RECORDED AT THE REQUEST OF AND
WHEN RECORDED RETURN TO:
City of Merced
678 W. 18"h Street
Merced, CA 95340
Attention: City Manager
WHEN RECORDED MAIL COPY TO:
Fuller Center for Housing of Merced County
P.O. Box 423
1230 Broadway Avenue
Atwater, California 95301
Attn: Lyle Allen
SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY
This Agreement is recorded at the request and for the benefit of the City of Merced and is exempt from the payment of a recording fee pursuant to Government Code Section 6103.
CITY OF MERCED,
a municipal corporation
By: _
Stephanie R. Dietz
City Manager
Dated:
DISPOSITION AND DEVELOPMENT AGREEMENT
By and Among
CITY OF MERCED
a California charter municipal corporation,
cting in its own capacity, and in its capacity as th
Lousing Successor to the former Merced Redevelopment Agenc and
Fuller Center for Housing of Merced County
Addresses:
1744 I Street
26 W.18t Street
49 W. 18"h Street
150 W. 19" Street
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ATTACHMENTS
Attachment No. 1 Legal Description of Properties
Attachment No. 2 Depiction of Properties
Attachment No. 3 Form of Grant Deed
Attachment No. 4 Schedule of Performance
Attachment No. 5 Scope of Development
Attachment No. 6 Reserved
Attachment No. 7 Form of Release of Construction Covenants Attachment No. 8 Form of Affordable Housing Covenant and Restrictions on Attachment No. 9 Form of Deed of Trust
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DISPOSITION AND DEVELOPMENT AGREEMENT
THIS DISPOSITION AND DEVELOPMENT AGREEMENT ("Agreement") is entered into between the City of Merced, a California charter municipal corporation ("City") in its own corporation ("Developer"). The effective date of this Agreement shall be the date the Agreement is executed by City ("Effective Date").
RECITALS
A. City owns certain real properties consisting of approximately:
a. 0.115 acres located at 1744 "I" Street, Merced, CA, Assessor's Parcel No. 031- 161-001 ("Property 1"), more particularly described in Attachment No. 1 and depicted in Attachment No. 2.
O.172 acres located at 26 W. 18" Street, Merced, CA, Assessor's Parcel No. 031- 163-005 ("Property 2") more particularly described in Attachment No. 1 and depicted in Attachment No. 2.
c. 0.248 acres located at 49 W. 18" Street, Merced, CA, Assessor's Parcel No. 031- 084-011 ('Property 3") more particularly described in Attachment No. 1 and depicted in Attachment No. 2.
d. 0.172 acres located at 150 W. 19th Street, Merced, CA, Assessor's Parcel No. 031-082-002 ("Property 4"') more particularly described in Attachment No. 1 and depicted in Attachment No. 2.
B. After following the California Surplus Land Act, the City made the Properties available for sale and private development. Developer expressed interest in purchasing the Properties for development of affordable housing.
C. Pursuant to HSC 34176, the City elected to retain the housing assets and functions previously performed by the Redevelopment Agency, including all rights, powers, assets, liabilities, duties and obligations associated with the housing activities of the Agency excluding any amounts on deposit in the Low and Moderate Income Housing Fund, to the Agency, as provided in resolution No. 2012-5 adopted on January 12, 2012. The City continues to serve as the Housing Successor to the Agency.
D. Developer is an experienced residential developer, and desires to purchase the Properties for the purposes of building affordable housing units in accordance with this Agreement.
E. City desires to sell the Properties to Developer for the purpose of developing the Properties to include a single family dwelling on each property with the possibility of a lot split on the largest parcel, Property 3, to allow for an additional single family dwelling, for purchase by very low income households in accordance with this Agreement and as described further in the Scope of Development in Attachment No. 5 (the "Project" or "Site").
F. The City's disposition of the Properties, and the construction, completion, and operation of affordable housing on the Properties pursuant to the terms of this Agreement, are in the vital and best interest of the City and the health, safety, and welfare of its residents, and will serve the public purpose in the City.
NOW, THEREFORE, upon the mutual covenants and consideration provided herein, the Parties agree as follows:
//
AGREEMENT
1. CONVEYANCE OF THE PROPERTIES
A. Disposition of the Properties. The Developer agrees to purchase the Properties from the City, and the City agrees to sell to the Properties to Developer, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the "Purchase Price" set forth below. The conveyance of the Properties shall be by "Grant Deed" substantially in the form of Attachment No. 3.
B. Purchase Price. City agrees to sell the Properties to Developer for the amount of One Dollar ($1.00) for each of the four Properties, or $4.00 total (the "Purchase Price"). Developer shall deposit the Purchase Price into Escrow, as defined below, within three (3) working dates after execution of this Agreement.
C. Escrow. Within three (3) working days after the execution of this Agreement by both parties, the parties shall open escrow ("Escrow") with TransCounty Title Co. located at 635 W Nineteenth Street, Merced, CA 95340, or another escrow company mutually satisfactory to both parties (the "Escrow Agent").
D. Costs of Escrow. The Developer shall pay the premium for the Condition of Title Guarantee as set forth in Section 1K hereof; the City shall pay for the documentary transfer taxes due, if any, with respect to the conveyance of the Properties; and the Developer shall pay all of the Escrow fee, notary fee, recording fee, costs of drawing the deed, and all usual and customary costs typically incurred by a purchaser in real estate transactions.
E. Escrow Instructions. This Agreement constitutes the joint escrow instructions of the Developer and the City, and the Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. The parties hereto agree to do all acts reasonably necessary to close this Escrow in the shortest possible time. Insurance policies for fire or casualty are not to be transferred, and the City will cancel its own policies after the Closing. All funds received in the Escrow shall be deposited with other escrow funds in a general escrow accounts) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State of California. All disbursements shall be made by check from such account. 2 If in the opinion of either party it is necessary or convenient in order to accomplish the Closing, such party may require that the parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. The Closing shall take place as set forth in Section 1G. The Escrow Agent is instructed to release the City's escrow closing statement and the Developer's escrow closing statement to the respective parties.
F. Authority of Escrow Agent. Escrow Agent is authorized to, and shall:
(1) Charge the City any amount necessary to place title in the condition necessary to satisfy Section 1J of this Agreement.
2) Pay and charge the Developer and the City for their respective shares of any escrow fees, charges, and costs payable under Section ID of this Agreement. (3) Disburse funds and deliver and record the Grant Deed, and the Affordable Housing Covenant and Restrictions on Sale, when both the Developer Conditions Precedent and the City Conditions Precedent have been fulfilled or waived by the Developer and the City. (4) Do such other actions as necessary, including obtaining the Condition of Title Guarantee, to fulfill its obligations under this Agreement. (5) Do such other actions as necessary to comply with any federal, state, or local reporting requirements, including directing the City and the Developer to execute any required forms, statements or certificates.
G. Closing. This transaction shall close escrow ("Closing") after the satisfaction of all of the City and Developer Conditions Precedent to Closing as set forth in Section 1L of this Agreement, but in no event later than one hundred eighty (180) days after Escrow is opened (the "Closing Deadline"), unless otherwise extended by written agreement of the parties. The Closing shall occur at a location within Merced County at a time and place reasonably agreed to by the parties. The Closing shall mean the time and day the Grant Deed is filed for record with the Merced County Recorder. The "Closing Date" shall mean the day on which the Closing occurs.
H. Termination. If Escrow is not in condition to close by the Closing Deadline, then either party which has fully performed under this Agreement may, in writing, demand termination of the Escrow. Under these circumstances, the Escrow Agent shall return all money, papers and documents deposited in Escrow to the respective depositing party. If either party makes a written demand for termination of Escrow, the Escrow shall not terminate until ten (10) days after the Escrow Agent shall have delivered copies of such demand to the other party at the address shown in this Agreement. If any objections are raised within that ten (10) day period, the Escrow Agent is authorized to hold all money, papers, and documents until instructed by a court of competent jurisdiction or by mutual written instructions of the parties. Termination of the Escrow shall be 3 without prejudice as to whatever legal rights either party may have against the other arising from this Agreement. If no demands are made, the Escrow Agent shall proceed with the Closing as soon as possible.
Closing Procedure. The Escrow Agent shall close Escrow for the Properties as follows:
Record the Grant Deed with instructions for the Recorder of Merced County, California to deliver the Grant Deed to the Developer.
Record the Affordable Housing Covenant and Restrictions on Sale (Attachment No. 8) with instructions for the Recorder of Merced County, California to deliver such document to the City.
(3) Instruct the Title Company to deliver the Condition of Title Guarantee to the Developer and a copy of the Condition of Title Guarantee to the City. (4) File and deliver any informational reports, forms, statements, and certificates as required by federal, state or local law.
(5) Forward to both the Developer and the City a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon.
Review of Title. The City shall cause TransCounty Title Co., or another title company mutually agreeable to both parties (the "Title Company"), to deliver to Developer a standard preliminary title report (the "Title Report") with respect to the title to the Properties, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report, within thirty (30) days from the date of this Agreement. The Developer shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Developer hereby approves the following Exceptions:
Property interests held by a public body or public bodies, including without limitation easements, franchises, licenses, or other property interests of the public body or public bodies, on the Properties and/or within the public rights-of-way around the perimeter of the Properties.
(2) The lien of any non-delinquent property taxes and assessments (to be prorated at the Closing).
(3) Any incidental easements or other matters affecting title which do not preclude Developer's use of the Properties as proposed herein. (4) Such other exceptions to title as may hereafter be mutually approved by the City and the Developer.
4 Within fifteen (15) days after receiving the Title Report from the Title Company, Developer shall give written notice to the City and the Escrow Agent of the Developer's approval or disapproval of any of the Exceptions. The Developer's failure to give written disapproval of the Title Report within such time limit shall be deemed approval of the Title Report. If the Developer notifies the City of its disapproval of any Exceptions in the Title Report, the City shall have the right, but not the obligation, to remove any disapproved Exceptions within thirty (30) days after receiving written notice of the Developer's disapproval or provide assurances satisfactory to the Developer that such Exception(s) will be removed on or before the Closing. If the City cannot or does not elect to remove any of the disapproved Exceptions within that period, the Developer shall have fifteen (15) days after the expiration of the thirty (30) day period to either give the City written notice that Developer elects to proceed with the purchase of the Properties subject to the previously disapproved Exceptions or to give the City written notice that the Developer elects to terminate this Agreement. The Exceptions to title approved by the Developer as provided herein shall hereinafter be referred to as the "Condition of Title." The Developer shall have the right to approve or disapprove any further Exceptions reported by the Title Company after the Developer has approved the Condition of Title for the Properties (which are not created by the Developer). The City shall not voluntarily create any new exceptions to title following the date of this Agreement.
K. Title Insurance. Developer will receive a Condition of Title Guarantee after close of escrow showing ownership in the Developer's name. The Title Company shall provide the City with a copy of the Condition of Title Guarantee.
L. Conditions of Closing. The Closing is conditioned upon the satisfaction of the following terms and conditions within the times designated below. (1) City's Conditions of Closing. City's obligation to proceed with the Closing of the sale of the Properties is subject to the fulfillment or waiver by the City of each and all of the conditions precedent (a) through (h), inclusive, described below ("City Conditions Precedent"), which are solely for the benefit of the City, and which shall be fulfilled or waived by the time periods provided for herein:
(a) No Default. Prior to the Close of Escrow, the Developer shall not be n default in any of its obligations under the terms of this Agreement and all presentations and warranties of the Developer contained herein shall be true and correct in all material respects.
(b) Execution of Documents. The Developer shall have executed the Grant Deed, the Affordable Housing Covenant and Restrictions on Sale, and any other documents required hereunder and delivered such documents into Escrow.
5 (0) Payment of Funds. Prior to the Closing, the Developer shall have deposited the Purchase Price and all required costs of the Closing into Escrow in accordance with Sections 1B and 1D hereof.
(d) Design Approvals. The Developer shall have obtained City's approval of the Preliminary Design Drawings, Site Plan Drawings, and Construction Drawings for the Developer Improvements as set forth in Section 2B hereof.
(e) Land Use Approvals. The Developer shall have received all land use approvals for the Developer Improvements required pursuant to Section 2C hereof.
(1) Financing. The City shall have approved the Developer's financing plan, or received proof of financial capacity to complete the Developer Improvements, as provided in Section 2M hereof, and such financing shall have closed and funded or be ready to close and fund upon the Closing. (g) Insurance. The Developer shall have provided proof of insurance as required by Section 2F hereof.
(h) Plans and Permits. The Developer shall have obtained City approval of its final building plans for all of the Developer Improvements, and building permits shall be ready to be issued (upon payment of necessary fees, posting of required security, and similar items).
Developer's Conditions of Closing. Developer's obligation to proceed with the Closing of the purchase of the Properties is subject to the fulfillment or waiver by Developer of each and all of the conditions precedent (a) through (e), inclusive, described below ("Developer Conditions Precedent", which are solely for the benefit of Developer, and which shall be fulfilled or waived by the time periods provided for herein:
(a) No Default. Prior to the Close of Escrow, the City shall not be in default in any of its obligations under the terms of this Agreement and all representations and warranties of the City contained herein shall be true and correct in all material respects.
(b) Execution of Documents. The City shall have executed the Grant Deed, the Affordable Housing Covenant and Restrictions on Sale, and any other documents required hereunder, and delivered such documents into Escrow.
(c) Review and Approval of Title. The Developer shall have reviewed and approved the condition of title of the Properties, as provided in Section 1J hereof.
6 Condition of Title Guarantee. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide to the Developer the Condition of Title Guarantee for the Properties after the Close of Escrow, in accordance with Section 1K hereof. (e) Feasibility. The Developer shall have approved or be deemed to have approved the feasibility of the development contemplated hereunder pursuant to Section 1N hereof.
M. Representations and Warranties.
(1) City Representations. City represents and warrants to Developer alows:
Authority. The City has the full right, power and lawful authority to acquire, grant, sell and convey the Properties as provided herein, and the execution, performance and delivery of this Agreement by the City has been fully authorized by all requisite actions on the part of the City. b) FIRPTA. City is not a "foreign person" within the parameters of FIRPIA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or that City has complied and will comply with all the requirements under FIRPTA or any similar statute. (c) No Conflict. To the best of the City's knowledge, the 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 the City is a party or by which it is bound.
(d) Litigation. To the best of the City's knowledge, there are no actions, suits, material claims, legal proceedings or any other proceedings affecting the Properties, or any portion thereof, at law or in equity, before any court or governmental agency, domestic or foreign.
All of the representations and warranties set forth in this Section 1M(1) are made with the acknowledgment that they are material, and with the intention that the City shall rely upon them as inducements to enter into this Agreement and to perform its obligations hereunder and to close the transactions contemplated herein. The representations and warranties contained in this Section 1M(1) shall each survive the execution of this Agreement and the Closing. (2) Developer Representations. Developer represents and warrants to the City as follows:
7 Authority. The Developer has the full right, power and lawful authority to purchase and accept the conveyance of the Properties, or any portion thereof, and undertake all obligations as provided herein and the execution, performance and delivery of this Agreement by the Developer has been fully authorized by all requisite actions on the part of the Developer. (b) Experience. The Developer is an experienced developer and operator of residential properties.
(c) No Conflict. To the best of the Developer's knowledge, the 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 the Developer is a party or by which it is bound. (d) No Developer Bankruptcy. The Developer is not the subject of a bankruptcy or other insolvency proceeding.
(e) FIRPTA. The Developer is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or that Developer has complied and will comply with all the requirements under FIRPTA or any similar state statute.
Patriot Act. Developer is in compliance with all laws, statutes, rules, and regulations or any federal state or local governmental authority applicable to Developer and all beneficial owners of Developer with respect to or arising out of the requirements of any Orders and other similar requirements contained in the rules and regulations of OFAC. Neither Developer nor any beneficial owner of Developer: (i) is listed on the Lists; (i) has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (iii) is owned or controlled by, not acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders.
(g) Deliveries. All documents, instruments and other information delivered by the Developer to the City pursuant to this Agreement are, to the best of Developer's knowledge, true, correct and complete. (h) Commissions. To the best of the Developer's knowledge there are no broker's commissions or finder's fees payable in connection with the Properties.
8 All of the representations and warranties set forth in this Section 1M(2) are made with the acknowledgment that they are material, and with the intention that the City shall rely upon them as inducements to enter into this Agreement and to perform its obligations hereunder and to close the transactions contemplated herein. The representations and warranties contained in this Section 1M(2) shall each survive the execution of this Agreement and the Closing.
N. Studies and Reports. Prior to the Closing, representatives of the Developer shall have the right of access to all portions of the Properties for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement, including the investigation of the environmental condition of the Properties pursuant to Section 10 hereof. Developer shall indemnify and hold harmless the City, and its officers, agents, employees, and volunteers, from any liability arising out of the Developer's access to the Properties for these purposes. Any preliminary work undertaken on the Properties by the Developer prior to the Closing shall be done at the sole expense of the Developer, and the Developer's execution of a right of entry agreement to be provided by the City. Any preliminary work shall be undertaken only after securing any necessary permits from the appropriate governmental agencies.
0. Condition of the Properties.
(1) Disclosure. The City and the Developer hereby represent and warrant to the other that they have no actual knowledge, and have not received any notice or communication from any government agency having jurisdiction over the Properties, notifying such party of the presence of surface or subsurface zone Hazardous Materials in, on, or under the Properties, or any portion thereof. "Actual knowledge," as used herein, shall not impose a duty of investigation, and shall be limited to the actual knowledge of the City and the Developer employees and agents who have participated in the preparation of this Agreement.
(2) No Further Warranties As To Properties; Release of City.
Notwithstanding any provisions of this Agreement to the contrary, the conveyance of all or any portion of the Properties shall be conveyed to the Developer in an "AS IS" condition, with no warranty, express or implied by the City, as to the condition of improvements on the Properties, the soil, its geology, the presence of known or unknown faults, Hazardous Materials, or other environmental conditions, and the Developer agrees to and shall indemnify and hold the City, and their officers, agents, employees, and volunteers, harmless from and against all liability, loss, damages, costs, or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the existence of such faults, substances, or conditions. It shall be the sole responsibility of the Developer at its expense to investigate and determine the soil and other improvement conditions on the Properties for the development to be constructed. If the soil or other environmental conditions are not in all respects entirely suitable for the use or uses to which the Properties will be put, then it is the sole responsibility and obligation of the Developer to take such action as may be necessary to place the soil or other conditions of the Properties in a condition entirely suitable for their development.
9 The Developer hereby waives, releases and discharges forever the City, and its officers, agents, employees, and volunteers, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the condition of the arising out of the negligence or misconduct of the City or its employees, officers, agents or representatives.
The Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor" As such relates to this Section 10, the Developer hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code.
Fuller Center for Housing of Merced County, a
California 501(c)(3) non-profit corporation
Sanier & Sorge
Title:
(3) Developer Precautions After Closing. Upon the Closing, the Developer shall take all necessary precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Properties. Such precautions shall include removal and disposal of Hazardous Materials.
Developer Indemnity. Upon the Closing, Developer agrees to indemnify, defend and hold the City, and its officers, agents, employees, and volunteers, harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees), resulting from, arising out of, or based upon: (a) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Properties which occurs after the Closing; or (b) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials 10 on, under, in or about, to or from, the Properties which occurs after the Closing. This indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity after closing cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death, tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Developer, the City shall cooperate with and assist the Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the City shall not be obligated to incur any expense in connection with such cooperation or assistance.
Hazardous Materials Definition. For purposes of this Section 10, Hazardous Materials means any substance, material, or waste which is or becomes defined and is regulated as hazardous or toxic by any governmental law or authority, the State of California, or the United States government.
P. Performance Conditions. The performance by the Developer shall include the diligent construction of the Developer Improvements in conformity with all provisions of this Agreement, including without limitation the Schedule of Performance, and includes: (1) the payment by the Developer of all required public entity fees in connection with the Developer Improvements; (2) the provision of defense, indemnification, assumption of responsibility for, and provision of insurance as required pursuant to each of Section 2F and Section 2G of this Agreement; (3) the payment prior to delinquency of all property taxes and assessments on the Properties; (4) compliance with all documents recorded pursuant to this Agreement; and (5) compliance, in the course of performing pursuant to this Agreement, with all applicable laws, including without limitation state labor standards.
Merger of Parcels. Any merger of the parcels which make up the Properties, and all lot line adjustments, shall be conditioned upon, and shall not take effect until, completion of the Developer Improvements in accordance with the terms of this Agreement.
2. DEVELOPMENT OF THE PROPERTIES
A. Developer's Obligation to Construct Improvements. The Developer shall develop or cause the development of the Developer Improvements in accordance with the Schedule of Performance (Attachment No. 4) and the Scope of Development (Attachment No. 5), the City of Merced Municipal Code, and the plans, drawings and documents submitted by the Developer and approved by the City as set forth herein. The "Developer Improvements" shall generally consist of the construction one single family dwelling, with the possibility of a lot split on the largest parcel, Property 3, for development of an additional single family dwelling, on each of the Properties, as more fully set forth in the Scope of Development.
B. Design Review. - Reserved
(2) Site Plan Drawings. - Reserved
(3) Construction Drawings. - Reserved
(4) City Review and Approval. The City shall review the building plans as part of the normal plan check review process and the plot plan for each property as part of the building permit application
(5) Consultation and Coordination. - Reserved
(6) Defects in Plans. - Reserved
C. Land Use Approvals. Before commencement of construction of the Developer Improvements or other related works of improvement upon or adjacent to the Properties, the Developer shall, at its own expense, secure or cause to be secured any and all land use and other entitlements, permits and approvals which may be required by the City or any other governmental agency affected by such construction or work, except for those which are the responsibility of the City as set forth herein. The Developer shall, without limitation, apply for and secure the following, and pay all costs, charges and fees associated therewith:
(1) Building Master Plan approvals - through plan check process and Building Permits
(2) All other permits and fees required by the City, County of Merced, and other governmental agencies with jurisdiction over the Developer Improvements. (3) Any environmental studies and documents required pursuant to the California Environmental Quality Act.
Notwithstanding the foregoing, any merger of the parcels which make up the Properties, and all lot line adjustments, shall be conditioned upon, and shall not take effect until, completion of the Developer Improvements in accordance with the terms of this Agreement as set forth in Section 1Q.
D. Schedule of Performance. The Developer shall submit all Preliminary Design Drawings, Site Plan Drawings and Construction Drawings, commence and complete all construction of the Developer Improvements, and satisfy all other obligations and conditions of this Agreement, within the respective times established therefor in the Schedule of Performance. The Schedule of Performance shall be deemed a material part of this Agreement.
E. Cost of Construction. Except to the extent otherwise expressly set forth in this Agreement, all of the costs of planning, designing, developing, and constructing the Developer Improvements, including site preparation and grading, shall be borne solely by the Developer. 12 F. Insurance Requirements. The Developer shall take out prior to commencement of construction of the Developer Improvements, and maintain or shall cause its contractor to take out and maintain until issuance of the Release of Construction Covenants pursuant to Section 2L of this Agreement, a comprehensive general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit policy, and if Developer owns automobiles, a comprehensive automobile liability policy in the amount of One Million Dollars ($1,000,000), combined single limit, or such other policy limits as the City may approve at its discretion, including contractual liability, as shall protect the Developer, the City from claims for such damages, and which policy shall be issued by an "A" rated insurance carrier. Such policy or policies shall be written on an occurrence form. The Developer shall also furnish or cause to be furnished to the City evidence satisfactory to the City that the Developer and any contractor with whom it has contracted for the performance of work on the Properties or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. The Developer shall furnish a notarized certificate of insurance countersigned by an authorized agent of the insurance carrier on a form approved by the City setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the City and its respective officers, agents, employees, and volunteers, as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status. The certificate and endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify the City of any material change, cancellation or termination of the coverage at least thirty (30) days in advance of the effective date of any such material change, cancellation or termination. Coverage provided hereunder by the Developer shall be primary insurance and not be contributing with any insurance maintained by the City, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the City. The required certificate shall be furnished by the Developer at the time set forth therefor in the Schedule of Performance or, if no time is specified, prior to the commencement of construction of the Developer Improvements.
G. Developer's Indemnity. The Developer shall defend, indemnify, assume all responsibility for, and hold the City and its officers, agents, employees, and volunteers, harmless from all claims, demands, damages, defense costs or liability of any kind or nature relating to the subject matter of this Agreement or the implementation thereof and for any damages to property or injuries to persons, including accidental death (including attorneys' fees and costs), which may be caused by any acts or omissions of the Developer under this Agreement, whether such activities or performance thereof be by the Developer or by anyone directly or indirectly employed or contracted with by the Developer and whether such damage shall accrue or be discovered before or after termination of this Agreement. The Developer shall not be liable for property damage or bodily injury occasioned by the sole negligence or willful misconduct of the City or its agents or employees.
The Developer shall have the obligation to defend any such action; provided, however, that this obligation to defend shall not be effective if and to the extent that Developer determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Developer shall compromise or settle such action in a way that fully protects City from any liability or obligation.
In this regard, the Developer's obligation and right to defend shall include the right to hire (subject 13 to written approval by the City) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against the Developer or City. If Developer defends any such action, as set forth above, it shall indemnify and hold harmless the City and its officers, agents, employees, and volunteers, from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation.
H. Rights of Access. Prior to the issuance of a Release of Construction Covenants (as specified in Section 2L of this Agreement), for purposes of assuring compliance with this Agreement, including construction of the Developer Improvements, representatives of the City shall have the right of access to the Properties conveyed to the Developer without charges or fees, at normal construction hours during the period of construction. City representatives shall comply with all safety rules during any such inspection. The City (or its representatives) shall, except in emergency situations, notify the Developer prior to exercising its rights pursuant to this Section 2H.
I. Compliance With Laws. The Developer shall carry out the design, construction and operation of the Developer Improvements in conformity with all applicable laws, including all applicable state labor standards, prevailing wage laws, the City zoning and development standards, building, plumbing, mechanical and electrical codes, environmental mitigation measures, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., California Government Code Section 4450, et seq., California Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq, and California Labor Code 1720 et seq.
J. Nondiscrimination in Employment. Developer certifies and agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies, and all subcontractors, bidders and vendors, are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability, and in compliance with Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000, et seq., the Federal Equal Pay Act of 1963, 29 U.S.C. Section 206(d), the Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621, et seq., the Immigration Reform and Control Act of 1986, 8 U.S.C. Section 1324b, et seq., 42 U.S.C. Section 1981, the California Fair Employment and Housing Act, California Government Code Section 12900, et seq., the California Equal Pay Law, California Labor Code Section 1197.5, California Government Code Section 11135, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., and all other anti-discrimination laws and regulations of the United States and the State of California as they now exist or may hereafter be amended.
K. Taxes and Assessments. The Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Properties conveyed to the Developer. The Developer shall remove or have removed any levy or attachment made on any portion of the Properties, or assure the satisfaction thereof within a reasonable time. The Developer shall not apply 14 for or receive any exemption from the payment of property taxes or assessments on any interest in or to the Properties or the Developer Improvements.
L. Release of Construction Covenants. Promptly after completion of the Developer Improvements in conformity with this Agreement, the City shall furnish the Developer with a "Release of Construction Covenants," substantially in the form of Attachment No. 7 hereto which is incorporated herein by reference. The City shall not unreasonably withhold such Release of Construction Covenants. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the Developer Improvements and the Release of Construction Covenants shall so state.
If the City refuses or fails to furnish the Release of Construction Covenants, after written request from the Developer, the City shall, within fifteen (15) days of written request therefor, provide the Developer with a written statement of the reasons the City refused or failed to furnish the Release of Construction Covenants. The statement shall also contain the City's opinion of the actions the Developer must take to obtain the Release of Construction Covenants. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the Developer Improvements, or any part thereof. The Release of Construction Covenants is not a notice of completion as referred to in Section 3093 of the California Civil Code.
M. Financing of Improvements.
Approval of Financing. As required herein and as a City Condition Precedent to the Closing, the Developer shall submit to City evidence that the Developer has obtained sufficient equity capital or has obtained firm and binding commitments for construction and permanent financing, in combination with credit for sweat equity, necessary to undertake the development of the Properties and the construction of the Developer Improvements in accordance with this Agreement. Such evidence shall include a description of development components covered by sweat equity and donations of materials and labor, and the total remaining cost that is to be funded with cash and proof of such financing. The City shall approve or disapprove such evidence of financing commitments within thirty (30) days of receipt of a complete submission. Approval shall not be unreasonably withheld or conditioned. If the City shall disapprove any such evidence of financing, the City shall do so by Notice to Developer stating the reasons for such disapproval and the Developer shall promptly obtain and submit to City new evidence of financing. City shall approve or disapprove such new evidence of financing in the same manner and within the same times established in this Section 2M(1) for the approval or disapproval of the evidence of financing as initially submitted to the City. The Developer shall close the approved construction financing prior to or concurrently with the Closing.
Such evidence of financing shall include the following: (a) a copy of a legally binding, firm and enforceable loan commitments) obtained by the Developer from one or more financial institutions for the mortgage loan or loans for financing to fund the construction, completion, operation and maintenance of the Developer Improvements, subject to such lenders' 15 reasonable, customary and normal conditions and terms; and/or (b) a certification from the chief financial officer of the Developer that the Developer has sufficient funds for such construction, and that such funds have been committed to such construction, and/or other documentation satisfactory to the City as evidence of other sources of capital, including, without limitation, credit for sweat equity and donated materials and labor, sufficient to demonstrate that the Developer has adequate funds to cover the difference between the total cost of the construction and completion of the Developer Improvements, less financing authorized by those loans set forth in subparagraph (a) above.
(2) No Encumbrances Except Mortgages, Deeds of Trust, or Sale and Lease-Back for Development. Mortgages, deeds of trust and sales and leases-back shall be permitted before the completion of the Developer Improvements only with the City's prior written approval, which shall not be unreasonably withheld or delayed, and only for the purpose of securing loans of funds to be used for financing the construction of the Developer Improvements (including architecture, engineering, legal, and related direct costs as well as indirect costs) on or in connection with the Developer Improvements, permanent financing, and any other purposes necessary and appropriate in connection with development under this Agreement. In no event, however, shall the amount or amounts of indebtedness secured by mortgages or deeds of trust exceed the projected cost of constructing the Developer Improvements, as evidenced by a pro forma and a construction contract which set forth such construction costs. The Developer shall notify the City in advance of any mortgage, deed of trust or sale and lease-back financing, if the Developer proposes to enter into the same before completion of the construction of the Developer Improvements. The words "mortgage" and "trust deed" as used hereinafter shall include sale and lease-back.
Holder Not Obligated to Construct 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 Developer Improvements or any portion thereot, or to guarantee such construction or completion; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Properties to any uses or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.
(4) Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure.
With respect to any mortgage or deed of trust granted by Developer as provided herein, whenever the City may deliver any notice or demand to Developer with respect to any breach or default by the Developer in completion of construction of the Developer Improvements, the City shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights granted by the City are concerned) have the right, at its option, within thirty (30) days after the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof 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 completion of the Developer Improvements, or any portion thereof (beyond the extent necessary to conserve or protect the improvements or 16 construction already made without first having expressly assumed the Developer's obligations to the City by written agreement reasonably satisfactory to the City. The holder, in that event, must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates. Any such holder properly completing such improvement shall be entitled, upon compliance with the requirements of Section 2L of this Agreement, to a Release of Construction Covenants. It is understood that a holder shall be deemed to have satisfied the thirty (30) day time limit set forth above for commencing to cure or remedy a Developer default which requires title and/or possession of that portion of the Properties which shall have been conveyed to the Developer if and to the extent any such holder has within such thirty (30) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. (5) Failure of Holder to Complete Developer Improvements. In any case where, thirty (30) days after the holder of any mortgage or deed of trust creating a lien or encumbrance upon the Properties or any part thereof receives a notice from City of a default by the Developer in completion of construction of any of the Developer Improvements under this Agreement, and such holder has not exercised the option to construct as set forth in this Section 2M, or if it has exercised the option but has defaulted hereunder and failed to timely cure such default, the City may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the ownership of the Properties or any part thereof has vested in the holder, the City, if it so desires, shall be entitled to a conveyance from the holder to the City of all or a portion of the Properties, as applicable, upon payment to the holder of an amount equal to the sum of the following:
(a) The unpaid mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings);
(b) All expenses with respect to foreclosure including reasonable attorneys' fees;
(c) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Site or part thereof;
(d) The costs of any improvements made by such holder;
(e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the City; and
17 (f) Any customary prepayment charges imposed by the lender pursuant to its loan documents and agreed to by the Developer.
(6) Right of the City to Cure Mortgage or Deed of Trust Default. In the event of a mortgage or deed of trust default or breach by the Developer prior to the completion of the construction of any of the Developer Improvements or any part thereof, Developer shall immediately deliver to City a copy of any mortgage holder's notice of default. If the holder of any mortgage or deed of trust has not exercised its option to construct, the City shall have the right but no obligation to cure the default. In such event, the City shall be entitled to reimbursement from the Developer of all proper costs and expenses incurred by the City in curing such default. The City shall also be entitled to a lien upon the Properties to the extent of such costs and disbursements. Any such lien shall be junior and subordinate to the mortgages or deeds of trust pursuant to this Section 2M.
3. AFFORDABLE HOUSING COVENANTS AND RESTRICTIONS
A. Use in Accordance with Agreement. The Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Properties or any part thereof, that upon the Closing and during construction, operation, and thereafter, the Developer shall devote the Properties to the uses specified in this Agreement for the periods of time specified therein. All uses conducted on the Properties, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to all applicable provisions of the City Municipal Code.
The foregoing covenants shall run with the land.
B. Affordable Housing Covenants. The Developer for itself and any successors in interest hereby covenants and agrees that the Properties will be used for five (5) ownership housing units sold to "Very Low Income Households" as defined in HSC Section 50105 (the "Affordable Units") at an "Affordable Housing Cost" as defined in HSC Section 50052.5 for Very Low Income Households. Persons and families meeting the definition of Very Low Income Households, who intend to purchase and reside in an Affordable Unit as their primary residence shall be referred to as "Qualified Homebuyers."
Developer shall additionally comply with any current or future policies adopted by the City for selection, qualification, and monitoring of homebuyers who purchase affordable units assisted by the City, provided, however, that in the event that such policies require a material change to Developer's selection, qualification or monitoring practices, the City shall allow Developer a commercially reasonable time to transition its policies.
Upon sale of each of the Affordable Units to a Qualified Homebuyer, the Qualified Homebuyer and the City shall enter into a Resale Restriction Agreement that restricts subsequent transfers of the Property to Very Low Income Households and requires that the Qualified Homebuyer live in the Affordable Unit as their primary residence. The Resale Restriction Agreement shall be in a form prepared and approved by the City and shall have a term of forty-five (45) years and shall adhere to the requirements of HSC Section 34176.1, as set forth in greater detail in Attachment No. 8. Upon recordation of a Resale Restriction Agreement in the Official Records of Merced County, the 18 applicable Affordable Unit shall be released from the restrictions set forth in this Affordable Housing Covenant.
Developer shall develop the Projects on the Sites in conformity with this Agreement and in the event of inconsistency among such provisions and covenants of record, the most restrictive restrictions then in effect shall apply. Should the Developer have multiple restrictions on unit affordability required by other funding sources, the Developer shall adhere to more restrictive (lower) income and Affordable Housing Cost limits.
C. Assistance to Developer.
(1) Intent. Due to land prices, inflation, material costs, and interest, many persons of low or moderate income cannot afford housing. It is the intent and purpose of the City and the Developer in entering into this Agreement that the Sites are developed with new high-quality single family dwelling units and such units are made available to Very Low Income Households. In order to accomplish these goals, it will be necessary for the City to sell the Properties to the Developer at a rate below fair market value.
Assistance is contingent upon satisfactory financial condition of Developer to be substantiated by submission of financial reports to City. The Developer and the City agree to mutually consider reasonable requests for amendments to this Agreement to add additional financial assistance or to respond to requests made by any of the parties hereto, lending institutions, equity or tax credit investors, bond counsel, or financial consultant to the City necessitated by requirements of the assistance programs involved in the financing of the Project. Such amendments shall be in writing and approved by the parties hereto, including the City Council. (2) Fee Waivers and Deferrals. The City agrees to assist with Building Permit Fees, Water and Sewer Connection Fees, and Public Facility Finance Program (PFFP) Fees :
a. Waivers: The City waives the PFFP Fees pursuant to Administrative Policies and Procedures A-32 for both affordable housing and infill housing. • This waiver of PFFP fees constitutes a commitment to the project of $11,671 per parcel. With the lot split creating five parcels, the total PFFP waiver is $58,355. The City further agrees to waive water and sewer connection fees that may be needed for the new parcel and for one parcel that has a ¾" water line, that may need to increase to a 1" line. b. Deferrals: The City agrees to waive Plan Check and Building Permit fees, on the first property, up to $7000 to be reimbursed from Housing Successor Agency funds, and to defer the cost of Building Permit Fees and Plan Check fees until the certificate of occupancy, on each additional housing unit.
(3) Funding Commitment. The Developer shall demonstrate the ability to construct the housing units based on pledges of sweat equity by the future tenant - owner, labor and 19 material donations, outside financial contributions or donations and available financing or cash under control by the Developer pledged towards the projects.
D. Use of the Site.
(1) Uses. The Developer covenants and agrees for itself, its successors, its assigns, and every successor-in-interest that during construction and thereafter, to devote the Site to residential uses that are restricted 50% of the area median income as set forth herein. The foregoing covenant shall run with the land.
(2) Obligation to Refrain from Discrimination. The Developer covenants by and for itself and any successors-in-interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, disability, religion, sex, marital status, ancestry, national origin, or sexual orientation or identity in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site, nor shall the 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, sub-lessees, or vendees of the Site. The foregoing covenants shall run with the land.
(3) Form of Nondiscrimination and Non-segregation Clauses. The Developer shall refrain from restricting the rental, sale, or lease of the Site on the basis of race, color, creed, disability, religion, sex, marital status, ancestry, national origin, or sexual orientation or identity of any person. All such deeds, leases, subleases, agreements, or contracts pertaining to the sale, lease, sublease, transfer assignment, use, occupancy, tenure, or enjoyment of the Site, or any portion thereof, shall contain or be subject to substantially the following nondiscrimination or non- segregation clauses:
(a) In deeds: "The Grantee herein covenants by and for himself, his 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, disability, religion, sex, marital status, ancestry, national origin or sexual orientation or identity in the sale, lease, sublease, transfer, assignment, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the Grantee itself or any person claiming under or through them 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 and subleases: "The lessee herein covenants by and for himself, his heirs, executors, administrators, and assigns, and all per persons claiming under or through him, and this lease is made and accepted upon and subject to the following conditions:
20 That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, disability, religion, sex, marital status, ancestry, national origin, or sexual orientation or identity in the lease, sublease, transfer, assignment, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him, 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, or sub-lessees, subtenants, or vendees in the land 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, disability, religion, sex, marital status, ancestry, national origin, or sexual orientation or identity in the sale, lease, sublease, transfer, assignment, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee himself or any person claiming under or through him, 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 land."
(4) Transfer Requirements. The Developer agrees the units constructed pursuant to this Agreement shall remain available and restricted to persons and families that are at or below 50% of the area median income as set forth herein for the longest feasible time, but for not less than forty-five (45) years upon the sale of each of the Affordable Units to a Qualified Homebuyer. City and Developer agree that agreements detailing the terms of this Section shall be recorded in the form attached hereto as Attachment No. 8. (5) Rights of Access-Public Improvements and Facilities. The City, for itself and other public agencies, at their sole risk and expense, reserves the right to enter the Site, 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 the Site. Any such entry shall be made only after reasonable notice to the Developer or its transferee, assignee, or successor-in-interest, and the City shall indemnify and hold the Developer harmless from any claims or liabilities pertaining to any entry. Any damage or injury to the Site resulting from such entry shall be properly repaired at the sole expense of the public City responsible for the entry.
(6) Effect and Duration of Covenants. Except as otherwise provided, the covenants contained in this Agreement and the deeds shall remain in effect for at least 45 years upon the sale of each of the Affordable Units to a Qualified Homebuyer. The covenants against discrimination shall remain in effect in perpetuity. The covenants established in the Agreement and the deeds shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and Agency, its successors and assigns, the City and any successor-in- interest to the Site or any part thereof.
21 The City and Agency are deemed the beneficiaries of the terms and provisions of this Agreement and the covenants running with the land, for and in its own rights and for the purpose of protecting the interests of the community and other parties, public and private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and covenants running in favor of the Agency and City without regard to whether the Agency or City has been, remains, or is an owner of any land or interest therein in the Site, any parcel or sub-parcel. The Agency and City shall have the right, but not the obligation, if the Agreement and covenants are breached, to exercise all rights and remedies and to maintain any actions or 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 the Agreement and covenants may be entitled.
E. Effect of Violation of the Terms and Provisions of this Agreement After Completion of Construction. The City is deemed the 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, without regard to whether the City has been, remains or is an owner of any land or interest therein in the Properties. The City shall have the right, if the Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches and to avail itself of the rights granted herein to which it or any other beneficiaries of this Agreement and covenants may be entitled.
4. DEFAULTS AND REMEDIES
A. Default Remedies. Subject to the extensions of time set forth in Section 5B of this Agreement, failure by either party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party claiming a Default shall give written Notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party within thirty (30) days from receipt of such Notice immediately, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with diligence.
B. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Merced, State of California, or in the District of the United States District Court in which such county is located.
C. Specific Performance. If the Developer or the City defaults under any of the provision of this Agreement, the non-defaulting party shall serve written notice of such default upon 22 the defaulting party. If the default is not cured within the time period described in Section 506, the non-defaulting party, at its option, may institute an action for specific performance of the terms of this Agreement.
ermination by the Developer Prior to Conveyance of the Properties. In th vent that prior to the conveyance of the Properties the Developer is not in default under thi Agreement and: (1) the City does not tender title pursuant to the Grant Deed in the manner and condition and by the date provided in this Agreement; or (2) one or more of the Developer Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the Developer; or (3) any default of the City prior to the Closing is not cured within the time set forth in Section 4A hereof, after written demand by the Developer; or (4) Developer timely disapproves the feasibility of the development contemplated hereunder pursuant to Section IN hereof; or (5) the Developer timely disapproves the environmental condition of the Site pursuant to Section 10 hereof; then this Agreement may, at the option of the Developer, be terminated by written Notice thereof to the City. From the date of the Notice of termination of this Agreement by the Developer to the City and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties with respect to the Properties by virtue of or with respect to this Agreement. Under these circumstances, the Developer shall be entitled to a return of the Developer Deposit plus any accrued interest.
E. Termination by the City Prior to Conveyance of the Properties. In the event that prior to conveyance of the Properties the City is not in Default under this Agreement and: (1) the Developer (or any successor in interest) assigns or attempts to assign the Agreement or any rights therein or in the Properties in violation of this Agreement; or (2) one or more of the City Conditions Precedent to the Closing is not fulfilled on or before the time set forth in the Schedule of Performance and such failure is not caused by the City; or (3) the Developer is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 4A hereof; then this Agreement and any rights of the Developer or any assignee or transferee with respect to or arising out of the Agreement or the Properties, shall, at the option of the City, be terminated by the City by written Notice thereof to the Developer. From the date of the Notice of termination of this Agreement by the City to the Developer and thereafter this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties. Under these circumstances, the City shall be entitled to keep the Developer Deposit plus any accrued interest.
Reentry and Revesting of Title in the City for Failure to Timely Commence and Complete Developer Improvements or for an Unlawful Transfer.
After the Closing and Prior to Completion of the Developer Improvements. The City has the right, at its election, to reenter and take possession of the Properties transferred to the Developer pursuant to this Agreement, with all improvements thereon, and terminate and revest in the City the estate conveyed to the Developer if after the Closing the Developer (or its successors in interest) shall:
23 (a) Fail to start the construction of the Developer Improvements as required by this Agreement for a period of thirty (30) days after written notice thereof from the City; or
(b) Abandon or substantially suspend construction of the Developer Improvements required by this Agreement for a period of thirty (30) day:
after written notice thereof from the City, unless such abandonment o suspension is not caused by Developer's acts or omissions or as provided for in Section 5B; or
Fail to complete the Developer Improvements within the time limits set forth in the Schedule of Performance, but in no event later than two (2) years after the Closing; or
(d) Contrary to the provisions of Section 5C, Transfer or suffer any involuntary Transfer in violation of this Agreement.
(2) Conditions of Reentry and Revesting Rights. The City's right to reenter, terminate and revest shall be subject to and be limited by and shall not defeat, render invalid or limit:
(a) Any mortgage or deed of trust permitted by this Agreement; or (b) Any rights or interests provided in this Agreement for the protection of the holders of such mortgages or deeds of trust.
(3) To exercise its right to reenter, repossess, and re-vest in the City the estate with respect to the Site theretofore conveyed to the Developer, the City shall execute a Deed of Trust in the form attached hereto as Attachment No. 9 to give effect to the City's right, as set forth in this Section under specified circumstances prior to the recordation of the Release of Construction Covenants, to reenter and take possession of the Site with all improvements thereon and terminate and re-vest in the City the estate conveyed to the Developer. (4)
provision to give effect to the City's right as set forth in this Section 4F, to reenter and take possession of the Properties, with all improvements thereon, and to terminate and revest in the City the estate conveyed to the Developer. Upon the revesting in the City of title to the Properties transferred to the Developer by Grant Deed as provided in this Section 4F, the City shall use its reasonable efforts to resell the Properties as soon and in such manner as the City shall find feasible to a qualified and responsible party or parties (as determined by the City) who will assume the obligation of making or completing the Developer Improvements, or such improvements in their stead as shall be satisfactory to the City and in accordance with the uses specified for the Properties.
Upon such resale of the Properties, the net proceeds thereof after repayment of any mortgage or deed of trust encumbering the Properties which is permitted by this Agreement, shall be applied:
24 (a) First, to reimburse the City, on its own behalf or on behalf of the City, all costs and expenses incurred by the City, excluding City statt costs, but specifically, including, but not limited to, any expenditures by the City in connection with the recapture, management and resale of the Properties (but less any income derived by the City from the Properties in connection with such management); all taxes, assessments and water or sewer charges with respect to the Properties which the Developer has not paid (or, in the event that Properties are exempt from taxation or assessment of such charges during the period of ownership thereof by the City, an amount, if paid, equal to such taxes, assessments, or charges as would have been payable if the Properties were not so exempt); any payments made or necessary to be made to discharge any encumbrances or liens existing on the Properties or part thereof at the time or revesting of title thereto in the City, or to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the Developer, its successors or transferees; any expenditures made or obligations incurred with respect to the making o1 completion of the Improvements or any part thereof on the Properties; an any amounts otherwise owing the City; and in the event additional proceeds are thereafter available; then
(b) Second, to reimburse the Developer, its successor or transferee, up to the amount equal to the sum of the costs incurred for the acquisition and development of the Properties transferred to the Developer by Grant Deed and for the Developer Improvements existing on such Properties at the time of the reentry and possession, less any gains or income withdrawn or mad y the Developer from the Properties transferred to the Developer by Gran Any balance remaining after such reimbursements shall be retained by the City as its property. The rights established in this Section 4F are not intended to be exclusive of any other right, power or remedy, but each and every such right, power, and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy authorized herein or now or hereafter existing at law or in equity. These rights are to be interpreted in light of the fact that the City will have conveyed the Properties to the Developer for redevelopment purposes, particularly for development and operation of residential and commercial facilities, and not for speculation in undeveloped land.
(5) The rights established in this Section 4F are to be interpreted in light of the fact that the Site is to be conveyed to the Developer under this Agreement for a specific development project and not for speculation in undeveloped land.
GENERAL PROVISIONS
A. Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to 25 the other party under this Agreement must be in writing and may be given by any commercially acceptable means to the party to whom the Notice is directed at the address of the party as set forth below, or at any other address as that party may later designate by Notice.
To City: City of Merced, A California Charter
Municipal Corporation
678 W. 18th Street
Merced, CA 95340
Attention: Stephanie Dietz, City Manager
With a copy to: City Attorney's Office
678 W. 18t Street
Merced, CA 95340
Attn: City Attorney
Fax No.: 209-388-7907
To Developer: Fuller Center for Housing of Merced County P.O. Box 423
1230 Broadway Ave.
Atwater, CA 95301
Attn: Lyle Allen
Any written notice, demand or communication shall be deemed received immediately if delivered by hand, 24 hours after delivery to a receipted, overnight delivery service such as Federal Express, and shall be deemed received on the third (3rd) day from the date it is postmarked if delivered by registered or certified mail.
Enforced Delay; Extension of Times of Performance. 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; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; governmental restrictions or priority; litigation; acts or omissions of the other party; or acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of the City which shall not excuse performance by the City). 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. Times of performance under this Agreement may also be extended in writing by the mutual agreement of the City and the Developer.
Notwithstanding any provision of this Agreement to the contrary, the lack of funding to complete the Developer Improvements shall not constitute grounds of enforced delay pursuant to this Section 5B.
C. Transfers of Interest in Properties or Agreement.
26 (1) Prohibition. The qualifications and identity of the Developer as a developer and operator or lessor of Attordable Housing are of particular concern to the City. Furthermore, the parties acknowledge that the City has negotiated the terms of this Agreement in contemplation of the development and operation of a high-quality residential development on the Properties.
Accordingly, for the period commencing upon the date of this Agreement and until furnishing of the Release of Construction Covenants: (a) no voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers under this Agreement; (b) nor shall the Developer make any total or partial sale, transfer, conveyance, assignment, subdivision, refinancing or lease of the whole or any part of the Properties or the Developer Improvements thereon; (c) nor shall any business be operated thereon; collectively referred to herein as a "Transfer," without the prior written approval of the City, except as expressly set forth herein. (2) Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, City approval of a Transfer shall not be required in connection with any of the following:
(a) Any Transfer to an entity or entities in which the Developer retains a and retain management anent strol of the rantere pory or encial interest (b) The conveyance or dedication of any portion of the Properties to the City or other appropriate governmental agency, or the granting of easement or permits to facilitate construction of the Developer Improvements (a (c) Any requested assignment for financing purposes (subject to such financing being considered and approved by the City pursuant to Section 2M erein), including the grant of a deed of trust to secure the funds necessary n. construction and permanent financing of the Develop
Improvements.
In the event of a Transfer by Developer under subparagraph (a) above not requiring the City's prior approval, Developer nevertheless agrees that at least thirty (30) days prior to such Transfer it shall give written notice to City of such assignment and satisfactory evidence that the assignee has assumed in writing through an assignment and assumption agreement of all of the obligations of this Agreement. Such assignment shall not, however, release the assigning Developer from any obligations to the City hereunder.
(3) City Consideration of Requested Transfer. The City agrees that it will not unreasonably withhold approval of a request for approval of a Transfer made pursuant to this Section 5C, provided the Developer delivers written Notice to the City requesting such approval.
Such Notice shall be accompanied by evidence regarding the proposed transferee's development and/or operational qualifications and experience, and its financial commitments and resources, in sufficient detail to enable the City to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 5C and as reasonably determined by the City. The City may, in 27 considering any such request, take into consideration such factors as: (a) the quality of any new and/or replacement operator; (b) the sales tax revenues projected to be received from the Properties; (c) the transferee's past performance as developer and operator of residential and commercial facilities; (d) the current financial condition of the transferee, and similar factors. The City agrees not to unreasonably withhold its approval of any such requested Transfer, taking into consideration the foregoing factors.
An assignment and assumption agreement in form satisfactory to the City's legal counsel shall also be required for all proposed Transfers. Within thirty (30) days after the receipt of the Developer's written Notice requesting City approval of a Transfer pursuant to this Section 5C the City shall either approve or disapprove such proposed assignment or shall respond in writing by stating what further information, if any, the City reasonably requires in order to determine the request complete and determine whether or not to grant the requested approval. Upon receipt of such a response, the Developer shall promptly furnish to the City such further information as may be reasonably requested.
D. Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon the Developer and its permitted successors and assigns. Whenever the term "Developer" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.
Assignment by City. The City may assign or transfer any of its rights or obligations under this Agreement with the approval of the Developer, which approval shall not be unreasonably withheld.
F. Relationship Between City and Developer. It is hereby acknowledged that the relationship between the City and the Developer is not that of a partnership or joint venture and that the City and the Developer shall not be deemed or construed for any purpose to be the agent of the other. Except as expressly provided herein or in the Attachments hereto, the City shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Developer Improvements. The Developer agrees to indemnify, hold harmless and defend the City, and its officers, agents, employees, and volunteers, from any claim made against the City arising from a claimed relationship of partnership or joint venture between the City and the Developer with respect to the development, operation, maintenance or management of the Properties, or the Developer Improvements, as set forth in this Agreement. The Developer has obtained legal advice from counsel of its choosing regarding this Agreement and all matters which may pertain thereto, including without limitation any consequences as to income tax or property tax, and the City has made no representations and has provided no advice in connection therewith.
G. No Third-Party Beneficiaries. There shall be no third party beneficiaries of this Agreement.
City Approvals and Actions. The City shall maintain authority over this Agreement and the authority to implement this Agreement through the City Manager (or his/her duly authorized representative). The City Manager shall have the authority to make approvals, issue interpretations, waive provisions, and/or enter into certain amendments of this Agreement on behalf of the City so long as such actions do not materially or substantially change the uses or development permitted on the Properties, or add to the costs incurred or to be incurred by the City as specified herein, and such approvals, interpretations, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the City Council.
I. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Agreement shall be executed in three (3) originals, each of which is deemed to be an original.
J. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 11, which are incorporated herein.
K. Real Estate Brokerage Commission. The City and the Developer each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with the Developer's acquisition of the Properties from the City. The parties agree to defend and hold harmless the other party from any claim to any such commission or fee from any other broker, agent or finder with respect to this Agreement which is payable by such party.
L. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms.
Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise.
M. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement has been prepared with input from both parties, and shall be interpreted as though prepared jointly by both parties.
N. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement.
29 O. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party.
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.
The time in which any act is to be done under this
Agreement is computed by excluding the first day (such as the day escrow opens), and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded.
The term "holiday" shall mean all holidays as specified in Section 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.
R. 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.
S. Time of Essence. Time is expressly made of the essence with respect to the performance by the City and the Developer of each and every obligation and condition of this Agreement.
Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements.
U. Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such 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.
V. Rights and Remedies Are 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 the same or different times, of any other rights or remedies for the same default or any other default by the other party. 30 W. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
Non-Liability of Officials and Employees of the City. No member, official o1 employee of the City shall be personally liable to the Developer, or any successor in interest, in the event of any Default or breach by the City of for any amount which may become due to the Developer or its successors, or on any obligations under the terms of this Agreement.
Z. Attorneys' Fees. In any action between the parties to interpret, enforce, reform, modify, rescind, or otherwise in connection with any of the terms or provisions of this Agreement, the prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other relief to which it might be entitled, reasonable costs and expenses including, without limitation, litigation costs and reasonable attorneys' fees. [signatures on next page]
IN WITNESS WHEREOF, the City and the Developer have executed this Disposition and Development Agreement as of the date set forth above.
APPROVED AS TO LEGAL FORM:
LOZANO SMITH
By bruno fres
for Travis Lindsey, City Attorney
ATTEST:
, CITY CLERK
(Attach Notary Acknowledgement)
By:
City Clerk
31 FULLER CENTER FOR HOUSING OF
MERCED COUNTY
A California 501(c)(3) Non-Profit Corporation
J:\WDOCS\03360\001\AGT\00977430.DOCX a Jamie & Anger
Signature
Vanice d. Sorge
Print Name
CITY OF MERCED
A California Charter Municipal Corporation President
Title
By: _
Stephanie R. Dietz, City Manager By: Lyle Aller
Date: Signature
LYLE ALLEN
Print Name
VICE PRESIDENT
Title
DEVELOPER:
11/2/22
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document
State of California
County of merced
on NovemBer 7, 2022 before me, Dawn Mendonca, Notary Public (insert name and title of the officer)
personally appeared Janice J. Sorge and Lule Allen
who proved to me on the basis of satisfactory evidence to be the persons whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she 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.
DAWN MENDONCA
Notary Public - California - NNA 11
Merced County
Commission # 2304595
SALIFOTNLE My Comm. Expires Oct 8, 2023
Signature DanuMendenc (Seal)
33 ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document
State of California
County of
On before me, _
(insert name and title of the officer)
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 executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
11/2/22