Resolution No. 2022-58 w/ Agreement — Gonzales City Council, August 15, 2022

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RESOLUTION NO. 2022-58

A RESOLUTION OF THE CITY OF GONZALES, APPROVING AND AUTHORIZING

AN AGREEMENT BETWEEN COMMUNITY HOUSING IMPROVEMENT SYSTEMS AND PLANNING ASSOCIATION, INC. (CHISPA), AND THE CITY OF GONZALES

FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS FOR THE PROPERTY LOCATED AT 498 S. ALTA STREET, GONZALES, CA. (APN 020-041-016)
WHEREAS, the City of Gonzales General Plan and Housing Element identifies the need for additional housing of all types; and
WHEREAS, the Housing Element listed housing for seniors as one of the types of housing needed; and
WHEREAS, the City Council has consistently provided direction to staff to actively look for and pursue the development of housing opportunities; and WHEREAS, APN 020-041-016, located at 498 S. Alta Street, is within the City of Gonzales and is adjacent to multi-family housing; and
WHEREAS, on October 18, 2021 in Resolution 2021-40, the City Council of the City of Gonzales and Gonzales Successor Housing Agency approved and authorized the City Manager and Executive Director to move forward with the process to purchase a 0.95 acre property located at 498 S. Alta Street, Gonzales, CA (APN 020-041-016); and WHEREAS, the City of Gonzales purchased the subject property for a negotiated price of $600,000, and had found the purchase price justifiable and appropriate for the purposes of partnering with a non-profit housing developer to develop a senior housing project; and WHEREAS, the City Council of the City of Gonzales and the Board of Directors of the Gonzales Successor Housing Agency resolved that the purchase of the property at APN 020-041- 016 is fully consistent with the approved City General Plan and Housing Element; and WHEREAS, the City Council further directed the City Manager to develop an agreement with a non-profit housing developer for the development of a Senior Housing Project on APN 020- 041-016 and to bring said agreement back to the City/agency for consideration and approval; and WHEREAS, the attached Agreement for Purchase and Sale and Escrow Instructions (“Agreement”) is made by and between the City of Gonzales, a California municipal corporation in the State of California (“Seller”), and Community Housing Improvement Systems and Planning Association, Inc., a California nonprofit public benefit corporation (“Buyer”): and WHEREAS, Seller is the owner of that certain real property containing approximately 0.95 acres of land located in Monterey County, California and currently identified by Assessor’s Parcel Number: 020-041-016; and

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WHEREAS, Seller desires to sell the Property to Buyer and Buyer desires to purchase the Property from Seller on the terms and conditions contained in the attached Agreement; and WHEREAS, if acquired by Buyer, Buyer intends to develop the property into either:
(i) Multifamily housing project which would utilize federal low income housing tax credits and contain at least thirty-six (36) units, at least forty percent (40%) of which would be rented to Senior Households (as defined below) earning no more than eighty percent (80%) of the area median income for Monterey County, California (the “LIHTC Project”), or
(ii) Fifteen (15) single family rental homes which would not utilize any federal low income housing tax credits, forty percent (40%) of which would be rented to Senior Households earning no more than eighty percent (80%) of the area median income for Monterey County, California, and the balance of which would be rented to Senior Households earning no more than one hundred twenty percent (120%) of the area median income for Monterey County, California (the “SFH Project”).

WHEREAS, pursuant to CEQA Guidelines Section 15378, acquisition of the 498 S. Alta Street Property (APN 020-041-016) is not a “project’ for purposes of California Environmental Quality Act (“CEQA”) analysis; and
WHEREAS, upon an anticipated physical development proposal for either project being considered, it will be independently evaluated under the California Environmental Quality Act; and

BE IT FURTHER RESOLVED that the City Council has considered the attached, “Agreement Between Community Housing Improvement Systems And Planning Association, Inc., And The City Of Gonzales For Purchase And Sale Of Real Property And Escrow Instructions." BE IT FURTHER RESOLVED that the City Council approves and authorizes the attached, “Agreement Between Community Housing Improvement Systems And Planning Association, Inc., And The City Of Gonzales For Purchase And Sale Of Real Property And Escrow Instructions."
PASSED AND ADOPTED by the City Council of the City of Gonzales at a regular meeting duly held on the 15th day of August 2022 by the following vote:

AYES: COUNCIL/BOARD MEMBERS:

NOES: COUNCIL/BOARD MEMBERS:

ABSTAIN: COUNCIL/BOARD MEMBERS:

ABSENT: COUNCIL/BOARD MEMBERS:
_____________________________________________
Jose L. Rios, The Honorable Mayor

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ATTEST:

Mary Villegas, Deputy City Clerk
1 AGREEMENT BETWEEN COMMUNITY HOUSING IMPROVEMENT SYSTEMS AND PLANNING ASSOCIATION, INC., AND THE CITY OF GONZALES FOR

PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS This Agreement for Purchase and Sale and Escrow Instructions (“Agreement”) is made by and between the City of Gonzales, a California municipal corporation in the State of California (“Seller”), and Community Housing Improvement Systems and Planning Association, Inc., a California nonprofit public benefit corporation (“Buyer”), and is dated for reference as of _____________, 2022, and effective as of the date of its execution by Seller (“Effective Date”).

RECITALS
WHEREAS, Seller is the owner of that certain real property containing approximately

0.95 acres of land located in Monterey County, California and currently identified by Assessor’s Parcel Number: 020-041-016, which is more particularly described in Exhibits A and A-1 attached hereto (the “Property”);
WHEREAS, Seller desires to sell the Property to Buyer and Buyer desires to purchase the Property from Seller on the terms and conditions contained in this Agreement; and WEHREAS, if acquired by Buyer, Buyer intends to develop the property into either (i) a multifamily housing project which would utilize federal low income housing tax credits and contain at least thirty-six (36) units, at least forty percent (40%) of which would be rented to Senior Households (as defined below) earning no more than eighty percent (80%) of the area median income for Monterey County, California (the “LIHTC Project”), or (ii) fifteen (15) single family rental homes which would not utilize any federal low income housing tax credits, forty percent (40%) of which would be rented to Senior Households earning no more than eighty percent (80%) of the area median income for Monterey County, California, and the balance of which would be rented to Senior Households earning no more than one hundred twenty percent (120%) of the area median income for Monterey County, California (the “SFH Project”). As used herein, the “Project” shall mean the LIHTC Project or the SFH Project, as applicable. As used herein, “Senior Households” shall mean households in which all members are at least fiftyfive (55) years of age or older under applicable provisions of California Civil Code Section 51.3 and the United States Fair Housing Act; provided, however, that the foregoing requirements shall be modified, as necessary, to comply with (i) any more restrictive requirements of any federal or state sources of funding for the Project which are applicable to senior housing (including, if applicable, the requirements of the California Tax Credit Allocation Committee applicable to senior projects), and (ii) all federal and state fair housing laws applicable to senior housing.

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and for good and valuable consideration, Seller and Buyer agree as follows:
2 1. Purchase and Sale
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property, and all improvements and structures situated on, and appurtenances to, the Property owned by Seller, including and without limitation, all of Seller’s rights, title and interest in and to all easements or rights-of-way, all development rights, air rights, mineral rights, water and water rights relating to the Property, for the Purchase Price (as defined below). As used herein, the “Purchase Price” shall mean (i) in the event that the Buyer obtains entitlements for the LIHTC Project, the sum of FOUR HUNDRED FORTY THOUSAND and NO/100 DOLLARS ($440,000.00), FIFTY THOUSAND and NO/100 DOLLARS ($50,000.00) of which shall be payable in cash on the Closing Date and the balance of which shall be payable by delivery of a promissory note substantially in the form of Exhibit D, attached hereto (“Promissory Note”), or (ii) in the event that the Buyer obtains entitlements for the SFH Project, the sum of FIFTY THOUSAND and NO/100 DOLLARS ($50,000.00), all of which shall be payable in cash on the Closing Date. As used herein, the “Cash Purchase Price” shall mean the portion of the Purchase Price payable in cash on the Closing Date, as applicable. If applicable, Buyer’s obligations under the Promissory Note shall be secured by a deed of trust substantially in the form of Exhibit E, attached hereto (“Deed of Trust”), and recorded against Buyer’s interest in the Property.

2. Conveyance of Property by Seller
Seller agrees to convey the Property to Buyer by duly executed and acknowledged grant deed, identical or substantially similar to that described in Exhibit B, attached hereto (“Grant Deed”), at the Salinas, California office of First American Title (“Title Company”) no later than two (2) business days before the Closing Date.

3. Title to Be Conveyed
Seller agrees that fee simple title to the Property shall be conveyed by the Grant Deed, from Seller to Buyer. Seller agrees that such title shall be free and clear of any and all conditions, restrictions, reservations, liens, encumbrances, assessments, easements (recorded and unrecorded), deeds of trust, mortgages, and any clouds or defects in title, except as expressly permitted herein.

4. Agreement as to Escrow Instructions

4.1. The parties agree to provide escrow instructions to the Title Company consistent with this Section.

4.2. No later than five (5) business days after the Effective Date of this Agreement, Buyer will open an escrow account with the Title Company, deliver a fully executed copy of this Agreement to the Title Company and deposit into the escrow account ONE THOUSAND and NO/100 DOLLARS ($1,000.00) (the “Deposit”). The Deposit shall be fully refundable to Buyer except in the event that this Agreement is terminated by Seller following a default by Buyer of its obligations under this Agreement. In the event the parties consummate the 3 purchase and sale of the Property pursuant to this Agreement, the Deposit, plus any interest earned thereon, shall be applied to the Cash Purchase Price payable by Buyer on the Closing Date.

4.3. Escrow shall close on or before the date which is the later of (i) six (6) months after the Effective Date, or (ii) thirty (30) days after the Entitlements Condition (as defined below) has been satisfied (the “Closing Date”). Notwithstanding the foregoing date, the close of escrow shall not occur unless the conditions set forth in this Agreement have been satisfied or waived. If any of such conditions have not been satisfied or waived on or before the Closing Date, this Agreement and the escrow shall terminate; provided, however that such termination shall not affect any claims that either party may have against the other for any breach of this Agreement.

4.4. Any delinquent taxes on the Property shall be paid in full by Seller on or before the close of escrow. Taxes not yet delinquent, and all other items that are customarily prorated in transactions of this nature, shall be prorated and adjusted between Seller and Buyer as of the Closing Date. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property for the entire day upon which the close of escrow occurs. All such prorations shall be made on the basis of the actual number of days of the month which shall have elapsed as of the Closing Date and based upon a thirty (30) day month and a three hundred sixty (360) day year.

4.5. No later than two (2) business days before the close of escrow, Buyer shall deposit with the Title Company (i) an amount equal to the Cash Purchase Price, less the Deposit and any interest earned on the Deposit, plus Buyer’s share of closing costs, in immediately available funds; (ii) if applicable, a duly executed Promissory Note, (iii) if applicable, a duly executed Deed of Trust; and (iv) a duly executed counterpart of the Affordable Housing Agreement and Declaration of Restrictive Covenants which is (A) substantially in the form of Exhibit F-1, attached hereto, in the event that the Buyer obtains entitlements for the LIHTC Project, or (B) substantially in the form of Exhibit F-2, attached hereto, in the event that the Buyer obtains entitlements for the SFH Project (as applicable, “Declaration”).

4.6. No later than two (2) business days before the close of escrow, Seller shall deposit with the Title Company (i) a duly executed Grant Deed, and (ii) a duly executed counterpart of the Declaration.

4.7. In closing escrow, the Title Company shall promptly undertake all of the following in the manner indicated:
4 4.7.1. Cause the Grant Deed, Deed of Trust (if applicable) and Declaration to be recorded in the Office of the Recorder for the County of Monterey, in that order.

4.7.2. Disburse the Cash Purchase Price, less Seller’s share of closing costs, to Seller in immediately available funds.

4.7.3. Disburse and deliver to such persons or entities any and all other funds and documents which Title Company is authorized or required to deliver or distribute pursuant to these, or any other escrow instructions.

5. Title Insurance
At the time of close of escrow and at no cost to Seller, Seller agrees to cause the Title Company to issue to Buyer with the conveyance of the Property, an Owner’s Policy of Title Insurance with CLTA coverage, with Buyer named as the insured, in the amount of the Purchase Price, insuring Buyer’s title to the Property is free and clear of any and all conditions, restrictions, liens, encumbrances, assessments, easements (recorded and unrecorded), taxes and any clouds or defects in title whatsoever (the “Title Insurance Policy”). Acceptance by Buyer of any such policy of insurance, whether such insurance complies with the requirements of this Section or not, shall not constitute a waiver by Buyer of its right to such insurance as is herein required of Seller, nor a waiver by Buyer of any rights of action for damages or any other rights which may accrue to Buyer by reason of the failure of Seller to convey title or to provide title insurance as required by this Agreement.

6. Costs

6.1. Buyer shall bear the cost of any documentary or transfer taxes and recording fees incidental to the conveying of the Property to Buyer.

6.2. Seller and Buyer shall each bear one-half (1/2) the cost of escrow charges and fees.

6.3. If applicable, Seller shall bear the cost of any mortgage prepayment penalty.

6.4. Each party shall be responsible for payment of the fees and expenses of its respective legal counsel relating to this Agreement and the transactions contemplated herein.

6.5. Any other closing costs, including the premium for the Title Insurance Policy, shall be paid by Buyer.
5 7. Removal of Seller’s Personal Property

7.1. Prior to the close of escrow, Seller agrees to remove from the Property any items of personal property belonging to Seller.

8. Environmental Compliance

8.1. To the best of Seller’s knowledge, the Property is not in violation of any applicable federal, state or local law, ordinance or regulation relating to the environmental conditions on, under or about the Property.

8.2. Seller represents and warrants that, to the best of Seller’s knowledge and after due and diligent inquiry, during the time of Seller’s ownership neither Seller nor any third party has used, generated, manufactured, produced, stored or disposed of on, under or about the Property any hazardous materials, as defined in Exhibit C (“Hazardous Materials”).

8.3. Seller further represents and warrants that, to the best of Seller’s knowledge, no proceeding, investigation or inquiry by any governmental authority with respect to the presence of Hazardous Materials on the Property or the migration of Hazardous Materials from or to other property, is in process, or about to commence, or has previously occurred, notwithstanding any investigation conducted by Buyer in conjunction with Buyer’s purchase of the Property.

8.4. The obligations of this Section 8 shall survive the close of escrow and the recordation of the Grant Deed for the Property.

9. Indemnification

9.1. Seller hereby agrees to indemnify, defend and hold harmless Buyer and its officers, employees, contractors and agents from and against any and all claims, costs (including but not limited to attorney’s fees), damages, demands, encumbrances, expenses, judgments, liabilities, liens, losses, obligations, penalties, whether direct, contingent or consequential, as a direct or indirect result of:
(i) Any material misrepresentation made by Seller in this Agreement or any document, certificate, or exhibit given or delivered to Buyer or Title Company pursuant to or in connection with this Agreement; (ii) Any material breach of, or material inaccuracy in any representation made by Seller in this Agreement; and
6 (iii) Any material breach of, misrepresentation or inaccuracy in any warranty, obligation or covenant made by Seller in this Agreement or in any of Seller’s documents given or delivered to Buyer or Title Company pursuant to, or in connection with this Agreement.
(iv) For the purposes of Section 9.1(i), (ii) and (iii), a “material misrepresentation” is a misrepresentation by Seller that directly results in costs or damages to Buyer in excess of $5,000; a “material breach” is a breach by Seller that directly results in costs or damages to Buyer in excess of $5,000; and a “material inaccuracy” is an inaccuracy by Seller that directly results in costs or damages to Buyer in excess of $5,000.

9.2. Seller hereby agrees to indemnify, defend and hold harmless Buyer and its officers, employees, contractors and agents from and against any and all claims, costs (including but not limited to attorney’s fees), damages, demands, encumbrances, expenses, judgments, liabilities, liens, losses, obligations, penalties, whether direct, contingent or consequential, arising or accruing before the close of escrow, or arising from any act, conduct, omission, contract or commitment of the Seller (or any of Seller’s agents or employees) at any time or times before the close of escrow, including, without limitation:
(i) All foreseeable and all unforeseeable consequential damages directly or indirectly arising out of the use, generation, storage, or disposal of Hazardous Materials by Seller; and
(ii) The cost of any required or necessary repair, cleanup, or detoxification and the preparation of any closure or other required plans, whether such action is required or necessary prior to or following transfer of title to the Property, to the full extent that such action is attributable, to the presence or use, generation, storage, release, or disposal of Hazardous Materials on the Property by any person during Seller’s ownership of the Property.

9.3. Indemnification by Buyer. Buyer hereby agrees to indemnify and hold harmless Seller and its officials, employees, contractors and agents from and against any and all claims, costs, damages, demands, encumbrances, expenses, judgments, liabilities, liens, losses, obligations, penalties, whether direct, contingent or consequential, arising on or after close of escrow as a direct or indirect result of Buyer’s use, operation or ownership of the Property. The rights and obligations of this Section 9.3 will not extend to any of the Seller’s assigns or successors-ininterest.

9.4. The obligations of this Section 9 shall survive the close of escrow and the recordation of the Grant Deed for the Property.
7 10. Seller’s Representations and Warranties; Survival

10.1. The representations and warranties herein by Seller are made to the best of its knowledge. Other than the representations and warranties contained in Section 8 above and 10.2 below, Buyer acknowledges that it is not relying on any representation, warranty or statement of Seller in purchasing the Property.

10.2. Subject to the provisions of Section 10.1, Seller hereby represents and warrants to Buyer that the following facts are true and correct in regard to the Property as of the Effective Date, unless Buyer is otherwise notified by Seller in writing:
(i) Seller has full right, title and authority to convey the Property to Buyer in accordance with this Agreement and to carry out Seller’s obligations hereunder.
(ii) Seller is not a “foreign person” within the meaning of Internal Revenue Code section 1445.
(iii) No third party has any option or right of first refusal to acquire the Property or any interest therein.
(iv) To the best of Seller’s knowledge, no notice has been given of any threatened or pending action to establish an interest in the Property by any third party or of any proceeding which may result in the issuance of such notice and Seller is aware of no such notice or proceedings and there are no other existing claims, suits, actions or legal proceedings, pending or threatened, which may affect the Property.
(v) To the best of Seller’s knowledge, there are no liens or encumbrances on, or claims, covenants, conditions, restrictions, easements, right-of-way, assessments or other matters affecting or pending against the Property other than those specifically disclosed by Seller in this Agreement. (vi) To the best of Seller’s knowledge, there are no encroachments or improvements from adjoining land onto the Property or any part thereof nor from the Property onto adjacent land.
(vii) The Property is not in violation of any federal, state or local law, ordinance, regulation, order, or ruling relating to the industrial hygiene of or environmental conditions in, on, under, above, or about the Property, including but not limited to, soil, asbestos, and groundwater conditions, and no proceeding or inquiry by any governmental authority (including and without limitation to the California Regional Water Quality Control 8 Board and the California Department of Toxic Substances Control) with respect to the presence of Hazardous Materials on the Property or the migration of Hazardous Materials from or to other property, is in progress, or about to commence or has previously occurred.
(viii) To the best of Seller’s knowledge, there are no improvements required or planned by any governmental agency having jurisdiction over the Property, which may result in any charge being levied or assessed against the Property.
(ix) There are no sums due, owing or unpaid for labor or materials furnished to the Property which might give rise to a mechanic’s lien on the Property. (x) All of Seller’s documents provided hereunder are correct and complete originals or copies and Seller knows of no inaccuracies set forth therein.

10.3 The continued validity of the representations and warranties described in this Agreement shall be a condition to Buyer’s obligation to the close of escrow on the Property. Any failure of a condition shall give rise to Buyer’s right to terminate this Agreement in addition to any other rights or remedies Buyer may have by reason of a breach by Seller under this Agreement. All of the representations and warranties set forth in this Agreement shall be deemed remade as of the close of escrow and shall survive the delivery and recordation of the Grant Deed.

11. Seller’s Covenants

11.1. Seller shall not enter into any leases or any other contracts, or any amendments or modifications thereto, relating to the Property for a term or with obligations that may extend beyond the close of escrow, nor shall Seller enter into any contracts with respect to the Property outside the normal course of business conducted on the Property. If applicable, Seller shall promptly pay Buyer all rents, if any, collected by Seller which are allocable to periods following the close of escrow.

11.2. Seller shall not cause or permit any encumbrance or lien to be placed on the Property or any interest or right therein following the Effective Date, including and without limitation to, easements, mortgages, or deeds of trust, whereby such rights or interests thereby granted could extend beyond the close of escrow.

11.3. Seller shall not make or permit any improvements to be made to the Property from the Effective Date until close of escrow, except as may be agreed in writing by the parties.
9 11.4. Seller shall not demolish or remove any improvements or structures on the Property from the Effective Date until close of escrow, except as may be agreed in writing by the parties. Buyer shall be responsible for the demotion and removal of any improvements and structures on the Property after the close of escrow.

11.5. Seller shall terminate as of the close of escrow all contracts, including and without limitation to, leases and service contracts relating to the Property, except as otherwise agreed in writing by Buyer and Seller.

12. Buyer’s Representations and Warranties

12.1. Buyer represents and warrants to Seller that as of the Effective Date and as of close of escrow, Buyer is a California nonprofit public benefit corporation and has the legal capacity to understand and execute this Agreement and all documents in connection hereunder.

12.2. All of Buyer’s documents provided hereunder are correct and complete originals or copies and Buyer knows of no inaccuracies set forth therein.

13. Buyer’s Conditions to Closing

13.1. In addition to the other terms and provisions of this Agreement which give Buyer the right to terminate this Agreement and the escrow created hereto, Buyer’s obligation to purchase the Property from Seller shall be subject to the occurrence and/or satisfaction of the following conditions, or Buyer’s written waiver thereto:
(i) No material damage, destruction or loss shall have been suffered with respect to the Property whether or not covered by insurance; (ii) All documents related to the transactions contemplated in this Agreement shall be executed and delivered in accordance with the escrow instructions herein;
(iii) The Title Company shall be unconditionally prepared and committed to issue the Policy of Title Insurance consistent with the terms herein; (iv) Buyer has accepted the form and substance of each document being executed and delivered under this Agreement, including and without limitation to, the Grant Deed; and
(v) The City of Gonzales shall have granted all zoning and planning approvals required for the development of either the LIHTC Project or the SFH 10 Project (it being within Buyer’s sole and absolute discretion whether to pursue such approvals for the LIHTC Project of the SHF Project) with such conditions as may be acceptable to Buyer in its sole and absolute discretion (the “Entitlements Condition”). Nothing in this Agreement shall be construed as binding the City of Gonzales and its City Council to grant any zoning and planning approvals and such approvals remain in the discretion of the City of Gonzales and its City Council.

13.2. If any of the conditions set forth in this Section are not satisfied at the time specified herein, Buyer may elect to:
(i) Waive such conditions in writing;
(ii) Grant to Seller an extension of time in which to satisfy such conditions; or (iii) Terminate this Agreement.

Any such election shall not prohibit Buyer from pursuing any rights or remedies set forth in this Agreement, at law or in equity.

14. Commissions
Buyer and Seller represent and warrant to one another that no broker, salesperson or finder has been engaged by them in connection with the transactions contemplated in this Agreement.

15. Survival
None of the obligations, terms or provisions in this Agreement which are expressly stated herein as surviving the close of escrow shall be merged into the Grant Deed, and the delivery and recordation of such Grant Deed shall not affect or impair such obligations or provisions.

16. Notices
Any notice which is required to be given hereunder, or which either party may desire to give to the other, shall be in writing and may be personally delivered or given by mailing the same by registered or certified mail, postage prepaid, and addressed as follows:
11 Buyer: Seller:

Community Housing Improvement Systems
and Planning Association, Inc.
295 Main Street, Suite 100
Salinas, CA 93901
Attn: Director of Real Estate Development
With a copy to:

Gubb & Barshay LLP
505 14th Street, Suite 405
Oakland, CA 94612
Attention: Lauren Fechter
Or to such other place as Buyer may
designate by written notice.

City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, California 93924
With a copy to:

Jarvis Fay LLP
555 12th Street, Suite 1630
Oakland, CA 94607
Attn: Michael Rodriquez
Or to such other place as Seller may designate
by written notice.

17. Governing Law
This Agreement is made under and shall be governed by and interpreted in accordance with the laws of the State of California. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Monterey County, California. In the event any litigation is initiated as a result of any controversy, claim or dispute relating to this Agreement or the breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorney’s fees and costs.

18. Counterparts
This Agreement may be executed in several counterparts each of which shall be deemed an original, but all of such counterparts shall constitute one such Agreement.

19. Waiver
The waiver by one party of performance of any term, condition or covenant in this Agreement shall not invalidate this Agreement, nor shall it be deemed to be a waiver of any other term, condition or covenant in this Agreement.

20. Severability
If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision herein and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein, unless such invalidity, illegality or unenforceability materially affects the transactions contemplated in this Agreement or the ability of either party to perform its obligations under this Agreement. In such 12 case, either party may terminate this Agreement and escrow on written notice to the other party given no later than ten (10) days after the party giving such notice becomes aware of such invalidity, illegality or unenforceability.

21. Entire Agreement
This Agreement supersedes any prior agreements, negotiations and communications, oral or written, and contains the entire agreement between Seller and Buyer relating to the subject matter hereof. No subsequent agreement, representation or promise made by either party hereto, or by or to any employee, officer, agent or representative of either party shall be of any effect unless it is in writing and executed by the party to be bound thereby. The terms of this Agreement shall not be modified or amended except by an instrument in writing executed by each of the parties hereto.

22. Independent Legal Counsel
Each party acknowledges that it had the opportunity to consult with independent legal counsel of its own choosing in connection with the negotiation and execution of this Agreement.

23. Assignment
Neither this Agreement nor any of the rights or obligations of Seller hereunder shall be transferred or assigned by Seller without the prior written consent of Buyer, which may be given or withheld in Buyer’s sole and absolute discretion. Buyer may assign this Agreement and Buyer’s rights and obligations hereunder without the Seller's written consent to (i) a nonprofit public benefit corporation affiliated with Buyer, (ii) a limited liability company in which Buyer or an affiliated nonprofit public corporation is the managing member, or (iii) a limited partnership in which Buyer, an affiliated nonprofit public benefit corporation, or a limited liability company in which Buyer of such affiliated nonprofit public benefit corporation is the managing general partner. Buyer shall deliver a copy of the fully executed written assignment and assumption agreement to Seller and the Title Company prior to the close of escrow. No other assignment may be made without the prior written consent of Seller, which may be given or withheld in Seller’s sole and absolute discretion.

24. Miscellaneous Provisions

24.1. Time is of the essence for each term and provision of this Agreement.

24.2. The headings and section titles of this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of any provisions of this Agreement and shall not be construed to affect the terms and provisions of this Agreement or the interpretation or construction of the terms and provisions of this Agreement.

24.3. All recitals, exhibits, addenda referred to herein, and any exhibits or schedules which may from time to time be referred to in any duly executed amendment 13 hereto, are by such reference incorporated herein and shall be deemed a part of this Agreement as if set forth fully herein.

24.4. This Agreement shall be interpreted and construed only by the contents hereof and there shall be no presumption or standard of construction in favor of or against either party.

24.5. Unless stated otherwise, “day” or “days” as used herein shall mean calendar days. “Business day” or “business days” as used herein shall mean weekdays, excluding holidays.

24.6. The parties agree to execute, acknowledge, if necessary, and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate and perform all of the terms, provisions and conditions of this Agreement and the transactions contemplated herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

SELLER:

City of Gonzales, a California municipal
corporation in the State of California, acting by and
through its City Manager
By: ____________________________
________________, City Manager
Dated: _____________________, 2022
APPROVED AS TO FORM:

By: ____________________________
Michael Rodriquez, City Attorney
BUYER:

Community Housing Improvement Systems and
Planning Association, Inc., a California nonprofit
public benefit corporation
By: ____________________________
Name: ____________________________
Title: ____________________________
Dated: _____________________, 2022

15 EXHIBIT A-1 – PLAT
[See Attached]

16 EXHIBIT B – GRANT DEED
Recording Requested By And
When Recorded Return To:

Community Housing Improvement Systems
and Planning Association, Inc.
295 Main Street, Suite 100
Salinas, CA 93901
Attention: ____________________

GRANT DEED
TITLE ORDER NO.:

ESCROW NO.:

APN: 020-041-016
For valuable consideration, receipt of which is hereby acknowledged, GRANTOR the City of Gonzales, a municipal corporation in the State of California, hereby GRANTS to
GRANTEE ______________________, a California _________________________, all of their rights, title and interests in and to that certain real property situated in the County of Monterey, State of California and currently identified by Assessor’s Parcel Number: 020-041- 016, more particularly described in Exhibits A and A-1 attached hereto and made a part hereof.

CITY OF GONZALES, a municipal corporation
By:
_____________________, City Manager
17 ACKNOWLEDGMENT

STATE OF CALIFORNIA )
) ss.

COUNTY OF MONTEREY )
On , 201 , before me, , a Notary
Public, personally appeared who proved to me on the
basis of satisfactory evidence to be the person(s) whose names 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
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. 18 EXHIBIT C – HAZARDOUS MATERIALS
“Hazardous Materials” shall mean any and all (a) substances, products, by-products, waste, or other materials of any nature or kind whatsoever which is or becomes listed, regulated or addressed under any Environmental Laws, and (b) any materials, substances, products, by-products, waste, or other materials of any nature or kind whatsoever whose presence in and of itself or in combination with other materials, substances, products, by-products, or waste may give rise to liability under any Environmental Laws or any statutory or common law theory based on negligence, trespass, intentional tort, nuisance, strict or absolute liability or under any reported decisions of any state or federal court; and (c) any substance, product, by-product, waste or any other material which may be hazardous or harmful to the air, water, soil, environment or affect industrial hygiene, occupational, health, safety and/or general welfare conditions, including without limitation, petroleum and/or asbestos materials, products, by-products, or waste.
“Environmental Laws” shall mean and include all federal, state, and local laws, statutes, ordinances, regulations, resolutions, decrees, and/or rules now or hereinafter in effect, as may be amended from time to time, and all implementing regulations, directives, orders, guidelines, and federal or state court decisions, interpreting, relating to, regulating or imposing liability (including, but not limited to, response, removal, remediation and damage costs) or standards of conduct or performance relating to industrial hygiene, occupational, health, and/or safety conditions, environmental conditions, or exposure to, contamination by, or clean-up of, any and all Hazardous Materials, including without limitation, all federal or state superlien or environmental clean-up statutes.
19 EXHIBIT D – PROMISSORY NOTE
[See Attached]
1 NON-RECOURSE PROMISSORY NOTE

SECURED BY DEED OF TRUST
$390,000 _____________, 2022
FOR VALUE RECEIVED, __________________________, a California ___________________ (“Maker”), promises to pay the CITY OF GONZALES, a California municipal corporation (“Holder”), the amount of Three Hundred Ninety Thousand Dollars ($390,000) (the “Loan”).

1. SECURITY. This Note shall be secured by a deed of trust (the “Deed of Trust”) recorded against Maker’s interest in that certain real property located in the City of Gonzales, California more particularly described in the Deed of Trust (the “Property”). Maker intends to construct a multifamily housing project containing at least thirty-six (36) units (the “Project”) at the Property.

2. MATURITY DATE. On the date which is the earlier of (i) fifty-five (55) years from the closing date for the permanent, post-construction financing for the Project, or (ii) fiftyeight (58) years from the date hereof (the “Maturity Date”), the entire amount of outstanding principal and all accrued but unpaid interest shall be due and payable.

3. REPAYMENT. The principal amount of this Note shall be repaid as follows:
(a) Interest. Interest shall accrue on the unpaid principal balance of this Note at the rate of three percent (3%) per annum. Interest shall be calculated on the basis of a year of 365 days and be charged for the actual number of days elapsed. (b) Payments Prior to Maturity Date. In any year in which the cash flow from operations of the Project results in Residual Receipts (as defined below), Maker shall pay to Holder an amount equal to Holder’s Share of Residual Receipts (as defined below). Payment shall be due within sixty (60) days of completion of an audited financial statement documenting cash flow from the Project, but in any event not later than six (6) months after the end of the Maker’s fiscal year.

All payments shall be credited first to accrued interest and then to outstanding principal.

As used herein, “Residual Receipts” shall mean, with respect to any calendar year, the amount by which Gross Revenue (as defined below) exceeds Annual Operating Expenses (as defined below).
“Gross Revenue,” with respect to any calendar year, shall mean all revenue, income, receipts, and other consideration from operation and leasing of the Project. “Gross Revenue” shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance; the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Project (or applied toward the cost of recovering such proceeds); and condemnation awards for a taking of part or all of the Project for a temporary period. “Gross 2 Revenue” shall not include tenants’ security deposits; interest earned on security deposits, reserves or other funds held in similarly restricted accounts; or loan proceeds, capital contributions or similar advances.
“Annual Operating Expenses,” with respect to any calendar year, shall include, without limitation: (1) all direct costs and expenses incurred for the operation and maintenance of the Project to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles; (2) property management and resident services fees and reimbursements, not to exceed fees and reimbursements which are standard in the industry; (3) debt service on any loans secured by the Property (excluding debt service due from Residual Receipts) and any issuer or lender monitoring fees payable in connection with such loans; (4) deposits into reserves as required by senior lenders or pursuant to the Maker’s partnership agreement (the “Partnership Agreement”); (5) deferred developer fees; (6) annual partnership management and asset management fees payable to Maker’s general partners and/or limited partners; (7) repayment of any loans or other advances to the partnership from a general partner or limited partner or an affiliate thereof; (8) the amount of any downward tax credit adjusters pursuant to the Partnership Agreement; and (9) all other ordinary and reasonable costs and expenses approved by Holder and not listed above. Any costs or expenses requiring Holder review and approval shall be deemed approved to the extent they are included in an operating budget for the Project approved by the Holder.

Gross Revenue and Annual Operating Expenses shall each be determined on an accrual basis, in a manner consistent with the multifamily housing projects similar to the Project.

As used herein, “Holder’s Share of Residual Receipts” shall mean the portion of Residual Receipts payable to Holder, which shall be a proportionate share of fifty percent (50%) of the Residual Receipts based on the Loan’s size as of the closing of the permanent, post-construction financing for the Project, net of any repayments made from construction savings, relative to all deferred payment loans with provisions for payments from Residual Receipts. (c) Payment of Principal upon Event of Default or Sale. In the event the Property is sold or upon an Event of Default, payment of the principal amount of the Loan, together with all accrued but unpaid interest, shall be due and payable. (d) Prepayment. This Note may be prepaid in whole or part at any time and from time to time without penalty, fee. or premium.
(e) Place of Payment. Any payment required under this Note shall be made payable to the City of Gonzales, P.O. Box 647, 147 Fourth Street, Gonzales, California 93924.

The place of payment may be changed from time and time as Holder may designate in writing.

Payments shall be in lawful money of the United States of America.

4. COLLECTION. This Note evidences the Loan and is secured by the Deed of Trust recorded against the Property. The terms of the Deed of Trust are incorporated herein by this reference. Maker agrees to pay all the collection and enforcement costs, expenses and attorneys’ fees paid or incurred by the holder of this Note or adjudged by a court in any litigation or 3 controversy connected with this Note, or security for it, including but not limited to actions for declaratory relief that any such holder is required to prosecute or defend and actions for relief based on rescission, or actions to cancel this Note that any such holder is required to defend.

5. DEFAULT.
(a) The occurrence of any of the following shall constitute an “Event of Default” under this Note: (i) Maker fails to pay to Holder any amount due hereunder within ten (10) days of notice from Holder that such payments is due; (ii) any default by Maker of any other covenant under this Note; (iii) any default by Maker under the Deed of Trust or any other document evidencing or securing the Loan; (iv) Maker fails to pay any taxes or assessments due on the Property; or (v) Maker’s bankruptcy, whether voluntary or involuntary. (b) Upon the occurrence of any Event of Default, or at any time thereafter, at the option of Holder hereof and without notice, the entire unpaid principal and interest owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Holder’s option. Holder’s failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Holder’s failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof. (c) Notwithstanding anything to the contrary in this Note or the Deed of Trust (collectively, the “Loan Documents”) and except with respect to any obligation to make payments to Holder, Maker shall have the right to cure any defaults under the Loan Documents and Holder agrees to accept cures tendered by Maker within thirty (30) days of written notice to Maker of such default, plus such additional time as is reasonably necessary to cure the default provided Maker has commenced the cure within such thirty (30) day period and is diligently prosecuting the cure, but in no event longer than ninety (90) days.
(d) The Note is a non-recourse obligation of Maker. Neither Maker nor any partner of Maker shall have any direct or indirect personal liability for payment of the principal of, or interest on, the Loan or the performance of the covenants of Maker under the Deed of Trust.

The sole recourse of Holder with respect to the principal of, or interest on, this Note and defaults by Maker in the performance of its covenants under the Deed of Trust shall be to the property described in the Deed of Trust.

6. WAIVER. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability. 4 7. ATTORNEY FEES. Maker agrees to pay immediately upon demand all costs and expenses of Holder, including attorneys’ fees if: (i) after an Event of Default this Note is placed in the hands of an attorney or attorneys for collection; (ii) after an Event of Default hereunder or under the Deed of Trust, Holder finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefore or to the protection of its rights under the Loan Documents; or (iii) Holder seeks to have the Property abandoned by or reclaimed from any estate in bankruptcy, or attempts to have any stay or injunction prohibiting the enforcement or collection of the Note or prohibiting the enforcement of the Loan Documents or any other agreement evidencing or securing this Note lifted by any bankruptcy or other courts.

8. INTEGRATION. This Note, the Deed of Trust and the other loan documents relating to this Note, embody the agreement between Holder and Maker for the Loan and its terms and conditions.

9. AMENDMENTS. This Note may not be modified or amended except by an instrument in writing executed by the parties sought to be bound thereby.

10. GOVERNING LAW. This Note shall be governed by and construed in accordance with the laws of the State of California.

11. ASSIGNMENT. Holder shall not sell or assign this Note without the prior written consent of Maker.

12. NOTICES. Any notice which is required to be given hereunder, or which either party may desire to give to the other, shall be in writing and may be personally delivered or given by mailing the same by registered or certified mail, postage prepaid, and addressed as follows:

Maker: Holder:
c/o Community Housing Improvement
Systems and Planning Association, Inc.
295 Main Street, Suite 100
Salinas, CA 93901
Attn: Director of Real Estate Development
With a copy to:

Gubb & Barshay LLP
505 14th Street, Suite 405
Oakland, CA 94612
Attention: Lauren Fechter
Or to such other place as Maker may
designate by written notice.

City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, California 93924
With a copy to:

Jarvis Fay LLP
555 12th Street, Suite 1630
Oakland, CA 94607
Attn: Michael Rodriquez
Or to such other place as Holder may
designate by written notice.
5 Executed as of the date first written above.

MAKER:
[Insert Signature Block]
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, _____________________________, 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_____________________________
20 EXHIBIT E – DEED OF TRUST
[See Attached]
1 RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, CA 93924

DEED OF TRUST WITH ASSIGNMENT OF RENTS
______________________________________________________________________________ APN: 020-041-016

RECORD WITHOUT FEE PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTIONS 6103 & 27388.1(a)(2)(D)
THIS DEED OF TRUST is made as of the ____ day of _________________, 2022, between __________________________, a California limited liability company, together with its successors and assigns, herein called “TRUSTOR,” and
__________________________, herein called “TRUSTEE”, and THE CITY OF GONZALES, a California municipal corporation, whose address is P.O. Box 647, 147 Fourth Street, Gonzales, California 93924, herein called “BENEFICIARY.” Trustor irrevocably grants, transfers and assigns to Trustee in Trust, with Power of Sale that property in the City of Gonzales, County of Monterey, State of California,, currently identified by Monterey County Assessor’s Parcel No. 020-041-016, and more particularly described as follows:

SEE EXHIBIT A ATTACHED
Together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits.

FOR THE PURPOSE OF SECURING: (1) payment of the sum of THREE HUNDRED NINETY THOUSAND DOLLARS ($390,000) with interest thereon according to the terms of a promissory note or notes of even date herewith made by TRUSTOR, payable to order of BENEFICIARY, and extensions or renewals thereof; (2) the performance of each agreement of TRUSTOR incorporated by reference or contained herein or reciting it is so secured; (3) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, or its successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust. 2 To protect the security of this Deed of Trust, and with respect to the property above described, Trustor agrees:
(1) To keep said property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of the law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general.
(2) To provide, maintain and deliver to Beneficiary fire, property damage, and general casualty insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees, in any action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.
(4) To pay: at least fifteen (15) days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; and all costs, fees and expenses of this Trust.

Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge, or lien, which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his or her reasonable fees. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the 3 obligation secured hereby, any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. (6) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him or her in the same manner and with the same effect as above provided for disposition or proceeds of fire or other insurance. (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (8) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and said note for endorsement, and without affecting the personal liability or any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof. (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said note to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof.

The Grantee in such reconveyance may be described as the person or persons legally entitled thereto.
(10) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his or her own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (11) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which 4 notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, said note and all documents evidencing expenditures secured hereby.

After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.

Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.

After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of:
all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (12) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the Office of the Recorder of Monterey County where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee.
(13) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or the neuter, and the singular number includes the plural.
(14) The Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obliged to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge thereof does not exceed the maximum allowed by law.
5 The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to him or her at its address hereinbefore set forth.

TRUSTOR:
[INSERT SIGNATURE BLOCK]
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.

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_____________________________
6 EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
21 EXHIBIT F-1 – DECLARATION (LIHTC PROJECT)
[See Attached]

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, CA 93924

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

AFFORDABLE HOUSING AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(LIHTC PROJECT)

THIS AFFORDABLE HOUSING AGREEMENT AND DECLARATION OF
RESTRICTIVE COVENANTS (this “Agreement”) is entered into effective as of ___________________, 2022 (“Effective Date”), by and between the City of Gonzales, a California municipal corporation (“City”), and __________________________ (“Owner”). The City and the Owner are collectively referred to herein as the “Parties.” A. Owner is the owner of the real property located in the City of Gonzales, County of Monterey, State of California, currently identified as Monterey County Assessor’s Parcel No. 020-041-016, and more particularly described in Exhibit A attached hereto (the “Property”).

B. Owner intends to develop, own, and operate an affordable multi-family residential development on the Property (the “Project”).

C. The purpose of this Agreement is to regulate and restrict the occupancy and rents of certain units at the Project. The Parties intend the covenants set forth in this Agreement to run with the land and to be binding upon Owner and Owner’s successors and assigns for the full term of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

2. Definitions. The following terms shall have the meanings set forth in this Section 2 wherever used in this Agreement.
“Actual Household Size” means the actual number of persons in the applicable household.
“Adjusted for Family Size Appropriate for the Unit” shall be determined consistent with Section 50052.5(h) of the California Health and Safety Code, subject to the application of federal rules and regulations applicable to Project financing sources, including, if applicable, Section 42(g)(2) of the Internal Revenue Code of 1986, as amended. “Affordable Rent” means the following for the Rent Restricted Units: a monthly rent that does not exceed one-twelfth of thirty percent (30%) of eighty percent (80%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit, less a utility allowance and other fees and charges required to be paid by tenants of the Project on a non-optional basis. “Area Median Income” or “AMI” means the area median income for Monterey County, California, adjusted for Actual Household Size, as determined by the United States Department of Housing and Urban Development (“HUD”) and as published from time to time by the State of California Department of Housing and Community Development (“HCD”) in Section 6932 of Title 25 of the California Code of Regulations or successor provision published pursuant to California Health and Safety Code Section 50093(c).
“Gross Income” shall have the meaning set forth in Section 6914 of Title 25 of the California Code of Regulations as such section may be revised from time to time. “Official Records” means the Official Records of the Monterey County Recorder. “Project” is defined in Recital B.
“Property” is defined in Recital A.
“Rent Restricted Units” is defined in Section 4.
“Senior Household” shall mean a household in which all members are at least fifty-five (55) years of age or older under applicable provisions of California Civil Code Section 51.3 and the United States Fair Housing Act; provided, however, that the foregoing requirements shall be modified, as necessary, to comply with (i) any more restrictive requirements of any federal or state sources of funding for the Project which are applicable to senior housing, including the requirements of the California Tax Credit Allocation Committee applicable to senior projects, and (ii) all federal and state fair housing laws applicable to senior housing. “Term” is defined in Section 4.

3. Reserved.

4. Household Restrictions. For a term of twenty (20) years commencing upon the date that the City Building Department signs off on the final inspection of the Project following 3 completion of construction and issues a final certificate of occupancy or equivalent for the Project (the “Term”), (i) one hundred percent (100%) of the residential units in the Project (excluding one manager’s unit) shall be restricted for occupancy by Senior Households, and (ii) not less than forty percent (40%) of the total number of residential units in the Project shall be restricted for occupancy by Senior Households whose household Gross Income at initial occupancy is no greater than eighty percent (80%) of AMI (the residential units described in this clause (ii) being collectively referred to herein as the “Rent Restricted Units”). Monthly rents for each Rent Restricted Unit shall be restricted to Affordable Rent.

5. No Condominium Conversion; Occupancy as Principal Residence; No Short-Term Rentals. Neither Owner nor any successor in interest shall be permitted to convert the residential units in the Project to condominium or cooperative ownership or sell condominium or cooperative rights to the residential units in the Project during the term of this Agreement. All residential units in the Project must be occupied as the principal residence of the tenant. The rental agreement or lease must provide that the tenant acknowledges and agrees that the dwelling unit must be occupied as the household’s principal residence, and that the unit may not be subleased or made available as a short-term rental.

6. Recordation; Reconveyance. This Agreement shall be recorded in the Official Records promptly following execution by the Parties. Upon the termination of this Agreement, the Parties agree to execute and record appropriate instruments to release and discharge this Agreement; provided, however, the execution and recordation of such instruments shall not be necessary or a prerequisite to the termination of this Agreement upon the expiration of the term.

7. Compliance with Fair Housing Laws; Nondiscrimination. Owner shall comply with all state and federal fair housing laws, rules, regulations and guidelines in the marketing and rental of the units in the Project. Owner shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or the Project, or any portion thereof, on the basis of race, color, religion, creed, sex, gender identity, sexual orientation, disability, marital status, ancestry, or national origin of any person. Owner covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of purchasers, tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Owner shall include such provision in all deeds, leases, contracts and other instruments executed by Owner, and shall enforce the same diligently and in good faith.

8. Records; Monitoring. On an annual basis, Owner shall provide a written certification in a form reasonably requested by City, that the Project is in compliance with the terms of this Agreement. Owner shall maintain rent and occupancy records for the Project, and with at least 4 48 hours’ notice, City shall have the right to inspect such records and the Project to monitor compliance with this Agreement.

9. Effectiveness Survives Conveyance of Property. This Agreement shall remain effective and fully binding regardless of any sale, assignment, transfer, or conveyance of the Property or the Project or any part thereof or interest therein.

10. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property and the Project to the covenants and restrictions set forth in this Agreement. The City and Owner hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Owner and City, regardless of any sale, assignment, conveyance or transfer of the Property, the Project or any part thereof or interest therein. Any successor-in-interest to Owner, including without limitation any purchaser, transferee or lessee of the Property or the Project (other than the tenants of the individual dwelling units within the Project) shall be subject to all of the duties and obligations imposed hereby for the full Term of this Agreement. Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or the Project or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. If any such contract, deed, ground lease or other instrument has been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, ground lease or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Project in favor of City.

11. No Subordination. Owner hereby represents, warrants and covenants that with the exception of easements of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the Property or the Project. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Project in position superior to this Agreement, upon the request of City, Owner hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such interest to this Agreement consistent with the intent of and in accordance with this Section 11, and to provide such evidence thereof as City may reasonably request.

12. Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Project or the Property, and the purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee’s sale or foreclosure sale. Promptly upon determining 5 that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Project or the Property that such violation has occurred.

13. Default and Remedies.

13.1 Events of Default. An Event of Default shall arise hereunder upon the occurrence of a default in the performance of any term, provision or covenant under this Agreement and the continuation of such default for thirty (30) days following the date upon which City shall have given written notice of the default to Owner, or if the nature of any such default is such that it cannot be cured within thirty (30) days, Owner’s failure to commence to cure the default within thirty (30) days and thereafter prosecute the curing of such default with due diligence and in good faith, but in no event longer than ninety (90) days from the date of delivery of the notice of default.

13.2 Remedies. Upon the occurrence of an Event of Default and its continuation beyond any applicable cure period, City may proceed with any of the following remedies:
(a) Bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking declaratory relief; (b) Bring an action for damages or pursue any other remedy allowed at law, or in equity;
(c) For violations with respect to allowable rents, impose a charge in an amount equal to the actual amount collected in excess of the Affordable Rent; or (d) Pursue any remedy available under any other applicable law.

Each of the remedies provided herein is cumulative and not exclusive. The City may exercise from time to time any rights and remedies available to it under applicable law or in equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this Agreement.

14. Miscellaneous.

14.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties and recorded in the Official Records.

14.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by City at any time to require strict performance by Owner of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding 6 breach of the same or any other provision hereof or a relinquishment for the future of such election.

14.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service.

City: City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, CA 93924
With a copy to: Jarvis Fay LLP
555 12th Street, Suite 1630
Oakland, CA 94607
Attention: Michael Rodriquez
Owner: _____________________________
c/o Community Housing Improvement Systems and Planning
Association, Inc.
295 Main Street, Suite 100
Salinas, CA 93901
Attention: Director of Real Estate Development
With a copy to: Gubb & Barshay LLP
505 14th Street, Suite 405
Oakland, CA 94612
Attention: Lauren Fechter

14.4 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.

Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.

14.5 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City’s City Manager or by any person who shall have been designated by the City Manager, subject to approval by the City Council.
7 14.6 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Gonzales shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.

14.7 Governing Law; Venue. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Monterey County, California.

14.8 Attorneys’ Fees and Costs. If any legal or administrative action is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys’ fees and costs incurred in such action.

14.9 Severability. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby.

14.10 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. [remainder of page left intentionally blank; signature pages follow] 8 IN WITNESS WHEREOF, the Parties have executed this Affordable Housing Agreement and Declaration of Restrictive Covenants as of the date first written above.

CITY:

City of Gonzales, a California municipal
corporation in the State of California,
acting by and through its City Manager
By: ____________________________
________________, City Manager
Dated: _____________________, 2022
APPROVED AS TO FORM:

By: ____________________________
Michael Rodriquez, City Attorney
OWNER:
[Insert Owner Signature Block]
9 ACKNOWLEDGMENT
State of California )
) ss
County of ___________ )
On , before me,___________________________________________, (Name of Notary)
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.
(Notary Signature)
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.
10 ACKNOWLEDGMENT
State of California )
) ss
County of ___________ )
On , before me,___________________________________________, (Name of Notary)
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.

LEGAL DESCRIPTION OF THE PROPERTY
22 EXHIBIT F-2 – DECLARATION (SFH PROJECT)
[See Attached]

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Gonzales
Attn: City Manager
P.O. Box 647
147 Fourth Street
Gonzales, CA 93924

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

AFFORDABLE HOUSING AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(SINGLE FAMILY HOMES PROJECT)

THIS AFFORDABLE HOUSING AGREEMENT AND DECLARATION OF
RESTRICTIVE COVENANTS (this “Agreement”) is entered into effective as of ___________________, 2022 (“Effective Date”), by and between the City of Gonzales, a California municipal corporation (“City”), and __________________________ (“Owner”). The City and the Owner are collectively referred to herein as the “Parties.” A. Owner is the owner of the real property located in the City of Gonzales, County of Monterey, State of California, currently identified by Monterey County Assessor’s Parcel No. 020-041-016, and more particularly described in Exhibit A attached hereto (the “Property”).

B. Owner intends to develop, own, and operate a residential development on the Property (the “Project”) containing fifteen (15) single family rental homes (each a “Unit,” and collectively, the “Units”).

C. The purpose of this Agreement is to regulate and restrict the occupancy and rents of the Units at the Project. The Parties intend the covenants set forth in this Agreement to run with the land and to be binding upon Owner and Owner’s successors and assigns for the full term of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows.

1. Incorporation of Recitals; Acknowledgement. The Parties acknowledge the truth of the foregoing Recitals which are hereby incorporated into this Agreement. Owner acknowledges and agrees that the City has authority to impose rent restrictions and income eligibility requirements on the Project as set forth in this Agreement. 2 2. Definitions. The following terms shall have the meanings set forth in this Section wherever used in this Agreement.
“80% AMI Units” is defined in Section 4.
“120% AMI Units” is defined in Section 4.
“Actual Household Size” means the actual number of persons in the applicable household.
“Adjusted for Family Size Appropriate for the Unit” shall be determined consistent with Section 50052.5(h) of the California Health and Safety Code, subject to the application of federal rules and regulations applicable to Project financing sources, including, if applicable, Section 42(g)(2) of the Internal Revenue Code of 1986, as amended. “Affordable Rent” means a monthly rent that does not exceed (i) with respect to the 80% AMI Units, one-twelfth of thirty percent (30%) of eighty percent (80%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit, less a utility allowance and other fees and charges required to be paid by tenants of the Project on a non-optional basis, or (ii) with respect to the 120% AMI Units, one-twelfth of thirty percent (30%) of one hundred twenty percent (120%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit, less a utility allowance and other fees and charges required to be paid by tenants of the Project on a non-optional basis.
“Area Median Income” or “AMI” means the area median income for Monterey County, California, adjusted for Actual Household Size, as determined by the United States Department of Housing and Urban Development (“HUD”) and as published from time to time by the State of California Department of Housing and Community Development (“HCD”) in Section 6932 of Title 25 of the California Code of Regulations or successor provision published pursuant to California Health and Safety Code Section 50093(c).
“Gross Income” shall have the meaning set forth in Section 6914 of Title 25 of the California Code of Regulations as such section may be revised from time to time. “Official Records” means the Official Records of the Monterey County Recorder. “Project” is defined in Recital B.
“Property” is defined in Recital A.
“Senior Household” shall mean a household in which all members are at least fifty-five (55) years of age or older under applicable provisions of California Civil Code Section 51.3 and the United States Fair Housing Act; provided, however, that the foregoing requirements shall be modified, as necessary, to comply with (i) any more restrictive requirements of any federal or state sources of funding for the Project which are applicable to senior housing, and (ii) all federal and state fair housing laws applicable to senior housing. 3 “Term” is defined in Section 4.

3. Reserved.

4. Affordability Restriction. For a term of twenty (20) years commencing upon the date that the City Building Department signs off on the final inspection of the Project following completion of construction and issues a final certificate of occupancy or equivalent for the Project (the “Term”), not less than forty percent (40%) of the total number of Units in the Project shall be restricted for occupancy by Senior Households whose household Gross Income at initial occupancy is no greater than eighty percent (80%) of AMI (the “80% AMI Units”) and the balance of the Units in the Project shall be restricted for occupancy by Senior Households whose household Gross Income at initial occupancy is no greater than one hundred twenty percent (120%) of AMI (the “120% AMI Units”). Monthly rents for each Unit shall be restricted to Affordable Rent.

5. No Condominium Conversion; No Subdivision; Occupancy as Principal Residence; No Short-Term Rentals. Neither Owner nor any successor in interest shall be permitted to convert the Units in the Project to condominium or cooperative ownership or sell condominium or cooperative rights to the residential units in the Project during the term of this Agreement.

Additionally, neither Owner nor any successor shall be permitted to transfer any ownership interest in any individual Unit or to subdivide the Property for the purpose of transferring any ownership interest in any individual Unit. All Units in the Project must be occupied as the principal residence of the tenant. The rental agreement or lease must provide that the tenant acknowledges and agrees that the Unit must be occupied as the household’s principal residence, and that the Unit may not be subleased or made available as a short-term rental.

7. Compliance with Fair Housing Laws; Nondiscrimination. Owner shall comply with all state and federal fair housing laws, rules, regulations and guidelines in the marketing and rental of the Units in the Project. Owner shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or the Project, or any portion thereof, on the basis of race, color, religion, creed, sex, gender identity, sexual orientation, disability, marital status, ancestry, or national origin of any person. Owner covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Owner or any person claiming under or through Owner establish or permit any 4 such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of purchasers, tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Owner shall include such provision in all deeds, leases, contracts and other instruments executed by Owner, and shall enforce the same diligently and in good faith.

8. Records; Monitoring. On an annual basis, Owner shall provide a written certification in a form reasonably requested by City, that the Project is in compliance with the terms of this Agreement. Owner shall maintain rent and occupancy records for the Project, and with at least 48 hours’ notice, City shall have the right to inspect such records and the Project to monitor compliance with this Agreement.

10. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property and the Project to the covenants and restrictions set forth in this Agreement. The City and Owner hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Owner and City, regardless of any sale, assignment, conveyance or transfer of the Property, the Project or any part thereof or interest therein. Any successor-in-interest to Owner, including without limitation any purchaser, transferee or lessee of the Property or the Project (other than the tenants of the individual Units within the Project) shall be subject to all of the duties and obligations imposed hereby for the full Term of this Agreement. Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or the Project or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. If any such contract, deed, ground lease or other instrument has been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, ground lease or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Project in favor of City.

11. No Subordination. Owner hereby represents, warrants and covenants that with the exception of easements of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the Property or the Project. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Project in position superior to this Agreement, upon the request of City, Owner hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such 5 interest to this Agreement consistent with the intent of and in accordance with this Section 11, and to provide such evidence thereof as City may reasonably request.

12. Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Project or the Property, and the purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee’s sale or foreclosure sale. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Project or the Property that such violation has occurred.

13. Default and Remedies.

14.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties and recorded in the Official Records.

14.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by City at any time to require strict performance by Owner of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election.

Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.

14.6 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Gonzales shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.

CITY:

City of Gonzales, a California municipal
corporation in the State of California,
acting by and through its City Manager
By: ____________________________
________________, City Manager
Dated: _____________________, 2022
APPROVED AS TO FORM:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

LEGAL DESCRIPTION OF THE PROPERTY

Gonzales City CouncilAugust 15, 2022

Gonzales City Council
August 15, 2022