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3 <br />This may occur either by Loan deposit into the escrow of EGM’s Property <br />purchase or, if EGM has already purchased the Property, by reimbursement of <br />EGM acquisition costs, all as set forth in the Loan Agreement. <br />To receive such acquisition funding, EGM must submit to the County and City <br />in writing the amount requested and backup documentation. The EGM <br />request must be accompanied by documentation regarding the total funding <br />that EGM has committed for acquisition, improvement, and operation of the <br />Property and Project. In addition, if the Property is subject to any deed of trust <br />or other lender lien, then EGM must also provide the County and City the form <br />of subordination agreement that the lender(s) will execute to subordinate <br />their interest(s) to the Loan. After review of EGM’s submittals, both County <br />and City will each determine, each at their sole discretion, whether to approve <br />proceeding with acquisition funding. After such approvals, the County will <br />deliver acquisition funding to the City, and then the City will deliver the <br />acquisition funding to EGM. <br />(ii) The Loan Agreement provides that EGM may use CDMH funds provided <br />under the Loan Agreement for Allowable Project Costs, which are defined <br />below. EGM will submit requests for reimbursement of Allowable Project <br />Costs to the City, which the City will provide to the County. Reimbursement <br />requested by EGM for Allowable Project Costs will not be paid to EGM unless <br />both City and County approve the EGM reimbursement request. <br />“Allowable Project Costs” are costs necessary to prepare the Property for <br />the Project, subject to the following limitations and clarifications: <br />➢ Unless pre-approved by both County and City in writing, Allowable <br />Project Costs do not include any costs for construction, alteration, <br />enlargement, improvement, repair, or demolition. <br />➢ Examples of Allowable Project Costs include design costs, permitting <br />costs, bed purchase costs, and furniture purchase costs as necessary for <br />the Project. However, costs are only allowable to the extent directly <br />attributable to preparation of the Property for the Project. For example, <br />if EGM’s design costs include costs for design of improvements/buildings <br />on the Property that include more than what is necessary for the <br />Project, reimbursement under this Agreement will be limited to those <br />design costs necessary for the Project. <br />(iii) To the extent that funds remain after (i) and (ii) above, EGM may use CDMH <br />funds provided under the Loan Agreement only for Project uses and under <br />such terms and conditions that the City and County may pre-approve in <br />writing. Reimbursement requested by EGM for such pre-approved uses will <br />not be paid to EGM unless both City and County approve the EGM <br />reimbursement request.