on behalf of, or in opposition to, any candidate for public office.

b. The Corporation is organized exclusively for charitable purposes within themeaning of Section 501(cX3) of the Internal Revenue Code of 1986 (or the correspondingprovision of any future United States internal revenue law). Notwithstanding any other provisionof these articles, this corporation shall not, except to an insubstantial degree, engage in anyactivities or exercise any powers that are not in furtherance of the purposes of this corporation,and the corporation shall not carry on any other activities not permitted to be carried on (i) by a

corporation exempt from federal income tax under Section 501(cX3) of the Internal RevenueCode of 1986 or the corresponding provision of any future United States internal revenue law,nt,(ii) by a corporation, contributions to which are deductible under Section 170(cX2) of theInternal Revenue Code of 1986 (or the corresponding provision of any future United Statesinternal revenue law).

ARTICLE VI

The Corporatica is empowered:

a. On its own account, to buy, own, sell, assign, mortgage, or lease any interest inreal estate and personal property and to construct, maintain, and operate improvements thereonnecessary or incident to the accomplishment of the purposes set forth in Article II, above.

b. To borrow money and issue evidence of indebtedness in furtherance of any or allof the objects of its business, and to secure the same by mortgage, pledge, or other lien of and onthe Corporation's property.

c. Upon the dissolution or winding up of the Corporation and after paying oradequately providing for the debts, obligations, and liabilities of the Corporation, the remainingassets of the Corporation shall be distributed to a nonprofit fund, foundation or corporation thatis organized and operated exclusively for the charitable purposes in the State of California, whichhas established its tax-exempt status under Section 501(cX3) of the Internal Revenue Code of1986 (or the corresponding provision of any fi gure United States internal revenue law), andwhich has established its tax-exempt status under Section 23701d of the California Revenue andTaxation Code (or the corresponding section of any future California revenue and tax law). Anysuch assets not so disposed of shall be disposed of by a court of competent jurisdiction of thecounty in which the principal office of the Corporation is then located, exclusively for suchpurposes as set forth in Article II above, or to such organization(s) as said court shall determine,which are organized and operated for such purposes.

C:\tvindows\TEMP\FORMATIONTEMPTORMATION Articles of Incorporation - LINC Franciscan (SD I 71 I ;2).DOCPage 2 of 3

ARTICLES OFINCORPORATION


ARTICLE VII

a. The Corporation has no members.

b. The directors of the Corporation shall serve their terms without compensation.

c. The officers of the Corporation, as provided by the bylaws of the Corporation,shall be elected by the directors of the Corporation in the manner therein set out, and shall serveuntil their successors are elected.

d. The bylaws of the Corporation, and any amendments thereto, may be adopted bythe directors at any regular meeting or any special meeting called for that purpose, so long as tht;bylaws and/or their amendments are not inconsistent with the provisions of these articles.

Signed by the Incorporator this ts- day of July, 2002.

Kevin

I declare that I am the person who executed the foregoing Articles of Incorporaticm whichexecution is my act and deed.

Kevin Ins; 7eut --

cAvviscaveramkFottmATioN Articles of Incorporar.on - UNC Franciscan (SDI 71 1;2).DOCPage 3 of 3

ARTICLFg OFinsrm onn ATIflN

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FILED.friIn IS office of the Swann of SW.

S the $turo of Confornlo

pl v-2 rftr3 h AUG 72002CERTIFICATE OF AMENDMENT OF

ARTICLES OF INCORPORATIONOF au ASA, it gaty ci SIS

LINC - FRANCISCAN

Kevin Lutz hereby certifies that:

1. He is the sole incorporator, of LINC - Franciscan, a California nonprofit publicbenefit corporation (the "Corporation").

2. The articles of incorporation of the Corporation were filed by the Secretary ofState of California on the 15th day of July, 2002.

3. Article I of the Articles of Incorporation is amended to read as follows:

The name of this corporation is: Franciscan Housing Corporation.

4. No directors were named in the original Articles of Incorporation and none havebeen elected,

5. The Corporation has no members.

We further declare under penalty of perjury under the laws of the State of California thatthe matters set forth in this Certificate are true and correct of our own knowledge.

Dated: August 7, 2002.

Kevin 1.3-- tz, ;Imo] -e incca-1

C:\wjfldows\TEMP\Cenjfic2Je of Amendment of Articles of Inc. (LEW Franc Ise) 71.0OC

Case5:10-cv-01087-JW Document46-6 Filet atbl 2tafe7 of 9

FILED,g4LU,YrOco in the office of the Secretary of State

of tbe State of California

SEP 0 5 2003FIRST AMENDED AND RESTATED •ARTICLES OF INCORPORATION

OF KEVIN SHELLEY, Se •, of EtatFRANCISCAN HOUSING CORPORATION

a California nonprofit public benefit corporation

The undersigned certify that:

I. They are the President and the Secretary, respectively, of Franciscan HousingCorporation, a California nonprofit public benefit corporation (the "Corporation").

2. The Articles of Incorporation of the Corporation were filed with the Secretary ofState of California on July 15, 2002.

3. A Certificate of Amendment of the Corporation was filed with the Secretary ofState of California on August 7, 2002.

4. The Articles of Incorporation of this corporation are amended and restated to readas follows:

ARTICLE 1

The name of this corporation is Franciscan Housing Corporation (the"Corporation").

ARTICLE H

a. This Corporation is a nonprofit public benefit corporation and is notorganized for the private gain of any person. It is organized under the CaliforniaNonprofit Public Benefit Corporation Law for the charitable and public purposes.

b. The specific charitable and public purposes for which this Corporation isorganized include: (I) lessening the burdens of government, and in particular, thegovernmental burdens of the City of Daly City; (2) providing affordable housing for verylow, low and moderate income persons in Daly City, California, where an inadequatesupply of housing exists for such groups; (3) increasing, improving or preserving thesupply of very low, low and moderate income housing in Daly City, includingmaintaining the community's supply of mobile homes; and (4) lessening neighborhoodtensions and combating neighborhood deterioration.

ARTICLE III

The property of the Corporation is irrevocably dedicated to charitable purposesset forth in Article II, above. No part of the net-income earnings or assets of the

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Corporation shall inure to the benefit of, or be distributable to, its directors or officersthereof, or to any private persons, except that the Corporation shall be authorized andempowered to pay reasonable compensation to private persons (other than its directors)for services actually rendered and to make payments and distributions in furtherance ofits exempt purposes.

ARTICLE IV

a. No substantial part of the activities of the Corporation shall consist of thecarrying on of propaganda or otherwise attempting to influence le gislation, and theCorporation shall not participate or intervene in (including the publishing or distributionof statements) political campaign on behalf of or in opposition to, any candidate forpublic office.

b. The Corporation is organized exclusively for charitable purposes withinthe meaning of Section 501(c)(3) of the Internal Revenue Code of 1986 (or thecorresponding provision of any future United States internal revenue law).Notwithstanding any other provision of these articles, this corporation shall not, except toan insubstantial degree, engage in any activities or exercise any powers that are not infurtherance of the purposes of this corporation, and the corporation shall not carry on anyother activities not permitted to be carried on (i) by a corporation exempt from federalincome tax under Section 501(c)(3) of the Internal Revenue Code of 1986 or thecorresponding provision of any future United States internal revenue law, or (ii) by ttcorporation, contributions to which are deductible under Section 170(c)(2) of the intarnalRevenue Code of 1986 (or the corresponding provision of any future United Stateninternal revenue law).

ARTICLE V

The Corporation is empowered:

a. On its own accotmt, to buy, own, sell, assign, mortgage, or lease anyinterest in real estate and personal property and to construct, maintain, and operateimprovements thereon necessary or incident to the accomplishment of the purposes setforth in Article II, above.

b. To borrow money and issue evidence of indebtedness in furtherance ofany or all of the objects of its business, and to secure the same by mortgage, pledge, orother lien of and on the Corporation's property.

c. Upon the dissolution or winding up of the Corporation and after paying oradequately providing for the debts, obligations, and liabilities of the Corporation, theremaining assets of the Corporation stall be distributed to a nonprofit fund, foundation orcorporation that is organized and operated exclusively for the charitable purposes in theState of California, which has established its tax-exempt status under Section 501(c)(3) ofthe Internal Revenue Code of 1986 (or the corresponding provision of any future United

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-, , • Ca se5:10-cv-01087-JW Docu me nt46-6 Filed08/12/10 Page9 of 9

States internal revenue law), and which has established its tax-exempt status underSection 23701d of the California Revenue and Taxation Code (or the correspondingsection of any future California revenue and tax law). Any such assets not so disposed ofshall be disposed of by a court of competent jurisdiction of the county in which theprincipal office of the Corporation is then lecatecl, exclusively for such purposes as setforth in Article II above, or to such organization(s) as said court shall determine, whichare organized and operated for such purposes.

ARTICLE VI

a. Effective with the filing of these First Amended and Restated Articles ofIncorporation, the Corporation shall have members, whose class and authority shall be asprovided in the Corporation's bylaws.

b. The directors of the Corporation shall serve their terms withoutcompensation.

c. The officers of the Corporation, as provided by the bylaws of theCorporation, shall be elected by the directors of the Corporation in the manner therein setout, and shall serve until their successors are elected.

d. The bylaws of the Corporation, and any amendments thereto, may beadopted by the directors at any regular meeting or any special meeting called for thatpurpose. so long as the bylaws and/or their amendments are not inconsistent with Urprovii :tans of these articles.

5. The foregoing Amended and Restated Articles of Incorporation have been dulyapproved by the Board of Diroctors.

6. The Corporation had no members at the time these First Amended and RestatedArticles of Incorporation were adopted by its directors.

We further declare under penalty of perjury under the laws of the State ofCalifornia that the matters set forth in this certificate are true and co .- and of our ownlmowledge.

i/AlainDated: eitlio 3 r Johnson, President

flye, hiN' 'chard Berger 4. etary

oc,E. OF -'s

faNtn)i,Q,,,,

o,s,NC17_ t4-C:OlvINDOWS1/2Temporary Internet Files \OLIC3NAmended and Restated Articles of Incorporation *ARV °(SD31133).DOC

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EXHIBIT "G"


S er)

STATE OF CALIFORNIA

JOHAN KLEHSSTATE BOARD OF EQUALIZATION First Distncl, HaywardPROPERTY TAXES DEPARTMENT

DEAN F ANDAL450 N STREET, MIC 63, SACRAMENTO, CALIFORNIA Second D pstrct, Stockton(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0063)

CLAUDE PARRISHTELEPHONE (916) 445-1516 Third Disinct, TorranceFAX (916) 323-87E15

JOHN CHIANGFourth District. Los AngelesDecember 31, 1999

KATHLEEN CONNELLController, Sacramento

TO COUNTY ASSESSORS:E. L SORENSEN. JR

Executive Director

INDIVIDUAL TRANSFERS IN RESIDENT-OWNED MOBILEHOME PARKS No. 99/87QUESTIONS AND ANSWERS

To provide current guidance from staff about the assessment implications of transfers ofindividual interests in resident-owned mobilehome parks, this letter will present questions andanswers relating to:

(1) The exclusion from change in ownership for mobilehome parks transferred to tenant-ownedentities.

(2) Upon subsequent transfers by individual resident-owners, the valuation of both themobilehomes themselves and the accompanying pro rata interests in the mobilehome parks.

(3) The calculation of supplemental assessments upon such transfers by individual resident-owners.

(4) The application of certain provisions for base-year value transfers.•

QUESTIONS AND ANSWERS

TRANSFERS OF MOBILEHOME PARKS TO TENANT-OWNED ENTITIES1. Question: Under what conditions is a transfer of a mobilehome park to the tenants of the parkexcluded from change in ownership?

Answer: Sections 62.1 and 62.2 1 create three sets of change in ownership exclusions with respectto transfers of mobilehome parks, as follows:

Transfers to Tenant-Owned EntitiesSubdivision (a) of section 62.1 excludes from change in ownership a transfer of a mobilehomepark to an entity formed by the tenants of the park, and requires that the individual tenants whowere renting at least 51 percent of the spaces in the mobilehome park prior to the transferparticipate in the transaction through the aggregate ownership of at least 51 percent of the votingstock of, or other ownership or membership interests in, the entity which acquires the park?

All statutory references are to California Revenue and Taxation Code, unless otherwise noted.2 For transfers on or after January 1, 1998, the exclusion is available notwithstanding that the entity failed to initiallyattain the required tenant participation level. In such cases, the entity has a "grace period" of up to one year after thedate of the transfer to attain the required participation level. Further, if an individual tenant notifies the countyassessor of the intention to comply with the required tenant participation level conditions, then the park may not bereappraised during the grace period.


TO COUNTY ASSESSORS 2 DATE

Additionally, transfers from that entity to the individual lot owners (e.g., to complete acondominium plan) are excluded.

Transfers of Individual Rental Spaces to TenantsSubdivision (b) of section 62.1 provides a separate exclusion for the transfer of rental spaces in amobilehome park to the individual tenants of the rental spaces, provided that (I) at least 51percent of the rental spaces are purchased by individual tenants renting their spaces prior topurchase, and (2) the individual tenants of these spaces form, within one year after the firstpurchase of a rental space by an individual tenant, a resident organization as described insubdivision (k) of Section 50781 of the Health and Safety Code, to operate and maintain thepark. For this exclusion, our view is that all of the transfers of rental spaces need not occur on thesame day; rather, the 51 percent participation may be accumulated, but must occur within the oneyear period that the residents have to form the resident organization.

Transfers to Non-Tenant-Owned EntitiesThe third exclusion, provided under section 62.2, applies to any transfer of a mobilehome park toan entity which is not formed by the tenants. The exclusion is available for a temporary periodfollowing the transfer, to facilitate the transfer of the park to resident ownership pursuant to oneof the exclusions under 62.1 described above. Within that temporary period, either subdivision(a) of section 62.1 (transfer to a tenant-formed entity), or subdivision (b) of section 62.1(transfers of at least 51 percent to the individual tenants), must be complied with, or theexclusion under section 62.2 is lost, and the property is subject to reappraisal and any resultingescape or supplemental assessments. In general, for mobilehome parks initially transferred after1993, this temporary period within which section 62.1 must be complied with is 36 months.3 Formobilehome parks initially transferred between January 1, 1989 and January 1, 1993, that periodwas 18 months.

SUBSEQUENT TRANSFERS OF INDIVIDUAL INTERESTS

Once a transfer of a mobilehome park has been excluded from change in ownership under eithersection 62.1(a) or 62.1(b), questions arise about the proper treatment of subsequent transfers ofindividual ownership interests in the park.

Under a typical scenario, a park is acquired by a non-profit corporation formed by the formertenants. Subsequent purchasers pay an established price for a share in a corporation, where eachshare gives its holder the right to occupy a specific space in the park. A share in the corporationmay be transferred only in combination with the purchase of a mobilehome. The purchase pricefor a share may represent consideration for both the mobilehome and the fractional interest in thecorporation. In addition, the price may be said to cover a special assessment for infrastructure inthe park.

2.Question: Under the scenario described above, what portion of the reported purchase price isassessable? How should it be allocated on the tax roll?

.3 Chapter 603, Statutes of 1999 (SB 42), expanded the 36-month time period for the subsequent transfer of amobilehome park that was first transferred on or after January 1, 1993. Specifically, this legislation provides that theexecution of a purchase contract and the opening of an escrow for the transfer of a rental space in the park is deemedto be within the 36-month time period if the escrow is opened before the end of that 36-month period and closes nomore than 6 months after the end of that 36-month period.



Answer: In amending section 62.1 in 1987 to provide for treatment of entity-owned mobilehomeparks, the Legislature intended that transfers of ownership interests in such parks be treated on apar with transfers of other forms of "share" ownership (i.e., condominiums or stock cooperatives)and with stick-built homes. Thus, while each share in the corporation may be said to afford itsholder the right, for example, to participate in the governance of the corporation and amanagement of the park, such rights are merely incidental to that which the share conveys to itsholder in substance: (1) the outright ownership of a particular mobilehome, and (2) the exclusiveright to occupy a particular space within the park. With this backdrop in mind, if the reportedpurchase price was negotiated in the open market at arm's length, then it is our view that theentire amount should be reflected in the combined assessments of the mobilehome and theunderlying interest in the park.

3.Question: Assuming that the reported purchase price represents the collective fair market valueof the mobilehome and the underlying interest in the park, how should that price be allocated?

Answer: The most reasonable way of allocating the value between the two assessments would beto (I) extract from the reported purchase price the value of the mobilehome itself, using theN.A.D.A. Manufactured Housing Appraisal Guide or another recognized value guide, and then(2) assign the remainder of the purchase price to the interest in the park.

4.Question: What is the proper assessed value for a mobilehome in a mobilehome park?

Answer: The law generally provides that while mobilehornes are to be classified as personalproperty, they receive a treatment similar to that afforded most real property under Proposition13. Thus, under sections 5800 and following, mobilehomes subject to local ad valorem propertytaxation (i.e., "manufactured homes") receive a base year value upon purchase or change inownership.4 The base year value of a mobilehome is its "full cash value," as defined in section110, as of the date of the change in ownership. 5 In general, these provisions apply to allmobilehomes sold new after June 30, 1980, including those located in tenant-owned parks, thatare not installed on approved foundation systems.

5.Question: Section 62.1(c)(1) indicates that the transfer of a corporate share in the entity thatacquired the park is a change in ownership of "a pro rata portion of the real property of the park."What does this mean?

Answer: Under subdivision (c)(2) of section 62.1. "pro rata portion of the real property" isdefined to mean, essentially, the fractional interest in the park that is conveyed by the transferredshare of stock. Thus, if there are 100 shares of outstanding stock, issued or unissued, a transfer ofone share gives rise to a reassessment of a 1/100th interest in the real property of the park.

6.Question: Is the "appraisal unit" the individual mobilehome space or the park as a whole?

4 Section 5802Section 5803



Answer: Subdivision (d) of section 51 provides that, when determining the taxable value of realproperty for purposes of Proposition 13, "real property" means "that appraisal unit that personsin the marketplace commonly buy and sell as a unit, or that is normally valued separately." Fortransfers of shares or other ownership interests that represent ownership of individualmobilehome spaces in a park, it is clear that what persons in the marketplace commonly buy andsell as a unit is not the entire park, but rather the fractional interests conveyed by the individualinterests. Thus, for purposes of determining a new base year value upon such transfers, theappraisal unit is the individual mobilehome space and the mobilehome.

7.Question: Can any portion of the purchase price be attributed to non-assessable "site value," asprovided under section 5803(b)?6

Answer: No. The ownership of a fractional interest in the park represents exclusive ownership ofthe individual underlying space Thus, while a resident may formally lease his or her space fromthe owning entity, in substance the ownership of the space is with the individual resident. Sincethe owner of the mobilehome and the owner of the underlying space are one and the same for allpractical purposes, the requirement under section 5803(6) does not apply.

8.Question: Is a transfer of an individual interest in a mobilehome park owned by a limitedequity housing cooperative, organized pursuant to Health and Safety Code section 33007.5,treated differently from interests in parks under other forms of ownership?

Answer: No. While there are provisions in Health and Safety Code section 33007.5 whichgenerally require that any difference between the fair market value of a sold interest and itsdefined "transfer value" be used only for certain purposes, including public benefit or charitablepurposes, those provisions merely govern the organization of the cooperative, and do notconstitute an enforceable restriction on the use of the land, as contemplated in Revenue andTaxation Code section 402.1.

SUPPLEMENTAL ASSESSMENTS

9.Question: How should supplemental assessments be calculated upon the transfer of anindividual interest in a resident-owned park?

Answer: Assuming that the purchase price represents the collective fair market value of themanufactured home and the underlying space, the assessor should (1) allocate that purchase pricebetween the manufactured home and the fractional interest in the real property of the park and(2) calculate separate supplemental amounts for each. The following example illustrates thisprocess:

Existing prorated value of individual interest in the mobilehome park: $ 10,000

6 Section 5803(b) provides, in essence, that the assessed value of a manufactured home located on rented or leasedland shall not be affected by the usual influences of location.



Existing taxable value of manufactured home: 40,000Total existing assessment: 50,000

Sale price of manufactured home and underlying park interest: 70,000Value of manufactured home (from value guide), as of the date of transfer: 30,000Residual value of individual interest in the park, as of the date of transfer: 40,000

Supplemental assessment amounts would be calculated as follows:

Manufactured homeNew base year value $30,000Existing taxable value 40 000

Supplemental assessment <10,000>

Individual interest in mobilehome parkNew base year value 40,000Existing taxable value 10 000

Supplemental assessment 30,000

Net supplemental assessment $20,000

BASE YEAR VALUE TRANSFERS AND DISASTER RELIEF10.Question: Is a manufactured home in a resident-owned park eligible for certain base yearvalue transfers?

Answer: In general, yes. Revenue and Taxation Code section 21S and Property Tax Rule 135treat a manufactured home as a "dwelling" (i.e., "a building, structure, or other shelterconstituting a place of abode."). Thus, manufactured homes in resident -owned parks, like otherprimary residences, arc eligible for the following benefits:

• Base year value transfer after displacement by eminent domain proceedings, acquisition by apublic entity, or inverse condemnation7;

• Base year value transfer for persons over 55 or disable& ;• Base year value transfer following a disaster9.

Note that, in any of these cases, the "dwelling" that is eligible for relief and/or value comparisonis the manufactured home and the accompanying fractional interest in the mobilehome park (i.e.,the underlying space).

Section 68

g Section 69.59 .Section 69.3



I 1.0uestion: Is a mobilehome in a resident-owned park eligible for disaster relief?

Answer: Yes. Disaster relief is available under Sections 69 and 170 to anyone owning amobilehome assessed as real property.

Sincerely,

Is! Harold M. Hale forRichard C. JohnsonDeputy DirectorProperty Taxes Department

RCJ:MN:cg


EXHIBIT "H"


NEW ISSUE (BOOK-ENTRY ONLY)

Rating: Standard & Poor's "&-"(See "Rating" herein)

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certainrepresentations and continuing compliance with certain covenants, interest on the Series A Bonds (including any original issue discount properly allocable tothe owner of a Series A Bond) is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of thefederal alternative minimum tax. In addition, in the opinion of Bond Counsel, interest on the Series A Bonds is exempt from State of Califomia personalincome taxation. For a more complete description, see "TAX MATTERS herein.

$45,725,000DALY CITY HOUSING DEVELOPMENT FINANCE AGENCY

MOBILE HOME PARK SENIOR REVENUE REFUNDING BONDS(FRANCISCAN MOBILE HOME PARK ACQUISITION PROJECT)

SERIES 2007ADated: Date of Delivery Due: December 15, as shown on the inside cover

The above-captioned bonds (the "Series A Bonds') are being issued pursuant to an Amended and Restated Indenture of Trust, dated as of December1, 2007 (the "Indenture"), between the Daly City Housing Development Finance Agency (the "Agency") and Union Bank of California. NA., as trustee (the'Trustee"). The proceeds of the 2007 Bonds (defined below) will be used to fund a loan to Franciscan Park, LLC, a California limited liability company (the"Borrower"), to (i) finance certain capital improvements to The Franciscan Country Club Mobile Home Park located in Daly City, California (the "Property"),(ii) prepay a portion of a previous loan relating to the Property and defease related bonds of the Agency, (iii) fund the Senior Bonds Debt Service ReserveFund, the Subordinate Bonds Debt Service Reserve Fund and the Third Tier Bonds Debt Service Reserve Fund established under the Indenture, and (iv)pay the costs of issuance of the 2007 Bonds. See "PLAN OF FINANCING."

The Series A Bonds will be delivered in fully registered form only and, when issued, will be registered in the name of Cede Co, as nominee of TheDepository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Series A Bonds. Ownership interests in the Series ABonds may be purchased, in denominations of $5,000, or any integral multiple thereof, in book-entry form only as described herein. Upon receipt ofpayments of principal of, premium, if any, and interest on the Series A Bonds, DTC will in turn remit such principal, premium, if any, and interest to theparticipants in DTC (as described herein) for subsequent disbursement to the beneficial owners of the Series A Bonds. Interest on the Series A Bonds ispayable semiannually on June 15 and December 15 of each year, commencing June 15, 2008.

The Series A Bonds are subject to optional, mandatory and special redemption prior to their respective maturity dates as described herein.

The Series A Bonds are being issued concurrently with the issuance of $5,175,000 aggregate principal amount of the Daly City Housing DevelopmentFinance Agency Mobile Home Park Subordinate Revenue Refunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007B (the "SeriesB Bonds") and $8,110,000 aggregate principal amount of the Daly City Housing Development Finance Agency Mobile Home Park Third Tier RevenueRefunding Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2007C (the "Series C Bonds" and, together with the Series A Bonds and theSeries B Bonds, the "2007 Bonds"). The Agency previously issued the Daly City Housing Development Finance Agency Mobile Home Park Fourth TierRevenue Bonds (Franciscan Mobile Home Park Acquisition Project), Series 2002D (the "2002D Bonds" and, together with the 2007 Bonds and anyadditional bonds, the "Bonds'). The proceeds of the 2002D Bonds were used to fund a loan to LINC Franciscan Limited Partnership ("Original Borrower").The Series A Bonds have senior payment priority to the Series B Bonds, Series C Bonds and 2002D Bonds.

The Series A Bonds are special limited obligations of the Agency, payable solely from Pledged Revenues (as hereinafter defined) and secured as tothe payment of the interest on and the principal of and the redemption premiums, if any, on the Series A Bonds in accordance with their terms and the termsof the Indenture, from Pledged Revenues and other funds as provided in the Indenture.

Pledged Revenues consist of Revenues (as hereinafter defined), except for amounts on deposit in the Repair, Replacement and Capital ImprovementFund that constitute proceeds of Bonds, the Rebate Fund and the Rental Assistance Fund created under the Indenture. Revenues consist of OperatingRevenues (as defined in the Indenture), Prepayments (as defined in the Indenture), the proceeds of certain insurance required to be maintained under theAmended and Restated Loan Agreement, dated as of December 1, 2007, between the Agency, the Trustee, the Original Borrower and the Borrower (the"Loan Agreement"), the amounts in the funds and accounts held by the Trustee under the Indenture, all proceeds of rental interruption insurance policies, ifany, required to be maintained under the Loan Agreement, any proceeds derived from the exercise of remedies under the Deed of Trust and any additionalproperty that may be subjected to the lien of the Indenture by the Agency, all as more fully set forth in the Indenture.

REPAYMENT OF THE SERIES A BONDS IS SUBJECT TO CERTAIN RISKS, INCLUDING THE RISK THAT THE PROJECT MAY NOT GENERATEOPERATING REVENUES SUFFICIENT FOR REPAYMENT OF THE SERIES A BONDS.

MATURITY SCHEDULE(See Inside Cover)

This cover page contains certain information for general reference only. It is not intended as a summary of this transaction. Investors are advised toread the entire Official Statement to obtain information essential to making an informed investment decision with respect to the Series A Bonds.

NEITHER THE AGENCY NOR ANY PERSON EXECUTING THE BONDS IS LIABLE PERSONALLY ON THE SERIES A BONDS OR SUBJECT TOANY PERSONAL LIABILITY OR ACCOUNTABILITY BY REASON OF THEIR ISSUANCE. THE SERIES A BONDS ARE SPECIAL LIMITEDOBLIGATIONS OF THE AGENCY AND ARE NOT A DEBT OR GENERAL OBLIGATION, NOR A PLEDGE OF THE FAITH AND CREDIT, OF THE STATEOF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER ARE THEY LIABLE ON THE SERIES A BONDS, NOR ARE THESERIES A BONDS PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THE PLEDGED REVENUES AND FUNDS PLEDGED UNDER THEINDENTURE FOR THE PAYMENT THEREOF. THE SERIES A BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANYCONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE ISSUANCE OF THE SERIES A BONDS DOES NOT DIRECTLY OR INDIRECTLY ORCONTINGENTLY OBLIGATE THE AGENCY, THE CITY OF DALY CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF TOLEVY OR TO PLEDGE ANY FORM OF TAXATION THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT. THE AGENCY HAS NOTAXING POWER.

The Series A Bonds are offered when as and if issued and received by the Underwriter, subject to the approval as to their legality of Kutak Rock LLP,Denver, Colorado Bond Counsel, and certain other conditions. Jones Hall, A Professional Law Corporation, San Francisco, California, is serving asDisclosure Counsel, Certain legal matters will be passed upon for the Agency by Agency Counsel and for the Borrower by Carle, Mackie, Power RossLLP, Santa Rosa, California. It is anticipates that the Series A Bonds will be available for delivery through the facilities of DTC in New York New York on orabout December 13, 2007,

PiperJaff ray.The date of this Official Statement is December 5, 2007.


ESTIMATED SOURCES AND USES OF FUNDS

Following are the estimated sources and uses of the proceeds from the sale of theSeries A Bonds, the Series B Bonds and the Series C Bonds.

Sources Principal Amount of Series A Bonds $45,725,000.00Principal Amount of Series B Bonds 5,175,000.00Principal Amount of Series C Bonds 8,110,000.00Less Net Original Issue Discount (1,770,170.05)Available Funds From the Prior Bonds'

Proceeds 4,313,355.11Available Project Revenue Funds (1) 2,654,232.24

Total Sources of Funds $64,207,417.30

UsesEscrow Funds $53,835,502.74Series A Debt Service Reserve Fund 2,676,375.00Series B Debt Service Reserve Fund 340,445.00Series C Debt Service Reserve Fund 585,075.00Cost of Issuance 1,386,475.00Ad Valorem Taxes Fund (1) 1,543,353.92Repair, Replacement and Capital

Improvement Fund (2) 3,340,190.64*Payment to Lessor under Podesta Lease (3) 500,000.00

Total Uses of Funds $64,207,417.30

(1) A portion of the Debt Service Funds for the Refunded Bonds will be depositedin the Ad Valorem Taxes Fund and used to pay property taxes and penaltiesowed with respect to the Property. See "THE PROJECT — Management'sDiscussion."

(2) To be used for various capital improvements to the Property. See "THEPROJECT — Physical Needs Assessment."

(3) See "THE PROJECT — The Podesta Leasehold Interest" herein.

* Estimated amount subject to variation based on settlement cost of termination ofcertain investment agreements.

5

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The estimates in the foregoing table were prepared based upon the facts summarizedabove. No assurance can be given that these estimates of revenues and expenses will beaccurate. These estimates were not prepared or compiled by an accountant and have not beenaudited. See "RISK FACTORS — Conditions Which May Affect Borrower's Ability to Pay —Limitations on Financial Information" herein. The Agency has not verified the information orassumptions in Table 6 and no assurance can be given as to the accuracy of the information setforth therein or as to the ability of the Project to achieve the projected operating levels assumedthereby.

As discussed above, Table 6 assumes a no base rent growth assumption (other than a3% rent increase on 125 parcels in 2008) and no increases in expenses. Actual revenues andexpenses could differ significantly from those set forth in Table 6. For example, paymentsunder the Podesta Lease are held constant in Table 6, but are actually scheduled to increase by3% annually.

Management's Discussion

Generally. Operating receipts for the Project have been for the most part stable in recentyears. Similarly, operating disbursements have also been stable, with the exception ofaccumulated property taxes, penalties and interest. See "- Delinquent Property Taxes." TheBorrower does not expect any significant changes on an annual basis in operating receipts ordisbursements.

Delinquent Property Taxes. At the time the Project was acquired by the OriginalBorrower, a third party estimated projected operating disbursements, including property taxes.The property tax estimates assumed a significant number of the residents would qualify for a taxexemption. The number of qualifying tax-exempt residents was lower than expected whichresulted in significantly higher property tax bills than expected. The variances for the firstseveral years of property tax bills were as follows:

2003 2004 2005 2006

Actual Property Taxes $471,200 $554,065 $401,987 $389,375Estimated* $175,000 $179,000 $183 000 $187,000Variance $296,200 $375,065 $218,987 $202,375

*2002 estimates provided by Ghirardi CPA in connection with the issuance of the Prior Bonds.

Because the Original Borrower believed that the original estimates would eventually berealized and any accumulated property taxes, penalties and interest due would be waived,property taxes on the largest parcel were not paid in for the 2002-03, 2003-04, 2004-05 and2005-06 tax years. In 2006 it became clear that the Project did not have the anticipated numberof tax-exempt residents, and as a result, the County would not waive any accumulated propertytaxes, penalties or interest due on the Project. At December 31, 2006, the Original Borrowerowed $1,704,895 to the County and arranged for a five-year payment plan with the Countywhich required a 20% down payment against all amounts due, minimum 20% annual paymentsover a five-year period, and timely semi-annual payments of property taxes coming due.Interest on any unpaid balance continues to accrue at 1.5% per month (18% per year). In April2007, the Original Borrower, with the consent of the City, withdrew $535,000 from the Repair,Replacement and Capital Improvement Fund held by the Trustee to make the 20% downpayment and to pay the second installment of property taxes for the 2006-07 tax year. The first

52


installment of property taxes for the 2006-07 tax year is still outstanding.

On December 15, 2007, the Original Borrower will owe $1,543,353.92 in accumulatedproperty taxes, penalties and interest on the Project. Concurrently with the refunding of thePrior Bonds, the Original Borrower will receive approximately $2.3 million in funds from the debtservice funds for the Prior Bonds and will transfer a portion of those funds to the County aspayment in full for all property taxes, penalties and interest on the Project.

Projected Operating Revenues and Debt Service Coverage

Set forth in the tables below are projected income and expenses for the Project and theestimated debt service coverages for the Series A Bonds for the fiscal years ending 2008through 2047. The data included in Table 7 is based on the revenues and expenses from the2007 budget and assumes that revenues and expenses remain stable after 2008 (herein, the"No Growth Assumption").

Generally, "RISK FACTORS — Conditions Which May Affect Borrower's Ability to Pay"and, specifically " — Limitations on Financial Information," "-- Projected Operating Results of theProject," and "—Operation of the Project" herein.

53


EXHIBIT "I"

Case5:10-ca7:01087-JW Document46-9 FiledOrail 2/10 Pa ge2 of 7•

CMPR

CARLE, MACKIE, POWER & Ross LLPATTORNEYS

100 3 SrpEEr, Sun-E 400 Tn• (707) 526-4200

SANTA ROSA, CALIFORNIA 95401 FAX. (707) 5264707

October 21, 2005•

Office of the Attorney GeneralCharitable Trusts Section300 South Spring Street, 5 th FloorLos Angeles, CA 90013-1230

Re: Corporate Fund for Housing, a California Non-Profit Public iefit Corporation

Dear Sir: .

Introduction

This firm represents Corporate Fund for Housing, a California non-profit public benefitcorporation (the "Corporation"). The Corporation currently •owns six (6) multifignily residentialrental developments in California. --The corporation is proposing. to seli_five (5) of these40.e10.131nents as described below.

This letter and Its enclosures represents notice to the Attorney General pursuant toCalifornia Corporations Code section 5913.

Background to the Transactions •

The Corporation currently owns six (6) residential rental developments in California brief detailsof which are as follows:

• A 149 unit senior apartment complex located at 23750 Highland Valley Road, DiamondBar, California (the "Diamond Bar Project");

• A 201 unit senior apartment complex located at 3200 South Street, Lakewood, California(the "Lakewood Project");

• An 85 unit senior apartment complex located at 2500 Damien Avenue, La Verne,California (the "La Verne Project");

• A 241 unit senior apartment complex at 1024 Royal Oaks Drive, Monrovia, California(the "Monrovia Project");

-www.cmpTlaw.corn crnpr@cmprlaw COTT1


CMPR CARLE, MACKIE, POWER & Ross LLP

• A multifamily residential apartment complex located at 2890 East Tahquitz Canyon Way,Palm Springs, California (the "Tahquitz Project"); and

• A 169 unit senior apartment complex located at 12251 Washington Boulevard, Whittier,California (the "Whittier Project").

The Corporation plans to sell all of these projects apart from the Tahquitz Project.

The acauisition and construction of the five_f5) developments_ that thq_cOrperatiOn is.plannin_g tosell (the "Sale Projects'ilwaa_reftuancedin-L999-i•y...the net_proceeds of certain bonds issued.bythe California StatewicleSommunities Detelopment AuthoritTlitge "Tionrs bisoirectionwith the sale ofTlie—Sale Projects, the Corporationimends to defease and/or retire the Bonds.

The Board of Directors has concluded that the Sale Projects are too over-leveraged tojoallow the Corporation to commit i-o-the anticipated capital improvements that are

anticipated and that -therefore it would be in the best interests of the Corporation to dispose of theSale Projects. The aggregate sale price of the Sale Projects is $79,000,000. After allowing fordefeasance and/or retirement of the Bonds and closing costs, the Corporation expects to netapproximately $5,000,000.

•Details of the Transactions

•The details of the transactions are as follows:

Sale Project Sale Price Buyer

Diamond Bar $14,400,000 1315 Meadows, L.P., a Californialimited partnership.

Lakewood $18,600,000 3200 Lakewood L.P., a Californialimited partnership

La Verne $ 7,800,000 Jagdish Yuma. and Usha K. Varmahusband and wife as communityproperty as to an undivided 50%interest and Ahmed M. Hassan andMagda A. Hassan husband and -wife as community property as toan undivided 50% interest, astenants in common.

Monrovia $22,700,000 1024 Royal Oaks L.P., a Californialimited partnership.

Whittier $15,500,000 1315 Meadows, L.P., a Californialimited partnership.

With regard to those transactions, please note the following:

Case5:10-6-v-201087-JW Document46-9 Filed*12/10 Page4 of 7

cMPR CARLE, MACKIE, FOINER & Ross LLP

• The buyers of the Diamond Bar' Project, the Lakewood Project, the Monrovia Project andthe Whittier Project are all entities ultimately controlled by Robert Korda;

• All of the buyers of the Sale Projects are for-profit parties;

• In each case the sale price is payable in cash in hill on closing;

• In each case the sale price exceeds the appraised market value of each of the Sale Projectsassuming a for-profit buyer; and

• Closing is scheduled to occur on November 18, 2005.

Enclosed with this letter you will find copies of the following:

• 'Audited Financial Statements of the Corporation for the year ending Decembtr 3 1, 2004;• Unaudited financial statements of the Corporation for the nine months ending September

30,2005;• Resolutions of the Board of Directors of the Corporation authorizing the trancartions.• The Restated Articles of Incorporation of the Corporation;• The organizational documents for each of the Buyers that are entities (we will forward

certified copies as soon as these are available); and• Letters dated March 4, 2004, confirming the appraised market value of each of the Sale

Projects.

Should you require any additional information, please do not hesitate to contact me. In themeantime please return the duplicate copy of this letter with a date stamped confirmation ofreceipt in the enclosed reply paid envelope.

Yours sincerely,c.Simon .Inman

cc Hunter Johnson, Corporate Fund for Housing

3

Case5:10-cv-01087-JW Document46-9 Filed0-8712/10 Page5 of 7

4:51BILL LOCICTER • State of CaliforniaAttorney General DEPARTMENT OF JUSTICE

RONALD REAGAN BUILDING300 sourm SPRING STREET, SUITE 1702

LOS ANGELES, CA 90013

Public: (213) 897-2000• Telephone: (213) 897-7076

Facsimile: (213) 897-7605E-Mail: [email protected]

December 9, 2005

Simon R. /nmanCarle, Maclde, Power & Ross LLP100 B Street, Suite 400Santa Rosa, CA 95401 •

RE: Corporate Fund For iiousing

Dear Mr. Inman:

This will acknowledge receipt of your notice of the sale of substantially all assets of theabove referenced California nonprofit public benefit corporation pursuant to CaliforniaCorporation Code section 5913

This letter is neither an approval nor disapproval of the proposed transaction, and thisoffice reserves the right under Corporations code section 5250 to investigate further to determinewhether the above corporation has complied with the charitable trusts upon which it holds itsassets.

Sincerely,

90 4,-/,1C-x et/ / eff4ADRIENNE W. WA SInvestigative Auditor

For BILL LOCKYER•Attorney General

cc: Registry of Charitable Trusts

•

Case5:10-cv-01087-JW Documente16-9 Filed08/12/10 Page6 of 7

RESOLUTIONS OF THE BOARD OF DIRECTORS OF CORPORATE FUND FORHOUSING, A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION

AUTHORIZING THE CORPORATION TO DISPOSE OFCERTAIN REAL ESTATE PROJECTS

At a meeting of the Board of Directors of Corporate Fund for Housing, a CaliforniaNonprofit Public Benefit Corporation (the "Corporation") duly convened and held on August 11,2005, the Board of Directors resolved as follows:

WHEREAS, the Corporation is presently the owner of six residential rental developmentslocated in California in the cities of Diamond Bar, Lakewood, La Verne, Monrovia, Whittier andPalm Springs and Whither (collectively the "Projects");

WHEREAS, in connection with the refinancing of the acquisition and construction of theProjects located in Diamond Bar, Lakewood, La Verne, Monrovia and Whittier (collectively the"Sale Projects") the net proceeds of certain bonds issued the California Statewide CommunitiesDevelopment Authority (the "Bonds") were advanced to the Corporation;

WHEREAS, the Corporation intends to sell the Sale Projects and,apply_the_net.pnoce.eds.of sale towatds defeasance and/or :retirement of the Ban&

WHEREAS, the Board of Directors of the Corporation deems it to be in the best interestof the Corporation to sell the Sale Projects and to defease and/or retire the Bonds.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the Corporationhereby approve and authorize the Sale of the Sale Projects and the defeasance and/or retirementof the Bonds (collectively the "Transactions"), and the consummation of the transactionscontemplated thereby are in all respects approved and authorized; and,

RESOLVED FURTHER, that the Executive Committee of the Board of Directorsishereby authorized and directed:

(i) to approve or authorize the approval of any and all necessary documents,agreements, certificates or other instruments in connection with the Transactions ("TransactionDocuments");

(ii) to authorize or approve the engagement by the Corporation of such professionaladvice and assistance as is deemed necessary for the purposes of the Transactions;

(iii) to authorize officers of the Corporation to execute and deliver any and allTransaction Documents on the Corporation's behalf;

(iv) to authorize or approve any and all other acts as the Executive Committee in itssole discretion may deem necessary or appropriate to effect the Transactions on such terms andconditions as the Executive Committee may determine; and

CADOCUME—I nSRInmang-OCALS—I \Teruo \ CFR Kew 3-1 1455 Seasons Sale Auth.doc


(v) to authorize or approve the performance of all of the Corporation's obligations inconnection with the Transactions. —

RESOLVED FURTHER, that any acts on behalf of the Corporation by the ExecutiveCommittee or any officers, employees or agents of the Corporation in connection with theTransactions occurring before this date are hereby ratified and approved by the Corporation:

The undersigned, as Assistant Secretary of the Corporation, hereby Certifies that theBoard of Directors of the Corporation unanimously passed and adopted these resolutionseffective on August 11, 2005.

Hunter Johnson, Assistant Secretary

• •

•

••

C:NDOCIIME-1 \SRIranan1LOCALS-1 TemptCHIReso 8.11-055 Seasons Sale Auth.doc


EXHIBIT "J"

Case 5:10-cv-01087-JW Docu me nt 46-10 Fi lead-6)(12/10 Pag e 2 of 4

COMMUNITY REDEVELOPMENT AGENCYCITY OF PALM SPRINGS, CALIFORNIA

4,ft„,ne

MINUTESWEDNESDAY, NOVEMBER 19, 2008

City Hall Council Chamber

CALL TO ORDER: Chair Pougnet called the meeting to order at 6:40 p.m.

ROLL CALL:PRESENT: Agency Member Hutcheson, Agency Member Weigel, Vice Chair

Foal, and Chair Pougnet.ABSENT: Agency Member Mills.ALSO PRESENT: Executive Director Ready, Agency Attorney Holland, and Assistant

Secretary Thompson.

PUBLIC COMMENT:

ROGER EVERSHED, commented on the Tahquilz Court Apartments, Item RA2., andrecommended approval of the modifications and assignment of the regulatoryagreement.

1. PUBUC HEARINGS: (Joint Public Hearing with the City Council)

1.8. AMENDMENT NO. 1 TO DISPOSITION AND DEVELOPMENTAGREEMENT NO. A0470C WITH SANTIAGO SUNRISE VILLAGEMOBILE HOME PARK CORPORATION FOR AGENCY ASSISTANCEIN THE AMOUNT OF $153,700, FOR LAUNDRY AND OFFICEFACILITIES AT SUNRISE VILLAGE MOBILE HOME PARK LOCATEDAT 1500 EAST SAN RAFAEL ROAD:ACTION: 1) Continue the Public Hearing to December 3, 2008, with nopublic testimony; and 2) Direct the City Clerk!Assistant Secretary to post aNotice of Continued Public Hearing. Motion Agency MemberHutcheson, seconded by Agency Member Weigel and unanimouslycarded 4-0 on a roll call vote.

AYES: Agency Member Hutcheson, Agency Member Weigel, ViceChair Foat, and Chair Pougnet.

NOES: None.ABSENT: Agency Member Mills.

rrEm NO.


City of Palm SpringsCommunity Redevelopment AgencyNovember 19, 2008Page 2

RA. COMMUNITY REDEVELOPMENT AGENCY:

RA1. APPROVAL OF MINUTES:ACTION: Approve the Community Redevelopment Agency Minutes ofOctober 1, 2008, and November 5, 2008. Motion Agency MemberWeigel, seconded by Agency Member Hutcheson and unanimouslycarried 4-0 on a roll call vote.

AYES; Agency Member Hutcheson, Agency Member Weigel, ViceChair Feat and Chair Pougnet

NOES: None.ABSENT: Agency Member Mills.

The Community Redevelopment Agency continued at 6:56 p.m., and the City of PalmSprings Housing Authority convened for a Joint Meeting.

RA2. MODIFICATION OF REGULATORY AGREEMENT, ASSIGNMENT ANDASSUMPTION OF LOAN DOCUMENTS, FREDDIE MAC RIDER TO THEREGULATORY AGREEMENT AND A SUBORDINATION AGREEMENTBY AN D BETWEEN THE COMMUNITY REDEVELOPMENT AGENCYOF THE CITY OF PALM SPRINGS AND CORPORATE FUND FORHOUSING, D.B.A., L1NC HOUSING CORPORATION, TO ASSIGN THEAGREEMENT TO TAHOUITZ ASSOCIATES, LP, AND BY THEHOUSING AUTHORITY OF THE CITY OF PALM SPRINGS ANDCORPORATE FUND FOR HOUSING, D.B.A., LINC HOUSINGCORPORATION, TO ALLOW FOR THE TRANSFER OF THEPROPERTY TO A PARTNERSHIP THAT IS NOT A 501C(3) '—ORGANIZATION FOR THE TAHOUITZ COURT APARTMENTS AT2800, 2890, 2900 and 2990 EAST TAHCIUITZ CANYON WAY:ACTION: 1) [Community Redevelopment Agency] Adopt ResolutionNo. 1369, "A RESOLUTION OF THE COMMUNITY REDEVELOPMENTAGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA,APPROVING A MODIFICATION OF THE REGULATORY AGREEMENT,ASSIGNMENT AND ASSUMPTION OF LOAN DOCUMENTS, FREDDIEMAC RIDER TO THE REGULATORY AGREEMENT AND ASUBORDINATION AGREEMENT BETWEEN THE COMMUNITYREDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS ANDCORPORATE FUND FOR HOUSING, D.BA, LINC HOUSINGCORPORATION, TO ASSIGN THE AGREEMENT TO TAHQUITZASSOCIATES, LP, FOR THE TAHQUITZ COURT APARTMENTS AT2800, 2890, 2900, and 2990 EAST TAHQUITZ CANYON WAY:" 2)[Housing Authority] Adopt Resolution No. 34, "A RESOLUTION OF THEHOUSING AUTHORITY OF THE CITY OF PALM SPRINGS,CALIFORNIA, APPROVING AN AMENDMENT TO A REGULATORYAGREEMENT AND DECLARATION OF COVENANTS AND

C2


City of Palm SpringsCommunity Redevelopment AgencyNovember- 19, 2008Page 3

•

RESTRICTIONS BETWEEN TFIE HOUSING AUTHORITY OF THE CITYOF PALM SPRINGS AND CORPORATE FUND FOR HOUSING, D.B.A.,LINC HOUSING CORPORATION, TO ALLOW FOR THE TRANSFER OFTHE PROPERTY TO A PARTNERSHIP THAT IS NOT A 501C(3)ORGANIZATION FOR THE TAHQUITZ COURT APARTMENTSLOCATED AT 2800, 2890, 2900 AND 2990 EAST TAHQUITZ CANYONWAY;" and 3) Authorize the Executive Director to execute all necessarydocuments. A0501 C. Motion Agency Member Weigel seconded byAgency Member Hutcheson and unanimously carried 441 on a rollcall vote.

AYES: Agency Member Hutcheson, Agency Member Weigel, ViceChair Foat, and Chair Pougnet

NOES: Norte.ABSENT: Agency Member Mills.

ADJOURNMENT: The Community Redevelopment Agency adjourned at 6:57

APPROVED BY A MOTION OF THE CITY OF PALM SPRINGS COMMUNITYREDEVELOPMENT AGENCY THIS 3R1) DAY OF DECEMBER, 2008.

STEPHEN P. POUGNET, CHAIRATTEST:

JAMES THOMPSON, CITY CLERK

03


EXHIBIT "K"

Case5:10-c'101087-JW Document46-11 Redd-a/12/10 Page2 of 2 rboisiose0811612009 SUP 12:34 FM .15 743 7724

Low Office of

DAVID G. KENYON

DA.AD G. Kahae 7200 Redwood elven Suite 404 • Novato. CA 94945Farresan M. CHAMPAGNE Telephone (416) 892-1868 • Fen (416) 892• 1716 E•mail: Lawkenyoneaolcam

•March 27, 2002

Residents of the Franciscan

Dear Residents:

You are receiving with this letter a notice of rent increase from CWS, the• operators of the park, telling you of the annual increase that occurs on July 1M, per your

original Lease. This increase is not the one that many of you have agreed to pay if L1NCHousing is able to purchase the park for your benefit.

• We are having some difficulty and delays Cvith the purchase. It will not °CCMbefore April 1°. The primary problem is that certain restrictions have been placed on thebonds that have made them difficult to sell. For now, you should assume that thetransaction will close in April and that those who have signed the Lease Amendment willbegin paying the $90 increase in May

When the Acquisition transaction is completed, those who have signed the LeaseAmendment will pay only the agreed-upon $90/month increase. Even if the transactiondoses after July Vt, your CWS increase will be superseded by the INC $90 increase,and your total rent increase will amotmt to $90/month. Those who did not Sign the IPaleAmendment will receive the annual CWS increase, per your original Lease.

For those of you who have not yet signed a Lease Amendment agreeing to pay$90 more per montb if the Aequisition is successful, it is not too law. The $90 increasewill be valid up to the closing of the transaction, atter which time the increase will bepro-rated but not less than $100 per month.

Sincerely

David G. Kenyon

•

•


EXHIBIT "L"

Case5:10-cv-01087-JW Document46-12 led08/12/10 Page2 of 26SPECIAL MEETING

VOLUME 4CITY OF DALY city

BEFORE TEE MOBILE ROME RENT REVIEW CCIVNISSION 1 APPEARANCES OF COUNSEL: CITY CLERKCOUNTY OF SAN MATEO 2STATE OF CALIFORNIA 3 For the City of Daly City:

CITY OF DALY CITYIN TEE NATTER OF: THE PETITION BY: RHEAN FAJARDO JUL 21 p J titOR TEE FRANCISCAN PARR 5 Deputy City AttorneyTENANTS PETITION TO ABATEAND RESCIND 0NREASCRABIS AND 333 - 90th Street

6 Daly City, California 94015ARBITRARY RENT INCREASEFILED AUGUST 19, 2009 415291.9122 RECEIVED7

8 Commission Members PresentJONAH CREW, Chairman

9 REBECCA CLARK, Owners' RepresentativeJEAN RAYNER, Tenants' Representative

.1.0 GEORGE MOCKRIDOEMARY ELLEN SCHEFtER, Vice-ChairpersonSPECIAL MEETING 11Daly City, California 12 Staff PresentWednesday, July 7, 2010

Vain 4 VALERIE ARMENTO,13 Counsel for the Commission14

Public Speakers:Reported by : 15DANA M. MUD Terrence HanleyCSR No. 10602 16 Bill StipinovichJOE No. 138508 William Orth

17 Jude BarretteCemdi Campbell

18 Robert MarsiliBob Quinn

19 Ricci RubioRose Huffman

20 Mamie ZhuSonny OniniquiniCyn Thompson

22232425

Page 407 Page 409

1 BEFORE THE MOBILE HOME RENT REVIEW COMMISSION 1 Daly City, California, Wednesday, July 7, 2010COUNTY OF SAN MATEO 2 6:10 p.m. - 9:29 p.m.

2 STATE OF CALIFORNIA 334 PROCEEDINGS4 IN THE MATTER OF: THE PETITION

OF THE FRANCISCAN PARK 55 TENANTS PETITION TO ABATE 6 MR. CHEW: Call the meeting to order. We'll

AND RESCIND UNREASONABLE AND 7 start with Pledge of Allegiance.6 ARBITRARY RENT INCREASE 8 (Pledge of Allegiance.)

FILED AUGUST 19, 2009 9 MS. FAJARDO: At this time, we'll take roll.710 Mr. Mockridge.8

9 11 MR. MOCICRIDGE: Here.10 12 MS. FAJARDO: Ms. Clark.11 13 MS. CLARK: Here.12 14 MS. FAJARDO: Mr. Chew.13 15 MR. CHEW: Here.14 Proceedings taken before the Daly City 16 MS. FAJARDO: Ms. Hayner.15 Mobile Home Rent Review Commission, Volume 4,16 beginning at 6:10 p.m. and ending at 9:29 p.m. 17 MS. HAYNER: Here.17 on Wednesday, July 7, 2010, at City Hall Chambers, 18 MS. FAJARDO: Ms. Scherer.18 333 90th Street, Daly City, California, before 19 MS. SCHERER: Here.19 DANA M. FREED, Certified Shorthand Reporter No. 10602. 20 MS. FAJARDO: All present.20 1 MR CHEW: Great. Thank you. So this part21

2 of the Commission hearing now has come to the2223 3 deliberations process and I think we expected more24 4 people to be here, but thank you for those who25 5 attended. So I will open this up to my fellow

Page 408 i Page 410

1 (Pages 407 to 410)

SAR.NOFF COURT REPORTERS AND LEGAL TECHNOLOGIES877.955.3855

Case5:10-cv-01087-JW Document46-12 Filed08/12/10 Page3 of 26SPECIAL MEETING 71712010

VOLUME 4

1 Commissioners. I'll ask the question if people would 1 "We the people of the United States, in order to form2 like to I guess give their tentative thought. Maybe. 2 a more perfect union, establish justice, ensure3 Uh-oh, I forgot about that. Thank you. How could I 3 domestic tranquility, provide for the common defense,4 forget? I'd love to open this up to public comment. 4 promote the general welfare, and secure the blessings5 So I'll do that first. 5 of liberty to ourselves and our posterity, do ordain6 (Applause.) 6 and establish this Constitution for the United States7 MR. QUINIQUINI: Sorry. I had to remind you. 7 of America."8 MR. CHEW: Thank you. 8 Note that the law is derived from the people,9 Thanks for the applause. 9 not the corporations. And a key phrase here is

10 Could Terrence Hanley come forward? 10 promote the general welfare, not the corporate11 I would make the admonition that you 11 welfare.12 shouldn't address what's on tonight's agenda. But 12 Thank you.1.3 that's pretty much been ignored the entire time, but 13 (Applause.)1.4 I would make that admonition again. 14 MR. CHEW: Can we have William Orth come15 MR. HANLEY: And I apologize for that. 15 forward, please?16 I'm Terrence Hanley. I live at 117 Seashore. 16 MR. OATH: Hello, Commission.17 L1NC, I'm told, is a nonprofit corporation. I run a 17 Well, justice. That's a rare commodity.18 small nonprofit school in San Francisco. The families 18 Especially for those with limited resources. Usually19 who come to my school pay tuition, and every year I 1.9 for justice, to obtain it, you have to have time,20 meet with my finance committee several times during 20 money, and effort. Well, that's what the Franciscan21 the year. It's a committee made up of the parents of 21 Mobile Homeowners for Justice did. They raised money,22 the students to determine how much tuition they will 22 they spent time and effort just to fight to get to23 pay. 23 hear this Commission.24 But we don't do that until we've looked at a 24 Again, the proceedings of this Commission,25 complete review of all the bills, all the expenses, 25 the burden of proof lay on L1NC & Associates and

Page 411 Page 413

1 all the plans, all the payroll, and anything else that 1 Hunter Johnson was their major witness.2 the school will incur as a financial problem. 2 During these proceedings, he was caught in3 My staff members are paid according to a 3 evasions, half-truths and untruths, and he did not4 published scale and their placement on the scale is 4 prove a valid or a legal reason for raising the rent5 objectively determined by their degrees, credentials, 5 for $50.6 and years of experience. 6 Likewise, Counsel Shelley Buchanan for7 Our school offers financial aid, and any 7 Homeowners for Justice did just that. We proved he8 parent who asks for an application can get one and 8 had no legal nor valid right to impose the $50. And9 that application is given fair consideration. 9 to prove that he violated mobile home residency law by

10 Everyone who works at my school could go to a 10 raising it, so there is only one right decision and11 public school and get paid 15 to 20 percent more. But 11 that is to rescind the $50 and return the money to the1.2 they choose to stay at a nonprofit, because they 12 homeowners. Anything else is an unjust decision.1.3 believe the economy should serve the people rather 13 So Pd like to thank the Council and the1.4 than the people should serve the economy. I don't see 14 Commission beforehand for the correct decision. Thank15 any of that from LINC. I really don't. 15 you.16 Commissioners, your job is to objectively 16 (Applause.)17 review the facts that have been presented at these 17 MR. CHEW: I guess again --LB meetings, and based on law rather than emotion, 18 MR. QUINN: It has been pointed out that they19 determine the outcome of the hearings. But let's be 19 cannot hear what's going on on television. There is20 honest here. There are enough ambiguities in our law 20 something wrong with the sound. Can that be21 that you can find laws to justify any decision you 21 addressed? Thank you very much.22 might come to. 22 MR. CHEW: Any suggestions?23 So Pd ask that you consider the fact -- the 23 MS. FAJARDO . I think Robert will probably24 facts of this case in light of the one sentence that I 24 come out.25 think is the foundation of all laws in our society: 25 (Off the record.)

Page 412 Page 414

2 (Pages 411 to 414)

SARNOFF COURT REPORTERS AND LEGAL TECHNOLOGIES877:955.3855

Case5:10-cv-01087-JW Document46-12 Filed08/12/10 Page4 of 26SPECIAL MEETING

VOLUME 4

1 MR. CHEW: My mic's on. I guess I'll remind 1 defeating the purpose of why we are here today if you2 everyone again that we really shouldn't be addressing 2 don't transmit this to all the Franciscans who cannot3 ' the subject of the topic on tonight's agenda, which is 3 come here. They are entitled to fmd out what's going4 our deliberations. We could get through this a lot 4 on, and this is not going to be a closed-door meeting.5 easier, a lot faster. 5 MS. MARTEL: This is not a closed-door6 While they're working on the microphone, just 6 meeting. This is an open, public meeting.7 so you're ready, Mr. Bill Stipinovich will be next. 7 MR. QUINIQUINI: if we can't do it with sound8 MR. STIPINOVICH: My name is Bill -- 8 and video in our homes at the Franciscan, let's9 MR. CHEW: Might want to wait, though, until 9 postpone it then.

10 we're clear to go. 10 MS. ARMENTO: Excuse me, sir. This is a11 We're going to take a 10-minute recess, so we 11 public meeting. It's being conducted in public.12 can get in order here. 12 Public is here, public can come here. The purpose of13 (Recess taken.) 13 the meeting is not for the people who are watching at14 MS. MARTEL: We have lost our ability, 14 home.15 at least initially, to broadcast sound live. The 15 The purpose of the meeting is for the16 visual is appearing on the TV screens, but we may not 16 Commission to conclude the hearing and the17 be able to have full sound However, we will have a 17 deliberations that have gone on for numerous meetings.18 recording that will be made of the entire meeting from 18 I can appreciate the fact that it would be preferable19 this point on. 19 to be able to watch and hear everything over the20 So all of the deliberations, all of the 20 television. But there is actually no law that21 discussion that goes on, along with the video so you 21 requires that.22 can see what's going on, will be recorded. But we 22 MR. QUINN: Actually, it is working. I just23 don't know if the broadcast will continue, the sound 23 got the phone call. It is on. The sound is working24 will continue live on Comcast and the sound. 24 now. Thank you so much.25 But for the purposes of recording everything 25 MS. MARTEL: The problem is, is we don't know

Page 415 Page 417

1 that occurs here tonight, we have a court reporter who 1 if it will continue through the entire broadcast. We2 will have a full transcript and we will have a 2 had to switch to a different air channel, so we don't3 recording on a DVD that will be made available to -- 3 know for sure that it's going to continue through the4 anyone who wants a copy of it can get a copy of it 4 whole meeting. That's why I'm telling you. It can be5 tomorrow, but we can't guarantee that the cable is 5 cut off later in the meeting, but we will have a full6 going to take the sound live throughout the whole 6 recording that will record it here of all of the7 proceedings. 7 proceedings.8 We're sorry about that We're going to get 8 MR. QUINIQUINI: We understand the situation,9 it fixed tomorrow. We've got to have it ready for our 9 Ms. Martel. And I fully agree with what you are

10 council meeting on Monday. This morning when they 10 saying. Unfortunately, the other issue here is we've11 were checking it everything seemed fine. I don't know 11 submitted this request since way back when we started12 what happened. But we just spent the last 20 minutes 12 with these bearings. As a matter of fact, we repeated13 trying to work with a technician online to try and get 13 that three days ago with an email and with a letter,14 it corrected. I apologize for the problem, but we 14 and it's about when we came here this morning to be15 will have an absolute recording of the proceedings 15 sure that this will be on video properly recorded16 tonight. 16 I don't think it's right --17 MR. QUINIQUINI: Can I speak about that, 17 MR. CHEW: I'm going to —18 Mr. Chairman? 18 MS. ARMENTO: It is being recorded on video.19 MS. FAJARDO: What do you need to say? 19 MR QUINIQUINI: I meant it's being viewed in20 MR. QUINIQUINI: We understand the operation 20 homes at the Franciscan.21 here, but I don't think it's fair -- 21 MS. ARMENTO: It's not for live broadcasting.22 MR CHEW: I'm sorry. What were you saying? 22 It was for a video recording of the proceedings, and23 MS. FAJARDO: There is nothing that can he 23 we will be complying with that request.24 done about it at this time. 24 MR. CHEW: Mr Quiniquini, we're going to25 MR. QUINIQUINI: Well, I think we are 25 move forward right now, so -- we understand your

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1 viewpoint. 1 America."2 MR. QUINIQUINI: Yeah, right. 2 Please note that the law is derived from the3 UNIDENTIFIED SPEAKER: Point of order, 3 consent of the people. Please note the key phrase is4 Chairman Chew. May the first two speakers speak again 4 "the general welfare," not "the corporate welfare."5 as they were not heard? 5 Again, thank you for letting me speak.6 MR. CHEW: Well, they can if they keep it 6 (Applause.)7 short. 7 MR. CHEW: We would like to move on.8 So Mr. Hanley, you want to come up here? 8 MR,. ORTH: Thank you for hearing me again,9 MR. HANLEY: Thank you. 9 Commission.

10 MR. CHEW: We'd really like to go forward I 0 Justice. It's a rare commodity, especially11 with this meeting. 11 for those with limited resources. It usually takes12 MR. HANLEY: I'll try to be quicker. I thank 12 money, time and effort to obtain justice in this13 you for this. 13 system. And that's just what the homeowners, the14 Fm Terry Hanley. I live in the Franciscan. • 4 Franciscan Homeowners for Justice, did. They raised15 LINC is a nonprofit corporation, I'm told. I run a '5 money, they spent time and effort and they fought to16 small nonprofit school in San Francisco. And the 16 get this Commission to hear them.17 families who come to my school pay tuition. 7 And in the proceedings of this Commission,18 Every year, I meet several times with the the burden of proof was on the respondent, L1NC19 finance committee which is made up of volunteer school 4 9 Associates, represented by Hunter Johnson. And during20 parents to determine what the tuition amount will be. • 0 those proceedings, Hunter Johnson had evasions, half21 They and I set the tuition rates only after a complete • 1 truths, and untruths And this ruined his credibility22 review of all bills, expenses, payroll, and any other • 2 as a witness. He failed with the burden of proof to23 expenses the school has or will incur. • 3 show that he had a valid reason or a legal reason to24 My staff members are all paid according to a • 4 raise this rent.25 public scale and their placement on that scale is • 5 Likewise, counsel for Franciscan Homeowners

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1 subjectively determined by degrees, credentials, and 1 for Justice, Shelley Buchanan, proved just that, that2 years of experience. Our school offers financial aid, 2 he had no valid nor legal right to raise the rent $50.3 and any parent who asks for an application is given 3 So the only right decision is to rescind the $50,4 one and each application is given fair consideration. 4 because if s illegal by homeowner residency law.

Everyone who works at my school can be paid 5 And so I urge you to make the right decision,6 15 to 20 percent more at a public school. But they 6 because any other decision is a miscarriage of justice7 choose not to and stay at a nonprofit, because they 7 and I'd like to thank you for your vote ahead of time.8 believe that the economy should serve the people; the 8 Thank you.9 people should not serve the economy. I have seen none 9 (Applause.)

10 of this from L1NC. 10 MR. CHEW: Mr. Bill Stipinovich.11 Commissioners, as you know, your job is to 11 MR. STIP1NOVICH: My name is Bill12 objectively review the facts presented at these 12 Stipinovich. And I'm here to, with my fellow13 meetings. And based on law, determine the outcomes of 1 3 neighbors, to talk tonight about the $50 rent14 these hearings. But let's be honest There are 14 increase.15 enough ambiguities in our laws to find a way to 15 I don't understand why we have so many16 justify any decision you might come to. 16 restrictions. This Commission is for the people --17 So I ask that you consider the facts of this I 7 this is a government for the people of the people by18 case in light of the one sentence that is the 8 the people and the restrictions are continually19 foundation of all laws in this country: "We, the 9 placed. This is about the $50 increase, and why can't20 people of the United States, in order to form a more • 0 we speak about that?21 perfect union, establish justice, ensure domestic 1 So I don't understand. There's a lot of22 tranquility, provide for the common defense, promote • 2 residents right now that would probably like to hear23 the general welfare, and secure the blessings of • 3 about it that are elderly and they -- you know, they24 liberty to ourselves and our posterity, do ordain and • 4 maybe don't have a DVD, so they should have that right25 establish this constitution of the United States of • 5 to -- to view these hearings.

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1 I want to congratulate our lawyer, Shelley 3. disabled, the janitor, the lawyer, the judge,2 Buchanan, on an excellent presentation. And that she 2 et cetera, despite station, race, or creed, everyone3 covered all the facts, the LINCs did not prove -- did 3 in the Daly City is struggling during these tough4 not defend against our, all the charges, the 4 economic times.5 mismanagement, the discussion and negotiation of the 5 Why is the Daly City Council siding with a6 Pedesta lease, all these increasing costs. All he 6 poorly managed company that is not centrally located7 said is we're not making enough interest on our 7 in Daly City but in L.A.? This is our house and we8 reserve account. 8 are your people. Thank you.9 Well, if you look at those eight pages, I was 9 (Applause.)

10 reading off my email in preparation for the City 10 MR. CHEW: We have Robertivlarsili.1.1 Council meeting -- it's decreased by hundreds, couple 11 MR. MARSILL My name is Robert Marsili, and1.2 hundred thousand dollars. We had no repairs. Where 12 I know a lot of residents at The Franciscan. I have1.3 did that money go? 13 been in business in Daly City with two stations14 So this council -- it reminds me of a time 14 across from Jefferson High School and the other by15 when I was at home in my grandma's house and saw a 15 Vernon Village and finally one down in Redwood City.1-6 letter from World War II censorship. You just want to 3. 6 But I know all about Daly City's little17 cut everything out, you want to get this -- you just 3.7 favors that are being done. For an example, the18 wanted the 2009. You have to look at the past to 18 station on Kambet and Mission was environmentally1.9 understand what's going on today, because there is no 19 repaired. And somehow the one on Como, that developer20 way you can make a decision. 20 transferred the papers from my station to his to clean21 So again, there's been times that council has 21 up that site, to build that three-story building on22 run smoothly. There's been times I've questioned 22 it, right now on Como and Mission.23 what's been going on here. But I how it's a tough 23 And like I said, I know a lot of people in24 job, and I appreciate all the effort that the 24 The Franciscan and it's just not right. And ifs hard25 Commission has took, Thank you. 25 to swallow the favors that are being done. And,

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1 (Applause.) 1 you know, it just isn't right the way it is_ 2 MR. CHEW: Jade Barretto, please. 2 continually going on and on and on -and nobody's

3 MR BARRETTO: Oh, Jude. 3 stepping forward.4 MR. CHEW: Jude. I should have known. 4 And that's really all I have to say. Thank5 Sorry. I thought it was Jose at first (indicating). 5 you.

6 MR. BARRETTO: That's fine. No problem. rm 6 MR. CREW: Thank you, sir.7 reading this on behalf of Natalia Bremmer, who could 7 (Applause.)8 not be here. 8 MR. CHEW: Candi Campbell, please.9 She says: It is our right to establish and 9 MS. CAMPBELL: Candi Campbell, Franciscan

10 make clear the fact that we as citizens and residents 10 resident. When my disabled, elderly and, foreign-born11 of Daly City need to speak up to establish truth and 11 neighbors began telling me that they are too poor, too12 security for all the Franciscan residents regardless 12 frightened, and too powerless to raise their voices13 of station, race, or creed. 13 and sing out in protest against the management and14 HNC has threatened the poor and disabled and 14 ownership of Franciscan Mobile Home Park, I determined15 the elderly at The Franciscan who are on fixed 15 that no matter how poor, how frightened, and how16 incomes, and is violating their right to establish a 16 powerless I am, too, I would raise my voice and sing17 home with economic stability and physical prosperity. 17 out in protest on their behalf.18 Daly City Council has forgotten that the very 18 So tonight I will continue to raise my voice1.9 chair that they sit in is not theirs, but Daly City 19 and sing out in protest for all of us.20 residents'. Daly City Council has forgotten that they 20 "Where has all the money gone from our Muni21 work in the house built by Daly City taxes on the 21 bonds? Where has all the money gone? 60 million22 residents' income, and therefore work for the 22 bucks? Where has all the money gone? To Hunter23 residents. The very chamber we deliberate in is not 23 Johnson and his crooks? They've misappropriated every24 the Council's house but our house. 24 dime. When will you stop their crime'?"25 Everyone here, the poor, the elderly, the 25 So in case you didn't like my singing it is

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1 not a very good voice, I'll say it in prose: 1 to Candi's question. Where did all the money go?2 "Where has all the money gone from our Muni 2 Where did the 50 million go?3 bonds? Where has all the money gone? 60 million 3 I think the corruption at City Hall right now4 bucks. Where has all the money gone to Hunter Johnson 4 is very much related to that. You spread around 505 and his crooks? They've misappropriated every dime. 5 million to different directions, and you get corrupt6 When will you stop their crime?" 6 officials who try to move this Commission to get7 (Applause.) 7 corrupt also. And that is why Ms. Clark is there and

MR. CHEW: Mr. Bob Quinn. Bob Quinn. 8 this is why Ms. Hayner is over there. So we're left9 MR. QUINN: My name is Bob Quinn. 9 with three Commissioners right now to whom we can

10 We know you want to split the $50 rent 10 appeal.11 increase to $25. But this is not fair as the CPI for 11 Now, you may decide in the way whether you12 2009 was .616. And therefore, any rent increase for 12 like it or not, but I think Ms Huffman would want to13 2009 is not justified. 13 find out how and why would you vote yes or no?14 We are The Franciscan Mobile Homeowners for 14 Explain to us individually why you would vote yes or15 Justice. We come here before you to receive justice. 15 no.16 We want justice, we deserve justice, and we have 16 I think in due fairness, not only to17 earned justice. 17 Ms. Huffman, and to all residents of The Franciscan18 There are members of the Commission whose 18 and to all the citizens of Daly City, you are19 votes have already been compromised because of their 19 obligated to explain to us individually how you're20 salary being paid by LINC. We understand this. We 20 voting. It is your obligation to explain to us, with21 appeal to your humanity that justice shall be served 21 all the reasonings that you can give, and we22 in the end result. We thank you in advance for your 22 understand you cannot justify a vote against us.23 fair and impartial decision you will render. 23 That is very clear, because we established24 (Applause.) 24 our cause. We have proven that LINC Housing and25 MR CHEW: Mr. Ricci Rubio. 25 Pacific West have been fraudulent in their management

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1 MR. RUBIO: My name is Ricci Rubio, and I'm a 1 and ownership of The Franciscan. That is proven and2 resident at The Franciscan. The residents at The 2 that is never, never disproven throughout the hearings3 Franciscan feel they have spoken upon deaf ears at 3 and --4 this Commission. It is the seniors, disabled, and 4 MS. FAJARDO: Your time is up.5 disenfranchised that you are disservicing in your 5 MR. QUINIQUINI: I challenge Mr. Hunter here6 decision here tonight. It is the opinion of the 6 to stand here and answer our questions. Thank you.7 residents that this Commission, by its statements and 7 MR. CHEW: Thank you.8 action, has been on the side of LINC from the 8 MS. HUFFMAN: Thank you.9 beginning. 9 MS. ARM:ENTO: While she's coming up, I would

10 If this Commission sides in favor with 10 like to reiterate for the record that the ordinance11 corruption, that, in the eyes of the residents, makes 11 specifies the composition of the Commission and the12 this Council corrupt and should expect little to 12 ordinance specifies that one member shall be a tenant,13 nothing from any one of you perched up there tonight. 13 one member shall be an owner, and the third, fourth14 (Applause.) 14 and fifth member shall be neither mobile home park15 MR. CHEW: Rose Hoffert. Okay. 15 tenants, owners, operators, or managers.16 Rose Huffman. 1.6 MR. CHEW: Thank you.17 MS. HUFFMAN: Sorry. I thought you said 17 MS. ZHU: My name is Mamie. Pm living in18 Hoffert. 18 South Park. There is a bit of dish from our previous19 MR. CHEW: I did. No one answered, so we're 19 meetings. We have found the evidence that how corrupt20 going on to Rose Huffman. 20 is LINC and Daly City officials in red and white.21 MS. HUFFMAN: Hi, Pm Rose Huffman, resident 21 Also, in secrets. We are not ATM of LINC and keep22 of The Franciscan. I'd like Sonny to speak for me, 22 that with them of Weston Property Management, and23 please. 23 which have no money to spend on the maintain because24 MR. QUINIQUINI: Thank you. 24 of the key (inaudible). The lease is full of no25 Rose Hoffman wanted to speak about her answer 25 disclosure. All the term was leaving plan so the

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1 management can fill in whatever they want. 1 (Applause.)2 We have more than 1,000 voice inside 2 That is what he said and that's his answer to3 The Franciscan Mobile Home Park. If the ruling is 3 whatever we're saying against the practice of fraud4 against the residents, all the while, they will turn 4 that we have established here. We respect your5 them back against the City Councilmen and 5 authority. We created this Commission and I hope that6 Councilwomen. manic you. 6 you take this responsibility with that moral7 (Applause.) 7 conscience in yours.8 MR. CHEW: Mr. Quiniquini, are you going to 8 We are going to see each other here in9 speak? Were you done? Are you done? 9 Daly City. I'll meet you in the streets here, in

10 MR. QUINIQUINI: I'm sorry. 10 supermarkets, in restaurants, and I hope that we can11 MR. CHEW: Were you going to speak again? 11 look at each other square in the eye and respect each12 MR QUINIQUINI: Yes, I will. 12 other. Unless you vote for us, we cannot do that.13 MR CHEW: I wasn't suggesting it to you, but 13 MS. FAJARDO: Your time is up.14 if you're done, we can move forward with 14 MR. QUINIQUINI: The case is closed. We won15 deliberations. 15 this case.16 MR. QUINIQUINTI: Fm sorry? 16 MS. FAJARDO: Your time is up.17 MR. CHEW: I said I wasn't suggesting that 117 MR. QUJNIQUINI: Thank you.18 you speak again, but I have a card now with your name 18 MS. FAJARDO: Your time is up.19 on it. 19 MR QUINTIQUINI: Thank you.20 MR QULNIQUINI: Right. 20 MR. CHEW: Cyn Thompson.21 MR CHEW: Okay. But you spoke before, so 21 MS. THOMPSON: Coming.22 are you going to speak on your behalf now? 22 Thank you, council members. This has been a23 MR QUINIQUINI: I will speak on my behalf. 23 very, very long process, of which I'm very new. And24 MR CHEW: Go ahead, sir. 24 I've sat back and I've watched and I've listened. And25 MR. QUINIQUINTI: I'll spend a few seconds 25 as a member, or as a person who lives in The

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1 answering Ms. Armento's request. The reason that we 1 Franciscan, I have seen it go down, I have seen what's2 look at this Commission as corrupt in relation to 2 happened to people. And it's been-very clear to me,3 Ms. Clark and Ms. Rayner, because the process in the 3 although I'm not a lawyer, I've never been in this4 provisions itself was not followed by the council, 4 sort of situation before, that the proof has been on5 whicb I opposed the very first time that Mayor Tones 5 our side.6 announced that the representative from UNC will be 6 I have been offended by LINC and its7 automatically in the Commission. 7 representatives when they were first here talking8 Now, in Ms. Hayner's situation, I applied for 8 almost -- I may be mistaken, but almost threatening us9 the chair. I got a call from Mayor Tones telling me, 9 that if we -- if they didn't have the increase, that

10 Sonny, if you don't drop your no on 50, you cannot sit 10 they would have to let go of our guards at our front11 on that Commission. I call that corruption. 11 gate, which is very important. I found that very12 Now, we had won this case, and we all know 12 offensive.13 this The burden of proof is on LINC and Pacific 13 I hope that you come to the right decision,14 West. And they are not able to be heard on this; they 14 because it does involve 101 --501 lives. So 1 thank15 are not able to explain anything that gives us any 15 you. And again, I hope you come to the right1.6 reason why there is an increase in rent. As a matter 16 decision.17 of fact, this issue is fraudulent. We all know this. 17 (Applause.)18 Our lawyer Shelley had expounded here. All you have 18 MR CHEW: Okay. So finally, I guess that19 to do is look at their closing statement. And that 19 leads us now into the deliberations amongst the20 has never been refuted. 20 Commissioners here. And I would open up to my fellow21 All that Mr. Power (sic) can say is we are 21 Commissioners if they would like to open up with their22 like blind man around an elephant. That's an insult 22 tentative thoughts or their tentative leanings or23 to all of us, because he includes all of you in being 23 ruling they might have. So I apologize. But,24 blind and not knowing what is right and wrong. Right? 24 Mr. Mocicridge, if you could help us out here.25 Okay? 25 MR MOCKRIDGE: Thank you. These are my

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1 initial thoughts concerning the rent increase and I 1 for this Commission to render opinions on any2 hope that it maybe will help set the stage for 2 complaints or allegations raised by the Petitioners3 discussion among -- amongst the entire group. 3 beyond the ten expense-related items.4 My opening opinion is that most or all of the 4 Finally, if time permits, I would recommend5 $50 monthly rent increase is unreasonable in 5 that the Commission consider including comments and6 accordance with the provisions of 2.52.050(j) of the 6 suggestions in its final report, which are based on7 Daly City Municipal Code, and therefore, should be 7 information learned through these proceedings and8 significantly reduced or rescinded. 8 which might be mutually beneficial to current and9 The Code itself enumerates nine expense 9 future residents and owners of the Park.

10 factors and one fair-rate-of-return factor that can be 10 One such area that comes immediately to mind11 considered by this Commission when deciding if a rate 11 is a need to revise the terms and conditions of the12 increase is justified. 12 rent control ordinance to include items that are

Although I recognize that the Respondents had 13 applicable to ownership of the Park by a nonprofit14 recently experienced significant loss-of-interest 14 private entity and/or nonprofit ownership by the15 income on their reserve assets, the current provisions 15 residents themselves.1.6 of the Municipal Code do not directly recognize that 16 The current ordinance was written at a time17 particular revenue source. 17 when only one private, for-profit mobile home park18 The Code also does not recognize penalties le existed in Daly City. The conditions for allowable1.9 and fees for nonpayment of property taxes, although 19 rent review do not include provisions for additional20 property tax increases are recognized in the Code. 20 revenues, expenses, governmental requirements and21 I will defer discussion of my calculations 21 other considerations unique to nonprofit ownership.22 for the ten allowable items for later in this session. 22 Another area that seems apparent is the23 As to the additional complaints and 23 necessity that HNC and the Park residents find a way24 allegations against [INC and other entities that the 24 to work together for their mutual benefit to identify25 petitioners have presented, I agree with the 25 and sign up all of the nontax-exempt households.

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1 Respondents, that most or all are beyond the scope of 1 I am sure my fellow Commissioners have2 this Commission and therefore not relevant to these 2 additional ideas ascertained during these lengthy3 proceedings. 3 proceedings which could help Franciscans residents4 My opinion was reached after careful review 4 during this difficult period and future years.5 of all the documents and oral arguments provided to 5 This concludes my initial opinion statement6 the Commission by the Petitioners, as well as those 6 regarding the rent increase. I am open to other7 provided by the Respondents. 7 opinions and persuasive arguments by my fellow8 I know that my fellow Commissioners have also 8 Commissioners during the course of deliberations.9 spent much time analyzing all the documentation and 9 I want to thank you all for your time.

10 carefully considered oral arguments. 10 (Applause.)The Petitioners have presented their 11 MR. CHEW: Ms. Clark, P11 ask you for your

1.2 arguments against the rate increase in a format 12 thoughts.13 resembling a courtroom trial, which embodies 13 MS. CLARK: Okay. We've listened to a lot ofZ. structured proceedings far removed from the resources 1 4 testimony over the course of many months here. And I15 and authority available to this Commission. 15 appreciate my fellow Commissioners in the discussion1.6 For example, we have no resources or fundings 16 that we've had.17 for pretrial proceedings such as interrogatories, 17 If we — Mr. Mocicridge, I certainly look18 depositions, Special Masters, expert witnesses, 18 forward to some of the discussion around the issues19 et cetera. We would also need to commission an 19 that you've raised and I know the other Commissioners20 independent audit of LINC's books. 20 will also raise.21 The Petitioners will have to fund these 21 But I have to say that my initial reaction to22 activities during the course of their actual lawsuit 22 this is that this is a business. Even though it's not23 against [INC, but such resources are not available for 23 run by a nonprofit, it has to stand on its own. And24 this current Rent Review Commission hearing. 24 anyone who's in the ownership and management industry25 Therefore, I do not think it is appropriate 25 will tell you the same thing. And so I do believe

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1. that the $50 rent increase is justified, because 1 MR. CHEW: So briefly, I have a couple of2 without which the property will be insolvent. 2 comments. Thank you, Ms. Clark.3 In evaluating the rent increase proposed, we 3 I don't have as prepared notes here, or a4 did -- I certainly did and I believe the other 4 statement, but my initial -- my tentative ruling here5 Commissioners have evaluated the items that were 5 is that I do not believe that the Respondent has met6 mandated by the ordinance which said that the 6 their burden of proof pursuant to the ordinance of7 Commission shall consider a whole series of increased 7 2.52.050, subdivision g, the burden of proof is upon

cost to the owner. 8 the Respondent and no rent adjustment shall be granted9 However, it did not limit our consideration 9 until supported by the preponderance of the evidence,

1.0 to those items. It said that we shall consider those 0 and I don't believe the preponderance of evidence has11 but not that those will be the only items you will 11 been met here.12 consider. And I don't think that you can fairly 12 I can go into it for a lot of reasons and13 evaluate this without taking all costs and expenses 3 a lot of reasonings, but just to highlight some of my14 and revenues into consideration. 4 thoughts here, I think it was a burden of proof issue.15 The simple fact is that the decrease in some 5 What I'm relying on mostly on my reasoning here is1 6 of the revenue has to be made up somewhere else. And I 6 that the Respondents attorney argued only one line of17 the audit -- the financials and the audits speak to 17 reasoning.18 that issue. 5 His one argument was the interest income.19 Further, this $50 rent increase amounted to 9 And that the interest income on the reserve accounts20 approximately 6 percent as an average in the • 0 had gone down and that was the only argument. Clearly21 resident -- in the increase in rent for most • 1 there was other arguments here, but I'm not here to22 residents. This 6 percent rent increase followed a • 2 be -- to negotiate against myself or argue against23 year in which no rent increase was given to the • 3 myself. I'm going to rely upon their attorney who has24 majority of residents in the Park. And so it's • 4 the most knowledge about the situation and I'm going25 important to note that this increase averaged 3 • 5 to accept his arguments as I -- as-I listen to what

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1 percent per year, taking into consideration 2008 when 1 Ms. Clark says, I would agree that it appears that2 the owner had a right to increase the rent but elected 2 there are a host of-other arguments and there's a host_3 not to. 3 of other reasons.4 Further, it's evidenced that the property 4 But unfortunately, for the Respondent here,5 couldn't afford to pay in 2009 the asset management 5 we are guided by the preponderance of the evidence and6 fee, nor could it pay the fee of the City. Those were 6 that's the duty and standard in which I must accord7 two fees that there just wasn't enough money to pay 7 here.8 those fees. 8 So viewed in that light, I clearly don't see9 So the question that I have is: Without the 9 the Respondents met their burden of proof. It wasn't

10 rent increase, does this property go into bankruptcy 1 0 clear to me what -- I'm sorry. Strike that.11 or become insolvent? I believe that that's what we're 1 1 I think a huge issue that stood out for me12 being asked to consider. I know it's a very difficult '2 was that they submitted two documents that13 pill. I 3 contradicted themselves about what the interest income14 I know that, from what I've heard here 04 was, and that was a huge problem for me.15 tonight, that you all believe that there is no answer 5 I tried to do some calculations and I also16 and you're not open to hearing other opinions other 1 6 agree with Mr. Mocicridge that, you know, at a certain17 than ones that you hold. I 7 point this Commission would need a forensic accountant18 And, you know, there's been a lot of comments 18 for us to wrap our heads around this And because19 made that have truly offended me tonight, because I I 9 it's Respondents burden of proof and things weren't20 feel that there have been veiled threats as well as • 0 spelled out well enough for me, unfortunately, that's21 accusations made without any of you knowing who I am 'I going to be construed against the Respondent, as it's22 and that I am also up here trying to weigh all the • 2 their burden of proof.23 evidence. • 3 I reviewed the closing argument a number of24 So I do find that my initial belief is that • 4 times of the Respondent and I-still only see one line25 this is a valid and reasonable rent increase. 5 of argument being that is they relied on the argument

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1 of the interest income being reduced and I had a 1 come to so far.2 problem with different documents being submitted to us 2 MR. CHEW: Thank you. Ms. Scherer.3 about what the income was. 3 MS. SCHERER: Okay. I too was not prepared4 Mr. Powers did argue that we should go to the 4 to make formal findings at this point, but I will5 financial audits, but it appears that I recommended 5 share some of my thoughts, having gone through inches6 that the raw numbers for the balance on reserve 6 and inches of material.7 accounts as well as the interest rate be brought in. 7 First I have to say that neither side's8 Another issue to me was when the documents 8 counsel focused this material for us in a way that I9 were -- one month of March 2010 was brought in, the 9 thought it should have been focused. This should have

10 interest rate was 2.69 percent And there was a 10 been an easy task. The documents are contradictory.11 substantial difference between one spreadsheet which 11 The ones that we asked for aren't there, so it makes12 showed, I think, if I remember right, roughly 410 -- I 1.2 the task more difficult when counsel are putting in13 don't remember the exact amount, but I remember a 13 irrelevant issues.14 spreadsheet being presented where interest income was 14 However, on the issue of the rent, I believe15 about 410,000 for 2008 and then there was another one 15 the project does have to be able to stand on its own.16 which shows significantly-less. 16 I don't think it's reasonable to take a position that17 But because they do carry the burden of 17 an owner is supposed to bring in assets from elsewhere18 proof, I don't know what I'm supposed to rely upon. 18 to make the project function.19 I'll leave that as my tentative thought and ruling. 19 That being said, the Respondent did have the20 (Applause.) 20 burden of proof and this is where it got really messy21 MR. CHEW: Ms. Rayner? 21 for me. I did not find Mr. Johnson's testimonial that22 MS. HAYNER: There was a lot of stuff 22 helpful. It was not credible in some instances; it23 presented and this whole situation has been pretty 23 was messy. There were all of these "I don't knows."24 complicated. So in order to me to- work with it, I had 24 And I thought, "Well, who does know?" It was25 to simplify it in my own mind. And I think the owner 25 simply not compelling.

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1 did succumb to the burden of proof, because the 1 The spreadsheets were not compelling, because2 - auditor's report showed thedropin interest income 2 of the number of errors or inconsistencies within3 and that was an auditor's-Sport prepared by an 3 them.4 outside auditor. 4 What was compelling to me was the outside5 So according to 252-of the Code, increased 5 audited statements. Those were done by a third party6 costs to the owner, such as a drop in interest, may be 6 and those show to me that if this project is going to7 considered. So I considered that. So therefore, the 7 stand on its own, there does have to be a rent8 rental increase is not unreasonable. The only problem 8 increase.9 I had was that it was across the board, $50 for all, 9 They made the statement that it needed to be

1.0 and not a percentage as agreed in the leases. Perhaps 10 $50 to balance the budget. I haven't -- I have some11 that could be restructured retroactively. I'm not 11 thoughts about that There was testimony from12 sure. 12 homeowners to the effect that they were used to much13 I'm concerned, from -a memo I have here from 13 smaller increases.1.4 LINC, if the rent increase-is not approved, 2010 14 And yet I think sometimes perception and15 budget will require refunding of the $50-per-month 15 reality are not the same, because the one lease that16 rent increase. It's my understanding that there is no 16 we did get, which was I believe Mr. -- I've forgotten17 other entity that will be coming forward to take up 17 the name, Mordinovia (sic), Mordinoia -- and excuse18 the slack in the budget, as was-kind of alluded to 18 the pronunciation -- but that particular lease showed19 many times in the -- in the previous discussions we've 10 the actual rent increases that happened for three20 had 20 years in a row.21 I agree with Rebecca that the project should 21 And all of those rent increases were beyond22 probably be standing on it own or it's not going to 22 what the testimony was to the effect that they were23 help us in our property values and things like that, 23 very small increases. Those rent increases started at24 and people wanting to live there and buying and 24 3.5 percent, and in the year 2003, it was 4.5 percent.25 selling our homes. That's what I -- that's what I've 25 And in fact, I believe another one of the

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1 homeowners testified that had this increase been 1 And yet that lease was going to expire in2 within the 5 percent, the 3 to 5 percent that the 2 2016 and if they didn't renegotiate it, were those 1253 original lease allowed for, we probably wouldn't be 3 people just going to pick up and move? So it's sort4 here. But it was his opinion that it was still quite 4 of hard to find that as unreasonable. We didn't get5 a bit more than the usual increases. 5 enough testimony -- we didn't get any countering6 And it couldn't have been that much more than 6 testimony that there was another action that could7 the 4.5 -- well, I guess it depends on which end you 7 have been taken; they could have waited till 2016 and8 were at, because the problem for me with this 50 8 gone on paying the 200, which would have cost less9 percent increase is that it ranges from 3 percent 9 than the 500.

10 increase at one end all the way to 11 percent at I 0 But would they have been able to even get it11 another end. 1 for 500 or even renegotiate that lease in 2016? That12 So is that fair? If there has to be an 2 would have been a risk. I don't find it unreasonable13 increase, is that a reasonable -- since we're dealing I 3 that they renegotiated it and didn't take the chance.14 with a reasonableness standard -- so Pm stuck looking I 4 And I'm betting the 125 people who are on that15 at -- well, okay, how come that real low rent is . 5 particular piece of land are glad that the lease was1.6 there? Is that a person who's been there for a very I 6 renegotiated.17 long time, so has the benefit has a much lower rent 7 I guess that's just my -- my initial feelings18 that was frozen for a long time versus the new people 8 and I'm open to hearing what everybody else bas to say19 who come in and get a higher rent? 9 now that we've all put our initial reactions out20 So maybe it's not all that unfair that the 11 • 0 there. But, you know, my overall feeling is again21 percent went to the lower end and the 3 percent went • 1 that there's perception out there by some of the22 to the top end. • 2 residents that this rent increase was way more than23 But for me, a more fair approach would have • 3 their others and yet that isn't what I'm seeing in the24 been to figure out what percent increase was necessary • 4 documents. So its an unfortunate increase to be25 and to apply a percentage increase over the entire • 5 sure.

Page 447 Page 449

1 gamut. And for me, a reasonable percentage increase, 1 And I also -- one last thing. It's true that2 even within the old lease, would have been 5 percent. 2 there were ten allowable items that we were supposed3 And that's just my initial thoughts as 3 to look at in determining wbether a rent increase is4 to -- because I believe this community needs to stand 4 reasonable. But it didn't say only those items.5 on its own. A member of this community testified 5 And I think it would be irresponsible to6 there's not even money for a bucket of paint. 6 ignore the economy. I mean, that's an obvious7 So to say that we should roll back the rent, 7 elephant in the room. Interest rates went down. And8 get rid of security, decrease the value, decrease the 8 so as, you know, a person looking at the overall --9 quality of living, our two choices are to have some 9 and as a person who hopes that whatever we decide,

10 kind of a rent increase to allow this project to stand 0 this community will stay the nice community that it11 on its own with some kind of quality of life, or to 1 is, have its amenities and have a quality of life. I12 roll it back and allow the owner to remove all of the 2 hope that that at least results from the ultimate1.3 amenities, the security, and all of the things that 3 decision.1.4 they've already testified that they plan to do, 4 MR. CHEW: Is this a good time for a break?1.5 because it's their position and it was from the I 5 Do you need a break?16 get-go incidentally, reading the document, that they 6 DEPOSITION OFFICER: I'm okay.1.7 never pledged any money outside of what the project 7 MS. SCHERER: I think we should probably get18 would produce on its own to make this project go. So 8 started. I think we should probably keep going, if we19 it's been their position it had to stand on it own 9 can, given the initial loss of a half an hour.20 from the get-go. • 0 MR. CHEW: Okay. So I'd like to look for21 I heard some complaints about the negotiation • 1 some guidance here at this point in terms of22 of the Pedesta lease. It's hard to know whether • 2 deliberations.23 that's reasonable or not. We didn't get an expert • 3 MS. ARMENTO: Any particular guidance you24 witness. It went from like 200,000 to over 500,000 a ' 4 were looking for?25 year. That doesn't sound reasonable. • 5 MR. CHEW: I guess we have a -- were

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1 obviously split on whether rent increase the 1. service fees, et cetera, for 2008, 2009.2 preponderance of the evidence was met or not, so 2 And, you know, when I look at that in the --3 should we deliberate on that first before we go to any 3 in the narrow version of how do we make this decision4 remedy and should we have a firm vote on that before 4 on reasonableness? I guess I would ask the others5 we move to the second step on the remedy? 5 what would have helped that burden of proof if, in6 MS. ARMENTO: Well, you definitely need to 6 fact, the numbers between the audit and this breakdown7 have some discussion with regard to whether or not you 7 in this format -- what else would have helped that8 think as a group you don't have to be unanimous, 8 burden of proof if this doesn't do it? I mean, to me,9 but you have to come to some conclusion as to whether 9 the numbers speak to the needs of the Park.0 or not the rent increase is reasonable or 10 So that's just a question I would throw to1 unconscionable. 11 Mr. Mocicridge or Mr. Chew.2 MR. CHEW: Okay. 12 MR. MOCKRIDGE: Well, I thought the breakdown3 MS. ARMENTO: And the question that you 13 was sufficient. I guess my -- the only thing you4 really need to deal with, based on the ordinance, is 1.4 might have wanted to highlight was which items in5 was the $50 per mobile home space rent increase which 15 there are pertinent to the Municipal Code and which6 became effective June 1st, 2009, so great as to be 16 are apart -- are not mentioned in the Municipal Code.7 unconscionable or an unreasonable increase? 17 And as I said in my opening remarks, it's8 - You need to make a decision on that first. 18 unfortunate that the Code itself was, I -- I believe9 That decision needs to be based on a variety of 19 was established for a private ownership of the Park, a

• 0 findings. You reach that decision because A, B and C. 20 for-profit ownership, and it -- you know, the Code•1 Having reached whatever decision you've 21 itself does not take into account some of the typical"2 reached, then there's the issue of does the $50 22 revenues and expenses that you would encounter in a --0 3 remain? Does the $50 go away completely? Does the 23 in a not-for-profit corporation.•4 $50 get replaced by something else? Either a flat 24 And that's unfortunate, and -- but that's,• 5 number or a percentage. 25 that's what we have to go by in making our decision.

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1 _ So that's, that's basically the manner in 1 In my opinion. And I realize that I probably am a2- which you need to proceed. Is that helpful? 2 little bit more strong on this than most of the

: 3 MR. CHEW: Thank you. 3 other -- the other people are more willing to consider4 MR. MOCKRIDGE: Is a percentage an option for 4 other factors.5 us? 5 MS. CLARK: So you believe that those are the6 MS. ARMENTO: The ordinance basically says 6 only factors we can consider, even though it just says

•7 that the Commission can fashion whatever it believes 7 you shall consider these without exclusion of the8 is the appropriate remedy, so based on comments heard 8 others?9 thus far, I do think that a percentage is an option. 9 MR. MOCKRIDGE: I give a lot more weight,

I 0 MR. CHEW: Does any Commissioner like to 10 let's put it that way, to the factors that are11 speak based on what any other of the Commissioners 11 mentioned than I do to factors that are not mentioned.12 have talked about at this point? 12 MR. CREW: Okay. So I'm not sure if II 3 MS. CLARK: I would, if I may. One of the 13 totally understand your question. You're asking me in4 questions that I have for the other Commissioners 24 terms of burden of proof what would have maybe changed5 would be -- 15 my mind in terms of what evidence was presented in6 UNIDENTIFIED SPEAKER: I can't hear. 16 terms of the spreadsheet or --7 MS. CLARK: I'm speaking to the microphone. 17 MS. CLARK: Yeah, in terms of the8 I don't -- 18 spreadsheets or the audits, I mean I think so much of9 UNIDENTIFIED SPEAKER: I can't hear. 19 this, in terms of what we're being asked to consider,

0 0 MS. CLARK: Is it -- is it turned? That's 20 is found on what's in the budget or what's in the• 1 the light. Okay. Well, I was speaking into it 21 financials.2 before, so let's try this again. 22 MR. CHEW: You know, as I sit here, again --

0 3 Based on -- we asked for some information. I 23 Ill say it again, I think there's a bost of other•4 believe it was based on Mr. Mocicridge's request for a 24 arguments that the Respondent should have made that• 5 breakdown of revenue and expenses including debt 25 you made clear and now that I look at my note, but• Page 452 Page 454

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1 they didn't do that so I don't know that they're 1 back that the landlord realistically will use it as an2 actually arguments. 2 excuse to bring detriment upon the Park and I hope3 So that's what I think is part of the problem 3 that the tenants there realize that any rent rollback4 here. I have a problem with -- they tell me interest 4 or decrease could -- could potentially realistically5 income is 420,000, when this is the sole basis of 5 hurt the Park.6 their argument that interest income went down. 6 But again, I'm guided -- I'm not guided -- I7 If I were to rely on the documents that 7 am bound by the burden of proof here.8 present to me specifically requested and within that 8 MS. SCHERER: In terms of burden of proof,9 area where this is the whole crux of their argument, 9 what about the homeowner, or the resident who

10 if I were to believe the documents that they've 10 testified they didn't even have money for a bucket of11 submitted for their burden of proof, that I'm supposed 11 paint? I mean, that actually for me was way more12 to know, if I were to rely on these documents would 12 compelling than any of the rest of the testimony that13 show that they had actually an increase in interest 13 we had that this project is barely standing on it own14 income, so that's -- that's part of my problem. 14 here.15 MS. HAYNER: If you look at the audit -- this 15 MR. CHEW And that just brings me back to my16 is an audited document, not just a -- I don't know, 16 comment that I just made that I fear that when -- when17 one sheet kind of by itself This is an audit 17 rents, assuming -- I'm sorry -- strike that.18 document. This is '08 and '09. 18 If we do decrease rent, that the Park is19 MR. CHEW: No, I understand that. 19 really going to suffer. And a lot of people here want20 MS. HAYNER: Okay. 20 justice and justice has been fashioned -- excuse me,21 MR. CHEW: And that's -- that's part of the 21 been harbored into what they want. And I think22 problem. I don't know how you couldn't double-check 22 justice is a little bit gayer sometimes and needs to23 this part. That's why I don't trust the numbers. I 23 be looked at in different perspectives.24 have issue with the fact that I- requestedand 24 And again, I really hope that any action that25 Ms. Buchanan requested for the actual interest rates 25 we take, that short-termwise the tenants might benefit

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1 and they were never disclosed to us. 1 from, but I fear that it might be detrimental to the2 And it was claimedthift-the interest rates 2 Park. And again, it's up to the tenants, [guess, to3 were a fraction of I percent to a negative percent -- 3 pay into this more if this is somethihg That the4 and I'm not even clear what a negative percent would 4 Commission votes on.5 be -- but clearly when the one month statement of 5 But I don't actually remember specifically6 March 2010 is provided and it shows 2.69 percent, it's 6 that testimony about the paint and I would take a look7 clearly not under 1 percent, it casts in-doubt the 7 at that at a break. Do you remember offhand where it8 reliability of all the numbers that are the basis for 8 was?9 even the audits. I don't know what was even provided 9 MS. HAYNER: Yeah, somebody was talking about

10 to the audits. 10 painting the gazebo. Is that it? They couldn't even11 Again, I remember telling Mr. Powers and 11 do it.12 Mr. Johnson when I asked certain questions and they 12 MS SCHERER: Pm not sure which one either.13 didn't answer a lot of questions without any legal 13 MS. HAYNER: It was the day that Joan called14 objection, but we can't compel any answer because we 14 the witnesses.15 don't have a contempt power. 15 MS. FAJARDO: find it for you.16 But I said, you know, you're going to do that 16 MS. SCHERER: It had to do also with there17 at the risk of-- of not carrying your burden of proof 17 was a lot of testimony about management and the18 and that's the election they made I specifically 18 perception that -- and not just perception. I'm not19 remember asking for interest rate figures and 19 saying it's only perception, but that management20 documents. And I know Ms. Buchanan did too and that 20 communication was lacking, to say the least. And that21 was, you know, pretty well put out there for them. So 21 does seem to be a major part of the problem here.22 I hope I'm answering your question. 22 And even our problem getting the testimony23 I would take this time, though, to echo. I 23 that we needed from Respondent. I mean, it's their24 do -- I do hope the Park stands on its own. I fear at 24 manner of communication. It's -- it's messy. It's25 a certain point that if and when the rents are scaled 25 not direct. It doesn't give you what you need. So

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1 it's frustrating. I understand that 1 the other Commissioners can convince me that the2 And I have to say I'm in a complex where 2 ordinance really is not as restrictive to those ten3 we've had our problems with management I think 3 items as I feel it is in the wording, or there's some4 everybody does. And ours was so bad that our manager 4 other justification for allowing a substantial portion5 didn't pay the PGR,F bill and the PG&E turned off the 5 of the rent increase to arise which I'm willing to6 electricity. And then they hired an electrician to 6 listen to that.7 find out what the problem was, you know, all on our 7 And as I say, it's mainly because I -- I go8 dime. And that was after they got, you know, a 30 -- 8 by your complex every single day twice a day. And9 or a seven-day notice, a 24-hour notice, and still 9 I've done this for a number of years. It's just on my

10 they then hired an electrician to find out why the 10 way to work, so -- and I also, I manage a homeowner's11 electricity was turned off. 11 association, and I've had several of my residents that12 So management companies do leave a lot to be 12 got into financial difficulties and moved into your13 desired and yours seems like it's not communicating 13 project.14 with you at all. So that does seem to be a problem, 14 So I really do, you know, have an affinity15 but it doesn't seem to be an issue with the rent 15 for the place And, you know, I just hope that I16 itself that we have to -- you know, it's certainly an 16 don't drive by in another month and see no guard out17 issue with your quality of life and your enjoyment of 17 there, see the grass drying, see all kinds of bad18 your property. But it doesn't seem to go to the rent 18 things happening.19 issue itself for me. Just frustration. 19 You know, I can't -- obviously, you're not20 MR. MOCICRIDGE: I was just going to agree 20 going to take my advice on exactly how to run things,21 with some of the people that, make no mistake, I've 21 but I would advise you to, once this is all over, to22 looked through the financials and this park has 22 somehow get somebody that you trust to give you an23 financial troubles. And, you know, without -- without 23 analysis of your financial condition, your true24 the substantial portion of the rent increase being 24 financial condition, because there is a big problem25 maintained, there is going to be a significant cutback 25 with the -- the revenue that is derived from the

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1 in services or even it's possible that the bond could 1 interest and there's a big problem in the tax -- in- 2- - be defaulted upon. 2 the property-tax area that, you Fm not sure

And I'm not sure how.the process works for a 3 how that's going to get resolved`g the future.4 nonprofit organization when that happens, but I 4 So those are my comments, and as I say, I'm5 promise you it's not going to be good. 5 open to -- if people can convince me that we will not6 So I know there's a lot of anger with the 6 be in violation of the existing ordinance, which I7 residents at The Franciscan and I -- you know, as I 7 agree is not ideal, that there is justification for8 say, I'm trying to go by the guidelines of an 8 more of the rent increase than Pm currently willing9 ordinance that really is not structured for your type 9 to vote on.

10 of-- of ownership. And that is the reason why I'm 10 MS. SCHERER: Could we ask that question of11 leaning towards reducing most of the rent increase. 11 our attorney? Would we be in violation of the12 But, you know, it would be my hope, if the 12 ordinance if we were to consider items outside of it?13 Commission did do that, that you would reconsider with 13 MR. MOCKRTDGE: Maybe "violation" isn't the14 LINC and, you know, even though the Commission might 14 ride word. You know, not in compliance with the15 reduce it, I think you need to take a hard look and 15 ordinance, even though we probably can't do -- nobody16 realize the position that you're in and the 16 can do anything about it.17 financially terrible things that could happen to you 17 MS. ARMENTO: The exact language of18 and you might want to voluntarily agree at least for 18 subsection (j) you would refer says, "In evaluating19 awhile, until the finances get into better shape, 19 the rent increase proposed or effective by the Park20 to -- to allow the increase yourself. 20 owner, the Commission shall consider increased costs21 And as I say, I know you're very angry at 21 to the owner attributable to increases in utility22 your management and everything, but as far as I can 22 rates and property taxes, insuranoe, advertising,23 tell from reviewing the finances, and I go through 23 governmental assessment, costs of living increases24 a lot of books, you have big problems. 24 attributable to incidental services, normal repair and25 And so, you know, Pm willing -- I'm open, if 25 maintenance, capital improvements, upgrading, and

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1 addition of amenities and services, as well as the 1 range.2 fair rate of return not to exceed 9-and-one-half 2 MS. HAYNER: Also there was a lot of people3 percent on investment." 3 in the audience who really had a hard time -- not that4 It says that you must consider these things. 4 everybody doesn't want to pay $50 a month, but there5 I believe one of the other Commissioners pointed out 5 must be people that have a harder time than others,6 it does not say that you can only consider these 6 and some of these papers we have where we were asking7 things. And it speaks primarily in terms of increased 7 for the -- I'm trying to remember -- the low incomeS costs, so it doesn't address various other types of 8 and when we got some, several sheets with a re --9 economic issues. 9 every unit, it said what category that one was in.

10 As, I believe, another Commissioner said, the 10 I mean, $50 for those particulars must be --11 economy is sort of the elephant in the room and can't 11 maybe was pretty hard and I don't know if there is12 be ignored. 12 some way it could have been restructured or done13 So I don't think when you look at the 13 differently. I don't know14 ordinance as a whole because you need to determine if 14 MS. SCHERER: On that same subject, it was15 the increase is unconscionable or unreasonable, that 15 very disconcerting for me, even though I kind of16 you are restricted to looking at just the factors that 16 understand it because the lack of communication and17 are enumerated in 6). That is my opinion. 17 now there's a lack of trust.18 MS. SCHERER: Thank you. 18 But for the residents to not fill out the19 MS. HAYNER: I don't have any problem with 19 financial information actually hurts everybody. And20 seeing the drop in interest income as part of the 20 there isn't anything the owner can do about that.21 increased cost to owner and fit into the ordinance and 21 That's a residents' issue, but it's sort of like22 I don't have any trouble with -- I don't have any 22 throwing the baby out with the bath.23 trouble with reading the numbers on the audit showing 23 So it's hard to say, "Get over your lack of24 how the interest income has gone down. 24 trust," but if you could somehow at least do that and25 MR. MOCICRIDGE: I don't have any problem with 25 know that you'd be benefiting yourself and your

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1 those either. It definitely has gone down. 1 neighbors by filling out those papers, because2 MS. SCHERER: While there's a pause, I did 2 obviously, if there is a reduction in the property3 - find the paint section. 3 taxes, that decreases the need for More income.4 MS. FAJARDO: I'm sorry. 4 And in terms of the percentage, I guess my5 MS. SCHERER: Because the court reporter put 5 feeling, just because I wanted the property to be able6 a -- an index and it says paint, page 352. So going 6 to stand on it own and to be painted and maintained7 to 352, we have Mr. Quinn on the stand and he was 7 and it's a beautiful complex and I -- I think to be8 questioned: 8 able to stay that way, it would need a rent increase9 "And why do you believe it's -- why do you 9 and for me, the most fair thing would have been a --

10 not believe it's been well maintained over the past 10 and within the original lease, would have been a 511 10 years?" 11 percent increase. •12 • And he answered: "The trees are dying, the 12 And that's less than the $50 across13 lawns are dying, every time we'd ask the manager even 13 the board. It would still leave the owner with less14 to paint the gazebo and she said there was no money to 1 4 than -- because the majority, the average is15 do anything. I went into the office time after time 15 6-and-a-half percent with the $50 increase.16 after time and even with Mr. Morciinoia as a witness, 16 But with the 5 percent, you're back down to17 and she told us the same thing over and over and over. 17 that original3 to 5 percent. You're only half of a16 There is no money for anything not even for paint." 18 percent over that 4-and-a-half percent that I actually19 MS. CLARK: I know that there's been some 19 saw in one of the leases. And it would enable the20 interest expressed in the idea of looking at this 20 community, in my opinion, to be whole and stay21 possibly as a -- as a percentage versus as, you know, 21 quality. That just my initial response.22 a flat increase. So I guess I'd be interested in 22 MR. MOCKRIDGE: You know, something you just23 hearing Commissioners comment on that as we did hear 23 said has made something occur to me, too. This big24 testimony saying that they believed it would be 24 reduction, at least in the rent --I mean, in the25 reasonable if it had been in that 3 to 5 percent 25 interest income -- is probably not going to reoccur

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1 next year. I mean, it's going to stay at the same 1 I have been in this business for 20-some2 level, but it's not going to drop way down like it 2 years. I'm a consultant that works for many3 did. 3 organizations at this point in time. And this is what4 So maybe some kind of percentage increase in 4 I advise my clients is that you have to get the5 the past historical range, 4-and-a-half, 5 percent 5 property tax exemption.6 this year, that doesn't necessarily mean that next 6 It is one of the major ways for making7 year you're going to require the same percentage 7 properties more affordable, because it can be — those8 increase. I think you understand what I'm trying to 8 property taxes are significant costs to the project.9 say. 9 And so by reducing those, it will essentially generate

10 MS. SCHERER: I do. 0 more revenue that can-be used elsewhere.11 MR. MOCICRIDGE: I'm not saying it very well. 1 MR. CHEW: Do you need a break?12 MS. SCHERER: And in fact -- 2 DEPOSITION OFFICER: It's a good time13 MR. MOCICRIDGE: That's kind of a little ray 3 MR. CHEW: Ten-minute break.14 of hope there. 4 (Recess taken.)15 MS. SCHERER: Not only that, but if the 5 MR. CHEW: We're back in session. Thank you16 economy ever does pick up again, hopefully in two 6 for being quiet.17 years, hopefully this won't be like the Golden Gate 7 At this time, I'll ask my fellow18 Bridge where what goes up will never go down. 8 Commissioners if anyone would like to bring a motion19 It would seem to me that if you need this 9 forward.20 rent increase because of the lack of revenues, if the 0 MR. MOCKRIDGE: To the Chair, could I just21 revenues pick up, then the rent should be able to be 'I have a little bit more discussion?22 reduced to match it. ' 2 MR. CHEW: Oh, please. Please. Go forward.23 MR. MOCICRIDGE: Well, true. You still have '3 MR. MOCICRIDGE: Let's try to focus on24 property tax issue, because I say, if the residents • 4 everybody's thought as far -- not so much of what the25 can corporate with L1NC and get everybody who's • 5 increase should or should not be, but whether the

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_ 1 eligible signed up for the tax-exempt status, that 1 increase should be based on percentage increase or a2 would address that probletn, too. I don't know. 2 flat rate increase, whatever it is:3 And as I say, we've teen told also through 3 Because I see a consensus starting to develop4 the -- these proceedings, that there is some kind of 4 that maybe whatever it is should be based on the5 negotiations going on between the Park and LINC for 5 percentage.6 perhaps to transfer ownership on a nonprofit basis, I 6 MR. CHEW: Yeah, I'm going to agree with7 guess, to the residents. 7 that. I think a percentage would be a fair way to8 So if that were to occur at some point in the 8 petition the zone. Any other views?9 future, the residents are facing the same problem that 9 MS. HAYNER . I said that before. Maybe

LINC is without an increase. You're not going to be 10 that's what we should be doing.1.1 able to operate the Park. 11 MR. MOCKRIDGE: And apparently, we all have12 And here again, it's going to still default 12 to do that13 on the bonds. The bonds are still going to be there '3 MS. ARMENTO: The Commission has wide14 if the ownership is transferred, I assume. 4 discretion in fashioning whatever it thinks is an15 So, you know, everything we're talking about 15 applupriate remedy.16 is not just, we're not just talking about enabling 6 MS. CLARK: The one comment I would make,17 LINC to-continue to operate the Park. We're -- what 17 based on some of the earlier comments, would be that18 we're really talking about is whatever that nonprofit 18 if we did fashion it as a percentage and it was19 entity is in the future to be able to operate the 19 retroactive, the comment had been made that some rents20 Park. • 0 had been increased as little as 3 percent or as much21 MS. CLARK: I would like actually to echo the '1 as 11.22 point that was just made, though, about if there were • 2 And if it was fashioned as a percentage, it's23 people that submitted the paperwork for the property '3 possible some people would actually see their rents go24 tax exemption, part of my business is -- is I'm an 4 up more than the $50, which, based on those that were25 expert in affordable housing development. 5 receiving a rent increase under a percentage,

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1 depending what that percentage is. But I would just 1 are paying the higher rent that perhaps came later and2 want to make sure that everybody was aware that that 2 paid full market value.3 could be the consequences of doing that. 3 You know, obviously we can't know the history4 MR_ MOCKRIDGE: And that's a good point. 4 of everyone of those. We can just do the best we can.5 It's understood if-- help me refresh my memory, but I 5 All I'm saying is you got two choices. It's either a6 think most of the testimony we had, the people that 6 flat rate, whatever it is, or it's a percentage,7 were testifying, one of their big complaints was they 7 whatever it is.8 felt that, they seemed to prefer the percentage 8 And I'm just wondering what's most fair to8 increase rather than the flat rate. 9 the majority of the residents and most beneficial to

10 Is that your recollection of the majority of 10 the lower-income residents.11 the testimony that we had? 11 MR. CHEW: Does it defeat your -- does it

MS. SCHERER: I think -the testimony was that 12 defeat your logic to have a percentage that's capped13 that's what all of the increases had been prior, 13 at a certain dollar amount?14 because that's the way the lease was structured. It 14 MR. MOCKROGE: No, it just makes it more15 was 3 to 5 percent. 15 complicated.16 MR. MOCKRIDGE: Even though nobody's ever 16 MR CHEW: I know, I know17 happy with any percentage increase, I got the feeling 17 MS. CLARK. I think that the problem there is18 that they felt that was somewhere in the ballpark that 18 it goes back to will it ultimately be a hardship on19 they could live with that. 19 the Park if they can't support the budget as it was20 MS. RAYNER: What was concerning me is -- I 20 written? Which I believe Mr. Mockridge and yourself21 don't remember if you remember this They look like 21 have both made that point.22 this (indicating) 22 MS. SCHERER: But I actually think that an23 MR. MOCICRIDGE: I remember. 23 increase, for example, at 5 percent, granted it's not24 MS. HAYNER: Said who was in the very, very 24 the 6 percent average, but it's not that far off. I25 low income and how many units there were. I don't 25 would think that it might not be a bad place to start,

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1 know. I just felt that maybe it was an unbelievable 1 because if it turns out there's not enough money and2 hardship in that category and - 2 something has to go, they're going : to know.3 MR. MOCKRIDGE: Yes, and exactly. 3 But it just seems like that shciuld provide --4 MS. HAYNER: If we're going to offer any 4 that should pretty much allow the project to function5 relief here, somehow -- I don't know how, because 5 as a whole. I think anything less than that, like I'd6 they're all different amounts. Some people take 6 love to do like 4-and-a-half percent, because that was7 percentages like -- 7 the last one we saw, but then we're going to be short8 MR. MOCKRIDGE: I guess you have to kind of 8 significantly.9 make the assumption that most -- you're right. That 9 MR. MOCICRIDGE: I mean, the other part of

10 was a huge document. Just making the assumption that 0 this equation is we don't know how that, what the11 most of the people that are paying the -- the people 1 equivalent flat rate is. Let's say we go to 5 -- a12 that are paying the lowest rents are probably the 2 5 percent increase. We don't know how that translates13 lowest income category people, too, on average, in 3 as far as the Commission reducing the $50 increase to14 general. 4 an equivalent of 40, 30, 20. We would need to reopen15 So for them a percentage increase, Fm 5 the hearing, have somebody do the calculations, so....16 assuming, would be more -- would be more fair for i 6 MS. SCHERER: Excuse me. Go ahead.17 them. 7 MR MOCICRIDGE: No. Go ahead.18 MS. SCHERER: The people who were on the low 18 MS. SCHERER: I was going to say one argument19 end, though, like, for example, the lowest one was 9 that occurred to me in favor of keeping a flat dollar20 457, which went up to 507. That was an 11 percent '0 amount, if we approve a rent increase, is that21 increase, so if there were a lesser percent -- • 1 at least the people who have the highest rents are22 MR. MOCKRIDGE. It would help them. • 2 sort of getting a break as such, because a 5 percent23 MS. SCHERER: Yes. '3 increase at the top is going to be more money than the24 MR. MOCKRIDGE: And-I'm assuming that they're '4 $50. And the people at the bottom have already gotten25 in the more financially troubled than the people that 5 a break on the other end.

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1 We have to make sure — and I guess we have 1 can't be more than that cap?2 never gotten an expert to tell us which of these are 2 MR. MOCKRIDGE: Exactly.3 actually legal and within the low cost whatever. We 3 MS. SCHERER: Oh, okay. Because 30 would --4 have to assume that's not our — our job, but we also 4 would be more like a 2-and-a-half percent increase, so5 can't increase it on that lower one. So that would 5 that would be a pretty low cap.6 take somebody out of low income now. • 6 MR. MOCKR1DGE: Well, maybe make thc cap what7 MR. MOCKR1DGE: Well, yeah. I mean, this 7 the original increase was $50 and then --8 gets back to Jonah's idea of percentage plus a cap -- 8 MS. SCHERER: That makes sense, actually.9 a cap in total dollars. Here again, we don't — we 9 MR. MOCKRIDGE: For the majority of the

10 can say that right now. 10 people do a percentage increase of --11 MS. SCHERER: I see what you mean, yeah. 11 MS. SCHERER: Okay.12 That makes sense. 12 MR. MOCKRIDGE: -- of what, I don't know.13 MR. MOCKRLDGE: We can say 5 percent and a 13 MS. CLARK: If the average, though -- I'm14 cap of $30, but we don't know how that translates to 14 sorry, Mr. Mockridge.15 the total, in total to the $50 increase. In sitting 15 MR. MOCKRIDGE: Go ahead.16 here tonight, we're not going to be able to get that 16 MS. CLARK: I just want to say if the average17 number. 17 was over 6 or 6-and-a-half percent, as you stated18 I'm wining to consider something along that 18 that by going to 5 percent with a cap of 50, we're19 line, though, if you want to take a shot that maybe we 19 starting to get -- cut into bone here.20 can ballpark something. 20 MS. SCHERER: I didn't see the average is21 MS. SCHERER: Even not -- 21 over 6.22 MR. MOCKRIDGE: We do know what the average 22 MS. CLARK: I thought you said 6-and-a-half.23 is. I think we were told that the $900 -- the average 23 MS. SCHERER: I actually looked at it in the24 rent was $900 and the $50 increase calculated was 24 high 5s25 roughly a 6percent increase. 25 MS. CLARK: I thought you said 6-and-a-half

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1 MS. CLARK: Yeah. [think, to the extent 1 at one point tonight.2 that we start trying to make a lot of changes without 2 MS. HAYNER: She didn't ray average. I think3 backup. - 3 she said some of them were as high as 3 percent to4 MR. MOCKRIDGE: Yeah. 4 11 percent, but I don't know if --5 MS. CLARK: We're getting into shooting in 5 MS. SCHERER: No, no, the average -- in fact,6 the dark here. We are sort of micromanaging. 6 we don't get to a 6 percent until you get up to $8217 MS. SCHERER: Well, maybe a little bit. But 7 rent, if went to 871. So all of them below 406,

I have to hope that some of the residents will also 8 that's number 416, so there are over 400 units under9 realize the advantage to the entire complex of filling 9 the 6 percent.

10 out the financial documents and maybe they'll get 10 MS. CLARK: Right. It's just --11 another break in terms of the tax break. 11 MS. SCHERER: So that wouldn't be average.12 MR. MOCKRLDGE: Yeah, I mean, they -- they 12 MS. CLARK: I think it did, when I did the13 can stabilize their situation for next year. If we do 13 math, I thought it came out to about 6 percent. So14 something reasonable this year and they do what they 14 I'd have to go back and find that.15 have to do, they -- you know, they're not going to be 15 MR. MOCICRLDGE: Well, and don't forget,16 looking at a big rate increase next year, whether it 16 though, the alternative to this is you might not get17 be percentage or flat rate, • - 17 enough consensus to -- not even for a $50 increase.18 And here again, we're not going to be precise 19 We might only approve a $10 increase, a 20. This way19 on this. We're going to have to pick a percentage. 19 we're probably up in the range of 30, 35 equivalent,20 MS. SCHERER: Yeah. - _ 20 if we did somewhat along the lines of maybe even21 MR. MOCKRIDGE:3 And then decide on the cap. 1 5 percent is too much. Maybe 4-and-a-half percent22 MS. SCHERER: I have a question about that 22 increase with a cap of not even necessarily $50. A23 cap concept. When you said a-percentage plus a cap 3 cap of equivalent of 40 -- I don't know. I'm just24 and you just threw 30 out, I know just as a 4 throwing numbers.25 hypothetical, did you mean this percentage, but it 5 MS. SCHERER: Then how does that allow this

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1 budget to function? 1 people were willing to give up and can't give up and2 MR. MOCKRIDGE: Well, they're not going to 2 what was necessary to keep it.3 get the equivalent of the full $50 increase, but 3 MR_ MOCK-RIDGE: I don't think we can really4 they're going to get a significant portion of that, 4 make decisions for them. As I say, no matter what, no5 which I'm not sure they're going to have enough votes 5 matter what reduction we make in the rent, if we do do6 to get otherwise. 6 any reduction at all, there's the -- probably their7 MS. SCHERER: Well, Pm just not sure how 7 going to lose some amenities.8 happy the homeowners would be with the loss of-- so 8 It's up to them to decide if they want to9 we lower the rent, but they lose security, which 9 go ahead and accept the full $50. After we've made

10 sounded like the first thing that was going to go. 0 our decision, there is nothing that says they can't to11 MR. MOCKRIDGE: Well, unless you allow the 1 keep those amenities. But that's not really our --12 full 50 increase, they're probably going to lose 2 something we can decide for them13 security or it's going to be reduced. I mean, they 13 MS. SCHERER: I guess that's why my feeling14 might not lose it at some level. 4 would be that the $50 needs to stand, because if the15 I mean, are you saying that we should -- do 15 project is going to stand as is with no reduction,16 you feel there's consensus just to allow the full $50 g 6 that's what's necessary.17 increase then, so they don't lose anything? • 7 MR. MOCKRIDGE: See, I have a problem with18 MS. SCHERER: I guess my feeling wasn't going 1 8 that, because I, I think some portion of that $50 is19 to be the full. It would have been a 5 percent, which 9 unreasonable in the terminology of the Code. And --20 would have been under. But I, I felt like if the MS. SCHERER. Even considering the economy21 homeowners cooperated, filled out the financial • 1 and the missing interest rates?22 papers, they would get very close to what they got • 2 MR. MOCKRIDGE: The Code specifically tells23 with the $50 now. That was just my -- ,3 us to look at 10 items. I will --24 MS. CLARK: Well, I think -- • 4 MS. SCHERER: Okay.25 MS. HAYNER: That wouldn't happen until the MR. MOCK-RIDGE: -- agree with you that we can

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• 1 future anyway. 1 look at other factors, but those ten factors are2 MS. CLARK: That's what I was going to say. 2 important I think they have a preponderance of

MR. MOCKRIDGE: Yeah. 3 weight. And I'm willing to, you know, compromise on4 MS. SCHERER: That's true. And this is 4 some of that, but I don't think I'm willing to....5 retroactive, in fact. 5 I mean, what you're proposing now is the full6 MS. CLARK: Yeah. So anything on the tax 6 $50 increase and I think they have made enough of a7 exemptions would only be for future years and that 7 case and I don't think the Respondents have proved8 isn't done until sort of after they've collected the 8 their case to such an extent that the full $50 is9 data. I don't know when that data get collected, but 9 justified.

10 it takes -- takes time. So it wouldn't be effective. 0 In trying to come up with a compromise11 I think it's already been done for 2010, so 1 based -- it's not only a compromise on the amount of12 it might not even be into effect for, until, you know, 12 the money, but also the way it is distributed among13 until the following year. I 3 the residents.14 MR. CHEW: You had pointed to at the average I 4 And, you know, this was other people's idea15 rent amount, though? Was that in testimony that we 5 on the percentage basis, which I feel is more fair and16 received? 6 I'm even more comfortable going a little higher on the17 MS. SCFEERER: No, it was just adding these up 17 percentage.18 and figuring out what the increases were, so -- I can 18 To me, 5 percent is kind of high. But I'm19 see, listening to my fellow Commissioners, that going 19 willing to go there with, you know, now that we —20 a percentage route is too maybe too complicated, 20 that we see there's the possibility that's not going21 because we might wind up with a shortfall in terms of 21 to be a continual required increase. It very probably22 the budget. b2 could level off in future years.23 But the alternative would be if we don't want 23 And I think there's also -- you know, here24 a shortfall, to accept the $50, which I assume 24 again, this just speculation, but interest rates are25 the board negotiated in the sense of what things 25 so low right now. And there's a lot of talk in the

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1 economic community the way the government is spending 1 years back. But all of those increases, the lowest2 and everything. 2 one was 3-and-a-half and then 4, 4-and-a-half.3 And at some point we could have inflation and 3 MR CHEW: Maybe I'll venture out here. I4 interest rates could take off Which in this case is 4 might stand alone here, but because I'm -- I'm pretty5 going to be beneficial to the residents. So, I don't 5 ill-equipped and I think the Commission is pretty6 know. 6 ill-equipped here to shoot in the dark here about7 Just let me throw out one more thing. Pm 7 numbers and percentages.8 going to throw out a figure maybe somewhere around 8 I'm almost inclined to think that my position9 4-and-a-half percent increase with a cap -- for me 9 might be to say the rent increase was not supported by

10 this is hard -- $35. 10 the preponderance of the evidence. I don't know where11 MS. SCHERER: See, the one lease that we 11 the money would come from to pay the residents back12 actually have a copy of in our documents had, back in 12 and I'm open to suggestions on that, if that's13 2003, a 4-and-a-half percent increase and I believe 13 possible.14 that was $36 all those years ago. So we're quite a 14 But let the Park figure out the rent -- the15 bit below what was being done a number of years ago. 15 appropriate rent increase based on these proceedings16 And I'm not sure how the -- that's nice, but, 16 and what can happen again if they come before us. And17 you know, I don't know how this project is going to 17 let input from the -- real input from the tenants and18 function like that. And it's just not -- it's not 18 their people come to what's an allowable and19 consistent with the traditional increases that 19 acceptable rental increase.20 happened. Where is that? 20 MP_ MOCICRIDGE: If we're going to abandon the21 MS. CLARK: A question for counsel: If we 21 idea of the percentage increases and/or caps or some22 were to make a determination, for example, or make a 22 combination, then I'm inclined to -- to somewhat agree23 motion that still is dependent on like $50 -- if we 23 with you. I will say I've done some calculations, and24 said let's leave that in place, we have no power to, 24 I think that the Municipal Code would justify25 to suggest or to bind the company to use a percentage 25 somewhere between an 8 and a $12 increase in the dues,

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in the future, for example? I mean, that's beyond ow 1 just going through the factors in the Municipal Code,2 scope? 2 so....

MS. ARIvIENTO: You couldn't bind them. You 3 But that's the area Pm-down in right now4 certainly can make the suggestion. 4 myself If we can't come to a, you know, an agreement5 MS. CLARK: Suggestion. So we could make a 5 on some other way to distribute it, to more fairly6 motion to the effect of let us leave the $50 rent 6 distribute the increase, then Pm willing to raise the7 increase standing with the advisement that the owner 7 amount of the increase. Not the full $50, though --8 would turn to a percentage increase, as well as leases 8 I'm sorry.9 in the future? 9 MR- CHEW: Just so I'm -- I know Pm on the0 MS. ARMENTO: I think you could do that. 10 same page here. Is the Commission right now, when1 MS. CLARK: I don't think if we're ready for 11 we're throwing out numbers with the percentage and the2 a motion, Mr. Chairman. But that would be a motion if 12 cap, are we trying to make those numbers roughly3 we got one. 13 equivalent to the 300,000 increase that was the4 MS. SCHERER: I have to correct, looking at 14 product of $50 a month times 501, or are we hoping in5 that lease, that it was 4-and-a-half percent. But it 15 the dark that those numbers somewhat approximate that?6 was a $33 increase back in 2003. 16 MR. MOCICRIDGE: I can do some quick7 MR CHEW: We don't know what the base rent 1 7 calculations here, but...

18 was? 18 MS. SCHERER: Forme, the object is for the9 MS. SCHERER: It started at -- wait a minute. 19 income to be able to meet the debt. I mean, it seems

•0 679 in '99. 20 that simple.•1 MR. CHEW: Okay. 21 MR CHEW: Pm holding on unequipped or ill• 2 MS. SCHERER: And then it increased $24 to 22 equipped to make those calculations.•-• 3 $703. Then the next increase was $28. And the next 23 MS. SCHERER: Yeah.4 increase $33, which took it up to 764. 124 MR. CHEW: I wish I could do that. I also

•5 And again, this was in 2003, so a number of ' 5 don't want to step on the toes of the management orPage 484 Page 486

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1 the tenants. 1 credible. The spreadsheets were not accurate. They2 MS. CLARK: I guess the question is where do 2 were inconsistent. But if you look at the auditors'3 we go from here? Are you looking for a motion? What 3 statements from independent third parties, then we4 do you want to do, Mr. Chairman? 4 need a certain amount of income to meet the debt.5 MR. CHEW: I'll let Mr. Mockridge make some 5 MR. MOCICRIDGE: I'm not arguing with the6 calculations. 6 figures. I'm not arguing that if we only — if we7 MR. MOCKR_IDGE: Oh, okay. Well, if I've done 7 don't allow the full $50 that the amenities are going8 this right, to come up to the equivalent of the 2009 8 to suffer.9 rent revenues, and if you do it on a percentage basis, 9 MS. SCHERER: Oh, okay.

10 you would have allowed a 3.7 percent increase. '0 MR. MOCICRIDGE: My problem is that I'm basing11 MR. CHEW: I'm sorry. To get to what amount? 1 it mostly on the conditions of the Municipal Code and12 MR. MOCICRIDGE: In total. 2 also, I think Jonah and I are in agreement, that the13 MR. CHEW: To get to. 3 Respondents did not meet their burden of proof, so....14 MR. MOCKRTDGE: To get to the actual 2009 -- '4 MS. SCHERER: Maybe we should start with15 MR. CHEW: Okay. 5 that Should we see if we have a burden of proof like16 MR MOCKRIDGE: -- rental revenues from 2008, 6 a majority who feel it was met?17 it was a 3.7 percent increase in total. So if we were 7 MR. CHEW: Would anyone like to bring that18 going to, if we were going to make a motion to allow 9 motion?19 -- here again, now I'm confused. The -- we're talking 9 MS. SCHERER: I will make the motion that the20 the range of 4 to 5 percent. That's even more. 00 burden of proof required on the reasonableness of the21 MS. CLARK: Yeah, that's where I don't see • 1 $50 increase was met.22 there's a way -- this is the problem. I don't see • 2 MS. HAYNER: I'll second the motion.23 that there's a way to get to the same revenue. • 3 MR. CHEW: Could you restate that? I'm24 MR. MOCKRIDGE; I'm not trying to get -- I'm • 4 sorry.25 trying to get to lesser revenue, but not as much as a 5 MS. SCHERER: Oh, probably not.

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1 full, let's say, $40 reduction. S MS. FAJARDO: Could you read it back?2 MS. CLARK: I -- go ahead, please. 2 Can you read it back?3 MS. SCHERER: To-me, we need the 300,000 to 5 MR. CHEW: Was it basically that the4 come from somewhere that they need in the budget. 4 Respondent -- Respondents had met the burden of proof5 It's a matter of how you get it, whether you decide we 5 that the rent increase was reasonable?6 won't go and get it, in which case some amenities have 6 MS. SCHERER: I guess I would prefer to7 to be done without. 7 reword it and say that it was not unconscionable.

MR CHEW: This is why I'm ill equipped with 8 MR. CHEW: But we're splitting up the9 this Because there's still an interest rate that was 9 statute. I don't know.

10 never provided to us. There's still an amount of 0 MS. SCHERER: I know. But we -- we were11 reserves balance that was not provided to us. I 1 required to find that it was either unreasonable or12 There's a certain Daly City fee that was 12 unconscionable. And I find that it was not/3 waived for the last two years and I don't know if 3 unconscionable.14 that's going to be credited toward that amount for the 4 MS. HAYNER: I'll second that.15 operating budget. 5 MR. CHEW: I'm sorry. Before that motion was16 And there is still some interest being 6 brought, I think we have to vote on both portions.17 accrued between 70 and 90,000, I believe, which we 17 MR. MOCICRIDGE: We'll have to come back.18 would be subtracting from this 300,000 amount. So I 8 - MR. CHEW: I don't know if we can move19 again, it's just -- I think I'm really ill-equipped to 9 forward if it's --20 come up with those numbers • 0 MS. CLARK: If it says "and," I would agree21 MS. CLARK: I guess I still feel like we need • 1 with you. If it says "or," I would say it's22 to rely on the audit, which is the one place where we ' 2 either/or; correct?23 had an independent third-party doing the calculations. 3 MR. CHEW: Right. But where are we left if24 That says it all to me. 4 we vote that it was -- it was not unconscionable?25 MS. SCHERER: That is what I found the most 25 Then we're still left with the loose end if it was

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1 unreasonable. 1 So the Commissioners have any closing2 MS. ARMENTO: The language of the statute is 2 comments?3 or. So you can make a fmding related to 3 MS. ARMENTO: So actually, it would be4 "unconscionable" or you can make a finding related to 4 helpful if some people could articulate some findings5 "unreasonable." I don't believe you need to make a 5 as to why the $50 increase is reasonable.6 finding related to both. 6 MS. SCHERER: My first reason for feeling7 MR. MOCICR1DGE: So if we -- we feel -- we 7 that way is because the independent audits show that8 don't agree that it was unconscionable, but we do 8 that rent increase is necessary in order for this9 agree that it was unreasonable, we would vote yes? 9 project to stand on its own.

10 MS. SCHERER: Shall I -- 10 MS. HAYNER: And I think it's reasonable11 MS. ARMENTO : I think it would be helpful if 3.1 because the drop in the interest income, as shown in12 the court reporter read the question that 12 the audited statements, are included in the increased1.3 originally -- or the motion that originally was stated 13 cost to the owner in the Code, as far as I'm14 by Commissioner Scherer. 14 concerned.15 (Record read as follows: 15 MS. CLARK: Another determining factor was16 I will make the motion that the 16 that the -- both the LNC asset management fee, as17 burden of proof required on the 17 well as the City's fee were not paid in the year 200918 reasonableness of the $50 increase 18 as evidence that the property could not support a1.9 was met.) 19 positive cash flow without those fees being, the20 MR. CHEW: Okay. Let's vote on that. You 20 payment of those fees being deferred or not paid at21 second that. 21 all.22 MS. HAYNER: Yeah. 22 MS. SCHERER: And one other reason behind my23 MS. FAJARDO: Well do a roll call vote 23 belief that the amount is reasonable is that! believe24 at this time. 24 that while the ordinance lays out 10 items that we25 Mr. Mocicridge? 25 shall consider, I believe that it would be

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1 MR. MOCKR1DGE: No. 1 irresponsible not to consider the elephant in the2 MS. FAJARDO: Ms. Clark? 2 room, the economy. - -3 MS. CLARK: Yes. 3 MS. HAYNER: I agree wiinhat.4 MS. FAJARDO: Mr. Chew? 4 MS. CLARK: I also believe that the budget,5 MR CHEW: No. 5 the decision on the budget was not up to one person or6 MS. FAJARDO: Ms. Hayner? 6 one organization but rather a compilation and I7 MS. HAYNER: Yes. 7 believe this was brought up by other Commissioners8 MS. FAJARDO: Ms. Scherer? 8 that it was a compilation of board members who9 MS. SCHERER: Yes. 9 approved the 2009 budget and reviewed the -- reviewed

10 MS. FAJARDO: We have three vote for yes and 10 the numbers and approved the 2009 budget.11 two votes for no as to the reasonableness. 11 MS. SCHERER: And another item I believe is12 MR. CHEW: Okay. Which leaves us with the 12 relevant is the homeowners expression of their desire13 appropriate remedy to fashion here. So does anyone 13 that the amenities continue. They want the security,2.4 have a motion at this point on that issue? 14 they want the landscaping, they want the place15 MS. ARMENTO: Wellr excuse me, but the motion 15 painted. And I believe that without this $50, that16 basically said that the $50 increase was reasonable, 16 would not happen.17 not unreasonable. So if the majority has just said 17 MS. HAYNER: I believe that there is no other18 that the $50 increase was reasonable -- 18 entity that will be coming forwairl to take care of the19 MR. CHEW: I understand. Pm sorry. 19 slack. That this is it.20 MS. ARMENTO: -- then there is no further 20 MS. CLARK: One more point is that no rent21 remedy. 21 increase was given in 2008 and so if you took the $5022 MR. CHEW: I was too stuck on that issue. 22 and apportioned it over the two years, it came out to23 I apologize. So I don't know where that leaves us 23 probably the equivalent of an-average of 3 percent

• 24 then. That might be maybe open -- I think that ifs 24 increase for all the residents. 3 percent of two25 the ultimate and final and only issue here. 25 years.

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1 MS. SCHERER: And another item that I believe 1 to -- to that type of ownership.2 made the $50 increase necessary, that I don't believe 2 MS. SCHERER: I don't know if it's3 we've articulated, is the residents' failure to fill 3 appropriate to add this kind of a suggestion, but4 out their financial information so that a tax 4 obviously communication has been terrible. And LINC5 exemption could be achieved. 5 needs to figure out a way, if it's going to continue6 MS. CLARK: I'm not sure if this is really 6 --I shouldn't, I'm using UNC generically, but the7 what you would be looking for in a finding, but one 7 owners should figure out a way to communicate better.8 comment that was made earlier tonight by a park 8 MS. FAJARDO: Do you want to take a recess?9 resident said that CPI was negligible for 2009. 9 MR. CHEW: You want to adjourn at this

10 But if we look around, healthcare doesn't go 10 moment?11 up by CPI, grocery prices, gas and other -- there's 1 MS. CLARK: She's asking for a recess.12 many other types of expenses that don't go up by CPI. 2 MR. CHEW: I mean, recess I'm sorry.13 MR. HANLEY: I pay those, too. Good night. 3 MS. ARMENTO: I suggest, if you would, maybe14 Thank you, gentlemen. Thank you, ladies. 14 about 10 minutes?15 MS. ARMENTO: Would the Commission like to 1 5 MR. CHEW: Yeah. We'll be in recess for 1016 take a recess for a few moments so that I can take I 6 minutes.17 these notes and kind of maybe rewrite them a little I 7 (Recess taken.)18 bit and then restate the findings for the record in a 8 MR. CHEW: I'd like to bring the meeting back19 comprehensive whole? 9 to order.20 MR. MOCKRIDGE: To the Chair: Would the • 0 MS. ARMENTO: Please bear with me, because I21 Commission like to consider adding a few other • 1 may have some difficulty reading my handwriting, but22 recommendations in the report, things that we've • 2 there are the following findings:23 discussed to urge people to fill out the tax-exempt • 3 One, the independent audit report show the24 status, maybe also to encourage the residents of The • 4 increase is necessary for the project to stand on its25 Franciscan to work with L1NC to propose some kind of '5 own.

Page 495 Page 497

1 revision to the existing ordinance that is more in 1 Two, the drop in interest income is a part of2 line with the requirements of a nonprofit? Those are 2 - the increased costs to the owner required to be3 two that I have that I'd like to -- 3 considered by Daly City Municipal Code Section4 MS. ARMENTO: Okay. Could you go back to the 4 2.52.0500).5 first one? 5 Three, both the L1NC asset management fee and6 MR. MOCKRIDGE: I'm sorry. First one? To 6 the City fee were not paid in 2009, which is evidence7 encourage -- that I think the residents and L1NC 7 that the property cash flow could not support payment8 should work together to come up with a plan to sign up 8 of the fees.9 all the eligible tax-exempt residents in the Park, 9 Four, while the ordinance sets forth ten

10 because it is beneficial to both parties. 0 items that, quote, "shall," close quote, be11 MS. SCHERER: The second suggestion that you i 1 considered, it would be irresponsible not to consider12 made, though. Did I understand you were encouraging 2 the economy as a whole.13 the homeowners and UNC to work on the ordinance, or 3 Five, the decision on the budget and the rent14 would that-be the City and UNC. 4 increase was not by -- excuse me -- was not up to one

' 15 MR. MOCKRIDGE: Well, the City would do it. I 5 person, but rather was the decision of the board in16 But.I can't imagine the City wanting to take on that 6 approving the budget.17 thankless task, unless it is -- a version is proposed I 7 Six, tenants expressed a desire for continued18 by -- that is in agreement first with both LINC and 8 park amenities such as security, landscaping, and19 the residents of The Franciscan. 9 paint. And without the $50 increase, the amenities20 As I say, whatever that change in the 0 will be curtailed or eliminated.21 ordinance is, that ordinance is written for a private, 1 Seven, there is no other entity to make up22 for-profit owner. Whether the residents in the future • 2 the monetary difference.23 own the Park themselves or whether a LINC or an entity • 3 Eight, there was no rent increase in 2008, so24 like LlNC owns it, they're nonprofit. And the • 4 the $50 increase over a two-year period equates to25 provisions of the ordinance are just not relevant • 5 approximately 3 percent per year.

Page 496 Page 498

23 (Pages 495 to 498)SARNOFF COURT REPORTERS AND LEGAL TECHNOLOGIES

877.955.3855

Case5:10-cv-01087-JW Document46-12 Filed08/12/10 Page25 of 26SPECIAL MEETING 7171201D

VOLUME 4

1 Nine, the failure of many residents to fill 1. Okay. Now, there were a couple of2 out forms for the Park to qualify for reduced taxes is 2 recommendations made. I'm not sure how that fits into3 a factor in park costs. 3 the overall decision, but I've recorded the4 Ten, although the CPI was negligible for 4 recommendations as follows:5 2009, many costs and expenses are not constrained or 5 Residents and the owner/operator should work6 limited to CPI rate increases. 6 together to encourage all tenants to complete the

, 7 MS. SCHERER: I have a question about the 7 paperwork necessary to apply for property tax8 accuracy of just one of those items -- not your 8 reduction.9 writing it -- but is it true that there was no 9 MR. MOCKRIDGE: I would say "all eligible

10 increase in 2008 to the people who were on the leases? 10 tenants to apply."11 Because I thought it was only the ones that had been 11 MS. CLARK: Problem is, will people know12 frozen, so I'm wondering if that statement is 12 eligibility until they submit?13 accurate. 13 MR. MOCKRIDGE: Well —14 MS. CLARK We could strike Mat I'm not 14 MS. CLARK: I mean, the way that I have seen15 sure, so better to strike it. 15 it work in the industry is you ask -- in a typical16 MS. ARMENTO: Okay. Strike that entire 16 complex, you ask everybody to fill out the paperwork,17 finding? 17 so that then the determination gets made.18 MS. CLARK: Yeah. 18 MR. MOCICRIDGE- I think that might be a19 MS. ARMENTO: Okay. 19 little insulting to people who know they are not20 MR. MOCKRIDGE: Could I make a quick comment? 20 eligible because their income is -- I think you could21 Getting back to the failure of the residents to fill 21 put -- you could give everybody information as to,22 out the tax forms. I had conversations with some of 22 you know, if they might be eligible or something.23 the residents and they -- they claim that a tot of 23 MS. CLARK: Okay.24 them did fill out the tax forms, but LINC was the one 24 MR. MOC1CRIDGE: I don't know.25 that failed to file it. 25 MS. ARMENTO: What if we just said that

Page 499 Page 501

1 Now, I don't know, you know, which is true, 1 residents and owner/operators shall encourage tenants2 but I did tell them that I would try to reword that, 2 without saying which tenants. -3 so you don't put blame on one side. Do you see what 3 MR. MOCKRIDGE: Yeah. And I would say that4 rm saying? Just say tax forms -- sufficient tax 4 those two parties should work together to encourage5 forms were not submitted -- or as many tax forms as 5 the tenants.6 could have been were not submitted, which resulted in 6 MS. ARMENTO: Yes, that's what I said7 a loss, which resulted in increased property taxes. 7 MR. MOCICRIDGE: Okay.8 Something along those lines, so -- 8 MS. ARMENTO: I'll turn off all the language9 MS. SCHERER: Except we actually had some 9 from "residents" to "tenants."

10 testimony from the residents themselves saying they 10 "Tenants and the owner/operator" -- this is11 didn't file them and wouldn't file them, because they 11 the second one now.12 believed that they weren't being filed. But they 12 "Tenants and the owner/operator should work13 actually testified they didn't fill them out. 13 together to suggest revisions to the City to" --1.4 MR. MOCKRIDGE: That's true. Some didn't 1.4 excuse me. Let me try that again.15 fill them out, but others claim that they did fill 15 "Tenants and the owner/operator shall work1.6 them out and LINC failed to file them for some reason. 16 together to make suggestions to the City for revising1.7 So, you Imow, I don't think it's a -- I'd just like to 17 the ordinance to better address nonprofit situations."18 leave the language neutral, if we could. 18 And then .3 --19 MS. ARMENTO: How about the following: "An 19 MR. MOCKRIDGE: Fm sorry. "To better20 insufficient number of tax forms have been completed 20 address nonprofit ownership."21 and filed to enable the Park to obtain reduced 21 MS. ARMENTO: Ownership of the Park.22 property taxes"? 22 MR. MOCICRIDGE: And situations isn't the23 MR. MOCKRIDGE: Yes, that's excellent. 23 right word either. I'm not sure what. Yeah.24 MS. ARMENTO: Any other comments on the 24 MS. ARME'NTO: "Owner/operator shall figure25 findings? 25 out a way to communicate better with tenants."

Page 500 Page 502

24 (Pages 499 to 502)

SARNOFF COURT REPORTERS AND LEGALTECHNOLOGIES.-877:955-3855

Case5:10-cv-01087-JW Document46-12 Filed08/12/10 Page26 of 26 .SPECIAL MEETING 7/7/2010

VOLUME 4

1. MR. MOCKRIDGE: "Owner/operator should" --2 "shall" means -- we can't manage.

3 MS. SCHERER: "It is recommended that"

4 MR. MOCKRIDGE Right

5 MS. ARMENTO: So those would be the three6 recommendations.

7 And then the ultimate decision is basically8 the Mobile Home Rent Review Commission determined by a9 vote of three to two that the burden of proof required

10 to establish the reasonableness of the $50 per mobile11 home space per month rent increase was met.

12 That was the motion. Which the ayes are13 Scherer, Hayner, and Clark and the nays are Mockridge14 and Chew.

15 MR. CHEW: Right?

16 MR MOCKR1DGE: Okay.

17 MS. ARMENTO: Anything else?

18 MS. CLARK: Okay.

19 MR. CREW; Do we have a motion to adjourn?

20 MR. MOCKRIDGE: Imotion we adjourn.

21 MS. SCHERER: I second that.

22 MS. FAJARDO: Meeting is adjourned.

23 (Whereupon, proceedings adjourned at 9:30 p.m.)2425

Page 503

1 I, the undersigned, a Certified Shorthand2 Reporter of the State of California, do hereby

3 certify:

4 That the foregoing proceedings were taken5 before me at the time and place herein set forth; that6 any witnesses in the foregoing proceedings, prior to7 testifying, were duly sworn; that a record of the8 proceedings was made by me using machine shorthand9 which was thereafter transcribed under my direction;

10 that the foregoing transcript is a true record of the11 testimony given.

12 Further, that if the foregoing pertains to13 the original transcript of a deposition in a Federal14 Case, before completion of the proceedings, review of15 the transcript [ ] was [ ] was not requested.

16 I further certify that I am neither17 financially interested in the action nor a relative or18 employee of any attorney or party to this action.

3.9 IN WITNESS WHEREOF, I have this date20 subscribed my name.2122 Dated:2324

DANA FREED

25 CSR No. 10602Page 504

25 (Pages 503 to 504)

SARNOFF COURT-REPORTERS AND LEGAL TECHNOLOGIES877.955.3855


EXHIBIT "M"

_

Ca se5:10-cv-01087-JW Document46-13 Filed08/12/10 Pa ge2 of 5_

LINC Housing

Memorandurn 110 Pine Avemie, Suite 500Long Beach, CA 90802562-684-1100562-684-1137 FAX

To: Mobile Home Rent Review Commission [email protected]

From: LINC Housing Corporation

Date: May 24, 2010

Re: The Franciscan Park

Attached you will find the Adopted 2010 Budget and an Example 2010 Budget if the MHRRC wereto repeal the June 2009 $50 per month rent increase and require the refunding of the $50 per monthrent increase. The point we are making is that there is no ability to cut expenses to the degreenecessary and still have a functioning Mobile Home Park.

The yellow highlighting in the "Example" budget with the rent rollback illustrates the changes to theAdopted budgeted numbers.

The bond documents, specifically the Indenture of Trust, indicate that if funds are not available thefollowing would be reduced or eliminated in the order specified: 1. City fee, 2. LINC's fee 3. D BondHolder's principal and interest payments. This has been done as illustrated.

However, the rent rollback would cause the necessary reductions or elimination of other expenses.For example, Security Service will have to cease effective July 1, 2010. The part time office personwill be laid off July 1 and the full time office personnel's hours will be reduced to 36 hours per weekfor the remainder of the year and continue into next year. All future resident events will need to beeliminated And any variances to the budgeted expenses would have to be offset elsewhere. Forexample, if evictions rise or revenue decreases, other services would have to be eliminated to offsetthese changes.

There is no room for error in this budget and the cuts in services will be deeply felt and ultimately willimpact property operations and property values.

It is our request that the Commission does not rescind the $50 per month increase because verysimply it is necessary for the prudent operation of the property.

_. .Case5:10-cv-01087-JW Document46-13 Filed08/12/10 Page3 of 5.._ :

The Franciscan Park 2010 Budget•

. EXAMPLE2010 ' 2010

- Adopted • Per Unit f ' No Rent Per Unit ISu .. et Ca Per Year • Increase Per Year

Revenue .Net Rental Revenues 5,492208 (2) 10,962 5,354,508 (3) 10,688$50 Rent Increase Reimbursement - June • December 2009 (160,650) (4) (321)

Interest Income 98,000 196 98,000 196

Utility Reimbursement 957,222 1,911 957,222 1$11.

Other Revenue 30,720 61 30,720 61

Total Revenues 6,578,150 13,130 6,279,800 12,535

Operating ExpensesManagement Fee 131,563 263 107,705 215

Office Supplies 2,340 5 2,340 5

Professional Fees 30,000 60 130,000 (5) 259

Audit 8,500 17 8,500 17

Accounting / Bookkeeping 2,400 5 2,400 5Site Office 300 1 300 1

Postage 3,900 _ 8 3,900 8

Employee Relations 375 _ 1 375 1

License! Permits! Fees 25,077 50 25,077 50

Credit! Collection / Eviction 24,000 48 10,980 22

Dues & Subscriptions 600 1 600 1.Copier I Permit 4,020 8 4,020 8

Training ! Seminars 2,080 4 2,080 4

Computer Supplies / Maintenance 900 2 900 2

Telephone/Answering 5,628 11 5,628 11

Bank Fees 4,800 10 4,800 10

Resident Promotions 7,800 16 1,500 3

Office Salaries 94,932 189 85,877 171

Maintenance Salaries 73,500 147 73,500 147

Employee Unit 10,968 22 10,968 22

Payroll Load! Taxes! Insurance 67,561 135 67,561 135

Utilities 726,367 1,450 726,367 1,450

Ground Contract 33,240 _ 66 33,240 66Trash Removal 159,168 318 159,168 318

Security Services 156,240 312 78,120 156Uniforms 400 1 400 1Vehicles 2,395 5 2,395 5Fire Protection 975 2 975 2Podesta Ground Lease_ 556,973 1,112 556,973 1,112Repair and Maintenance 18,940 38 18,940 38Insurance 46,292 92 46,292 92

Real Estate Taxes 429,268 857 429,268 857Replacement Reserves 75,000 150 751000 150 1

Total Operating Expenses 2,706,502 5,402 2,676,149 5,342

Net Operating Income 3,871,648 7,728 3,603,651 7,193

Debt SegiSte5:10-cv-01087-JW Document46 -13 Filed08/12/10 age4 of 5Principal (Bonds A+B+C) 525,000 1,048 525,000 1,048Interest (Bonds A+B+C) 3,058,155 6,104, 3,058,155 6,104Principal (Bond D) 45,000 90 -Interest (Bond D) 163,170 326Trustee Fees 20,496 41 20,496 41

Total Debt Service 3,811,821 7,608 3,603,651 7,193

Cash Flow 59,827 119 0 0

frilTrCapitatiNeedi•-.) —• 63,033 126 63,033 126Less Replacement Reserve Withdrawal 1631:1331— —(126) -(C3,0331— 1126) _

FeesLINC Asset Management Fee , 38,900 78 -City Fee -

Total Fees 38,900 78 -

Available Operating Cash (Deficit) 20,927 42 -

(1)Adopted and approved by FHC Board subject to review after Rent Review Commission(2)Net Rental Revenues -2010 Adopted Budget includes $50 increase(3)Example 2010 Budget reduces income by $137,700 representing the $50 rent increase that would not be collected from July -December 2010(4)Rebate amount is $22,950 per month, $160,650 for the period of June 2009- December 2009. The remaining $137,700 would berefunded in January - June 2011(5)Professional fees have increased due to the expenses incurred from the Rent Review Commission and pending litigation. Theadditional amount is based on January - April 2010 actual expenses with expectations the Rent Review Commission concludes inJune 2010

•

•


The Franciscan Park

Ackia12008 8udget2009 : ' , VariOnt:04i :Att.tiar2008: ' ..*8301 . 2009 ,„ '..r-Variance, Revenue

Net Rental Revenues 5,187,595 5,370,466 182,871 5,187,595 5,380,072 192,477•Interest Income. ...

420,126\ 90,000 (330,126) 420,126 , 70,568 (349,558)

„ . . .Utility Reimbursement 974,146 1,028940 53,894 974,146 ' 92e,219 (48,930)Other Revenue 123,898 28,440 (95,458) 123,898 e5,007 (68,891)

Total Revenues6,705,765 6,516,946 (188,819) 6,705,765 6,430,863 (274,902)

ExpensesUtilities , 780,778 876,275 36,097 780,178 676,157 (704,027). . . .Property Taxes . 427,560 437,790 70,230 421,560 425,267 4,707Insurance 35,084 38,330 3,246 35,084 44,090 9,006Advertising 48,692 6,000 (42,692) 48,692 4,232 (44,460)Government Assessments 0 0 0 0 0 0Incidental Services . . 703240 776,837 73,597 703,240 821,700 777,860Normal Repair and Maintenance 54,289 52,875 (1,474) 54,289 57,033 (3,256)Upgrade and Additional Amenities and SerWces 178,378 159,000 (79,378) 778,378 162,51,2 (15,866). Cap/61 Improvements 2,763,808 152,280 (2,077,528) 2,763,808 710,259 (1,453,549)Capital Improvements Reimbursement from Reserves . (2,151,684) (152,280) 1,999,404 . . (2,076,684) (677,205) 1,399,479. . ..Payroll 252,122 248,392 (3,730) 252,122 241,491 (10,631)Management Fee 125,586 130,339 4,7e3 125,586 126,764 1,178

Total Operating Expenses 2,611,253 2,659,772 48,519 2,686,253 2,586,700 (99,553)

Net Operating Income 4,094,512 3,857,174 (237,338) 4,019,512 3,844,763 (175,349)

Debt ServicePrincipal _ , 3,283,028 3,174,842 (108,186) 3,283,028 3,245,368 (37,660)Interest 514,000 513,500 (500) . 514,000 513,400 (600)Trustee Fees 20,500 . _ 20,496 . (4) .. 20,500 20,500 0Replacement Reserve Funding 75,000 75,000 0 75,000 75,000 0

Total Debt Service 3,892,528 3,783,838 (108,690) 3,892,528 3,854,268 (38,260)

Cash Flow 201,984 73,336 (128,648) 126,984 (10,105) (137,089)

FeesLINC Asset Management Fee . 72,523 12,967 , (59,556) 72,523 0 (72.523)City Fee 33,411 33,411 0 33,411 b (33,411)

Total Fees 105,934 46,378 (59,556) 105,934 0 (105,934)

**** Fan- rate of return not to exceed 9.5% 0 0 0 0 0 0

Available Operating Cash (Deficit) 96,050 26,958 (69,092) 21,050 (10,105) (31,155)

**** Expenses shown W italics are those cited in the Daly City Mobile Home Rent Review Commission; Chapter 2.52.050- J

Utilities = Electricity Water, Sewer and Utility ailing FeeProperty Taxes - Real Estate Property Taxes plus other governmentally imposed chargesInsurance = Property InsuranceAdvertising = Leasing and Resident ServicesIncidental Services - Property Administration, Garbage and Trash, Podesta Ground LeaseNormal Repair and Maintenance - Grounds Maintenance Contract, Equipment Rental, Vehicles, Eke Protection, Repairs and MaintenanceUpgrade and Additional Amenities and Services = Security Patrol, Decorating and CleaningCapita/ Improvements - Non-Recurring Replacement ExpensesCapital Improvements Reimbursement from Reserves - Non-Recurring Replacement Expenses Reimbursed from Replacement Reserve Acct.Payroll = Property payroll, payroll taxes, and benefitsManagement Fee = 2% Fee

-

Case5:10-cv-01087-JW Document46-14 FiIedO8/1 2/10 Pagel of 2

EXHIBIT "N"

Case5:10-cv-01087-JW Document46-14led08/12/10 Page2 of 2

FRANCISCAN PARK, LLC(A CALIFORNIA LIMITED LIABILITY COMPANY)

BALANCE SHEETSDECEMBER 31, 2009 AND 2008

Assets2009 2008

Property, at costLand $ 38,377,652 $ 38,377,652Land improvements 9,813,151 9,442,028Building and improvements 1,467,819 1,467,819Furniture and equipment 197,344 197,344

49,855,966 49,484,843Less accumulated depreciation (4,108,678) (3,401,982)

Net property 45,747,288 46,082,861

Cash 160.795 67,126Restricted cash:

Trust funds 3,661,177 4,120,952Replacement reserve 31,953 506,068

•Operating reserve 71,000Tenant security deposits 34,666 27,345

Tenant receivables 23,139 20,797Interest income receivable 9,037 9,037Prepaid ground lease 477,779 488,889Deferred costs 3,175,261 3,260,056

Total assets

$ 53,392,095 $ 54,583,131

Liabilities and Members Deficit

Bonds payable $ 59,891,000 $ 60,401,000Accounts payable and accrued expenses 118,336 500,436Accrued Asset Management Fee payable 80,614 39,029Accrued social services fee payable 8,000Accrued interest payable 191,257 163,095Accrued ground lease 1,097,714 556,732Prepaid rent 7,045 3,367Deferred revenue 60,784 71,355Tenant security deposits 34,666 27,345

Total liabilities 61,481,416 61,770,359

Commitments and contingencies (Notes 1 through 7)

Member's deficit (8,089,321) (2,187,228)

Total liabilities and Member's deficit $ 53,392,095 $ 54,583,131

See notes to financial statements

2


EXHIBIT "0"


Very Low Income Residents" means individuals or families with an Adjusted Pncomewhich does not exceed the amount promulgated by the US Department of Housing andUrban Develpment for very low income households for the Area as adjusted forhousehold size as set forth below:

(A) (B)No Mortgage Mortgage

San Mateo County Median Family Income - fiscal year 2009, huduser.or 96,800.00 96,800.00Household adjustment - per p. 7 of 41 ofRegulatory Agreement definition of VeryLow Income ResidentsAdjustment for 1 = 70% 67,760.00 67,760.00Adjustment for 2 = 80% 77,440.00 77440.00Adjustment for 3 = 90% 87,120.00 87,120.00Adjustment for 4 = 100% 96,800.00 96,800.00

Formula per Regulatory Agreement at pp. 11-13 [see Exhibit "Fl

50% for 1 person household 33,880.00 33,880.0050% for 2 person household 38,720.00 38,720.0050% for 3 person household 43,560.00 43,560.0050% for 4 person household 48,400.00 48,400.00

30% for 1 person household 10,164.0030% for 2 person household 11,616.0030% for 3 person household 13,068.0030% for 4 person household 14,520.00

15% for 1 person household 5,082.0015% for 2 person household 5,808.0015% for 3 person household 6,534.0015% for 4 person household 7,260.00

Monthly amount 12.00 12.00

1-person household 847.00 423.502-person household 968.00 484.003-person household 1,089.00 544.504-person household 1,210.00 605.00

I

\A-1\C*


EXHIBIT "P"

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Another . if- - 1.:0^4 ,113.,-*-: -4:13-;;I.,-2 4.•.: -.3:;.1 .474,1 -,,,;.11,f.‘:er acess Conversion to ILICS1 i : g ' t. ;; ..k „. j.:L.„...1 '::._,!4•74.::,-,4-.4.a.c.:' ' "g — " " hal ship: Cooperative Acquires Seal Beach Trailer Pit --J . rg,i14:1114.-.-

On Friday, October 30th, The Loftin Firm LLP successfully assisted Seal Beach Shores, Inc. in acquiring theSeal Beach Trailer Park from the Seal Beach Affordable Housing Corporation, making the community a resi-dent owned mobilehome park. Seal Beach Shores, Inc. is the first resident owned corporation to have acquireda mobilehome home park from another entity organized as a 501(c)(3) nonprofit corporation and is itself a 501(c)(3) nonprofit corporation.

The deal included Seal Beach Shores assuming all underlying financing in place on the Park, including Cityissued bond financing, California Department of Housing and Community Development ("HCD"), Mobile-home Park Resident Ownership Program financing and other loan and grant money from the RedevelopmentAgency of the City of Seal Beach. The cooperative relationship development between Seal Beach AffordableHousing Corporation and its affiliated entity LINC Housing Corporation, the City of Seal Beach, I4CD, SealBeach Shores, the bond issuers and all attorneys is a testament to a collective desire to see a communitythrough the entire process of becoming resident owned.

Seal Beach Shores, as a limited equity housing cooperative, will provide residents within the mobilehome parkan opportunity to own a piece of the corporation that owns the park, an opportunity to regulate their own com-munity and their lives overall and to continue the protection for residents from unnecessary rent increases. Theprocess took many years to complete, but the residents are ecstatic about the opportunity and over 81% of theresidents have opted to become members of the cooperative.

Ariel It. Bedell, a partner with The Loftin Firm LLP stated that "Without the tenacity of the residents and thefull cooperation of everyone involved, the dream of resident ownership would not have occurred." Such testa-ment was reiterated by Ken Williams, Secretary of Seal Beach Shores, Inc., who stated that after the closing onFriday, residents were celebrating throughout the weekend and they are very thankful to Seal Beach Afford-able Housing Corporation, LINC Housing Corporation, the City of Seal Beach and HCD for their respective .. .participation, assistance, guidance and professionalism.

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The Loftin Firm LLP has converted over 80 mobilehome parks to resident ownershjp:p..k ; 'n.r::Cit'ritalffornia,representing park owners, residents and government agencies in the process. „c,.,:lic.07,t,jran-i7::.:1,ff?: ::.: : •., ' ::' : .'' ::!

at.,:ifft:'.'",:;„:7::,,;,;ii.;:fc, .?.,_ rrh;,::'For additional information regarding the conversion of the Seal B. -,..1:;;;;,:1;:ii•-.::Park to resident.5490ein.i'.2VIplease contact either Ariel Bedell with The Loftin Finn at 760..^?..;1:...:.-f;i1..gr'Ken Williams: Wit,11:!$41,i*g.k.!:!:::.7

.s . , Shores at 562 397.0999. . „, .,.. "

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1 SHELLEY S. BUCHANAN Attorney At Law

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