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DEVELOPMENT LOAN AGREEMENT
(Local Housing Trust Fund, Prohousing Incentive Program, Homekey+)
by and between the
CITY OF FAIRFIELD
and
FAIRFIELD NORTH TEXAS STREET LP
TABLE OF CONTENTS
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1. DEFINITIONS. ................................................................................................................. 2
1.1 Definitions............................................................................................................. 2
2. LOAN AGREEMENT. ..................................................................................................... 7
2.1 Loan. ..................................................................................................................... 7
2.2 Use of Funds. ........................................................................................................ 7
2.3 Repayment of Loan. .............................................................................................. 7
2.4 City Conditions Precedent to Construction Closing and Disbursement. ....................................................................................................... 7
2.5 Process for Disbursement of Loan Proceeds. ....................................................... 9
2.6 City Not Liable. .................................................................................................. 10
2.7 HCD Amendments. ............................................................................................. 10
3. DEVELOPMENT COVENANTS. ................................................................................. 10
3.1 Environmental Review........................................................................................ 10
3.2 Development of the Project. ............................................................................... 11
3.3 City’s Right to Review Plans and Specifications. .............................................. 11
3.4 Construction Contract. ........................................................................................ 11
3.5 Costs of Entitlement, Development and Construction; Prevailing Wages. ................................................................................................................. 12
3.6 Rights of Access and Inspection. ........................................................................ 12
3.7 Local, State and Federal Laws. ........................................................................... 12
3.8 Governmental Permits and Approvals. ............................................................... 12
3.9 No Discrimination During Construction. ............................................................ 12
3.10 Taxes, Assessments, Encumbrances and Liens. ................................................. 12
3.11 No Agency Created. ............................................................................................ 13
3.12 Certificate of Completion. .................................................................................. 13
3.13 Capital Replacement Reserve. ............................................................................ 13
4. LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS. ........................... 13
4.1 Restrictions on Transfer of Developer’s Rights and Obligations. ...................... 13
4.2 Holders of Deeds of Trust. .................................................................................. 14
4.3 Rights of Holders. ............................................................................................... 14
4.4 In any case where the applicable Holder, having first exercised its option to construct, has not proceeded diligently with the completion of construction after first exercising such option, City shall be afforded those rights against such Holder it would otherwise have against the Developer under this Agreement. ..................................................... 14
4.5 Noninterference with Holders. ............................................................................ 14
4.6 Right of City to Cure........................................................................................... 15
4.7 Right of City to Satisfy Other Liens. .................................................................. 15
5. DEFAULT, REMEDIES AND TERMINATION. ......................................................... 15 TABLE OF CONTENTS (cont.)
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5.1 Defaults. .............................................................................................................. 15
5.2 Remedies. ............................................................................................................ 16
5.3 No Personal Liability. ......................................................................................... 16
5.4 Rights and Remedies are Cumulative. ................................................................ 16
5.5 Inaction Not a Waiver of Default........................................................................ 17
5.6 Force Majeure. .................................................................................................... 17
6. INSURANCE; INDEMNITY. ........................................................................................ 17
6.1 Insurance. ............................................................................................................ 17
6.2 Indemnity. ........................................................................................................... 18
7. REPRESENTATIONS AND WARRANTIES............................................................... 19
7.1 Developer Representations. ................................................................................ 19
8. GENERAL PROVISIONS. ............................................................................................ 20
8.1 Notices. ............................................................................................................... 20
8.2 Construction. ....................................................................................................... 20
8.3 Interpretation. ...................................................................................................... 20
8.4 Time of the Essence. ........................................................................................... 20
8.5 Warranty Against Payment of Consideration for Agreement. ............................ 21
8.6 Attorneys’ Fees. .................................................................................................. 21
8.7 Entire Agreement. ............................................................................................... 21
8.8 Severability. ........................................................................................................ 21
8.9 No Third Party Beneficiaries. ............................................................................. 21
8.10 Governing Law; Jurisdiction; Service of Process. .............................................. 21
8.11 Survival. .............................................................................................................. 21
8.12 City Actions. ....................................................................................................... 21
8.13 Counterparts. ....................................................................................................... 22
TABLE OF EXHIBITS
EXHIBIT “A” LEGAL DESCRIPTION OF PROPERTY
EXHIBIT “B” RESERVED
EXHIBIT “C” FORM OF CITY LOAN PROMISSORY NOTE
EXHIBIT “D” FORM OF CITY LOAN DEED OF TRUST
EXHIBIT “E” SCHEDULE OF PERFORMANCE
EXHIBIT “F” SCOPE OF DEVELOPMENT
EXHIBIT “G” FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS EXHIBIT “H” FORM OF AFFORDABILITY RESTRICTIONS AND R EGULATORY
AGREEMENT
EXHIBIT “I” FORM OF CERTIFICATE OF COMPLETION
EXHIBIT “J” BASE PROJECT FINANCING SUMMARY
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City Loan Agreement
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DEVELOPMENT LOAN AGREEMENT
THIS DEVELOPMENT LOAN AGREEMENT (the “Agreement” ) is dated as of ____, 2025 and is entered into by and between the CITY OF FAIRFIELD (the “City”), and FAIRFIELD NORTH TEXAS STREET LP, a California limited partnership (“Developer”). Collectively, the City and Developer are referred to as the Parties, or individually as a Party.
RECITALS
A. On February 4, 2025, the City Co uncil for the City of Fairfield (the “City Council”) authorized the City, in collaboration with Developer, to submit an application for Homekey+ funding (“Homekey”) in response to the California Department of Housing and Community Development (“HCD”)’s November 26, 2024 issuance of a Notice of Funding Availability (NOFA), as amended on January 7, 2025 and August 7, 2025.
B. On October 2, 2024, Developer entered into a purchase and sale agreement to acquire and rehabilitate the SureStay Hotel located at 3331 N . Texas Street, in the City of Fairfield, California, as more particularly described in Exhibit “A” (the “Property”).
C. Developer intends to renovate, rehabilitate, and convert an existing three (3) story, one hundred (100) room hotel into approximately fift y (50) units of permanent supportive housing and one (1) manager’s unit (the “Project”). Except for the manager’s unit, one hundred percent (100%) of the residential units shall be affordable to affordable to households making at or below thirty percent (30%) of area median income for Solano County for a minimum of fifty-five (55) years from the certificate of occupancy. The Project affordability restrictions and the maximum monthly rent for residential units shall be governed by the City Regulatory Agreement. The Project also includes on-site offices and amenity spaces and outdoor amenities. Each room will have kitchenettes and indoor amenities include lounges, laundry room, manager’s office, security office, and a large community room.
D. On September 19, 2025, HCD issued a conditional award to the Project of Twenty-One Million, Five -Hundred Thirty -Five Thousand, Five Hundred Forty Dollars ($21,535,540), which funds are for acquisition and rehabilitation of the Property. The City intends to loan these funds to the Project. The Parties have or will enter into that certain Standard Agreement with HCD, dated ____ (the “Homekey Standard Agreement”). The Homekey funds must be used in a manner consistent with Health and Safety Code Section 50675.1.3, the NOFA, the California Multifamily Housing Program (MHP) and MHP Final Guidelines dated June 19, 2019, and the Homekey Standard Agreement (the “Homekey Requirements”).
E. On January 21, 2025, in connection with the application to the Homekey Program, the City Council approved funding which may be used towards acquisition and the development of the Project commitments, including One Million Dollars ($1,000,000) of Fairfield Housing Trust Fund (“FHTF”) funds governed by Ordinance No. 2021-24 passed by the City Council of the City of Fairfield on January 18, 2022; and on January 21, 2025, the City Council passed Resolution 2025 -14 HD Danco Homes, LLC Allocation of Local Housing Trust Funds and approved Five Hundred Thirty -Five
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Thousand, Five Hundred Forty -One Dollars ($535 ,541) in Prohousing Incentive Program (“PIP”) funds. The FHTF funds are comprised of Five Hundred Thousand Dollars ($500,000) from HCD Local Housing Trust Fund (“LHTF”) Program and a Five Hundred Thousand Dollar ($500,000) City match.
F. The City was awarded HCD LHTF Program funds. The LHTF funds must be used in a manner consistent with the [_____] Local Housing Trust Fund Program Notice of Funding Availability published by HCD on [____], and HCD Standard Agreement entered into on [_______], Health and Safety Code Sections 50842.2 and 50843.5, and the Local Housing Trust Fund Program 2020 Final Guidelines published by HCD (the “LHTF Requirements”).
G. The City was awarded Prohousing Incentive (“PIP”) Program funds, pursuant to Health and Safety Code Section 50470 (2)(C)(i) which authorized the Prohousing Incentive Pilot Program grant. The PIP funds must be used in accordance with the Prohousing Incentive Program Guidelines issued by HCD in August 2024 (the “PIP Guidelines”).
H. Concurrently with this Agreement, a City Loan Promissory Note will be executed by Developer evidencing the loan. In addition, a City Loan Deed of Trust and a City Regulatory Agreement will be recorded as a lien and encumbrance against Developer’s interest in the Property. These instruments are intended to secure the City’s continuing interest as a governmental entity in the affordability of project units, as well as to secure performance of other covenants contained in these agreements.
I. Developer has received a commitment from the Fairfield Ho using Authority for fifty (50) project based vouchers to provide rental assistance.
J. Developer has received a commitment from Banc of California for a construction bridge loan and permanent Project loan in the approximate amount of Three Million Two Hundred Thirty-Five Thousand Three Hundred Ninety-Seven Dollars ($3,235,397).
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants contained in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 Definitions. The following capitalized terms used in this Agreement shall have the meanings set forth below:
1.1.1 “Affiliated Person” means, when used in reference to a specific person, any person that directly or indirectly controls or is controlled by or under common control with the specified person, any person that is an officer or director of, a trustee of, or a general partner, managing member or operator in, the specified person or of which the specified person is an officer, director, trustee, general partner or managing member.
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City Loan Agreement
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1.1.2 “Agreement” means this Development Loan Agreement.
1.1.3 “Base Project Financing Summary ” means the summary of the Project financing showing current estimated total development cost and City financial contribution attached hereto as Exhibit “J”.
1.1.4 “Building Permit” means, collectively, any and all permits necessary to construct the Project that would be issued by the City.
1.1.5 “Capital Replacement Reserve” means a reserve fund to be established by the Developer pursuant to Section 3.13 hereof.
1.1.6 “Certificate of Completion” means the certificate described in Section 3.12.
1.1.7 “City Manager” means the City Manager of the City or their designee.
1.1.8 “City Regulatory Agreement” means the City Regulatory Agreement attached hereto as Exhibit “H”, by and between the Cit y and Developer for purposes of ensuring that the Project shall be operated as an affordable supportive housing residential development in accordance with the terms of this Agreement, the LHTF Requirements, PIP Guidelines, and Homekey Requirements.
1.1.9 “Construction Contract” is defined in Section 3.4.
1.1.10 “Construction Closing” means the date upon which all financing necessary for the acquisition of the Property and rehabilitation of the Improvements on the Property closes, as listed in Exhibit “J”, of this Agreement and any deeds of trust related to such financing, are recorded against the Property.
1.1.11 “Debt Service” means required debt service payments under the Senior Project Loan (which will not require payments based on Residual Receipts or any similar concept) and reserve deposits, compliance monitoring fees and any mandatory payments (excluding any payments based on Residual Receipts or any similar concept) required by any Lender with a Permitted Security Instrument.
1.1.12 “Default” is defined in Section 5.1.
1.1.13 “Force Majeure Delay” is defined in Section 5.6.
1.1.14 “General Contractor” is defined in Section 3.4.
1.1.15 “Gross Revenues” means the sum of: the total rental income and all other revenues or income received by the Developer or its successors or assigns in connection with the Project, including without limitation Housing Rent, laundry charges or consideration received from an entity that contracts to provide laundry services, payments in connection with Section 8
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certificates or project-based vouchers, if any (including payments under such certificates that are in excess of the restricted rents provided for herein), cable income or consideration received from an entity that contracts to provide cable services, and each of (i) amounts paid to Developer on account of Operating Expenses for further disbursement by Developer to a third party or parties; (ii) late charges and interest paid on rentals; (iii) rents and receipts from licenses, concessions, vending machines, coin laundry, and similar sources; (iv) other fees, charges, or payments not denominated as rental but payable to Developer in connection with the rental of office, retail, storage, or other space in the Project; (v) consideration received in whole or in part for the cancellation, modification, extension or renewal of leases; (vi) interest and other investment earnings on security deposits, reserve accounts and other Project accounts to the extent disbursed and not added to the respective account or, in the case of reserve accounts, used to pay for repairs, capital improvements or to fund operating deficits, (vii) grants, but only to the extent they are used to pay Operating Expenses or Debt Service, and (viii) all other income from the Project, but does not include insurance proceeds applied to reconstruct or repair the Project.
1.1.16 “Holder” is defined in Section 4.2.
1.1.17 “Housing Rent” means the total of payments by the tenants of the Project for (a) use and occupancy of their rental unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer which are required of all tenants, other than security deposits (until they are applied), and (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, provided that the rent charged as to any affordable unit shall not exceed the affordable rent described in the City Regulatory Agreement.
1.1.18 “Improvements” means all buildings, landscaping, infrastructure, utilities, and other improvements to be bui lt on the Property, as described in the Scope of Development.
1.1.19 “Institutional Lender” means any reputable, established and creditworthy bank (State or Federal), savings bank (State or Federal), trust company, insurance company, credit union, pension, welfare or retirement fund or system, real estate investment trust (or an umbrella partnership or other entity of which a real estate investment trust is the majority owner), Federal or State agency or nonprofit lender regularly making or guaranteeing mortgage loans, investment bank or Fortune 500 company, or any combination of, any one or more of the entities described above.
1.1.20 “Lender” means the holder of any Security Instrument and such holder’s successors and assigns.
1.1.21 “Loan Documents” means the documents, instr uments and agreements evidencing and securing the City Loan including, but not limited to, this Agreement, the City Loan Promissory Note, a form of which is attached hereto as Exhibit “C”, the City Loan Deed of Trust, a form of which is attached hereto as Exhibit “D”, and the City Regulatory Agreement, a form of which is attached hereto as Exhibit “H”.
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1.1.22 “Operating Expenses” means actual, reasonable and customary costs, fees and expenses directly incurred and for which payment has been made and which are attributable to the operation, maintenance, and management of the Project (but not any capital replacement reserves or other reserves, expenditures or capital), including without limitation the following (to the extent actual, reasonable and customary, and att ributable to the operation, maintenance or management of the Project): painting, cleaning, repairs and alterations; landscaping; utilities; rubbish removal; sewer charges; real and personal property taxes and assessments; insurance premiums; security; advertising, promotion and publicity; office, janitorial, cleaning and building supplies; actual and customary salary payable to on-site staff which directly and exclusively benefits residents of the Project; reasonable current and accrued partnership and asset management fees, if required by Developer’s partnership agreement, with annual earnings not to exceed $25,000, increased by 3.5% each January 1 st, for the general partner s; a property management fee (“Management Fee”) to a property manager of not to exceed [of no more than six (6%) of effective gross income , plus $9.50 per unit ] per month for bookkeeping fees; purchase, repairs, servicing and installation of appliances, equipment, fixtures and furnishings; reasonable and customary fees and expenses of accountants, attorneys, consultants and other professionals as incurred commencing after the completion of the Project (as evidenced by the issuance by the City of a certificate of occupancy) in connection with the operation of the Project; deposits to reserves from operating cash, as required by the Developer’s partnership agreement or any lender, or as reasonably necessary for the financial sustainability of the Project as determined by the Developer and approved by the City or the lender for the Senior Project Loan (such approval may be provided in the form of an approved annual Project Budget); payments of deductibles in connection with casualty insurance claims not normally paid from reserves; resident services, repayment of advances or loans from the gene ral partner or its affiliates used for fund operating costs/deficits; and deferred developer fees. The Operating Expenses shall not include non -cash expenses, including without limitation, depreciation. Operating Expenses shall also exclude all of the following: (i) salaries of employees of Developer or Developer’s general overhead expenses, or expenses, costs and fees paid to an Affiliated Person, except as set forth above; (ii) any amounts paid directly by a tenant of the Project which, if incurred by Developer, would be Operating Expenses; (iii) optional or elective payments with respect to the Senior Project Loan or any other loan; (iv) Debt Service; (v) expenses, expenditures, and charges of any nature whatsoever arising or incurred by Developer prio r to completion of the Project, or any portion thereof, including, without limitation, all predevelopment and preconstruction activities conducted by Developer in connection with the Project, including, without limitation, the preparation of all plans and the performance of any tests, studies, investigations or other work, and the construction of the Project and any on site or off site work in connection therewith; (vi) depreciation, amortization, and accrued principal and interest expense on deferred debt; and (vii) any partnership internal fees except as set forth above. The Operating Expenses shall be reported in the Annual Financial Statement and Residual Receipts Report and shall be described in line-item format and detail.
1.1.23 “Party” means any party to this Agreement, and “Parties” means all parties to this Agreement.
1.1.24 “Permitted Security Instrument” means any Security Instrument (a) that encumbers only the Project; (b) a copy of which, together with the related loan documents, is promptly after execution delivered to City, (c) that is held by a Lender that is an Institutional
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Lender or by an affiliate of the Developer, and (d) only secures the repayment of money used to pay or reimburse the Total Development Costs or any Refinancing permitted by this Agreement.
1.1.25 “Plans and Specifications” means all drawings, landscaping and grading plans, engineering drawings, final construction drawings, and any other plans or specifications for construction of the Project.
1.1.26 “Project” is defined in Recital C.
1.1.27 “Project Budget” is defined in Section 2.4.1.
1.1.28 “Refinancing” means any loan secured by a Permitted Security Instrument that Developer obtains to pay off all or a portion of an existing loan secured by a Permitted Security Instrument and costs in connection with such a loan.
1.1.29 “Residual Receipts” for a particular Operating Year means Gross Revenues for the corresponding Operating Year less Operating Expenses. All calculations of Residual Receipts shall be made annually, on or before July 1 for the preceding Operating Year , the components thereof shall be subject to verification and approval, on an annual basis, based upon conformity with the terms of this Agreement and the City Loan Promissory Note, by City.
1.1.30 “Schedule of Performance” means the schedule attached hereto as Exhibit “E”.
1.1.31 “Scope of Development” means the description attached hereto as Exhibit “F”.
1.1.32 “Senior Project Loan” means the loan or loans that Developer obtains from an Institutional Lender in an amount that is sufficient to pay and the proceeds of which are to be used and applied solely to pay (a) the reasonable costs of obtaining such loan, and (b) all or a portion of the Total Project Costs. Such loan shall provide for normal and customary disbursement controls for the payment of Total Project Costs as con struction of the Project progresses and normal and customary fees and expenses for a loan of similar size and purpose.
Such loan may also provide for a portion of the loan to convert to a permanent loan status following completion of the Project. Any refinancing of a Senior Project Loan that either (i) does not exceed the outstanding principal balance of the loan refinanced plus refinancing loan closing costs or (ii) has Debt Service which does not exceed the Debt Service on the loan being refinanced or ( iii) constitutes a “takeout” loan at conversion to the permanent phase, shall also be a Senior Project Loan
1.1.33 “Total Project Costs” means all hard and soft costs of the construction of the Project, including land costs and carry costs, as set forth in the Project Budget.
1.1.34 “Transfer” is defined in Section 4.1.
1.1.35 “Transferee” is defined in Section 4.1.
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City Loan Agreement
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2. LOAN AGREEMENT.
2.1 Loan. City shall make a loan to Developer in the amount of Twenty-Three Million, Seventy -One Thousand, Eight y-One Dollars and no/100 ($ 23,071,081.00) (the “ City Loan”), consisting of a $1, 000,000 from LHTF funds, $535,541 PIP funds, and $ 21,535,540 Homekey funds . The City Loan shall be evidenced by and repayable in accordance with the promissory note (“City Loan Promissory Note”) attached hereto as Exhibit “C”.
The City Loan Promissory Note shall be secured by a deed of trust on the Project in the form attached hereto as Exhibit “D” (“City Loan Deed of Trust”) and a City Regulatory Agreement on the Project in the form attached hereto as Exhibit “H”. The City shall reasonably subordinate the City Loan Deed of Trust to the deed of trust securing the Senior Project Loan by a reasonable subordination agreement approved by the Executive Director. The City Regulatory Agreement shall not be subordinated. The City Loan shall be repaid with Residual Receipts, as described in the City Loan Promissory Note.
On or before July 1 of each calendar year commencing in the first year following receipt of a certificate of oc cupancy for the Project, Developer shall provide the City with an annual Residual Receipts report in form and substance reasonably acceptable to City that includes annual financial statements with respect to the Project that have been reviewed by an independent certified public accountant, together with an express written opinion of such independent certified public accountant that such report presents the financial position, results of operations and cash flows of the Project accurately and in accordance w ith tax accounting principles (“Annual Financial Report”). In the event the Residual Receipts reported or paid deviate by three percent (3%) or more from that amount determined to be owing upon review of Developer’s submittal and an audit (and the City shall have the right to audit), Developer shall reimburse City for its cost to review and shall pay the amounts owing.
2.2 Use of Funds . City Loan funds may be used only for the acquisition and rehabilitation of the Project in accordance with the Scope of Deve lopment attached hereto as Exhibit “F”, the Homekey Requirements, LHTF Requirements, and PIP Guidelines , and the approved Project Budget.
2.3 Repayment of Loan. The City Loan shall be repaid from Residual Receipts in accordance with the City Loan Promissory Note. The entire unpaid balance of the City Loan shall be due and payable in full at the earlier of (i) transfer of all or any interest in Developer, other than a Permitted Transfer; (ii) a Default under this Agreement or any of the Loan Documents; or (iii) that date that is fifty-five (55) years after the date a final certificate of occupancy is issued for the Project. The City Loan shall bear simple interest at the rate of three percent (3%) per annum, commencing upon the date of the first disbursement of the City Loan.
2.4 City Conditions Precedent to Construction Closing and Disbursement. The City Loan proceeds will be disbursed through periodic payments in accordance with Section 2.5, below. The City is not obligated to disburse any portion of the City Loan funds, or to take any other action under the Loan Documents, and the Construction Closing may not occur unless all of the following conditions have been and continue to be satisfied (or there is express written waiver by the City Manager) (collectively, the “ City Conditions”), subject to City having received the Homekey funds from HCD:
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2.4.1 There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under this Agreement, or under any other agreement between the City and Borrower.
2.4.2 Borrower holds a fee interest in title to the Property or is acquiring a fee interest in title to the Property simultaneously with the Construction Closing.
2.4.3 Developer shall have submitted to the City Manager, and the City Manager shall have approved, a comprehensive project budget, showing line items for each type of expenditure and the applicable sources of funds, together with a copy of all commitments obtained by the Developer for acquisition financing, construction financing, permanent financing, and other financing from external sources (including deferred Developer fees) to assist in financing the acquisition and development of the Project, certified by the Developer to be true and correct, and financial projections (or other evidence in a form satisfactory to the City) demonstrating that the Developer has sufficient additional capital funds ( i.e., “equity”) available and is committing such funds (and/or deferring development or other fees) to cover the difference, if any, between costs of development of the Project and the funds available to the Developer to acquire the Property and construct the Improvements (the “Project Budget”).
2.4.4 The Developer shall have delivered to the City a copy of the loan documents for the Senior Project Loan, financial terms of which must be consistent with the Project Budget.
2.4.5 The Senior Project Loan and all other loans necessary to finance construction of the Improvements shall close prior to or concurrently with the City Loan.
2.4.6 The City Manager shall have approved the executed Construction Contract for the Project, as provided in Section 3.4 hereof.
2.4.7 The Developer shall have submitted to the City Manager a description of the legal and ownership structure of the Developer and the City Manager shall have approved such entity and documents.
2.4.8 The City shall have received evidence acceptable to the City Manager demonstrating the insurance required by Section 6.1 of this Agreement shall be in effect.
2.4.9 All conditions to the issuance of the Building Permit shall have been approved/issued and a “permit ready” letter shall have been issued by the City (and any permit fees, shall be paid at or immediately following disbursement of City Loan).
2.4.10 The Developer shall have provided evidence to th e City that the Developer’s general contractor is experienced, creditworthy and able to construct and complete the Project (pursuant to the Construction Contract) and evidence that the obligations of Developer’s general contractor to construct the Project have been bonded, for the express benefit of Developer, Developer’s construction lender, and the City. If the bonding requirement applies, Developer shall secure and deposit with the City a Performance Bond and a Labor and Material Payment Bond (in the fo rm of AlA form A311 or A312), issued by a surety admitted to issue
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insurance in the State of California and otherwise acceptable to the City Manager, securing the faithful performance by the General Contractor of the completion of construction of the Improvements free of all liens and claims, within the time provided in the Schedule of Performance attached hereto. Such bond shall be in an amount equal to one hundred percent (100%) of the stipulated sum or guaranteed maximum price, as applicable. Such cons truction bond shall be issued by a company acceptable to the City and listed in the current United States Treasury Department circular 570 and otherwise within the underwriting limits specified for that company in such circular. All of the foregoing shall be satisfactory in form and substance to the City Manager.
2.4.11 Subject to expiration of any applicable cure period, Developer shall not be in default of any of its obligations under the terms of the Loan Documents.
2.4.12 Developer shall have delivered to the City the executed City Regulatory Agreement, City Loan Promissory Note, and City Loan Deed of Trust and the City Loan Deed of Trust and City Regulatory Agreement shall be recorded against the Property concurrently with the Construction Closing.
2.4.13 Developer has caused a title insurance company acceptable to the City to deliver a binding commitment to issue a lender’s policy of Title Insurance with any endorsements the City may reasonably require, insuring the City in the p rincipal amount of the City Loan, of the validity and priority of the Deed of Trust, subject only to liens and matters of record approved by the City in writing, and showing title of the Property in the name of Developer.
2.4.14 Developer shall have provided the City with a copy of the resolution of Developer approving and authorizing execution of this Agreement and all documents contemplated hereby on behalf of Developer and with such other documentation required by the City regarding Developer’s creation, status and authority to enter into this transaction.
2.4.15 Developer shall have provided City with a certificate showing it to be in good standing under the laws of the State of California.
2.4.16 All of the representations and warranties made by Developer in this Agreement and in the City Loan Note, the City Loan Deed of Trust, and the City Regulatory Agreement shall be true and correct in all material respects as of the date of the disbursement.
2.4.17 Developer shall have performed, observed and complied with all covenants, agreements and conditions required by this Agreement.
2.5 Process for Disbursement of Loan Proceeds . The City will approve draw down of the proceeds of the Loan by Developer based on Development costs actually incurred or reasonably expected to be incurred, as evidenced by a written draw request which shall include sufficient detail and include sufficient supporting documentation to permit the City to confirm that the request is consistent with this Agreement.
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City Loan Agreement
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2.5.1.1 A draw request for up to Fifteen Million Dollars ($15,000,000) may be submitted to the City for disbursement at Construction Closing to be applied to cost of the acquisition of the Property.
2.5.2 Subsequent draw requests shall not be submitted by Developer more frequently than one time each calendar month and must contain sufficient supporting documentation to permit the City to confirm that the work to be funded by the draw request has been performed, or if yet performed, Developer shall submit a detailed invoice of costs related to the work for which the draw is requested, evidence of payment of the invoiced costs within ten (10) days following the City’s disbursement. Draw requests should be presented on a draw request form acceptable to the City and include the following: 1) updated schedule of values; 2) invoices and receipts; 3) lien waivers; 4) change orders, if any; 5) progress reports or photos concerning the work paid for with the City Loan; and 6) inspection reports from a third party inspector.
2.6 City Not Liable . In no event shall the City be liable to any third person, including but not limited to Senior Project Lender, contractor or subcontractor, for any damage whatsoever which may result in whole or in part from any action or inaction of the City hereunder, including without limitation, failure or delay in making any disbursement of City Loan funds, except to the extent of the City’s gross negligence or willful misconduct.
2.7 HCD Amendments . Developer acknowledges that HCD may require additional modifications to the Loan Documents in connection with the LHTF funds, PIP funds, or Homekey funds. In the event HCD requires amendments to the Loan Documents before it is willing to transmit to the City the award of Homekey funds, Developer shall approve such changes.
HCD refusal to disburse Homekey funds to the City on account of the Loan Documents shall not constitute an instance of gross negligence or willful misconduct of City, and may not be asserted as such by Developer or any third party.
3. DEVELOPMENT COVENANTS.
3.1 Environmental Review . Environmental analyses required under the California Environmental Quality Act (Pub. Res. Code § 21000 et seq.)(“CEQA”) has been completed. The Parties acknowledge that the City of Fairfield, acti ng as the lead agency, has determined that the Project is exempt from CEQA pursuant to Public Resources Code S ection Health and Safety Code Section 50675.1.5. The parties acknowledge that no development of the Property will occur unless and until environmental analyses required under the National Environmental Policy Act (42 U.S.C. § 4321 et seq.) (“NEPA”) has been completed to inform the parties of the potential environmental effects of development, and alternatives and mitigation measures therefore. The Parties further acknowledge that the parties retain the discretion to modify Project as may be necessary to comply with NEPA, select other feasible alternatives to avoid significant environmental effects identified during the NEPA processes, balanc e the benefits of any proposed development against any significant environmental effects prior to taking final action if such significant effects cannot otherwise be avoided, and/or determine not to proceed with any proposed development. Developer shall not take any action to construct or install anything for or in relation to the Project until NEPA review has been completed. Developer acknowledges that approval or disapproval of the Project following completion of the environmental review process is within the sole, complete, unfettered, and absolute discretion of the City without limitation by
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or consideration of the terms of this Agreement. In addition, Developer acknowledges that any required approvals by any other local, state or federal agency may require additional environmental review, and that any approval by the City shall not bind any other local, state or federal agency to approve the Project pursuant to the City’s environmental review. NEPA clearance was completed on February 14, 2025.
3.2 Development of the Project . Developer shall develop the Project in accordance with the Scope of Development, the Schedule of Performance, all requirements of any and all applicable federal, state and local laws, rules and regulations (including any conditio ns of approval required by the City, the Plans and Specifications, and all other terms, conditions and requirements of this Agreement. Developer shall comply with the Schedule of Performance in a timely manner. Until a Certificate of Completion is issued , the Developer shall provide the City with quarterly written, detailed progress reports regarding the status of the construction of the Improvements.
3.3 City’s Right to Review Plans and Specifications . In connection with construction of the Project, Develop er shall comply in all material respects with Plans and Specifications approved by the City. Developer shall deliver a copy of the Plans and Specifications for the Improvements submitted to the City Department of Community Development to the City, in its proprietary capacity ( i.e., its capacity as a party to this contract, as opposed to its governmental capacity) for its review to ensure that the Improvements are constructed in accordance with the Scope of Development and the other applicable provisions of this Agreement. .
3.4 Construction Contract. Developer shall retain one or more reputable and financially responsible general contractors (each, a “General Contractor”) to undertake the construction of the Project. Each General Contractor shall be acceptable to and approved in writing by the City Manager (in the exercise of their reasonable discretion), licensed in California, shall have any other licenses required by the City, and shall be experienced in constructing the type of improvements constituting the Improvements. The General Contractor sh all be deemed to have been approved if the City Manager fails to approve or disapprove of the General Contractor within five (5) business days after receipt of all requested information relating to the General Contractor.
City acknowledges and agrees that the City Manager has approved Danco Builders Northwest as General Contractor. On or before the date set forth in the Schedule of Performance, Developer shall enter into a written contract, in form and substance reasonably acceptable to the City Manager (the “Construction Contract”), with the General Contractor(s) for performing the work constituting the construction of all of the Project. Each such Construction Contract shall be a guaranteed maximum cost contract or stipulated sum insuring construction of the improvements for a fixed or maximum price, and shall obligate the General Contractor to commence and complete such construction in accordance with this Agreement and all applicable federal, state and local laws, rules and regulations. Each such Const ruction Contract shall provide for retention of at least ten percent (10%) from each progress payment (except there shall be no retention for any items excused from retention as specified in the Construction Contract) until the final payment, and said final payment shall not be paid to the General Contractor until the portion of the Project covered by such Construction Contract shall have been completed to Developer’s satisfaction, and Developer shall have obtained all appropriate lien waivers from the Gene ral Contractor and its
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subcontractors, or bonds acceptable to Developer in form and amount, insuring against loss arising from any mechanics’, laborers’, materialmen’s or similar liens filed against the Project.
3.5 Costs of Entitlement, Development and Constr uction; Prevailing Wages .
The Developer agrees that all costs, expenses and fees associated with the development and construction of the Project including the costs for developing and constructing the Improvements thereon (including, but not limited to, the land acquisition costs and governmental permits and approvals) shall be borne by Developer.
Developer shall pay and cause its contractors to pay any prevailing wages for construction of the Improvements , as applicable, and shall otherwise comply (and cause its contractors to comply) with California Labor Code Sections 1720 et seq. (including all reporting requirements) and all federal loans regarding prevailing wages that may apply (due to project - based vouchers or otherwise).
3.6 Rights of Access and Inspection. In addition to those rights of access to and across the Property to which the City may be entitled by law, members of the staff of the City shall have a reasonable right of access to the Property, without charge or fee, during normal construction hours, upon 48 hours’ notice to Developer (which notice may be provided to Cameron Dart at [email protected]) to inspect the work being performed at the Property in connection with the development of the Project but shall not be obligated t o do so and City shall not be liable for any failure to disclose any information discovered by City (or that could or should have been discovered by any City inspection). The City shall also have the right at all reasonable times upon reasonable notice to inspect and copy the books, records and all other documentation of the Developer pertaining to its obligations under this Agreement. City shall defend, indemnify and hold Developer harmless from and against any and all claims, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and cost) resulting from City’s entry onto the Property for such purposes, except to the extent any such claims, liabilities, loss, damages, costs or expenses are the result of the negligence or willful misconduct of Developer.
3.7 Local, State and Federal Laws. Developer shall carry out the construction of the Improvements on the Property in conformity with all applicable federal, state and local laws, including all applicable federal and state occupation, safety and health standards.
3.8 Governmental Permits and Approvals . Before commencement of construction or development of any work of improvement on the Property, Developer shall (at Developer’s expense) secure, or cause to be secured, the Building Permit, and any other required governmental permits and approvals.
3.9 No Discrimination During Construction . Developer, for itself and its successors and assigns, agrees that it shall not discriminate against any employee or applicant for employment because of age, sex, marital status, race, handicap, color, religion, creed, ancestry, or national origin in the construction of the Improvements.
3.10 Taxes, Assessments, Encumbrances and Liens. Developer shall pay when due all real property taxes and assessments assessed or levied on portions of the Land from time to time owned by Developer, commencing immediately after closing of the land acquisition.
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3.11 No Agency Created . In performing this Agreement, Developer is not the agent of the City and the City is not an agent of Developer. The City shall not have any responsibility whatsoever for payment to any contractor or supplier of Developer or its contractors.
Developer shall not have any responsibility whatsoever for payment to any contractor or supplier of the City.
3.12 Certificate of Completion . Upon Developer’s completion of the construction of the Project, Developer will apply to the City for a Certificate of Completion (which shall be substantially in the form attached hereto as Exhibit “I” ). The City’s issuance of the Certificate of Completion shall constitute the acknowledgement of the City that Developer has complied in all respects with its development obligations (and only the development obligations) set forth in this Article 3. Promptly following the City’s issuance of a certificate of occupancy for the entire project, and provided that Developer is then in full compliance with all of its obligations under Article 3 of this Agreement, the City Manager shall execute, acknowledge and deliver the Certificate of Completion, which shall be recorded in the Official Records of Solano County. If the City Manager believes that the Developer is not in compliance with its obligations under this Article 3, the City Manager shall promptly specify the nature of such non -compliance by written notice to Developer.
3.13 Capital Replacement Reserve. Upon completion of the Project, Developer shall annually set aside $500 per unit or such greater amount as may be required or approved by the Senior Project Loan documents delivered to City, from the gross rents received by the Project into a separate Capital Replacement Reserve account identified in writing to City. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements and replacements to the accepted accounting principles. The non -availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligat ions to undertake any and all necessary capital repairs, improvements or replacements and to continue to maintain the Project in the manner prescribed in this Agreement or the City Regulatory Agreement.
Notwithstanding the foregoing, this Section 3.1 3 shall not apply to the Senior Project Lender or any foreclosure transferee following a foreclosure or deed in lieu of foreclosure of the Senior Project Loan.
4. LIMITATIONS ON TRANSFERS AND SECURITY INTERESTS.
4.1 Restrictions on Transfer of Developer’s Rights and Obligations. Prior to issuance of a Certificate of Completion for the Project, Developer shall not sell, assign, transfer, mortgage, lease (except for leases/rental agreements that comply with the City Regulatory Agreement), hypothecate, or convey (collectively, a “Transfer”) the Project or any part thereof or any of Developer’s rights or obligations hereunder, or agree to do so, or change the general partner of Developer (except for cause and in accordance with the limited partnership agreement of Developer, which shall not require City’s consent) or transfer fifty percent (50%) or more of the ownership interests in Developer in a single transaction or series of transactions, without the City’s prior written consent, which consent may be granted or withhe ld in the City’s sole and absolute discretion, except that the City’s consent shall not be required for : (i) execution of one or more deeds of trust and related instruments securing Developer’s construction and permanent financing (provided a copy is given to City), or (ii) a conveyance of the Project resulting from the foreclosure thereof (or a deed in lieu of such a foreclosure), or (iii) the grant, exercise and subsequent transfer
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of the Property pursuant to an option or right of first refusal to Develop er’s general partner or an affiliate thereof in accordance with Developer’s partnership documents and Section 42 of the Internal Revenue Code (each of the foregoing in this clause (i ii) shall be referred to herein as a “Permitted Transferee”). Developer a cknowledges that the identity of Developer is of particular concern to the City, and it is because of Developer’s identity that the City has entered into this Agreement with Developer. Except for any Transferee approved by the City pursuant to this Section 4.1, any Permitted Transferee and except for any Holder (defined in Section 4.2), no voluntary or involuntary successor in interest of Developer shall acquire any rights or powers under this Agreement prior to the issuance of a Certificate of Completion. Except with respect to a transfer to a Permitted Transferee, no transfer or assignment of Developer’s interest hereunder without the City’s prior written approval shall release Developer from the obligations of Developer hereunder.
4.2 Holders of Deeds of Trust. Notwithstanding any provisions of Section 4.1 to the contrary, Developer shall have the right to hypothecate its interest in the Property and the Project pursuant to one or more deeds of trust from an Institutional Lender, for the purpose of securing loans of funds to be used for financing the direct and indirect costs of the Project (including land development costs, reasonable and customary developer fees, loan fees and costs, and other normal and customary project costs), or for refinancing the construction financing with permanent financing. Any Institutional Lender of record holding any such deed of trust, whose name and address shall have been provided by Developer to City is referred to herein as a “Holder.”
4.3 Rights of Holders. The City shall deliver a copy of any notice or demand to Developer concerning any breach or default by Developer under this Agreement to each Holder who has previously made a written request to the City for special notice hereunder. Any notice of breach or default by Developer shall not be effective against any such Holder unless given to such Holder. Such Holder shall have the right, but not the obligation, at its option to cure or remedy any such default and to add the cost thereof to the secured debt and the lien of its security interest.
If such breach or default can only be remedied or cured by such Holder upon obtaining possession, such Holder may remedy or cure such breach or default within a reasonable period of time after obtaining possession, provided such Holder seeks possession with diligence through a receiver or foreclosure. Such Holder shall not be obligated to undertake or continue the construction or completion of the Improvements beyond the extent necessary to conserve or protect the Improvements already constructed. Any Holder completing the Improvements must assume all rights and obligations of Developer under this Agreement and shall then be entitled, upon written request made to the City, to a Certificate of Completion from the City.
4.4 In any case where the applicable Holder, having first exercised its option to construct, has not proceeded diligently with the completion of construction after first exercising such option, City shall be afforded those rights against such Holder it would otherwise have against the Developer under this Agreement.
4.5 Noninterference with Holders . The provisions of this Agreement do not limit the right of Holders (a) to foreclose or otherwise enforce any mortgage, deed of trust, or other security instrument encumbering all or any portion of the Project, (b) to pursue any remedies for the enforcement of any pledge or lien encumbering such portions of the Project, or (c) to accept, or cause its nominee to accept, a deed or other conveyance in lieu of foreclosure or other realization. No Holder is obligated by, or to perform, any of the Developer's obligations under this
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Agreement, including, without limitation, to construct or complete any improvements or to guarantee such construction or completion; nor shall any covenant or any other provision in conveyances from City to the Developer evidencing the realty comprising the Property or any part thereof be construed so to obligate such Holder. However, nothing in this Agreement shall be deemed to permit or authorize any Holder to devote the Property or any portion thereof to any uses, or to construct an y improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. The City agrees to execute such further documentation regarding the rights of any Holder as is customary with respect to construction or permanent financing, as the case may be, to the extent that such documentation is reasonably requested by any Holder and is reasonably approved by the Executive Director.
4.6 Right of City to Cure. In the event of a default or breach by the Developer of a loan by a Holder prior to the completion of the Improvements, the City may, upon prior written notice to the Developer, cure the default, prior to the completion of any foreclosure. In such event the City shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the City in curing the default. The City shall also be entitled to a lien upon the Project or any portion thereof to the extent of such costs and disbursements. The City agrees that such lien shall be subordinate to any lien i n favor of a Holder, and the City shall execute from time to time any and all documentation reasonably requested by the Developer to effect such subordination.
4.7 Right of City to Satisfy Other Liens . After the Developer has had a reasonable time (not exceeding 30 days) to challenge, cure, or satisfy any liens or encumbrances on the Project or any portion thereof, and has failed to do so within thirty (30) days, in whole or in part, the City shall, upon prior written notice to the Developer, have the right t o satisfy any such lien or encumbrances; however, nothing in this Agreement shall require the Developer to pay or make provision for the payment of any tax, assessment, lien or charge so long as the Developer in good faith shall contest the validity or amount therein and so long as such delay in payment shall not subject the Property or any portion thereof to forfeiture or sale.
5. DEFAULT, REMEDIES AND TERMINATION.
5.1 Defaults. The occurrence of any or all of the following after the passage of applicable notice and cure periods shall constitute a default (“Default”) under this Agreement:
5.1.1 Developer’s failure to timely comply with the Schedule of Performance, subject to Section 5.6;
5.1.2 Any breach of this Agreement by any Party involving the payment of money, and the continuance of such breach for a period of ten (10) days after the non defaulting Party has given written notice to the defaulting Party;
5.1.3 Except as otherwise provided in Section 5.1.1 hereof, a breach of any other term of this Agreement by any Party not involving the payment of money, and failure of such Party to cure such breach within thirty (30) days after the non defaulting Party has given written notice to the defaulting Party; provided, however, if such breach is not reasonably curable within such thirty (30) day period, then such Party shall be deemed in Default only if such Party does not commence to cure such breach within such thirty (30) day period and thereafter fails to diligently prosecute such cure to completion;
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5.1.4 Developer’s violation of Section 4.1;
5.1.5 Developer’s failure or refusal to keep in force and effect any material permit or approval with respect to construction of the Project, and Developer’s failure to cure such breach within thirty (30) calendar days after notice from the City of Developer’s breach; provided, however, if such breach is not reasonably curable within such thirty (30) day period, then Developer shall be deemed in Default only if Developer does not commence to cure such breach within such thirty (30) day period and thereaf ter fails to diligently prosecute such cure to completion; or
5.1.6 Filing of a petition in bankruptcy by or against any Party or appointment of a receiver or trustee of any property of any Party, or an assignment by any Party for the benefit of creditors, or adjudication that such Party is insolvent by a court, and the failure of such Party to cause such petition, appointment, or assignment to be removed or discharged within 180 days.
5.1.7 The failure to comply with any of the requirements of Section 6 below;
5.1.8 If ap plicable under Section 2. 4.8, the failure to maintain, or the cancellation of, any of the bonds described in Section 2.4.8 prior to the issuance of a Certificate of Completion.
5.2 Remedies.
5.2.1 Remedies for Default. In the event of a Default by any Party, a non defaulting party shall be entitled to the following remedies, as applicable:
A defaulting Party shall be liable to the non defaulting Party for all damages, costs and losses incurred by the non defaulting Party, and the non defaulting Party may seek against the defaulting Party any available remedies at law or equity, including but not limited to the right to receive damages or to pursue an action for specific performance, and the City shall have its rights and remedies under the City Loan Promissory Note and the City Loan Deed of Trust securing it.
5.3 No Personal Liability . No representative, agent, attorney, consultant, or employee of the City shall personally be liable to the Developer or any successor in interest of Developer, in the event of any Default or breach by the City, or for any amount which may become due to Developer or any successor in interest, on any obligation under the terms of this Agreement.
No representative, agent, attorney, consultant, or employee of the Developer shall personally be liable to the City or any successor in interest of City, in the event of any Default or breach by the Developer, or for any amount which may become due to City or any successor in interest, on any obligation under the terms of this Agreement.
5.4 Rights and Remedies are Cumulative . The rights and remedies of the Parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same time or different times, of any other rights or remedies for the same default or any other default by the nondefaulting Party.
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5.5 Inaction Not a Waiver of Default. Any failures or delays by either Party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such Party of its rights to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. The acceptance by a Party of less than the full amount due from the other party shall not constitute a waiver of such Party’s right to demand and receive the full amount due, unless such Party executes a specific accord and satisfaction.
5.6 Force Majeure . Notwithstanding anything to the contrary in this Agreement, nonperformance shall be excused when performance is prevented or delayed by reason of any of the following forces reasonably beyond the control of such party (a “Force Majeure Delay”): (i) failure to perform by Developer attribu table to any strike, lockout or other labor or industrial disturbance (whether or not on the part of the employees of either party hereto), civil disturbance, future order claiming jurisdiction, lack of labor or supplies due to pandemic or epidemic, act of the public enemy, war, riot, sabotage, blockade, embargo, inability to secure customary materials, supplies or labor through ordinary sources by reason of regulation or order of any government or regulatory body; or (ii) delay attributable to severe weath er, lightning, earthquake, fire, storm, hurricane, tornado, flood, washout, explosion, or any other cause beyond the reasonable control of the party from whom performance is required, or any of its contractors or other representatives. Any prevention, delay or stoppage due to any Force Majeure Delay shall excuse the performance of the Party affected for a period of time equal to any such prevention, delay or stoppage (except the obligations of either Party to pay money to the other party) provided that the Party claiming the Force Majeure Delay notifies the other Party of the Force Majeure Delay within a reasonable time (not to exceed ten business days) after the commencement of the Force Majeure Delay.
6. INSURANCE; INDEMNITY.
6.1 Insurance.
6.1.1 Developer shall obt ain and maintain at no cost or expense to the City, with a reputable and financially responsible insurance company reasonably acceptable to the City, (i) after the opening of the Project for business, commercially reasonable casualty insurance for the Improvements in an amount not less than the replacement cost of the Improvements (subject to commercially reasonable deductibles); (ii) commercial broad form general liability insurance, insuring against claims and liability for bodily injury, death, or proper ty damage arising from the construction, use, occupancy, condition, or operation of the Property or Project , which liability insurance shall provide combined single limit protection of at least $2,000,000 and shall include a reasonable inflation rider, con tractual liability coverage and products and completed operations coverage, and (iii) commercial automobile liability insurance, or non -owned/hired automobile insurance provided through Developer’s general liability policy, of at least $1,000,000 combined single limit. Such liability insurance policies shall name the City and their council members, board members, officers, agents and employees as additional insureds.
6.1.2 Before commencement of any demolition or construction work by Developer on any portion of the Land owned by Developer, Developer shall obtain and maintain in force until completion of such work (i) “all risk” builder’s risk insurance, including coverage for vandalism and malicious mischief, in a form and amount and with a company reasonably
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acceptable to the City, and (ii) workers’ compensation insurance covering all persons employed by Developer in connection with work on the Project, or any portion thereof. During the construction of Improvements on any portion of the Property by Developer, s uch builder’s risk insurance shall cover improvements in place and all material and equipment at the job site furnished under contract, but shall exclude contractors’, subcontractors’, and construction managers’ tools and equipment and property owned by co ntractors’ and subcontractors’ employees.
6.1.3 Each architect and each engineer engaged by Developer shall provide professional liability insurance with a limit of liability of at least One Million Dollars ($1,000,000.00).
6.1.4 Developer shall also furnish or cause to be furnished to the City evidence satisfactory to the City that any contractor with whom it has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law.
6.1.5 With respect to each policy of insurance required above, Developer and each of Developer’s general contractors, engineers and architects shall furnish to the City a certificate on the insurance carrier’s form setting forth the general provisions of the insur ance coverage promptly after written request by City showing the additional insureds. The certificate shall also be furnished by Developer prior to commencement of construction of any Improvements.
6.1.6 All policies required by this Section to be furnished by Developer shall contain (i) language to the effect that the policies cannot be cancelled except after thirty (30) days’ written notice by the insurer to the City, and (ii) a waiver of the insurer of all rights of subrogation against the City and the other additional insureds. All such insurance shall have deductibility limits which shall be commercially reasonable.
6.2 Indemnity. From and after the execution of this Agreement, Developer hereby agrees to indemnify, defend, protect, and hold harmless the City (as a third party beneficiary) and any and all agents, employees, representatives, council members, board members, consultants, and officers of the City (the “City Parties” and each, a “City Party”), from and against all losses, liabilities, claims, damage s (including foreseeable or unforeseeable consequential damages), penalties, fines, forfeitures, costs and expenses (including all reasonable out of pocket litigation costs and reasonable attorneys’ fees) and demands of any nature whatsoever (collectively, “Losses”), related directly or indirectly to, or arising out of or in connection with:
(i) the validity of this Agreement (based on CEQA, NEPA or otherwise);
(ii) the development and construction by Developer of the Improvements on the Property or the use, ownership, management, occupancy, or possession of the Property during Developer’s period of ownership of the Property; (iii) any breach or Default by Developer hereunder;
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(iv) any of Developer’s activities on the Property (or the activities of Developer’s agents, employees, lessees, representatives, licensees, guests, invitees, contractors, subcontractors, or independent contractors on the Property), regardless of whether such losses and liabilities shall accrue or are discovered before or after termination or expiration of this Agreement, except to the extent such losses or liabilities are caused by the gross negligence or willful misconduct of the City. The City may in its discretion participate in the defense of any legal action naming the City; or (v) claims for prevailing wages under or violation of California Labor Code Sections 1720 et seq.
The provisions of this Section shall survive the termination of this Agreement.
Notwithstanding the foregoing, Developer shall not be required to indemnify the City Parties to the extent that any Losses are caused by the gross negligence or willful misconduct of any City Party.
7. REPRESENTATIONS AND WARRANTIES.
7.1 Developer Representations. Developer represents and warrants to the City as of the date of this Agreement, and shall remake these representations and warranties on the date of disbursement of the Loan, that:
(i) Developer is a limited partnership validly existing and in good standing under the laws of the State of California.
(ii) Developer has duly authorized the exec ution and performance of this Agreement, the Loan Documents, and the execution and performance of all of the documents set forth herein.
(iii) The Loan Documents have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Developer, and all actions required under Developer’s organization documents and applicable governing law for the authorization, execution, deliver, and performance o f the Loan Documents have been duly taken.
(iv) Developer’s execution and performance of this Agreement and the Loan Documents will not violate any provision of the Developer’s formation documents or any deed of trust, lease, contract, agreement, instrument, order, judgment or decree by which Developer is bound.
(v) There has been no material adverse change in the financial condition of Developer since the dates of the last financial statement Developer furnished to City, and except as otherwise disclosed to City in writing, Developer has not entered into any material transaction that is not disclosed in such financial statements. (vi) All reports, documents, instruments, information and forms of evidence delivered to City concerning the Loan or security for the Loan or required by the
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Loan Documents are accurate and correct in all material respects, and sufficiently complete to give City true and accurate knowledge of their subject matter and do not contain any material misrepresentation or omission.
8. GENERAL PROVISIONS.
8.1 Notices. All notices and demands shall be given in writing by certified mail, postage prepaid, and return receipt requested, or by reputable overnight messenger. Notices shall be considered given upon the earlier of (a) one business day following deposit or deli very with a nationally recognized overnight courier delivery charges prepaid, or (b) upon delivery or attempted delivery as shown on the return receipt if sent by certified mail. Notices shall be addressed as provided below for the respective Party; provi ded that if any Party gives notice in writing of a change of name or address, notices to such Party shall thereafter be given as demanded in that notice:
City: City of Fairfield
1000 Webster Street, 2nd Floor
Fairfield, CA 94533
Attn: City Manager
With a copy to: City of Fairfield
1000 Webster Street, 2nd Floor
Fairfield, CA 94533
Attn: Director of Housing Services
Developer: Fairfield North Texas Street LP
5251 Ericson Way, Suite A
Arcata, CA 95521
Attn: Project Manager
8.2 Construction. The Parties agree that each Party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not apply in the interpretation of this Agreement or any amendments or exhibits thereto. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties.
8.3 Interpretation. In this Agreement the neuter gender includes the feminine and masculine, and singular number includes the plural, and the words “person” and “party” include corporation, partnership, firm, trust, or association where ever the context so requires.
Unless otherwise required by a specific provision of this Agreement, time hereunder is to be computed by excluding the first day and including the last day. If the date for performance falls on a Saturday, Sunday, or legal holiday, the date for performance shall be extended to the next business day. All references in this Agreement to a number of days in which either party shall have to consent approve or perform shall mean calendar days unless specifically stated to be business days.
8.4 Time of the Essence. Time is of the essence of this Agreement.
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8.5 Warranty Against Payment of Consideration for Agreement . Developer warrants that it has not paid or given, and will not pay or give, to any third person, any money or other consideration for obtaining this Agreement, other than normal costs of conducting busi ness and costs of professional services such as architects, engineers and attorneys.
8.6 Attorneys’ Fees. If any Party brings an action to enforce the terms hereof or declare its rights hereunder, the prevailing Party in any such action shall be entitled to its reasonable attorneys’ fees to be paid by the losing Party as fixed by the court. If the City is made a party to any litigation instituted by or against Developer or to any litigation attacking the validity of this Agreement, then Developer shall indem nify and defend the City against, and save them harmless from, all costs, expenses (including reasonable attorneys’ fees), claims, liabilities, damages and losses incurred by the City in connection with such litigation provided, however, that in no event shall the Developer be obligated to pay any damages awarded to any person or entity that result from the gross negligence or willful misconduct of the City.
8.7 Entire Agreement . This Agreement, together with all attachments and exhibits hereto, and all agreements executed pursuant hereto, constitutes the entire understanding and agreement of the Parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties with respect to the subject matter hereof.
8.8 Severability. Each and every provision of this Agreement is, and shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this Agreement or the application thereof shall to any extent be held to be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected hereby, and each term and provision of this Agreement shall be valid and shall be enforced to the extent permitted by law.
8.9 No Third Party Beneficiaries. This Agreement is made and entered into for the sole benefit of the Parties, and there are no third party beneficiaries of this Agreement. No other person shall have any right of action based upon any provision of this Agreement.
8.10 Governing Law; Jurisdiction; Service of Process. This Agreement and the rights of the Parties shall be governed by California law. The Parties consent to the exclusive jurisdiction of the California Superior Court for the County of Solano. If any legal action is commenced by Developer against the City, or by City against Developer, service of process on the City shall be made by personal service upon the City Manager or City Clerk of the City, or in such other manner as may be provided by law. If any legal action is commenced by the City against Developer, service of process on Developer shall be made by personal service to Developer’s agent for service of process, or in such other manner as may be provided by law.
8.11 Survival. The provisions hereof shall not merge into, but rather shall survive, any conveyance hereunder and the delivery of all consideration.
8.12 City Actions. In addition to any provisions of this Agreement that gives the City Manager the authority to make decisions and grant approvals, the City hereby authorizes the City Manager to deliver such approvals, consents as are contemplated by this Agreement, waive requirements under this Agreement, and modify this Agreement, on behalf of the City provided that the applicable approval, consent, waiver or modification is not substantial ( i.e., does not
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City Loan Agreement
(Vista Ridge)
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change the fundamental business transaction between the Developer and the City, as determined by the City Manager in his reasonable discretion).
8.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed as original but all of which together shall constitute one and the same instrument.
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[Signatures Appear on the Following Page]
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City Loan Agreement
(Vista Ridge)
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IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the day and year first above written.
DEVELOPER:
FAIRFIELD NORTH TEXAS STREET LP,
a California limited partnership
By: Fairfield North Texas Street LLC,
a California limited liability company,
its Administrative General Partner
By: Danco Communities,
a California corporation,
its Manager
By:
Daniel Johnson
President
By: Community Revitalization and Development
Corporation, a California nonprofit public
benefit corporation, its Managing General Partner
By:
David Rutledge
President
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CITY:
CITY OF FAIRFIELD
By: _____________________________
David Gassaway,
City Manager
APPROVED AS TO FORM:
By:
David Lim,
City Attorney
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EXHIBIT “A”
LEGAL DESCRIPTION OF PROPERTY
The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:
Parcel One:
Parcel "1" as shown and described on that certain Parcel Map entitled "Parcel Map of the lands of Edward Parish, et al, Portion Lot 38, Rancho Tolenas & South 1/2, Section 12, Township 5 North, Range 2 West, M.D.B & M. Ext. Fairfield, Solano County, California", which said parcel map was filed for record on October 27, 1986, in Book 30 of Parcel maps at Page 29, in the office of the Solano County, California recorder.
Excepting therefrom all that portion described as Parcel 2 as shown on the Parcel Map entitled, "Parcel Map of E-2 8 Motel Property" filed July 10, 2001 in Book 42 of Parcel Maps, at Page 80.
Parcel Two:
A non-exclusive easement for private common and reciprocal access rights, as set forth in that certain instrument entitled "Declaration Re Private Access Rights", recorded September 23, 1986, as Instrument No. 52477, Page 107975, official records.
APN: 0167-130-240
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EXHIBIT “B”
(Reserved)
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EXHIBIT “C”
FORM OF CITY LOAN PROMISSORY NOTE
(Attached)
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EXHIBIT “D”
FORM OF CITY LOAN DEED OF TRUST
(Attached)
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EXHIBIT “E”
SCHEDULE OF PERFORMANCE
This Schedule of Performance requires the submission of plans or other documents at specific times. Some of the submissions are not described in the text of the Agreement. Such plans or other documents, as submitted, must be complete and adequate for rev iew by the City or other applicable governmental entity when submitted. Prior to the time set forth for each particular submission, the Developer shall consult with City staff informally as necessary concerning such submission in order to assure that such submission will be complete and in a proper form within the time for submission set forth herein.
Action Date / Deadline
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EXHIBIT “F”
SCOPE OF DEVELOPMENT
The Project includes renovation of an existing 3 -story hotel, converting 100 existing hotel rooms into 51 larger permanent supportive housing single-room occupancy and related onsite offices and amenity spaces. The Project will provide onsite supportive services such as assistance accessing health care, life skills, and other positive offerings provided by dedicated and qualified service providers.
Exterior renovations will include site improvements, accessibility upgrades, development of outdoor recreation areas, exterior repairs and painting. Interior renovations will include reconfiguring existing hotel rooms into larger kitchenette units, plus reconfiguring existing hotel service spaces for permanent supportive housing use: to provide property management, service provider and security offices, laundry facilities, and community gathering space. Renovations will include new flooring, appliances, fixtures, finishes, as well as necessar y MEP upgrades to the building envelope, HVAC and lighting.
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EXHIBIT “G”
FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
The City of Fairfield
1000 Webster Street
Fairfield, CA 94533
Attn: City Manager
with a copy to:
Fairfield North Texas Street LP
5251 Ericson Way, Suite A
Arcata, CA 95521
Attention: Project Manager
APN: 0167-130-240
Exempt From Recording Fee Pursuant to Government Code § 27383
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies, and other persons, regarding affordable housing restrictions on the real property described in this Notice: Affordable housing restrictions have been recorded with respect to the property described below (referred to in this Notice as the “Site”) which require that the Site be developed as an affordable rental housing development (the “Project”) and that all of the units be rented to and occupied by persons and households of limited income at affordable rents.
Title of Document Containing Affordable Housing Restrictions: Affordability Restrictions and Regulatory Agreement (“Agreement”).
Parties to Agreement: Fairfield North Texas Street LP, a California limited partnership (“Developer”) and the City of Fairfield, a general law city (the “City”).
The Agreement is recorded concurrently with this Notice, in the Official Records of Solano County.
Legal Description of Site: See Exhibit “A” attached hereto and incorporated herein by this reference.
Site Location (address): 3331 N Texas Street, Fairfield, CA 94533.
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Assessor’s Parcel Numbers of Site: 0167-130-240
Summary of Agreement:
o The Agreement requires Developer to develop a fifty-one (51) Unit (each, a “Unit”) rental housing project on property being acquired by Developer from the City.
o The Agreement restricts the rental of fifty (50) Units (“Required Affordable Units”), which are required to be rented to and occupied by Extremely Low Income Households whose annual income cannot exceed 30% of Area Median Income for the Solano County area, adjusted for household size. o Area Median Income limits (or “AMI”) are all as established and as published periodically by the California Department of Housing and Community Development.
o The Agreement restricts the rents that may be charged to households occupying Required Household Units to the following maximum rents (“Affordable Rent”):
Affordable Rent for Extremely Low Income Households shall be 30% x 30% of AMI, or 30% of Social Security Income, for a household size appropriate to the Unit, including a reasonable utility allowance; Household size appropriate to the unit shall be one person for a studio Unit, two persons for a one-bedroom Unit, and 4 persons for a three- bedroom Unit.
The term of the Agreement is fifty-five (55) years from the date of the City’s issuance of a Final Certificate of Occupancy for the Project.
This Notice does not contain a full description of the details of all of the terms and conditions of the Agreement. You will need to obtain and read the Agreement to fully understand the restrictions and requirements which apply to the Site.
This Notice is being recorded and filed in compliance with Health and Safety Code Section 33334.3(f)(3) and (4).
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[Signatures on the following page.]
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Notice of Affordability
(Vista Ridge)
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Date: _______________,
2025
CITY OF FAIRFIELD
By:
David Gassaway,
City Manager
Date: _______________,
2025
APPROVED AS TO FORM:
By:
David Lim, City Attorney
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DEVELOPER
FAIRFIELD NORTH TEXAS STREET LP,
a California limited partnership
By: Fairfield North Texas Street LLC,
a California limited liability company,
its Administrative General Partner
By: Danco Communities,
a California corporation,
its Manager
By:
Daniel Johnson
President
By: Community Revitalization and Development
Corporation, a California nonprofit public
benefit corporation, its Managing General Partner
By:
David Rutledge
President
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
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EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:
Parcel One:
Parcel "1" as shown and described on that certain Parcel Map entitled "Parcel Map of the lands of Edward Parish, et al, Portion Lot 38, Rancho Tolenas & South 1/2, Section 12, Township 5 North, Range 2 West, M.D.B & M. Ext. Fairfield, Solano County, California", which said parcel map was filed for record on October 27, 1986, in Book 30 of Parcel maps at Page 29, in the office of the Solano County, California recorder.
Excepting therefrom all that portion described as Parcel 2 as shown on the Parcel Map entitled, "Parcel Map of E-2 8 Motel Property" filed July 10, 2001 in Book 42 of Parcel Maps, at Page 80.
Parcel Two:
A non-exclusive easement for private common and reciprocal access rights, as set forth in that certain instrument entitled "Declaration Re Private Access Rights", recorded September 23, 1986, as Instrument No. 52477, Page 107975, official records.
APN: 0167-130-240
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EXHIBIT “H”
FORM OF AFFORDABILITY RESTRICTIONS AND REGULATORY AGREEMENT (ATTACHED)
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EXHIBIT “I”
FORM OF CERTIFICATE OF COMPLETION
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Fairfield
Dept. of Community Resources
1000 Webster Street, 2nd Floor
Fairfield, CA 94533
Attn: Director of Community Resources
With a copy to:
Fairfield North Texas Street LP
5251 Ericson Way, Suite A
Arcata, CA 95521
Attention: Project Manager
APN: 0167-130-240
(Space Above for Recorder’s Use Only)
This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383.
CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (the “Certificate”) is made by the CITY OF FAIRFIELD (the “ City”), in favor of Fairfield North Texas Street LP , a California limited partnership (“Developer”).
R E C I T A L S
A. City and Developer have entered into that certain unrecorded Development Loan Agreement (the “ Loan Agreement ”) dated as of _____, 202 5 concerning the development of certain real property situated in the City of Fairfield, California, described in Exhibit “A” attached hereto (the “Site”).
B. As referenced in Section 3.12 of the Loan Agreement, City is required to furnish Developer or its successors with a Certificate of Completion upon completion of construction of the “Project” (as defined in the Loan Agreement), which Certificate is required to be in such form as to permit it to be recorded in the Recorder’s Office of Solano County. Thi s Certificate is conclusive determination of satisfactory completion of the construction and development required by the Agreement.
C. City has conclusively determined that the construction and development of the Project has been satisfactorily completed.
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NOW, THEREFORE, City hereby certifies as follows:
1. City does hereby certify that the Project to be constructed by Developer has been fully and satisfactorily completed in full conformance with the Loan Agreement.
2. This Certificate shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance construction work on the Site, or any part thereof.
3. This Certificate shall not constitute evidence of Developer’s compliance with those covenants in the Loan Agreement that survive the issuance of this Certificate.
4. This Certificate is not a Notice of Completion as referred to in California Civil Code Section 3093.
5. Nothing contained in this instrument shall modify in any other way any other provisions of the Loan Agreement (including without limitation the attachments thereto).
IN WITNESS WHEREOF, City has executed this Certificate of Completion this ___ day of ________________, 20__.
CITY OF FAIRFIELD
By:
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State of California )
County of ________ )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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EXHIBIT “A”
LEGAL DESCRIPTION
The land referred to is situated in the County of Solano, City of Fairfield, State of California, and is described as follows:
DRAFT
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EXHIBIT "J"
BASE PROJECT FINANCING SUMMARY
1. Homekey+: $21,535,540
2. Banc of California Construction Bridge
and Permanent Loan:
$3,235,397
3. City of Fairfield Housing Trust Fund
(FHTF) Loan
$1,000,000
4. City of Fairfield Prohousing Incentive
Program (PIP) Loan
$535,541
4. Fee Deferral approximate amount*: 7,993 $7,993 *Fee Deferrals will be paid at a later date
Total Development
Costs
$26,314,471