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SAN MARCOS HOUSING AUTHORITY 254. 1201 Thorpe Lane, San Marcos, Texas 78666 Allen Wood Homes Central Office Tel (512} $53-5058 Fax (512) 3?2-7458 Email smpha@netscape.net AIber~ Sierra, Executive Director and Secretary June 9, 2004 The Honorable Susan Narvaiz and City Councilmembers City of San Marcos 630 East Hopkins Street San Marcos, TX 78666 Re.' Willow Springs Senior Residences, 2600 Block, Hunter Road, San Marcos, Texas Letter of Commitment for PILOT Agreement Dear Mayor and Councilmembers: Hunter Road Affordable Housing, Ltd. (the "Project Owner"), a to-be-formed Texas limited parmership acting by and through the San Marcos Reinvestment Corporation, a nonprofit instrumentality of the Housing Authority of the City of San Marcos that will be the sole member of the to-be-formed SMRC Willow Springs LLC as the managing general partner, requests that the City of San Marcos (the "City") join in this letter of commitment to enter into a PILOT Agreement for Willow Springs Senior Residences (the "Project"), a 180-unit multifamily residential rental apartment complex to be constructed in the 2600 Block of Hunter Road in the city of San Marcos. The PILOT Agreement will provide for payments in lieu of taxes ("PILOT") to be made by the Project Owner to vmfous taxing units through the operation of the Project, which otherwise will be exempt from property taxes under Tex. Local Government Code, Sec. 392.005 (c). The Project will be developed with the proceeds of multifamily housing revenue bonds (the "Bond Issue") issued by the Capital Area Housing Finance Corporation ("CAHFC") and capital contributions from a Limited Partner through low-income housing tax credits allocated to the Project. The purpose of the Project will be to provide safe, attractive, and affordable housing primarily to residents age 55 years and older whose household incomes are 60% or less of the area median income as determined by the Texas Department of Housing and Community Affairs ("TDHCA"). Accordingly, we request that the City approve the Project for the benefit of its low-income senior citizens and commit to negotiate and execute a PILOT Agreement, which will be incorporated into the Bond Issue documents, including the Loan Agreement, Trust Indenture, and Regulatory Agreement between Capital Area Housing Finance Corporation (CAHFC) and the Project Owner, among other parties to the Bond Issue, and documents related to the equity syndication of low income housing tax credits allocated to the Project, consistent with the terms described in this Letter of Commitment: 1. PILOT Payments. The PILOT payments made by the Project Owner will consist of two-tiers: Priority Cash Flow PILOT Payment. The Project Owner will make an annual PILOT Payment of $25,000, as available from cash flow after payment of operating expemes, debt service, reserves, escrow, impounds, or fees required by CAHFC, the lender or bondholder, or the limited parmer(s), distributed pro rata among the various taxing authorities where the Project is located. bo Excess Cash Flow PILOT Payment. The Project Owner will make an annual Excess Cash Flow PILOT Payment equal to 25% of Available Cash Flow distributed pro rata among the various taxing authorities where the Project is located. Maximum Total PILOT Payment. The Maximum Total PILOT payment, including the