Agenda packet, regular meeting — Healdsburg City Council, April 3, 2023 (part 3 of 5)

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Manager
Exempt From Recording Fees Per
Government Code §27383 And
Building Homes And Jobs Trust
Fund Fee Per Government Code
§27388.1(A)(2)(D)
Space above this line for Recorder’s use.

RENTAL AFFORDABLE HOUSING AGREEMENT
AND

DECLARATION OF RESTRICTIVE COVENANTS
by and between

THE CITY OF HEALDSBURG
and
[INSERT NAME OF DEVELOPER]

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RENTAL AFFORDABLE HOUSING AGREEMENT

AND DECLARATION OF RESTRICTIVE COVENANTS
This Rental Affordable Housing Agreement and Declaration of Restrictive Covenants (this “Agreement”) is entered into for reference purposes as of ________________, 20__ (the “Effective Date”), by and between the City of Healdsburg, a California municipal corporation (“City”) and __________________________________ (“Developer”). City and Developer are individually referred to herein as a “Party” and collectively as the “Parties.”

R E C I T A L S
A. On November 8, 2022, the Planning Commission adopted Resolution No. 2022-18, conditionally approving an application for design review (DR 2022-05) (“Design Review Approval”), and on April 3, 2023, the City Council adopted Resolution ___-2023, conditionally approving an application for a tentative map (TM 2022-02) (the "Tentative Map Approval") related to the subdivision of certain parcels of real property collectively and commonly known as the Saggio Hills Affordable Housing Project in the City of Healdsburg, California (the "Property"), as more particularly described in Exhibit A attached hereto and incorporated herein to this Agreement, into seventeen lots and the development of 118 affordable housing residential units, preservation of open space, outdoor amenities for residents, a community building and publicly accessible trails on the Property (the "Development").

B. The City and Freebird Development Company, a California limited liability company (“Freebird”) have entered into a Disposition and Development Agreement ("DDA"), dated April 3, 2023, as evidenced by a Memorandum of Agreement dated ___________, 202__, and recorded on ___________, 20___, in the Official Records of Sonoma County (“Official Records”) as Instrument No. 20___________, to provide for the subdivision and phased sale of the Property from City to Freebird and the construction of the Development in phases in accordance with the Project Approvals and subject to certain terms and conditions.

C. [Section 601 (f) of the DDA specifies that Lot 3 of the Property (“Site”), as more particularly described in Exhibit B attached hereto and incorporated herein to this Agreement, shall be improved with four, three-story residential buildings of a height not to exceed 35 feet, containing 42 residential units totaling approximately 45,299 square feet and comprised of one (1) studio unit, nineteen (19) one-bedroom units, eleven (11) two-bedroom units, and eleven (11) three-bedroom units, 64 surface parking spaces and associated hardscape and landscaping improvements, which residential units shall be restricted for rental to and occupancy by lower income households, very low income households and extremely low income households, at an affordable rent, for a minimum period of fifty five (55) years (“Project”).] OR
[Section 601 (h) of the DDA specifies that Lot 14 of the Property (“Site”), as more particularly described in Exhibit B attached hereto and incorporated herein to this Agreement, shall be improved with one, three-story residential buildings of a height not to exceed 35 feet, containing 48 residential units totaling approximately 59,531 square feet and comprised of

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thirteen (13) studio units, eleven (11) one-bedroom units, twelve (12) two-bedroom units, and twelve (12) three-bedroom units, 60 surface parking spaces and associated hardscape and landscaping improvements, which residential units shall be restricted for rental to and occupancy by lower income households, very low income households and extremely low income households, at an affordable rent, for a minimum period of fifty five (55) years (“Project”).] OR
[Section 601 (i) of the DDA specifies that Lot 15 of the Property (“Site”), as more particularly described in Exhibit B attached hereto and incorporated herein to this Agreement, shall be improved with two, three-story residential buildings of a height not to exceed 35 feet, containing 18 residential units totaling approximately 20,077 square feet and comprised of one (1) studio unit, six (6) one-bedroom units, six (6) two-bedroom units, and five (5) three-bedroom units, 29 surface parking spaces and associated hardscape and landscaping improvements, which residential units shall be restricted for rental to and occupancy by lower income households, very low income households and extremely low income households, at an affordable rent, for a minimum period of fifty five (55) years (“Project”).]
D. Section 702 of the DDA provides that all of the residential units constructed on the Site shall be rented to and occupied by an “Eligible Household” at an “Affordable Rent”, as said terms are defined herein (each, an “Affordable Unit” and, collectively, the “Affordable Units”).

E. In accordance with Section 103 of the DDA, Freebird has assigned its rights and obligations under the DDA in relation to the Site and Project, defined herein, to Developer as set forth in that certain Assignment and Assumption Agreement dated ___________, 202__ (“Assignment Agreement”), and to ensure the continued affordability of the Affordable Units for the Term, this Agreement shall be executed and recorded against the Site immediately following the recordation of the Assignment Agreement and the Grant Deed dated ____________, 202__ (“Grant Deed”) conveying fee title to the Site from City to Developer in the Official Records.

F. The purpose of this Agreement is to restrict the occupancy of the Affordable Units to Eligible Households at an Affordable Rent for the Term as required by the DDA. The Parties intend the covenants set forth in this Agreement to run with the land and to be binding upon Developer and its permitted successors and assigns for the Term of this Agreement.

A G R E E M E N T
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.

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“Affordable Housing Occupancy Date” shall mean the date of issuance by City of a certificate of occupancy for the final Affordable Unit in the Project, to be memorialized by the Parties through execution and recordation of the Certificate of Completion in the form attached hereto as Exhibit C.
“Affordable Rent” shall mean rental rates no greater than that considered as affordable rent for extremely low income households to lower income households, adjusted for family size appropriate to the unit, determined in accordance with California Health and Safety Code section 50053, as amended, or any successor statute thereto; provided, however, that for lower income households with gross incomes that exceed 60 percent of the area median income adjusted for family size appropriate to the unit, rental rates may be established at a level not to exceed 30 percent of gross income of the household. Notwithstanding the foregoing, if applicable to financing sources for all or a portion of the Project, during the fifteen (15) year tax credit compliance period under Internal Revenue Code Section 42, or such longer term of the regulatory agreement to be executed by TCAC and Developer and recorded against the applicable portion of the Project, the City hereby permits Developer to use the occupancy standards and rent levels required by TCAC. “Affordable Unit” and “Affordable Units” are defined in Recital D of this Agreement. “Agreement” means this Rental Affordable Housing Agreement and Declaration of Restrictive Covenants.
“Annual Report” is defined in Section 9 of this Agreement. “Applicable Laws” means all laws, ordinances, statutes, codes, rules, regulations, orders and decrees, of the United States, the State of California, County, City, any other political subdivision in which the Site is located, and of any other political subdivision, City or instrumentality exercising jurisdiction over City, Developer, the Site or the Project Improvements, including all applicable state labor laws and standards (including prevailing wages, as applicable); all applicable public contracts requirements, zoning and development standards; building, plumbing, mechanical and electrical codes; all other provisions of the City Municipal Code; and all applicable disabled and handicapped access requirements, including the Americans With Disabilities Act, 42 U.S.C. section 12101, et seq., Government Code section 4450, et seq., Government Code section 11135, et seq., and the Unruh Civil Rights Act, Civil Code section 51, et seq..
“Assignment Agreement” is defined in Recital E.
“City” means the City of Healdsburg, a California municipal corporation. “City Documents” means the Project Approvals, Conditions of Approval, DDA and this Agreement.
“City’s Authorized Representative” means the City Manager of the City of Healdsburg, or his or her designee.
“Conditions of Approval” shall mean, collectively, the conditions of approval adopted by (i) the Planning Commission pursuant to the Design Review Approval and (ii) the City Council pursuant to the Tentative Map Approval.
“Construction Drawings” shall have the meaning set forth in Section 604.2 of the DDA.
“DDA” is defined in Recital B of this Agreement.

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“Design Review Approval” is defined in Recital A of this Agreement. “Developer” means ___________________________________________________. “Development” is defined in Recital A.
“Effective Date” means the date set forth in the first paragraph of this Agreement. “Eligible Household” means an Extremely Low Income Household, Very Low Income Household, or Lower Income Household qualified in accordance with the terms of this Agreement and Sections 50106, 50105 and 50079.5, respectively, of the California Health and Safety Code, as amended or any successor statute thereto.
“Extremely Low Income Household” is defined in Section 50106 of the California Health and Safety Code section, as amended or any successor statute thereto. “ELI Rent” means an Affordable Rent for an Extremely Low Income Household. “ELI Unit” means an Affordable Unit available at ELI Rent. “Freebird” is defined in Recital B.
“Grant Deed” is defined in Recital E.
“Gross Income” means the combined, gross, pre-tax income of all adult occupants of the applicant household, as calculated under California Code of Regulations, Title 25, Section 6914, unless a federal standard applicable to the Project (such as the Tax Credits program, as administered pursuant to the regulations of TCAC) provides for the use of a different calculation of household income, in which case the federal standard shall apply. “Indemnitees” is defined in Section 19 of this Agreement. “LI Rent” means an Affordable Rent for a Lower Income Household. “LI Unit” means an Affordable Unit available at LI Rent. “Lower Income Household” shall have the meaning defined in Section 50079.5 of the California Health and Safety Code, as amended or any successor statute thereto. “Management Agreement” is defined in Section 15.b of this Agreement. “Official Records” is defined in Recital B.
“Party” or “Parties” respectively means City and Developer individually or collectively. “Project” is defined in Recital C of this Agreement.
“Project Approvals” means the Design Review Approval and Tentative Map Approval. “Property” is defined in Recital A of this Agreement and more particularly described in the legal description attached hereto as Exhibit A.
“Property Manager” is defined in Section 15.b of this Agreement. “Property Manager Unit” is defined in Section 15.b of this Agreement. “Rent” means the total of monthly payments required to be paid by a Tenant of an Affordable Unit for the following: use and occupancy of the Affordable Unit and associated facilities, including parking; any separately charged fees or service charges assessed by the

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Developer which are required of all Tenants of the Project other than security deposits; an allowance for the cost of an adequate level of service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service or cable TV, to be established annually by the Housing Manager of the City of Healdsburg; and any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than the Developer, and required to be paid by the Tenant.
“Rental Residential Marketing Plan” is defined in Section 15.g of this Agreement. “Site” is defined in Recital C and more particularly described in the legal description attached hereto as Exhibit B.
“Site Management Plan” is defined in Section 15.g of this Agreement. “Supportive Services Plan” is defined in Section 15.g of this Agreement. “Tax Credits” means the federal low-income housing tax credit program under Section 42 of the Internal Revenue Code.
“TCAC” means the California Tax Credit Allocation Committee. “Tenant” shall mean a household legally occupying an Affordable Unit pursuant to a valid lease with Developer.
“Tentative Map Approval” is defined in Recital A of this Agreement. “Term”, as provided in Section 13.a. of this Agreement, means the period of time that this Agreement is in effect, which shall commence upon the Effective Date and end on the Termination Date.
“Termination Date” is the date that is fifty five (55) years after the Affordable Housing Occupancy Date.
“Very Low Income Household” shall have the meaning defined in Section 50105 of the California Health and Safety Code, as amended or any successor statute thereto. “VLI Rent” means an Affordable Rent for a Very Low Income Household. “VLI Unit” means an Affordable Unit available at VLI Rent.

2. Use and Affordability Restrictions. During the Term of this Agreement, Developer hereby covenants and agrees, for itself and its successors and assigns, that the Affordable Units shall be used solely in compliance with the Project Approvals, including the Conditions of Approval, the DDA and the requirements set forth in this Agreement. Developer represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with the occupancy and affordability restrictions set forth in this Agreement, and Developer covenants that it shall not enter into any agreement that is inconsistent with such restrictions without the express written consent of City, which consent may be granted, denied or conditioned by City in its sole discretion. Nothing herein shall prohibit Developer from entering into regulatory agreements with TCAC or other government agencies providing financing for the Project that impose additional income and/or occupancy requirements upon the Affordable Units.

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3. Unit Size Mix for Affordable Units. [Lot 3] The Affordable Units shall include no fewer than one (1) studio unit, nineteen (19) one-bedroom units, eleven (11) two-bedroom units, and eleven (11) three-bedroom units on the Site, consistent in all respects with the Construction Drawings.

OR
[Lot 14] The Affordable Units shall include no fewer than thirteen (13) studio units, eleven (11) one-bedroom units, twelve (12) two-bedroom units, and twelve (12) three-bedroom units on the Site, consistent in all respects with the Construction Drawings.

OR
[Lot 15] The Affordable Units shall include no fewer than one (1) studio unit, six (6) onebedroom units, six (6) two-bedroom units, and five (5) three-bedroom units on the Site, consistent in all respects with the Construction Drawings.

4. Income Mix for Affordable Units. During the Term of this Agreement, Developer hereby covenants and agrees as follows:
a. of the ___ studio units on the Site, ___ shall be an ELI Unit, ___ shall be an VLI Unit, and ___ shall be an LI Unit;
b. of the ____one-bedroom units on the Site, ___ shall be an ELI Unit, ___ shall be an VLI Unit, and ___ shall be an LI Unit;
c. of the ____ two-bedroom units on the Site, ___ shall be an ELI Unit, ___ shall be an VLI Unit, and ___ shall be an LI Unit; and
d. of the ____ three-bedroom units on the Site, ___ shall be an ELI Unit, ___ shall be a VLI Unit, and ___ shall be an LI Unit; and
e. [Lot 3 and 14, only] one (1) of the ____ bedroom units on the Site shall be a Property Manager’s unit.

5. Affordable Unit Income Restrictions.
a. ELI Unit Affordability Requirements. As outlined in Section 4 above, there shall be ___ studio ELI Units, ___ one-bedroom ELI Units, ___ two-bedroom ELI Units and ____ three-bedroom ELI Units. During the Term of this Agreement, each ELI Unit shall be rented at an ELI Rent to (or if vacant, available for occupancy by) an Extremely Low Income Household.
b. VLI Unit Affordability Requirements. As outlined in Section 4 above, there shall be ___ studio VLI Units, ___ one-bedroom VLI Units, ___ two-bedroom VLI Units and ____ three-bedroom VLI Units. During the Term of this Agreement, each VLI

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Unit shall be rented at a VLI Rent to (or if vacant, available for occupancy by) a Very Low Income Household.
c. LI Unit Affordability Requirements. As outlined in Section 4 above, there shall be ___ studio LI Units, ___ one-bedroom LI Units, ___ two-bedroom LI Units and ____ three-bedroom LI Units. During the Term of this Agreement, each LI Unit shall be rented at an LI Rent to (or if vacant, available for occupancy by) a Lower Income Household.
d. Household Income Recertification and Increases. In connection with Developer’s obligation to maintain and certify that the Project is in compliance with this Agreement, Developer shall verify the household income of Tenants and address increases to household income of Tenants in accordance with all applicable provisions of Internal Revenue Code Section 42, Section 10337 of the California Code of Regulations Title 4, Division 17, Chapter 1, and TCAC Compliance Monitoring Manual, as amended or any successor statute, rule, regulation or compliance manual thereto.

6. Effect of Foreclosure on Income Restrictions. Notwithstanding any other covenant of this Agreement to the contrary, upon the acquisition by any holder of a mortgage or deed of trust encumbering the Project by a foreclosure, deed in lieu of foreclosure, the Gross Income of Eligible Households (i) in Affordable Units reserved for 30% Income Households, 40% Income Households, or 50% Income Households, as defined by TCAC, may be increased to 60% Income Households as defined by TCAC and (ii) in all other Affordable Units, may be increased to 80% Income Households, as defined by TCAC. The maximum annual rent for such Affordable Units will be increased to the amount that would be allowed by TCAC for such households at the adjusted Gross Income limits.

The affordability restrictions set forth in this Agreement shall be revived according to the original terms herein if, during the original Term of this Agreement, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the current or former owner obtains an ownership interest in the Project (unless the construction lender and tax credit investor are related entities, in which event the forgoing shall not apply to the construction lender).

7. No Condominium Conversion. Developer shall not convert any of the Affordable Units to condominium or cooperative tenancy or sell condominium or cooperative rights to the Affordable Units or any part thereof during the Term of this Agreement.

8. Affordable Unit Occupancy. In the Affordable Units, no less than one occupant shall be allowed per bedroom, unless a reasonable accommodation is required pursuant to state or federal fair housing laws subject to the application of federal rules and regulations applicable to Project financing sources, including the Tax Credits and applicable federal and TCAC regulations. A studio unit shall count as a one-bedroom unit for the purposes of these occupancy requirements. If no Extremely Low Income Household, Very Low Income Household or Lower Income Household applies within ninety (90) days of an ELI Unit, VLI Unit or LI Unit being available that meet these occupancy standards, respectively, the City may, upon request of Developer, grant exceptions to the occupancy standards, but only to

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the extent such exceptions are consistent with Applicable Laws, and do not increase City’s obligations or liabilities under this Agreement, or diminish or impair City’s rights and remedies under this Agreement.

9. Annual Report; Inspections. By not later than June 1 of each year during the Term of this Agreement, commencing with the year following the year of the Affordable Housing Occupancy Date (reflecting information from the year of the Affordable Housing Occupancy Date), Developer shall submit an annual report (“Annual Report”) to City in a form reasonably satisfactory to City, together with Developer’s certification that the Affordable Units are in compliance with the requirements of this Agreement. The Annual Report shall, at a minimum, include the following information for each Affordable Unit: (i) designation as either an ELI Unit, VLI Unit or LI Unit; (ii) unit number; (iii) number of bedrooms; (iv) current rent and other charges; (v) dates of any vacancies during the previous year; (vi) number of people residing in each Affordable Unit; (vii) total gross income of all adult occupants in each Affordable Unit; (viii) documentation of source of household gross income; and (ix) compliance with Section 5 (d) of this Agreement. The foregoing notwithstanding, during such time that the Project is subject to a regulatory agreement restricting occupancy and/or rents pursuant to requirements imposed in connection with the use of state or federal low-income housing tax credits or tax-exempt bond financing, or imposed by a public agency lender, Developer may satisfy the requirements of this Section to provide City an Annual Report by providing City with a copy of compliance reports required in connection with such financing. Developer shall maintain Project rent and occupancy records, and with at least five (5) calendar days prior notice, City shall have the right to inspect such records and the Project to monitor compliance with this Agreement.

10. Non-Discrimination; Compliance with Fair Housing Laws. a. Preferences. In order to ensure that there is an adequate supply of affordable housing within the City of Healdsburg for residents and employees of businesses within the City, to the extent permitted by law and consistent with regulations for funding sources used for development of the Affordable Units, within the pool of Eligible Households, Developer shall grant priority to applicants as follows: (i) first, to Eligible Households with members who work at the hotel resort located and operated on Parcel 1 of Saggio Hills per Map recorded May 23, 2018 in Book 795, Pages 31-40 as Instrument No. 2018-037508, of Official Records, in the City of Healdsburg, County of Sonoma, State of California; (ii) second, to Eligible Households with members who live or work in the city limits of Healdsburg; (iii) third, to Eligible Households with members who live or work in unincorporated Healdsburg, but within the 95448 zip code; (iv) fourth, to Eligible Households with members who live or work in Windsor, Geyserville, or Cloverdale or within the unincorporated Windsor, Geyserville and Cloverdale boundaries, but within the 95492, 95441, 95425 zip codes, respectively; (v) fifth, to members of the general public who are Eligible Households. Notwithstanding the foregoing, in the event of a conflict between this provision and the provisions of Section 42 of the Internal Revenue Code of 1986, as amended, the provisions of such Section 42 of the Internal Revenue Code of 1986, as amended, shall control if such provisions apply to the Project due to the source of financing.

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b. Fair Housing. Developer shall comply with state and federal fair housing laws in the marketing and rental of the Affordable Units. With respect to the Affordable Units, Developer shall accept as Tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to Section 8 of the United States Housing Act, or any successor statute or program thereto.

11. Non-Discrimination. Developer shall not restrict the rental, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Affordable Units on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person.

Developer 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 lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Affordable Units, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Affordable Units.

12. Reporting Requirements; Access to Information; Inspections. a. Maintenance of Records.
i. Developer shall maintain Affordable Unit leases, income certifications and other matters related to the leasing of the Affordable Units for a period of not less than three (3) years after the final date of occupancy by the Tenant. ii. Records related to compliance with this Agreement must be kept accurate and up-to-date. City shall notify Developer of any records it deems insufficient. Developer shall have thirty (30) calendar days from such notice to correct any specified reasonable deficiency in the records, or, if more than thirty (30) days shall be reasonably necessary to correct the deficiency, Developer shall begin to correct the deficiency within thirty (30) days and diligently pursue the correction of the deficiency as soon as reasonably possible.
b. Access to Records; Inspections.
i. Developer shall provide City and its authorized agents and representatives reasonable access to any books, documents, papers and records associated with the Affordable Units for the purpose of making audits, examinations, excerpts and transcriptions in connection with monitoring compliance with this Agreement, during normal business hours of Developer and upon not less than three (3) business days’ prior written notice.

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ii. With forty-eight (48) hours’ notice, during normal business hours and as often as may be deemed necessary, City and its authorized agents and representatives shall be permitted access to and the right to examine the Affordable Units and to interview Tenants of Affordable Units and employees of Developer, for the purpose of verifying compliance with applicable regulations and compliance with the conditions of this Agreement.

13. Term of Agreement.
a. Term of Restrictions. The term of this Agreement shall commence upon the Effective Date and shall remain in effect until the Termination Date (“Term”). b. Effectiveness Survives Conveyance of Site. This Agreement shall remain effective and fully binding on all portions of the Site for the full Term hereof, regardless of any sale, assignment, transfer, refinancing, or conveyance of the Affordable Units or the Project or any part thereof or interest therein.
c. Reconveyance. 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.

14. Binding Upon Successors; Covenants to Run with the Land. Developer hereby subjects its interest in the Site and Affordable Units to the covenants and restrictions set forth in this Agreement. City and Developer 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 Developer and City, regardless of any sale, assignment, refinancing, conveyance or transfer of the Site and Affordable Units, or any part thereof or interest therein, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by City. Any successor-in-interest to Developer, including without limitation any purchaser, transferee or lessee of the Site and Affordable Units (other than the Tenants of the individual Affordable Units) shall be subject to all of the duties and obligations imposed hereby for the full term of this Agreement. Each and every contract, deed, lease or other instrument affecting or conveying the Site and Affordable Units 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, lease or other instrument. If any such contract, deed, lease or other instrument has been executed prior to the date hereof, Developer hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, lease or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby.

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Developer 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 Site and Affordable Units in favor of City.

Without limiting the generality of the foregoing, Developer and City hereby declare their understanding and intent that:
a. The covenants and restrictions contained in this Agreement shall be construed as covenants running with the land pursuant to California Civil Code section 1468 and not as conditions which might result in forfeiture of title by Developer; b. The burden of the covenants and restrictions set forth in this Agreement touch and concern the Site in that the Developer’s legal interest in the Site and all improvements thereon are rendered less valuable thereby; and
c. The benefit of the covenants and restrictions set forth in this Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Site by Tenants of the Affordable Units.
d. All covenants and restrictions contained herein without regard to technical classification or designation shall be binding upon Developer and its successors in interest for the benefit of the City, and such covenants and restrictions shall run in favor of the City for the entire period during which such covenants and restrictions shall be in force and effect, without regard to whether the City is an owner of any land or interest therein to which such covenant and restrictions relate.

15. Project Construction; Property Management; Repair and Maintenance; Marketing. a. Management Responsibilities. Developer shall be responsible for all management functions with respect to the Affordable Units, including without limitation the selection of Tenants, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, security and implementation of the Rental Residential Marketing Plan, Supportive Services Plan and Site Management Plan approved by the City under Section 15.g of this Agreement. City shall have no responsibility for construction, rehabilitation, management, repair, maintenance or marketing of the Affordable Units. b. Property Management. Developer shall be responsible for ensuring that a person with the requisite skill and experience managing multi-family residential developments (“Property Manager”) either (i) lives on the Site in one (1) of the Affordable Units, or (ii) lives in one of the residential housing units on the Property (“Property Manager Unit”). The rental of the Property Manager Unit to the Property Manager shall not be subject to the income and rent restrictions set forth herein that are otherwise applicable to the Affordable Units. If Developer enters into a separate property management agreement (“Management Agreement”) with a property management company or other organization in order to manage the Affordable Units (including leasing, property management, maintenance and repair

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services, and reporting obligations) and ensure that Developer’s obligations under this Agreement with respect to the Affordable Units are satisfied, the Management Agreement shall not relieve Developer of its primary responsibility for the proper performance of management duties. Developer shall ensure that the Property Manager has the requisite skill and experience to implement the Rental Residential Marketing Plan, Supportive Services Plan and Site Management Plan approved by the City under Section 15.g of this Agreement. c. Management Policies. Developer shall adopt and implement written management policies with respect to the Affordable Units that comply with the provisions of this Agreement. The Developer shall provide copies of its management policies to City upon their initial adoption and thereafter upon request. d. Repair, Maintenance and Security. Throughout the Term of this Agreement, Developer shall at its own expense, maintain the Affordable Units in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Affordable Units (including without limitation, the residential units, common areas, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Affordable Units. Developer shall prevent and/or rectify any physical deterioration apart from reasonable wear and tear of the Affordable Units and the Project and shall make all repairs, renewals and replacements necessary to keep the Affordable Units and the improvements located therein in good condition and repair. Developer shall provide adequate security measures for the Project, including without limitation, the installation of adequate lighting and deadbolt locks.
e. Additional Requirements. All construction work and professional services for the Affordable Units shall be performed by persons or entities licensed or otherwise authorized to perform the applicable work or service in the State of California and shall have a current City of Healdsburg business license if required under local law.

To the extent allowed by state and federal laws, Developer shall limit the installation of satellite dish, antenna and other such equipment to screened locations on the Affordable Unit buildings as approved by City. Developer shall diligently work to resolve complaints related to noise, smoking, odors, parking, litter or other nuisance issues and concerns.
f. City’s Right to Perform Maintenance. In the event that Developer breaches any of the covenants contained in this Section 15, and such default continues for a period of ten (10) days after written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from City (with respect to landscaping, building improvements and general maintenance), or such additional time as is reasonably required to rectify the condition, then City, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the

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right, but not the obligation, to enter upon the Affordable Units and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Site. All reasonable third-party costs expended by City in connection with the foregoing shall be paid by Developer to City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City’s invoice therefor shall bear interest at the lesser of 8% per annum or the highest rate permitted by Applicable Law. City shall have a lien against the Affordable Units for the amount of such unpaid sums and shall have the right to record a Notice of Claim of Lien against the Affordable Units.
g. Rental Residential Marketing Plan; Supportive Services Plan; Site Management Plan. Within the time set forth in the Schedule of Performance attached to the DDA, Developer shall submit for City review and approval, a plan for (i) marketing the Affordable Units (the “Rental Residential Marketing Plan”), (ii) provision of adequate supportive services and programs to residents of the Affordable Units (the “Supportive Services Plan”), and (iii) maintenance, repair (both routine and extraordinary), and rehabilitation of the Rental Affordable Units (the “Site Management Plan”).

The Rental Residential Marketing Plan shall address in detail how Developer plans to market the Affordable Units to prospective Eligible Households in accordance with fair housing laws and this Agreement, Developer’s tenant selection criteria, and how Developer plans to certify the eligibility of Eligible Households. The Plan Rental Residential Marketing shall include the form of rental agreement that Developer proposes to enter into with Tenants of the Affordable Units, which form shall include, among other matters, the terms set forth in Section 15.h of this Agreement.

The Supportive Services Plan shall address in detail those services Developer plans to provide to residents of the Affordable Units either at the Site or at other off-site locations.

The Site Management Plan shall address in detail how Developer plans to provide for the maintenance, repair (both routine and extraordinary), and rehabilitation of the Rental Affordable Units, replacement of capital items in the Rental Affordable Units, implementation of the vegetation management plan required by the Conditions of Approval, as well as the development and enforcement of a program governing parking of vehicles by residents of the Rental Affordable Units. The Site Management Plan shall also describe the management team and shall address how Developer and the management entity plan to manage and maintain the Affordable Units.

Upon receipt of the Rental Residential Marketing Plan, Supportive Services Plan, and Site Management Plan, the City shall promptly review the applicable plan and shall approve or disapprove it within thirty (30) days after submission. If City has not responded to the proposed Rental Residential Marketing Plan, Supportive Services Plan, or Site Management Plan within thirty (30) days following City’s

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receipt of such plan(s), Developer may simultaneously give a subsequent request to the City Manager, the Planning Director, and the City Attorney, which request shall be labelled prominently: "Second Request: Deemed Approval Matter." If City fails to respond to the subsequent request within fifteen (15) days following the date when given, then the Rental Residential Marketing Plan, Supportive Services Plan, and Site Management Plan, as applicable, shall be deemed approved. If the Rental Residential Marketing Plan, Supportive Services Plan, or Site Management Plan is not approved, the Developer shall submit a revised plan, as applicable, within thirty (30) days, which shall be subject to the same review procedure set forth in this Subsection (g). Developer shall abide by the terms of the Rental Residential Marketing Plan, Supportive Services Plan, and Site Management Plan in marketing, managing, leasing, and maintaining the Affordable Units and the Project, throughout the Term of this Agreement, and shall submit all material modifications to any of the aforementioned plans to the City for review and approval prior to implementation of any such modifications.
h. Tenant Lease Provisions. The form of lease that Developer utilizes for the rental of Affordable Units with Tenants shall, among other matters, include the following terms:
i. provide for termination of the lease and consent by the Tenant to immediate eviction for failure: (1) to provide any information required under this Agreement or reasonably requested by the Developer to establish or recertify the Tenant's qualification, or the qualification of the Tenant's household, for occupancy of the Affordable Units in accordance with the standards set forth in this Agreement, or (2) to qualify as an Eligible Household, as a result of any material misrepresentation made by such Tenant with respect to the income computation or certification; ii. be for an initial term of not less than one (1) year, unless a shorter term is mutually agreed upon by Developer and Tenant. After the initial term of the lease, the lease may be month-to-month by mutual agreement of the Developer and the Tenant; provided however, the Rent may not be raised more often than once every twelve (12) months after such initial term. The Developer will provide each Tenant with at least sixty (60) days' written notice of any increase in Rent, with a copy provided to City; iii. prohibit subleasing or assignment of the Affordable Unit, contain nondiscrimination provisions, and include the Tenant's obligation to inform the Developer of any need for maintenance or repair;
iv. include reasonable rules of conduct consistent with California law; and v. allow termination of the tenancy only for good cause, including serious or repeated violation of the terms and conditions of the rental agreement, or violations of applicable federal, state, or local law in connection with the use or occupancy of the Affordable Unit.
i. Security Deposits. Any security deposits collected by Developer or Developer's agent in connection with the rental of an Affordable Unit shall (i) not exceed the equivalent of one (1) month rent, (ii) be kept separate and apart from all other funds

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in a trust account with a depository insured by the Federal Deposit Insurance Corporation or other comparable federal deposit insurance program, (iii) be held and disbursed in accordance with California law, and (iv) the balance in the trust account shall at all times equal or exceed the aggregate of all outstanding obligations, plus accrued interest thereon.
j. Approval of Amendments. If City has not responded to any proposed amendment or change to the Management and Marketing Plan within thirty (30) days following City’s receipt of such amendment, Developer may simultaneously give a subsequent request to the City Manager, the Planning Director, and the City Attorney, which request shall be labelled prominently: "Second Request: Deemed Approval Matter." If City fails to respond to the subsequent request within fifteen (15) days following the date when given, then the amendment shall be deemed approved by City. k. Fees, Taxes, and Other Levies. Developer shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Affordable Units, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. However, Developer shall not be required to pay any such charge so long as (a) Developer is contesting such charge in good faith and by appropriate proceedings, (b) Developer maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Developer immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest.

Developer shall have all rights under Applicable Law to appeal the valuation of the Project (including but not limited to the Affordable Units, any improvements, fixtures or appurtenances, and any personal property) for tax purposes, and nothing herein shall be deemed to preclude Developer from applying for a Welfare Exemption or other taxation relief as a result of the affordability and public benefit provided by the Affordable Units.
l. Property Damage or Destruction. If any part of the Affordable Units are damaged or destroyed, Developer shall repair or restore the same, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Such work shall be commenced as soon as reasonably practicable after the damage or loss occurs and shall be completed within one year thereafter or as soon as reasonably practicable, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible.

During such time that lenders or low-income housing tax credit investors providing financing for the construction of the Project impose requirements that differ from the requirements of this Section the requirements of such lenders and investors shall prevail.

16. Recordation; Subordination. This Agreement shall be recorded immediately following the recordation of the Assignment Agreement and Grant Deed in the Official Records. Developer hereby represents, warrants and covenants that with the exception of easements of record, 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 Affordable Units.

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17. No Impairment of Lien. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument; provided, however, that any successor in interest to the Affordable Units shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise.

18. Default and Remedies.
a. Events of Default. An Event of Default shall arise hereunder if Developer fails to perform any obligation under this Agreement and fails to cure such default within thirty (30) days after the City has notified the Developer in writing of the default, or if the default cannot be cured within thirty (30) days, has failed to commence to cure within thirty (30) days and thereafter diligently pursued such cure and completed such cure within a reasonable time.
b. 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:
i. 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;
ii. For violations of obligations with respect to rents for residential units in the Affordable Units, impose as liquidated damages a charge in an amount equal to the actual amount collected in excess of the ELI Rent, VLI Rent or LI Rent, as applicable; and/or
iii. Pursue any other remedy allowed under the City Documents or at law or in equity.

Each of the remedies provided herein is cumulative and not exclusive. 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. Any failure or delay by City in asserting any of its rights or remedies, including specific performance, as to any Event of Default shall not operate as a waiver of any default or of any such rights or remedies or deprive City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

19. Indemnity. To the fullest extent permitted by law, Developer hereby covenants and agrees that it shall indemnify, defend (with counsel approved by City) and hold City and its elected and appointed officers, officials, employees, agents, consultants, contractors and representatives (collectively, the “Indemnitees”) harmless from and against (a) any and all claims, suits, actions, losses and liability of every kind, nature and description made against it by or on behalf of any person arising from any cause whatsoever in connection with the approval of this Agreement or the

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Project on the Site; (b) any and all claims, suits, actions, losses and liability of every kind, nature and description made against it by or on behalf of any person arising from any cause whatsoever in connection with the implementation or enforcement of this Agreement; (c) any and all claims, suits, actions, losses and liability of every kind, nature and description made against it arising from an act or omission of Developer or any of its shareholders, partners, members, principals, officials, officers, employees, representatives, agents, contractors or subcontractors in connection with this Agreement or the Project on the Site; (d) any and all claims, suits, actions, losses and liability of every kind, nature and description made against it arising out of or related to the development, construction, marketing, leasing, sale, operation, use, occupancy, maintenance or ownership of the Project on the Site, including compliance with the laws, ordinances, rules and regulations of City pursuant to this Agreement, and any failure to perform any obligation as and when required by this Agreement; and (e) all reasonable costs, attorney fees, expenses or liabilities incurred in connection with any such claim, suit, action, loss and liability of every kind, nature and description made against it or proceeding brought thereon; provided, however, that this provision shall not require Developer to indemnify an Indemnitee from any claims, suits, actions, losses, costs, fees expenses or liabilities arising from the gross negligence or willful misconduct of said Indemnitee. In the event any action or proceeding is brought against an Indemnitee, with respect to which indemnity may be sought hereunder, Developer, upon receipt of written notice from City, shall assume the investigation and defense thereof, including the employment of counsel approved by the City and the payment of all expenses related thereto.

Each Party shall notify the other Party immediately in writing of any claim, suit, action, loss, liability or damage related to activities performed under this Agreement. The Parties shall cooperate with each other in the investigation and disposition of any claim, suit, action, loss, liability or damage arising out of the activities under this Agreement, provided that nothing shall require either Party to disclose any documents, records or communications that are protected under the attorney-client privilege or attorney work product privilege.

The provisions of this Section 19 shall survive the expiration of the Term or the earlier termination of this Agreement.

20. Expenses. Developer agrees to pay an annual monitoring fee for compliance with this Agreement as may be adopted by resolution of the City Council which is in force and effect for a similar class of affordable units; provided, however, that if the Project is financed with Tax Credits or other Federal or State assistance and subject to a regulatory agreement administered by TCAC, then the annual reporting requirements imposed by such regulatory agreement shall apply and no additional annual monitoring fee shall be imposed or collected.

21. Miscellaneous.
a. Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties and recorded in the Official Records of Sonoma County.
b. 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

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this Agreement or Applicable Law. No failure or delay by City at any time to require strict performance by Developer 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. c. Notices. Except for any notice, demand or communication required under applicable law to be given in another matter, all notices, demands and communications 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 notices demands or communications shall be shall be sent by personal delivery, by reputable overnight delivery service (which provides a delivery receipt), or by certified or registered mail, return receipt requested, postage prepaid. Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either Party may change its address at any time by giving written notice of such change to City or Developer as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective.

Any notice to be delivered to City shall be addressed to:

City: City Manager
City of Healdsburg
401 Grove Street
Healdsburg, California 95448
with copy to: Samantha Zutler, Esq.

City Attorney
c/o Burke, Williams & Sorensen, LLP
1 California Street, Suite 3050
San Francisco, California 94111-5432
Developer: Freebird Development Company, LLC
1111 Broadway
Oakland, CA 94607
Attention: Robin Zimbler, Manager
Telephone: (510) 319-6959
Email: [email protected]

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with copy to: Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94101
Attention: Evan Gross, Esq.

Telephone: (415) 781-6600 ext. 6
Email: [email protected]
d. Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement. e. Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.

Furthermore, Developer and its employees shall at no time pretend to be or hold themselves out as employees or agents of City. Except as City may specify in writing, Developer shall not have any authority to act as an agent of City or to bind City to any obligation.
f. Action by City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by City’s Authorized Representative or by any person who shall have been designated by City’s Authorized Representative, without further approval by the City Council. The foregoing notwithstanding, the City’s Authorized Representative may, in his or her discretion, defer any such action to the City Council.
g. No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of any person other than the Parties and their permitted successors and assigns. h. Non-Liability of City and City Officials, Employees and Agents. No member, official, employee or agent of City shall be personally liable to Developer or any successor in interest, in the event of any default or breach by City, or for any amount of money which may become due to Developer or its successor or for any obligation of City under this Agreement.
i. 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

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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 Healdsburg 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.
j. Time is of the Essence. Time is of the essence in the performance of this Agreement. k. 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 Sonoma County, California or in the Federal District Court for the Northern District of California.
l. 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. m. 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.
n. Entire Agreement; Exhibits. This Agreement, together with the DDA, contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. Exhibit A, Exhibit B, and Exhibit C attached hereto are incorporated herein by this reference. o. 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.

SIGNATURES ON FOLLOWING PAGE(S).

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IN WITNESS WHEREOF, the Parties have executed this Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written above.

CITY:

CITY OF HEALDSBURG, a municipal corporation
By: _______________________________
Jeffrey Kay, City Manager
Attest:

By: _____________________________
Raina Allan, City Clerk
Approved as to form:

By: ____________________________
Samantha Zutler, City Attorney
DEVELOPER:

FREEBIRD DEVELOPMENT COMPANY, LLC,
a California limited liability company
By:

Name:

Its:

SIGNATURES MUST BE NOTARIZED.

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STATE OF CALIFORNIA )
)

COUNTY OF SONOMA )
On , 20__, 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 _______________________________ (Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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STATE OF CALIFORNIA )
)

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

WITNESS my hand and official seal.

Signature _______________________________ (Seal)

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Exhibit A

PROPERTY LEGAL DESCRIPTION
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:

APN: _______________

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Exhibit B

LEGAL DESCRIPTION OF SITE
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
[INSERT LEGAL DESCRIPTION]
APN: _______________

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Exhibit C

CERTIFICATE OF COMPLETION

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Manager
This document is exempt from the payment of a
recording fee pursuant to Government Code
§27383 and Building Homes & Jobs Trust Fund
Fee pursuant to Government Code
§27388.1(a)(2)(D).

CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (“Certificate of Completion”) is made by the CITY OF HEALDSBURG, California municipal corporation (“City”), in favor of __________________________________________________ (“Developer”), as of the date set forth below.

RECITALS
A. City and Developer have entered into that certain Rental Affordable Housing Agreement And Declaration Of Restrictive Covenants (“Agreement”) dated _____, 20__, concerning the development of affordable multifamily rental housing on certain real property (the “Property”) situated in the City of Healdsburg, California, as more fully described in Attachment “A” attached hereto and made a part hereof. The Agreement was recorded in the Official Records of Sonoma County on ________, 20___, at Instrument No.______________.

B. As referenced in Section 1 of the Agreement, the Affordable Housing Occupancy Date shall mean the date of issuance by City of a certificate of occupancy for the final Affordable Unit, as memorialized in a Certificate of Completion to be executed by City and Developer and recorded in the Official Records of Sonoma County.

NOW, THEREFORE, City and Developer hereby agree as follows:

1. City has issued to Developer a certificate of occupancy for the final Affordable Unit as of _____________, 20__. Accordingly, as provided in the Agreement, the Affordable Housing Occupancy Date shall mean ____________, 20__ and the Termination Date shall be fifty five (55) years thereafter, meaning ____________, 2___.

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2. This Certificate of Completion shall not be deemed or construed to constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction and development of the Project or any portion thereof. This Certificate of Completion is not a notice of completion as referred to in Section 8182 of the California Civil Code.

IN WITNESS WHEREOF, City and Developer have executed this Certificate of Completion this ___ day of _______________, 20__.

CITY OF HEALDSBURG,
a California municipal corporation
By:

Print Name: Jeffrey Kay
Title: City Manager
APPROVED AS TO FORM:

Samantha Zutler, City Attorney
ATTEST:
_____________________________
Raina Allan, City Clerk
DEVELOPER:

___________________________________
___________________________________
By:

Name:

Title:

SIGNATURES MUST BE NOTARIZED.

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STATE OF CALIFORNIA )
)

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.

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STATE OF CALIFORNIA )
)

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

WITNESS my hand and official seal.

Signature _______________________________ (Seal)

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ATTACHMENT A

LEGAL DESCRIPTION OF PROPERTY
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:
[INSERT DESCRIPTION}
APN: _______________

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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Manager

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §27383 AND

BUILDING HOMES AND JOBS TRUST

FUND FEE PER GOVERNMENT CODE
§27388.1(a)(2)(D)
Space above this line for Recorder’s use.

OWNER OCCUPIED AFFORDABLE HOUSING REGULATORY AGREEMENT
AND

DECLARATION OF RESTRICTIVE COVENANTS
by and between

THE CITY OF HEALDSBURG
and
[NAME OF DEVELOPMENT ENTITY]
for

SAGGIO HILLS AFFORDABLE HOUSING PROJECT

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Packet Pg. 371 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 2

OWNER OCCUPIED AFFORDABLE HOUSING REGULATORY AGREEMENT

AND DECLARATION OF RESTRICTIVE COVENANTS
This Owner Occupied Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (this “Agreement”) is entered into as of ________________, 20___ (the "Effective Date"), by and between the City of Healdsburg, a California municipal corporation (“City”) and [Name of Development Entity] (“Developer”). City and Developer are individually referred to herein as a “Party” and collectively as the “Parties.”

R E C I T A L S
A. On November 8, 2022, the Planning Commission adopted Resolution No. 2022- 18, conditionally approving an application for design review (DR 2022-05) (“Design Review Approval”), and on April 3, 2023, the City Council adopted Resolution ___-2023, conditionally approving an application for a tentative map (TM 2022-02) ("Tentative Map Approval") related to the subdivision of certain parcels of real property collectively and commonly known as the Saggio Hills Affordable Housing Project in the City of Healdsburg, California, into seventeen lots and the development of 118 affordable housing residential units, preservation of open space, outdoor amenities for residents, a community building and publicly accessible trails on the Property (the "Development").

B. The City and Freebird Development Company, a California limited liability company (“Freebird”) have entered into a Disposition and Development Agreement ("DDA"), dated April 3, 2023, as evidenced by a Memorandum of Agreement dated ___________, 202__, and recorded on ___________, 20___, in the Official Records of Sonoma County (“Official Records”) as Instrument No. 20___________, to provide for the construction of the Development in phases in accordance with the Design Review Approval and Tentative Map Approval and subject to certain terms and conditions.

C. [Section 601 (g) of the DDA specifies that Lots 4 through 13 of TM 2022-02 (“Property”), as more particularly described in Exhibit A attached hereto and incorporated herein to this Agreement, shall each be improved with a two-story, three-bedroom townhome residence on each parcel of a height not to exceed 28 feet, and 1,766 square feet, and associated surface parking and hardscaping and landscaping improvements, which townhome residences shall be restricted for sale to and occupancy by persons and families of moderate income, at an affordable housing cost, for a minimum period of 45 years, as more particularly set forth in this Agreement (“Project”).]
OR
[Section 601 (i) of the DDA specifies that Lot 15 of TM 2022-02 (“Property”), as more particularly described in Exhibit A attached hereto and incorporated herein to this Agreement, shall be improved with two, three-story residential buildings of a height not to exceed 35 feet, containing 18 residential units totaling approximately 20,077 square feet and comprised of one (1) studio unit, six (6) one-bedroom units, six (6) two-bedroom units, and five (5) three-bedroom units, 29 surface parking spaces and associated hardscape and landscaping improvements,

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which residential units shall be restricted for sale to and occupancy by persons and families of moderate income, at an affordable housing cost, for a minimum period of 45 years, as more particularly set forth in the Owner-Occupied (“Project”).] D. Section 703 of the DDA provides, in sum. that all of the residential units constructed on the Property shall be sold to and occupied by an “Moderate Income Household” at an “Moderate Income Housing Cost”, as said terms are defined herein (each, an “Moderate Income Unit” and, collectively, the “Moderate Income Units”).

E. In accordance with Section 103 of the DDA, Freebird has assigned its rights and obligations under the DDA in relation to the Property and Project, defined herein, to Developer as set forth in that certain Assignment and Assumption Agreement dated ___________, 202__ (“Assignment Agreement”), and to ensure the continued affordability of the Moderate Income Units for the Term, this Agreement shall be executed and recorded against the Property immediately following the recordation of the Assignment Agreement and the Grant Deed dated ____________, 202__ (“Grant Deed”) conveying fee title to the Property from City to Developer in the Official Records.

F. The purpose of this Agreement is to restrict the sale and occupancy of the Moderate Income Units at a Moderate Income Housing Cost for the Term as required by the DDA. The Parties intend the covenants set forth in this Agreement to run with the land and to be binding upon Developer and its permitted successors and assigns.

1. Definitions. The following terms have the meanings set forth in this Section wherever used in this Agreement or the attached exhibits:
“Adjusted for family size appropriate to the unit” shall have the meaning set forth in Section 50052.5 of the California Health and Safety Code, as amended or any successor statute thereto.
“Affordable Housing Occupancy Date” shall mean the date of issuance by City of a certificate of completion for the Project in accordance with Section 610 of the DDA, to be memorialized by the Parties through execution and recordation of a Certificate of Completion in the form of Attachment No. 10 to the DDA. “Agreement” means this Owner Occupied Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants.
“Applicable Laws” means all applicable laws, ordinances, statutes, codes, orders, decrees, rules, regulations, official policies, standards and specifications (including any ordinance, resolution, rule, regulation, standard, official policy, condition, or other measure) of the United States, the State of California, the County of Sonoma, City of Healdsburg, or any

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other political subdivision in which the Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Developer, or the Project. “Area Median Income” or “AMI” means the median income for Sonoma County, California, adjusted for the actual number of persons in the applicable household, as determined by HUD pursuant to Section 8 of the United States Housing Act of 1937 and as published from time to time by 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).
“Assignment Agreement” is defined in Recital E.
“City” means the City of Healdsburg, a California municipal corporation. “City Documents” means the Disposition and Development Agreement and this Agreement.
“City’s Authorized Representative” means the City Manager of the City of Healdsburg, or his or her designee.
“Claims” is defined in Section 13.
“DDA” is defined in Recital B.
“Design Review Approval” is defined in Recital A.
"Developer” means [Name of Developer Entity] or its transferee, successor, or assignee.
“Development” is defined in Recital A.
"Effective Date" is defined in the opening paragraph of this Agreement. "Excess Proceeds" is defined in Section 4.d.
“Freebird” is defined in Recital B.
“Grant Deed” is defined in Recital E.
“Gross Income” means the combined, gross, pre-tax income of all adult occupants of the applicant household, as calculated under California Code of Regulations, Title 25, Section 6914.
“HCD” means the State of California Department of Housing and Community Development.
“HUD” means the U.S. Department of Housing and Urban Development. “Indemnitees” is defined in Section 13.

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Packet Pg. 374 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 5
“Marketing Plan” or “Plan” is defined in Section 9.b.
“Moderate Income Household” means a household whose Gross Income upon initial occupancy is no more than one hundred twenty percent (120%) of AMI, as adjusted for the actual number of persons in the applicable household.
“Moderate Income Housing Cost” means a monthly obligation to pay mortgage payments (principal and interest), property taxes, property insurance, mortgage insurance, utilities, and homeowners’ association dues (if applicable) in an aggregate amount not greater than one-twelfth of thirty-five percent (35%) of one hundred twenty percent (120%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit. “Moderate Income Unit” means a unit that is restricted for sale to a Moderate Income Household at a Moderate Income Housing Cost.
“Official Records” is defined in Recital B.
“Party” or “Parties” respectively means City and Developer individually or collectively. “Performance Deed of Trust” means the deed of trust to be executed by a homebuyer of each Moderate Income Unit that is substantially in the form attached as Appendix C to the Resale Restriction Agreement and recorded in the Official Records at the closing for the sale of each Moderate Income Unit.
“Project” is defined in Recital C.
"Project Approvals" means the Design Review Approval, defined in Recital A, and the Tentative Map Approval, defined in Recital A.
“Property” is defined in Recital C and more particularly described in the legal description attached hereto as Exhibit A.
“Regulations” means Title 25 of the California Code of Regulations. “Resale Restriction Agreement” is defined in Section 4.c. “Restricted Sales Price” means the maximum sales price for a Moderate Income Unit as determined by the City pursuant to Section 4.a that will result in a Moderate Income Housing Cost for a homebuyer.
"Senior Interest" is defined in Section 10.
"Senior Lender" is defined in Section 10.b.
“Tentative Map Approval” is defined in Recital A.
“Term” means the term of this Agreement, commencing upon the Effective Date and ending on the Termination Date.
“Termination Date” is defined in Section 7(a).

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Packet Pg. 375 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 6

2. Use and Affordability Restrictions. Developer hereby covenants and agrees, for itself and its successors and assigns, that the Moderate Income Units shall be used solely in compliance with the Project Approvals, including the DDA, and the requirements set forth herein. Developer represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with the occupancy and affordability restrictions set forth in this Agreement, and Developer covenants that it shall not enter into any agreement that is inconsistent with such restrictions.

3. Interior Finishes and Parking. [Lots 4-13] The Moderate Income Units shall have interior finishes and features that are durable, of good quality, and consistent with contemporary standards for new housing. The Moderate Income Units must contain air conditioning, dishwashers, refrigerators, garbage disposals, cooking facilities and in-unit laundry facilities.

Prior to issuing a building permit for the Moderate Income Units, the City shall have the right to review the Moderate Income Unit plans and/or construction drawings for the sole purpose of determining consistency with this Section.

OR
[Lot 15] The Moderate Income Units shall have interior finishes and features that are durable, of good quality, and consistent with contemporary standards for new housing. The Moderate Income Units must contain air conditioning, dishwashers, refrigerators, garbage disposals, cooking facilities and either in-unit laundry facilities or access to common area laundry facilities, in the Developer’s sole discretion. Prior to issuing a building permit for the Moderate Income Units, the City shall have the right to review the Moderate Income Unit plans and/or construction drawings for the sole purpose of determining consistency with this Section.

4. Moderate Income Unit Restrictions.
a. Determination of Restricted Sales Price.
i. Unless released from this Agreement following City’s decision not to exercise its right of first refusal to purchase a Moderate Income Unit under Section 4.d, below, the Moderate Income Units may be sold only to Moderate Income Households (or to the City or its designee pursuant to Section 4.d, below).
ii. Except as provided in Section 4.d, below, the sale price of each Moderate Income Unit may not exceed the Restricted Sales Price. Prior to offering a Moderate Income Unit for sale, Developer shall provide not less than ninety (90) days’ written notice to City of Developer’s intent to offer Moderate Income Units for sale, which notice shall include the proposed maximum Restricted Sales Price at which the Moderate Income Units will be offered for sale for City’s review and approval. The Restricted Sales Price shall be determined by using a ten percent (10%) down payment of the Restricted Sales Price and a Moderate Income Housing Cost based on then-current prevailing interest rates for a fixed 30-year mortgage.

Following the initial sale of any Moderate Income Unit by Developer, the

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Packet Pg. 376 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 7
Restricted Sales Price of all future sales of those units shall be determined in accordance with the terms of the Resale Restriction Agreement. b. Buyer Selection.
i. Income Verification. Prior to entering into a contractual commitment to sell each Moderate Income Unit, Developer shall provide a certification to City attesting to the prospective buyer’s household income and status as a Moderate Income Household. In connection with such certification, prospective purchasers shall be required to provide written certification of household income as reasonably required by the City, including without limitation such documents as income tax returns and W-2 statement for the previous two (2) calendar years, and all pay stubs issued to the prospective buyer within the last sixty (60) calendar days.
ii. Owner-Occupancy. Prospective purchasers of Moderate Income Units must sign a written statement acknowledging their agreement that the Moderate Income Unit must be occupied as the purchaser’s principal residence, that the unit may not be rented or leased, except as allowed under the Resale Restriction Agreement.
iii. Credit and Background Checks. Developer shall require each prospective purchaser of a Moderate Income Unit to complete an application and credit and background check. There shall be no obligation to sell a Moderate Income Unit to a prospective buyer whose application and credit check does not demonstrate ability to purchase the unit.
c. Resale Restriction Agreement. The initial buyer and each subsequent buyer of a Moderate Income Unit shall execute and record a covenant, substantially in the form of Exhibit B, that restricts the future sale of such Moderate Income Unit to Moderate Income Households at the Restricted Sales Price for a period of fortyfive (45) years unless released sooner pursuant to Section 4.d below (the "Resale Restriction Agreement"). The initial buyer and each subsequent buyer shall also execute and record, as applicable, a note and performance deed of trust, substantially in the form attached to the Resale Restriction Agreement, agreeing to be bound to the Resale Restriction Agreement and to pay any Excess Proceeds when due to the City.
d. City Right of First Refusal. For the initial sale of any Moderate Income Unit and, except as provided below, all future sales of those units, if an escrow for a Moderate Income Unit to purchase such unit at or below the Restricted Sales Price is not opened within ninety (90) days after the unit is first made available for sale, the City or its designee shall have a right of first refusal to purchase any such unit(s) at the Restricted Sales Price. The City acknowledges on behalf of itself and its designees that owners of Moderate Income Units will be subject to recorded conditions, covenants, and restrictions, and will be required to pay all homeowners association assessments validly assessed. If the City or its designee declines to

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Packet Pg. 377 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 8
exercise its right of first refusal to purchase any such unit within an additional ninety (90) days from the time the City is notified that it has the right to purchase that unit, any such unit(s) may be sold at an unrestricted market price without any continuing sale price restriction. However, at the close of escrow for such unit, the seller shall pay to the City the positive difference, if any, between the actual purchase price and the Restricted Sales Price ("Excess Proceeds"). Following payment of any Excess Proceeds to the City, the Moderate Income Unit in question shall be released from the Resale Restriction Agreement, the City's right of first refusal to purchase shall terminate, and the unit no longer shall be referred to as a Moderate Income Unit.

5. Non-Discrimination; Compliance with Fair Housing Laws. a. Preference for Local Residents. To the extent not inconsistent with state and federal fair housing laws, in order to ensure that there is an adequate supply of affordable housing within the City of Healdsburg for residents and employees of businesses within the City, to the extent permitted by law and consistent with regulations for funding sources used for development of the Moderate Income Units, within the pool of eligible applicants, first priority for sale of Moderate Income Units will be given to qualified Moderate Income Households with members who work at the hotel resort located and operated on Parcel 1 of Saggio Hills per Map recorded May 23, 2018 in Book 795, Pages 31-40 as Instrument No. 2018-037508, of Official Records, in the City of Healdsburg, County of Sonoma, State of California. If there are no qualified Moderate Income Households who meet these criteria, second priority shall be granted to qualified Moderate Income Households with members who live or work in the city limits of Healdsburg. If there are no qualified Moderate Income Households who meet these criteria, third priority shall be granted to qualified Moderate Income Households with members who live or work in unincorporated Healdsburg, but within the 95448 zip code. If there are no qualified Moderate Income Households who meet these criteria, fourth priority shall be granted to qualified Moderate Income Households with members who live or work in Windsor, Geyserville, or Cloverdale or within the unincorporated Windsor, Geyserville and Cloverdale boundaries, but within the 95492, 95441, or 95425 zip codes, respectively. If there are no qualified Moderate Income Households who meet these criteria, fifth priority shall be granted to qualified Moderate Income Households with members who have previously lived in Healdsburg (within City limits and within the unincorporated 95448 zip code), as determined by prior enrollment in Healdsburg public or private schools, or a previously active utility account with the City of Healdsburg. In the event there are fewer applicants for Moderate Income Units that meet the criteria specified in this paragraph than there are available Moderate Income Units, such units shall be made available to members of the general public who are qualified Moderate Income Households.
b. Fair Housing. Developer shall comply with state and federal fair housing laws in the marketing and sale of the Moderate Income Units, as applicable.

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Packet Pg. 378 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 9
c. Non-Discrimination. Developer shall not restrict the sale, transfer, use, occupancy, tenure or enjoyment of the Moderate Income Units on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer 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, transfer, use, occupancy, tenure or enjoyment of the Moderate Income Units, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of vendees in, of, or for the Moderate Income Units.

6. Access to Information; Inspections. Records related to compliance with this Agreement must be kept accurate and up-to-date. Developer shall provide City and its authorized agents and representatives reasonable access to any books, documents, papers and records associated with the sale of Moderate Income Units for the purpose of making audits, examinations, excerpts and transcriptions in connection with monitoring compliance with this Agreement, during normal business hours of Developer and upon not less than three (3) business days’ prior written notice.

City shall notify Developer of any records it deems insufficient. Developer shall have thirty (30) calendar days from such notice to correct any specified reasonable deficiency in the records, or, if more than thirty (30) days shall be reasonably necessary to correct the deficiency, Developer shall begin to correct the deficiency within thirty (30) days and diligently pursue the correction of the deficiency as soon as reasonably possible.

7. Term of Agreement.
a. Term of Restrictions. This Agreement shall commence upon the Effective Date and shall remain in effect until the forth-fifth (45th) anniversary of the date on which the last Moderate Income Unit receives a Certificate of Completion in accordance with Section 610 of the DDA (the “Termination Date”). b. Effectiveness Succeeds Conveyance of Property and Repayment of Loan. i. Except as otherwise provided in this Subsection 7.b, this Agreement shall remain effective and fully binding on all portions of the Property for the full term hereof, regardless of any sale, assignment, transfer, refinancing, or conveyance of the Moderate Income Units or the Project or any part thereof or interest therein.
ii. Upon execution and recordation of a Resale Restriction Agreement for an individual Moderate Income Unit, or sale at a market price and repayment of Excess Proceeds pursuant to Section 4.d, above, such Moderate Income Unit shall be released from this Agreement.

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Packet Pg. 379 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4888-1505-1609 v3 10
c. Reconveyance. 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. This Agreement shall be partially released from the Property as specified in Section 7.b.ii, above, and the Parties agree to execute and record appropriate instruments to release and discharge this Agreement as to the portions of the Property so specified.

8. Binding Upon Successors; Covenants to Run with the Land. Developer hereby subjects its interest in the Moderate Income Units to the covenants and restrictions set forth in this Agreement. City and Developer 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 Developer and City, regardless of any sale, assignment, refinancing, conveyance or transfer of the Moderate Income Units, or any part thereof or interest therein, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by City. Any successor-in-interest to Developer, including without limitation any purchaser, transferee or lessee of the Moderate Income Units (other than the purchasers 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, or other instrument affecting or conveying the Moderate Income Units 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, or other instrument. If any such contract, deed, or other instrument has been executed prior to the date hereof, Developer hereby covenants to obtain and deliver to the City an instrument in recordable form signed by the parties to such contract, deed, or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby.

Without limiting the generality of the foregoing, Developer and the City hereby declare their understanding and intent that:
(a) The covenants and restrictions contained in this Agreement shall be construed as covenants running with the land pursuant to California Civil Code section 1468 and not as conditions which might result in forfeiture of title by Developer; (b) The burden of the covenants and restrictions set forth in this Agreement touch and concern the Property in that the Developer’s legal interest in the Property and all improvements thereon are rendered less valuable thereby; (c) The benefit of the covenants and restrictions set forth in this Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Property by the Moderate Income Housing unit owners; and

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(d) All covenants and restrictions contained herein without regard to technical classification or designation shall be binding upon Developer and its successors in interest for the benefit of the City, and such covenants and restrictions shall run in favor of the City for the entire period during which such covenants and restrictions shall be in force and effect, without regard to whether the City is an owner of any land or interest therein to which such covenant and restrictions relate.

9. Management; Maintenance; Taxes, Fees, and Assessments; Casualty. a. Additional Requirements. All construction work and professional services for the Project shall be performed by persons or entities licensed or otherwise authorized to perform the applicable work or service in the State of California and shall have a current City of Healdsburg business license if required under local law. To the extent allowed by state and federal laws, Developer shall limit the installation of satellite dish, antenna and other such equipment to screened locations on the Project buildings as approved by City.
b. Marketing Plan. Not fewer than sixty (60) days before Developer begins offering Moderate Income Units for sale, Developer shall submit for City review and approval a plan for marketing the Moderate Income Units (the “Marketing Plan” or “Plan”). The Marketing Plan shall address, (i) plans for compliance with fair housing laws and this Agreement, (ii) how Developer plans to certify the eligibility of Moderate Income Households, (iii) preparation of clear and accurate marketing information regarding the Moderate Income Units (preferably in English, Spanish and other languages representative of eligible households in the area) to be distributed to eligible Moderate Income Households included on any City maintained affordable housing waiting list, and (iv) placement of advertisements regarding the availability of the Moderate Income Units online or in other media during the applicable marketing period (preferably in English, Spanish and other languages representative of eligible households in the area). The Plan shall include the form of purchase and sale agreement that Developer proposes to enter into with respect to the Moderate Income Units, as well as the Resale Restriction Agreement. Upon receipt of the Plan, the City shall promptly review the Plan and shall approve or disapprove it within thirty (30) days after submission. If City has not responded to the proposed Marketing Plan within thirty (30) days following City’s receipt of such Plan, Developer may simultaneously give a subsequent request to the City Manager, the Planning Director, and the City Attorney, which request shall be labelled prominently:
"Second Request: Deemed Approval Matter." If City fails to respond to the subsequent request within fifteen (15) days following the date when given, then the Marketing Plan shall be deemed approved. If the Plan is not approved, the Developer shall submit a revised Plan within thirty (30) days, which shall be approved or disapproved by the City within fifteen (15) days after submission. If City fails to approve or disapprove the revised Marking Plan within such fifteen (15) day period, then the Marking Plan shall be deemed approved. Developer shall abide by the terms of the Marketing Plan in marketing and selling the Moderate

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Income Units throughout the Term of this Agreement, and shall submit proposed material modifications to City for review and approval as described herein. c. Fees, Taxes, and Other Levies. Developer shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Project, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. However, Developer shall not be required to pay any such charge so long as (a) Developer is contesting such charge in good faith and by appropriate proceedings, (b) Developer maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Developer immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest. Developer shall have all rights under Applicable Law to appeal the valuation of the Project (including but not limited to the Moderate Income Units, any improvements, fixtures or appurtenances, and any personal property) for tax purposes, and nothing herein shall be deemed to preclude Developer from applying for any legally available taxation relief as a result of the affordability and public benefit provided by the Moderate Income Units.

10. Recordation; Subordination. This Agreement shall be executed and recorded against the Property immediately following the recordation of the Assignment Agreement and the Grant Deed conveying fee title to the Property from City to Developer in the Official Records.

Developer 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 Moderate Income Units or the Project. Upon request, the City shall not unreasonably withhold its consent to subordinate this Agreement to the deeds of trust and regulatory agreements required by Developer’s construction and permanent lenders (each a “Senior Interest”) in a form reasonably approved by the City, if the subordination request meets the following conditions:
a. All the proceeds of loans related to the proposed Senior Interest, less any transaction costs, must be used to provide construction and/or permanent financing for the Project.
b. The proposed lender of a Senior Interest (each a “Senior Lender”) must be a state or federally chartered financial institution, or a nonprofit corporation that is not affiliated with Developer or any of Developer’s affiliates, other than as a depositor or lender. The City reserves the right to negotiate priority of interest with public entities.
c. The subordination agreement(s) must be structured to minimize the risk that this Agreement would be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Interest. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Developer, including: (i) providing the City or its successor with copies of any notices of default in the same manner as provided to Developer at the same

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time or promptly thereafter such notice is provided to the Developer; and (ii) providing the City with a cure period of at least thirty (30) days to cure any default. d. The subordination does not require the consent of the Senior Lender prior to the City exercising remedies available to the City under this Agreement.

11. No Impairment of Lien. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust, or other financing or security instrument; provided, however, that any successor in interest to the Property or the Project shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise.

12. Default and Remedies.
a. Events of Default. An Event of Default shall arise hereunder if Developer fails to perform any obligation under this Agreement and fails to cure such default within thirty (30) days after the City has notified the Developer in writing of the default, or if the default cannot be cured within thirty (30) days, has failed to commence to cure within thirty (30) days and thereafter diligently pursued such cure and completed such cure within a reasonable time.
b. 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:
(i) 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; and/or
(ii) Pursue any other remedy allowed under the City Documents or at law or in equity.

13. Indemnity. To the fullest extent permitted by law, Developer shall indemnify, defend (with counsel approved by the City) and hold the City and its elected and appointed officers, officials, employees, agents, consultants, contractors and representatives (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without

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limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s construction, management, marketing, evaluation and determination of a household’s Gross Income, sale of the Moderate Income Units, or any failure to perform any obligation as and when required by this Agreement. Developer’s indemnification obligations under this Section 13 shall not extend to Claims resulting solely from the gross negligence or willful misconduct of Indemnitees or to Claims resulting from the City’s exercise of its right of first refusal to purchase a Moderate Income Unit. The provisions of this Section 13 shall survive the expiration or earlier termination of this Agreement.

14. Miscellaneous.
a. Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties and recorded in the Official Records of Sonoma County.
b. 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 Developer 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.
c. Notices. Except for any notice, demand or communication required under Applicable Laws to be given in another matter, all notices, demands and communications 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 notices demands or communications shall be sent by personal delivery, by reputable overnight delivery service (which provides a delivery receipt), or by certified or registered mail, return receipt requested, postage prepaid. Any notice, demand or communication shall be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either Party may change its address at any time by giving written notice of such change to City or Developer as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective.

Any notice to be delivered to City shall be addressed to:

City Manager
City of Healdsburg

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401 Grove Street
Healdsburg, CA 95448
With a copy to:

Samantha Zutler, Esq., City Attorney
City of Healdsburg
101 Howard Suite, Suite 400
San Francisco, CA 94123
Any notice to be delivered to Developer shall be addressed to:
[Name of Developer]
[Developer Address]
[Developer Address]
Attention: [Name of Contact]
With a copy to:
[Name]
[Address]
[Address]
Attention: [Name of Contact]
d. Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement.
e. 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. The relationship of Developer and City shall not be construed as a joint venture, equity venture, partnership or any other relationship. City neither undertakes nor assumes any responsibility or duty to Developer (except as expressly provided in this Agreement) or to any third-party with respect to the Project. Developer and its employees are not employees of City but rather are, and shall always be considered independent contractors. Furthermore, Developer and its employees shall at no time pretend to be or hold themselves out as employees or agents of City. Except as City may specify in writing, Developer shall not have any authority to act as an agent of City or to bind City to any obligation.
f. Action by City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by City is required or permitted under this Agreement, such action shall be in writing, and such action

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may be given, made or taken by City’s Authorized Representative or by any person who shall have been designated by City’s Authorized Representative, without further approval by the City Council. The foregoing notwithstanding, the City’s Authorized Representative may, in his or her discretion, defer any such action to the City Council, provided that such deferral shall not toll any period herein within which the City is required to perform any act without Developer’s written consent.
g. No Third-Party Beneficiaries. This Agreement is not intended to be for the benefit of any person other than the Parties and their permitted successors and assigns. h. Non-Liability of City and City Officials, Employees and Agents. No member, official, employee or agent of City shall be personally liable to Developer or any successor in interest, in the event of any default or breach by City, or for any amount of money which may become due to Developer or its successor or for any obligation of City under this Agreement.
i. 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 Healdsburg 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.
j. Time is of the Essence. Time is of the essence in the performance of this Agreement.
k. 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 Sonoma County, California or in the Federal District Court for the Northern District of California.
l. 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. m. 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.
n. Entire Agreement; Exhibits. This Agreement contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or

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written agreements between the Parties with respect thereto. Exhibits A and B, attached hereto are incorporated herein by this reference. o. 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.

SIGNATURES ON FOLLOWING PAGE(S).

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IN WITNESS WHEREOF, the Parties have executed this Owner Occupied Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written above.

CITY:

CITY OF HEALDSBURG, a municipal corporation
By: _______________________________
Jeffrey Kay, City Manager
Attest:

By: _____________________________
Raina Allan, City Clerk
Approved as to form:

By: ____________________________
Samantha Zutler, City Attorney
DEVELOPER:
[NAME OF DEVELOPER]
By:

Name:

Its:

SIGNATURES MUST BE NOTARIZED.

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STATE OF CALIFORNIA )
)

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.

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STATE OF CALIFORNIA )
)

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.

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EXHIBIT A

PROPERTY DESCRIPTION
The real property situated in the City of Healdsburg, County of Sonoma, State of California, described as follows:

APN: _______________

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Exhibit B
RESALE RESTRICTION AGREEMENT [to be attached]

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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attn: City Clerk
APN: _________________________
_
Exempt From Recording Fee Per (Space above for Recorder's Use) Government Code Section 27383 And Building Homes And Jobs Trust Fund Fee Per Government Code Section 27388.1(a)(2)(D)

BUYER'S OCCUPANCY AND RESALE RESTRICTION AGREEMENT

WITH RIGHT OF FIRST REFUSAL

CITY OF HEALDSBURG
(Insert Property Address)
This Buyer's Occupancy and Resale Restriction Agreement with Right of First Refusal (this "Agreement") is entered into as of ________________, 20__, by and between the City of Healdsburg, a California municipal corporation (the "City"), and __________________________ (the "Owner").

RECITALS
A. Pursuant to the terms of that certain Disposition and Development Agreement (“DDA”) between the City and Freebird Development Company, LLC, a California limited liability company, as evidenced by a Memorandum of Disposition and Development Agreement recorded on __________, 20___, as Document No. 20_____________ in the Official Records of Sonoma County (the "Official Records"), and that certain Owner Occupied Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (“Regulatory Agreement”), recorded on ______________, 20__, as Document No. ________________ in the Official Records, that certain property described in Exhibit A to this Agreement (the "Home") was designated as a Moderate Income Unit, to be made available for sale only to Moderate Income Households at a price not to exceed a Moderate Income Housing Cost for a period of forty-five (45) years.

B. Owner is a Moderate Income Household, and is purchasing the Home. As a condition of purchasing the Home, and in exchange for having the opportunity to acquire the Home at a price not to exceed a Moderate Income Housing Cost, Owner is required to enter into this Agreement to ensure the continued affordability of the Home, consistent with the DDA and Regulatory Agreement.

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C. This Agreement also provides the City a right of first refusal to purchase the Home at a Restricted Price, given in consideration of the economic benefits to the Owner resulting from the purchase of the Home at a price not to exceed a Moderate Income Housing Cost.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and benefits of this Agreement, the sufficiency of which is hereby acknowledged, the Owner and the City agree as follows:

ARTICLE 1. DEFINITIONS AND EXHIBITS
Section 1.1 Definitions. Unless otherwise specified in this Agreement, the following capitalized terms shall have the meanings set forth below:
(a) "Additional Financing", if obtained by Owner, is defined in Section 2.1. (b) "Agreement" is defined in the opening paragraph.
(c) "Area Median Income" shall mean the median income for Sonoma County, California as determined by the U.S. Department of Housing and Urban Development pursuant to Section 8 of the United States Housing Act of 1937, and as published from time to time by the California Department of Housing and Community Development 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). For purposes of calculating a Moderate Income Housing Cost or Moderate Income Rent, Area Median Income shall be adjusted for an assumed household of one person in the case of a studio unit, two persons in the case of a one-bedroom unit, three persons in the case of a two-bedroom unit, four persons in the case of a three-bedroom unit, and one additional person for every additional bedroom thereafter.

For purposes of determining whether a household is a Moderate Income Household, Area Median Income shall be adjusted according to the actual size of that household. (d) "City" is defined in the opening paragraph.
(e) "City Deed of Trust" shall mean the deed of trust, the form of which is attached hereto as Appendix C, executed by the Owner for the benefit of the City and securing the City Note.
(f) "City Note" shall mean the promissory note, the form of which is attached hereto as Appendix B, executed by the Owner securing the Owner's payment of Excess Sales Proceeds and Excess Rental Proceeds.
(g) "Default" is defined in Section 5.1.
(h) "Excess Sales Proceeds" shall mean the amount by which the gross sales proceeds received by the Owner from a Transfer of the Home exceeds the maximum possible Moderate Income Housing Cost.
(i) "Excess Rental Proceeds" shall mean the amount by which the gross rental income received by the Owner from any lease of the Home exceeds a Moderate Income Rent.

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(j) "Fair Market Value" means the value of the Home as determined by an appraisal dated no sooner than thirty (30) days prior to the date of the Owner's Notice of Intent to Sell and prepared by a certified Member of the Appraisal Institute (MAI) chosen by the Owner with experience appraising residential properties in Sonoma County. (k) "First Lender Loan" is defined in Section 2.1.
(l) "Form of Release" is defined in Section 4.6(c).
(m) "Inheriting Owner" is defined in Section 4.3.
(n) “Listing Agreement” is defined in Section 4.4(c).
(o) "Moderate Income Household" shall mean a household whose gross income upon initial occupancy is no more than one hundred twenty percent (120%) of Area Median Income; provided that "gross income" shall include the combined, gross, pre-tax income of all adult occupants of the household, as calculated under California Code of Regulations, Title 25, Section 6914.
(p) "Moderate Income Housing Cost" shall mean a sales price of the Home calculated to result in a monthly obligation to pay mortgage payments (principal and interest), property taxes, property insurance, mortgage insurance, utilities, and homeowners’ association dues (if applicable) in an aggregate amount not greater than one-twelfth of thirty-five percent (35%) of one hundred twenty percent (120%) of Area Median Income, assuming a fixed 30-year mortgage at then-current prevailing interest rates and an assumed down payment of ten percent (10%) of the sales price.
(q) "Moderate Income Rent" shall mean the following amount, including a reasonable utility allowance for utilities paid by the tenant as established by the Sonoma County Community Development Commission, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service, Internet, or cable or subscription TV, plus other fees and charges required to be paid by tenants of the Home on a non-optional basis other than security deposits: a monthly rent that does not exceed one-twelfth of thirty percent (30%) of one hundred ten percent (110%) of Area Median Income. (r) "Official Records" is defined in Recital A.
(s) "Owner" is defined in the opening paragraph.
(t) "Owner's Notice of Intent to Sell" is defined in Section 4.4(a). (u) "Permitted Transfer" is defined in Section 4.1.
(v) "Proposed Purchaser" is defined in Section 4.4(c).
(w) “Purchase Agreement” is defined in Section 4.6(a).
(x) "Response Notice" is defined in Section 4.4(b)

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(y) "Restricted Price" is defined in Section 4.6(a).
(z) "Right of First Refusal" is defined in Section 4.6(a). (aa) "Spouse" shall mean, (i) an individual legally married to the Owner; (ii) a registered domestic partner of the Owner, pursuant to Family Code Section 297, et seq.; or (iii) a registered domestic partner of the Owner pursuant to any local domestic partner registry created by any city, county, or city and county in California.
(bb) "Transfer" is defined in Section 4.1, and for greater clarity does not include a Permitted Transfer.

Section 1.2 Exhibits. The following exhibits are attached to this Agreement, and are incorporated by this reference:

APPENDIX A: Legal Description of the Home
APPENDIX B: Form of City Note
APPENDIX C: Form of City Deed of Trust
APPENDIX D: Form of Release
ARTICLE 2. APPROVED FINANCING; LIEN PRIORITY
Section 2.1 Approved Financing. The City acknowledges that the Owner is acquiring the Home, in part, with a first purchase money loan (the "First Lender Loan"). [The City further acknowledges that the Owner is acquiring the Home with the following additional financing, which has been approved in advance by the City (the "Additional Financing"): ___.] Section 2.2 Lien Priority. This Agreement is accompanied by the City Note from the Owner to the City pursuant to which the Owner agrees to pay any Excess Sales Proceeds or Excess Rental Proceeds to the City. The City Note is secured by the City Deed of Trust. The City Deed of Trust is subordinate to this Agreement, the First Lender Loan, and the lien of the Additional Financing, if any. However, this Agreement shall be superior to and have lien priority to the lien of the First Lender Loan, Additional Financing, if any, and any other lien, mortgage or deed of trust encumbering the Home.

ARTICLE 3.OWNER CERTIFICATIONS AND

GENERAL OBLIGATIONS
Section 3.1 Owner Certification. The Owner certifies that the financial and other information previously provided in order to qualify to purchase the Home is true and correct as of the date first written above.

Section 3.2 Owner Occupation. The Owner shall occupy the Home as the Owner's principal and sole place of residence within thirty (30) days of close of escrow and for the entire term of this Agreement. The Owner shall be considered as occupying the Home if the Owner is

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living in the Home for at least ten (10) months out of each calendar year. Owner shall comply with reasonable requests from the City to certify that the Home is occupied as the Owner's principal residence.

Section 3.3 No Rentals. Except as provided in Section 3.4, the rental or lease of the Home or any portion thereof for any period of time is prohibited.

Section 3.4 Leasing. The Owner may lease or rent the Home with the permission of the City, as may be granted or denied in its sole and exclusive discretion, and subject to such conditions as the City may reasonably require, including but not limited to the following conditions:
(a) The term of the rental or lease shall not be greater than twelve (12) months unless extended by the City;
(b) As a condition of renting or leasing the Home, the Owner shall demonstrate to the City's reasonable satisfaction that the Owner will incur some special hardship if not permitted to rent or lease the Home to a third party; (c) The tenant shall qualify as a Moderate Income Household, as certified to the City;
(d) The rent for the home shall be a Moderate Income Rent; (e) Any outstanding amounts due on the First Lender Loan, Additional Financing, if any, and any other lien, mortgage or deed of trust encumbering the Home, and any home owner association assessments have been paid in full, all insurance premiums are current and any outstanding maintenance of the Home has been addressed; and (f) Subject to the rights of senior lenders, any Excess Rental Proceeds collected by the Owner shall be due and payable upon receipt by the Owner, and shall be considered a recourse debt of the Owner to the City, as evidenced by the City Note.

Section 3.5 Maintenance.
(a) The Owner shall maintain the Home and all landscaping in good repair and in a neat, clean, sanitary, and orderly condition, in accordance with all applicable laws, so as not to cause any nuisance. The Owner agrees not to commit any waste or to permit deterioration of the Home, and shall make reasonable repairs to the Home as necessary. (b) The Owner shall pay all homeowners association assessments levied against the Home on or before the due date of the assessment, and shall perform all obligations required in any declaration of covenants, conditions, and restrictions recorded against the Home.

Section 3.6 Insurance. The Owner shall maintain a standard all risk property insurance policy equal to the replacement value of the Home. Additional insurance requirements are set forth in the City Deed of Trust. The Owner shall provide the City with evidence of required insurance coverage upon request. If the Home is damaged or destroyed and the Owner

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elects not to rebuild or repair the Home, the Owner shall pay the City the portion of any insurance proceeds received by the Owner for such destruction or damage that is in excess of a Moderate Income Housing Cost.

ARTICLE 4.RESTRICTIONS ON RESALE OR TRANSFER
Section 4.1 Transfer. Any Transfer of the Home will be subject to the provisions of this Agreement including, without limitation, the exercise of the City's Right of First Refusal.

Any Transfer without satisfaction of the provisions of this Agreement shall constitute a Default.

For purposes of this Agreement, "Transfer" means any sale, assignment or transfer, voluntary or involuntary, of any interest in the Home, including, but not limited to, a fee simple interest, a joint tenancy interest, a life estate, a leasehold interest, an interest evidenced by a land contract by which possession of the Home is transferred and Owner retains title, any lien or mortgage, or a deed of trust, including any refinancing of the First Lender Loan, Additional Financing, if any, and any other lien, mortgage or deed of trust. A Transfer shall not include any of the following, each instead a "Permitted Transfer":
(a) To an existing Spouse;
(b) By an Owner to a Spouse where the Spouse becomes the co-owner of the Home;
(c) Between Spouses as part of a dissolution proceeding; (d) To an existing Spouse by devise or inheritance following the death of the Owner;
(e) To an existing joint tenant with the right of survivorship upon the death of an Owner, provided the joint tenant(s) are listed as parties to this Agreement as of the date of this Agreement; or
(f) By Owner to an inter vivos revocable trust in which the Owner is the beneficiary, trustor, and trustee.

Section 4.2 Notice of Permitted Transfer; Other Conditions. Owner shall provide written notice of all Permitted Transfers to the City within thirty (30) days of the date of the Permitted Transfer; and Owner shall continue to occupy the Home as his or her principal place of residence, except where the Permitted Transfer occurs because of the Owner's death, in which event the transferee shall owner-occupy the Home and affirmatively assume Owner's obligations under this Agreement, the City Note, and the City Deed of Trust.

Section 4.3 Inheritance.
(a) In the event a Transfer occurs by devise or inheritance due to death of the Owner, the administrator of the Owner's estate or the person inheriting the Home shall provide written notice to the City of the Owner's death within sixty (60) days of the date of death.

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(b) Prior to taking title to the Home, the person inheriting the Home (the "Inheriting Owner") shall provide the City with income information, to be verified by the City, so that the City may determine if the Inheriting Owner is a Moderate Income Household. If the Inheriting Owner fails to provide required financial information and/or documentation, he or she shall be deemed not to qualify as a Moderate Income Household. If the Inheriting Owner qualifies as a Moderate Income Household, he or she shall succeed to the Owner's interest and obligations under this Agreement, the City Note, and the City Deed of Trust, and new documents shall be executed between the Inheriting Owner and the City and recorded against the Home, and the documents with the Inheriting Owner shall have a remaining term of forty-five (45) years. If the Inheriting Owner fails to qualify as a Moderate Income Household, he or she shall be required to Transfer the Home as set forth in Section 4.4, below; provided, however that the Inheriting Owner may own and occupy the Home for up to twelve (12) months prior to providing an Owner's Notice of Intent to Sell to the City, and provided further that the Inheriting Owner remains in compliance with the requirements of this Agreement and the City Deed of Trust. The Inheriting Owner shall not be required to occupy the Home during this twelve (12)-month time period, but shall not rent the Home except as provided in Section 3.4 above. (c) If the Inheriting Owner is a minor child, such Inheriting Owner and his or her legal guardian may occupy the Home for the time period prescribed in Probate Code Section 6500 without the City determining that the legal guardian qualifies as a Moderate Income Household.
(d) For greater clarity, this Section does not apply in the case of a Permitted Transfer resulting from the Owner's death.

Section 4.4 Sale of the Home.
(a) If the Owner intends to Transfer or vacate the Home, the Owner shall give the City prompt written notice of such intent (the "Owner's Notice of Intent to Sell"). The Owner shall give the Owner's Notice of Intent to Sell prior to taking any affirmative steps to sell the Home, such as listing the Home on the Multiple Listing Service. The Owner's Intent to Sell shall include, (i) the address of the Home; (ii) the date on which the Owner intends to vacate the Home; (iii) the date the Home will be placed on the market; and (iv) the Owner's daytime phone number.
(b) Upon receipt of the Owner's Notice of Intent to Sell, the City shall calculate the Moderate Income Housing Cost, and shall submit such calculation to the Owner within fifteen (15) days of Owner's Notice of Intent to Sell (the "Response Notice"). (c) After delivering the Owner's Notice of Intent to Sell, the Owner shall ensure that the Home is in a saleable condition, and after receipt of the City’s Response Notice may take steps to market the Home to a buyer (the "Proposed Purchaser"). Owner shall retain a real estate agent, real estate broker, or similar professional to assist Owner with the sale of the Home and any commission or other charge of a real estate agent, real estate broker, or similar professional retained by Owner shall be Owner's exclusive obligation, and the City shall not be liable for any such cost. The Owner shall use bona fide good faith efforts to sell the Home in compliance with this Agreement, which shall include listing the Home on the Multiple Listing

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Service, keeping the Home in an orderly condition, making it available to show agents and prospective buyers, and providing buyers with eligible purchaser requirements, including income qualifications. Owner shall provide to City a fully executed and dated copy of the agreement (the “Listing Agreement”) between Owner and the real estate agent, real estate broker, or similar professional engaged by Owner to assist with the sale of the Home within five (5) days of its execution.
(d) Any Proposed Purchaser shall be a Moderate Income Household. The sale shall be at a Moderate Income Housing Cost, and although closing costs shall not be included in the sales price for purposes of determining the maximum sales price, closing costs paid by the Proposed Purchaser shall be reasonable and customary in Sonoma County. The City shall verify that the sale complies with this subsection, as described in Section 4.5, below. As a condition of the City's approval of the sale, the Proposed Purchaser shall agree to sign a promissory note, deed of trust, and buyer's occupancy and resale restriction with right of first refusal substantially similar to this Agreement. It shall be a Default under this Agreement if escrow closes without the foregoing documents being executed by the Proposed Purchaser and recorded as part of the escrow, and certified copies of all of the foregoing documents shall be forwarded to the City within three (3) days of the close of escrow, together with all other information and documentation relating to the escrow that the City may reasonably request.

Section 4.5 City Approval of Proposed Sale.
(a) The Owner and the Proposed Purchaser shall provide the following information and documents to the City within ten (10) days of an offer from the Proposed Purchaser:
(1) The name, address and telephone number in writing of the Proposed Purchaser.
(2) A signed financial statement of the Proposed Purchaser in a form acceptable to the City and any other supporting documentation requested by the City. Owner acknowledges that the City may request the following documentation, (i) pay stubs for the most recent pay periods; (ii) income tax returns for the three (3) most recent tax years; (iii) an income verification form from the Proposed Purchaser's current employer; (iv) an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; and/or (v) if the Proposed Purchaser is unemployed and has no such tax return, another form of independent verification of income. The financial information shall be used by the City to determine the income eligibility of the Proposed Purchaser.
(3) The proposed sales contract and all other related documents which shall set forth all the terms of the sale of the Home, including a HUD-1 Settlement Statement.

Said documents shall include at least, (i) the sales price; and (ii) the price to be paid by the Proposed Purchaser for the Owner's personal property, if any, for the services of the Owner, if any, and any credits, allowances or other consideration, if any.

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(b) Within ten (10) days (excluding weekends and City holidays) of receipt of the documentation and information described in subsection (a) of this Section, the City shall approve or disapprove the Proposed Purchaser and terms of sale. Within ten (10) days of the City's approval, but in any event prior to the close of escrow, the Owner and Proposed Purchase Purchaser shall notify the City of the name of the title company escrow holder for the sale of the Home, the escrow number, and name, address, and phone number of the escrow officer.

Section 4.6 City Right of First Refusal; Release.
(a) If an escrow is not opened within ninety (90) days of the date of the Listing Agreement, the City or its designee shall, for a period of ninety (90) additional days, have a right of first refusal (the "Right of First Refusal") to purchase the Home at the lesser of, (i) the Fair Market Value, or (ii) the maximum possible price that is a Moderate Income Housing Cost (the "Restricted Price"). The exercise of the City's Right of First Refusal shall be in the City's sole and absolute discretion, and City shall have no obligation to the Owner, a successor in interest to the Owner, or any other person to exercise the same. The City or its designee shall exercise the Right of First Refusal by delivering notice of the same to the Owner, together with the City's calculation of the Restricted Price and a standard form of California Residential Purchase Agreement And Joint Escrow Instructions (the “Purchase Agreement”) prepared by the California Association of Realtors or similar organization, executed by City. Owner shall countersign the Purchase Agreement and promptly return a fully executed copy thereof to the City within five (5) days of receipt . Within sixty (60) days of the date of the Purchase Agreement, the City or its designee shall complete the purchase of the Home, bearing all customary closing costs for buyers in Sonoma County. Owner shall execute any and all documents, instruments and instructions as may reasonably be required by City or escrow to complete the sale of the Home to City or its designee. Thereafter, this Agreement shall be released from the Home.
(b) Notwithstanding subsection (a) of this Section, the Owner may continue to market the Home during the City's period within which to exercise the Right of First Refusal. If the Owner receives an offer on the Home from a Proposed Purchaser during that period, then during the City's review of documentation pursuant to Section 4.5 above, the City may exercise its Right of First Refusal, provided that in that case the City shall be required to pay Owner for the Home the greater of, (i) the Restricted Price, or (ii) the amount of the Proposed Purchaser's offer, not to exceed a Moderate Income Housing Cost.
(c) If the City or designee does not exercise its right of first refusal within the ninety (90) day period set forth in subsection (a) of this Section, then the Owner shall be free to sell the Home to any buyer at any price without restriction or City approval, and the City shall execute the release and reconveyance attached to this Agreement as Exhibit D (the "Form of Release"); provided, however, that the Owner shall assign any Excess Sales Proceeds to the City to be used by the City for affordable housing programs.

Section 4.7 Refinance and Subordinate Loans.
(a) Any refinancing of the First Lender Loan or the Additional Financing, and any new subordinate loans, shall require the City's approval, which shall not be unreasonably

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delayed or conditioned, and which shall be granted if such financing is consistent with the requirements of this Section.
(b) The City shall permit a prepayment and refinance of the First Lender Loan, provided that,
(1) Following such refinance, the principal amount of all debt secured by the Home does not exceed the greater of, (i) ninety percent (90%) of the Moderate Income Housing Cost, (ii) the remaining balance on the First Lender Loan, or (iii) such other amount approved in writing by the City in its sole and absolute discretion in order to prevent substantial hardship to the Owner;
(2) The refinanced First Lender Loan is a fully amortized fixed rate loan, is fully documented, has a term not exceeding thirty (30) years, and requires no balloon payments;
(3) If the remaining balance of the original First Lender Loan exceeds ninety percent (90%) of the Moderate Income Housing Cost, then the refinanced First Lender Loan reduces the Owner's principal and interest payments; and (4) The total new housing cost to the Owner after the refinance does not exceed the Owner's ability to pay, as reasonably determined by City. (c) Subordinate loans, including second or junior loans and equity lines of credit, are not permitted except as expressly approved by the City in writing. The City shall permit only those subordinate loans that conform to all of the following:
(1) Following the addition of the subordinate loan (calculated assuming a maximum permitted draw on any equity line of credit), the principal amount of all debt secured by the Home shall not exceed the greater of, (i) seventy-five percent (75%) of the Moderate Income Housing Cost, (ii) the remaining balance on the First Lender Loan, or (iii) such other amount approved in writing by the City in its sole and absolute discretion in order to prevent substantial hardship to the Owner; and
(2) The total new housing cost to the Owner does not exceed the Owner's ability to pay, as reasonably determined by City.

ARTICLE 5. DEFAULT AND REMEDIES
Section 5.1 Defaults. The following events shall constitute a default ("Default") by the Owner under this Agreement:
(a) Any material misrepresentation by the Owner has occurred to obtain the benefits of purchase of the Home or in connection with any of Owner's obligations under this Agreement;
(b) The Owner fails to occupy the Home as required under Section 3.2, and such failure continues uncured sixty (60) days following written notice by the City;

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(c) The Owner rents the Home in violation of Sections 3.3 or 3.4 above, or fails to pay Excess Rental Proceeds due and payable to the City, within sixty (60) days following written notice by the City;
(d) The Owner fails to provide information to the City required under this Agreement necessary to determine the Owner's compliance with the Agreement; (e) The Owner makes any Transfer in violation of this Agreement, including any refinancing of the First Lender Loan, Additional Financing, if any, and any other lien, mortgage or deed of trust in violation of Section 4.7;
(f) A notice of default is issued under the First Lender Loan or other financing secured by the Home;
(g) A lien is recorded against the Home other than as a result of a Transfer approved by the City, and the Owner fails to discharge the lien within thirty (30) days of its recordation; provided, however, that nothing herein requires the Owner to pay any claims for labor, materials or services which the Owner in good faith disputes and is diligently contesting provided that the Owner shall, within thirty (30) days after the filing of any claim of lien, record in the Official Records, a surety bond in an amount 1 and 1/2 times the amount of such claim item to protect against a claim of lien;
(h) The Owner commits any violation of the City Note or City Deed of Trust not otherwise specified in this Section, subject to any notice and cure provision in such document;
(i) The Owner declares bankruptcy or makes an assignment of assets for the benefit of creditors; and
(j) The Owner otherwise commits a material breach of this Agreement, and such breach remains uncured thirty (30) days following written notice by the City, provided that, if the breach cannot reasonably be cured within thirty (30) days, the Owner shall commence a cure within thirty (30) days, and shall effectuate a cure as soon as reasonably practicable thereafter.

Section 5.2 Payment of Excess Sales Proceeds and Excess Rental Proceeds. The Owner acknowledges and agrees to execute the City Note and the City Deed of Trust, and to pay any Excess Sales Proceeds to the City upon Transfer of the Home, and any Excess Rental Proceeds pursuant to Section 3.4. These amounts shall constitute a debt of the Owner to the City, further evidenced by the City Note and secured by the City Deed of Trust. The Owner acknowledges that the City shall have no obligation to cause termination of this Agreement or reconveyance of the City Deed of Trust until any Excess Rental Proceeds and Excess Sales Proceeds are paid to the City. The City shall use any such proceeds for affordable housing programs. The Owner and the City acknowledge that the formula for calculating the amount of Excess Sales Proceeds due from the Owner to the City is intended to cause the Owner to receive the same or fewer net sales proceeds from the Sale of the Home at an unrestricted price to a market purchaser (in violation of this Agreement) as the Owner would receive from the sale of the Home at a Moderate Income Housing Cost.

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Section 5.3 Remedies. Upon a Default, the City may exercise every remedy available at law, in equity, or under this Agreement (no such remedy being exclusive of any other available remedy), including by declaring Excess Sales Proceeds or Excess Rental Proceeds immediately due and payable, and, without further demand, accelerating payments due under the City Note and exercise the City's power of sale under the City Deed of Trust.

ARTICLE 6. NOTICE OF DEFAULT AND FORECLOSURE
Section 6.1 Request for Notice. A request for notice of default and any notice of sale under any deed of trust or mortgage with power of sale encumbering the Home shall be recorded by the City in the Official Records. The City may declare a Default under this Agreement upon receipt of any notice given to the City pursuant to Civil Code Section 2924b, and may exercise its rights as provided in Article 5.

Section 6.2 City Cure and Redemption Rights. In the event of default and foreclosure, the City shall have the same right as the Owner to cure defaults and redeem the Home prior to the foreclosure sale. Nothing herein shall be construed as creating any obligation of the City to cure any such default, nor shall this right to cure and redeem operate to extend any time limitations in the default provisions of the underlying deed of trust or mortgage.

Section 6.3 Restriction on Foreclosure Proceeds. If a creditor acquires title to the Home through deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the Owner shall not be entitled to proceeds of sale to the extent that such proceeds otherwise payable to the Owner when added to the proceeds paid or credited to the creditor exceed a Moderate Income Housing Cost. The Owner shall instruct the holder of such excess proceeds to pay such proceeds to the City in consideration of the benefits received by the Owner through purchase of the Home under this Agreement.

ARTICLE 7. CITY NONLIABILITY

AND OWNER'S INDEMNITY
Section 7.1 Nonliability for Negligence, Loss, or Damage. The Owner acknowledges and agrees that the relationship between the Owner and the City is solely that of an owner and an administrator of a City housing program, and that the City does not undertake or assume any responsibility for, or duty to, the Owner, to select, review, inspect, supervise, pass judgment on, or inform the Owner of the quality, adequacy, or suitability of the Home or any other matter.

The City owes no duty of care to protect Owner against negligent, faulty, inadequate, or defective building or construction or any condition of the Home, and Owner agrees that neither Owner, or Owner's heirs, successors, or assigns, shall ever claim or have or assert any right or action against the City for any loss, damage, or other matter arising out of, or resulting from, any condition of the Home, and will hold the City harmless from any liability, loss, or damage for these things.

Section 7.2 Indemnity. Owner agrees to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys' fees that the City may incur as a direct or indirect consequence of, (i) any Default by

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the Owner, (ii) the failure at any time of any of Owner's representations to the City to be true and correct, or (iii) Owner's purchase, ownership, use, or possession of the Home.

Section 7.3 Owner agrees on behalf of itself and its heirs, successors, and assigns, that the provisions of Section 7.1 and 7.2 above shall survive the expiration or termination of this Agreement.

ARTICLE 8. MISCELLANEOUS PROVISIONS
Section 8.1 Term of Agreement. All the provisions of this Agreement, including the benefits and burdens, run with the land and the Home and this Agreement shall bind, and the benefit hereof shall inure to, the Owner, his or her heirs, legal representatives, executors, successors in interest and assigns, and to the City and its successors for a term of forty-five (45) years commencing on the date of recordation of this Agreement, or the date of Transfer of the Home to the City or another purchaser in compliance with this Agreement (including execution by the purchaser of a new resale restriction and option to purchase agreement for the benefit of the City). At the expiration of the Term and release of this Agreement, Owner shall no longer be subject to the affordability requirements included in this Agreement. Subject to Section 4.6(c), if the Owner sells the Home in accordance with this Agreement, upon the buyer's execution and recordation of a promissory note, deed of trust, and buyer's occupancy and resale restriction with right of first refusal substantially similar to this Agreement, the City shall cause a completed and executed Form of Release to be recorded against the Home to release the Owner from this Agreement and the City Deed of Trust, and the Owner shall, thereafter, have no further liability under the City Note.

Section 8.2 Nondiscrimination. The Owner covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, gender or gender identification, sex, sexual orientation, family or marital status, ancestry, veteran status, or national origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Home, nor shall the Owner or any person claiming under or through the Owner establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Home. The foregoing covenant shall run with the land.

Section 8.3 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, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

Section 8.4 Controlling Law and Venue. The terms of this Agreement shall be construed according to the laws of the State of California, and venue for any legal action arising out of or pertaining to this Agreement shall be in Sonoma County, California.

Section 8.5 No Waiver. No delay or omission in the exercise of any right or remedy of the City upon any Default by the Owner shall be construed as a waiver of such right, or of a continuing waiver in the case of future Defaults.

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Section 8.6 Notices. Wherever this Agreement requires any notice from either party, the notice shall be sent by personal delivery, certified mail, return receipt requested, or express delivery service with a delivery receipt, and shall be deemed effective as of the date received or the date delivery was refused as indicated in a return receipt. Unless otherwise provided by either party by written notice to the other party, notice to the Owner shall be to the address of the Home, and notice to the City shall be to the attention of the City Manager to the then current address of City Hall.

Section 8.7 Covenants Running with the Land.
(a) Owner hereby subjects the Home to the covenants and restrictions set forth in this Agreement. Owner hereby declares his or her express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land for the term of this Agreement, and shall pass to and be binding upon all parties having any interest in the Home throughout the term of this Agreement. Each and every contract, deed, lease or other instrument covering, conveying or otherwise transferring the Home or any interest therein, as the case may be, shall conclusively be held to have been executed, delivered and accepted subject to this Agreement regardless of whether the other party or parties to such contract have actual knowledge of this Agreement.
(b) The Owner and the City hereby declare their understanding and intent that, (1) The covenants and restrictions contained in this Agreement shall be construed as covenants running with the land pursuant to Civil Code Section 1468, and not as conditions which might result in forfeiture of title by Owner; (2) The burden of the covenants and restrictions set forth in this Agreement touch and concern the Home in that the Owner's legal interest in the Home may be rendered less valuable thereby; and
(3) The benefit of the covenants and restrictions set forth in this Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Home by eligible purchasers, the intended beneficiaries of such covenants and restrictions. (4) All covenants and restrictions contained herein without regard to technical classification or designation shall be binding upon Owner for the benefit of the City and eligible purchasers, and such covenants and restrictions shall run in favor of such parties for the entire period during which such covenants and restrictions shall be in force and effect, without regard to whether the City is an owner of any land or interest therein to which such covenants and restrictions relate.

Section 8.8 Owner's Acknowledgment of Resale Restriction. Owner hereby acknowledges and agrees that:
(a) Owner hereby subjects the Home to certain restrictions, and limits the price for which Owner may sell the Home and the persons to whom Owner may sell the Home.

The resale price limitation, and other provisions contained in this Agreement, restrict the full

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benefits of owning the Home. Owner may not enjoy the same economic or other benefits from owning the Home that Owner would enjoy if this Agreement did not exist. (b) Absent the provisions of this Agreement, the Home could not be made available to eligible purchasers at a Moderate Income Housing Cost, including Owner. (c) Owner understands all of the provisions of this Agreement. Owner accepts and agrees to the provisions of this Agreement with the understanding that this Agreement will remain in full force and effect as to the Home following any Transfer of the Home throughout the term of this Agreement.
(d) OWNER UNDERSTANDS THAT THE DETERMINATION OF THE

MAXIMUM RESTRICTED RESALE PRICE OF THE HOME TO AN ELIGIBLE

PURCHASER CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER,

TAKING INTO CONSIDERATION INCREASES IN AREA MEDIAN INCOME AND

OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED AND THAT THE

SALES PRICE PERMITTED HEREUNDER MAY NOT INCREASE OR DECREASE IN THE

SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS AGREEMENT. OWNER FURTHER ACKNOWLEDGES THAT

AT ALL TIMES IN SETTING THE SALES PRICE OF THE HOME THE PRIMARY

OBJECTIVE OF THE CITY AND THIS AGREEMENT IS TO PROVIDE HOUSING TO ELIGIBLE PURCHASERS AT AN AFFORDABLE HOUSING COST.

THE MAXIMUM RESTRICTED RESALE PRICE WILL ALMOST CERTAINLY BE LESS THAN OTHER SIMILAR PROPERTIES THAT HAVE NO RESTRICTIONS. [Signatures to Follow]

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

CITY:

CITY OF HEALDSBURG,
a municipal corporation
By: _____________________________
Name: _____________________________
City Manager
[Signature Must Be Notarized]
APPROVED AS TO FORM:

By: _______________________________
City Attorney
ATTEST:

By: _______________________________
City Clerk
_ OWNER:

By: _____________________________
Name: _____________________________
By: _____________________________
Name: _____________________________
[Signatures Must Be Notarized]

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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.

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______________________________________
Name: ______________________________
Notary Public

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.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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APPENDIX A

LEGAL DESCRIPTION

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APPENDIX B

CITY NOTE

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APPENDIX C

CITY DEED OF TRUST

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APPENDIX D

FORM OF RELEASE

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NOTICE TO OWNER: THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING RESALES AND ASSUMPTIONS.

PROMISSORY NOTE
Secured by Deed of Trust
(City of Healdsburg Moderate Income Homebuyer Program)
Healdsburg, California
Excess Sales Proceeds and
Excess Rental Proceeds [DATE]
FOR VALUE RECEIVED, the undersigned owner of the Home,
______________________ (the "Owner"), promises to pay the City of Healdsburg, a California municipal corporation (the "City"), at 401 Grove Street, Healdsburg, California 95448, Attn:
________________, or such other place as the City may designate in writing, any amounts due the City as Excess Rental Proceeds pursuant to the Resale Restriction Agreement plus any amounts due the City as Excess Sales Proceeds pursuant to the Resale Restriction Agreement.

1. Purpose of Note. Owner is purchasing the Home located at _____________________________ in the City of Healdsburg pursuant to the City of Healdsburg's moderate income housing program, which provides for the rental or purchase of homes by moderate income households at affordable prices. Because the purchase price has been restricted to a moderate income housing cost, the Owner is required and has agreed to execute a Resale Restriction Agreement which restricts the price of the Home upon resale and which requires the Owner to pay any Excess Sales Proceeds at resale to the City. In addition, the Resale Restriction Agreement prohibits the Owner from renting or leasing the Home except under limited circumstances and requires the Owner to pay any Excess Rental Proceeds to the City. This promissory note (the "Note") evidences both, (a) the obligation of the Owner to pay any Excess Rental Proceeds to the City, and (b) the obligation of the Owner to pay any Excess Sales Proceeds to the City.

2. Definitions. The terms set forth in this section shall have the following meanings in this Note.
(a) "City" shall have the meaning set forth in the opening paragraph hereof. (b) "Deed of Trust" shall have the meaning set forth in Section 4 hereof. (c) "Excess Rental Proceeds" shall have the meaning set forth in the Resale Restriction Agreement.
(d) "Excess Sales Proceeds" shall have the meaning set forth in the Resale Restriction Agreement.

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(e) "Home" shall mean the dwelling and the real property, on which the dwelling is located, which secure the Deed of Trust.
(f) "Note" shall have the meaning set forth in Section 1 hereof. (g) "Owner" shall have the meaning set forth in the opening paragraph hereof. (h) "Resale Restriction Agreement" shall mean the Buyer's Occupancy And Resale Restriction Agreement With Right of First Refusal executed by the Owner and the City and recorded on _____________, in the official records of Sonoma County as Instrument No. __________, in connection with the Owner's purchase of the Home. (i) "Term" shall mean the term of this Note, which shall be the same as the term of the Resale Restriction Agreement, as set forth in Section 8.1 of the Resale Restriction Agreement.
(j) "Transfer" shall have the meaning set forth in the Resale Restriction Agreement.

3. Payments. In the event any Excess Rental Proceeds or Excess Sales Proceeds become due and payable under the Resale Restriction Agreement, such amounts shall be immediately due and payable hereunder. Failure to declare such amounts due shall not constitute a waiver on the part of the City to declare them due in the event of a subsequent Transfer.

4. Security. This Note is secured by a deed of trust dated the same date as this Note, executed by the Owner and City and recorded on _____________, in the official records of Sonoma County as Instrument No. __________ (the "Deed of Trust").

5. Due on Transfer. Any amounts due under this Note shall be due and payable in full on the date of any Transfer of the Home.

6. Default and Acceleration. The Owner shall be in default under this Note if he or she is in default under the Resale Restriction Agreement. Upon the occurrence of a default under this Note, the full amount of any Excess Rental Proceeds or Excess Sales Proceeds due under the Resale Agreement shall be immediately due and payable.

7. Nondiscrimination. The Owner covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, gender or gender identification, sex, sexual orientation, family or marital status, ancestry, veteran status, or national origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Home, nor shall the Owner or any person claiming under or through the Owner establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Home.

8. Indemnity. Owner agrees to defend, indemnify, and hold City and its employees, agents, officers, and council members harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorney's fees that the City may incur as a direct or

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indirect consequence of Owner's failure to perform any obligations as and when required by this Note, the Deed of Trust, or the Resale Restriction Agreement.

9. No Waiver by City. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under this Note, the Resale Restriction Agreement, and the Deed of Trust. Nor shall acceptance by the City of any payment provided for herein constitute a waiver of the City's right to require prompt payment of any remaining payments owed.

10. Attorney's Fees and Costs. Owner agrees that if any amounts due under this Note are not paid when due, to pay in addition to principal and accrued interest, all costs and expenses of collection and reasonable attorney fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed.

11. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns.

12. No Offset. Owner hereby waives any rights of offset it now has or may hereafter have against City, its successors and assigns, and agrees to make the payments called for herein in accordance with the terms of this Note.

13. Waiver. Owner and any endorsers or guarantors of this Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, notice of dishonor and notice of nonpayment of this Note, and expressly waive any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorneys' fees.

14. Notices. All notices required in this Note shall be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained and shall be deemed to be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undeliverable as follows:

To the Owner:

At the address of the Home.

To the City:

City of Healdsburg
401 Grove Street
Healdsburg, CA 9544
Attn: __________________________

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The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section.

15. Controlling Law. This Note shall be construed in accordance with and be governed by the laws of the State of California.

16. Assignment by City. The City may assign its right to receive the proceeds under this Note to any person and upon notice to the Owner by the City all payments shall be made to the assignee. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.Entire Agreement. This Note (along with the Resale Restriction Agreement and Deed of Trust) sets forth the entire understanding and agreement of the City and the Owner and any amendment, alteration or interpretation of this Note must be in writing signed by both the City and the Owner.

OWNER:
_________________________________

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Packet Pg. 419 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) Appendix C to Resale Restriction Agreement

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attn: _________________________
APN: _________________________
Exempt FromRecording Fee Per (Space above for Recorder's Use) Government Code Section 27383 and Building Homes & Jobs Trust Fund Fee Per Government Code Section 27388.1(a)(2)(D)

DEED OF TRUST

AND SECURITY AGREEMENT
([Insert Property Address])
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") made as of _________________________, 20__, among the trustor, ________________________ _____________________________________________ (the "Owner"), whose address is ___________________________________________, and ___________________ ______________________ (the "Trustee"), and the City of Healdsburg, a California municipal corporation (the "City") as Beneficiary.

The Owner, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the property located in Sonoma County, State of California, described in the attached Exhibit A and more commonly known as: _________________________________________ ____________________________________________Healdsburg, California (the "Property").

TOGETHER with all the improvements now or hereafter erected on the Property, and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the Property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by this Deed of Trust; and
TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the

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same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security"; To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever;
TO SECURE to the City the performance of the covenants and agreements of Owner contained in that certain Buyer's Occupancy And Resale Restriction Agreement With Right of First Refusal executed by and between the Owner and the City of even date herewith (the "Resale Agreement");
TO SECURE to the City the payment of Excess Sales Proceeds (as defined in the Resale Agreement) and Excess Rental Proceeds (as defined in the Resale Agreement) that may become due by Owner to City, which payment obligation is further evidenced by a promissory note executed by the Owner to the City dated of even date herewith (the "Note"); and TO SECURE the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of Owner herein contained.

OWNER AND CITY COVENANT AND AGREE AS FOLLOWS:

1. Owner's Estate. That Owner is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust, the Security is encumbered only by [amend as necessary to include subordinate acquisition loans]: (a) that deed of trust executed by Owner in connection with a loan made to Owner by _________________ _________________________ (the "First Lender"), securing a promissory note executed by Owner in favor of the First Lender ("First Lender Note"), to assist in the purchase of the Property; and (b) the Resale Agreement. Owner agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the City's interest in the Security. (As used in this Deed of Trust, the term "First Lender" shall include all successors and assigns of the First Lender.)

2. Payment of Excess Sales Proceeds and/or Excess Rental Proceeds. Owner will promptly pay to the City, when and if due pursuant to the Resale Agreement, the Excess Sales Proceeds (as defined in the Resale Agreement) and Excess Rental Proceeds (as defined in the Resale Agreement).

3. Resale Agreement. Owner will observe and perform all of the covenants and agreements of the Resale Agreement, the Note, and this Deed of Trust.

4. Charges; Liens. Owner will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by Owner making any payment, when due, directly to the payee thereof. Upon request by the City, Owner will promptly furnish to the City all notices of amounts due under this paragraph.

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In the event Owner makes payment directly, Owner will promptly discharge any lien which has priority over this Deed of Trust; provided, that Owner will not be required to discharge the lien of the deed of trust securing the First Lender Note (the "First Lender Deed of Trust") [insert any other superior deeds of trust], or any other lien described in this paragraph, so long as Owner will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the City, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof.

5. Hazard Insurance. Owner will keep the Security insured by a standard all risk property insurance policy equal to the replacement value of the Security (adjusted every five (5) years by appraisal, if requested by the City). If the Security is located in a flood plain, Owner shall also obtain flood insurance.

The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by Owner subject to approval by the City.

All insurance policies and renewals thereof will be in a form acceptable to the City and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note [insert any other holder of a note secured by a superior deed of trust in the Property] and the City as their interests may appear and in a form acceptable to the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Owner shall promptly furnish to the City, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Owner will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss if not made promptly by Owner. The City shall receive thirty (30) days advance notice of cancellation of any insurance policies required under this Section 5.

Unless the City and Owner otherwise agree in writing, insurance proceeds, subject to the rights of the First Lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used to repay any amounts due under the Resale Agreement, with the excess, if any, paid to Owner. If the Security is abandoned by Owner, or if Owner fails to respond to the City, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to Owner that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to pay amounts due under the Resale Agreement.

If the Security is acquired by the City, all right, title and interest of Owner in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition, subject to the rights of the First Lender.

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6. Preservation and Maintenance of Security. Owner will keep the Security in good repair and in a neat, clean, and orderly condition and will not commit waste or permit impairment or deterioration of the Security. If there arises a condition in contravention of this Section 6, and if the Owner has not cured such condition within thirty (30) days after receiving a notice of such a condition from the City, then in addition to any other rights available to the City, the City shall have the right (but not the obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Security to recover its cost of curing.

7. Protection of the City's Security. If Owner fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the City's interest in the Security, including, but not limited to, default under the First Lender Deed of Trust, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the City, at the City's option, upon notice to Owner, may make such appearances, disburse such sums and take such action as it determines necessary to protect the City's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs.

Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will become an indebtedness of Owner secured by this Deed of Trust. Unless Owner and City agree to other terms of payment, such amount will be payable upon notice from the City to Owner requesting payment thereof, and will bear interest from the date of disbursement at the lesser of (i) ten percent (10%); or (ii) the highest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or take any action hereunder. Notwithstanding anything to the contrary, the original principal amount shall bear no interest, and the only interest payable will be interest incurred as a result of the application of this Section 7.

8. Inspection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provided that the City will give Owner reasonable notice of inspection.

9. Forbearance by the City Not a Waiver. Any forbearance by the City in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the City will not be a waiver of the City's right to require payment of any amounts secured by this Deed of Trust.

10. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively.

11. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the City and Owner subject to the provisions of this Deed of Trust.

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12. Joint and Several Liability. All covenants and agreements of Owner shall be joint and several.

13. Notice. Except for any notice required under applicable law to be given in another manner, wherever this Deed of Trust requires any notice from either party, the notice shall be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, and shall be deemed effective as of the date received or the date delivery was refused as indicated in a return receipt. Unless otherwise provided by either party by written notice to the other party, notice to the Owner shall be to the address of the Property, and notice to the City shall be to the attention of the City Manager to the then current address of City Hall.

14. Governing Law. This Deed of Trust shall be governed by the laws of the State of California.

15. Severability. In the event that any provision or clause of this Deed of Trust or the Resale Agreement conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the Resale Agreement which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the Resale Agreement are declared to be severable.

16. Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof.

17. Nondiscrimination. The Owner covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, gender or gender identification, sex, sexual orientation, family or marital status, ancestry, veteran status, or national origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Owner or any person claiming under or through the Owner establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Security.

The foregoing covenant shall run with the land.

18. Nonliability for Negligence, Loss, or Damage. Owner acknowledges, understands and agrees that the relationship between Owner and City is solely that of an owner and an administrator of a City affordable housing program, and that City neither undertakes nor assumes any responsibility for or duty to Owner to select, review, inspect, supervise, pass judgment on, or inform Owner of the quality, adequacy or suitability of the Security or any other matter. City owes no duty of care to protect Owner against negligent, faulty, inadequate or defective building or construction or any condition of the Security and Owner agrees that neither Owner, or Owner's heirs, successors or assigns shall ever claim, have or assert any right or action against City for any loss, damage or other matter arising out of or resulting from any condition of the Security and will hold City harmless from any liability, loss or damage for these things.

19. Indemnity. Owner agrees to defend, indemnify, and hold City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorney's fees that City may incur as a direct or indirect consequence of:

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(a) Owner's failure to perform any obligations as and when required by the Resale Agreement and this Deed of Trust; or
(b) the failure at any time of any of Owner's representations or warranties to be true and correct.

20. Acceleration; Remedies. Upon Owner's breach of any covenant or agreement of Owner in this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the City, prior to acceleration, will mail by express delivery, return receipt requested notice to Owner specifying: (a) the breach; (b) the action required to cure such breach; (c) a date, not less than thirty (30) days from the date the notice is received by Owner as shown on the return receipt, by which such breach is to be cured; and (d) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust, a declaration of default under this Deed of Trust and sale of the Security. The notice will also inform Owner of Owner's right to reinstate after acceleration or declaration of default and the right to bring a court action to assert the nonexistence of default or any other defense of Owner to acceleration and sale. If the breach is not cured on or before the date specified in the notice, the City, at the City's option, may: (1) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; and (2) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to: (A) exercise the power of sale; (B) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (C) deliver to Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (D) exercise all other rights and remedies provided herein, in the instruments by which the Owner acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law.

The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees.

21. Owner's Right to Reinstate. Notwithstanding the City's acceleration of the sums secured by this Deed of Trust, Owner will have the right to have any proceedings begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to

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entry of a judgment enforcing this Deed of Trust if: (a) Owner pays City all sums which would be then due under this Deed of Trust and no acceleration under this Deed of Trust or the Resale Agreement has occurred; (b) Owner cures all breaches of any other covenants or agreements of Owner contained in the Resale Agreement or this Deed of Trust; (c) Owner pays all reasonable expenses incurred by City and Trustee in enforcing the covenants and agreements of Owner contained in the Resale Agreement, or this Deed of Trust, and in enforcing the City's and Trustee's remedies, including, but not limited to, reasonable attorney's fees; and (d) Owner takes such action as City may reasonably require to assure that the lien of this Deed of Trust, City's interest in the Security and Owner's obligation to comply with the Resale Agreement secured by this Deed of Trust and to pay the sums secured by this Deed of Trust shall continue unimpaired.

Upon such payment and cure by Owner, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred.

22. Due on Transfer of the Property. Upon a Transfer (as defined in the Resale Agreement) of the Property or any interest in it, the City shall require immediate payment in full of all sums secured by this Deed of Trust.

23. Reconveyance. Upon performance of all obligations of the Resale Agreement and expiration of its term and upon payment of all sums secured by this Deed of Trust, the City will request Trustee to reconvey the Security and will surrender this Deed of Trust and the Resale Agreement to Trustee. Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any.

24. Substitute Trustee. The City, at the City's option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law.

25. Superiority of First Lender Documents. [Revise as necessary to include any other superior deeds of trust.] Notwithstanding any provision herein, this Deed of Trust shall not diminish or affect the rights of the First Lender under the First Lender Deed of Trust or any subsequent First Lender deeds of trust hereafter recorded against the Security in compliance with the requirements of Section 4.7 of the Resale Agreement.

Notwithstanding any other provision hereof, the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the First Lender, or such lender's assignee or successor in interest, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Owner. Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, this Deed of Trust shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure and notice of default was recorded against the Property in connection therewith, this Deed of Trust shall automatically terminate upon such acquisition of title,

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provided that: (a) the City has been given written notice of default under such First Lender Deed of Trust with a sixty (60)-day cure period, and (b) the City shall not have cured or commenced to cure the default within such sixty (60)-day period or commenced to cure and given its firm commitment to complete the cure in form and substance acceptable to the First Lender.

26. Request for Notice.Owner requests that copies of the notice of default and notice of sale be sent to the City in the manner set forth in Section 13, above.

IN WITNESS WHEREOF, Owner has executed this Deed of Trust as of the date first written above.
_____________________________
Owner
_____________________________
Owner

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

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

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EXHIBIT A
Legal Description of the Home
The land is situated in the State of California, County of Sonoma, City of Healdsburg, and is described as follows:
[Insert Legal Description Here.]
APN: _______________________

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2036\02\2739151.1

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attn: City Clerk
APN: _________________________
_
Exempt FromRecording Fee Per (Space above for Recorder's Use) Government Code Section 27383 and Building Homes & Jobs Trust Fund Fee Per Government Code Section 27388.1(a)(2)(D)

SUBSTITUTION OF TRUSTEE, RECONVEYANCE OF DEED OF TRUST, AND

TERMINATION AND RELEASE OF BUYER'S OCCUPANCY AND RESALE

RESTRICTION AGREEMENT WITH RIGHT OF FIRST REFUSAL
([Insert Address of Home Here])
The undersigned, City of Healdsburg, a California municipal corporation (the "Beneficiary"), in and under the provisions of that certain Deed of Trust and Security Agreement (the "Deed of Trust") executed by ___________________________ (the "Trustor"), __________________________________, as trustee (the "Trustee") for the benefit of the Beneficiary, dated as of _________________, and recorded on ___________________, in the official records of Sonoma County (the "Official Records") as Instrument No. ________________, in accordance with the provisions of said Deed of Trust, hereby gives notice of the substitution and appointment of the Beneficiary in place and instead of the Trustee, and does hereby vest in said substituted trustee, all the rights, title, estate, power, duty and trusts conferred by said Deed of Trust therein named.

NOW THEREFORE, the Beneficiary, as substituted trustee, does hereby GRANT AND RECONVEY unto the parties entitled thereto without warranty, that portion of the estate and interest derived to the said substituted trustee under said Deed of Trust in the real property described in Exhibit A attached hereto and incorporated herein by this reference, which is located at, ____________________, Healdsburg, California (the "Property").

In conjunction with the reconveyance of the Deed of Trust, the Beneficiary, does hereby terminate, release, and reconvey all of its interest under that certain Buyer's Occupancy And Resale Restriction Agreement With Right of First Refusal executed by the Trustor in favor of the Beneficiary dated as of ___________________, and recorded against the Property in the Official Records on ___________________, as Instrument No. No. _______________ (the "Resale Restriction Agreement"). Upon the recordation of this instrument in the Official Records, the Resale Restriction Agreement shall terminate and is of no further force or effect, other than any provision that expressly survives the termination or expiration of the Resale Restriction Agreement.

Remainder of Page Left Intentionally Blank

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IN WITNESS WHEREOF, the Beneficiary has executed this instrument as of __________________, 20__.

Beneficiary:

CITY OF HEALDSBURG,
a municipal corporation
By: _________________________________
Name: _________________________________
Its: _________________________________

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

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

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Packet Pg. 434 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA)

LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this “License”) is entered into as of this ___ day of ________, 2022 (“Effective Date”), by and between the CITY OF HEALDSBURG, a California municipal corporation (“Licensor”), and SONOMA LUXURY RESORT LLC, a Delaware limited liability company (“Licensee”). Licensor and Licensee may be referred to herein individually as a “Party” or collectively as the “Parties” or the “Parties to this License.” WHEREAS, Licensor and Licensee are parties to that certain Development Agreement dated April 11, 2011, as amended by that certain Insubstantial Amendment to Development Agreement dated on or about April 2, 2016, that certain Second Insubstantial Amendment to Development Agreement dated on or about May 30, 2019, and that certain Third Amendment to Development Agreement dated on or about January 19, 2021 (as amended, the “Development Agreement”); and WHEREAS, pursuant to the terms of the Development Agreement, Licensee has dedicated and conveyed to Licensor one parcel of real property located in Healdsburg, California, known as Parcel 9 of Saggio Hills per Map recorded May 23, 2018 in Book 795, Pages 31-40 as Instrument No. 2018-037508, of Official Records, in the City of Healdsburg, County of Sonoma, State of California (“Saggio Hills Final Map”), and identified as Sonoma County Assessor Parcel Numbers 091-310-009 (the “Pump Station Parcel”); and
WHEREAS, pursuant to the terms of the Development Agreement, Licensee has dedicated and conveyed to Licensor two parcels of real property located in Healdsburg, California, known as Parcels 5 and 6 of Saggio Hills Final Map, and identified as Sonoma County Assessor Parcel Numbers 091-310-005 and 091-310-006 (the “Affordable Housing Parcels”); and WHEREAS, pursuant to the terms of the Development Agreement, Licensee has dedicated and conveyed to Licensor one parcel of real property located in Healdsburg, California, known as Parcel 8 of Saggio Hills Final Map and identified as Sonoma County Assessor Parcel Numbers 091- 310-008 (the “Public Park Parcel”); and
WHEREAS, Licensor owns two parcels of real property located in Healdsburg, California, located adjacent to the Public Park Parcel and identified as Sonoma County Assessor Parcel Numbers 091-040-062 and 091-040-105 (the “Existing City Park Lands”); and WHEREAS, the Parties acknowledge that development of the project as contemplated in the Development Agreement required the removal of certain existing wetlands, and mitigation of the effects of such removal was therefore required; and
WHEREAS, the Licensee has, at its sole cost and expense, made application to and obtained an U.S. Army Corps of Engineers 404 Permit No. 1999024647N (“404 Permit”), Regional Water Quality Control Board Water Quality Certification WDID No. 1B06169WNSO (“401 Certification”), and California Department of Fish and Wildlife Lake and Streambed Alteration Agreement 1600-2013-0219-RS (“1602 Agreement”) (collectively, “Creek Restoration and Wetland Mitigation Permits”) for the project governed by the Development Agreement and 31st August

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required to lawfully remove such existing wetlands and mitigate the removal thereof with the installation and "grow-in" of replacement wetlands and restoration of creeks; and WHEREAS, the Parties acknowledge that mitigation required by the Creek Restoration and Wetland Mitigation Permits includes the creation of new additional wetlands on a portion of the Public Park Parcel located south of Foss Creek and on the Existing City Park Lands (collectively, the “Wetland Replacement Lands”), as described in Section 10 (a) of the Development Agreement, and conceptually shown on Exhibit B-14 of the Development Agreement; and WHEREAS, the Parties acknowledge that mitigation required by the Creek Restoration and Wetland Mitigation Permits includes the restoration of creeks located on the Pump Station Parcel, Affordable Housing Parcels and Public Park Parcel; and
WHEREAS, the Parties acknowledge that the contemplated wetland removal, wetland replacement, creek restoration and mitigation required of Licensee by the Creek Restoration and Wetland Mitigation Permits has been completed and is now subject to the required mitigation monitoring period and that Licensee will remain responsible for completing the mitigation monitoring for those portions of wetland replacement that it has executed upon the Wetland Replacement Lands and creek restoration it has executed upon the Pump Station Parcel, Public Park Parcel and Affordable Housing Parcels; and
WHEREAS, as contemplated in the Development Agreement, the Licensor agreed that it would provide Licensee with appropriate access to the Pump Station Parcel, Public Park Parcel, Affordable Housing Parcels and Existing City Parcels to allow Licensee to perform all the wetlands mitigation and creek restoration, and such mitigation monitoring required to achieve full and complete compliance with all requirements of the Creek Restoration and Wetland Mitigation Permits, including the possibility of alternative or corrective actions, if on-site mitigation efforts are not accepted as "complete" by such agencies; and
WHEREAS, in order to facilitate Licensee’s maintenance, monitoring, and replacement, if required, of wetlands replacement and creek restoration mitigation as required by the Creek Restoration and Wetland Mitigation Permits, Licensor has agreed to grant Licensee a revocable license to use the Pump Station Parcel, Public Park Parcel, Affordable Housing Parcels and Existing City Park Lands (collectively, the “Property”);
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

1. Permitted Activities. Licensor hereby grants Licensee a revocable license to use the Property for the specific and limited purposes set forth in this License. Said revocable license is granted to Licensee, its employees, agents and contractors for the sole purpose of conducting the following activities:

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(a) Use. Licensee, its employees, agents and contractors are authorized to enter on and cross over Property only for the limited purpose of (i) conducting monitoring of wetlands replacement and creek restoration mitigation that Licensee has executed, constructed and installed upon the Property pursuant to the Creek Restoration and Wetland Mitigation Permits prior to the Effective Date, (ii) conducting maintenance of wetlands replacement and creek restoration mitigation that Licensee has executed, constructed and installed upon the Property pursuant to the Creek Restoration and Wetland Mitigation Permits prior to the Effective Date, (iii) if required by one or more of the Army Corps of Engineers, Regional Water Quality Control Board or California Department of Fish and Wildlife (each a “Regulatory Agency”) pursuant to the terms of the Creek Restoration and Wetland Mitigation Permits, conducting the planning, execution, construction and installation of repairs, rehabilitation and replacement of wetlands and creek restoration mitigation that Licensee has executed, constructed and installed upon the Property pursuant to the Creek Restoration and Wetland Mitigation Permits, and (iv) activities incidental or related to the foregoing purposes. It is understood by the Parties that the uses permitted under this License are limited to the purposes described above. The foregoing notwithstanding, if a Regulatory Agency requires Licensee to replace wetlands and/or creek restoration mitigation in a location on the Property that is different than originally installed (“Replacement Mitigation”), prior to agreeing to Replacement Mitigation as requested or required by a Regulatory Agency, Licensee shall obtain Licensor’s written consent regarding the location, scope and timing of installation, maintenance and monitoring of the Replacement Mitigation, which consent may be reasonably conditioned or denied. (b) Access. Licensee is granted limited rights of access to the Property by this License. Licensee’s access to the Pump Station Parcel and Public Park Parcel will be from Passalacqua Road; Licensee’s access to the Affordable Housing Parcels will be from Passalacqua Road and Parkland Farms Boulevard; and Licensee’s access to the Existing City Park Lands will be from Spur Ridge Lane. Licensee must provide notice to Licensor requesting access to the Property not less than 24 hours prior to entry onto the Property. All such notices shall be in writing; shall be delivered to Licensor via electronic mail to Mark Themig, Community Services Director at [email protected], with a copy to Scott Duiven, Community Development Director at [email protected]; and shall include the following information: (i) date and time of requested access, (ii) anticipated length of time at the Property, (iii) name(s) of firm(s) and individuals to be present at the Property, and (iv) scope of work (i.e., the activities to be conducted) with a confirmation that any appropriate permits have been secured. (c) Gates. If applicable, a representative of Licensor will arrange for any gates securing the Property to be opened prior to Licensee’s entry onto the Property. Licensee agrees to keep all gates it utilizes closed if found to be closed, or open if found to be open. (d) Weather. All activities will be conducted on a “weather permitting” basis.

Licensee shall use its best efforts to keep surface disturbances to a minimum and avoid rutting of any surfaces or paths on the Property. Any damage caused to the Property or any underground electrical ducts, storm sewer and water lines, manholes and appurtenances located on or under the surface of the Property or to any roads shall be promptly repaired by Licensee. The surfaces, paths, roads or any other area on the Property shall not be left in a rutted or otherwise damaged condition. (e) Prohibitions and Limitations. Except as may be required to accomplish the permitted use(s) described in Section 1(a), above, the use(s) and activities authorized under this

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License shall not: (i) significantly disturb the surface of the Property; (ii) be inconsistent with those permitted on the Property; (iii) interfere in any way with Licensor’s ownership rights and privileges on the Property; and/or (iv) cause or contribute in any way to the contamination of all or any portion of the Property, by any substance, especially Hazardous Materials (as such term is defined in Section 4).

2. Term. Unless sooner revoked or extended by Licensor in writing, Licensor grants this License for temporary access to the Property to Licensee for a time period commencing on the Effective Date and ending upon the earlier of (i) twenty four (24) months after the Effective Date or (ii) certification by each Regulatory Agency that mitigation required pursuant to the 404 Permit, 401 Certification and 1602 Agreement, respectively issued by said Regulatory Agency, has been accepted as complete (“Mitigation Certification of Completion”). Upon prior written approval by Licensor, extensions of the term of this License, not to exceed ninety (90) calendar days per approved extension, may be granted after Licensee submits a written request to Licensor which justifies the extension. The Licensee acknowledges that the 404 Permit expires on December 5, 2022; the 401 Certification expires December 5, 2023; and the 1602 Agreement expires December 31, 2022. Accordingly, Licensee covenants and agrees that it shall, at its sole cost and expense, secure and obtain extensions to the 404 Permit, 401 Certification and 1602 Agreement from the appropriate Regulatory Agency as may be necessary or required to secure and obtain Mitigation Certification of Completion.

3. Return of Property to Existing Condition. Immediately upon completion of the use of the Property permitted by this License, or upon the expiration of the term of this License, whichever occurs first, Licensee shall restore the Property to substantially the same condition as it was existing prior to Licensee’s use, as reasonably determined by Licensor’s representatives. At that time, Licensee shall remove from the Property any and all equipment or materials used in conducting the permitted activities. Licensee expressly acknowledges its financial obligation to fulfill this condition promptly.

4. Hazardous Materials.
(a) Licensee shall not use or store Hazardous Materials of any kind on or near the Property which could contaminate the Property, without prior written permission from Licensor.

Subject to Section 4(d), below, in the event that any Hazardous Material is spilled or leaked or otherwise released on the Property or any area in the vicinity of the Property as a result of Licensee’s exercise of this License, Licensee shall promptly take all steps necessary to remove any contamination resulting from such activities. Licensee accepts full responsibility for all activities and costs incurred related to cleaning up the Property from the effects of such spill or leak. Licensee shall be responsible for meeting, and possess the means to satisfy, the requirements of all federal, state and local controlling agencies, such as the North Coast Regional Water Quality Control Board and/or the Environmental Protection Agency, which may have jurisdiction over the region in which the Property is located or over the substance being used by Licensee on the Property. (b) Hazardous Materials Defined. The term “Hazardous Material(s)” shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant or infectious or radioactive material, including but not limited to, those substances, materials or wastes regulated now or in the future under any of the following statutes or regulations and any and all of those

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substances included within the definitions of “hazardous substances,” “hazardous waste,” “hazardous chemical substance or mixture,” “imminently hazardous chemical substance or mixture,” “toxic substances,” “hazardous air pollutant,” “toxic pollutant” or “solid waste” in the (a) “CERCLA” or “Superfund” as amended by SARA, 42 U.S.C. Sec. 9601 et seq., (b) RCRA, 42 U.S.C. Sec. 6901 et seq., (c) CWA., 33 U.S.C. Sec. 1251 et seq., (d) CAA, 42 U.S.C. 78401 et seq., (e) TSCA, 15 U.S.C. Sec. 2601 et seq., (f) The Refuse Act of 1899, 33 U.S.C. Sec. 407, (g) OSHA, 29 U.S.C. 651 et seq. (h) Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq., (i) USDOT Table (40 CFR Part 302 and amendments) or the EPA Table (40 CFR Part 302 and amendments), (j) California Superfund, Cal. Health & Safety Code Sec. 25300 et seq., (k) Cal.

Hazardous Waste Control Act, Cal. Health & Safety Code Section 25100 et seq., (l) Porter-Cologne Act, Cal. Water Code Sec. 13000 et seq., (m) Hazardous Waste Disposal Land Use Law, Cal. Health & Safety Code Sec. 25220 et seq., (n) “Proposition 65,” Cal. Health and Safety Code Sec. 25249.5 et seq., (o) Hazardous Substances Underground Storage Tank Law, Cal. Health & Safety Code Sec. 25280 et seq., (p) California Hazardous Substance Act, Cal. Health & Safety Code Sec. 28740 et seq., (q) Air Resources Law, Cal. Health & Safety Code Sec. 39000 et seq., (r) Hazardous Materials Release Response Plans and Inventory, Cal. Health & Safety Code Secs. 25500-25541, (s) TCPA, Cal. Health and Safety Code Secs. 25208 et seq., and (t) regulations promulgated pursuant to said laws or any replacement thereof, or as similar terms are defined in the federal, state and local laws, statutes, regulations, orders or rules (collectively, “Hazardous Materials Laws”). Hazardous Materials shall also mean any and all other substances, materials and wastes which are, or in the future become regulated under applicable local, state or federal law for the protection of health or the environment, or which are classified as hazardous or toxic substances, materials or wastes, pollutants or contaminants, as defined, listed or regulated by any federal, state or local law, regulation or order or by common law decision, including, without limitation, (i) trichloroethylene, tetracholoethylene, perchloroethylene and other chlorinated solvents, (ii) any petroleum products or fractions thereof, (iii) asbestos, (iv) polychlorinated biphenyls, (v) flammable explosives, (vi) urea formaldehyde, and (vii) radioactive materials and waste.
(c) Hazardous Materials Indemnity. Subject to Section 4(d) below, Licensee shall indemnify, defend (by counsel reasonably acceptable to Licensor), protect and hold Licensor harmless from and against any and all claims, liabilities, penalties, forfeitures, losses and/or expenses, including, without limitation, diminution in value of the Property, damages for the loss or restriction on use of the rentable or usable space or of any amenity of the Property, damages arising from any adverse impact or marketing of the Property and sums paid in settlement of claims, response costs, cleanup costs, site assessment costs, attorneys’ fees, consultant and expert fees, judgments, administrative rulings or orders, fines, costs of death of or injury to any person or damage to any property whatsoever (including, without limitation, groundwater, sewer systems and atmosphere), arising from, or caused or resulting, either prior to or during the term of this License, in whole or in part, directly or indirectly, by the presence or discharge in, on, under or about the Property by Licensee, Licensee’s agents, employees, licensees or invitees or at Licensee’s direction of Hazardous Material, or by Licensee’s failure to comply with any Hazardous Materials Law, whether knowingly or by strict liability. Licensee’s indemnification obligations shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary Hazardous Materials management plan, investigation, repairs, cleanup or detoxification or decontamination of the Property, and the presence and implementation of any closure, remedial action or other required plans, and shall survive the expiration of or early termination of the term of

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this License. For purposes of the indemnity provided herein, any acts or omissions of Licensee, or its employees, agents, customers, sublessees, assignees, contractors or subcontractors of Licensee (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Licensee.
(d) Notwithstanding anything to the contrary contained in this Section 4, Licensee shall not be liable for clean-up of pre-existing Hazardous Materials located on the Property (“Pre-existing Materials”) that may be disturbed or discovered by Licensee’s activities hereunder, nor shall Licensee’s indemnification in Section 4(c) apply to any discovery or disturbance of Preexisting Materials.

5. Hold Harmless/Indemnification. To the extent permitted by law, Licensee hereby agrees to protect, defend, hold harmless, and indemnify Licensor, its directors, officers, employees, agents, successors, and assigns (“Indemnitees”), from and against all claims, injury, liability, loss, cost, and expense, or damage however same may be caused, including without limitation, all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom, or any loss of or damage to property (real and/or personal), and for personal injury to or the death of any person or persons, arising out of, occurring by reason of, or in any way connected with, Licensee’s operations, acts, errors, omissions or use of the Property or exercise of it rights under this License, except to the extent arising out of the negligence or willful misconduct of Licensor. Licensee’s obligations hereunder shall survive the expiration or termination of this License.

6. Insurance Requirements. Licensee agrees that at all times during the Term of this License that it shall, at its sole cost and expense, procure and maintain in effect, insurance coverage for general liability, automobile liability, workers compensation and pollution liability against claims which may arise out of or result from use of the Property by Licensee, its employees, agents and contractors. Licensee shall deliver to Licensor one or more certificates of coverage, with the appropriate endorsements outlined below, prior to the Effective Date. The insurance policies shall be provided by a financially responsible insurance company authorized to write business in the State of California and have, at all times, a Best’s rating of “A- VII” (A minus VII) or better by AM Best & Company, and with coverage and policy limits as follows:
(i) The general liability insurance coverage shall have a per occurrence limit of one million and 00/100 dollars ($1,000,000.00) and an aggregate limit of at least two million and 00/100 dollars ($2,000,000.00), and shall be endorsed to (a) include the Indemnitees as additional covered parties providing all required coverages including coverages for both ongoing and completed operations, (b) stipulate that such coverage is primary and is not excess of, or contributing with, any other insurance carried by, or for the benefit of the Indemnitees, (c) apply separately to each insured and additional insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability, (d) waive any and all right of subrogation against the Indemnitees, and (e) contain a cross liability/severability endorsement (unless the base policy contains a separation of insureds clause accomplishing the same result); (ii) The auto liability insurance coverage shall cover all owned, hired and non-owned vehicles brought onto the Property with a per occurrence limit of one million and 00/100 dollars ($1,000,000.00) and an aggregate limit of not less than two million and 00/100 dollars ($2,000,000.00), and shall be endorsed to (a) include the Indemnitees as additional covered parties,

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(b) stipulate that such coverage is primary and is not excess of, or contributing with, any other insurance carried by, or for the benefit of the additional covered parties, (c) apply separately to each insured and additional covered parties against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability, (d) waive any and all right of subrogation against the additional covered parties, and (e) contain a cross liability/severability endorsement (unless the base policy contains a separation of insureds clause accomplishing the same result); (iii) Worker’s Compensation insurance as required by the State of California which shall be endorsed to waive any and all rights of subrogation against the Indemnitees; further, any and all subcontractors shall maintain insurance coverage limits in accordance with state statute which shall also be endorsed to waive any and all rights of subrogation against the Indemnitees; and (iv) Pollution liability coverage shall have coverage limits of not less than $2,000,000 for each claim arising from the discharge, dispersal, release or escape of any irritant or contaminant into or upon land, any structure, the atmosphere, watercourse or body of water, including groundwater; coverage shall include on and off-site clean up and emergency response costs and claims arising from above ground and below ground storage tanks.

Licensee’s compliance with the provisions of this Section shall in no way relieve or decrease Licensee’s indemnification obligations hereunder. Notwithstanding anything to the contrary in this License, this License shall terminate immediately, without notice to Licensee, on the lapse of any required insurance coverage.

7. Licensor’s Rights. Licensor reserves the right to use the Property in any manner, provided such use does not unreasonably interfere with the rights granted to the Licensee in this License.

8. Assignment/Exclusive to Licensee. The access rights granted in this License are personal and limited solely to Licensee for the stated purpose set forth in this License. The rights, duties and obligations of Licensee under this License shall not be assigned or transferred to any party and any attempt to assign or transfer any such rights or obligations to any third parties shall be null and void. Licensee agrees not to commit waste or to construct, allow or maintain any use, construction or operate any equipment which constitutes a nuisance on the Property, or which may in any way interfere with the use, enjoyment or possession of the Property by Licensor, or the Licensor’s lessee(s) or licensee(s) on the Property, if any. The Property shall not be used by any person or entity, including the Licensee or its employees, for any purpose other than stated in this License. Neither this License, nor the rights granted to Licensee within it, shall be assignable or otherwise transferable without the prior written consent of Licensor. Unless specifically stated to the contrary in any written consent to an assignment, no assignment or other transfer will release or discharge the Licensee from any duty, responsibility or liability under this License.

9. Revocation or Termination of License. This License may be revoked or terminated with or without cause by Licensor immediately upon providing written notice of said revocation or termination to Licensee, or its representative.

10. Notices. If any notice given pursuant to the License is not personally delivered to Licensee, said notice (other than notices under Section 1(b), which shall be delivered in the manner

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set forth therein) shall be deemed to be delivered five (5) days after deposit of said notice in a sealed envelope, postage fully prepaid, in a mailing facility regularly maintained by the United States Post Office, addressed as follows:

If to Licensee:

Sonoma Luxury Resort LLC
c/o Ohana Real Estate Investors
1991 Broadway Street, Suite 100
Redwood City, CA 94063
If to Licensor:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attn: City Manager
With a copy to:

Burke, Williams & Sorensen, LLP
1 California Street, Suite 3050
San Francisco, CA 94111
Attn: Samantha Zutler, City Attorney

11. Authority to Grant License. Licensor warrants that it is the owner of the Property and that it has the full rights and authority to grant the rights to the Licensee which are contained in this License.

12. Counterparts. This License may be executed in two counterparts, each of which shall be deemed to be an original, but both of which shall constitute one and the same instrument.

13. Electronic Signature. The Parties agree that electronic signatures on this License, including those transmitted by electronic email or other electronic means, including, without limitation, via Adobe DocuSign, shall be sufficient to bind the Parties.

14. Independent Contractor. In performing its obligations under this License, Licensee is an independent contractor and not an agent or employee of Licensor.

15. Venue; Attorneys’ Fees. In the event that any action is brought by either Party hereto as against the other Party for the enforcement or declaration of any right or remedy in or under this License or for the breach of any covenant or condition of this License, venue shall be in the Superior Court of the County of Sonoma, State of California. Should any party hereto institute any action or proceeding in court or other dispute resolution mechanism (“DRM”) to enforce any provision hereof by reason of an alleged breach of any provision of this License, the prevailing party shall be entitled to receive from the losing party, court or DRM costs or expenses reasonably incurred by the prevailing party including, without limitation, expert witness fees, document copying expenses,

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exhibit preparation costs, carrier expenses and postage and communication expenses, and such amount as the court or DRM may adjudge to be reasonable attorneys’ fees for the services rendered to the prevailing party in such action or proceeding. Attorneys’ fees under this Section 15 include attorneys’ fees on any appeal, and, in addition, a party entitled to attorneys’ fees shall be entitled to all other reasonable costs and expenses incurred in connection with such action.

16. Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this License by another Party, or the failure by a Party to exercise its rights upon the default of another Party, shall not constitute a waiver of such Party’s right to insist upon and demand strict compliance by the other Party with the terms of this License thereafter.

17. Legal and Equitable Relief. Each Party shall have the right (but not the obligation) to prosecute any proceedings at law or in equity against any other Party, or any other person or entity, violating or attempting to violate or defaulting in the performance of any of the provisions contained in this License in order to prevent such party, person or entity from violating or attempting to violate or defaulting in the performance of any of the provisions of this License or to recover damages for any such violation or default. It is agreed that damages would be an inadequate remedy for violation of this License by any party and, therefore, injunctive or other appropriate equitable relief shall be available to the other party. The remedies available under this Section 17 shall include, by way of illustration but not limitation, ex parte applications for temporary restraining orders, preliminary injunctions and permanent injunctions enjoining any such violation or attempted violation or default, and actions for specific performance of this License. The result of every action or omission whereby any covenant, condition or restriction herein contained is violated in whole or in part is hereby declared to be and to constitute a nuisance, and every remedy allowed by law or equity against any party, either public or private, shall be applicable against every such result and may be exercised by any party.

18. Parties in Interest. Nothing in this License, expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than Licensor and Licensee, any rights, remedies or claims under or by reason of this License or any covenants, conditions or stipulations hereof; and all covenants, conditions, promises, and agreements in this License contained by or on behalf of the Licensor, or Licensee shall be for the sole and exclusive benefit of the named Parties.

19. Amendment. This License may be amended, from time to time, by written supplement or amendment hereto and executed by Licensor and Licensee. The City Manager is authorized to execute on behalf of Licensor any amendment that the City Manager determines is in Licensor’s best interests and does not materially increase the Licensor’s obligations or materially diminish the Licensor’s rights under this License. The foregoing notwithstanding, nothing herein shall preclude the City Manager from seeking and securing approval or concurrence of any amendment by the City Council.

20. Interpretation of License. The recitals above and exhibits attached hereto are incorporated herein by reference and comprise part of this License. This License constitutes the entire agreement between the Parties with respect to the subject matter hereof and no prior oral or written understanding shall be of any force or effect with respect to the matters covered herein. The

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titles to the sections of this License are not a part of this License and shall have no effect upon the construction or interpretation of any part of this License. As used in this License, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word “including” shall be construed as if followed by the words “without limitation.” This License shall be interpreted as though prepared jointly by both Parties. The laws of the State of California, without regard to conflict of laws principles, shall govern the interpretation and enforcement of this License.

21. Relationship Between the Parties; Authority; Binding Effect. This License does not create any partnership or agency between the Parties, each of which is, and at all times shall remain, solely responsible for all acts of its officials, employees, agents, contractors and any subcontractors, including any negligent acts or omissions. Neither Party is an agent of the other, and has no authority to act on behalf of or to bind the other Party to any obligation whatsoever. Each Party executing this License on behalf of a party represents and warrants that such person is duly and validly authorized to do so on behalf of the entity it purports to bind. Each of the terms, covenants and conditions of this License shall extend to and be binding on and shall inure to the benefit the parties and each of their respective successors and assigns and all those taking by, under or through it or them.

22. Severability. If any term, provision, condition or covenant of this License or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this License, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. [continued on next page]

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Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 9
OAK #4874-0073-3496 v1

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, CA 95448
Attention: City Clerk
)
)
)
)
)
)
)
)
The document is exempt from recording fees per
Government Code § 27383 and Building Homes & Jobs
Trust Fund Fee per Government Code § 27388.1(a)(2)(D).

GRANT DEED (INCLUDING OPTION TO REPURCHASE)
For valuable consideration, the receipt of which is hereby acknowledged:

The CITY OF HEALDSBURG, a California municipal corporation (“City” or “Grantor”), hereby grants to FREEBIRD DEVELOPMENT COMPANY, LLC, a California limited liability company (“Grantee”), the real property legally described in Exhibit A, attached hereto and incorporated herein by this reference (“Site”).

1. Grantor and Grantee are parties to a Disposition and Development Agreement dated for identification purposes as of __________, 20___ (“DDA”). The Site is conveyed subject to all matters of record. The Grantor and Grantee have executed a Memorandum of Disposition and Development Agreement (“Memorandum of Agreement”), a Rental Affordable Housing Covenant, and an Owner-Occupied Affordable Housing Covenant (collectively, the “Project Affordable Housing Covenants”) each dated concurrently herewith and recorded against the Site. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the DDA.

2. Option To Repurchase. Grantee hereby grants to Grantor the option to repurchase the Site or any portion thereof hereby conveyed and all improvements subsequently constructed thereon if after Conveyance of the Site and prior to issuance of the Certificate of Completion for either the Phase 1 Improvements or Phase 2 Improvements:
(a) Failure to Commence Construction. Grantee fails to Commence Construction of the Phase 1 Improvements or Phase 2 Improvements on the Site within the time set forth in the Schedule of Performance attached to the DDA; or (b) Failure Diligently to Prosecute Construction to Completion.

Once Grantee Commences Construction, Grantee fails diligently to prosecute construction of the Phase 1 Improvements or Phase 2 Improvements to completion within the time set forth in the Schedule of Performance attached to the DDA; or
(c) Abandonment. Grantee abandons or substantially suspends construction of the Phase 1 Improvements or Phase 2 Improvements for a period of three (3)

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months after Grantee’s receipt of written Notice of such abandonment or suspension from Grantor; or
(d) Unauthorized Sale or Transfer. Grantee directly or indirectly, voluntarily or involuntarily sells, assigns, transfers, disposes of or further encumbers or agrees to sell, assign, transfer, dispose of or further encumber or suffer to exist any other lien against all or any portion of or any interest in the Site, except in accordance with the terms of the DDA. For the purpose of this provision, the terms “sell” and “transfer” shall include, in addition to the common and ordinary meaning of those terms and without limiting their generality, transfers made to subsidiary or affiliated entities, and any “change in ownership” as that term is used from time to time in California real property taxation law.

This option shall be subordinate and subject to and be limited by and shall not defeat, render invalid or limit: (i) any mortgage, deed of trust or other security instrument permitted by the DDA; or (ii) any rights or interests provided in the DDA for the protection of the holder of such mortgages, deeds of trust or other security instruments.

To exercise its option to repurchase the Site or any portion thereof, Grantor shall pay to Grantee in cash an amount equal to: (A) the Purchase Price originally paid by Grantee; plus (B) the out-of-pocket costs actually incurred by Grantee for labor and materials for the construction of the Project Improvements or that portion thereof existing at the time Grantor exercises the option to repurchase (exclusive of costs paid from the City Assistance and amounts financed, if any, to the extent such financing obligations are assumed by Grantor); less (C) any net gains or net income withdrawn or made by Grantee from the Site or such portion thereof or the Project Improvements thereon; and less (D) the amount of unpaid liens on the Site or such portion thereof which Grantor agrees to pay, and any unpaid current or past-due installments of taxes or assessments against the Site or portion thereof which Grantor agrees to pay (collectively, the “Option Price”).

In order to exercise this repurchase option, Grantor shall give Grantee Notice of such exercise and Grantee shall, within forty-five (45) days after Grantee’s receipt of such Notice, provide Grantor with a detailed accounting of all of Grantee’s costs incurred as provided above, supported by contracts, invoices and evidence of payment. Grantor, within thirty (30) days thereafter, shall pay to Grantee in cash (through an escrow if desired by Grantor) all sums owing pursuant to this paragraph 2, and Grantee shall thereupon execute and deliver to Grantor a grant deed transferring to Grantor all of Grantee’s interest in the Site or portion thereof and improvements thereon, as applicable. Grantor shall have the continuing right to conduct an audit of Grantee’s records pertaining to the Option Price for a period of two (2) years following Grantee’s execution and delivery to Grantor of the grant deed; accordingly, Grantee shall maintain accurate books and records supporting its costs of design, construction and installation of the Project Improvements until issuance of a Certificate of Completion for the Phase 1 Improvements and Phase 2 Improvements or two years following termination of the DDA.

3. Grantee covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, 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

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Packet Pg. 447 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4874-0073-3496 v1
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 premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed.

All deeds, leases or contracts made relative to the Site, the improvements thereon or any part thereof shall contain or be subject to substantially the following nondiscrimination clauses:
a. In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, 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 premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
b. In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

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 leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”

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Packet Pg. 448 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4874-0073-3496 v1
c. In contracts: “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 premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises.”
The provisions of this paragraph 3 shall run with the land and shall be contained in each subsequent grant deed conveying title to the Site to any subsequent owner.

4. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted by the DDA, provided, however, that any successor of Grantee to the Site shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise.

5. The covenant contained in paragraph 2 shall remain in effect until issuance of a Certificate of Completion for the Phase 1 Improvements and Phase 2 Improvements pursuant to Section 310 of the DDA. The covenants against discrimination contained in paragraph 3 of this Grant Deed shall remain in perpetuity.

6. The covenants and option to repurchase contained in this Grant Deed shall be binding on Grantee and its heirs, executors, successors and assigns and any successor in interest to the Site or any part thereof, and such covenants and repurchase option shall run in favor of the Grantor and its successors and assigns for the entire period during which such covenants and option shall be in force and effect, without regard to whether the Grantor is or remains an owner of any land or interest therein to which such covenants or option relate. The Grantor, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies and to maintain any actions at law or suits in equity or other proper proceedings to enforce the curing of such breach or repurchase option. The covenants and repurchase option contained in this Grant Deed shall be for the benefit of and shall be enforceable only by the Grantor and its successors and assigns.

7. In the event of any express conflict between this Grant Deed and the DDA, the provisions of this Grant Deed shall control.

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Packet Pg. 449 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4874-0073-3496 v1
IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized as of the date noted below.

APPROVED AS TO FORM:
_______________________________
Samantha Zutler, City Attorney
GRANTOR:

CITY OF HEALDSBURG, a California
municipal corporation
By:

Jeffrey Kay, City Manager
[Signature must be notarized]
Date: ________________________, 20___
The provisions of this Grant Deed are hereby approved and accepted by Grantee.

GRANTEE:

FREEBIRD DEVELOPMENT
COMPANY, LLC, a California
limited liability company
By: __________________________
Robin Zimbler, Manager
[Signature must be notarized]
Date: _____________________, 20___

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Packet Pg. 450 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 10
OAK #4893-9617-3624 v1

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

CERTIFICATE OF COMPLETION
THIS CERTIFICATE OF COMPLETION (“Certificate of Completion”) is made by the CITY OF HEALDSBURG, a California municipal corporation (“City”), for the benefit of FREEBIRD DEVELOPMENT COMPANY, LLC, a California limited liability company (“Developer”), as of the date set forth below.

RECITALS
A. City and Developer have entered into that certain Disposition and Development (“DDA”) dated ____________, 20___, a Memorandum of Agreement of which was recorded on _______________, 20___, in the Official Records of Sonoma County as Instrument No. ____________, concerning the redevelopment of certain real property (“Site”) situated in the City of Healdsburg, California, as more fully described in Exhibit A attached hereto and made a part hereof. Pursuant to the DDA, City conveyed fee title to the Site to Developer or on or about ____________, 20___.

B. City and Developer are also Parties to a [Rental Affordable Housing Covenant dated ______________, 20__, recorded against a portion of the Site in the Official Records of Sonoma County as Instrument No. ________ ] [ Owner-Occupied Affordable Housing Covenant dated ______________, 20__, recorded against a portion of the Site in the Official Records of Sonoma County as Instrument No. ________ ] (“Affordable Housing Covenant”).

C. As provided in Section 310 of the DDA, Agency is required to furnish Developer or its successors with a Certificate of Completion upon satisfactory completion of the [Phase 1 Improvements] [Phase 2 Improvements] (as defined in Section 301 of the DDA). This Certificate of Completion is City’s conclusive determination of Developer’s satisfactory completion of the construction and development of the [Phase 1 Improvements] [Phase 2 Improvements] required by the DDA.

NOW, THEREFORE, City hereby certifies as follows:

1. The work of [Phase 1 Improvements] [Phase 2 Improvements] to be constructed by Developer has been fully and satisfactorily completed in conformance with the DDA.

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Packet Pg. 451 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 10
OAK #4893-9617-3624 v1

2. All affordable housing, use, maintenance, nondiscrimination and other covenants contained in the Affordable Housing Covenant shall remain in effect and enforceable according to their terms.

3. This Certificate of Completion shall not be deemed or construed to constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction and development of the [Phase 1 Improvements] [Phase 2 Improvements] on the Site or portion thereof. This Certificate of Completion is not a notice of completion as referred to in section 3093 of the California Civil Code.

IN WITNESS WHEREOF, City has executed this Certificate of Completion this _____ day of ____________________, 20___.

CITY OF HEALDSBURG, a California municipal
corporation
By:

Print Name:

Its: City Manager
[notary acknowledgment required]
ATTEST:
________________________
City Clerk

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Packet Pg. 452 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 11
1 OAK #4880-6351-2381 v4

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of Healdsburg
401 Grove Street
Healdsburg, California 95448
Attn: City Clerk
Exempt From Recording Fees Per Government Code 27383 And Building Homes & Jobs Trust Fund Fee Per Government Code 27388.1(A)(2)(D)

SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY

PARCEL A PUBLIC ACCESS EASEMENT AGREEMENT
This PARCEL A PUBLIC ACCESS EASEMENT AGREEMENT ("Agreement") is entered into as of ________, 20__ (the "Effective Date"), by and between THE CITY OF HEALDSBURG, a California municipal corporation ("City"), and FREEBIRD DEVELOPMENT COMPANY, LLC, a California limited liability company (the "Developer").

City and Developer may each be referred to as a "Party," and collectively the "Parties".

RECITALS
A. On March 20, 2023, the City Council of the City of Healdsburg adopted Resolution ___-20__ approving a Tentative Map (TM2022-02) (the "Tentative Map") for certain real property commonly known as the Saggio Hills Affordable Housing Project in the City of Healdsburg, California (the "Property"), to create seventeen lots for the development of 118 affordable housing residential units, preservation of open space, outdoor amenities for residents, a 2,957 square foot community building and publicly accessible trails (the "Project"), subject to certain conditions of approval.

B. The Parties have entered into a Disposition and Development Agreement ("DDA"), effective ______________, 2023, as evidenced by a Memorandum of Agreement dated ___________, 2023, and recorded on ___________, 20___, in the Official Records of Sonoma County as Instrument No. 20___________, to provide for the phased sale of the Property from City to Developer and the phased development of the Project subject to certain terms and conditions.

C. Section 301 (b) of the DDA specifies that the Project shall incorporate pedestrian trails on Parcel A of the Property (“Parcel A Improvements”), which shall be privately-owned and maintained, subject to a permanent easement in favor of the City for public access on, over and across Parcel A to access the Parcel A Improvements. The Tentative Map identifies Parcel A as the location of the easement and the conditions of approval require that the easement be designated as open to the public in perpetuity.

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Packet Pg. 453 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 11
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D. In accordance with the DDA, a portion of the Property identified as Parcel A, and more particularly described in Exhibit A, attached hereto and incorporated herein by this reference, has been sold and transferred to Developer, and in connection therewith Developer, as owner of fee title to Parcel A, desires to grant to the City, and the City desires to accept from the Developer, a non-exclusive public easement on, over and across Parcel A to provide public access to and use of the Parcel A Improvements in perpetuity as more particularly set forth below. Through this Agreement, the Parties desire to memorialize compliance with the terms of the DDA and Tentative Map conditions of approval and the terms under which the Developer will grant the easement to City over Parcel A and the Parcel A Improvements for public access and use.

AGREEMENT
NOW, THEREFORE, with reference to the foregoing recitals, which are incorporated herein and are a part of this Agreement, and in consideration of the mutual promises, obligations and covenants herein contained, the Parties agree as follows:

1. Grant of Easement. The Developer hereby grants to the City a non-exclusive public access and use easement (the "Public Trail Easement"), on, over and across the Parcel A Improvements and Parcel A described in the legal description set forth in Exhibit B attached to this Agreement and incorporated herein by this reference (the "Easement Area"), subject to the terms and conditions of this Agreement. This Public Trail Easement shall burden the Easement Area in perpetuity for the benefit of the City and the general public as an easement in gross, and it is a covenant that shall run with the land.

2. Construction of Parcel A Improvements.
a. Construction of the Parcel A Improvements shall be completed by Developer substantially in conformance with the Tentative Map conditions of approval, the DDA, any applicable City Design Review approval or equivalent approval, and all other applicable state and local building codes, development standards, and ordinances, and shall be completed prior to the issuance of a certificate of occupancy for any other component of the Project.
b. Any future changes to the design of the Parcel A Improvements, including but not limited to changes to or relocation of the provided amenities, landscaping, or pathways, unless otherwise required to be approved by the Planning Commission pursuant to the City’s Municipal Code, shall be subject to approval by the City Manager, or his or her designee; provided however, that the City Manager in his or her discretion may refer the proposal to the Planning Commission for review and approval. The foregoing notwithstanding, nothing herein confers discretion on the City to initiate and require design changes to the Parcel A Improvements.

3. Public Use. Upon completion of construction of the Parcel A Improvements by Developer, the public is hereby permitted to enter into the Easement Area and use the Public Trail Easement for park and recreational uses and activities customarily permitted within other park sites in the City, consistent with the provisions of the Healdsburg Municipal Code,

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including but not limited to Chapters 9.12, 12.28, and 12.36, as may be amended by City in its sole discretion or any successor statutes thereto. No portion of the Easement Area shall be used for any use that violates any applicable law or that constitutes a nuisance. Developer may, with prior written notice to and the consent of City, temporarily close all or portions of the Easement Area during construction activities on Parcel A, or on adjacent real property identified as Lot 2 and Lot 3 of Saggio Hills Affordable Housing Project, per Map recorded _______, 202__ in Book ____, Pages _____ as Instrument No. 202___________, of Official Records of the Sonoma County Recorder, if, and for so long as, public safety concerns associated with such construction activities warrant, as determined by City in its reasonable discretion.

4. Parcel A and Parcel A Improvements Maintenance. The Developer shall be responsible for the maintenance, repair and replacement, at its sole cost and expense, of Parcel A and the Parcel A Improvements developed in the Easement Area, which Developer shall keep in a good, safe and usable condition, in good repair, and in compliance with all applicable federal, state, county, and local ordinances. In no event shall the City have any responsibility for the maintenance, repair or replacement of Parcel A or the Parcel A Improvements developed in the Easement Area.

5. Term and Termination; Amendment.
a. The term of this Agreement shall commence as of the Effective Date and shall continue in perpetuity until and unless terminated by written agreement of the Parties. b. No amendment to or termination of this Agreement or any provision hereof shall be effective for any purpose unless specifically set forth in a writing that refers expressly to this Agreement and is signed by duly authorized representatives of the Parties.

Where this Agreement requires an approval or consent of the City, such approval may be given on behalf of the City by the City Manager or his or her designee, excepting any such approval or consent relating to the termination of this Agreement which may only be authorized by resolution of the City Council.

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the Developer shall have forty-eight (48) hours to rectify the problem. If the Developer timely responds to the City and demonstrates in good faith that the deficiency will take more than fortyeight (48) hours to correct, the City shall cooperate in good faith with the Developer to set a mutually agreeable time to cure the deficiency while ensuring adequate protection of public health and safety.
c. If the City exercises its rights under Section 6(b) of this Agreement, upon written demand from the City with reasonable supporting documentation, the Developer agrees to pay the City upon demand all reasonable and actual charges and costs incurred by the City for such maintenance and repair work and related inspections. d. Either Party shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the opposite Party to perform its obligations and covenants under this Agreement, including but not limited to Developer’s obligation to maintain Parcel A and the Parcel A Improvements pursuant to Section 4, and to enjoin acts on things which may be unlawful or in violation of the provisions of this Agreement. e. Any failures or delays by a Party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies. Delays by a Party in asserting any of its rights and remedies, irrespective of the length of the delay, shall not deprive the Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies, nor constitute a waiver of such Party's right to demand strict compliance by such other Party in the future. No waiver by a Party of a Default shall be effective or binding upon such Party unless made in writing by such Party, and no such waiver shall be implied from any omission by a Party to take any action with respect to such Default.

7. Covenant Running with the Land. The Parties hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall apply to and bind the Developer and its heirs, executors, administrators, successors, transferees, and assignees having or acquiring any right, title or interest in or to any part of the Easement Area and shall run with and burden the Easement Area. Until all or portions of Parcel A are expressly released from the burdens of this Agreement, each and every contract, deed or other instrument hereafter executed covering or conveying the Easement Area or any portion thereof shall be held conclusively to have been executed, delivered, and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument. In the event of foreclosure or transfer by deed-in-lieu of all or any portion of the Easement Area, title to all or any portion of the Easement Area shall be taken subject to this Agreement. The Developer acknowledges that compliance with this Agreement is a land use requirement and a requirement of the DDA, and that no event of foreclosure or trustee's sale may remove these requirements from the Easement Area. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.

8. Mortgagee Protection. This Agreement, and the rights, privileges, covenants, agreements and Public Trail Easement hereunder with respect to the Easement Area, shall be superior and senior to any lien placed upon the Property following the Effective Date, including

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the lien of any mortgage or deed of trust. Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish or impair the lien of any mortgage or deed of trust made in good faith and for value, but the rights, privileges, covenants, agreements, Public Trail Easement and other provisions contained in this Agreement shall be binding upon and effective against any person (including, but not limited to, any mortgagee or beneficiary under a deed of trust) who acquires title to the Property or any portion thereof by foreclosure, trustee's sale, deed in lieu of foreclosure, or otherwise; provided, however, that no such person shall be obligated to construct the Parcel A Improvements unless that person takes title to the Easement Area and otherwise elects in its sole discretion, to construct the larger Project pursuant to the DDA; and provided further that no such person shall assume or have any liability for the Developer's prior defaults under this Agreement or for the payment of any amounts not paid if and when due from the Developer under this Agreement. Developer or any subsequent owner of all or any portion of the Property may, at any time during the term of this Agreement, and from time to time, deliver written notice to the City requesting that the City certify in writing the Developer's compliance with this Agreement. Upon receiving such request, the City Manager or his or her designee shall execute and return such certificate or give a written, detailed response explaining why it will not do so within twenty (20) days following the receipt thereof. The consent and subordination of the existing mortgagee of record to this Agreement is attached hereto as Exhibit C.

9. Notice. Except as otherwise expressly provided herein, all notices and demands pursuant to this Agreement shall be in writing and delivered in person, by commercial courier or by first-class certified mail, postage prepaid. Except as otherwise expressly provided herein, notices shall be considered delivered when personally served, upon delivery if delivered by commercial courier, or two (2) days after mailing if sent by mail. Notices shall be sent to the addresses below for the respective Parties; provided, however, that any Party may change its address for purposes of this Section by giving written notice to the other Parties. These addresses may be used for service of process:

City: City Manager
City of Healdsburg
401 Grove Street
Healdsburg, California 95448
with copy to: Samantha Zutler, Esq.

City Attorney
City of Healdsburg
101 Howard Street, Suite 400
San Francisco, California 94123
Developer: Freebird Development Company, LLC
1111 Broadway
Oakland, CA 94607
Attention: Robin Zimbler

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Packet Pg. 457 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 11
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with copy to: Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94101
Attention: Evan Gross

10. Partial Invalidity. If any provision of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.

11. Applicable Law/Venue. This Agreement and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. Any references herein to particular statutes or regulations shall be deemed to refer to successor statutes or regulations, or amendments thereto. The venue for any action shall be the County of Sonoma, California.

12. Further Assurances. Each Party covenants, on behalf of itself and its successors, heirs, and assigns, to take all actions and do all things, and to execute, with acknowledgment or affidavit if required, any and all documents and writings that may be necessary or proper to achieve the purposes and objectives of this Agreement.

13. Nondiscrimination. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the use of the Public Trail Easement in accordance with this Agreement. The foregoing covenant shall run with the land.

14. Headings. Section headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants, or conditions of this Agreement.

15. Agreement is Entire Understanding. This Agreement is executed in one original, which constitutes the entire understanding and agreement of the Parties with respect to the subject matter hereof. Except for the Tentative Map conditions of approval, the DDA and except as otherwise specified in this Agreement, any prior correspondence, memoranda, agreements, warranties, or representations are superseded in total by this Agreement.

16. Interpretation. Each Party to this Agreement has had an opportunity to review the Agreement, confer with legal counsel regarding the meaning of the Agreement, and negotiate revisions to the Agreement. Accordingly, neither Party shall rely upon Civil Code Section 1654 in order to interpret any uncertainty in the meaning of the Agreement.

17. Intended Beneficiaries. The City and the public are the intended beneficiaries of this Agreement, and the City shall have the sole and exclusive power to enforce this Agreement.

It is intended that the City may enforce this Agreement, on its own behalf or on behalf of the public, in order to implement the provisions of the DDA. No other person or persons, other than

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the City and the Developer and their assigns and successors, shall have any right of action hereon.

18. Recordation of Termination. If this Agreement is terminated, a written statement acknowledging such termination shall be executed by Parties and shall be recorded by City in the Official Records of Sonoma County, California.

19. Signature Pages; Execution in Counterparts. For convenience, the signatures of the Parties to this Agreement may be executed and acknowledged on separate pages in counterparts which, when attached to this Agreement, shall constitute this as one complete Agreement.

20. Exhibits. The following exhibits are attached to this Agreement and incorporated into the Agreement by reference:

Exhibit A: Legal Description of Property
Exhibit B: Legal Description of Parcel A/Easement Area
Exhibit C: Consent And Subordination
[Signature Page Follows.]

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Packet Pg. 459 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4880-6351-2381 v4
IN WITNESS WHEREOF, this Agreement has been entered into by and between the Parties as of the Effective Date.

CITY:

CITY OF HEALDSBURG, a
California municipal corporation
By:

Jeffrey Kay
City Manager
APPROVED AS TO FORM:

By:

Samantha Zutler, Esq.

City Attorney
ATTEST:

By:

Raina Allan
City Clerk
DEVELOPER:

FREEBIRD DEVELOPMENT

COMPANY, LLC,
a California limited liability company
By:

Robin Zimbler
Manager

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Packet Pg. 460 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4880-6351-2381 v4

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

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Packet Pg. 461 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4880-6351-2381 v4

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

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Packet Pg. 462 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4880
-6351-2381 v4

EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

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EXHIBIT B

LEGAL DESCRIPTION OF PARCEL A / EASEMENT AREA

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Packet Pg. 464 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) OAK #4880-6351-2381 v4

EXHIBIT C
CONSENT AND SUBORDINATION OF ______________ TO

PARCEL A PUBLIC ACCESS EASEMENT AGREEMENT
The undersigned, as present Beneficiary under that certain [DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING] recorded ___________, 20__, under Series No. ________________ in the Official Records of Sonoma County, executed by ____________________, a ________________, as Trustor, to ____________________, as Trustee (the "Deed of Trust"), does hereby consent to the execution and recordation of the Parcel A Public Access Easement Agreement, dated as of _______, 20__ (the "Agreement"), to which this consent is attached, and does hereby subordinate the lien of the Deed of Trust to the Agreement, subject to the mortgagee protections set forth in Section 8 of the Agreement, to the same extent and with the same force and effect as if the Agreement had been executed and recorded prior to the execution and recordation of the Deed of Trust.

IN WITNESS WHEREOF, the undersigned has executed this consent this ______ day of _____, 20__.

BENEFICIARY:
__________________, a _________________________
By: _______________________________
Name: _______________________________
Its: _______________________________

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Packet Pg. 465 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) ATTACHMENT NO. 12
1 OAK #4864-1383-5838 v3

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY
LOT 3 INGRESS & EGRESS EASEMENT AGREEMENT
This LOT 3 INGRESS & EGRESS EASEMENT AGREEMENT ("Agreement") is entered into as of ________, 20__ (the "Effective Date"), by and between THE CITY OF HEALDSBURG, a California municipal corporation ("City"), and FREEBIRD DEVELOPMENT COMPANY, LLC, a California limited liability company (the "Developer"). City and Developer may each be referred to as a "Party," and collectively the "Parties".

RECITALS
A. Developer is the fee owner of those certain parcels of real property collectively and commonly known as the Saggio Hills Affordable Housing Project in the City of Healdsburg, California (the "Property"), as more particularly described in Exhibit A attached hereto and incorporated herein to this Agreement.

B. On __________, 20__, the City Council adopted Resolution ___-20__ approving a Tentative Map (TM2022-02) for the Property to create seventeen lots (the "Tentative Map") to allow for the development of 118 affordable housing residential units, preservation of open space, outdoor amenities for residents, a 2,957 square foot community building and publicly accessible trails (the "Project"), subject to certain conditions of approval.

C. The Parties have entered into a Disposition and Development Agreement ("DDA"), effective ______________, 202__, as evidenced by a Memorandum of Agreement dated ___________, 202__, and recorded on ___________, 20___, in the Official Records of Sonoma County as Instrument No. 20___________, to provide for the sale of the Property from City to Developer and the development of the Project subject to certain terms and conditions.

D. Section 301 (f) of the DDA specifies that the Project shall be subject to a permanent easement in favor of the City for public pedestrian, bicycle and vehicular ingress and egress from Parkland Farms Boulevard on, over and across Lot 3 to a public parking lot serving the Healdsburg Ridge Open Space Reserve to be located adjacent and to the east of Lot 3. The

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Tentative Map identifies the location of the easement on Lot 3 and the conditions of approval require that the easement be designated as open to the public in perpetuity.

E. The Developer desires to grant to the City, and the City desires to accept from the Developer, a non-exclusive public easement on, over and across Lot 3 to provide public pedestrian, bicycle and vehicular ingress and egress access from Parkland Farms Boulevard to a public parking lot serving the Healdsburg Ridge Open Space Reserve, located adjacent and to the east of Lot 3, in perpetuity, as more particularly set forth below. Through this Agreement, the Parties desire to memorialize compliance with the terms of the DDA and Tentative Map conditions of approval and the terms under which the Developer will grant the easement to the City over Lot 3 for public ingress and egress.

1. Grant of Easement. The Developer hereby grants to the City a non-exclusive public easement for pedestrian, bicycle and vehicular ingress and egress from Parkland Farms Boulevard to a public parking lot located adjacent and to the east of Lot 3 (the "Public Access Easement"), on, over and across a portion of Lot 3 described in the legal description set forth in Exhibit B attached to this Agreement and incorporated herein by this reference (the "Easement Area"), subject to the terms and conditions of this Agreement. This Public Access Easement shall burden the Easement Area in perpetuity for the benefit of the City and the general public as an easement in gross, and it is a covenant that shall run with the land.

2. Construction of Lot 3 Improvements.
a. Construction of the Lot 3 Improvements, as defined in the DDA and incorporated herein by this reference, shall be constructed substantially in conformance with the DDA, any applicable City Design Review approval or equivalent approval, and all other applicable state and local building codes, development standards, and ordinances, and shall be completed in accordance with the timeframe and terms of the DDA. b. Any future changes impacting the Public Access Easement within the Easement Area, unless otherwise required to be approved by the Planning Commission pursuant to the City’s Municipal Code, shall be subject to approval by the City Manager, or his or her designee; provided however, that the City Manager in his or her discretion may refer the proposal to the Planning Commission for review and approval. The foregoing notwithstanding, nothing herein confers discretion on the City to initiate and require design changes to the Easement Area.

3. Public Use. The public is hereby permitted to enter into the Easement Area and use the Public Access Easement for pedestrian, bicycle and vehicular ingress and egress between Parkland Farms Boulevard and the public parking lot located adjacent and to the east of the

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Easement Area. No portion of the Easement Area shall be used for any use that violates any applicable law or that constitutes a nuisance.

4. Lot 3 and Lot 3 Improvements Maintenance. The Developer shall be responsible for the maintenance, repair and replacement, at its sole cost and expense, of Lot 3 and the Lot 3 Improvements developed in the Easement Area, which Developer shall keep in a good, safe and usable condition, in good repair, and in compliance with all applicable federal, state, county, and local ordinances. In no event shall the City have any responsibility for the maintenance, repair or replacement of Lot 3 or the Lot 3 Improvements developed in the Easement Area.

6. Default and Remedies.
a. A Party's violation of any material term of this Agreement or failure by any Party to perform any material obligation of this Agreement shall constitute a default ("Default"), if the violation continues for a period of thirty (30) days after written notice thereof to the defaulting Party without the defaulting Party curing such breach, or if such breach cannot reasonably be cured within such thirty (30) day period, commencing the cure of such breach within such thirty (30) day period and thereafter diligently proceeding to cure such breach within ninety (90) days, unless a longer period is granted by the non-defaulting Party. b. If after expiration of the notice and cure period set forth in Section 6(a) of this Agreement, the Developer does not inspect, maintain, care for and, if and when necessary, repair Lot 3 or the Lot 3 Improvements as required by this Agreement, the City shall have the right, but not the obligation, to elect to maintain, repair, periodically inspect, care for, and repair the same, or to contract for the correction of such deficiencies. If the written notification states that the problem constitutes an emergency and relates to the public health and safety, then the Developer shall have forty-eight (48) hours to rectify the problem. If the Developer timely responds to the City and demonstrates in good faith that the deficiency will take more than fortyeight (48) hours to correct, the City shall cooperate in good faith with the Developer to set a mutually agreeable time to cure the deficiency while ensuring adequate protection of public health and safety.
c. If the City exercises its rights under Section 6(b) of this Agreement, upon written demand from the City with reasonable supporting documentation, the Developer agrees

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to pay the City upon demand all reasonable and actual charges and costs incurred by the City for such maintenance and repair work and related inspections. d. Either Party shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the opposite Party to perform its obligations and covenants under this Agreement, including but not limited to Developer’s obligation to maintain Lot 3 and the Lot 3 Improvements pursuant to Section 4, and to enjoin acts on things which may be unlawful or in violation of the provisions of this Agreement. e. Any failures or delays by a Party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies. Delays by a Party in asserting any of its rights and remedies, irrespective of the length of the delay, shall not deprive the Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies, nor constitute a waiver of such Party's right to demand strict compliance by such other Party in the future. No waiver by a Party of a Default shall be effective or binding upon such Party unless made in writing by such Party, and no such waiver shall be implied from any omission by a Party to take any action with respect to such Default.

7. Covenant Running with the Land. The Parties hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall apply to and bind the Developer and its heirs, executors, administrators, successors, transferees, and assignees having or acquiring any right, title or interest in or to any part of the Easement Area and shall run with and burden the Easement Area. Until all or portions of Lot 3 are expressly released from the burdens of this Agreement, each and every contract, deed or other instrument hereafter executed covering or conveying the Easement Area or any portion thereof shall be held conclusively to have been executed, delivered, and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument. In the event of foreclosure or transfer by deed-in-lieu of all or any portion of the Easement Area, title to all or any portion of the Easement Area shall be taken subject to this Agreement. The Developer acknowledges that compliance with this Agreement is a land use requirement and a requirement of the DDA, and that no event of foreclosure or trustee's sale may remove these requirements from the Easement Area. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.

8. Mortgagee Protection. This Agreement, and the rights, privileges, covenants, agreements and Public Access Easement hereunder with respect to the Easement Area, shall be superior and senior to any lien placed upon the Property following the Effective Date, including the lien of any mortgage or deed of trust. Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish or impair the lien of any mortgage or deed of trust made in good faith and for value, but the rights, privileges, covenants, agreements, Public Access Easement and other provisions contained in this Agreement shall be binding upon and effective against any person (including, but not limited to, any mortgagee or beneficiary under a deed of trust) who acquires title to the Property or any portion thereof by foreclosure, trustee's sale, deed in lieu of foreclosure, or otherwise; provided, however, that no such person shall be obligated to construct the Lot 3 Improvements unless that person takes title to the Easement Area and otherwise elects

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in its sole discretion, to construct the larger Project pursuant to the DDA; and provided further that no such person shall assume or have any liability for the Developer's prior defaults under this Agreement or for the payment of any amounts not paid if and when due from the Developer under this Agreement. Developer or any subsequent owner of all or any portion of the Property may, at any time during the term of this Agreement, and from time to time, deliver written notice to the City requesting that the City certify in writing the Developer's compliance with this Agreement. Upon receiving such request, the City Manager or his or her designee shall execute and return such certificate or give a written, detailed response explaining why it will not do so within twenty (20) days following the receipt thereof. The consent and subordination of the existing mortgagee of record to this Agreement is attached hereto as Exhibit C.

City: City Manager
City of Healdsburg
401 Grove Street
Healdsburg, California 95448
with copy to: Samantha Zutler, Esq.

City Attorney
City of Healdsburg
101 Howard Street, Suite 400
San Francisco, California 94123
Developer: Freebird Development Company, LLC
1111 Broadway
Oakland, CA 94607
Attention: Robin Zimbler
with copy to: Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94101
Attention: Evan Gross

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13. Nondiscrimination. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the use of the Public Access Easement in accordance with this Agreement. The foregoing covenant shall run with the land.

14. Headings. Section headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants, or conditions of this Agreement.

17. Intended Beneficiaries. The City and the public are the intended beneficiaries of this Agreement, and the City shall have the sole and exclusive power to enforce this Agreement.

It is intended that the City may enforce this Agreement, on its own behalf or on behalf of the public, in order to implement the provisions of the DDA. No other person or persons, other than the City and the Developer and their assigns and successors, shall have any right of action hereon.

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20. Exhibits. The following exhibits are attached to this Agreement and incorporated into the Agreement by reference:

Exhibit A: Legal Description of Property
Exhibit B: Legal Description of Easement Area
Exhibit C: Consent And Subordination
[Signature Page Follows.]

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IN WITNESS WHEREOF, this Agreement has been entered into by and between the Parties as of the Effective Date.

CITY:

CITY OF HEALDSBURG, a
California municipal corporation
By:

Jeffrey Kay
City Manager
APPROVED AS TO FORM:

By:

Samantha Zutler, Esq.

City Attorney
ATTEST:

By:

Raina Allan
City Clerk
DEVELOPER:

FREEBIRD DEVELOPMENT

COMPANY, LLC,
a California limited liability company
By:

Robin Zimbler
Manager

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

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

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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

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EXHIBIT B

LEGAL DESCRIPTION OF EASEMENT AREA

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EXHIBIT C
CONSENT AND SUBORDINATION OF ______________ TO

PARCEL A PUBLIC ACCESS EASEMENT AGREEMENT
The undersigned, as present Beneficiary under that certain [DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING] recorded ___________, 20__, under Series No. ________________ in the Official Records of Sonoma County, executed by ____________________, a ________________, as Trustor, to ____________________, as Trustee (the "Deed of Trust"), does hereby consent to the execution and recordation of the Lot 3 Ingress & Egress Easement Agreement, dated as of _______, 20__ (the "Agreement"), to which this consent is attached, and does hereby subordinate the lien of the Deed of Trust to the Agreement, subject to the mortgagee protections set forth in Section 8 of the Agreement, to the same extent and with the same force and effect as if the Agreement had been executed and recorded prior to the execution and recordation of the Deed of Trust.

IN WITNESS WHEREOF, the undersigned has executed this consent this ______ day of _____, 20__.

BENEFICIARY:
__________________, a _________________________
By: _______________________________
Name: _______________________________
Its: _______________________________

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ATTACHMENT NO. 13

APPRAISAL INSTRUCTIONS
Appraisal Assignment:

The Developer is to retain the Appraiser. The final appraisal service work product and any preliminary drafts thereof are to be provided to the City and Developer, simultaneously.

Property to be appraised:

The property to be appraised is that certain real property described as the Phase 1 Parcels, Phase 2 Parcels, Phase 3 Parcel or Phase 4 Parcels (“Phased Parcels”), as applicable to the Phase 1 Carry-Back Financing, Phase 2 Carry-Back Financing, Phase 3 Carry-Back Financing, or Phase 4 Carry-Back Financing, as provided for in Sections 201, 301, 401 and 501 of the Disposition and Development Agreement, respectively.

Appraisal Standards:

The appraisal shall be performed in accordance with the Uniform Standards of Professional Appraisal Practice. The interest appraised shall be a fee simple interest in the Phased Parcels. The appraisal shall determine the "fair market value" or the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, as enumerated in the Appraisal Institute's definition of "fair market value." The appraisal shall include industry-standard information and analysis to support such current fair market value determination.

The Appraiser shall prepare and deliver to Developer and City an appraisal determining the fair market value of the Phased Parcels on a total dollar value basis as of the valuation date, taking into consideration the actual total square footage of the Phased Parcels, the Project Approvals and Subsequent Project Approvals for the Phased Parcels as of the valuation date, the actual state and condition of the Phased Parcels on the valuation date, and the current general market conditions in the applicable market area as of the valuation date.

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PROMISSORY NOTE
(Saggio Hills Affordable Housing Project)
$_____________ Healdsburg, California
_______, 20__

FOR VALUE RECEIVED, [Insert Name of Developer Entity] (“Borrower”), promises to pay to the City of Healdsburg, a California municipal corporation (the “City”), in lawful money of the United States of America the principal sum of ________________ Dollars ($________) , together with interest on the outstanding principal balance in accordance with the terms and conditions described herein. Interest shall accrue on the principal balance of this Note outstanding from time to time at the rate of zero percent (0%) simple annual interest. Interest shall be calculated on the basis of a year of 365 days, and charged for the actual number of days elapsed.

This Promissory Note (this “Note”) has been executed and delivered pursuant to and in accordance with that certain Disposition and Development Agreement dated ___________, 2023, and executed by and between Borrower and City (the “Agreement”), wherein City agreed to provide Borrower with [□ Phase 1 Carry-Back Financing; □ Phase 2 Carry-Back Financing; □ Phase 3 Carry-Back Financing; □ Public Improvement Loan] (the “Loan”), and is subject to the terms and conditions of the Agreement, which is by this reference incorporated herein and made a part hereof. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Agreement.

This Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date hereof, executed by Borrower as trustor for the benefit of City, and encumbering the property described therein (“Property”). City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein and in the Deed of Trust. Collectively, the Agreement, Note and Deed of Trust may be referred to herein as the “City Documents”.

1. PAYMENTS.

1.1 ANNUAL PAYMENT DATES; MATURITY DATE. No payments toward principal and interest accrued on this Note shall be payable. Any payments received shall be credited first to any unpaid late charges and other costs and fees then due, then to accrued interest, and then to principal. In no event shall any amount due under this Note become subject to any rights, offset, deduction or counterclaim on the part of Borrower. The entire outstanding principal balance of this Note, together with interest accrued thereon and all other sums accrued hereunder shall be payable in full on the date (the “Maturity Date”) which is the [fifty-fifth (55th) / forty-fifth (45th)] anniversary of the date upon which the Certificate of Completion is recorded against the Property pursuant to the terms of Section 610 of the Agreement.

1.2 DUE ON SALE. The entire unpaid principal balance and all interest and other sums accrued hereunder shall be due and payable upon the transfer of an Interest (as defined in Section 103.1 of the Agreement) absent City consent, of all or any part of the Project Phase or

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the Property or any interest therein other than a Pre-Approved Transfer permitted without City consent pursuant to the City Documents. Without limiting the generality of the foregoing, this Note shall not be assumable without City’s prior written consent, which consent may be granted or denied in City’s sole discretion.

1.3 PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note, provided that each such prepayment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal.

1.4 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made to City at 401 Grove Street, Healdsburg, CA 95448 or such other place as City shall designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by City in writing.

2. DEFAULTS AND REMEDIES.

2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder (“Event of Default”):
(A) Borrower fails to pay when due the principal and interest payable hereunder and such failure continues for thirty (30) days after such payment is due. (B) Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Borrower (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. (C) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Borrower in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or substantially all of Borrower’s assets, (iii) orders the liquidation of Borrower, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within sixty (60) days after its issuance.
(D) Borrower shall have voluntarily suspended its business or Borrower shall have been dissolved or terminated.
(E) The occurrence of a transfer of an Interest in violation of the City Documents. (F) The holder of any instrument secured by a mortgage or deed of trust on the Project Phase or the Property declares a default and such default remains uncured beyond any

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applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder.
(G) Borrower fails to maintain insurance on the Property and the Project Phase as required pursuant to the City Documents and Borrower fails to cure such default within five (5) days.
(H) Subject to Borrower’s right to contest the following charges pursuant to the City Documents, if Borrower fails to pay prior to delinquency taxes or assessments due on the Property or the Project Phase or fails to pay when due any other charge that may result in a lien on the Property or the Project Phase, and Borrower fails to cure such default within twenty (20) days of the date of delinquency, but in all events prior to the date upon which the holder of any such tax or other lien has the right to foreclose thereon. (I) If any representation or warranty contained in any City Document, or any certificate furnished in connection therewith, proves to have been false or misleading in any material adverse respect when made and continues to be materially adverse to the City. (J) An Event of Default shall have been declared under any City Document, and remains uncured beyond the expiration of the applicable cure period.

2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under applicable law, and (iii) exercise any and all rights and remedies available to City under this Note and the other City Documents, including without limitation the right to pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys' fees, incurred in connection with City's enforcement of this Note and the exercise of any or all of its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not alternative.

2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall automatically be increased without notice to the rate of the lesser of ten percent (10%) per annum or the maximum rate permitted by law (the “Default Rate”); provided however, if any payment due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date for such payment. When Borrower is no longer in default, the Default Rate shall no longer apply, and the interest rate shall once again be the rate specified in the first paragraph of this Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent City from exercising any of its other rights or remedies.

3. MISCELLANEOUS.

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3.1 WAIVERS; AMENDMENTS; BORROWER’S WAIVERS. No waiver by City of any right or remedy under this Note shall be effective unless in a writing signed by City.

Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver that may be given by City will be applicable except in the specific instance for which it is given. No notice to or demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right of City to take further action without notice or demand as provided in this Note. There shall be no amendment to or modification of this Note except by written instrument executed by Borrower and City.

To the maximum extent permitted by applicable law, Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice.

3.2 RIGHT TO CURE. Borrower’s limited partner(s) shall have the right to cure any default of Borrower hereunder upon the same terms and conditions afforded to Borrower. Any cure tendered by a limited partner of Borrower shall be deemed to be a cure by Borrower and shall be accepted or rejected on the same basis as if tendered by Borrower.

3.3 NOTICES. Any notice required or permitted to be given hereunder shall be given in accordance with Section 1001 of the Agreement.

3.4 SEVERABILITY. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

3.5 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Any legal action filed in connection with this Note shall be filed in the Superior Court of Sonoma County, California, or in the United States District Court for the Northern District of California.

3.6 BINDING ON SUCCESSORS. This Note shall bind Borrower and its successors and assigns and shall accrue to the benefit of City and its successors and assigns.

3.7 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation.

3.8 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City under this Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the Deed of Trust will in no manner make City the partner or joint venturer of Borrower.

3.9 TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of this Note.

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3.10 NONRECOURSE. Except as expressly provided in this Section 3.9, Borrower shall not have personal liability for payment of the principal of, or interest on, this Note, and the sole recourse of City with respect to the payment of the principal of, and interest on, this Note shall be to the Project, the Property and any other collateral held by City as security for this Note; provided however, nothing contained in the foregoing limitation of liability shall:
(A) impair the enforcement against all such security for the Loan of all the rights and remedies of the City under the Deed of Trust and any financing statements City files in connection with the Loan as each of the foregoing may be amended, modified, or restated from time to time; (B) impair the right of City to bring a foreclosure action, action for specific performance or other appropriate action or proceeding to enable City to enforce and realize upon the Deed of Trust, the interest in the Project Phase and the Property created thereby and any other collateral given to City in connection with the indebtedness evidenced hereby and to name the Borrower as party defendant in any such action;
(C) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Loan as a demand for money within the meaning of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; (D) constitute a waiver of any right which City may have under any bankruptcy law to file a claim for the full amount of the indebtedness owed to City hereunder or to require that the Project Phase and the Property shall continue to secure all of the indebtedness owed to City hereunder in accordance with this Note and the Deed of Trust; or (E) limit or restrict the ability of City to seek or obtain a judgment against Borrower to:
(1) recover under any provision of any City Document that obligates Borrower to indemnify City, or
(2) recover from Borrower compensatory damages as well as other costs and expenses incurred by City (including without limitation attorneys’ fees and expenses) arising as a result of the occurrence of any of the following:
(a) any fraud or intentional misrepresentation on the part of the Borrower, or any officer, director, member, manager, general partner, or authorized representative of Borrower in connection with the request for or creation of the Loan, or in any City Document, or in connection with any request for any action or consent by City in connection with the Loan;
(b) any failure to maintain insurance on the Property and the Project Phase as required pursuant to the City Documents;
(c) failure to pay taxes, assessments or other charges which may become liens on the Property or the Project Phase (subject to the right to contest as set forth in the Agreement);

7.A.f
Packet Pg. 484 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA) 6 OAK #4887-8883-5160 v2
(d) the presence of Hazardous Materials on the Property or other violation of the Borrower’s obligations under the City Documents pertaining to environmental matters;
(e) the occurrence of any act or omission of Borrower that results in waste to or of the Project Phase or the Property;
(f) the material misapplication of the Loan proceeds;
(g) the removal or disposal of any personal property or fixtures other than in the normal course of Borrower’s business, or the retention of rents, insurance proceeds, or condemnation awards in violation of the Deed of Trust; (h) the material misapplication of the proceeds of any insurance policy or award resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Project Phase or the Property; and
(i) the failure of Borrower to pay all amounts payable under this Note in full if Borrower transfers an Interest in the Property in violation of the City Documents.

IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written above.

BORROWER:
[Insert Name of Developer Entity]
By: ___________________________
[Name, Title]

7.A.f
Packet Pg. 485 Attachment: 3A Healdsburg_Freebird_Disposition and Development Agreement (4000 : Saggio Hills Affordable Housing TM, DA, DDA)

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Healdsburg City CouncilApril 3, 2023

Healdsburg City Council
April 3, 2023