Agenda Packet — Hercules City Council, October 24, 2023 (part 2 of 3)

ORDINANCE NO. _____

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HERCULES AMENDING THE HERCULES MUNICIPAL CODE TITLE 3, CHAPTER 4, ARTICLE 12 TO SPECIFY

PARKING RESTRICTIONS IN DESIGNATED GREEN ZONES, AND CLARIFYING

PARKING TIME LIMITS IN DESIGNATED YELLOW ZONES
WHEREAS, the City of Hercules has adopted parking regulations providing for restricted on-street parking, codified in the Hercules Municipal Code Title 3, Chapter 4; and
WHEREAS, local regulations providing for restricted on-street parking make use of color coded curbs to differentiate the types of allowable on-street parking; and WHEREAS, two parking spaces on John Muir Parkway have been converted to 20 minute parking stalls by painting the curbs green; and
WHEREAS, it has been subsequently determined that green curb parking has not been specifically defined or designated in Hercules Municipal Code Title 3, Chapter 4; and WHEREAS, in reviewing current on-street parking code provisions it has also been determined that there is ambiguity in several provisions that should be clarified; and WHEREAS, the proposed amendments are consistent with state law requirements for curb markings contained in California Vehicle Code Section 21458.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HERCULES DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. Recitals. The City Council hereby incorporates the above recitals into this Ordinance by this reference.

SECTION 2. Amendment. That the City Council of the City of Hercules does hereby amend Hercules Municipal Code Title 3, Chapter 4, Article 12, to read as follows:
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Hercules Municipal Code
TITLE 3
Chapter 4. Traffic
Article 12. Stopping for Loading or Unloading
Sec. 3-4.1202 Curb Markings.
(a) The Director of Public Works is hereby authorized, subject to the provisions and limitations of this section, to place, and when required herein shall place, the following curb markings to indicate the regulations of this article, and such curb markings shall have the meanings as set forth in this section:
(1) Red shall mean no stopping, standing or parking No person shall stop, park, or leave standing any vehicle in a Red zone at any time except as permitted by the Vehicle Code, and except that a bus may stop in a red zone marked or signed as a bus zone.
(2) Yellow shall mean no stopping, standing or parking No person shall stop, park, or leave standing any vehicle in a Yellow zone at any time between the hours of 7:00 a.m. and 6:00 p.m. of any day except Sundays and holidays for any purpose other than the loading or unloading of passengers or materials provided that the loading or unloading of passengers or materials shall not consume more than five (5) minutes nor the loading or unloading of materials more than twenty (20) consecutive minutes.
(3) White shall mean no stopping, standing or parking No person shall stop, park, or leave standing any vehicle in a White zone for any purpose other than loading or unloading passengers, or for the purpose of depositing mail in an adjacent mail box, which shall not exceed five (5) consecutive minutes, and such restrictions shall apply between the hours of 7:00 a.m. and 6:00 p.m. of any day except Sundays and holidays and except as follows:

A. When such zone is in front of a hotel or in front of a mail box the restrictions shall apply at all times.

B. When such zone is in front of a theater the restrictions shall apply at all times except when such theater is closed.
(4) No person shall stop, park, or leave standing any vehicle in a Green zone other than the time and days specified on the sign adjacent to such green zone.

If no signage specifying a time limitation is present, no vehicle shall stop, park or be left standing for longer than twenty (20) consecutive minutes in the green zone.
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(4) (5) When the Director of Public Works has caused such curb markings to be placed, no person shall stop, stand or park, or leave standing a vehicle adjacent to any such legible curb marking in violation of any of the provisions of this section.

SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid, such decisions shall not affect the validity of the remaining portions of this Ordinance. The Council hereby declares that it would have adopted the Ordinance, and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be deleted.

SECTION 4. Effective Date and Publication. The City Clerk shall certify to the adoption of this Ordinance and shall publish or post the Ordinance as required by law.

This Ordinance shall be effective thirty (30) days from date of final adoption.

THE FOREGOING ORDINANCE was first read at a regular meeting of the Hercules City Council on the 10th day of October, 2023, and was passed and adopted at a regular meeting of the Hercules City Council on the _____ day of _____________, 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Alex Walker-Griffin, Mayor
__________________________________________
Eibleis Melendez
City Clerk
359

DISCUSSION AND/OR ACTION

AGENDA ITEMS

1. 22-686

2. 22-687

3. 22-688

4. 22-685

5. 22-689

6. 22-690
360

STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of October 24, 2023
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Mike Roberts, Public Works Director/City Engineer SUBJECT: Refugio Valley Park Tree Succession & Shade Structure Plan - Review of Community Survey and Selection of Preferred Alternative RECOMMENDED ACTION:

Receive a report on the Refugio Valley Park community survey and Tree Succession and Shade Structure Plan conceptual alternatives, discuss, and provide direction to staff on the preferred alternative.

BACKGROUND:

This past summer approximately 40 eucalyptus trees were removed in Refugio Park due to public safety concerns from falling branches. The trees were concentrated in the highest-use areas, including the parking lot and adjacent picnic tables as well as the children’s play area.
22-686
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The services of Gates & Associates, a landscape architecture firm on the City’s prequalified vendor list, was subsequently secured to assist with developing a succession plan for the trees that had been removed and the shade they provided.

Guidance for this effort was obtained from the Draft Parks Master Plan as cited below:

I. Potential Priority Projects for 10-Year Action Plan
Refugio Valley Park – Restore and enhance entire site
II. Site Recommendations - Refugio Valley Park

6. Where trees have been removed, provide shade structures near parking lot and group picnicking area
II. Prioritization Process – Steering Committee Direction a) Concentrate efforts at some of Hercules’ larger, aging parks that will provide visible results to the community
b) Implement small projects that have a big impact
The public was engaged through a survey at a pop-up event on Friday, September 15 during movie night. The survey then ran on a web-based application for the following 2 weeks. Over 350 people participated in the survey, which was a very strong turnout. A high-level recap of the survey, which is described and illustrated more fully in Att #1, is as follows:
 Option A is the preferred distribution of trees. This option is to install trees around the walking path loop versus only replacing trees in the areas where they were removed at the southern end of Refugio Park.
 Top trees:
o Red Maple
o New Zealand Christmas
o Frontier Elm
o Valley Oak
o California Pepper
o Southern Live Oak
 Permanent shade structures are preferred at the picnic area.  Hip roof is the preferred shade structure style.
 Top trends from open comments:
o The community is interested in native species of trees, preferably options that are wildlife-friendly, drought-tolerant, and grow well in the area. o There were numerous requests for planting mature trees and/or fastgrowing trees so the shade can be enjoyed in a shorter time frame. o The trees and shade structures should be selected to minimize maintenance and expense over time.
 Demographics show a good representation of the diverse local community:
o 91% of respondents reside in Hercules.
362
o Participation included all five age groups listed, youth to seniors, as well as multiple different ethnicities.

ANALYSIS:

Using guidance from the Draft Parks Master Plan and community input from the survey, 3 alternative conceptual plans were developed for the Refugio Valley Park Tree and Shade Succession Project which are described and illustrated more fully in Att #1.

Alternative 1 – Trees only (could also include Temporary Fabric Shade Structure) Planning Level Cost Estimate - $99K ($149K total with Temporary Fabric Shade Structure)
Pros:

1. Replaces the trees that were removed and adds new trees around the northeast side of the walking trail.

2. Is the least expensive option.

Cons:

1. It will take at least a decade for the trees to mature to the point that they effectively shade the picnic area. An interim fabric shade structure could be installed, which would cost an additional $50K and require more intensive maintenance.

2. Does not address the needed repairs and generally poor condition of the picnicking surfacing and tables, which would benefit from being replaced in their entirety.

Alternative 2 –Trees, Shade Structure, Asphalt Concrete Repairs & Picnic Table Repairs
Planning Level Cost Estimate - $578K
Pros:

1. Replaces the trees that were removed and adds new trees around the northeast side of the walking trail.

2. Provides attractive Hip Roof shade structure over the picnic area. 363

3. Makes spot repairs to asphalt concrete surfacing in damaged locations.

4. Repairs picnic tables where they were damaged from falling tree limbs.

Cons:

1. Is more expensive than trees alone.

2. May create an attractive nuisance given the shelter it provides.

3. Does not address the generally deteriorated condition of the asphalt concrete (i.e. blacktop) surfacing for the picnic area or replace the tables, which are outdated and also in poor condition.

Alternative 3 –Trees, Shade Structure, New Portland Cement Paving & New Picnic Tables/BBQ
Planning Level Cost Estimate - $721K
Pros:

1. Replaces the trees that were removed and adds new trees around the northeast side of the walking trail.

2. Provides attractive Hip Roof shade structure.

3. Replaces the picnicking surfacing with Portland cement concrete (i.e. similar to sidewalks) and installs new picnic tables and barbeques. 364
Cons:

1. Is the most expensive option.

2. May create an attractive nuisance given the shelter it provides.

Staff recommends proceeding with Alternative 3 as this option most closely aligns with the goals of the Draft Parks Master Plan and preference of the community. While the most expensive option, it would transform Refugio Park and have the most positive impact of the 3 alternatives.

FISCAL IMPACT:

The Adopted FY 23/24 Capital Improvement Program (CIP) includes $200K for an undesignated park improvement project, which was to be selected once the priorities for the Parks Master Plan had been sufficiently developed. It is recommended this funding be designated for the Refugio Valley Park Tree Succession & Shade Structure Project.

The funding would initially be used for the installation of the trees during this Winter and to complete the final design, which would provide a bid-level cost estimate. At that time any additional funding could be appropriated from the General Fund/Capital Reserves to fully fund the project.

ATTACHMENTS:
1) Summary of Community Outreach and Conceptual Alternatives Nos. 1-3.

FY 23-24
Funding Source Account Number Project Number Budget
General Fund/Capital Reserves 300-5432-642.05-00 63061 200,000 365

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DISCUSSION AND/OR ACTION

AGENDA ITEM

2. 22-687
383

STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of October 24, 2023
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Timothy Rood, AICP
Community Development Director
SUBJECT: Termination of Disposition and Development Agreement for Loop Site (APN 406-070-042)
RECOMMENDED ACTION:

Approve the draft Termination of the Disposition and Development Agreement (Attachment 2) for the Loop Site and authorize the City Manager to execute all related documents that are substantially similar to the approved draft.

BACKGROUND:

On March 8, 2005, the City of Hercules and the former Redevelopment Agency of the City of Hercules (City/Agency) approved a Disposition and Development Agreement (DDA) with Hercules New Town Center, LLC, a California limited liability company managed by Red Barn Communities Company, a California corporation (Attachment 3).

The agreement was intended to facilitate the redevelopment of the planned Town Center along the Willow Avenue Corridor between San Pablo Avenue and Palm Avenue (Figure 1, Site Map).
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Figure 1. Site Map
On December 11, 2006, the City/Agency approved the First Minor Amendment to the DDA (Attachment 4), intended to effectuate an agreement to advance Redevelopment Agency funds to the developer to buy out one of the members of its LLC, The Surland Companies, at its request, and to provide financial participation in the project to the Agency in return.

On January 22, 2008, the City/Agency approved a second minor amendment (Attachment 5), which adjusted the budget and schedule for the initial project and made certain other modifications.
385
The DDA identifies two “Initial Parcels,” which are the site that is now Safeway (“PNR Parcel”) and the site that is now the Hercules Transit Center (“C-1 Parcel”). It also designates “Additional Town Center Parcels,” which are other parcels in the vicinity that were considered important to the creation of the planned New Town Center and which the developer had the option to develop in accordance with the other provisions of the DDA if the developer was able to acquire an interest in them. The Loop Site bounded by the off-ramp from eastbound I-80 and Willow Avenue is one of these Additional Town Center Parcels. The DDA was recorded against both the Initial and Additional Parcels covered by the agreement.

The redevelopment project contemplated by the DDA did not move forward, the developer did not acquire an interest in the Loop Site, and the California legislature dissolved all redevelopment agencies in California effective February 1, 2012.

A DDA termination agreement for the Loop Site was drafted and circulated in March 2014 but was never executed.

ANALYSIS:

The current owners of the Loop Site, Hercules Hotel Development Group, have requested that the City terminate the DDA with respect to the Loop Site to facilitate the potential sale of the parcel.

As the previously contemplated redevelopment project led by Red Barn Communities has not moved forward and the Redevelopment Agency no longer exists, staff requests that the City Council approve the Termination of the DDA for the Loop Site in order to facilitate its sale and potential development and authorize the City Manager to execute all related documents that are substantially similar to the approved draft.

FISCAL IMPACT:

There is no fiscal impact associated with this action.

ATTACHMENTS:

Attach 1 – Resolution
Attach 2 – Draft Termination of DDA
Attach 3 – DDA
Attach 4 – First Minor Amendment to DDA
Attach 5 – Second Minor Amendment to DDA
386
RESOLUTION NO. 23-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERCULES TERMINATING

THE DISPOSITION AND DEVELOPMENT AGREEMENT FOR THE LOOP SITE (APN 406-070-042)
WHEREAS, On March 8, 2005, the City of Hercules and the former Redevelopment Agency of the City of Hercules (City/Agency) approved a Disposition and Development Agreement (DDA) with Hercules New Town Center, LLC, a California limited liability company managed by Red Barn Communities Company, a California corporation (Developer); and
WHEREAS, the agreement was intended to facilitate the redevelopment of the planned New Town Center along the Willow Avenue Corridor between San Pablo Avenue and Palm Avenue; and
WHEREAS, on December 11, 2006, the City/Agency approved the First Minor Amendment to the DDA, intended to effectuate an agreement to advance Redevelopment Agency funds to the developer to buy out one of the members of its LLC, The Surland Companies, at its request, and to provide financial participation in the project to the Agency in return; and
WHEREAS, on January 22, 2008, the City/Agency approved a second minor amendment, which adjusted the budget and schedule for the initial project and made certain other modifications; and
WHEREAS, The DDA identifies “Additional Town Center Parcels,” which are other parcels in the vicinity that were considered important to the creation of the planned New Town Center and which the developer had the option to develop in accordance with the other provisions of the DDA if the developer was able to acquire an interest in them; and WHEREAS, The DDA was recorded against the “Additional Town Center Parcels”; and WHEREAS, Developer did not acquire an interest in the Loop Site; and WHEREAS, the development contemplated by the DDA did not move forward; and WHEREAS, the California legislature dissolved all redevelopment agencies in California effective February 1, 2012; and
WHEREAS, the owners of the Loop Site, Hercules Hotel Development Group, have requested that the City terminate the DDA with respect to the Loop Site to facilitate the potential sale of the parcel; and
WHEREAS, the City Council of the City of Hercules finds that termination of the DDA to facilitate the sale and potential development of the site is in the public interest. 387
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Hercules as follows:

1. The Council hereby approves the Termination of the DDA for the Loop Site (APN 406-070-042) and authorizes the City Manager to execute all related documents that are substantially similar to the approved draft.

The foregoing Resolution was duly and regularly adopted at a regular meeting of the City Council of the City of Hercules held on the twenty-fourth day of October 2023, by the following vote of the Council:

AYES:

NOES:

ABSENT:
____________________________
Alex Walker-Griffin, Mayor
ATTEST:
________________________________
Eibleis Melendez, City Clerk
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Termination

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RECORDING REQUESTED BY
Old Republic Title Company
Order No. _______________

WHEN RECORDED MAIL TO
City Clerk
City of Hercules
111 Civic Drive
Hercules, CA 94547

REQUEST IS MADE THAT DOCUMENT

BE RECORDED WITHOUT FEE
PURSUANT TO G.C. §27383

TERMINATION OF DISPOSITION AND DEVELOPMENT AND AGREEMENT This TERMINATION is made November 14, 2023, by The City of Hercules, a municipal corporation of the State of California (“City”) and The City of Hercules, as Successor Agency to the Hercules Redevelopment Agency, (“Agency”) and Hercules Hotel Development Group, LLC, a California limited liability company, (“Owner”), as successor in interest to Developer, as to the real property hereafter defined, with reference to that certain Disposition and Development Agreement disclosed by Memorandum thereof dated April 11, 2006, and recorded June 26, 2009, in the Official Records of Contra Costa County, California, as Instrument No. 2009-0151069.

The Disposition and Development Agreement was made by City, Agency and Hercules New Town Center, LLC, a California limited liability company, (“Developer”) with respect to certain real property situated in the City of Hercules, County of Contra Costa, in the State of California, that portion thereof belonging to Owner being particularly described as:

That certain real property shown on Parcel Map No. 1007, filed August 2, 1977, in the Official Records for Contra Costa County, in Book 56 of Parcel Maps at pages 42 and 43.

EXCEPTING THEREFROM:

That portion of said land as described in the Grant Deed to the State of California, recorded June 11, 1993, in Book 18645 Official Records, Page 685, as Series No. 93-155095.

APN: 406-070-042
Notice is hereby given that said Disposition and Development Agreement is no longer of any further force and effect as to the above-described real property, and the parties mutually release each other from all terms, covenants, obligations and provisions contained therein. 389
Termination

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CITY:

The City of Hercules, a municipal
corporation of the State of California
By: Dante C. Hall
Its: City Manager
AGENCY:

The City of Hercules, as Successor
Agency to the Hercules Redevelopment
Agency,
By: Dante C. Hall
Its: City Manager
ATTEST:

Eibleis Melendez, City Clerk/
Successor Agency Secretary
APPROVED AS TO FORM:

OWNER:

Hercules Hotel Development Group, LLC,
a California limited liability company
By: Amin–Anaheim LLC, a California
limited liability company
Its: Manager
By: Mahesh D. Amin
Its: Member
By: Meeta M. Amin
Its: Member
By: Indumati Desai
Its: Manager
By: Arvind Desai
Its: Manager
Patrick Tang
City Attorney
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Termination

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STATE OF CALIFORNIA

COUNTY OF CONTRA COSTA
On before me, , a 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
Name:

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
Name:
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Termination

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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
Name:

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
Name:
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DDA-Surland Body R12.doc Printed: 3/2/06; 10:10 AM

DISPOSITION AND DEVELOPMENT AGREEMENT
by and among

CITY OF HERCULES
and

REDEVELOPMENT AGENCY OF CITY OF HERCULES,
on the one hand,
and

HERCULES NEW TOWN CENTER, LLC,
a California limited liability company,
on the other hand
Dated as of April 7, 2005
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CONTENTS
ARTICLE I: DEFINITIONS
ARTICLE II: ACQUISITION AND DISPOSITION OF THE SITES

2.1. General.............................................................................................................11

2.2. Agency acquisition of parcels...........................................................................11

2.2.1. C-1 Parcel..................................................................................................11

2.2.2. PNR Site....................................................................................................11

2.2.3. Additional Town Center Parcels ................................................................11

2.3. Determination of parcels subject to disposition and/or development .................12

2.3.1. Determination of Primary Parcel and BART Residual Parcel.....................12

2.3.2. Disposition and development of Primary Parcel.........................................12

2.3.3. Development of BART Residual Parcel.....................................................12

2.3.4. Development of Additional Town Center Parcels.......................................12

2.3.5. First Right of Refusal.................................................................................12

2.3.5.1. Notice of Offer ..................................................................................13

2.3.5.2. Developer election to purchase ..........................................................13

2.3.5.3. Closing of Developer purchase ..........................................................13

2.3.5.4. Circumstances of reinstatement..........................................................13

2.3.5.5. Termination.......................................................................................13

2.4. Terms and conditions of disposition of Primary Parcel......................................13

2.4.1. Purchase agreement and Purchase Price .....................................................14

2.4.2. Escrow....................................................................................................... 14

2.4.2.1. Escrow opened ..................................................................................14

2.4.2.2. Closing ..............................................................................................14

2.4.3. Title...........................................................................................................15

2.4.4. Conditions precedent ................................................................................. 15

2.4.4.1. Agency’s conditions precedent ..........................................................15

2.4.4.1.1. No Default.................................................................................15

2.4.4.1.2. Execution of documents.............................................................15

2.4.4.2. Developer’s conditions precedent ......................................................15

2.4.4.2.1. Title Policy................................................................................16

2.4.4.2.2. No Default.................................................................................16

2.4.4.2.3. Execution of documents.............................................................16

2.4.4.2.4. Land use approvals....................................................................16

2.4.4.2.5. CEQA review............................................................................16

2.4.4.2.6. Hazardous Materials..................................................................16 394
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2.4.4.2.7. No material adverse change .......................................................17

2.4.4.2.8. No adverse action ......................................................................17

2.4.5. Deliveries to Escrow Agent .......................................................................17

2.4.5.1. Developer’s deliveries to Escrow Agent ............................................17

2.4.5.2. Agency’s deliveries to Escrow Agent.................................................17

2.4.6. Closing provisions.....................................................................................18

2.4.6.1. Prorations..........................................................................................18

2.4.6.2. Costs and expenses............................................................................18

2.4.6.3. Closing procedure..............................................................................18

2.4.7. Termination ............................................................................................... 19

2.4.7.1. Allocation of costs and expenses........................................................19

2.4.7.2. Return of funds and documents..........................................................19

2.5. Right of Entry...................................................................................................19

2.5.1. Permitted purposes .................................................................................... 19

2.5.2. Indemnity .................................................................................................. 19

2.5.3. Required permits .......................................................................................20

2.5.4. PNR Parcel limitations...............................................................................20

2.5.5. Termination ...............................................................................................20

2.5.6. Restoration ................................................................................................ 20 ARTICLE III: DEVELOPMENT OF A PROJECT

3.1. Development plans...........................................................................................20

3.1.1. Specific Scope of Development ................................................................. 20

3.1.2. Consistency with Central Hercules Plan.....................................................21

3.1.3. Affordable housing ....................................................................................21

3.2. Development schedule......................................................................................21

3.3. Project Approvals.............................................................................................21

3.3.1. Land use approval process......................................................................... 21

3.3.2. Biological mitigation .................................................................................24

3.4. Construction .....................................................................................................24

3.4.1. Diligent prosecution...................................................................................24

3.4.2. Progress reports.........................................................................................24

3.4.3. Insurance ...................................................................................................24

3.4.3.1. Liability insurance .............................................................................24

3.4.3.2. Endorsements....................................................................................25

3.4.3.3. Workers’ compensation insurance .....................................................25

3.4.4. Rights of access......................................................................................... 26

3.4.5. Compliance with Agreement, Governing Ordinances, and Laws................26 395
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3.4.6. Antidiscrimination ..................................................................................... 26

3.4.7. Project sign................................................................................................26

3.5. Transfers and liens............................................................................................26

3.5.1. Transfers.................................................................................................... 26

3.5.2. Agency consideration of requested transfer prior to issuance of Certificate of Completion...........................................................................27

3.5.3. Holder not obligated to construct Project Improvements............................ 28

3.5.4. Holder’s right to cure.................................................................................28

3.5.5. Estoppel certificates................................................................................... 29

3.5.6. Taxes and assessments...............................................................................29

3.5.7. Right of Agency to satisfy liens on Primary Parcel.....................................29

3.6. Completion.......................................................................................................29

3.6.1. Certificate of Completion...........................................................................29

3.6.2. Failure to issue Certificate of Completion .................................................. 30 ARTICLE IV: PROJECT COSTS AND FINANCING

4.1. Developer’s costs..............................................................................................30

4.2. Project Financial Assistance .............................................................................30

4.2.1. Primary Parcel ...........................................................................................30

4.2.1.1. Payment into Primary Project Fund....................................................30

4.2.1.2. Tax Increment Assistance option .......................................................31

4.2.1.3. Initial Parcel Pledge Agreement.........................................................31

4.2.2. BART Residual Parcel...............................................................................31

4.2.3. Additional Parcels...................................................................................... 31

4.2.4. Zero assistance option................................................................................ 31

4.3. Tax Increment Assistance .................................................................................32

4.3.1. Deposit of funds into Project Fund.............................................................32

4.3.1.1. Subordination to Agency Bonds.........................................................32

4.3.1.2. Project Bond Proceeds.......................................................................32

4.3.2. Project Fund account statements................................................................ 32

4.3.3. Periodic accountings of Unreimbursed Eligible Costs................................32

4.3.4. Payments during Project ............................................................................ 33

4.3.5. Final accounting of Unreimbursed Eligible Costs.......................................33

4.3.6. Payments after Certificate of Completion................................................... 33

4.3.7. Discontinuation of payments......................................................................33

4.3.8. Dispute of accountings...............................................................................33

4.3.9. Project Pledge Agreement.......................................................................... 34

4.3.10. Maximizing Project Fund...........................................................................34

4.4. Agency revenue participation............................................................................34 396
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4.4.1. Baseline Residential Price..........................................................................34

4.4.2. Primary Parcel Project ...............................................................................35

4.4.3. Other Projects............................................................................................ 35

4.4.4. Participation conditioned Project Financial Assistance............................... 35 ARTICLE V: USE OF THE PROJECT PARCELS

5.1. Nondiscrimination ............................................................................................35

5.2. Effect and duration of covenants.......................................................................36

5.2.1. Effect of violation of the terms and provisions of this Agreement after completion of construction.........................................................................36

5.2.2. Agency as beneficiary................................................................................ 36

5.3. Right of access to public improvements and facilities .......................................37 ARTICLE VI: DEFAULTS AND REMEDIES

6.1. Defaults............................................................................................................37

6.2. Notice and cure.................................................................................................37

6.3. Legal actions ....................................................................................................37

6.4. Resolution of Schedule Defaults.......................................................................38

6.4.1. Meet and confer.........................................................................................38

6.4.2. Mediation ..................................................................................................38

6.4.3. Arbitration.................................................................................................38

6.5. Rights and remedies cumulative........................................................................38

6.6. No cross-default ...............................................................................................39

6.7. Remedies..........................................................................................................39

6.8. Additional remedies for Schedule Defaults.......................................................39 ARTICLE VII: GENERAL PROVISIONS

7.1. Notices.............................................................................................................40

7.2. Attorneys’ fees .................................................................................................41

7.3. Representations and warranties.........................................................................41

7.3.1. Agency’s representations and warranties....................................................41

7.3.2. City’s representations and warranties.........................................................42

7.3.3. Developer’s representations and warranties................................................43

7.4. Memorandum of Agreement.............................................................................43

7.5. Time.................................................................................................................43

7.5.1. Time of the essence ...................................................................................43

7.5.2. Computation of time ..................................................................................44

7.5.3. Force majeure ............................................................................................44

7.6. Parties...............................................................................................................44

7.6.1. Relationship between Agency and Developer ............................................44 397
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7.6.2. Successors and assigns...............................................................................44

7.6.3. No liability of officials and employees of City and Agency........................ 44

7.6.4. Conflicts of interest....................................................................................45

7.6.5. Brokers......................................................................................................45

7.7. Interpretation ....................................................................................................45

7.7.1. Rules of construction .................................................................................45

7.7.2. Legal advice ..............................................................................................45

7.7.3. Entire agreement........................................................................................ 45

7.7.4. Severability ............................................................................................... 46

7.7.5. Approvals.................................................................................................. 46

7.7.6. Agency and City approvals and actions......................................................46

7.7.7. City legislative discretion...........................................................................46

7.8. Waivers and amendments.................................................................................46

7.8.1. Minor Amendments...................................................................................46

7.8.2. Major Amendments...................................................................................47

7.9. Counterparts.....................................................................................................47 398
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EXHIBITS
A. Site Map
B. Legal Descriptions
B-1. PNR Parcel
B-2. C-1 Parcel
B-3. Additional Town Center Parcels
C. Governing Ordinances Title Pages
D. Memorandum of Agreement
E. Schedules of Performance
E-1. General Schedule of Performance
E-2. PNR Parcel as the Primary Parcel
E-3. C-1 Parcel as the Primary Parcel
E-4. BART Residual Parcel and Additional Town Center Parcels F. Scopes of Development
F-1. PNR Parcel
F-2. C-1 Parcel
G. Eligible Project Costs
H. Forms of Pledge Agreement
H-1. Initial Parcel Pledge Agreement
H-2. Project Pledge Agreement
I. Form of Grant Deed
J. Approved Exceptions to Title
J-1. PNR Parcel
J-2. C-1 Parcel
K. Certificate of Completion
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DISPOSITION AND DEVELOPMENT AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT (this “Agreement”) is made and entered into as of this 7th day of April, 2005 (the “Effective Date”) by and among the City of Hercules, California (“City”) and the Redevelopment Agency of the City (“Agency”), on the one hand (City and Agency may be referred to collectively as the “City/Agency”), and Hercules New Town Center, LLC, a California limited liability company (“Developer”), on the other hand, with reference to the following:

R E C I T A L S :

A. In June 2000, through a series of design sessions involving the community and a team of design professionals, City specified its desired form of land use for the then-remaining undeveloped, centrally located parcels. This central portion of the City covered an area generally coextensive with the Dynamite Redevelopment Project Area (the “Redevelopment Project Area”). The critical need for a town center for the City of Hercules (the “Town Center”) and the desired land use forms for the creation of the Town Center were described in a narrative administrative document entitled, “The Plan for Central Hercules” (the “Central Hercules Plan”). On July 16, 2001, City codified the Central Hercules Plan by amending the text and graphics of the Zoning Ordinance to include a new Chapter 28 of the Zoning Ordinance entitled, “Central Hercules Plan Regulating Code” (the “Regulating Code”). The Regulating Code designates four separate districts within the City, one of which is the Civic Center/Hospitality Corridor (the “Corridor.”)
B. Two parcels within the Corridor that are key to the creation of the Town Center are the “PNR Parcel,” consisting of approximately 6.62 acres owned by Bay Area Rapid Transit District (“BARTD”), and the “C-1 Parcel,” consisting of approximately 8.69 acres owned by Agency. These parcels are shown on Exhibit “A” and are further described on Exhibits “B-1” and “B-2,” respectively. The PNR Parcel is an existing BARTD “Park and Ride” lot, and the C-1 Parcel is currently vacant. The PNR Parcel and the C-1 Parcel may be referred to collectively as the “Initial Parcels.”
C. The City has identified those parcels identified on Exhibit “A” as “Additional Town Center Parcels” certain additional parcels that are important to the creation of the Town Center.

The Additional Town Center Parcels are further described on Exhibit “B-3.” The Initial Parcels and the Additional Town Center Parcels may be referred to collectively as the “Subject Parcels.” D. The Subject Parcels all lie within the Redevelopment Project Area. The Redevelopment Project Area is governed by that certain Amended and Restated Redevelopment Plan, which was adopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City (the “Redevelopment Plan”). The Redevelopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelopment Project Area and Project Area No. 2.

E. On August 25, 2000, City, Agency, and BARTD entered into a Memorandum of Understanding (the “BART MOU”) for purposes of exploring the feasibility of an exchange of the PNR Parcel and the C-1 Parcel. The PNR Parcel is of interest to City/Agency as a “gateway” to central Hercules because of its high visibility location, and the C-1 Parcel is of interest to 400
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BARTD because it is located across Willow Avenue from a privately owned interstate railroad line that has been identified as a possible future route for a passenger service extension to the BART regional transit system. Agency and BARTD entered into an agreement with an effective date of March 1, 2006 whereby Agency was granted the option (the “Exchange Option”), under specified conditions, to initiate the exchange of the C-1 Parcel to BARTD for the PNR Parcel within a period of two years (the “Exchange Option Agreement”).

F. The land parcels in the Corridor, which include the Subject Parcels, have development hurdles such as fractured ownerships, wetland and streambed mitigation requirements, and lack of infrastructure. Consequently, no private-sector development has occurred or has even been proposed in the Corridor that would contribute to creating the Town Center or otherwise further the objectives of the Central Hercules Plan.

G. City/Agency recognize that bringing the vision of the Town Center in the Corridor to practical reality will require close coordination with a private sector developer that understands and shares the City’s vision for the Town Center and accepts the challenges associated with such a project. City/Agency further recognize that the economics of creating a mixed-use, urbanized Town Center in a largely suburban location will require financial assistance from Agency because: (i) such a project must compete with other suburban developments that do not have the development costs associated with structured parking and mixed-use buildings; (ii) retail tenants typically require financial concessions to locate in an urbanized project in a suburban location; and (iii) the cost of capital for such a project is higher than usual because of the project’s complexity. With this understanding, Agency issued a request for proposals in April 2003 to seek a specialized master developer to work with the City/Agency to develop a transit-oriented town center, with re-engineered and re-positioned transit facilities, and buildings with successful commercial businesses integrated with buildings hosting other uses such as multifamily residential, hospitality, and office. Through this process, and after Agency evaluated several proposals, Agency selected Developer as the party with whom it would pursue the development of the Town Center.

H. Developer entered into an Exclusive Right to Negotiate with City/Agency dated as of April 13, 2004 pursuant to which Developer was given a period of exclusive negotiation to attempt to negotiate a Disposition and Development Agreement with City/Agency that would further the City and Agency objective of creating a Town Center in the Corridor. This Agreement is the product of that effort.

I. Agency is authorized and empowered under Health and Safety Code Sections 33000, et seq., (the “Redevelopment Law”) to enter into agreements for the acquisition, disposition, and development of real property and otherwise to assist in the redevelopment of real property within a redevelopment project area in conformity with a redevelopment plan adopted for such area, to acquire real and personal property in redevelopment project areas, to receive consideration for the provision by Agency of redevelopment assistance, to make and execute contracts and other instruments necessary or convenient to the exercise of its powers, and to incur indebtedness to finance or refinance redevelopment projects.

J. City/Agency finds that the redevelopment of one or more of the Subject Parcels as provided in this Agreement is in the vital and best interests of the City, including the Agency, 401
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and its residents, and in accord with the public purposes and provisions of applicable State and local laws.

K. City/Agency and Developer desire to enter into this Agreement for the redevelopment of one or more of the Subject Parcels in order to (i) effectuate the Redevelopment Plan, (ii) eliminate blight in the Redevelopment Project Area; and (iii) implement the Central Hercules Plan by creating the Town Center in the Corridor.

L. On March 8, 2005, Agency held a duly noticed public hearing and adopted a resolution approving this Agreement. According to law, the resolution takes effect thirty (30) days after adoption.

NOW, THEREFORE, in consideration of the foregoing, the covenants and obligations hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I: DEFINITIONS
“Acquired Parcel” is defined in Section 2.3.5 below.
“Additional Town Center Parcels” means those certain parcels located within the Corridor that are identified as the “Additional Town Center Parcels” on Exhibit “A” and further described on Exhibit “B-3.” “Affordable Housing Obligation” means, with respect to a Project Parcel, the obligation that fifteen percent (15%) of new housing units on such Project Parcel be provided at prices affordable to very-low- to moderate-income households and that at least forty percent (40%) of such affordable housing units shall be affordable to very-low-income households. For purposes of this definition, affordability at the various income levels shall be as defined in the Redevelopment Law. “Affordable Housing Set-Aside” means, with respect to a Project Parcel, the twenty percent (20%) set-aside of tax increment for low and moderate income housing required by Sections 33334.2 and 33487 of the Redevelopment Law.
“Agency” means the Redevelopment Agency of the City of Hercules, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities.
“Agency Board” means the board of directors for the Agency. “Agency Bonds” means any bonds issued by the Agency under the Agency Indenture, including, but not limited to, the Hercules Redevelopment Agency Hercules Merged Project Area Tax Allocation Bonds, Series 2005, and any bonds issued on a parity therewith.“Agency Director” means the Executive Director for the Agency. 402
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“Agency Indenture” means that certain Indenture, dated as of August 1, 2005 (the "Indenture"), by and between the Agency and The Bank of New York Trust Company, N.A., as trustee, as amended and supplemented from time to time in accordance with its terms. “Agency Parity Debt” is defined in Section 4.3.1.1 below. “Agency’s Prevailing Wage Policy” means that certain “Prevailing Wage Policy of the Hercules Redevelopment Agency,” adopted October 26, 1999. “Agreement” means this Disposition and Development Agreement by and between Agency and City, on the one hand, and Developer, on the other hand. “BART” means the Bay Area Rapid Transit regional transit system. “BART MOU” means that certain Memorandum of Understanding dated as of August 25, 2000 by and between City, Agency, and BARTD entered into for purposes of exploring the feasibility of and exchange of the PNR Parcel and the C-1 Parcel. “BART Residual Parcel” means either the PNR Parcel or the C-1 Parcel, as determined in accordance with Section 2.3.1 below. The BART Residual Parcel may be developed in accordance with this Agreement upon certain conditions which are specified in this Agreement. The other of the two parcels shall be the Primary Parcel.
“BARTD” means Bay Area Rapid Transit District.
“Base Year Assessed Valuation” means, with respect to a particular Project, the assessed value of the Project Parcel as shown on the assessment roll used in connection with the taxation of the Project Parcel by the County, last equalized prior to the effective date of the ordinance approving the Redevelopment Plan. “Baseline Residential Price” is defined in Section 4.4.1 below. “C-1 Parcel” means that certain parcel currently owned by Agency consisting of approximately 8.69 acres as shown on Exhibit “A” as the “C-1 Parcel” and further described on Exhibit “B-2.”
“CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq. “Central Hercules Plan” means a narrative administrative document entitled, “The Plan for Central Hercules,” which was developed through a series of design sessions sponsored by the City in June 2000 and which describes the desired land use forms for central Hercules. “Certificate of Completion” means a certificate in the form attached hereto as Exhibit “K.” “City” means the City of Hercules, a California municipal corporation. “City/Agency” means the City and the Agency, collectively. 403
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“City Council” means the City Council for the City.
“City Manager” means the City Manager of the City.
“Closing” is defined in Section 2.4.2.2 below.
“Closing Date” is defined in Section 2.4.2.2 below.
“Conceptual PDP” means a conceptual planned development plan, as defined in Section

48.400 of the Zoning Ordinance. See also “Initial PDP” and “Final PDP.” “Corridor” means the area referred to in the Central Hercules Plan and the Regulating Code as the “Civic Center/Hospitality Corridor.”
“County” means the County of Contra Costa, California.
“Default” is defined in Section 6.1 below.
“Design Submittal Documents” means, with respect to a particular Project, the following proposed documents: (i) a Final PDP and (ii) a design review plan pursuant to Chapter 42 of the Zoning Ordinance that is consistent with the proposed Final PDP. See also “Primary Submittal Documents” and “Submittal Documents.”
“Developer” means Hercules New Town Center, LLC.
“Development Costs” means, with respect to any Project, all of Developer’s costs in connection with the acquisition of the Project Parcel and the construction and development of the Project Improvements. Development Costs shall include: (i) Developer’s purchase price and other land acquisition costs paid by Developer to the owners or existing occupants of all or any part of the Project Parcel, including closing costs, title insurance, and transfer taxes; (ii) costs incurred by Developer in connection with the Project Approvals, including, community relations; (iii) all so-called “hard” construction costs for the Project Improvements, including both on-site and off-site improvements; (iv) all so-called “soft” construction costs for the Project Improvements, including planning, design, engineering, pre-construction services, plats, surveys, permit fees, bonds, legal and filing fees, and insurance and development fees. “Effective Date” means April 7, 2005.
“Eligible Project Costs” means, with respect to a particular Project, Development Costs with respect to such Project that fall into one of the categories described on Exhibit “G” hereto.

Interest on such Development Costs shall not be an Eligible Project Cost. “Escrow” is defined in Section 2.4.2.1 below.
“Escrow Agent” is defined in Section 2.4.2.1 below.
“Exchange Option” means Agency’s two-year conditional option, granted in the Exchange Option Agreement, to initiate the exchange of the C-1 Parcel to BARTD for the PNR Parcel.
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“Exchange Option Agreement” means that certain agreement for the exchange of the PNR Parcel and the C-1 Parcel contemplated by the BART MOU and entered into between BARTD and Agency with an effective date of March 1, 2006. “Final PDP” means a final planned development plan, as defined in Section 48.500 of the Zoning Ordinance. See also “Conceptual PDP” and “Initial PDP.” “FIRPTA Certificate” is defined in Section 2.4.5.2 below. “First Right of Refusal” is defined in Section 2.3.5 below. “Governing Ordinances” means the ordinances, resolutions, official policies, fees, rules, and regulations of the City and the Agency governing the permitted uses of land, intensity of development, improvement and construction standards and requirements, specifications, and conditions of approval applicable to the development of the Project, including, but not limited to, the Enacting Ordinance, Ordinance No. 363 approving the Redevelopment Plan, the City’s General Plan, Zoning Ordinance, the Regulating Code, Subdivision Ordinance, Municipal Code, Resolution 93-59, and construction codes, title pages from which are attached hereto for ease of future reference as Exhibit C.”
“Grant Deed” is defined in Section 2.4.2.2 below.
“Hazardous Materials” means any substance, material, or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States government, including, but not limited to, any material or substance which is (i) defined as a “hazardous waste,” “extremely hazardous waste,” or “restricted hazardous waste” under Section 25115, 25117, or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as “hazardous” or “extremely hazardous” pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix) designated as “hazardous substances” pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (xi) Methyl-tert-Butyl Ether, or (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601, et seq. “High Target Intensity” means a total square footage of building area, excluding the square footage of any structured parking, of 300,000 square feet, which square footage shall include either (i) in the event that the PNR Parcel is the Primary Parcel, a minimum of 50,000 square feet of commercial space or (ii) in the event that the C-1 Parcel is the Primary Parcel, a minimum of 40,000 square feet of commercial space. See also “Low Target Intensity.” 405
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“Initial Parcel Pledge Agreement” is defined in Section 4.2.1.3 below. “Initial Parcels” means the PNR Parcel and the C-1 Parcel, collectively. “Initial PDP” means an initial planned development plan, as defined in Section 48.400 of the Zoning Ordinance. See also “Conceptual PDP” and “Final PDP.” “Initiation Date” means the date that the Primary Parcel is conclusively identified in accordance with Section 2.3.1 below. “JAMS” means the San Francisco Office of the Judicial Arbitration and Mediation Service. “Laws” means all State and federal laws, including, without limitation, the constitution and laws of the State, the United States of America, and any political subdivision within the State, along with any codes, statutes, ordinances, regulations, official policies, or rules of any of them, and any applicable state or federal court decisions thereunder, together with all applicable federal and state labor standards. The definition of Laws specifically excludes the Governing Ordinances. “Low Target Intensity” means a total square footage of building area, excluding the square footage of any structured parking, of 200,000 square feet, which square footage shall include either (i) in the event that the PNR Parcel is the Primary Parcel, a minimum of 37,500 square feet of commercial space or (ii) in the event that the C-1 Parcel is the Primary Parcel, a minimum of 30,000 square feet of commercial space. See also “High Target Intensity.” “Major Amendment” means any amendment to this Agreement which relates to the term, identification of Subject Parcels, increases in City or Agency financial obligations beyond those contemplated in this Agreement, reservation or dedication of land for public improvements, or which will cause a significant new or significantly worse unmitigated adverse environmental impact and thus requires a Subsequent or Supplemental Environmental Impact Report under CEQA. See also “Minor Amendment.”
“Memorandum of Agreement” means a memorandum of agreement in substantially the form attached hereto as Exhibit “D,” executed and acknowledged by Agency and City. “Minor Amendment” means an amendment to this Agreement that is not a Major Amendment. See also “Major Amendment.”
“Notice” is defined in Section 7.1 below.
“Offer” is defined in Section 2.3.5.1 below.
“Party” means a party to this Agreement, and “Parties” means more than one of the parties to this Agreement, as the context indicates. “Permitted Exceptions” is defined in Section 2.4.3 below. “Permitted Transfer” is defined in Section 3.5.1 below. 406
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“Planning Commission” means the Planning Commission for the City. “PNR Parcel” means that certain parcel currently owned by BARTD consisting of approximately 6.62 acres as shown on Exhibit “A” as the “PNR Parcel” and further described on Exhibit “B-1.”
“Primary Parcel” means either the PNR Parcel or the C-1 Parcel, as determined in accordance with Section 2.3.1 below. The Primary Parcel shall be conveyed to Developer in accordance with this Agreement. The other of the two parcels shall be the BART Residual Parcel. “Primary Project Fund” means an escrow or other depository agreed upon by Agency and Developer into which the funds described in Section 4.2.1.1 are to be deposited by Agency and may be withdrawn by Developer. Instructions to the escrow agent or other holder of the Primary Project Fund shall provide that (i) the funds deposited therein shall be invested by the holder at the discretion of Developer in such liquid investments as Developer shall direct; (ii) such funds may be drawn only by Developer; and (iii) Developer’s ability to draw on such funds shall be subject to Developer’s submission to the holder of reasonable evidence of having incurred costs related to the Project on the Primary Parcel for design, engineering, fees, or construction in at least the amount of the requested draw (which costs had not been previously reimbursed from the Primary Project Fund). Draws from the Primary Project Fund by Developer shall not be limited to Eligible Project Costs.
“Primary Submittal Documents” means, with respect to a particular Project, the following proposed documents: (i) an Initial PDP; (ii) a zone change or specific plan (if required to provide underlying zoning for the proposed Initial PDP), (iii) a general plan amendment (if required to cause the City’s general plan to be consistent with the proposed specific plan or other underlying zoning), (iv) a site development plan that is consistent with the proposed Initial PDP, and (v) a subdivision plan that is consistent with the proposed site development plan. See also “Design Submittal Documents” and “Submittal Documents.” “Project” means, with respect to a particular Subject Parcel, both the Subject Parcel and the improvements constructed thereon pursuant to the Project Approvals in accordance with Articles III, IV, and V hereof. The development of any Subject Parcel outside of Articles III, IV, and V hereof shall not be considered a Project hereunder. Also see the definitions of “Project Parcel” and “Project Improvements.”
“Project Approvals” means, with respect to a particular Project, approval of Primary Submittal Documents and Design Submittal Documents, along with any other discretionary approvals required by City in connection with the construction and use of the Project Improvements. “Project Bond Proceeds” means, with respect to a particular Project, that share of proceeds received by Agency from tax increment bonds, including any bond reserves distributed to Agency, that are attributable to any pledge of Project Tax Increment. “Project Commencement Date” means, with respect to any Project, sixty (60) days after the date that all Project Approvals have been obtained for such Project or, in the case that Agency holds title to the subject parcel as of the date that all Project Approvals are obtained for 407
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the Project, the later of (i) the date of the conveyance of the Subject Parcel to Developer or (ii) the final vacancy of the Subject Parcel by its prior owner. “Project Financial Assistance” is defined in Section 4.2 below. “Project Fund” means, with respect to a particular Project, a segregated account of Agency into which Project Tax Increment and Project Bond Proceeds are accumulated and from which financial assistance is provided to Developer in accordance with Section 4.3 below. Unless otherwise agreed between Agency and Developer, each Project shall have a separate Project Fund that is not commingled with any other Project Funds or any other funds of Agency. “Project Improvements” means, with respect to a particular Project, the improvements constructed on the Project Parcel in accordance with this Agreement. “Project Parcel” means, with respect to a particular Project, the Subject Parcel that is the subject of the Project.
“Project Pledge Agreement” is defined in Section 4.3.9 below. “Project Tax Increment” means, with respect to a particular Project, that portion of ad valorem property taxes resulting from the increase in the assessed valuation of such Project Parcel, including any improvements on such Project Parcel, over the Base Year Assessed Valuation, that is allocated to and received by the Agency pursuant to Health and Safety Code Section 33670(b) or any successor provisions of law in accordance with the Redevelopment Plan (including any extension or modification thereof, or any new redevelopment plan which encompasses the Project Parcel) less one percent (1.00%) of such amounts received to cover Agency administrative costs. Project Tax Increment shall include the Affordable Housing Set-Aside attributable to the Project Parcel except to the extent that Developer is relieved of the Affordable Housing Obligation with respect to the Project Parcel. Except by the agreement of the Agency in its absolute discretion, Project Tax Increment shall not include (i) any property tax revenue that results from an increase in the assessed valuation of such Project Parcel after the occurrence of the first reassessment of such Project Parcel following the issuance of a Certificate of Occupancy for such Project by the City or (ii) any property tax revenue that results from an annual reassessment of such Project Parcel that is allowed under California Constitution Article XIII. “Purchase Price” is defined in Section 2.4.1 below.
“Redevelopment Law” means the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended. “Redevelopment Plan” means that certain Amended and Restated Redevelopment Plan adopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Redevelopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelopment Project Area and Project Area No. 2. “Redevelopment Project” means the Dynamite Redevelopment Project, adopted by the City Council pursuant to the Redevelopment Plan.
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“Redevelopment Project Area” means the area contained within the boundaries of the Redevelopment Project.
“Regulating Code” means the Central Hercules Plan Regulating Code adopted by the City Council on July 16, 2001 and incorporated into the City of Hercules Zoning Ordinance as Chapter 28 thereof, as it exists on the Effective Date. “Right of Entry” is defined in Section 2.5 below.
“Schedule Default” is a Default with respect to the provisions of Section 3.2 or Section

3.4.1 of this Agreement.
“Schedule of Performance” means, with respect to a particular Project, the applicable schedule of performance set forth on Exhibit “E,” setting out the dates and/or time periods by which certain obligations set forth in this Agreement shall be accomplished with respect to such Project. The schedule of performance entitled, “General Schedule of Performance,” set forth on Exhibit “E-1,” relates to the Agreement as a whole and therefore applies to each Project as steps that are to occur prior to the specific schedule of performance applicable to a Project. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between Developer and the Agency Director, and the Agency Director is hereby authorized to make such revisions as he/she deems reasonably necessary to further the purposes of this Agreement.
“Scope of Development” means, with respect to either of the Initial Parcels, that certain scope of development set for such parcel set forth on Exhibit “F.” “State” means the State of California.
“Subject Parcels” means the Initial Parcels and the Additional Town Center Parcels, collectively.
“Submittal Documents” means the Primary Submittal Documents and the Design Submittal Documents. “Tax Increment Assistance” is defined in Section 4.3 below. “Title Company” is defined in Section 2.4.4.2.1 below.
“Title Policy” is defined in Section 2.4.4.2.1 below.
“Town Center” means an implementation of the town center concept described in the Central Hercules Plan to be located within the Corridor. “Transfer” means any total or partial sale, transfer, conveyance, assignment or lease of the whole or any part of one or more parcels of real property; provided, however, that the definition of Transfer shall exclude conveyances for financing purposes or conveyances to entities in which Developer has and maintains full or partial ownership. “Unreimbursed Eligible Costs” means, with respect to a particular Project on a particular date, the excess, if any, of Eligible Project Costs incurred by Developer since the inception of the 409
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Project over cumulative Project Financial Assistance received by Developer since the inception of the Project.
“Zoning Ordinance” means the City of Hercules Zoning Ordinance approved by the City Council on October 13, 1998, as revised by action of the City Council on April 23, 2003 and on January 5, 2004.

ARTICLE II: ACQUISITION AND DISPOSITION OF THE SITES

2.1. General. Agency shall acquire and convey to Developer one or more of the Subject Parcels in accordance with this Article II.

2.2. Agency acquisition of parcels. Agency has acquired or may acquire certain parcels of land for purposes of disposition to Developer as provided in this Section 2.2.

2.2.1. C-1 Parcel. Agency has acquired and holds the C-1 Parcel with the intent to exchange it for the PNR Parcel currently owned by BARTD. In the event that said exchange does not occur in accordance with Section 2.2.2 below, then the C-1 Parcel shall be subject to disposition to Developer in accordance with Sections 2.3.1 and 2.3.2 below.

2.2.2. PNR Parcel. It is Agency’s intent to effect an exchange with BARTD pursuant to the Exchange Option Agreement whereby Agency would convey to BARTD the C-1 Parcel, and BARTD would convey to Agency the PNR Parcel. Accordingly, Agency shall exercise the Exchange Option only upon the satisfaction of the following conditions: (i) all conditions to Agency’s exercise of the Exchange Option, as set forth in the Exchange Option Agreement, are timely satisfied or waived such that Agency may effectively exercise the Exchange Option; and (ii) Agency has determined, and Developer has reasonably concurred with Agency’s determination, that none of the closing conditions for the Primary Parcel set forth in Sections

2.4.4.2.1, 2.4.4.2.6, or 2.4.4.2.8 below would fail with respect to the PNR Parcel as of the date of the exercise of the Exchange Option. Upon the satisfaction of the foregoing conditions, Agency shall, at its sole cost and expense, exercise the Exchange Option without delay in accordance with the Exchange Option Agreement and take all other actions necessary to complete the exchange of the C-1 Parcel for the PNR Parcel in accordance with the Exchange Option Agreement.

2.2.3. Additional Town Center Parcels. Agency may, but shall not be required by this Agreement to, acquire any one or more of the Additional Town Center Parcels that it does not currently own. Any Additional Town Center Parcels that are either currently owned by Agency or are acquired by Agency or City during the term of this Agreement shall be subject to the provisions of Sections 2.3.4 and 2.3.5 below.
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2.3. Determination of parcels subject to disposition and/or development. Which of the Subject Parcels shall be subject to disposition and development pursuant to this Agreement shall be determined in accordance with this Section 2.3.

2.3.1. Determination of Primary Parcel and BART Residual Parcel. In the event that the Exchange Option is exercised and Agency completes the acquisition of the PNR Parcel in accordance with Section 2.2.2 above, then the PNR Parcel shall be the Primary Parcel and the C-1 Parcel shall be the BART Residual Parcel; otherwise, the C-1 Parcel shall be the Primary Parcel and the PNR Parcel shall be the BART Residual Parcel.

2.3.2. Disposition and development of Primary Parcel. Commencing from the Initiation Date, the Primary Parcel shall be conveyed to Developer on the terms and conditions set forth in Section 2.4 below. Provided that the disposition of the Primary Parcel to Developer is consummated in accordance with Section 2.4 below, Developer shall develop the Primary Parcel in accordance with Article III below, and the resulting Project shall be financed in accordance with Article IV below and shall be subject to the use provisions of Article V below.

2.3.3. Development of BART Residual Parcel. Provided that either (i) Developer acquires the BART Residual Parcel or (ii) BARTD retains ownership of the BART Residual Parcel and enters into an agreement with Developer whereby Developer is to have a management role in the development of the BART Residual Parcel, then, at Developer’s option, the BART Residual Parcel may be developed in accordance with Article III below, in which event the resulting Project shall be financed in accordance with Article IV below and shall be subject to the use provisions of Article V below.

2.3.4. Development of Additional Town Center Parcels. With respect to any of the Additional Town Center Parcels, in the event that either (i) Developer acquires such parcel or (ii) the owner of such parcel enters into an agreement with Developer whereby Developer is to have a management role in the development of such parcel, then, at Developer’s option, such parcel may be developed in accordance with Article III below, in which event the resulting Project shall be financed in accordance with Article IV below (which provides for Agency’s discretion as to Project Financial Assistance for the Project) and shall be subject to the use provisions of Article V below.

2.3.5. First Right of Refusal. From time to time after the Effective Date, Agency or City may own or elect to acquire the BART Residual Parcel or one or more of the Additional Town Center Parcels (an “Acquired Parcel”).

City/Agency hereby grants Developer a first right of refusal with respect to each such Acquired Parcel as provided in this Section 2.3.5 (the “First Right of Refusal”) as follows:
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2.3.5.1. Notice of Offer. Prior to or concurrent with the City/Agency’s giving or receiving a bona fide written offer for the Transfer of an Acquired Parcel from the City/Agency to a third-party purchaser, which such offer is either made by or acceptable to the City/Agency (an “Offer”), the
City/Agency shall provide written Notice to Developer,
which Notice shall include a copy of the Offer.

2.3.5.2. Developer election to purchase. Developer shall have thirty (30) days after the City/Agency delivers its Notice of an Offer to elect to purchase the Acquired Property pursuant to the specific terms, conditions, and restrictions set forth in the Offer by notifying the City/Agency of its election in writing.

2.3.5.3. Closing of Developer purchase. In the event Developer so elects to purchase the Acquired Parcel, the closing of the purchase of the Acquired Parcel by Developer, in accordance with the terms set forth in the Offer, shall take place on the date set forth in the Offer, but in no event less than thirty (30) days after Developer delivers Notice to the City/Agency of its election to purchase.

2.3.5.4. Circumstances of reinstatement. In the event that (i) City/Agency desires to sell the Acquired Parcel on terms more favorable to the third-party purchaser, or (ii) the closing of the sale to the third-party purchaser does not occur within thirty days after the date of closing specified in the Offer, then the First Right of Refusal as to such Offer shall automatically reinstate and the sale of the Acquired Parcel to such third-party purchaser shall again be subject to the First Right of Refusal.

2.3.5.5. Termination. Developer’s First Right of Refusal shall terminate with respect to a particular Acquired Parcel upon either (i) the mutual agreement of the parties hereto, (ii) the sale of such Acquired Parcel to a third-party purchaser in compliance with the terms and provisions of this Section 2.3.5, (iii) the default by Developer in its obligation to purchase such Acquired Parcel after Developer’s delivery of its Notice of election to purchase the Acquired Parcel, (iv) the passage of ten (10) years after the Effective Date, or (v) the termination of this Agreement.

2.4. Terms and conditions of disposition of Primary Parcel. Agency shall convey to Developer, and Developer shall acquire from Agency, the Primary Parcel on the following terms and conditions:
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2.4.1. Purchase agreement and Purchase Price. Subject to the terms and conditions contained in this Section 2.4, Agency hereby agrees to sell and convey to Developer, and Developer hereby agrees to purchase from Agency, the Primary Parcel. The total purchase price to be paid to Agency by Developer for the Primary Parcel shall be Five Million and no/100th Dollars ($5,000,000.00), subject to reduction as provided below in this Section

2.4.1 (the “Purchase Price”). The Purchase Price shall be payable in cash at Closing. The Purchase Price shall be subject to reduction as follows: If the Project Approvals meet or exceed the High Target Intensity, then the Purchase Price shall be reduced to Zero and no/100th Dollars ($0.00); if the Project Approvals meet or exceed the Low Target Intensity, but not the High Target Intensity, then the Purchase Price shall be reduced to Two Million Five Hundred Thousand and no/100th Dollars ($2,500,000.00). In the event that the Purchase Price is reduced in accordance with this Section

2.4.1, Developer shall be required to construct Project Improvements on the Primary Parcel that actually meet the intensity requirements that justified the reduction in Purchase Price.

2.4.2. Escrow.

2.4.2.1. Escrow opened. An escrow (the “Escrow”) has been opened with William Perry, First American Title Company, 1737
North First Street, San Jose, California 95117 (the “Escrow Agent”), for the conveyance of the Primary Parcel to Developer. Agency and Developer shall execute Escrow Agent’s standard form of escrow instructions as such instructions may have been modified by mutual agreement of Agency, Developer, and Escrow Agent. This Section 2.4 shall constitute additional joint escrow instructions of Developer and Agency, and Escrow Agent is hereby empowered to act under this
Section 2.4. Agency and Developer shall execute and deposit such additional instructions as shall be reasonably required by Escrow Agent to consummate the transactions contemplated hereunder.

2.4.2.2. Closing. “Closing” means filing for record a grant deed in the form attached hereto as Exhibit “I” conveying the Primary Parcel from Agency to Developer (the “Grant Deed”) and such other documents as may be necessary to deliver title to Developer in the condition described in Section 2.4.3 below. “Closing Date” means the date on which Close of Escrow occurs. In the event that land use approvals satisfying the condition to close set forth in Section 2.4.4.2.4 below are obtained prior to the opening of Escrow, the scheduled Closing Date shall be sixty (60) days following the Initiation Date; otherwise, the scheduled Closing Date shall be sixty (60) days following the date that land use approvals satisfy413 Disposition and Development Agreement Page 15
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ing the condition set forth in Section 2.4.4.2.4 below are obtained. Escrow Agent shall cause Closing to occur when and only when (i) each of the conditions set forth in Section 2.4.4 below has been, or upon Closing will be, satisfied or waived and (ii) all funds and documents required by Section 2.4.5 below have been delivered to Escrow Agent.

2.4.3. Title. Developer has received from First American Title Company an ALTA preliminary title report on the Primary Parcel, together with copies of all documents referred to therein as exceptions. Agency agrees to deliver to Developer fee simple title vested in Developer subject only to the following, which shall constitute the “Permitted Exceptions”:
(a) The Redevelopment Plan;
(b) The Memorandum of Agreement;
(c) Current real property taxes a lien not yet delinquent and all unpaid general and special bonds and assessments;
(d) Those other exceptions that are listed on Exhibit “J” hereto as “approved exceptions” for the Primary Parcel; and (e) All other matters approved in writing by Developer.

2.4.4. Conditions precedent. Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below:

2.4.4.1. Agency’s conditions precedent. Agency’s obligation to proceed to Closing is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent described in Sections 2.4.4.1.1 through 2.4.4.1.2 below, which are solely for the benefit of Agency, and which shall be fulfilled or waived by the time periods provided for herein:

2.4.4.1.1. No Default. Prior to Closing, Developer shall not be in Default of any of its obligations under the terms of this Agreement, and all representations and warranties of Developer contained herein shall be true and correct in all material respects.

2.4.4.1.2. Execution of documents. Developer shall
have executed and acknowledged any documents required hereunder and delivered such documents into Escrow.

2.4.4.2. Developer’s conditions precedent. Developer’s obligation to proceed to Closing is subject to the fulfillment or waiver 414
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by Developer of each and all of the conditions precedent described in Sections 2.4.4.2.1 through 2.4.4.2.8 below, which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein:

2.4.4.2.1. Title Policy. First American Title Company
(the “Title Company”) shall be unconditionally prepared and committed to issue an ALTA Owner’s Form Policy of Extended Coverage
Title Insurance in the amount of the Purchase
Price as of the Closing Date, together with
such endorsements as are requested by Developer, showing fee title vested in Developer, subject only to the Permitted Exceptions (the
“Title Policy”).

2.4.4.2.2. No Default. Prior to Closing, City/Agency
shall not be in Default of any of its obligations
under the terms of this Agreement, and all representations and warranties of City or Agency contained herein shall be true and correct in
all material respects.

2.4.4.2.3. Execution of documents. City/Agency (or
City or Agency, as appropriate) shall have
executed and acknowledged the Grant Deed,
the Memorandum of Agreement, and any
other documents required hereunder, and delivered such documents into Escrow.

2.4.4.2.4. Land use approvals. Developer shall have
obtained each of the Project Approvals, and
the period for administrative and legal challenge to such Project Approvals shall have expired.

2.4.4.2.5. CEQA review. The City, Agency, and Developer shall have complied with the requirements of CEQA for the Project and the time for appeal from such action shall have expired.

2.4.4.2.6. Hazardous Materials. There shall be no Hazardous Materials on the Primary Parcel that as of the Closing Date materially and adversely
affect all or any part of the Primary Parcel or
the prospective operation, use, value, income,
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expenses or occupancy thereof, or its suitability for the development of the Project.

2.4.4.2.7. No material adverse change. No event shall
have occurred nor shall any condition have
arisen after the Initiation Date that as of the
Closing Date materially and adversely affects
all or any part of the Primary Parcel or the
current or prospective operation, use, value,
income, expense, or occupancy thereof or its
suitability for development of the Project and
materially changes a contingency that has
been approved by or waived by Developer.

2.4.4.2.8. No adverse action. There shall exist no actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefits of
creditors, insolvency, bankruptcy, reorganization, or other proceedings pending or threatened against Agency, BARTD, or an occupant of, or respecting the Primary Parcel that would
materially and adversely affect Agency’s ability to perform its obligation under this Agreement or Developer’s title to the Primary Parcel, and there shall exist no pending or threatened action, suit, or proceeding with respect to Agency before or by any court or administrative agency which seeks to restrain or prohibit or obtain damages or discovery order with respect to this Agreement or the consummation of the transaction contemplated hereby.

2.4.5. Deliveries to Escrow Agent.

2.4.5.1. Developer’s deliveries to Escrow Agent. Prior to 3:00 p.m. on the last business day before the scheduled Closing Date, Developer shall deliver to Escrow Agent (i) the Purchase Price and (ii) the amount, if any, required of Developer under Section 2.4.6.2 below.

2.4.5.2. Agency’s deliveries to Escrow Agent. Prior to 3:00 p.m. on the last business day before the scheduled Closing Date, Agency shall deliver to Escrow Agent (i) the Grant Deed, duly executed and acknowledged by Agency; (ii) a certification satisfying the requirements of Internal Revenue Code Section 1445 to the effect that Agency is not a “foreign person,” executed by Agency (the “FIRPTA Certificate”); and 416
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(iii) the amounts, if any, required of Agency under Sections

2.4.6.2 and 2.4.6.3(a) below.

2.4.6. Closing provisions.

2.4.6.1. Prorations. Real property taxes and current installments of assessments applicable to the Primary Parcel and other expenses applicable to the Primary Parcel and all income from the Primary Parcel (if any) shall be prorated as of the Closing Date with income and expenses allocable to the period on and after the Closing Date to be for Developer’s account and income and expenses allocable to the period before the
Closing Date to be to Agency’s account. Any property taxes assessed against the Primary Parcel after the Closing Date with respect to any period of time before the Closing Date shall be paid by Agency on demand.

2.4.6.2. Costs and expenses. Agency shall pay any city and county real property transfer taxes on the transaction. Developer shall pay the cost of the Title Policy. All other usual fees, charges, and costs which arise from Escrow shall be paid by Developer.

2.4.6.3. Closing procedure. Escrow Agent shall close Escrow for the Primary Parcel as follows:
(a) Pay from funds deposited by Developer with Escrow
Agent (or by Agency to the extent that the funds deposited by Developer are insufficient), to the obligees thereof, all liens and encumbrances dischargeable by
the payment of money other than those permitted
hereby to be shown in the Title Policy, if any;
(b) Pay from funds deposited by Developer with Escrow
Agent the balance of the Purchase Price after deducting (i) the amounts that Agency is obligated to pay under Section 2.4.6.2 above and (ii) the amount necessary to pay the obligations described in item (a) above, if any;
(c) Record the Grant Deed for the Primary Parcel with
instructions for the Recorder of Contra Costa County,
California to deliver the Grant Deed to Developer;
(d) Instruct the Title Company to deliver the Title Policy to Developer;
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(e) File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any
other applicable requirements;
(f) Deliver the FIRPTA Certificate to Developer; and
(g) Forward to both Developer and Agency a separate accounting of all funds received from and disbursed to each Party and conformed copies of all executed and
recorded or filed documents deposited into Escrow,
with such recording and filing date and information
endorsed thereon.

2.4.7. Termination.

2.4.7.1. Allocation of costs and expenses. In the event of a termination of Escrow, each Party shall forthwith pay to Escrow Agent one-half (1/2) of Escrow Agent’s reasonable escrow termination charges. Notwithstanding the foregoing, Escrow Agent may deduct from any cash or other funds held by it, a sum sufficient to pay its escrow termination charges in full.

2.4.7.2. Return of funds and documents. In the event of any termination of Escrow, Escrow Agent shall forthwith terminate the escrow and return all funds, documents, and other items held by it to the Party depositing same, except that Escrow Agent may retain such documents and other items usually retained by escrow agents in accordance with standard escrow termination procedures and practices. If the Escrow is terminated for any reason other than a Default by Agency, then forthwith upon such termination, Developer shall deliver to Agency any documents and materials related to the Primary Parcel previously delivered by Agency to Developer.

2.5. Right of Entry. Developer and its representatives, agents, and independent contractors shall have the right and license to enter onto the Initial Parcels in accordance with the following terms and conditions (the “Right of Entry”):

2.5.1. Permitted purposes. Developer’s entry may be for the purpose of obtaining any and all information regarding the Initial Parcels that Buyer deems appropriate, including, without limitation, by performing engineering studies, surveys, and soil tests.

2.5.2. Indemnity. Developer hereby agrees to indemnify and hold harmless Agency from and against any loss, liability, or damage, including reasonable attorneys’ fees and costs (collectively, “Losses”), resulting from the activities of Developer, or Developer’s representatives, agents, and independent contractors, or anyone acting pursuant to authorization from De418 Disposition and Development Agreement Page 20
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veloper, in relation to the Initial Parcels, and from and against any mechanics’ liens or claims of lien resulting therefrom. Notwithstanding the foregoing, the provisions of the foregoing sentence shall not be applicable to the extent any such Losses arise out of or in connection with either (i) the mere discovery of any pre-existing condition at an Initial Parcel, or (ii) the negligence or willful misconduct of City/Agency or any party under its direction or control.

2.5.3. Required permits. Before undertaking any activity on an Initial Parcel which requires a permit from any governmental agency, Developer shall obtain (and, except for permits issued by City or Agency, Agency shall cooperate at no cost to Agency to assist Developer in obtaining) such permit and pay any fee, cost, charge, or expense required to obtain or carry out its terms.

2.5.4. PNR Parcel limitations. So long as the PNR Parcel is not under Agency’s or City’s ownership or effective control, the Right of Entry shall be limited to the extent of Agency’s or City’s right of entry, if any, that it receives from the owner or controller of the PNR Parcel.

2.5.5. Termination. The Right of Entry shall terminate as to the BART Residual Parcel upon the Initiation Date and as to the Primary Parcel at such time it is determined under the terms of this Agreement, if at all, that the Primary Parcel will not be conveyed to Developer under this Agreement.

2.5.6. Restoration. Upon the termination of the Right of Entry as to an Initial Parcel under Section 2.5.5 above, Developer shall forthwith, at its sole cost and expense, return such Initial Property to its physical condition as of the date of this Agreement or as close thereto as reasonably possible.

ARTICLE III: DEVELOPMENT OF A PROJECT

3.1. Development plans. For any Project Improvements developed under this Article III, Developer shall submit development plans to the City for approval that conform to the following:

3.1.1. Specific Scope of Development. In the case of Project Improvements on one of the Initial Parcels, all Submittal Documents shall be in substantial conformance with the Scope of Development for the Project Parcel and with applicable Laws and Governing Ordinances. If at any time the City staff, Planning Commission, or City Council indicates, either formally or informally, that any element of the Project Approvals is likely to be denied if the Submittal Documents conform with such Scope of Development, then the Submittal Documents shall no longer be required to be in conformance with such Scope of Development and shall be required instead to be consistent with the Central Hercules Plan as provided in Section 3.1.2 below. 419
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3.1.2. Consistency with Central Hercules Plan. In the case of Project Improvements on one of the Additional Town Center Parcels, or Project Improvements on one of the Initial Parcels for which Submittal Documents are no longer required to conform to a specific Scope of Development under Section 3.1.1 above, the Submittal Documents shall be in substantial conformance with the provisions of the Regulating Code as it relates to the Corridor and with applicable Laws and Governing Ordinances.

3.1.3. Affordable housing. The Affordable Housing Obligation shall be met at Developer’s expense with respect to each Project Parcel that is to include residential units. One hundred percent (100%) of the Affordable Housing Set-Aside attributable to the Project Parcel shall be provided to Developer to assist in meeting the obligations of this Section 3.1.3. Notwithstanding the foregoing, Agency may, in its discretion and with the consent of Developer, do one or more of the following in order to help meet the objectives of Agency with respect to a Project: (i) provide financial assistance to Developer in addition to the Affordable Housing Set-Aside to further assist Developer in meeting the Affordable Housing Obligation, (ii) permit Developer to meet the Affordable Housing Obligation off-site, either in whole or in part; or (iii) satisfy the Affordable Housing Obligation off-site on behalf of Developer, either in whole or in part.

3.2. Development schedule. The Project shall proceed in conformance with the Schedule of Performance. A Party shall be in default of this Agreement in the event that such Party fails to do its part to comply with an item on the Schedule of Performance for which it is a responsible Party, as listed on the Schedule of Performance.

3.3. Project Approvals. Before commencement of construction of any Project Improvements, Developer shall cause to be secured any and all Project Approvals which may be required for the Project by the City or any other governmental agency affected by or having jurisdiction over such construction or work. The Project Improvements shall be constructed in accordance with this Agreement and the Project Approvals, except as to changes which may be mutually agreed upon between Developer and Agency and approved by the City. The Project Improvements also shall be constructed in accordance with all applicable Laws and the Governing Ordinances, as the Governing Ordinances may be modified by Project Approvals that amend the Governing Ordinances.

3.3.1. Land use approval process. Project Approvals shall be processed using the Planned Development Plan process set forth in Chapter 48 of the Zoning Ordinance, with concurrent processing of (i) any required zone change, (ii) any required general plan amendment, and (iii) other actions required to comply with all other applicable Governing Ordinances and all applicable Laws, in accordance with the following specific steps:
(a) Developer meets with City staff informally to establish general direction and strategy for the Project; (b) Developer prepares and submits a draft Conceptual PDP; 420
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(c) Developer meets with City staff to obtain informal feedback on the draft Conceptual PDP;
(d) Developer submits a revised Conceptual PDP;
(e) The Planning Commission holds one or more workshops, in its discretion, to review and discuss the Conceptual PDP (no formal action to be taken; more than one such workshop may be held if Planning Commission staff so advises and Developer agrees);
(f) The City Council holds one or more workshops, in its discretion, to review and discuss the Conceptual PDP;
(g) Developer prepares and submits draft Primary Submittal Documents for the Project; (h) Developer and City staff hold one or more pre-application conferences for staff to provide feedback on draft Primary Submittal Documents;
(i) Developer prepares and submits applications for the approval of the Primary Submittal Documents, and pays required fees;
(j) City staff reviews the applications for the approval of the Primary Submittal Documents and accepts them as complete or notifies Developer of any lack of completeness; if staff determines that one or more of the applications are incomplete, Developer revises and resubmits such applications until they are accepted as complete by City staff;
(k) City prepares an initial study under CEQA for consideration of the Primary Submittal Documents;
(l) Developer submits revised Primary Submittal Documents in consultation with City staff; (m) During the foregoing two steps, Developer prepares a strategy for compliance with all Governing Ordinances and all Laws that are applicable to the Project;
(n) During the foregoing three steps, City prepares and circulates studies and documentation as required by CEQA to support findings by the City under CEQA with respect to the Primary Submittal Documents; (o) The Planning Commission holds one or more public hearings and votes to recommend, recommend with changes, or not recommend City Council approval of the Primary Submittal Documents; 421
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(p) City Council holds one or more public hearings and (i) votes to approve or not approve the proposed Primary Submittal Documents and, (ii) as required under CEQA, makes findings and/or certifies or declines to certify environmental documentation in support of its decision;
(q) Developer prepares and submits draft Design Submittal Documents for the Project;
(r) Developer and City staff hold one or more pre-application conferences for staff to provide feedback on draft Design Submittal Documents;
(s) Developer prepares and submits applications for the approval of the Design Submittal Documents, and pays required fees;
(t) City staff reviews the applications for the approval of the Design Submittal Documents and accepts them as complete or notifies Developer of any lack of completeness; if staff determines that one or more of the applications are incomplete, Developer revises and resubmits such applications until they are accepted as complete by City staff;
(u) City prepares an initial study under CEQA for consideration of the Design Submittal Documents;
(v) Developer submits revised Design Submittal Documents in consultation with City staff; (w) During the foregoing two steps, Developer prepares to demonstrate compliance with this Agreement and with all Governing Ordinances and all Laws that are applicable to the Project;
(x) During the foregoing three steps, City prepares and circulates studies and documentation as required by CEQA to support findings by the City under CEQA with respect to the Design Submittal Documents; (y) The Planning Commission holds one or more public hearings and votes to recommend or not recommend approval of the Design Submittal Documents;
(z) City Council holds one or more public hearings and (i) votes to approve or not approve the proposed Design Submittal Documents and, (ii) as required under CEQA, makes findings and/or certifies or declines to certify environmental documentation in support of its decision.
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The steps listed in (a)–(z) above may be collapsed, with the mutual agreement of Developer and City, such that the Primary Submittal Documents and the Design Submittal Documents are processed together as one submittal. Developer may, at its option, elect to have City contract with a project planner acceptable to City and Developer to process the Submittal Documents on behalf of City at Developer’s expense.

This Agreement does not, and shall not be construed to, vest Developer with any right or entitlement to build or develop any Project on the Subject Parcels or on any other property in the City. Any rights or entitlements Developer may obtain to build or develop any Project on the Subject Parcels or on any other property in the City shall vest only after a project successfully completes all of the steps listed in (a)–(z) above. City and Agency retain their discretion to approve, disapprove, or condition any Project or the application for any Project on the Subject Parcels. Nothing in this Agreement shall be construed to limit or actually limit the exercise of that discretion in any respect.

3.3.2. Biological mitigation. Agency may take steps, in its sole and absolute discretion, to obtain clearance under the State and federal endangered species acts and under State and federal regulations governing wetland habitat and streambed alteration permitting for one or more of the Subject Parcels to be developed without any on-site constraints due to any such regulations. In the event that Agency obtains such clearance, Developer shall reimburse Agency a share of all of Agency’s reasonable third-party costs of planning, obtaining federal and state approvals for, establishing, and maintaining such mitigation areas. Developer’s share of such costs for any Subject Parcel shall be (i) prorated based on the relative impact of the Subject Parcel in comparison to all covered parcels, determined in a manner to be established by Agency, (ii) payable only if the Subject Parcel is developed by Developer under this Agreement, and (iii) payable at the time that a permit is obtained for the grading of the Subject Parcel.

3.4. Construction.

3.4.1. Diligent prosecution. Development of the Project Improvements shall commence on the Project Commencement Date, and Developer shall diligently prosecute the development of the Project Improvements so as to comply with the Schedule of Performance.

3.4.2. Progress reports. Prior to Agency’s issuance of its Certificate of Completion for the Project, Developer shall provide quarterly reports to Agency on the progress of the Project Improvements.

3.4.3. Insurance.

3.4.3.1. Liability insurance. During construction of the Project Improvements, Developer shall: (i) obtain and maintain a policy 423
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of commercial general liability insurance, including blanket contractual coverage with limits of not less than One Million Dollars ($1,000,000.00) per occurrence, general aggregate of Five Million Dollars ($5,000,000.00) and builder’s all risk insurance in an amount not less than the full insurable value of the Project Improvements on a replacement cost basis, which policies shall be issued by an "A:VIII" or better rated insurance carrier as rated by A.M. Best Company and shall provide all coverages on an occurrence basis; and (ii) obtain and maintain a policy of comprehensive automobile liability insurance with limits of not less than One Million Dollars ($1,000,000.00) per occurrence.

3.4.3.2. Endorsements. Developer shall furnish an endorsement(s) of insurance countersigned by an authorized agent of the insurance carrier on a form of the insurance carrier evidencing and/or affecting the requirements herein and/or the changes to Developer’s policy to effect such conformity and setting forth the general provisions of the insurance coverage and an endorsement that shall name the City and Agency and their respective officers, boards, agents, and employees as additional insureds under the policy with respect to the Project and this Agreement. The endorsement by the insurance carrier shall contain a statement of obligation on the part of the issuing agent or carrier to notify the City and Agency of any material reduction, cancellation, or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material change or non-renewal. Coverage provided hereunder by Developer shall be primary insurance and not be contributing with any insurance or self-insurance maintained by Agency or City, and the policy shall contain such an endorsement. Not less than fifteen (15) days prior to the expiration date of any policy of insurance required by this Section 3.4.3, Developer shall cause to be delivered to Agency a binder or certificate of insurance with respect to each renewal or new policy, bearing a notation evidencing payment of the premium therefor, or other proof of payment reasonably satisfactory to Agency.

3.4.3.3. Workers’ compensation insurance. Developer shall also furnish or cause to be furnished to Agency evidence satisfactory to Agency that any contractor with whom it has contracted for the performance of work on the Project or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law. 424
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3.4.4. Rights of access. At any time prior to issuance of a Certificate of Completion for the Project Improvements, for the purpose of assuring compliance with this Agreement, representatives of Agency and the City shall have the right of access to all portions of the Project Parcel without charges or fees, at normal construction hours during the period of construction.

3.4.5. Compliance with Agreement, Governing Ordinances, and Laws. Developer shall carry out the construction of the Project Improvements in conformity with this Agreement and all applicable Governing Ordinances and Laws. Developer hereby agrees to pay “prevailing wage” for the initial construction of the Project Improvements in accordance with the terms of Agency’s Prevailing Wage Policy with respect thereto.

3.4.6. Antidiscrimination. Developer, for itself and its successors and assigns, agrees that in the construction of the Project Improvements, Developer will not discriminate against any employee or applicant for employment because of race, color, creed, religion, sex, marital status, ancestry, or national origin.

3.4.7. Project sign. Developer and Agency agree to cooperate in placing and maintaining on the Project Parcel one sign indicating the respective roles of Developer and Agency in the Project. The cost of the sign shall be borne by Developer.

3.5. Transfers and liens.

3.5.1. Transfers. The qualifications and identity of Developer are of particular concern to the City and Agency. It is because of those qualifications that Agency has entered into this Agreement with Developer. Except as provided in this Section 3.5.1, no Transfer of a Project Parcel or of the Project Improvements thereon shall be permitted prior to the issuance of the Certificate of Completion for a Project without the prior written approval of Agency, which approval Agency may grant or withhold in its reasonable discretion. Notwithstanding the foregoing, Agency approval of a change in the ownership, management, or control of Developer, an assignment of this Agreement, or a conveyance of the Project Parcel or the Project Improvements, or any part thereof, shall not be required in connection with any of the following (each, a “Permitted Transfer”):
(a) The Transfer of the Project Parcel or the Project Improvements or assignment of this Agreement as it relates to the Project Parcel to an affiliate of Developer so long as Developer submits to Agency a signed assumption agreement that complies with the description in Section 3.5.2 below. For purposes of this provision, “affiliate of Developer” means an entity with which Developer may merge or consolidate, an entity to which Developer sells all or substantially all of its assets, the entity resulting from a reorganization of Developer, a parent or subsidiary of Developer or subsidiary of any parent of De425 Disposition and Development Agreement Page 27
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veloper, and any entity in which Developer owns a beneficial economic interest and in which, either directly or indirectly, Developer retains effective management and control, subject only to major events requiring the consent or approval of the other owners of such entity.
(b) The conveyance or dedication of any portion of the Project Parcel to the City or other appropriate governmental agency, or the granting of easements or permits to facilitate construction of the Project Improvements. (c) Any requested assignment for financing purposes, including the grant of a deed of trust, or a sale-leaseback, a so-called “synthetic lease,” or any such similar financing device the purpose of which is to secure the funds necessary for construction and permanent financing of the Project Improvements.

In the event of a Permitted Transfer, Developer agrees that it shall give at least fifteen (15) days prior written Notice to Agency of such assignment or Transfer.

3.5.2. Agency consideration of requested Transfer prior to issuance of Certificate of Completion. Prior to the issuance of a Certificate of Completion, Agency agrees that it will not unreasonably withhold approval of a request made pursuant to Section 3.5.1 above, provided Developer delivers written Notice to Agency requesting such approval. Such Notice shall be accompanied by evidence regarding the proposed assignee’s or purchaser’s development qualifications and experience and its financial commitments and resources sufficient to enable Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 3.5.2 and other criteria as reasonably determined by Agency. Before any proposed Transfer requiring the approval of Agency is considered for approval, Developer shall deliver to the Agency Director the form of a proposed written assignment and assumption agreement in which the assignee would expressly agree to assume all rights and obligations of Developer under this Agreement which arise after the effective date of the assignment, and in which the assignee would agree to assume all performance of Developer which arose prior to the effective date of the assignment, or in the alternative, Developer would remain liable to Agency for the performance of Developer’s obligations which arose prior to the effective date of any assignment. The assignment and assumption agreement shall be in form and content reasonably acceptable to Agency’s legal counsel. No later than the date the assignment becomes effective, Developer and the assignee shall deliver to Agency a fully executed copy of the assignment and assumption agreement. 426
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3.5.3. Holder not obligated to construct Project Improvements. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct or complete the Project Improvements or to guarantee such construction or completion; nor, with respect to the Primary Parcel, shall any covenant or any other provision in the Grant Deed be construed to so obligate such holder. Nothing in this Agreement shall be deemed to construe, permit, or authorize any such holder to devote the Project Parcel to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement. Further, the holder of any permanent mortgage or deed of trust authorized by this Agreement shall not be deemed to be the successor in interest to Developer hereunder for purposes of any indemnity granted by Developer hereunder or for purposes of any affirmative obligation to be performed by Developer hereunder.

3.5.4. Holder’s right to cure. With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever Agency shall deliver any Notice or demand to Developer with respect to any breach or Default by Developer in connection with construction of the Project Improvements, Agency shall at the same time deliver a copy of such Notice or demand to each holder of record of any mortgage or deed of trust authorized by this Agreement. Each such holder shall (insofar as the rights of Agency are concerned) have the right, at its option, within sixty (60) days after the receipt of the Notice, to cure or remedy such Default or, with respect to an item of Default that reasonably requires a greater time to cure or remedy, commence to cure or remedy any such Default within such period of time and proceed with all reasonable diligence to cure or remedy such Default within such greater time as may be reasonably necessary to cure, correct, or remedy to completion given the nature of the Default. With respect to any Schedule Default, such holder shall have the right, at its option, to participate in the process set forth in Section 6.4 below and to take any steps required of Developer as a result of such process. Such holder shall have the right to add the reasonable cost of actions it takes to cure or remedy Defaults pursuant to this Section 3.5.4 to the mortgage debt and the lien of its mortgage. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or development of the Project Improvements (beyond the extent necessary to conserve or protect the Project Improvements or construction already made) without first having expressly assumed Developer’s obligations to Agency by written agreement in a form acceptable to Agency in its sole discretion.

The holder, in that event, must agree to complete, in the manner provided in this Agreement, the Project Improvements to which the lien or title of such holder relates and submit evidence satisfactory to Agency that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder properly completing the Project Improvements shall be entitled to a Certificate of Completion. 427
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3.5.5. Estoppel certificates. At the request of Developer or any holder of a mortgage or deed of trust, Agency and City shall, from time to time and upon the request of Developer or such holder, timely execute and deliver to Developer or such holder a written statement of Agency and City that no Default or breach exists (or would exist with the passage of time, or giving of Notice, or both) by Developer under this Agreement, if such be the case, and certifying as to whether or not Developer has at the date of such certification complied with any obligation of Developer hereunder as to which such holder may inquire. The form of any estoppel certificate shall be prepared by the holder or Developer and shall be at no cost to Agency.

3.5.6. Taxes and assessments. Developer shall pay prior to delinquency all ad valorem taxes and assessments levied on the Project Parcel with respect to any period subsequent to the Developer’s acquisition of the Project Parcel, subject to Developer’s right to contest in good faith any such taxes.

3.5.7. Right of Agency to satisfy liens on Primary Parcel. If a mortgage or deed of trust default or breach by Developer prior to the completion of the construction of the Project Improvements occurs with respect to the Primary Parcel, and the holder of any mortgage or deed of trust has not exercised its option to construct, Agency may cure the default, without acceleration of the subject loan, following prior Notice thereof to Developer. In such event, Developer shall be liable for and Agency shall be entitled to reimbursement from Developer of all costs and expenses associated with and attributable to the curing of the mortgage or deed of trust default or breach of this Agreement by Developer and incurred by Agency in curing such default.

Agency shall also be entitled to record a lien upon the Primary Parcel to the extent of such incurred costs and disbursements. Any such lien shall be subject to prior encumbrances and deeds of trust. Agency shall have no cure rights described herein from and after the issuance of a Certificate of Completion on the Primary Parcel.

3.6. Completion.

3.6.1. Certificate of Completion. Within thirty (30) days after Developer’s request following completion of construction of the Project Improvements upon the Project Parcel in accordance with this Agreement, Agency shall furnish Developer with a Certificate of Completion upon written request therefor by Developer. Agency shall not unreasonably withhold any such Certificate of Completion. The Certificate of Completion shall be a conclusive determination of satisfactory completion of the construction of the Project Improvements upon the Project Parcel, and the Certificate of Completion shall so state. After recordation of such Certificate of Completion, any Party then owning or thereafter purchasing, leasing, or otherwise acquiring any interest therein shall not, because of such ownership, purchase, lease or acquisition, incur any obligation or liability under this Agreement, except that such Party shall be bound by the covenants contained in the 428
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Grant Deed and any other documents establishing covenants on the Project Parcel in accordance with this Agreement, which shall be applicable according to their terms.

3.6.2. Failure to issue Certificate of Completion. If Agency refuses or fails to furnish a Certificate of Completion for the Project Improvements after written request from Developer, Agency shall, within thirty (30) days of written request therefor, provide Developer with a written statement of the reasons Agency refused or failed to furnish a Certificate of Completion.

The statement shall also contain Agency’s opinion of the actions Developer must take to obtain a Certificate of Completion. If Agency shall have failed to provide such written statement within said thirty (30) day period, the Certificate of Completion shall be deemed to have been approved. If Agency fails to issue a Certificate of Completion, the issuance of a temporary certificate of occupancy by the City for the Project shall be deemed to be equivalent to the issuance of a Certificate of Completion.

ARTICLE IV: PROJECT COSTS AND FINANCING

4.1. Developer’s costs. Except as specifically set forth herein, Developer shall be responsible for all Development Costs with respect to each Project.

4.2. Project Financial Assistance. In consideration of Developer’s agreement to plan, seek Project Approvals for, and construct the Project Improvements as provided in this Agreement with respect to a Project, Agency agrees to make payments of financial assistance to Developer with respect to each Project (“Project Financial Assistance”) as follows:

4.2.1. Primary Parcel. Agency shall provide Project Financial Assistance with respect to the Project on the Primary Parcel as follows:

4.2.1.1. Payment into Primary Project Fund. Agency shall deposit into the Primary Project Fund in cash upon the Closing of the purchase of the Primary Parcel by Developer the sum equal to the lesser of (i) Agency’s reasonable estimate, as of the date of Project Approvals, of the Project Tax Increment that will be generated from the Primary Parcel over the life of the Agency, discounted to present value at the bond rate available to Agency at such time, as reasonably determined by Agency; or (ii) Agency’s reasonable estimate, based upon estimates provided to Agency by Developer of the total
amount of Eligible Project Costs that Developer is expected to incur in the development of the Project; or (iii) Twelve Million and no/100 Dollars ($12,000,000.00). Developer may draw funds from the Primary Project Fund as permitted by the instructions to the holder of the fund (see the definition of Primary Project Fund in Article I above).
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4.2.1.2. Tax Increment Assistance option. Upon the mutual agreement of Agency and Developer, Agency may provide the Project Financial Assistance for the Project on the Primary Parcel by providing to Developer Tax Increment Assistance (defined in Section 4.3 below) rather than providing the single payment as provided in Section 4.2.1.1 above.

4.2.1.3. Initial Parcel Pledge Agreement. In order to secure Agency’s obligations under this Section 4.2.1, Agency shall make and deliver to Developer within ten (10) days after the Effective Date a pledge agreement in the form attached
hereto as Exhibit “H-1,” duly authorized and acknowledged by Agency, that pledges the Project Tax Increment to the Project with respect to the two Initial Parcels (the “Initial Parcel Pledge Agreement”). The Initial Parcel Pledge
Agreement shall be released upon either (i) Agency’s delivery into the Primary Project Fund the sum defined in Section

4.2.1.1 above or (ii) Agency’s deliver to Developer of a Project Pledge Agreement for the Project on the Primary Parcel as provided in Section 4.3.9 below.

4.2.2. BART Residual Parcel. With respect to the Project on the BART Residual Parcel, Agency shall provide to Developer Tax Increment Assistance (defined in Section 4.3 below).

4.2.3. Additional Parcels. With respect to any Project on an Additional Parcel, Agency shall, in its discretion, make an assessment of the amount and form of Project Financial Assistance that Agency believes, in its sole discretion, may be appropriate for the Project and may provide to Developer such Project Financial Assistance as it determines is appropriate, if any. Such Project Financial Assistance, if any, may be in the form of a lump cash sum, Tax Increment Assistance, a limited form of Tax Increment Assistance, or any other form of financial assistance determined appropriate by Agency in its sole and absolute discretion.

4.2.4. Zero assistance option. With respect to any Project, City and Agency may elect on or before the date that the City Council holds its first workshop to review and discuss the Conceptual PDP for the Project pursuant to Section

3.3.1(f) above, the “zero assistance option” under this Section 4.2.4. Upon such election, (i) Agency shall have no obligation to provide Project Financial Assistance under this Section 4.2 for the Project; (ii) the provisions of Article III above shall not apply to the Project; (iii) the revenue sharing provisions of Section 4.4 below shall not apply to the Project; and (iv) City thereby agrees not to require, with respect to the Project, structured parking, a mix of uses on the Project, or civic spaces in excess of what City typically requires for conventional developments in the City. If the City and/or Agency elect the “zero assistance option” they nevertheless retain 430
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discretion to approve, disapprove or condition any Project or the application for any Project on the Subject Parcels.

4.3. Tax Increment Assistance. “Tax Increment Assistance” is defined as financial assistance provided by Agency to Developer on the following terms and conditions:

4.3.1. Deposit of funds into Project Fund. Subject to Sections 4.3.1.1 and

4.3.1.2, Agency shall deposit all Project Tax Increment into the Project Fund as such funds are received by Agency.

4.3.1.1. Subordination to Agency Bonds. Notwithstanding anything contained herein to the contrary, the obligation of the Agency to deposit Project Tax Increment into the Project Fund pursuant to Section 4.3.1 shall be subordinate to the payment of debt service on Agency Bonds issued pursuant to the Agency Indenture; provided, that at the time of issuance of such Agency Bonds, the Agency certifies that, based on the
amount of tax increment revenue pledged to pay debt service on such Agency Bonds and all other Agency Bonds then outstanding (collectively, the “Agency Parity Debt”), and based on the annual debt service payable with respect to Agency Parity Debt, there will be sufficient tax increment revenue in each fiscal year after payment of such Agency Parity Debt to make the deposits required pursuant to Section 4.3.1.

4.3.1.2. Project Bond Proceeds. The Agency may, in its sole discretion, elect to deposit Project Bond Proceeds into the Project Fund. In the event such deposit is made, the amount of Project Tax Increment required to be deposited to the Project Fund pursuant to Section 4.3.1.1 shall be reduced in each year by an amount equal to the product of (i) the annual debt service on the Agency Bonds times (ii) a fraction, the numerator of which is the amount of Project Tax Increment and the denominator of which is the total tax increment revenue pledged to the payment of such Agency Bonds, in each case based on the most recent equalized assessment roll of the County of Contra Costa as of the date of issuance of the Agency Bonds.

4.3.2. Project Fund account statements. By each January 31, Agency shall provide Developer with an account statement for the Project Fund showing account activity over the prior calendar year. Agency shall provide Developer with interim account statements upon request of Developer.

4.3.3. Periodic accountings of Unreimbursed Eligible Costs. At any time and from time to time following the Project Commencement Date, Developer may provide to Agency an accounting of Unreimbursed Eligible Costs, including a listing of cumulative Eligible Project Costs incurred by Devel431 Disposition and Development Agreement Page 33
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oper and cumulative Project Financial Assistance received by Developer; provided, however, that each such accounting may not be given fewer than ninety (90) days following the previous such accounting. The first time that an item of Eligible Project Costs is listed on such an accounting, such accounting shall be accompanied by such back up materials as may be reasonably required by Agency to verify Developer’s incursion of such item and the nature and amount of such item.

4.3.4. Payments during Project. Within thirty (30) days following Agency’s receipt of an accounting from Developer in accordance with Section 4.3.3 above, and subject to Sections 4.3.7 and 4.3.8 below, Agency shall make a payment of Project Financial Assistance to Developer in an amount equal to the lesser of (i) the Unreimbursed Eligible Costs reported on such accounting; or (ii) the amount in the Project Fund.

4.3.5. Final accounting of Unreimbursed Eligible Costs. Immediately following the issuance of a Certificate of Completion, Developer shall submit a final accounting of Unreimbursed Eligible Costs.

4.3.6. Payments after Certificate of Completion. On each February 1 after issuance of a Certificate of Completion, and subject to Sections 4.3.7 and 4.3.8 below, Agency shall make a payment of Project Financial Assistance to Developer in the amount of all available amounts in the Project Fund until the Unreimbursed Eligible Costs have been reduced to zero.

4.3.7. Discontinuation of payments. Agency shall continue to make payments of Project Financial Assistance to Developer as provided in Sections 4.3.4 and

4.3.6 above until Agency no longer receives and does not reasonably expect to receive Project Tax Increment that Agency is required to deposit into the Project Fund under Section 4.3.1 above or Project Bond Proceeds with respect to the Project Parcel. Thereafter, Agency may close the Project Fund account, Agency shall have no further obligation to Developer with respect to Project Tax Increment or Project Bond Proceeds, and the Project Pledge Agreement made in accordance with Section 4.3.9 below shall be released. Nothing in this Section 4.3 or in this Agreement obligates Agency to make payments of Project Financial Assistance after the expiry of the life of the Agency and the final depletion of the Project Fund to zero.

4.3.8. Dispute of accountings. If Agency disputes any amount reported in an accounting given by Developer pursuant to Section 4.3.3 above or Section

4.3.5 above, Agency shall provide Notice to Developer of such disputed item, along with Agency’s reasons for disputing such item. Agency may adjust its next payment under Section 4.3.4 above or under Section 4.3.6 above accordingly, provided that Agency shall timely pay all undisputed amounts. Agency and Developer shall meet within ten (10) business days of Agency’s Notice to Developer under this Section 4.3.8 to attempt to resolve the disputed item. If the matter is not resolved as provided above, 432
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then Developer may appeal the matter to the Agency Board and shall receive a hearing of the Agency Board within thirty (30) days of request. If the matter is not resolved at such hearing of the Agency Board, then Developer may bring an action in a court of law in accordance with Article VI below. Upon resolution of the disputed item in accordance with this Section

4.3.8, Agency shall immediately make any adjusting payment required to effect such resolution.

4.3.9. Project Pledge Agreement. In order to secure Agency’s obligations under this Section 4.3 with respect to each Project that is to receive Tax Increment Assistance, Agency shall make and deliver to Developer prior to the Project Commencement Date a pledge agreement in the form attached hereto as Exhibit “H-2,” duly authorized and acknowledged by Agency, that pledges the Project Tax Increment to the Project (a “Project Pledge Agreement”).

4.3.10. Maximizing Project Fund. Agency hereby agrees to use reasonable efforts to maximize the amounts available in the Project Fund for all Projects by doing, without limitation, the following: (i) use reasonable efforts to renegotiate the existing tax increment cap with County; (ii) consider, in its discretion, whether to issue tax increment bonds that include the Subject Parcels (and may include other parcels) and would result in Project Bond Proceeds for Projects on the Subject Parcels; (iii) refrain from renegotiating any tax increment agreements in a manner that would reduce the Project Tax Increment or the Project Bond Proceeds for Projects on the Subject Parcels; and (iv) refrain from pledging or allocating to any other project or purpose tax increment that could become Project Tax Increment for Projects on the Subject Parcels. Developer shall not object to Agency issuing tax increment bonds that include any of the Subject Parcels and that result in Project Bond Proceeds for Projects on the Subject Parcels so long as such bond issuance would not be in violation of any other provision of this Agreement, the Initial Pledge Agreement, or any Project Pledge Agreement. Developer agrees that it shall not challenge the assessed value of any Project Parcel so long as such Project Parcel is generating Project Tax Increment.

4.4. Agency revenue participation. Developer shall share with Agency in the project revenues of each Project developed by Developer under this DDA as follows:

4.4.1. Baseline Residential Price. The average market price per square foot for for-sale residential units to be built on the Project Parcel (the “Baseline Residential Price”) shall be established between Developer and Agency as of the completion of the Project Approvals based upon then-current market sales data.
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4.4.2. Primary Parcel Project. As to the Project on the Primary Parcel:
(a) For every for-sale residential unit on the Project that sells for 125% or more of the Baseline Residential Price per square foot, Developer shall pay to Agency, upon the close of escrow for the sale of such unit, the sum of $10,000, subject to item (b) below.
(b) The maximum aggregate amount that Developer shall be required to pay to Agency with respect to any Project under this Section 4.4.2 shall be equal to 100% of the dollar amount of Project Financial Assistance that Agency actually provided to Developer for the Project.

4.4.3. Other Projects. As to any Project on the BART Residual Parcel or any of the Additional Parcels:
(a) For every for-sale residential unit on the Project that sells for 110% or more of the Baseline Residential Price per square foot, Developer shall pay to Agency, upon the close of escrow for the sale of such unit, the sum of $10,000, subject to item (b) below.
(b) The maximum aggregate amount that Developer shall be required to pay to Agency with respect to any Project under this Section 4.4.3 shall be equal to 100% of the dollar amount of Project Financial Assistance that Agency actually provided to Developer for the Project.

4.4.4. Participation conditioned on Project Financial Assistance. By definition, Agency shall receive no revenue participation on Projects for which Agency does not provide Developer with Project Financial Assistance.

ARTICLE V: USE OF THE PROJECT PARCELS

5.1. Nondiscrimination. Developer by and for itself and any successors in interest covenants 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, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the any Project Parcel, nor shall Developer itself or any person claiming under or through it 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 of any Project Parcel. The foregoing covenants shall run with the land. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation 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 race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the 434
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grantee 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, subtenants, sublessees or vendees in the land 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: 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 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.” (c) In contracts: “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 sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee 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, subtenants, sublessees or vendees of the premises.”

5.2. Effect and duration of covenants.

5.2.1. Effect of violation of the terms and provisions of this Agreement after completion of construction. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of Agency, its successors, and assigns. The covenants contained in this Agreement shall remain in effect for the periods of time specified herein. The covenants against discrimination shall remain in effect in perpetuity.

5.2.2. Agency as beneficiary. Agency is deemed Beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. The Agreement and the covenants shall run in favor of Agency, without regard to whether Agency has been, remains, or is an Owner of any land or interest therein in the Site or in the Redevelopment Project. Agency shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or 435
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suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. After issuance of a Certificate of Completion with respect to a Project, all of the terms, covenants, agreements, and conditions set forth in this Agreement relating to the construction and development of the Project Improvements on the associated Project Parcel shall cease and terminate.

5.3. Right of access to public improvements and facilities. The Agency, for itself and for the City and other public agencies, at their sole risk and expense, reserves the right to enter each Project Parcel or any part thereof at all reasonable times and with as little interference as possible for the purposes of construction, reconstruction, maintenance, repair, or service of any public improvements or public facilities located on such Project Parcel. Any such entry shall be made only after reasonable Notice to Developer, and Agency shall indemnify and hold Developer harmless from any claims or liabilities pertaining to any entry. Any damage or injury to a Project Parcel resulting from such entry shall be promptly repaired at the sole expense of the Agency.

ARTICLE VI: DEFAULTS AND REMEDIES

6.1. Defaults. Failure or delay by either Party to perform any term or provision of this Agreement constitutes a “Default” under this Agreement, unless the time to perform the obligation in question is extended pursuant to the provisions of Section 7.5.3 below.

6.2. Notice and cure. The non-defaulting Party shall give written Notice of Default to the Party in Default, specifying the Default complained of by the non-defaulting Party. Such Notice shall include a list of specific items to be cured or remedied and, for each such item, a description of a method and timing of cure or remedy that would be acceptable to the non-defaulting Party. The Party in Default may protest such list but shall be obligated nonetheless to cure or remedy any actual Default as provided in this Section 6.2. The non-defaulting Party may not institute proceedings against the Party in Default until thirty (30) days after giving such Notice or, provided that the Party is proceeding with all reasonable diligence to cure, such greater time as may be reasonably necessary to cure, correct, or remedy to completion given the nature of the Default. Failure or delay in giving such Notice shall not constitute a waiver of any Default, nor shall it change the time of Default. Notwithstanding the foregoing provisions of this Section 6.2, Section

6.4 below, and not this Section 6.2, shall apply to Schedule Defaults.

6.3. Legal actions. Subject to the alternative procedure for remedying Schedule Defaults under Section 6.4 below and the limitations on remedies set forth in Section 6.7 below, upon the occurrence of a Default and the expiration of any applicable cure period provided herein, including under Section 6.2 above, the non-defaulting Party may institute legal action to cure, correct, or remedy any Default. Legal actions must be instituted in the Superior Court of the County of Contra Costa or in the Federal District Court in the Northern District of California.
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6.4. Resolution of Schedule Defaults. The following procedure shall apply in lieu of Sections 6.2 and 6.3 above in the event of any claim of a Schedule Default:

6.4.1. Meet and confer. The non-defaulting Party shall give written Notice of Default to the Party in Default, specifying the Default complained of by the non-defaulting Party and advising the other Party that it desires to meet and confer. Within fifteen (15) days after provision of that written notice by the Party desiring to meet and confer, the primary contacts for each Party shall meet in person and attempt to amicably resolve their dispute. Each primary contact, or the duly authorized person acting in their absence, shall attend the meeting, shall have full authority to resolve the dispute, and shall be prepared to devote an entire day thereto. If any dispute remains unresolved at the end of the meeting, any Party to this Agreement shall have the right to invoke the mediation process provided for in Section 6.4.2 below.

6.4.2. Mediation. Any dispute that remains unresolved after the meet and confer described in Section 6.4.1 above shall immediately be submitted to nonbinding, neutral mediation before a mutually acceptable, neutral retired judge or justice at JAMS. If within five (5) days after the meet and confer the Parties are unable to agree upon the selection of a neutral mediator, then the first available retired judge or justice at JAMS shall serve as the neutral mediator. The Parties agree to dedicate at least one full day to the mediation process. Each primary contact, or the duly authorized person acting in their absence, shall attend the mediation and shall have full authority to resolve the dispute. Additionally, to expedite the resolution of any dispute that is not resolved by mediation, the Parties agree to each bring to the neutral mediation a list of at least five (5) neutral arbitrators, including their resumes, whose availability for an arbitration hearing within fifteen (15) days after the mediation has been confirmed.

6.4.3. Arbitration. If mediation is unsuccessful, then before the mediation concludes, the Parties shall mediate the selection of a neutral arbitrator to assist in the resolution of their dispute. If the Parties are unable to agree on an arbitrator, the Parties agree to submit selection of an arbitrator to the mediator, whose decision shall be binding on the Parties. In that case, the mediator shall select one neutral arbitrator from the then active list of retired judges or justices at JAMS. The arbitration shall be conducted pursuant to the provisions of the California Arbitration Act, Sections 1280-1294.2 of the California Code of Civil Procedure. In such case, the provisions of Code of Civil Procedure Section 1283.05 and 1283.1 shall not apply, and no discovery shall be permitted exc ept upon leave of the assigned arbitrator.

6.5. Rights and remedies cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at 437
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the same or different times, of any other rights or remedies for the same Default or any other Default by the other Party.

6.6. No cross-default. No Default by Agency or Developer with respect to a particular Project or Subject Parcel under this Agreement shall result in a general Default under this Agreement or any cross-default with respect to any other Project or Subject Parcel under this Agreement. Accordingly, such a default shall give the non-defaulting Party remedies with respect to the Project or Subject Parcel affected by such Default only and shall not affect the rights of obligations of the Parties under this Agreement with respect to other Projects or other Subject Parcels.

6.7. Remedies. Subject to the provisions of Section 6.4 above with respect to Schedule Defaults, in the event of any Default by either Developer or Agency hereunder, either Party may institute legal action to cure, correct, or remedy any Default, enforce any covenant or agreement herein, enjoin any threatened or attempted violation, or enforce by specific performance the obligations and rights of the Parties hereto. Except as set forth in this Section 6.7, in no event shall either Party or its officers, agents, or employees be liable in monetary damages for any breach, violation, or Default of this Agreement, it being expressly understood and agreed that the sole legal or equitable remedy available to either Party for breach, violation, or Default of this Agreement by the other Party shall be an action in mandamus, specific performance, injunctive or declaratory relief to enforce the provisions of this Agreement. Notwithstanding the foregoing, in the event of any termination of this Agreement as a result of Agency’s default hereunder, Agency shall reimburse Developer for all Development Costs, including costs of acquisition paid by Developer to Agency. In no event shall a Party be entitled to recover consequential or punitive damages in connection with a Default, and any monetary damages payable to the non-defaulting Party shall be limited to those actual damages specifically provided for in this Section 6.7.

6.8. Additional remedies for Schedule Defaults. In addition to the remedies described in Section 6.7 above, in the event of a Schedule Default, a mediator may suggest or an arbitrator may impose any of the following additional remedies that such mediator or arbitrator determines would be fair and equitable under the circumstances: (i) set deadlines for performance by any or all Parties; (ii) establish specific remedies that will automatically take effect if performance deadlines are missed by the defaulting Party; (iii) in the case of a Developer Default with respect to a Subject Parcel that was acquired by Developer pursuant to this Agreement, give Agency the option to repurchase such Subject Parcel at a specified price and upon specified terms; (iv) cause the defaulting Party to lose the benefits of the DDA with respect to the Subject Parcel in question; or (v) in the case of an Agency or City Default, require Agency to reimburse Developer for all or a portion of the Development Costs incurred by Developer with respect to the Subject Parcel in question. In the event that an arbitrator determines that Developer has abandoned the Project with respect to the Primary Parcel prior to Project Approvals for that parcel, then Agency’s and City’s sole and exclusive remedy for the resulting Schedule Default shall be that Developer shall be required to deliver to Agency possession and ownership of all development plans, construction drawings, and third-party analyses and studies that Developer has in its possession or control with respect to such Project. 438
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ARTICLE VII: GENERAL PROVISIONS

7.1. Notices. Any written notice, demand, or communication between Agency or City and Developer (“Notice”) shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be given) or dispatched by first-class, registered or certified mail, postage prepaid, or delivered by facsimile (with confirmation of delivery) or overnight delivery service as follow:

If to Agency:

Redevelopment Agency of the City of Hercules
111 Civic Center Drive
Hercules, CA 94547
Attn: Agency Directory
Fax: (510) 799-2521
with copy to:

Pelletreau, Alderson & Cabral
Plaza Two, Hilltop Office Park
3260 Blume Drive, Suite 410
Richmond, CA 94806
Attn: Alfred Cabral, Esq.

If to City:

City of Hercules
111 Civic Center Drive
Hercules, CA 94547
Attn: City Manager
Fax: (510) 799-2521
with copy to:

Pelletreau, Alderson & Cabral
Plaza Two, Hilltop Office Park
3260 Blume Drive, Suite 410
Richmond, CA 94806
Attn: Alfred Cabral, Esq.

If to Developer:

Hercules New Town Center, LLC
c/o The Surland Companies
390 Railroad Avenue, Suite 201
Danville, CA 94526
Attn: Les Serpa
Fax: (925) 242-7050
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and:

Hercules New Town Center, LLC
c/o The Red Barn Co.
2901 W. Coast Hwy, Suite 200
Newport Beach, CA 92663
Attn: Thomas J. Weigel
Fax: (949) 767-5646
with copy to:

Miller Starr & Regalia
1331 North Carolina Blvd., Fifth Floor
Walnut Creek, CA 94596
Attn: Wilson F. Wendt. Esq.

Fax: (925) 933-4126
and with copy to:

Saltarelli Law Corporation
4695 MacArthur Court, Suite 310
Newport Beach, CA 92660
Attn: Tom Saltarelli. Esq.

Fax: (949) 833-9486
Notices may be sent in the same manner to such other address as a Party may from time to time designate by Notice as provided herein. Any Notice shall be deemed received immediately if delivered by hand or facsimile, shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by first-class, registered or certified mail and shall be deemed received on the next weekday which is not a federal or state holiday after the date it is sent by overnight delivery service.

7.2. Attorneys’ fees. In the event of any dispute between the Parties hereto arising out of the subject matter of this Agreement, the prevailing Party shall be entitled to recover reasonable expenses, attorneys’ fees, and costs from the other Party, including fees and costs on appeal and fees and costs incurred in enforcing any judgment awarded to the prevailing Party.

7.3. Representations and warranties.

7.3.1. Agency’s representations and warranties. Agency represents and warrants to Developer as follows:
(a) Authority. Agency is a public body, corporate and politic, existing pursuant to the Redevelopment Law, which has been authorized to transact business pursuant to action of the City. Agency has full right, power and lawful authority to perform its obligations hereunder and the execution, performance and delivery of this 440
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Agreement by Agency has been fully authorized by all requisite actions on the part of Agency. (b) No conflict. Agency’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which Agency is a party or by which it is bound.
(c) No litigation or other proceeding. To the best of Agency’s knowledge, no litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder, or delay the ability of Agency to perform its obligations under this Agreement.

Until the expiration or earlier termination of this Agreement, Agency shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 7.3.1 not to be true, immediately give written Notice of such fact or condition to Developer. Any such fact or condition shall constitute a Default if not cured within the time period provided following Notice and opportunity to cure set forth in Section 6.2 above.

7.3.2. City’s representations and warranties. City represents and warrants to Developer as follows:
(a) Authority. City is a municipal corporation, corporate and politic, existing pursuant to the laws of the State. It derives its legal existence and primary legal authority from California Constitution Article XI; California Government Code Title 4, Division 1, commencing with Section 34000; and California Government Code Title 5, Division 3, Part 1, commencing with Section 56000. City has full right, power, and lawful authority to perform its obligations hereunder and the execution, performance, and delivery of this Agreement by City has been fully authorized by all requisite actions on the part of City.
(b) No conflict. City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which City is a party or by which it is bound.
(c) No litigation or other proceeding. To the best of City’s knowledge, no litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder, or delay the ability of City to perform its obligations under this Agreement.
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Until the expiration or earlier termination of this Agreement, City shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 7.3.2 not to be true, immediately give written Notice of such fact or condition to Developer. Any such fact or condition shall constitute a Default if not cured within the time period provided following Notice and opportunity to cure set forth in Section 6.2 above.

7.3.3. Developer’s representations and warranties. Developer represents and warrants to Agency and City as follows:
(a) Authority. Developer is a limited liability company, duly organized within and in good standing under the laws of the State. Developer has full right, power and lawful authority to undertake all obligations as provided herein and the execution, performance, and delivery of this Agreement by Developer has been fully authorized by all requisite actions on the part of Developer.
(b) No conflict. Developer’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement, or order to which Developer is a party or by which it is bound. (c) No Developer bankruptcy. Developer is not the subject of a bankruptcy proceeding.

Until the expiration or earlier termination of this Agreement, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 7.3.3 not to be true, immediately give written Notice of such fact or condition to Agency and City. Any such fact or condition shall constitute a Default if not cured within the time period provided following Notice and opportunity to cure set forth in Section 6.2 above.

7.4. Memorandum of Agreement. Agency shall cause the Memorandum of Agreement, in substantially the form attached hereto as Exhibit “D,” to be recorded against each of the Subject Parcels within ten (10) days after the Effective Date. The Memorandum of Agreement shall be senior to any and all mortgages and deeds of trust to be recorded against the Subject Parcels, including any deeds of trust or mortgages securing repayment of Developer’s land acquisition/construction loans.

7.5. Time.

7.5.1. Time of the essence. It is understood and expressly agreed that time is of the essence for the performance of each and every covenant, condition, and obligation of this Agreement.
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7.5.2. Computation of time. The time in which any act is to be done under this Agreement is computed by excluding the first day, and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day shall be deemed to be the next business day. The term “holiday” shall mean all holidays as specified in Sections 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time.

7.5.3. Force majeure. In addition to specific provisions of this Agreement, performance by either Party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to: war; insurrection; terrorism; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; unusually severe weather; or acts or failures to act of a public or governmental agency or entity (other than Agency or City). In no event shall financial inability excuse performance hereunder. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if Notice by the Party claiming such extension is sent to the other Party within thirty (30) days of the commencement of the cause. Any requests for extension shall be in writing. Times of performance under this Agreement may also be extended in writing by the mutual agreement of Agency and Developer.

7.6. Parties.

7.6.1. Relationship between Agency and Developer. It is hereby acknowledged that the relationship between Agency and Developer is not that of a partnership or joint venture and that Agency and Developer shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the exhibits hereto, Agency shall have no rights, powers, duties, or obligations with respect to the development, operation, maintenance, or management of any Project.

7.6.2. Successors and assigns. The terms, covenants, conditions, and restrictions of this Agreement shall extend to and shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of Agency and Developer.

7.6.3. No liability of officials and employees of City and Agency. No member, official, or employee of Agency or the City shall be personally liable to Developer, or any successor in interest, in the event of any Default or breach by Agency or the City or for any amount which may become due to Developer, or its successors, or on any obligations under the terms of this Agreement. No officer, director, contractor, or employee of Developer shall be personally liable to the City or Agency in the event of any Default or 443
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breach by Developer or for any amount which may become due to City or Agency or on any obligations under the terms of this Agreement.

7.6.4. Conflicts of interest. No member, official, or employee of Agency or City shall have any personal interest, direct or indirect, in this Agreement, nor shall any member, official, or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested.

7.6.5. Brokers. Agency and Developer each agrees to hold harmless the other Party from any real estate commissions or fees as are alleged to be due by reason of the actions of the other Party.

7.7. Interpretation.

7.7.1. Rules of construction. Masculine, feminine, or neuter gender and the singular and plural number shall each be considered to include the other whenever the context so requires. The captions and headings included at the beginning of the various sections of this Agreement are inserted for convenience of reference only, are not part of this Agreement, and do not limit, expand, or otherwise define the contents of the respective sections and subsections. The word “including” shall be construed as if followed by the words “without limitation.” The word “shall” is mandatory, and “may” is permissive. This Agreement shall be interpreted as though prepared jointly by both Parties. Any reference to any section of this Agreement cited without a decimal includes all sections following the cited section.

For example, a reference to Section 2.4 includes 2.4.1, 2.4.2, 2.4.2.1, et seq.

7.7.2. Legal advice. Each Party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other Party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise.

7.7.3. Entire agreement. This Agreement includes pages 1 through 48 and Exhibits “A” through “K,” which constitute the entire understanding and agreement of the Parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the Parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 444
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7.7.4. Severability. If any term, provision, condition, or covenant of this Agreement or its application to any Party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, 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.

7.7.5. Approvals. Unless otherwise provided in this Agreement, whenever approval, consent, or satisfaction (collectively, an “approval”) is required of a Party pursuant to this Agreement (or any Attachment hereto), it shall not be unreasonably withheld or delayed. Unless provision is made for a specific time period, approval shall be given within thirty (30) days after receipt of written request for approval. If a Party neither approves nor disapproves within such 30-day period, or other time period for approval as may be specified in this Agreement or Attachment hereto, that Party shall be deemed to have given its approval. All approvals (including conditional approvals) and disapprovals shall be given or made in writing. If a Party disapproves, the reasons therefor shall be stated in reasonable detail in writing. The provisions of this Section 7.7.5 shall not apply to discretionary legislative approvals, such as the approval of Submittal Documents.

7.7.6. Agency and City approvals and actions. Whenever a reference is made herein to an action or approval to be undertaken by Agency, the Agency Director is authorized to act on behalf of Agency, unless specifically provided otherwise or the context requires otherwise. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager is authorized to act on behalf of City, unless specifically provided otherwise or the context requires otherwise. All approvals under this Section 7.7.6 must be in accordance with all applicable Governing Ordinances and Laws.

7.7.7. City legislative discretion. Nothing in this Agreement shall be construed so as to deny City its discretion over future land use decisions under the Governing Ordinances. Accordingly, phrases such as “Developer shall develop…” shall be construed to mean that Developer’s ability to develop shall be subject to obtaining the requisite approvals under the Governing Ordinances.

7.8. Waivers and amendments. Any waivers of the provisions of this Agreement must be in writing by the appropriate authorities of Agency, City, and Developer, and all amendments hereto must be in writing by the appropriate authorities of Agency, City, and Developer. Each amendment shall be processed by City and Agency based on whether it is a Minor Amendment or a Major Amendment, as follows:

7.8.1. Minor Amendments. The City Manager or his designee, along with the Agency Director or his designee, shall have the authority to review and approve Minor Amendments to this Agreement requested by Developer. De445 Disposition and Development Agreement Page 47
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veloper shall have the right to appeal the rejection of any such request by Developer to the Planning Commission, the City Council, and the Agency Board pursuant to the process set forth in Section 7.8.2 below for Major Amendments; provided that the scope of any such amendment proceeding shall be limited to the provisions of the proposed amendment.

7.8.2. Major Amendments. Major Amendments shall require giving of notice and shall require a public hearing before the Planning Commission, the City Council, and the Agency Board; provided that the scope of any such hearing and amendment proceeding shall be limited to those provisions of the proposed amendment that constitute a Major Amendment; Minor Amendments, if any, shall be subject only to the requirements of Section

7.8.1 above.

7.9. Counterparts. This Agreement may be signed in counterparts, and is executed in three (3) duplicate originals, each of which is deemed to be an original. 446
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Exhibit “A”
Site Map
The Subject Parcels consist of the Initial Parcels and the Additional Town Center Parcels listed below and depicted above:

Key Name Acres APN
Initial Parcels:

1. PNR Parcel 6.62 404 040 040

2. C-1 Parcel 8.69 406 070 043
Additional Town Center Parcels:

3. “Loop” 6.25 406 070 042

4. “Ramp” 3.23 CalTrans R.O.W.

5. “CalTrans” 6.35 406 070 025

6. “Carone 1” 2.04 406 160 002

7. “Carone 2” 1.77 406 160 006
448
Exhibit “B”—Legal Descriptions Page B-1
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Exhibit “B”
Legal Descriptions
449
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Exhibit “B-1”
Legal Description—PNR Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Records for Contra Costa County, in Book 74 of Parcel Maps, Page 37.

EXCEPTING THEREFROM:

A. That portion described as Parcel 1 in the Deed to State of California, recorded March 13, 1981, in Book 10237, Page 84, Official Records.

B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982, in Book 10970 Official Records of Contra Costa County, Page 528, Series No. 82-143385. 450
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Exhibit “B-2”
Legal Description—C-1 Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

PARCEL 1:

Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984, map recorded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.

EXCEPTING THEREFROM: Beginning at the Northwesterly corner of said Parcel 1; thence from said point of beginning, along the Northerly line of said Parcel 1, S. 68º 50' 51" E., 132.15 feet, thence leaving said Northerly line from a tangent which bears S. 73º 41' 02" W., along a curve to the left with a radius of 260.00 feet, through an angle of 42º 31' 59", and arc length of 193.01 feet to a point of compound curvature; thence along a tangent curve to the left with a radius of 30.00 feet, through an angle of 21º 17' 03", an arc length of 11.14 feet to the Westerly line of said Parcel 1; thence along last said line N. 9º 52' 00" E., 175.70 feet to the Point of Beginning.

ALSO EXCEPTING THEREFROM:

48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the Southerly line of said Parcel 1; thence along last said line from a tangent which bears N. 83º 32' 32" W., along a curve to the left with a radius of 1224.92 feet, through an angle of 03º 52' 36", an arc length of 82.88 feet to the Point of Beginning. 451
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Exhibit “B-3”
Legal Descriptions—Additional Town Center Parcels

3. Loop
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

That certain real property shown on Parcel Map No. 1007, filed August 2, 1977, in the Official Records for Contra Costa County, in Book 56 of Parcel Maps at pages 42 and 43.

EXCEPTING THEREFROM: That portion of said land as described in the Grant Deed to the State of California, recorded June 11, 1993, in Book 18645 Official Records, Page 685, Series No. 93-155095

4. Ramp
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, bounded on the West by Parcel Three identified herein, bounded on the East by Parcel Two identified herein, bounded on the South by Willow Avenue, and generally bounded on the North by State Highway 4. The exact configuration of Parcel Four shall be determined in the future by the California Department of Transportation in the event that the Interstate 80 off-ramp that is partially included with Parcel Four is abandoned by the California Department of Transportation.

5. CalTrans
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

A portion of that parcel of land described in that deed to Hercules Powder Company, a corporation, recorded June 7, 1913 in Volume 207 of Deeds, at Page 1, Contra Costa County Records and being more particularly described as follows:

Commencing at the easterly corner of that parcel of land described in that deed to Pacific Gas and Electric Company, a California corporation, recorded February 28, 1955, in Volume 2484 at

Page 130 ends

length of 1603.58 feet described in deed to State of California recorded March 22, 1957 in Volume 2952 at Page 116, Official Records of Contra Costa County N 21° 09’ 09” E, 228.25 feet to said course; thence along said course and along that course with length of 481.63 feet described in said deed to the State of California, S 68° 50’ 51” E, 429.20 feet and S 52° 52’ 03” E, 481.63 feet to a line parallel with and distant 40.00 feet, northerly, from those courses with distances of 1008.45 feet and 100.19 feet in the center line described in Parcel III of that deed to State of California recorded February 26, 1930 in Volume 212 at Page 297, Official Records of Contra Costa County; thence along said parallel line from a tangent that bears S 75° 37’ 12” W, along a curve of 31° 35’ 44”, an arc length of 970.48 feet and N 72° 47’ 04” W, 23.23 feet to the south452 Exhibit “B”—Legal Descriptions Page B-5
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easterly line of said parcel to Pacific Gas and Electric Company; thence along last said line N 29° 18’ 36” E, 231.84 feet to the point of commencement.

6. Carone 1
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Being all that real property shown on Parcel Map 1004, filed August 2, 1977, in Book 56 of Parcel Maps, at Page 40, Contra Costa County Records.

7. Carone 2
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Portion of the Atchison, Topeka and Santa Fe Railway Company’s 400 foot wide property as said property is described in the deed recorded in Book 78 of Deeds, Page 545, records of said county, in Lot B, Division 10 of the Ranch El Pinole, Described as follows:

Beginning at the intersection of the northeasterly boundary of said 400 feet wide property with a line parallel with and distant northerly 65.00 feet measured at right angles from the centerline of said railway company’s main track; thence westerly along said parallel line 420.27 feet; thence westerly along the arc of a curve tangent to the preceding course, concave northerly and having a radius of 931.87 feet, through a central angle of 12° 48’ 00” a distance of 208.18 feet to a point in the westerly boundary of said 400 foot wide property; thence northerly along said westerly boundary, 135.23 feet to a point in the northerly boundary of said 400 foot wide property; thence easterly along said northerly boundary, 505.78 feet to a point in said northeasterly boundary of said 400 foot wide property; thence southeasterly along said northeasterly boundary, 164.24 feet to the point of beginning.
453
Exhibit “C”—Governing Ordinances Title Pages Page C-1
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Exhibit “C”
Governing Ordinances Title Pages
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Exhibit “D”—Memorandum of Agreement Page D-1
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Exhibit “D”
Memorandum of Agreement

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Pelletreau, Alderson & Cabral
3260 Blume Drive, Suite 410
Richmond, CA 94806-5277
Attention: Alfred A. Cabral, Esq.
(Above space for Recorder's use only)
A.P.N. 404-040-040; 406-070-025, 042, 043; 406-160-002, 006; Parcel 4 described herein, which has not been assigned an A.P.N.

MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENT
PLEASE TAKE NOTICE that on April 7, 2005, the City of Hercules, a public body corporate and politic (the “City”), and the Redevelopment Agency of the City, a public body corporate and politic (the “Agency”), on the one hand, and Hercules New Town Center, LLC, a California limited liability company ( “Developer”), on the other hand, entered into a Disposition and Development Agreement (the “Agreement”) pertaining to the following described real property and improvements thereon (the “Real Property”), and the disposition and development thereof:

REAL PROPERTY in the City of Hercules, County of Contra Costa, State of California, described as follows:

PARCEL ONE:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Records for Contra Costa County, in Book 74 of Parcel Maps, Page 37.

EXCEPTING THEREFROM:

A. That portion described as Parcel 1 in the Deed to State of California, recorded March 13, 1981, in Book 10237, Page 84, Official Records.

B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982, in Book 10970 Official Records of Contra Costa County, Page 528, Series No. 82- 143385.

PARCEL TWO:
497
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That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

PARCEL 1:

Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984, map recorded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.

ALSO EXCEPTING THEREFROM:

Beginning at the Southwesterly corner of said Parcel 1; thence from said Point of Beginning along the Westerly line of said Parcel 1, N. 9º 52' 00" E., 35.00 feet; thence leaving said Westerly line S. 38º 22' 00" E., 45.27 feet to a curve concentric with and distant 1 foot radially from the Southerly line of said Parcel 1; thence from a tangent which bears S. 85º 49' 28" E., along a curve to the right with radius of 1225.92 feet, through an angle of 02º 16' 56", an arc length of 48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the Southerly line of said Parcel 1; thence along last said line from a tangent which bears N. 83º 32' 32" W., along a curve to the left with a radius of 1224.92 feet, through an angle of 03º 52' 36", an arc length of 82.88 feet to the Point of Beginning.

PARCEL THREE:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

That certain real property shown on Parcel Map No. 1007, filed August 2, 1977, in the Official Records for Contra Costa County, in Book 56 of Parcel Maps at pages 42 and 43.

EXCEPTING THEREFROM: That portion of said land as described in the Grant Deed to the State of California, recorded June 11, 1993, in Book 18645 Official Records, Page 685, Series No. 93-155095
A.P. No.: 406-070-042
498
Exhibit “D”—Memorandum of Agreement Page D-3
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PARCEL FOUR:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, bounded on the West by Parcel Three identified herein, bounded on the East by Parcel Two identified herein, bounded on the South by Willow Avenue, and generally bounded on the North by State Highway 4. The exact configuration of Parcel Four shall be determined in the future by the California Department of Transportation in the event that the Interstate 80 off-ramp that is partially included with Parcel Four is abandoned by the California Department of Transportation.

PARCEL FIVE:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Commencing at the easterly corner of that parcel of land described in that deed to Pacific Gas and Electric Company, a California corporation, recorded February 28, 1955, in Volume 2484 at Page 130, Official Records of Contra Costa County; thence perpendicular to that course with length of 1603.58 feet described in deed to State of California recorded March 22, 1957 in Volume 2952 at Page 116, Official Records of Contra Costa County N 21° 09’ 09” E, 228.25 feet to said course; thence along said course and along that course with length of 481.63 feet described in said deed to the State of California, S 68° 50’ 51” E, 429.20 feet and S 52° 52’ 03” E, 481.63 feet to a line parallel with and distant 40.00 feet, northerly, from those courses with distances of 1008.45 feet and 100.19 feet in the center line described in Parcel III of that deed to State of California recorded February 26, 1930 in Volume 212 at Page 297, Official Records of Contra Costa County; thence along said parallel line from a tangent that bears S 75° 37’ 12” W, along a curve of 31° 35’ 44”, an arc length of 970.48 feet and N 72° 47’ 04” W, 23.23 feet to the southeasterly line of said parcel to Pacific Gas and Electric Company; thence along last said line N 29° 18’ 36” E, 231.84 feet to the point of commencement.

A.P. No.: 406-070-025
PARCEL SIX:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Being all that real property shown on Parcel Map 1004, filed August 2, 1977, in Book 56 of Parcel Maps, at Page 40, Contra Costa County Records.

A.P. No.: 406-160-002
499
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PARCEL SEVEN:

That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

A.P. No.: 406-160-006
Parcel One of the Real Property shall be referred to as the “PNR Parcel”; Parcel Two of the Real Property shall be referred to as the “C-1 Parcel”; Parcels Three through Seven of the Real Property shall be referred to collectively as the “Additional Town Center Parcels.” The Agreement provides, among other things, that Agency will attempt to acquire the PNR Parcel from the Bay Area Rapid Transit District, by means of an exchange for the C-1 Parcel, and sell the PNR Parcel to Developer. If the exchange does not proceed as provided, Agency will instead sell the C-1 Parcel to Developer. Whichever of the two aforementioned parcels is thus sold to developer shall be referred to as the “Primary Parcel,” and the other such parcel shall be referred to as the “BART Residual Parcel.” Developer shall construct a mixed-use development pursuant to the terms and on the conditions specified in the Agreement on the Primary Parcel. Under circumstances specified in the Agreement, Developer may acquire and/or develop the BART Residual Parcel and/or any or all of the Additional Town Center Parcels pursuant to the terms and on the conditions specified in the Agreement, but only with respect to such parcels as to which Developer either acquires an ownership interest or obtains an agreement with the owner to act as the developer or assist in the development of the parcel. The Agreement also gives Developer a first right of refusal on the BART Residual Parcel and/or any or all of the Additional Town Center Parcels pursuant to the terms and on the conditions specified in the Agreement, but only with respect to such parcels as to which Agency or City from time to time either acquires or arranges for the acquisition. The Agreement also permits or requires Agency, under certain conditions, to pledge to Developer the tax increment generated by parcels developed under the DDA to secure certain obligations of Agency under the DDA. The Agreement further requires Agency 500
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to initially pledge to Developer the tax increment generated by PNR Parcel and the C-1 Parcel until it is determined which shall be the Primary Parcel, at which time the parcel that is not identified as the Primary Parcel shall be released from such initial pledge. All of the terms and conditions of the Agreement are hereby referred to and incorporated by reference as though fully set forth herein.

Executed on ___________________, 2005, at Hercules, Contra Costa County, California.

ATTEST:
_______________________________
Secretary
APPROVED AS TO FORM:
_______________________________
Pelletreau, Alderson & Cabral
Agency Counsel

REDEVELOPMENT AGENCY OF THE
CITY OF HERCULES, a public body corporate and politic
By:____________________________________
Chairman

STATE OF CALIFORNIA )
) ss.

COUNTY OF CONTRA COSTA )
On this ___ day of _____________________, 200__, before me, _____________________, the undersigned Notary Public, personally appeared _____________________, personally known to me (or 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.

WITNESS my hand and official seal.
________________________________________
Notary Public
501
Exhibit “E”—Schedules of Performance Page E-1
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Exhibit “E”
Schedules of Performance
502
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Exhibit “E-1”
General Schedule of Performance
Action Date1 Resp. Party
(a) Execution and delivery of Agreement
by Agency and City
Thirty (30) days after approval (i.e., after
second reading) by Agency and City
Agency/City
(b) Effective Date (Preamble) April 7, 2005
(c) Memorandum of Agreement recorded
(§7.4)
Within ten (10) days after the Effective
Date
Agency
(d) Initial Parcel Pledge Agreement delivered to Developer (§4.2.9)Within ten (10) days after the Effective Date
Agency

1 Assumes no legal challenge under CEQA, by initiative or referendum, or by other legal action. All dates are subject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal challenges. Certain dates are also subject to being extended by waiver, if permitted by the Agreement, or by other operation of the terms of the Agreement.
503
Exhibit “E”—Schedules of Performance Page E-3
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Exhibit “E-2”
Schedule of Performance—PNR Parcel as the Primary Parcel Action Date2 Resp. Party
(a) Approval process through City Council workshop(s) on Conceptual PDP (§3.3.1(a)–(f))
Within fifteen (15) weeks after Effective
Date plus four (4) weeks for each workshop held by City Council or Planning Commission in excess of one (1) each
City & Developer
(b) Approval process through Submittal
and acceptance of Primary Submittal
Documents as complete
(§3.3.1(g)–(j))
Within thirteen (13) weeks after final City
Council workshop on Conceptual PDP
((a) above)
City &
Developer
(c) Approval process through preparation
for public hearings on Primary Submittal Documents (§3.3.1(k)–(n)) Within thirteen (13) weeks after acceptance of Primary Submittal Documents ((b) above)
City &
Developer
(d) Approval process through City Council vote on Primary Submittal Documents (§3.3.1(o)–(p))Within six (6) weeks after preparation for public hearings on Primary Submittal
Documents ((c) above) plus four (4)
weeks for each public hearing held by
City Council or Planning Commission in
excess of one (1) each
City
(e) Approval process through Submittal
and acceptance of Design Submittal
Documents as complete
(§3.3.1(q)–(t))
Within thirteen (13) weeks after City
Council vote on Primary Submittal
Documents ((d) above)
City &
Developer
(f) Approval process through preparation
for public hearings on Design Submittal Documents (§3.3.1(u)–(x)) Within ten (10) weeks after acceptance of
Design Submittal Documents ((e) above)
City &
Developer
(g) Approval process through vote on
Design Submittal Documents
(§3.3.1(y)–(z))
Within six (6) weeks after acceptance of
Design Submittal Documents ((f) above)
plus four (4) weeks for each public hearing held by City Council or Planning Commission in excess of one (1) each
City
(h) Project Approvals (§3.3) Upon approval of Design Submittal Documents by City Council ((g) above)
(i) Exercise of Exchange Option (§2.2.2) Within the option period under the Exchange Option Agreement Agency
(conditional)
(j) Initiation Date (the date that the Primary Parcel is conclusively identified) (Art. 1, “Initiation Date”; §2.3.1)
Upon the timely exercise of the Exchange
Option ((h) above)

2 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.

All dates are subject to extension due to force majeure as provided in Section 7.5.3 and any resulting legal challenges. Certain dates are also subject to being extended by waiver, if permitted by the Agreement, or by other operation of the terms of the Agreement. 504
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Action Date2 Resp. Party
(k) Conveyance of Primary Parcel/Closing Date (§2.4.2.2)Within sixty (60) days after the Initiation Date ((i) above)
Developer &
Agency
(l) Construction of parking on the C-1
Parcel to replace the BARTD parking
on the PNR Parcel
As required under the terms of the Exchange Option Agreement Developer
(m) BARTD vacancy of the PNR Parcel As required under the terms of the Exchange Option Agreement (n) Project Pledge Agreement delivered
by Agency (§4.2.8)
Prior to Project Commencement Date ((o)
below)
Agency
(o) Developer's insurance obtained
(§3.4.3)
Prior to commencement of construction Developer
(p) Project Commencement Date (Art. 1,
“Project Commencement Date”;
§3.4.1)
Sixty (60) days following BARTD’s vacancy of the PNR Parcel ((m) above) (q) Completion of construction of first
phase of Project Improvements
Within thirty-six (36) months after the
Project Commencement Date ((o) above)
Developer
(r) Completion of construction of all
phases of Project Improvements
Within a reasonable time after the completion of the first phase of Project Improvements ((p) above), given market and project conditions (the Project may, in
Developer’s discretion, be completed in
one phase, thereby eliminating this step)
Developer
(s) Certificate of Completion (§3.6.1) Within thirty (30) days of Developer’s request following completion of construction of all Project Improvements ((r) above)
Agency
505
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Exhibit “E-3”
Schedule of Performance—C-1 Parcel as the Primary Parcel Action Date3 Resp. Party
(a) Initiation Date (the date that the Primary Parcel is conclusively identified) (Art. 1, “Initiation Date”; §2.3.1)
Upon the failure of Agency to timely exercise the Exchange Option (b) Approval process through City Council workshop(s) on Conceptual PDP (§3.3.1(a)–(f))
Within fifteen (15) weeks after Initiation
Date ((a) above) plus four (4) weeks for
each workshop held by City Council or
Planning Commission in excess of one (1)
each
City & Developer
(c) Approval process through Submittal
and acceptance of Primary Submittal
Documents as complete
(§3.3.1(g)–(j))
Within thirteen (13) weeks after final City
Council workshop on Conceptual PDP
((b) above)
City &
Developer
(d) Approval process through preparation
for public hearings on Primary Submittal Documents (§3.3.1(k)–(n)) Within thirteen weeks after acceptance of
Primary Submittal Documents ((c) above)
City &
Developer
(e) Approval process through City Council vote on Primary Submittal Documents (§3.3.1(o)–(p))Within six (6) weeks after preparation for public hearings on Primary Submittal
Documents ((d) above) plus four (4)
weeks for each public hearing held by
City Council or Planning Commission in
excess of one (1) each
City
(f) Approval process through Submittal
and acceptance of Design Submittal
Documents as complete
(§3.3.1(q)–(t))
Within thirteen (13) weeks after City
Council vote on Primary Submittal
Documents ((e) above)
City &
Developer
(g) Approval process through preparation
for public hearings on Design Submittal Documents (§3.3.1(u)–(x)) Within ten (10) weeks after acceptance of
Design Submittal Documents ((f) above)
City &
Developer
(h) Approval process through vote on
Design Submittal Documents
(§3.3.1(y)–(z))
Within six (6) weeks after acceptance of
Design Submittal Documents ((g) above)
plus four (4) weeks for each public hearing held by City Council or Planning Commission in excess of one (1) each
City
(i) Project Approvals (§3.3) Upon approval of Design Submittal Documents by City Council ((h) above)

3 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.

2.3.4)
After the Effective Date and prior to the
expiration or earlier termination of the
Agreement
Developer
(not mandatory)
(b) Approval process through City Council workshop(s) on Conceptual PDP (§3.3.1(a)–(f))
Within fifteen (15) weeks after acquisition of title or development management agreement ((a) above) plus four (4) weeks
for each workshop held by City Council
or Planning Commission in excess of one
(1) each
City & Developer
(c) Approval process through Submittal
and acceptance of Primary Submittal
Documents as complete
(§3.3.1(g)–(j))
Within thirteen (13) weeks after final City
Council workshop on Conceptual PDP
((b) above)
City &
Developer
(d) Approval process through preparation
for public hearings on Primary Submittal Documents (§3.3.1(k)–(n)) Within thirteen (13) weeks after acceptance of Primary Submittal Documents ((c) above)
City &
Developer
(e) Approval process through City Council vote on Primary Submittal Documents (§3.3.1(o)–(p))Within six (6) weeks after preparation for public hearings on Primary Submittal
Documents ((d) above) plus four (4)
weeks for each public hearing held by
City Council or Planning Commission in
excess of one (1) each
City
(f) Approval process through Submittal
and acceptance of Design Submittal
Documents as complete
(§3.3.1(q)–(t))
Within thirteen (13) weeks after City
Council vote on Primary Submittal
Documents ((e above)
City &
Developer
(g) Approval process through preparation
for public hearings on Design Submittal Documents (§3.3.1(u)–(x)) Within ten (10) weeks after acceptance of
Design Submittal Documents ((f) above)
City &
Developer
(h) Approval process through vote on
Design Submittal Documents
(§3.3.1(y)–(z))
Within six (6) weeks after acceptance of
Design Submittal Documents ((g) above)
plus four (4) weeks for each public hearing held by City Council or Planning Commission in excess of one (1) each
City
(i) Project Approvals (§3.3) Upon approval of Design Submittal Documents by City Council ((h) above)

4 Assumes no challenge to any Project Approvals under CEQA, by initiative or referendum, or by other legal action.

Qualitative:
• The parcel shall be developed with a mix of uses, including any type of commercial (such as retail, restaurant, entertainment, and/or office) or residential uses, and optionally including cultural and other quasi-public uses. • The development shall provide clearly-defined civic spaces such as pedestrian walkways and public gathering places, such as plazas.
• The project shall consist of one or more multi-story buildings up to six stories. • Viewed from San Pablo Avenue, the project shall have a predominantly urban rather than suburban appearance.
• The majority of the parking for the project shall not be perceptible from San Pablo Avenue.

Quantitative:
• The project shall include at least 25,000 square feet of commercial space (as defined above).
• If the PNR Parcel is the Primary Parcel, Developer will receive Purchase Price reduction incentives under Section 2.4.1 of the Agreement for meeting target building sizes as follows (in the event of any conflict between this bulleted point and Section 2.4.1, Section

2.4.1 shall control):

Minimum Building Size Minimum Commercial1 Purchase Price Reduction NONE 25,000 sq. ft. 0%
200,000 sq. ft. 37,500 sq. ft. 50%
300,000 sq. ft. 50,000 sq. ft. 100%
• If the PNR Parcel is the Primary Parcel, the project shall include, at Developer’s expense, the construction of replacement Park and Ride facilities on the C-1 Parcel in accordance with the requirements of the Exchange Option Agreement. 1 Included within minimum building size; both the Minimum Building Size and Minimum Commercial conditions must be met for Developer to obtain the indicated reductions in Purchase Price.
511
Exhibit “F”—Scopes of Development Page F-3
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Exhibit “F-2”
Scope of Development—C-1 Parcel
The Scope of Development for the C-1 Parcel has both a qualitative and a quantitative component, as follows:

Qualitative:
• The parcel shall be developed with a mix of uses, including any type of commercial (such as retail, restaurant, entertainment, and/or office) or residential uses, and optionally including cultural and other quasi-public uses. • The development shall provide clearly-defined civic spaces such as pedestrian walkways and public gathering places, such as plazas.
• The project shall consist of one or more multi-story buildings up to six stories. • Viewed from Willow Avenue, the project shall have a predominantly urban rather than suburban appearance.
• The majority of the parking for the project shall not be perceptible from Willow Avenue.

Quantitative:
• The project shall include at least 20,000 square feet of commercial space (as defined above).
• If the C-1 Parcel is the Primary Parcel, Developer will receive Purchase Price reduction incentives under Section 2.4.1 of the Agreement for meeting target building sizes as follows (in the event of any conflict between this bulleted point and Section 2.4.1, Section

2.4.1 shall control):

Minimum Building Size Minimum Commercial2 Purchase Price Reduction NONE 20,000 sq. ft. 0%
200,000 sq. ft. 30,000 sq. ft. 50%
300,000 sq. ft. 40,000 sq. ft. 100%
2 Included within minimum building size; both the Minimum Building Size and Minimum Commercial conditions must be met for Developer to obtain the indicated reductions in Purchase Price.
512
Exhibit “G”—Eligible Project Costs Page G-1
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Exhibit “G”
Eligible Project Costs
Sections 4.2 and 4.3 of the Agreement provide the only means for Developer to receive financial assistance based on tax increment (called “Tax Increment Assistance” in the Agreement). Tax Increment Assistance is only available to Developer (i) based on tax increment generated by a Project, (ii) as a reimbursement for “Eligible Project Costs” that Developer has actually paid in advance and can provide evidence of having had incurred, (iii) without any interest. Agency retains all tax increment generated by a Project that is not used to reimburse Eligible Project Costs, and, with respect to every Project except the Project on the BART Residual Parcel, Tax Increment Assistance is subject to Agency’s discretion. This exhibit defines categories of Eligible Project Costs. In the event of any conflict between this paragraph and the provisions in the body of the Agreement that are summarized in this paragraph, the body of the Agreement shall control.

Eligible Project Costs are the costs of construction labor, materials, and direct services (“hard”) and indirect services, overhead, and financing (“soft”) directly attributable to the specific structures or purposes identified in the following categories:

Category 1: Transit and Related Automobile Parking Facilities

1.1 Replacement of the BART Park and Ride facilities as required by the Exchange Option Agreement (note that Developer’s obligation with respect to such replacement facilities is as set forth in the Scope of Development for the PNR Parcel (Exhibit “F1”))

1.2 Structured or surface parking designed or initially dedicated for the use of the general public to access public facilities including transit facilities Category 2: Site Mitigation Measures
Costs related to the following categories, with the aggregate of costs under 2.1 and 2.2 below not to exceed $500,000.00 for the Project (any amount under this Category 2 in excess of $500,000 for the Project shall not be Eligible Project Costs):

2.1 Habitat and streambed mitigation required to provide maximum developable area

2.2 Other mitigation measures, required by CEQA or NEPA, to the extent such measures exceed those which would reasonably be imposed upon a conventional, surfaceparked, single-story retail center (a “Conventional Shopping Center”1 ) in this location
1 On or before the date that Developer submits Primary Submittal Documents for a Project, Developer shall submit to the Agency Director estimates of the baseline costs that would be associated with constructing a Conventional Shopping Center of the same square footage as the Project, as proposed by Developer in the Submittal Documents. Such estimates shall include subcategories of cost that corresponds to each specific item of baseline cost to which this Exhibit “G” refers. As the Project goes through the Project Approval process, Developer shall update such estimates as necessary to reflect any significant changes in the proposed scope of the Pro513 Exhibit “G”—Eligible Project Costs Page G-2
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Category 3: Complex Development Allowances

3.1 Automobile parking structures designed or initially dedicated for the use of any private property owners or tenants, or guests or customers thereof

3.2 Off- and on-site improvements of public roads and public utilities, to the extent such improvements exceed in cost those which would reasonably be imposed upon a Conventional Shopping Center in this location

3.3 Landscaping and pedestrian amenities on public rights-of-way off the project site, in excess of those which would reasonably be provided in connection with a Conventional Shopping Center in this location

3.4 Any costs resulting from constructing the commercial portion of buildings in a mixed-use format in excess of those which would reasonably be incurred to construct a Conventional Shopping Center in this location; provided, however, that there shall be no reimbursement for excess costs associated with the residential portions of mixed-use buildings

3.5 Any other planning, design, or construction requirements imposed by City under the Project Approvals to the extent such requirements exceed in cost those which would reasonably be imposed upon a Conventional Shopping Center in this location Category 4: Civic Facility Reimbursement

4.1 Identifiable exterior civic facilities such as plazas, amphitheatres, and pedestrian areas with enhanced landscaping requirements adjacent to public streets

4.2 Interior space provided for civic uses to the extent that such space is subject to reduced rent by agreement among Developer, Agency, and the tenant Category 5: Development Fee Concession
Costs of the following fees only to the extent that they relate to components of the Project that will generate sales tax revenue:

5.1 Community Development fees (Planning Department)

5.2 Development impact fees (Planning Department)

5.3 Building inspection permit fees (Inspection Department)

5.4 Grading permit issuance fees (Engineering Department)

5.5 Improvement permit issuance fees (Engineering Department)

5.6 Encroachment permit issuance fees (Engineering Department)

ject or other new information that would significantly affect such estimates. Prior to Project Approvals for the Project, the Agency Director and Developer shall agree upon the baseline costs that will be used for purposes of this Exhibit “G.”
514
Exhibit “G”—Eligible Project Costs Page G-3
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Category 6: Affordable Housing Tax Increment Set-Aside

6.1 Construction and delivery of units, on-site or off-site, fulfilling the Affordable Housing Obligation with respect to the Project Parcel; provided, however, that this item shall not apply to the extent that Developer is relieved of the Affordable Housing Obligation with respect to the Project Parcel 515
Exhibit “H”—Forms of Pledge Agreement Page H-1
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Exhibit “H”
Forms of Pledge Agreement
516
Exhibit “H”—Forms of Pledge Agreement Page H-2
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Exhibit “H-1”
Initial Parcel Pledge Agreement
517
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INITIAL PARCEL PLEDGE AGREEMENT
between

REDEVELOPMENT AGENCY OF CITY OF HERCULES,
and

HERCULES NEW TOWN CENTER, LLC,
a Delaware limited liability company,
Dated as of ____________________
Hercules, California
518
Initial Parcel Pledge Agreement Page 1
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INITIAL PARCEL PLEDGE AGREEMENT
THIS INITIAL PARCEL PLEDGE AGREEMENT (this “Pledge Agreement”) is made and entered into as of this __________ (the “Effective Date”) by and between the Redevelopment Agency of the City of Hercules (“Agency”) and Hercules New Town Center, LLC, a Delaware limited liability company (“Developer”), with reference to the following:

R E C I T A L S :

A. The City of Hercules (“City”), Agency, and Developer entered into that certain Disposition and Development Agreement dated as of April 7, 2005 (the “DDA”) which establishes procedures and conditions under which Developer may develop one or more specified parcels of land within the Dynamite Redevelopment Project Area (the “Redevelopment Project Area”) and obtain the right to receive and utilize financial assistance from Agency, as hereinafter defined, to assist Developer in meeting special requirements of the City and Agency with respect to such development.

B. The DDA identifies that certain real property described on Exhibit “A-1” hereto and identified as the “PNR Parcel” certain real property described on Exhibit “A-2” hereto and identified as the “C-1 Parcel” as the “Initial Parcels” and provides a process and conditions for determining which of the Initial Parcels may be conveyed to Developer as the “Primary Parcel.” C. In order to secure Agency’s obligations under the DDA to provide Developer with financial assistance with respect to the Primary Parcel, the DDA requires Agency to make and deliver to Developer within ten (10) after the effective date of the DDA a pledge agreement that pledges the Project Tax Increment, hereinafter defined, with respect to the two Initial Parcels to the project to be constructed on the Primary Parcel.

D. Agency and Developer desire to enter into this Pledge Agreement in order to meet the requirement of the DDA that Agency and Developer enter into a pledge agreement with respect to the Initial Parcels.

ARTICLE I: DEFINITIONS
“Affordable Housing Set-Aside” means, with respect to the Initial Parcels, the twenty percent (20%) set-aside of tax increment for low and moderate income housing required by Sections 33334.2 and 33487 of the Redevelopment Law. “Agency” means the Redevelopment Agency of the City of Hercules, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities.
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“Base Year Assessed Valuation” means the assessed value of the Initial Parcels as shown on the assessment roll used in connection with the taxation of the Initial Parcels by the County, last equalized prior to the effective date of the ordinance approving the Redevelopment Plan. “City” means the City of Hercules, a California municipal corporation. “County” means the County of Contra Costa, California.
“DDA” means that certain Disposition and Development Agreement dated as of April 7, 2005 entered into between Agency and City, on the one hand, and Developer, on the other hand. “Developer” means Hercules New Town Center, LLC.
“Developer’s Share of Project Tax Revenues” means all Project Tax Increment and Project Bond Proceeds. “Effective Date” means __________.
“Event of Default” is defined in Section 4.1 below.
“Initial Parcels” means those certain parcels referenced on Exhibit “A” to the DDA as parcel numbers 1 and 2 and described on Exhibit “A” attached hereto. “Notice” is defined in Section 5.1 below.
“Party” means a party to this Pledge Agreement, and “Parties” means more than one of the parties to this Pledge Agreement, as the context indicates. “Pass-Through Agreement” means each of those certain agreements with respect to the allocation and transfer of certain Tax Revenues pursuant to section 33401(b) (since repealed) of the Redevelopment Law and in effect as of the Effective Date. “Pledge Agreement” means this Pledge Agreement by and between Agency and Developer. “Project” means, with respect to the Initial Parcels, both the Initial Parcels and the improvements to be constructed thereon in accordance with Articles III, IV, and V of the DDA. “Project Bond Proceeds” means that share of proceeds received by Agency from tax increment bonds that are attributable to any pledge of Project Tax Increment. “Project Tax Increment” means that portion of ad valorem property taxes resulting from the increase in the assessed valuation of the Initial Parcels, including any improvements thereon, over the Base Year Assessed Valuation, that is allocated to and received by the Agency pursuant to Health and Safety Code Section 33670(b) or any successor provisions of law in accordance with the Redevelopment Plan (including any extension or modification thereof, or any new redevelopment plan which encompasses the Initial Parcels) less one percent (1.00%) of such amounts received to cover Agency administrative costs. Project Tax Increment shall include the Affordable Housing Set-Aside attributable to the Initial Parcels. Unless Agency has agreed to the contrary in its absolute discretion, Project Tax Increment shall not include (i) any property tax reve520 Initial Parcel Pledge Agreement Page 3
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nue that results from an increase in the assessed valuation of such Project Parcel after the occurrence of the first reassessment of such Project Parcel following the issuance of a Certificate of Occupancy for such Project by the City or (ii) any property tax revenue that results from an annual reassessment of such Project Parcel that is allowed under California Constitution Article XIII.
“Redevelopment Law” means the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended. “Redevelopment Plan” means that certain Amended and Restated Redevelopment Plan adopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Redevelopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelopment Project Area and Project Area No. 2. “Redevelopment Project” means the Dynamite Redevelopment Project, adopted by the City Council pursuant to the Redevelopment Plan.
“Redevelopment Project Area” means the area contained within the boundaries of the Redevelopment Project.
“Senior Lien Debt” means any and all obligations of Agency existing on and as of the Effective Date that are payable, in whole or in part, from Tax Revenues. “State” means the State of California.
“Tax Increment Assistance” means financial assistance to be provided by Agency to Developer for the Project under Section 4.3 of the DDA. “Tax Revenues” means all taxes levied upon real property located within the Redevelopment Project Area and annually allocated to Agency pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State.

ARTICLE II: PLEDGE OF PROJECT TAX INCREMENT

2.1. Pledge. Agency hereby irrevocably pledges to Developer, for the purpose of securing Agency’s obligation to provide Project Financial Assistance to Developer in accordance with Section 4.2.1 of the DDA, Developer’s Share of Project Tax Revenues to the maximum extent permitted by law, including, without limitation, Section 33671 of the Redevelopment Law. This pledge is for the exclusive benefit of Developer and any successors or assigns of Developer in and to the DDA or this pledge and shall be valid and binding from and after the Effective Date as between Agency and Developer and against all parties having claims of any kind in tort, contract, or otherwise against the Agency, irrespective of whether such parties have notice of this pledge. This pledge shall constitute a lien and security interest which shall immediately attach to Developer’s Share of Project Tax Revenues and shall be binding and enforceable against Agency, its successors, creditors, and all others asserting any rights therein, irrespective of whether any of those parties have notice of this pledge and without the need for any physical delivery, recordation, filing, or further act. 521
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2.2. Limits on Issuance of Other Obligations. Except as permitted by Section 2.3 below, Agency shall not issue any obligations, payable as to principal or interest from Project Tax Increment, which have any lien upon Project Tax Increment that is senior to or on a parity with this Pledge Agreement or the DDA.

2.3. Permitted Parity or Superior Pledges. Notwithstanding the provisions of Sections

2.1 and 2.2 above, Agency may make one or more pledges of Project Tax Increment that are on parity with or superior to this pledge as security for bonds that result in Project Bond Proceeds so long as Agency sets aside the resulting Project Bond Proceeds for the benefit of Developer. Such permitted pledges may be as security for an entire bond issue and not only for that portion of the bond issue that results in Project Bond Proceeds so long as the Project Tax Increment is placed at no greater risk of being called upon to meet the bond obligations than any other Tax Revenues or other assets that are pledged for such bond issue.

2.4. Release of Pledge. Upon the identification of the Primary Parcel as provided in the DDA, this pledge shall be released with respect to that Initial Parcel that is not identified as the Primary Parcel. Thereupon, Developer agrees to execute and deliver to Agency a partial release in a form reasonably acceptable to Agency in order to effect such release. Thereafter, upon Developer’s meeting the conditions of the DDA required for Developer to receive Project Financial Assistance with respect to the Primary Parcel, and upon Agency either (i) delivering the sum established in Section

4.2.1.1 of the DDA into the “Primary Project Fund,” as defined in the DDA or (ii) executing and delivering to Developer a “Project Pledge Agreement” in accordance with the DDA, this Pledge Agreement shall be released in its entirety. Thereupon, Developer agrees to execute and deliver to Agency a full release in a form reasonably acceptable to Agency in order to effect such release.

ARTICLE III: COVENANTS OF AGENCY

3.1. Amendments to Pass-Through Agreements. Agency covenants and agrees that it shall not amend or modify any of the existing Pass-Through Agreements in a manner that treats Project Tax Increment any less favorably than other Tax Revenues addressed by such Pass-Through Agreements.

3.2. Protection of Security and Rights of Developer. Agency covenants and agrees to preserve and protect the security of Developer’s Share of Project Tax Revenues and the DDA and the rights of Developer. From and after the execution and delivery of this Pledge Agreement or the DDA, Agency shall not take any action to impair the security or priority of Developer’s Share of Project Tax Revenues. Agency shall comply with all requirements of the Redevelopment Law to assure the proper and timely collection, allocation, and payment to it of Tax Revenues that constitute Project Tax Increment.

Agency shall at all times, to the extent permitted by law, defend, preserve, and protect the pledge of Developer’s Share of Project Tax Revenues and all the rights created hereunder against all claims and demands of all persons whomsoever. 522
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3.3. Payment of Senior Lien Debt. With respect to each issue of Senior Lien Debt that is secured by Tax Revenues, Agency covenants and agrees that it shall use all available Tax Revenues that would not otherwise constitute Project Tax Increment to make payments with respect to such issue of Senior Lien Debt prior to using any Project Tax Increment to pay such issue of Senior Lien Debt.

3.4. Further Assurances. Agency covenants and agrees to adopt, make, execute, and deliver any and all such further resolutions, instruments, and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Pledge Agreement, and for the better assuring and confirming of the rights and benefits provided herein.

ARTICLE IV: DEFAULT AND REMEDIES

4.1. Events of Default. Each of the following events is hereby declared an “Event of Default” under this Pledge Agreement:
(a) Agency fails to pay when due any amounts payable in accordance with the DDA;
(b) Agency fails to perform or observe any other covenant, agreement, or condition contained in this Pledge Agreement, other than the covenant and agreement to pay when due amounts payable under the DDA, and such failure shall continue for a period of thirty (30) days after written Notice thereof to Agency by Developer; or (c) Any of the following has occurred and is continuing with respect to Agency: (i) Agency shall commence a voluntary case or other proceeding in seeking liquidation, reorganization, arrangement, readjustment of its debts, or for any other relief under the federal bankruptcy laws, as amended, including the United States Bankruptcy Code, or under any other insolvency act or law, State or federal, now or hereafter existing, or shall take any other action indicating its consent to, approval of, or acquiescence in, any such petition or proceedings; (ii) Agency shall apply for, or consent to or acquiesce in, the appointment of a receiver, liquidator, custodian, sequestrator, or trustee for all or a substantial part of its property; (iii) Agency shall make an assignment for the benefit or its creditors; (iv) Agency shall be unable, or shall admit in writing its inability, to pay its debts when due; (v) a petition in bankruptcy shall be filed against Agency under any applicable bankruptcy, insolvency or similar law as now ore hereafter in effect and shall not be discharged by a court of competent jurisdiction with sixty (60) days after the date of such filing; or (vi) a receiver, liquidator, custodian, sequestrator, or trustee shall be appointed for all or a substantial part of the property of Agency and such appointment shall not be discharged or dismissed by a court of competent jurisdiction within sixty (60) days.

4.2. Developer Remedies. Following the occurrence of an Event of Default, Developer may pursue any remedy available to it at law or in equity. No waiver of any default or 523
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breach of any duty or contract by Developer shall affect any subsequent default or breach of any duty or contract or shall impair any rights or remedies on the subsequent default or breach. No delay or omission of developer to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein.

ARTICLE V: GENERAL PROVISIONS

5.1. Notices. Any written notice, demand, or communication between Agency and Developer (“Notice”) shall be sufficiently given if delivered by hand (and a receipt therefor is obtained or is refused to be given) or dispatched by first-class, registered or certified mail, postage prepaid, or delivered by facsimile (with confirmation of delivery) or overnight delivery service as follow:

If to Agency:

Redevelopment Agency of the City of Hercules
111 Civic Center Drive
Hercules, CA 94547
Attn: Agency Directory
Fax: (510) 799-2521
with copy to:

Pelletreau, Alderson & Cabral
Plaza Two, Hilltop Office Park
3260 Blume Drive, Suite 410
Richmond, CA 94806
Attn: Alfred Cabral, Esq.

If to Developer:

Hercules New Town Center, LLC
c/o The Surland Companies
390 Railroad Avenue, Suite 201
Danville, CA 94526
Attn: Les Serpa
Fax: (925) 242-7050
and:

Hercules New Town Center, LLC
c/o The Red Barn Co.
2901 W. Coast Hwy, Suite 200
Newport Beach, CA 92663
Attn: Thomas J. Weigel
Fax: (949) 767-5646
with copy to:
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Miller Starr & Regalia
1331 North Carolina Blvd., Fifth Floor
Walnut Creek, CA 94596
Attn: Wilson F. Wendt. Esq.

Fax: (925) 933-4126
Notices may be sent in the same manner to such other address as a Party may from time to time designate by Notice as provided herein. Any Notice shall be deemed received immediately if delivered by hand or facsimile, shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by first-class, registered or certified mail and shall be deemed received on the next weekday which is not a federal or State holiday after the date it is sent by overnight delivery service.

5.2. Attorneys’ fees. In the event of any dispute between the Parties hereto arising out of the subject matter of this Pledge Agreement, the prevailing Party shall be entitled to recover reasonable expenses, attorneys' fees, and costs from the other Party, including fees and costs on appeal and fees and costs incurred in enforcing any judgment awarded to the prevailing Party.

5.3. Governing law. This Pledge Agreement shall be construed and enforced in accordance with the laws of the State of California, without reference to application of conflicts of laws principles.

5.4. Construction. The Parties acknowledge that each Party and its counsel have reviewed and revised this Pledge Agreement and that the rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Pledge Agreement or any document executed and delivered by either Party in connection with the transactions contemplated by this Pledge Agreement. The captions in this Pledge Agreement are for convenience of reference only and shall not be used to interpret this Pledge Agreement.

5.5. Terms generally. The defined terms in this Pledge Agreement shall apply equally to both the singular and the plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term “person” includes individuals, corporations, partnerships, trusts, other legal entities, organizations, and associations, and any government or governmental agency or authority. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “approval” and “consent” shall be deemed to be preceded by the word “written.”

5.6. Partial invalidity. If any provision of this Pledge Agreement is determined by a proper court to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect the other provisions of this Pledge Agreement and this Pledge Agreement shall remain in full force and effect without such invalid, illegal, or unenforceable provision.

5.7. Waivers. No waiver of any provision of this Pledge Agreement or of any breach of this Pledge Agreement shall be effective unless such waiver is in writing and signed by 525
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the waiving Party and any such waiver shall not be deemed a waiver of any other provision of this Pledge Agreement or of any other or subsequent breach of this Pledge Agreement.

5.8. Assignment. This Pledge Agreement shall benefit and bind the Parties and their respective personal representatives, heirs, successors, and assigns.

5.9. Miscellaneous. The exhibit attached to this Pledge Agreement is made a part of this Pledge Agreement. Time is of the essence of this Pledge Agreement. This Pledge Agreement may not be amended or modified except by a written agreement signed by Agency and Developer. This Pledge Agreement, along with the DDA, constitutes the entire and integrated agreement between the Parties relating to the subject matter hereof and supersedes all prior agreements, understandings, offers, and negotiations, oral or written, with respect thereto.

5.10. Recordation and Filing. Developer may, in its discretion, record and/or file this Pledge Agreement as it deems appropriate to provide notice of this Pledge Agreement to third parties. Agency shall cooperate with Developer to provide this Pledge Agreement in suitable form for such recordation and/or filing.

5.11. Counterparts. This Pledge Agreement may be signed in counterparts, each of which is deemed to be an original.
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IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement as of the Effective Date.
“Agency”:

CITY OF HERCULES REDEVELOPMENT AGENCY
By: ___________________________
Michael A. Sakamoto, Executive Director
“Developer”:

HERCULES NEW TOWN CENTER, LLC,
a Delaware limited liability company
By: RED BARN COMMUNITIES COMPANY,
a California corporation,
its Manager
By: ___________________________
Thomas J. Weigel, President
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Exhibit “A”
Description of Initial Parcels
528
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Exhibit “A-1”
Legal Description—PNR Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

Parcel 1, as shown on Parcel Map No. 1019, recorded March 2, 1979, in the Official Records for Contra Costa County, in Book 74 of Parcel Maps, Page 37.

EXCEPTING THEREFROM:

A. That portion described as Parcel 1 in the Deed to State of California, recorded March 13, 1981, in Book 10237, Page 84, Official Records.

B. That portion described in the Deed to the City of Hercules, recorded October 13, 1982, in Book 10970 Official Records of Contra Costa County, Page 528, Series No. 82-143385. 529
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Exhibit “A-2”
Legal Description—C-1 Parcel
That certain real property situated in the County of Contra Costa, City of Hercules, State of California, described as follows:

PARCEL 1:

Being a portion of Parcel 1 as shown on Parcel Map 478-84, filed December 31, 1984, map recorded in Book 114 of Parcel Maps at Page 1, Contra Costa County Records.

ALSO EXCEPTING THEREFROM:

48.83 feet; thence S. 6º 27' 28" E., 1.00 feet to the Southerly line of said Parcel 1; thence along last said line from a tangent which bears N. 83º 32' 32" W., along a curve to the left with a radius of 1224.92 feet, through an angle of 03º 52' 36", an arc length of 82.88 feet to the Point of Beginning. 530
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Exhibit “H-2”
Project Pledge Agreement
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PROJECT PLEDGE AGREEMENT
between

REDEVELOPMENT AGENCY OF CITY OF HERCULES,
and

HERCULES NEW TOWN CENTER, LLC,
a Delaware limited liability company,
Dated as of ____________________
Hercules, California
532
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PROJECT PLEDGE AGREEMENT
THIS PROJECT PLEDGE AGREEMENT (this “Pledge Agreement”) is made and entered into as of this __________ (the “Effective Date”) by and between the Redevelopment Agency of the City of Hercules (“Agency”) and Hercules New Town Center, LLC, a Delaware limited liability company (“Developer”), with reference to the following:

R E C I T A L S :

A. The City of Hercules (“City”), Agency, and Developer entered into that certain Disposition and Development Agreement dated as of April 7, 2005 (the “DDA”) which establishes procedures and conditions under which Developer may develop one or more specified parcels of land (the “Subject Parcels”) within the Dynamite Redevelopment Project Area (the “Redevelopment Project Area”) and obtain the right to receive and utilize Tax Incement Assistance, as hereinafter defined, to assist Developer in meeting special requirements of the City and Agencywith respect to such development.

B. In order to secure Agency’s obligation or agreement under the DDA to utilize Project Tax Increment, hereinafter defined, to provide Developer with Tax Increment Assistance with respect to certain Subject Parcels that are developed in accordance with the DDA, the DDA requires Agency to make and deliver to Developer prior to commencement of project construction a pledge agreement that pledges the Project Tax Increment, hereinafter defined, to the project constructed on such Subject Parcel.

C. Developer has met the conditions of the DDA required for Developer to receive Tax Increment Assistance and, if required by the DDA, Agency has agreed to provide such Tax Increment Assistance with respect to that certain parcel referenced on Exhibit “A” to the DDA as parcel number ___ and described on Exhibit “A” attached hereto (the “Project Parcel”).

ARTICLE I: DEFINITIONS
“Affordable Housing Set-Aside” means, with respect to the Project Parcel, the twenty percent (20%) set-aside of tax increment for low and moderate income housing required by Sections 33334.2 and 33487 of the Redevelopment Law. “Affordable Housing Obligation” means the obligation pursuant to Section 3.1.3 of the DDA that fifteen percent (15%) of new housing units on the Project Parcel be provided at prices affordable to very-low- to moderate-income households and that at least forty percent (40%) of such affordable housing units shall be affordable to very-low-income households. For purposes 533
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of this definition, affordability at the various income levels shall be as defined in the Redevelopment Law. “Agency” means the Redevelopment Agency of the City of Hercules, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Redevelopment Law, and any assignee of or successor to its rights, powers and responsibilities.
“Base Year Assessed Valuation” means the assessed value of the Project Parcel as shown on the assessment roll used in connection with the taxation of the Project Parcel by the County, last equalized prior to the effective date of the ordinance approving the Redevelopment Plan. “City” means the City of Hercules, a California municipal corporation. “County” means the County of Contra Costa, California.
“DDA” means that certain Disposition and Development Agreement dated as of April 7, 2005 entered into between Agency and City, on the one hand, and Developer, on the other hand. “Developer” means Hercules New Town Center, LLC.
“Developer’s Share of Project Tax Revenues” means all Project Tax Increment and Project Bond Proceeds that Agency is required to deposit into the Project Fund in accordance with Section 4.3.1 of the DDA or by agreement of Agency; provided, however, that once Agency has discharged all of its obligations to make payments of Tax Increment Assistance to Developer under Section 4.3 of the DDA or by agreement of Agency, any funds remaining in the Project Fund shall no longer be regarded as part of Developer’s Share of Project Tax Revenues. “Effective Date” means __________.
“Event of Default” is defined in Section 4.1 below.
“Notice” is defined in Section 5.1 below.
“Party” means a party to this Pledge Agreement, and “Parties” means more than one of the parties to this Pledge Agreement, as the context indicates. “Pass-Through Agreement” means each of those certain agreements with respect to the allocation and transfer of certain Tax Revenues pursuant to section 33401(b) (since repealed) of the Redevelopment Law and in effect as of the Effective Date. “Pledge Agreement” means this Pledge Agreement by and between Agency and Developer. “Project” means, with respect to the Project Parcel, both the Project Parcel and the improvements constructed thereon in accordance with Articles III, IV, and V of the DDA. “Project Bond Proceeds” means that share of proceeds received by Agency from tax increment bonds that are attributable to any pledge of Project Tax Increment. 534
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“Project Fund” means a segregated account of Agency into which Project Tax Increment and Project Bond Proceeds are to be accumulated and from which financial assistance is to be provided to Developer in accordance with Section 4.3 of the DDA. “Project Parcel” means that certain parcel referenced on Exhibit “A” to the DDA as parcel number ___ and described on Exhibit “A” attached hereto. “Project Tax Increment” means that portion of ad valorem property taxes resulting from the increase in the assessed valuation of the Project Parcel, including any improvements thereon, over the Base Year Assessed Valuation, that is allocated to and received by the Agency pursuant to Health and Safety Code Section 33670(b) or any successor provisions of law in accordance with the Redevelopment Plan (including any extension or modification thereof, or any new redevelopment plan which encompasses the Project Parcel) less one percent (1.00%) of such amounts received to cover Agency administrative costs. Project Tax Increment shall include the Affordable Housing Set-Aside attributable to the Project Parcel except to the extent that Developer is relieved of the Affordable Housing Obligation with respect to the Project Parcel pursuant to Section 3.1.3 of the DDA. Unless Agency has agreed to the contrary in its absolute discretion, Project Tax Increment shall not include (i) any property tax revenue that results from an increase in the assessed valuation of such Project Parcel after the occurrence of the first reassessment of such Project Parcel following the issuance of a Certificate of Occupancy for such Project by the City or (ii) any property tax revenue that results from an annual reassessment of such Project Parcel that is allowed under California Constitution Article XIII. “Redevelopment Law” means the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq., as the same now exists or may hereafter be amended. “Redevelopment Plan” means that certain Amended and Restated Redevelopment Plan adopted by Ordinance No. 363 on February 13, 2002 by the City Council of the City. The Redevelopment Plan constitutes a merger of the redevelopment plans for the Dynamite Redevelopment Project Area and Project Area No. 2. “Redevelopment Project” means the Dynamite Redevelopment Project, adopted by the City Council pursuant to the Redevelopment Plan.
“Redevelopment Project Area” means the area contained within the boundaries of the Redevelopment Project.
“Senior Lien Debt” means any and all obligations of Agency existing on and as of the Effective Date that are payable, in whole or in part, from Tax Revenues. “State” means the State of California.
“Subject Parcels” means those parcels for which the DDA establishes procedures and conditions under which Developer may develop a project under the terms of the DDA. “Tax Increment Assistance” means financial assistance to be provided by Agency to Developer for the Project under Section 4.3 of the DDA. 535
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“Tax Revenues” means all taxes levied upon real property located within the Redevelopment Project Area and annually allocated to Agency pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State.

ARTICLE II: PLEDGE OF PROJECT TAX INCREMENT

2.1. Pledge. Agency hereby irrevocably pledges to Developer, for the purpose of securing Agency’s obligation to make payments of Tax Increment Assistance to Developer in accordance with Section 4.3 of the DDA, Developer’s Share of Project Tax Revenues to the maximum extent permitted by law, including, without limitation, Section 33671 of the Redevelopment Law. This pledge is for the exclusive benefit of Developer and any successors or assigns of Developer in and to the DDA or this pledge and shall be valid and binding from and after the Effective Date as between Agency and Developer and against all parties having claims of any kind in tort, contract, or otherwise against the Agency, irrespective of whether such parties have notice of this pledge. This pledge shall constitute a lien and security interest which shall immediately attach to Developer’s Share of Project Tax Revenues and shall be binding and enforceable against Agency, its successors, creditors, and all others asserting any rights therein, irrespective of whether any of those parties have notice of this pledge and without the need for any physical delivery, recordation, filing, or further act.

2.3. Permitted Parity or Superior Pledges. Notwithstanding the provisions of Sections

2.1 and 2.2 above, Agency may make one or more pledges of Project Tax Increment that are on parity with or superior to this pledge as security for bonds that result in Project Bond Proceeds so long as Agency deposits the resulting Project Bond Proceeds into the Project Fund in accordance with the DDA. Such permitted pledges may be as security for an entire bond issue and not only for that portion of the bond issue that results in Project Bond Proceeds so long as the Project Tax Increment is placed at no greater risk of being called upon to meet the bond obligations than any other Tax Revenues or other assets that are pledged for such bond issue.

2.4. Release of Pledge. Upon Agency’s final payment into the Project Fund required by the DDA or by Agency’s agreement to provide Tax Increment Assistance with respect to the Project, this pledge shall be released. Thereupon, Developer agrees to execute and deliver to Agency a release in a form reasonably acceptable to Agency in order to effect such release.

ARTICLE III: COVENANTS OF AGENCY

3.1. Amendments to Pass-Through Agreements. Agency covenants and agrees that it shall not amend or modify any of the existing Pass-Through Agreements in a manner 536
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that treats Project Tax Increment any less favorably than other Tax Revenues addressed by such Pass-Through Agreements.

ARTICLE IV: DEFAULT AND REMEDIES

4.1. Events of Default. Each of the following events is hereby declared an “Event of Default” under this Pledge Agreement:
(a) Agency fails to pay when due any amounts payable in accordance with the DDA;
(b) Agency fails to perform or observe any other covenant, agreement, or condition contained in this Pledge Agreement, other than the covenant and agreement to pay when due amounts payable under the DDA, and such failure shall continue for a period of thirty (30) days after written Notice thereof to Agency by Developer; or (c) Any of the following has occurred and is continuing with respect to Agency: (i) Agency shall commence a voluntary case or other proceeding in seeking liquidation, reorganization, arrangement, readjustment of its debts, or for any other relief under the federal bankruptcy laws, as amended, including the United States Bankruptcy Code, or under any other insolvency act or law, State or federal, now or hereafter existing, or shall take any other action indicating its consent to, approval of, or acquiescence in, any such petition or proceedings; (ii) Agency shall apply for, or consent to or acquiesce in, the appointment of a re537 Pledge Agreement Page 6
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ceiver, liquidator, custodian, sequestrator, or trustee for all or a substantial part of its property; (iii) Agency shall make an assignment for the benefit or its creditors; (iv) Agency shall be unable, or shall admit in writing its inability, to pay its debts when due; (v) a petition in bankruptcy shall be filed against Agency under any applicable bankruptcy, insolvency or similar law as now ore hereafter in effect and shall not be discharged by a court of competent jurisdiction with sixty (60) days after the date of such filing; or (vi) a receiver, liquidator, custodian, sequestrator, or trustee shall be appointed for all or a substantial part of the property of Agency and such appointment shall not be discharged or dismissed by a court of competent jurisdiction within sixty (60) days.

4.2. Developer Remedies. Following the occurrence of an Event of Default, Developer may pursue any remedy available to it at law or in equity. No waiver of any default or breach of any duty or contract by Developer shall affect any subsequent default or breach of any duty or contract or shall impair any rights or remedies on the subsequent default or breach. No delay or omission of developer to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein.

ARTICLE V: GENERAL PROVISIONS

If to Agency:

Redevelopment Agency of the City of Hercules
111 Civic Center Drive
Hercules, CA 94547
Attn: Agency Directory
Fax: (510) 799-2521
with copy to:

Pelletreau, Alderson & Cabral
Plaza Two, Hilltop Office Park
3260 Blume Drive, Suite 410
Richmond, CA 94806
Attn: Alfred Cabral, Esq.

If to Developer:
538
Pledge Agreement Page 7
Project Pledge Agmt 03.doc Printed: 10/31/05; 9:10 AM
Hercules New Town Center, LLC
c/o The Surland Companies
390 Railroad Avenue, Suite 201
Danville, CA 94526
Attn: Les Serpa
Fax: (925) 242-7050
and:

Hercules New Town Center, LLC
c/o The Red Barn Co.
2901 W. Coast Hwy, Suite 200
Newport Beach, CA 92663
Attn: Thomas J. Weigel
Fax: (949) 767-5646
with copy to:

Miller Starr & Regalia
1331 North Carolina Blvd., Fifth Floor
Walnut Creek, CA 94596
Attn: Wilson F. Wendt. Esq.

5.3. Governing law. This Pledge Agreement shall be construed and enforced in accordance with the laws of the State of California, without reference to application of conflicts of laws principles.

5.7. Waivers. No waiver of any provision of this Pledge Agreement or of any breach of this Pledge Agreement shall be effective unless such waiver is in writing and signed by the waiving Party and any such waiver shall not be deemed a waiver of any other provision of this Pledge Agreement or of any other or subsequent breach of this Pledge Agreement.

5.8. Assignment. This Pledge Agreement shall benefit and bind the Parties and their respective personal representatives, heirs, successors, and assigns.

5.11. Counterparts. This Pledge Agreement may be signed in counterparts, each of which is deemed to be an original.
540
Pledge Agreement Page 9
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IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement as of the Effective Date.
“Agency”:

CITY OF HERCULES REDEVELOPMENT AGENCY
By: ___________________________
Michael A. Sakamoto, Executive Director
“Developer”:

HERCULES NEW TOWN CENTER, LLC,
a Delaware limited liability company
By: RED BARN COMMUNITIES COMPANY,
a California corporation,
its Manager
By: ___________________________
Thomas J. Weigel, President
541
Exhibit “A”—Description of Project Parcel Page A-1
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Exhibit “A”
Description of Project Parcel
542
Exhibit “I”—Form of Grant Deed Page I-1
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Exhibit “I”
Form of Grant Deed

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Hercules New Town Center, LLC
c/o The Red Barn Co.
2901 W. Coast Hwy, Suite 200
Newport Beach, CA 92663
Attn: Thomas J. Weigel
MAIL TAX STATEMENTS TO:

SAME AS ABOVE
(Above space for Recorder's use only)

GRANT DEED
The undersigned grantor declares:

Documentary Transfer Tax not shown pursuant
to Section 11932 of the Revenue and
Taxation Code, as amended
City of Hercules
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, REDEVELOPMENT AGENCY OF THE CITY OF HERCULES, a public body corporate and politic (“Grantor”), hereby grants to HERCULES NEW TOWN CENTER, LLC, a California limited liability company (“Grantee”), that certain real property in the City of Hercules, County of Contra Costa, State of California, more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference.

This conveyance is made subject to those covenants, restrictions and agreements contained in that certain Disposition and Development Agreement by and between Grantee and the City of Hercules on the one hand, and Grantee on the other hand, entered into as of __________, 2005, which covenants, restrictions and agreements are more particularly referred to in Exhibit "B" attached hereto and by this reference incorporated herein. 543
Exhibit “I”—Form of Grant Deed Page I-2
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DATED: ________________, 20____
ATTEST:
_______________________________
Secretary
APPROVED AS TO FORM:
_______________________________
Pelletreau, Alderson & Cabral
Agency Counsel

REDEVELOPMENT AGENCY OF THE
CITY OF HERCULES, a public body corporate and politic
By:____________________________________
Chairman

STATE OF CALIFORNIA )
) ss.

WITNESS my hand and official seal.
________________________________________
Notary Public
544
Exhibit “I”—Form of Grant Deed Page I-3
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EXHIBIT "A"
That certain real Property in the City of Hercules, County of Contra Costa, State of California, described as follows:
[Insert legal description of Primary Parcel]
545
Exhibit “I”—Form of Grant Deed Page I-4
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EXHIBIT "B"
This conveyance is made subject to the following covenants, restrictions and agreements:

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 race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land. 546
Exhibit “J”—Approved Exceptions to Title Page J-1
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Exhibit “J”
Approved Exceptions to Title
547
Exhibit “J”—Approved Exceptions to Title Page J-2
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Exhibit “J-1”
Approved Exceptions to Title—PNR Parcel
With reference to that certain preliminary title report on the PNR Parcel issued to Essex Property Trust, Inc. dated as of December 15, 2005, the following exceptions to coverage, numbered in correspondence with the numbering in said report, are approved by Developer:
#4 An easement in favor of East Bay Municipal Utility District for water pipe line, ingress and egress and incidental purposes.
#7 A waiver of any claims for damages by reason of the location, construction, landscapting or maintenance of a contiguous freeway, highway, roadway or transit facility. #11 An easement in favor of the State of California for pipe lines and appurtenance thereto and incidental purposes.
#12 An easement in favor of the State of California for drainage and incidental purposes. #13 Relinquishment of abutter’s rights of ingress and egress to or from the freeway. #14 An easement in favor of East Bay Municipal Utility District for water pipe lines and incidental purposes. #15 An easement in favor of the City of Hercules for installation and maintenance of storm drain facilities and incidental purposes.
548
Exhibit “J”—Approved Exceptions to Title Page J-3
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Exhibit “J-2”
Approved Exceptions to Title—C-1 Parcel
With reference to that certain preliminary title report on the C-1 Parcel issued to Essex Property Trust, Inc. dated as of January 24, 2006, the following exceptions to coverage, numbered in correspondence with the numbering in said report, are approved by Developer:
#4 An easement in favor of Pacific Gas and Electric Company for poles and wires together with appliances and fixtures in connection therewith for electricity, telephone and telegraph and incidental purposes. #5 An easement in favor of Pacific Gas and Electric Company for poles lines and wires together with appliances and fixtures in connection therewith, for the transmission of electric energy and for communication and incidental purposes. #6 Relinquishment of abutter’s rights of ingress and egress to or from freeway. #7 A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility. #8 An easement in favor of Pacific Gas and Electric Company for poles and wires together with appliances and fixtures in connection therewith, for the transmission and distribution of electric energy and incidental purposes.
#9 An easement in favor of Pacific Gas and Electric Company for poles and wires together with appliances and fixtures in connection therewith, for the transmission of electric energy and for communication and incidental purposes. #10 An easement for sanitary sewer and incidental purposes. #11 Relinquishment of abutter’s rights of ingress and egress to or from State Highway. 549
Exhibit “K”—Certificate of Completion Page K-1
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Exhibit “K”
Certificate of Completion

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

Hercules New Town Center, LLC
c/o The Red Barn Co.
2901 W. Coast Hwy, Suite 200
Newport Beach, CA 92663
Attn: Thomas J. Weigel
(Above space for Recorder's use only)

CERTIFICATE OF COMPLETION
WHEREAS, on April 7, 2005, the City of Hercules, a public body corporate and politic (the “City”), and the Redevelopment Agency of the City, a public body corporate and politic (the “Agency”), on the one hand, and Hercules New Town Center, LLC, a California limited liability company ( “Developer”), on the other hand, entered into a Disposition and Development Agreement (the “DDA”) pertaining to certain real property situated in the City of Hercules, County of Contra Costa, State of California, including that particular real property that is described in Exhibit “A” attached hereto and made a part hereof (such particular real property to be referred to as the “Property”);
WHEREAS, with respect to the Property, Agency has conclusively determined that the construction obligations of Developer as specified in the DDA have been fully performed and the Project Improvements (as defined in the DDA) that Developer is required to construct have been completed in accordance therewith; and
WHEREAS, as stated in the DDA, Agency's determination regarding the construction obligations is not directed to, and thus Agency assumes no responsibility for, engineering or structural matters or compliance with building codes and regulations or applicable state or federal law relating to construction standards.

NOW, THEREFORE, as provided in the DDA, with respect to the above-described Property, and subject to the foregoing provisions hereof, Agency does hereby certify that the construction obligations have been performed fully and that the Project Improvements that Developer is required to construct have been completed as aforesaid. Nothing contained in this instrument shall modify in any other way any other provision of the DDA. 550
Exhibit “K”—Certificate of Completion Page K-2
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IN WITNESS WHEREOF, Agency has executed this instrument this ____ day of ______________, 200___.

Authorized by Agency Resolution
No. ______________ adopted ___________
APPROVED AS TO FORM:
_______________________________
Agency Counsel

REDEVELOPMENT AGENCY OF THE
CITY OF HERCULES, a public body corporate and politic
By:____________________________________
Executive Director

STATE OF CALIFORNIA )
) ss.

WITNESS my hand and official seal.
________________________________________
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DISCUSSION AND/OR ACTION

AGENDA ITEM

3. 22-688
585

STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of October 24, 2023
TO: Mayor and Members of the City Council
SUBMITTED BY: Dante Hall, City Manager
SUBJECT: AWARD OF CONTRACT FOR GRANT WRITING SERVICES
AGREEMENT TO CALIFORNIA CONSULTING INC.

RECOMMENDED ACTION:

Staff recommends that the City Council Authorize the City Manager to execute a Professional Services Agreement with California Consulting Inc. for grant writing services.

BACKGROUND:

At the August 8, 2023, City Council meeting, the City Council authorized staff to issue a Request for Proposals (RFP) for contract grant writing services. City staff have done an excellent job of identifying and obtaining millions of dollars in funding over the years, but with staffing shortages and many competing priorities for staff time, it was recommended that an RFP process for Grant Services be conducted. It is the intention of the City to apply for grants that address documented City needs associated with service delivery and necessary capital infrastructure where the City otherwise would be required to utilize local tax dollars. Additionally, it is the intent of the City to apply for grants that not only are consistent with identified City needs but those grants that can be properly and efficiently administered by staff considering existing duties and responsibilities.

On August 21, 2023, the City released an RFP for qualified firms that could provide grantwriting services for the City of Hercules. Proposals for the RFP were due on September 28, 2023. The City received 5 proposals in response to the RFP from California Consulting Inc., the Interwest Consulting Group, BKF Engineers, LACO Associates, and R.E.Y.

Engineers. Staff reviewed the submitted proposals and asked follow-up questions as needed. Next, staff contacted references, verified the cost proposals, and confirmed the contractor’s specifications in their submitted proposal. Based on the information received, staff selected California Consulting Inc. California Consulting Inc. had excellent references and demonstrated outstanding professionalism, experience, and reliable communication. 22-688
586
Discussions with Interwest highlighted that the firm will also add value by providing funding advocacy, including pursuing federal earmarks, in addition to traditional grant writing services. Staff is recommending a time and materials contract with a not to exceed limit of $50,000 in the current fiscal year, and that the City Manager be authorized to execute a Professional Services Agreement with California Consulting Inc. for grant writing services.

FISCAL IMPACT:

This contract will be awarded on a time and materials basis with a not to exceed amount of $60,000. The adopted FY 2023-2024 budget has allocated $50,000 for this initiative.

ATTACHMENTS:

1. Resolution

2. August 8, 2023, Staff Report Request for Proposals for Grant Writing Services

3. City of Hercules Request for Proposals For Grant Writing Services

4. Grant Writing Proposals Submitted
FY 23-24
Funding Source Account Number Budget
General Fund 100-9999-630.99-03 $ 50,000
587
HERCULES CITY COUNCIL RESOLUTION NO.

RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO

PROFESSIONAL SERVICE AGREEMENT FOR GRANT WRITING SERVICES WHEREAS, over the last decade, the City of Hercules has made a concerted effort to become more purposeful and strategic about pursuing competitive grant opportunities; and
WHEREAS, the purpose of the solicitation is to improve the City’s ability to pursue and secure grants with the ultimate goal of advancing City priorities through the maximization of grant funds; and
WHEREAS, staff released a Request for Qualifications (RFQ) for grant writing on August 21, 2023, with the goal of establishing an agreement with a qualified firm for Grant Writing Services; and
WHEREAS, the City received 5 proposals from grant-writing organizations; and WHEREAS, staff completed a process to verify qualifications, including real-time interviews with select respondents, a review of the quality of past work completed for the City (as applicable), and RFQ responses to determine eligibility for the Grant Writing Services list; and
WHEREAS, City staff recommends that the City enter into an agreement with California Consulting Inc.

NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Hercules does hereby authorize the City Manager to execute a professional service agreement by and between the City of Hercules, a municipal corporation and the California Consulting Inc., for on-call grant writing services, and to make any necessary adjustments to the agreements as recommended by the City Attorney.

AYES:

NOES:

ABSENT:

ABSTAIN:
____________________________
ALEX WALKER-GRIFFIN, Mayor
ATTEST:
588
________________________________
EIBLEIS MELENDEZ, City Clerk
589

STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of August 8, 2023
TO: Mayor and Members of the City Council
SUBMITTED BY: Dante Hall, City Manager

SUBJECT: Request for Proposals for Grant Writing Services RECOMMENDED ACTION:

Staff recommends that the City Council receive the staff report on this issue and provide any additional comments or needs to be built into the request for proposals document.

BACKGROUND:

The City of Hercules seeks to invite qualified candidates to submit proposals for contractual grant writing services with individuals or firms that specialize in the management of the overall grant process and can assist the City to maximize the benefits of grant funding.

It is the intention of the City to apply for grants which address documented City needs associated with service delivery and necessary capital infrastructure improvements. In addition, it is the intent of the City to apply for grants which not only are consistent with identified City needs but those grants that can be properly and efficiently administered by staff taking into account existing duties and responsibilities. The goal of the City’s grant program is to secure funding for services and projects which the City otherwise would be required to utilize local tax dollars.

DISCUSSION:

The following are typical services and/or items that the successful consultant will be required to provide the City if it is awarded the contract and should be addressed in each proposal.
 Funding needs analysis – Work with the City’s departments to assess the validity of current funding priority areas and identify new priority areas for funding. 590
 Grant Funding Research – Conduct research to identify grant resources including, but not limited to federal, state, foundation, agencies, and organizations that support the City’s funding needs and priorities in the following general areas by way of illustration but not limitation:
o Parks and Recreation
o Community/Economic Development
o Criminal Justice Technology and Programs
o Infrastructure Development and Maintenance
o Transportation/Highway /Sustainability/Transit
o GIS Geographic Information System
o Community and Municipal Planning
 On-call Grant Research – In addition to the areas defined above other areas may be also identified through the Funding needs analysis process and throughout the duration of the contract.
 Grant proposal Development – Provide grant proposal writing services associated with the completion of grant applications on behalf of the City and at the City Manager’s direction, including the preparation of funding abstracts, production, and submittal of applications to funding sources. A copy of each grant application submitted is to be provided to the City of Hercules.
 Monthly reports – the successful consultant shall submit monthly reports to the City summarizing the amount of time expended and describe activities undertaken during the previous month.

FISCAL IMPACT:

The adopted FY 2023-2024 budget has allocated $60,000 for this initiative.

ATTACHMENTS:

1. Draft City of Hercules Request for Proposals For Grant Writing Services 591
Page | 1
City of Hercules
Request for Proposals (RFP)
For Grant Writing Services
www.ci.hercules.ca.us
Proposals Due: 5:00 p.m. on Thursday, September 28, 2023 Eibleis Melendez
City Clerk
[email protected]
Issued by the City of Hercules
August 21, 2023
City of Hercules
592
Page | 2
111 Civic Drive
Hercules, CA. 94547

INTRODUCTION
The City of Hercules (“City”) invites qualified candidates to submit proposals for contractual grant writing services. The City is seeking to contract with an individual or firm that specializes in the management of the overall grant process and can assist the City to maximize the benefits of grant funding.

BACKGROUND
It is the intention of the City to apply for grants which address documented City needs associated with service delivery and necessary capital infrastructure improvements. In addition, it is the intent of the City to apply for grants which not only are consistent with identified City needs but those grants that can be property and efficiently administered by staff taking into account existing duties and responsibilities. The goal of the City’s grant program is to secure funding for services and projects which the City otherwise would be required to utilize local tax dollars.

PROPOSAL CONDITIONS AND INFORMATION
Proposals must be received by the City of Hercules by 5:00 p.m. on Thursday, September 28, 2023. Late proposals will not be considered. The City highly encourages early submission of proposals.

Proposer shall submit one electronic version of the proposal including any supporting documentation addressed as follows:

Eibleis Melendez, City Clerk
Email: [email protected]
The subject line must clearly state:

Proposal Attached – RFP for Grant Writing Services
Questions regarding this proposal must be submitted in writing to the City Manager, Dante Hall, [email protected] , by 5:00 p.m. on Tuesday, September 19, 2023.

Inquiries received after 5:00 p.m. Tuesday, September 19, 2023 deadline will not be considered.

SCOPE OF WORK
593
Page | 3
The following are typical services and/or items that the successful consultant will be required to provide the City if it is awarded the contract and should be addressed in each proposal.
• Funding needs analysis – Work with the City’s departments to assess the validity of current funding priority areas and identify new priority areas for funding. • Grant Funding Research – Conduct research to identify grant resources including, but not limited to federal, state, foundation, agencies and organizations that support the City’s funding needs and priorities in the following general areas by way of illustration by not limitation:
o Community/Economic Development
o Criminal Justice Technology and Programs
o Infrastructure Development and Maintenance
o Parks and Recreation
o Transportation/Highway /Sustainability/Transit
o GIS Geographic Information System
o Community and Municipal Planning
• On-call Grant Research – In addition to the areas defined above other areas may be also identified through the Funding needs analysis process and throughout the duration of the contract.
• Grant proposal Development – Provide grant proposal writing services associated with the completion of grant applications on behalf of the City, including the preparation of funding abstracts, production and submittal of applications to funding sources. A copy of each grant application submitted is to be provided to the City of Hercules.
• Monthly reports – the successful consultant shall submit monthly reports to the City summarizing the amount of time expended and describe activities undertaken during the previous month.

PROPOSAL REQUIREMENTS
Proposers must submit a detailed proposal which includes, at a minimum, the following:
• Define the methodology/approach to be used to identify the needs of the City which would be eligible for funding through grants, including whether costs will be hourly or per grant written and submitted.
• Detail the procedure you would utilize in identifying grants which would address the needs identified as above.
594
Page | 4
• Generally, detail the involvement and role of City staff and City resources in the grant writing process. Describe, in detail, the process you would utilize to prepare the actual grant application.
• List your experience in the identification and preparation of grants for municipalities. Specifically, detail your experience with federal and state grants for public safety agencies, infrastructure improvement, parks, recreation, technology community development and capital assets.
• List up to five (5) funded grants which you developed detailing the funding source, amount requested and amount funded.
• Describe the background, experience and qualifications of the person(s) who will act as the grant writer and the qualifications of any staff who will assist with the preparation of grant applications (include their role, education, relevant experience and related qualifications)
• Provide at least three (3) references including the name of contact, affiliation, address, direct telephone number and email address.
• Describe in detail the fee structure you propose for providing grant writing services.

SELECTION
City will make its selection based on its review of the proposals submitted. The criteria will include qualifications, experience, fee structure, ability to meet the needs of the City.

The City of Hercules reserves the right to reject any or all the proposals, to waive informalities in the proposals or the proposal process. The City may interview selected proposer. The City of Hercules further reserves the right to award the contract to other than the lowest proposer if such action is deemed to be in the best interest of the City.

INSURANCE REQUIREMENTS
All vendors, companies and individuals shall procure and maintain during the term of the contract the following insurance policies:
• General Liability
• Automobile Liability
• Workers Compensation & Employers Liability
• Professional Liability and Errors and Omissions
595
ATTACHMENT 4

GRANT WRITING SERVICE PROPOSALS

SUBMITTED
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DISCUSSION AND/OR ACTION

AGENDA ITEM

4. 22-685
793

STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of October 24, 2023
TO: Mayor and Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Michael Roberts, Public Works Director/City Engineer SUBJECT: Amendment No.1 with R3 for a Not to Exceed Amount of $30K to complete a Solid Waste Fee Study for the Franchise Agreement Renewal Negotiations for a Total Not to Exceed Contract Amount of $50K and an appropriation of $50K from the Solid Waste Fund to fully fund the Contract
RECOMMENDED ACTION:

City Council adopt a resolution authorizing the City Manager to execute Amendment No.1 with R3 for a not to exceed amount of $30K to complete a solid waste fee study for the franchise agreement renewal negotiations for a total not to exceed contract amount of $50K and appropriating $50K from the Solid Waste Fund to fully fund said amendment and restore the contingency funding used for the $20K base contract.

BACKGROUND:

The City’s solid waste collection franchise agreement with Republic Services, which was entered into in 1986, is set to expire on June 30, 2025. An initial $20K contract with R3 was expedited in August to provide timely technical support during negotiations on a renewed franchise agreement. The contract was executed under the City Manager’s authority using contingency funding from the Solid Waste Fund. Negotiations with Republic Services are now well underway, including potential 10-, 15-, and 20- year terms as directed by City Council.

The City’s solid waste services, which include garbage, recycling, and green waste, are divided into collection and post-collection activities. Collection activities are overseen by the City whereas post-collection activities are managed by Recyclemore, a Joint Powers 22-685
794
Authority for which the City is a member. Collection includes the curbside (or on-property) collection of solid waste material and hauling to a processing facility, such as a transfer station, recycling facility, or composting facility. The collection franchise agreement includes fees collected by the City from rate payers via Republic Services. These fees are then used to support City solid waste-related activities.

Amending the contract with R3 to include a fee study to evaluate these solid waste-related activities will ensure consideration can be given to fully recovering the cost of all eligible activities for the duration of the renewed agreement.

ANALYSIS:

R3’s Solid Waste Fee Study will identify City-related solid waste activities eligible for cost recovery from solid waste rates via franchise fees under the renewed agreement. Their scope includes:

1. Cost Recovery Analysis – This is for the City’s solid waste management, administration, oversight, compliance and other expenditures. It includes street sweeping, storm drain and/or catch basin waste removal, purchase and distribution of reusable bags, and other compliance related expenditures.

2. Vehicle Impact Analysis – To mitigate damage from the garbage trucks on City streets.

3. Property Value Analysis – For solid waste containers that are placed in the public right-of-way for collection (i.e. reasonable estimates of the rental value for that unique use of the public right-of-way) and other uses of government property.

R3 will capture their findings in a report that can be utilized during negotiations with Republic as well as a policy tool for City Council when considering cost recovery levels.

FISCAL IMPACT:

The base contract with R3 (Att #3) was executed under the City Manager’s authority using $20K in contingency funding in the Solid Waste Fund. Appropriating $50K from the Solid Waste Fund will restore the contingency funding and fully fund Amendment No.1 in the amount of $30K. The solid waste fund has adequate reserves of approximately over $700K to cover the cost of the appropriation.

Budget
Funding Source Account Number Request
Solid Waste 291-0000-611.40-00 $ 50,000
795
ATTACHMENTS:

Attach 1 - Resolution
Attach 2 - Amendment No.1
Attach 3 - Base Contract
796
RESOLUTION NO.

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERCULES
AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT NO.1 WITH R3 FOR A NOT TO EXCEED AMOUNT OF $30K TO COMPLETE A SOLID WASTE FEE

STUDY FOR THE FRANCHISE AGREEMENT RENEWAL NEGOTIATIONS, FOR A TOTAL NOT TO EXCEED CONTRACT AMOUNT OF $50K, AND APPROPRIATING $50K FROM THE SOLID WASTE FUND TO FULLY FUND SAID AMENDMENT AND RESTORE THE CONTINGENCY FUNDING USED FOR THE $20K BASE CONTRACT WHEREAS, the City’s solid waste collection franchise agreement with Republic Services, which was entered into in 1986, is set to expire on June 30, 2025; and WHEREAS, an initial $20K base contract with R3 was expedited in August to provide timely technical support during negotiations on the renewed franchise agreement; and
WHEREAS, the contract was executed under the City Manager’s authority using contingency funding from the Solid Waste Fund; and
WHEREAS, negotiations with Republic Services are now well underway; and WHEREAS, Amendment No.1 to the contract with R3 for a fee study to evaluate the City’s solid waste-related activities will ensure consideration can be given to fully recovering the cost of all eligible activities for the duration of the renewed agreement; and
WHEREAS, an appropriation of $50K will fund the $30K Amendment No.1 and fully restore the $20K in contingency funding in the Sewer Fund used for the base contract; and
WHEREAS, there is sufficient funding in the Sewer Fund to cover the cost of this appropriation.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hercules that the City Council hereby authorizes the City Manager to execute Amendment No.1 with R3 for a not to exceed amount of $30K to complete a solid waste fee study for the franchise agreement renewal negotiations, for a total not to exceed contract amount of $50K, and appropriates $50K from the Solid Waste Fund to fully fund said amendment and restore the contingency funding used for the $20K base contract
The foregoing Resolution was duly and regularly adopted at a regular meeting of the City Council of the City of Hercules held on the twenty-fourth day of October, 2023 by the following vote of the Council:

AYES:
797
NOES:

ABSENT:
____________________________
Alex Walker-Griffin, Mayor
ATTEST:

Eibleis Melendez, City Clerk
798
Original Agreement No. 23-058-CM
Negotiation Assistance for Republic Services
AMENDMENT NO. 1

1. Parties. The parties to this Contract Amendment are the City of Hercules, a public body corporate and the following named Contractor:

R3 Consulting Group, Inc.
1512 Eureka Road Suite 220
Roseville, CA 95661
(916) 782-7821
Attn: Rose Radford
[email protected]
The parties to this Contract Amendment do mutually agree and promise as follows:

2. Purpose. This Amendment No. 1 is being entered into to amend an existing contract between the City and Contractor which was approved by the City Council/City Manager of the City of Hercules on August 28, 2023. Said contract shall hereinafter be referred to as the "Original Contract" and is incorporated herein by reference.

3. Original Contract Provisions. The parties hereto agree to continue to abide by those terms and conditions of the Original Contract, and any amendments thereto, which are unaffected by this Contract Amendment Agreement.

4. Amendment. This Amendment No. 1 is intended to amend the Original Contract and previously approved amendments (collectively, the "Amended Contract") thereto to provide for additional compensation in an amount not to exceed $30,000, total contract amount $50,000.

5. Amendment Approval: This Amendment No. 1 is hereby approved by the City Council/City Manager of the City of Hercules on this 24 day of October 2023.

6. Signatures. These signatures attest the parties' agreement hereto:

City of Hercules
s/_______________________________
Dante Hall, City Manager
Date: ___________________________
Approved as to form:

By ______________________________
Patrick Tang, City Attorney
R3 Consulting Group, Inc
s/_______________________________
_________________________________
Name/Title
Date: ___________________________
Attachments:

Attachment A: Scope of Service & Payment
Garth Schultz, President 10-17-2023
799
City of Hercules | Solid Waste Fee Study 1
October 13, 2023
Mr. Michael Roberts, PE Mr. J. Patrick Tang
Public Works Director/City Engineer City Attorney
City of Hercules Jarvis Fay, LLP
submitted via email: [email protected] patrick@ jarvisfay.com SUBJECT: Solid Waste Fee Study – R3 Proposal
Dear Mr. Roberts,
R3 Consulting Group, Inc. (R3) is pleased to submit the attached proposal to the City of Hercules to provide a Solid Waste Fee Study (Study).

R3 is a statewide leader in analyzing solid waste franchise fees and we are excellently positioned to provide well-informed and cost-effective analysis to the City. Our team members are experts in the underlying solid waste management operations necessary for such analysis, and we have provided solid waste rate, revenue and fee studies to local governments throughout the state for over 20 years.

Study Approach
Upon acceptance of this proposal, R3 will provide the City with:

1. Cost-Recovery Analysis
R3 will research, analyze and estimate the value of the City’s solid waste management, administration, oversight, compliance and other expenditures that may be eligible for recovery from solid waste rates via franchise fees.

The analysis will rely on financial information provided by the City, including but not limited to internal cost-allocation information, salary and benefit information for positions having responsibility for solid waste management and compliance matters, street sweeping, storm-drain and/or catch basin waste removal, compliance activities, and other associated information that may identified by the City or R3.

The outcome of the analysis will be a set of total annual costs for solid waste management, administration, oversight, compliance and other activities. This total will represent the fee amount available to offset documentable City expenditures.

2. Vehicle Impact Analysis
R3 will research, analyze and estimate the value of the impact that solid waste collection vehicles operated by the City’s contracted solid waste service provider(s) have on the City’s streets.

The analysis will be based on the value of the City’s streets, wear and tear to them, and the estimated proportionate impact from solid waste collection vehicles. Information used in this analysis may include but is not limited to the number of street miles by type, vehicle trips on streets by vehicle type, pavement management plans, and other associated information provided by the City.

The outcome of this analysis will be a total annual proportionate allocation of maintenance needs attributable to solid waste collection vehicles. The resultant total will represent the fee amount available to offset vehicle impacts to streets.

3. Property Value Analysis
R3 will research, analyze, and estimate the value of the City-government property rights conveyed to the City’s contracted solid waste provider(s) that may be eligible for recovery via franchise fees.

Attachment A: Scope of Service & Payment
800
City of Hercules | Solid Waste Fee Study 2
The analysis will be based on the estimated amounts of time that solid waste containers are placed in the public right-of-way for collection as well reasonable estimates of the rental value for that unique use of the public right-of-way. This analysis may also include other significant uses of government property that may be identified by the City and R3.

The outcome of this analysis will be an estimated annual figure for the rental value associated with the use of City government property and will represent the fee amount available to compensate the City for the use of public property.

4. Fee Analysis
R3 will research, analyze and summarize current fee revenues paid to City by contracted solid waste providers and will compare those values to the sum of the cost-recovery and property value fee estimates per the above. Differences between current franchise fee revenues, fees collected through other mechanisms (e.g., AB 939 or SB 1383 fees) and those resulting from our analysis will be identified and quantified.

5. Findings
R3 will provide the City a written memorandum of findings regarding the results of our analysis. We will work with City staff to revise and finalize the memorandum for City consideration. One round of revisions in response to comments is included in our pricing.

6. Meetings
R3 will periodically meet with City representatives during the course of the engagement. This will include an initial kick-off meeting, limited check-in meetings, and a meeting to review draft results.

Public meetings are not included in the base pricing, but our team can be available, on an hourly basis, to attend public meetings if necessary. All meetings will be conducted virtually.

Study Timeline & Cost
R3 proposes to complete the Study within 90 to 150 days of proposal acceptance, reliant on timing of proposal acceptance and the City’s timely and thorough provision of information needed for completion.

R3 proposes to complete the Study for a cost of $30,000 on a time and materials basis. A breakdown of costs by task are provided in Table 1, below.

Any additional consulting services beyond those proposed will be charged at our standard hourly billing rates, shown on Table 2, on the following page.

Table 1: Breakdown of Costs

TASK COST
Cost-Recovery Analysis $ 7,500
Vehicle Impact Analysis $ 7,500
Property Value Analysis $ 7,500
Fee Analysis $ 2,500
Findings $ 2,500
Meetings $ 2,500
801
City of Hercules | Solid Waste Fee Study 3
Table 2: Standard Hourly Billing Rates

CLASSIFICATION HOURLY RATE
Principal $ 285 per hour
Sr. Director $ 285 per hour
Director $ 240 per hour
Sr. Managing Consultant $ 220 per hour
Managing Consultant $ 200 per hour
Sr. Consultant $ 190 per hour
Consultant $ 170 per hour
Associate Consultant $ 155 per hour

REIMBURSABLE COSTS
Consultants/Subcontractors Cost plus 10%
Lodging and meals Direct cost
Travel - Private or company car At Current Federal Rate Travel - Other Direct cost
Delivery and other expenses Direct cost
About R3
Incorporated in 2002, R3 is an “S” Corporation and a California Certified Small Business with offices in Roseville and Oakland. With decades of solid waste consulting experience and knowledge, our seasoned, professional team members have backgrounds in the public and private sectors, engineering, resource management, environmental science, and urban planning. We have conducted hundreds of solid waste management consulting projects for clients throughout California, and we aim to always complete work in a cost-effective manner while achieving our clients’ goals and objectives.

With R3, our clients always receive:
》 Unbiased, conflict-free project management and objective, fair treatment. – We have no entanglements with local districts or waste haulers, no hidden agendas, and no preordained vendors. This translates to a high repeat customer rate and solid, respectful relationships with cities and haulers.
– Extensive experience managing projects with multiple stakeholders, which includes planning realistic goals, schedules, and budgets, effectively communicating with all key players, working collaboratively to achieve objectives and stay responsive, and streamlining processes. 》 Data-driven solutions and clear deliverables.
– Best-approach, honest recommendations to meet the City’s needs, derived from decades of solid waste consulting experience and analysis of client data. – Focused on improving safety & customer service, increasing productivity, and reducing costs. 》 Comprehensive, up-to-the-minute understanding of industry regulations. – Principals and key staff have superior knowledge base from over decades of hands-on industry and legislative compliance experience. This foundational knowledge is supplemented by active, weekly participation and engagement with industry groups, regulators, and state policymakers. 802
1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 f 916.782.7824 | www.r3cgi.com 4 Project Team
Oversight and Quality Assurance
R3’s solid waste fee studies are overseen by R3’s seasoned solid waste consultants Garth Schultz, Scott Hanin, and William Schoen, each of whom have over 20 years of experience in the solid waste field.

Garth is R3’s President and has been the lead analyst on R3’s prior solid waste franchise fee studies. He also brings experience in both the public and private solid waste sectors.

Scott, Sr. Director, is a former city manager and former solid waste joint powers’ authority executive director. In his prior roles, Scott conducted numerous fee studies, of all varieties and types. William, Sr.

Director, is R3’s most senior financial analyst and has completed rate and fee studies for dozens of public agencies statewide.

Client Engagement and Analysis
The City’s client contact and Project Lead for this engagement will be Rose Radford, Sr. Managing Consultant. Rose is the primary consultant to the City and will be responsible for engaging with the City to gather necessary information for completion of the Study, arrange associated meetings, and communicate results.

Rose will work with the support and direction of Garth Schultz, Principal, who will provide analytical oversight and quality control and assurance, and Jim Howison, Sr. Managing Consultant, who is heavily engaged in our team’s efforts related to fee justification studies for 20+ public sector clients. The team will be supported by other qualified R3 staff, as necessary, for timely and successful completion. Brief biographies of our staff are currently available on our website, and relevant team member resumes can be made available upon request.
* * * * *
We appreciate the opportunity to submit this proposal to the City of Hercules. Should you have questions regarding our proposal or need additional information, please don’t hesitate to reach out directly.

Sincerely,
Rose Radford | Sr. Managing Consultant Garth Schultz | President R3 Consulting Group, Inc. R3 Consulting Group, Inc.
415.347.9536 | [email protected] 510.292.0853 | [email protected] 803
Professional Services Agreement Agreement No. <23-058-CM> City Attorney Approved, 082321 Negotiation Assistance for Republic Services

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Hercules City CouncilOctober 24, 2023

Hercules City Council
October 24, 2023