During the drilling of Well 274, staff was informed by the Department of Water Recourses that well number 274 could not be re-used. New well numbers are required for replacement wells; therefore, the project became known as Grayson Well 69 (Replacing Well 274).
On May 7, 2019, by Resolution No. 2019-234, Council accepted the Well 274 (subsurface improvements) Project as complete.
On July 14, 2020, by Resolution No. 2020-312, Council accepted a 4,137 square foot site from Stanislaus County, expanding the Well Site in order to accommodate a future tank, booster pump and treatment system for the new well.
On October 6, 2020, by Resolution No. 2020-413, Council approved an agreement with Hazen and Sawyer for Engineering Services During Construction for the Grayson Well 69 (Replacing Well 274) Project.
On December 7, 2021, by Resolution 2021-473, Council awarded a construction contract to W.M. Lyles Co., Fresno, CA, in the amount of $2,683,800 plus $268,380 for contingency (if needed), for a total amount not to exceed $2,952,180, for the Grayson Well 69 (Replacing Well 274) Project.
DISCUSSION:
Construction began in February 2022 for the Grayson Well 69 (Replacing Well 274) Project.
Due to limited resources, combined with the technical nature of the Grayson Well 69 project, construction services are needed to supplement staffing resources. To account for the construction support services, an agreement is needed.
Staff is currently utilizing Brown & Caldwell (B&C) for construction services for a similar project:
Well 71 (Replacing Well 267). Therefore, to assist with workload capacity limitations and project delivery efficiencies, staff is recommending the use of B&C for construction support services as outlined in the overall agreement.
Tasks included in the agreement include the following:
o Construction Support Services
Construction Management
Schedule Review
Site Coordination
Construction Team Communication
Start-up & Commissioning
In accordance with Modesto Municipal Code 8-3.204(a) Exceptions to Formal Bidding Requirements, the agreement with B&C is for professional services and, therefore, exempt from the bid requirement. In accordance with Administrative Directive 3.1, Selection Procedures for Professional Consultants who Provide Architectural & Engineering Services for Capital Projects, the Director at his direction, may secure a candidate firm if it is in the best interest of the City.
Considering B&C is providing similar services for well project, and has rendered satisfactory #12..
- 197 -
City Council, May 10, 2022
Agreement with Brown and Caldwell, Inc.
Construction Support Services for Grayson Well 69 (Replacing Well 274)
services, there is efficiency in utilizing their resources. Therefore, staff recommends approval of a consultant agreement for construction support services with B&C.
FISCAL IMPACT:
Funding for the construction, contingency, construction administration, and design support, will be budgeted in the current FY 2021-22 Capital Improvement Program budget in account:
101080 – Well 69 (Replacing Well 274)
Total estimated cost for consultant services associated with the agreement with B&C is $176,383 and will be funded in the current FY 2021-22 Capital Improvement Program budget in account:
101080 – Well 69 (Replacing Well 274)
ANTICIPATED CONSTRUCTION EXPENDITURES:
Construction Contract $2,683,800
Construction Contingency (10%) $268,380
Construction Administration – City Staff $91,998
Construction Support Services – (Brown & Caldwell) * $160,348 - Additional Services (if needed) * $16,035
City Construction Forces $25,000
Engineering Design Support During Construction – City Staff (4%) $107,352 TOTAL ANTICIPATED CONSTRUCTION EXPENDITURES: $3,352,913 *Funds are available and budgeted in Construction Administration (CA) and will be used to fund this agreement.
COMMITTEE RECOMMENDATION:
This project was presented to the Economic Development Committee (EDC) on November 6, 2019, as part of a report on upcoming Capital Improvement construction projects. As stated in the EDC staff report, as bids are received, staff will present projects directly to Council for award of construction.
RECOMMENDED COUNCIL ACTION:
Resolution approving an Agreement with Brown and Caldwell, Inc., Rancho Cordova, CA, for Construction Support Services for Grayson Well 69 (Replacing Well 274) in the amount of $160,348 for the identified scope of services, plus $16,035 in additional services, if needed, for a total not to exceed amount of $176,383 and authorizing the City Manager, or his designee, to execute the Agreement.
#12..
- 198 -
City Council, May 10, 2022
Agreement with Brown and Caldwell, Inc.
Construction Support Services for Grayson Well 69 (Replacing Well 274)
Approved by:
William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:
1. Resolution
2. Brown and Caldwell Agreement
3. Exhibits A & B
#12..
- 199 -
MODESTO CITY COUNCIL
RESOLUTION NO. 2022-XX
RESOLUTION APPROVING AN AGREEMENT WITH BROWN AND CALDWELL, INC., RANCHO CORDOVA, CA, FOR CONSTRUCTION SUPPORT SERVICES FOR GRAYSON WELL 69 (REPLACING WELL 274) IN THE AMOUNT OF $160,348 FOR THE IDENTIFIED SCOPE OF SERVICES, PLUS $16,035 IN ADDITIONAL SERVICES, IF NEEDED, FOR A TOTAL NOT TO EXCEED AMOUNT OF $176,383 AND
AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE THE
AGREEMENT
WHEREAS, the Grayson water service area was acquired from the Del Este Water Company in 1995 as part of the overall acquisition of Del Este’s water system, where the City now operates and maintains two wells and storage tank No. 9 in the outlying service area of Grayson; and
WHEREAS, elevated nitrate concentrations have been a problem at Well 274, and a feasibility study completed in January 2015, addressed nitrate concentrations in Well 274 and recommended a replacement well, because the current well is relatively shallow and was installed in 1967; and
WHEREAS, on January 10, 2017, by Resolution No. 2017-18, Council approved an agreement with Hazen and Sawyer to provide hydrogeological and design services for Grayson Replacement Well 274; and
WHEREAS, On January 23, 2018 by Resolution No. 2018-46, Council awarded a construction contract to Maggiora Bros. for the Grayson Replacement Well 274 Project which constructed the subsurface improvements; and
WHEREAS, during the drilling of Well 274, staff was informed by the Department of Water Recourses that well number 274 could not be re-used. New well numbers are required for #12..
- 200 -
replacement wells; therefore, the project became known as Grayson Well 69 (Replacing Well 274); and
WHEREAS, On May 7, 2019, by Resolution No. 2019-234, Council accepted the Well 274 (subsurface improvements) Project as complete; and
WHEREAS, on December 7, 2021, by Resolution 2021-473, Council awarded a construction contract to W.M. Lyles Co., Fresno, CA, in the amount of $2,683,800 plus $268,380 for contingency (if needed), for a total amount not to exceed $2,952,180, for the Grayson Well 69 (Replacing Well 274) Project; and
WHEREAS, construction began in February 2022 for the Grayson Well 69 (Replacing Well 274) Project, and due to limited resources, combined with the technical nature of the Grayson Well 69 project, construction services are needed to supplement staffing resources; and WHEREAS, staff is currently utilizing Brown & Caldwell (B&C) for construction services for a similar project: Well 71 (Replacing Well 267). Therefore, to assist with workload capacity limitations and project delivery efficiencies, staff is recommending the use of B&C for construction support services as outlined in the overall agreement; and WHEREAS, in accordance with Modesto Municipal Code 8-3.204(a) Exceptions to Formal Bidding Requirements, the agreement with B&C is for professional services and, therefore, exempt from the bid requirement. In accordance with Administrative Directive
3.1Selection Procedures for Professional Consultants who Provide Architectural & Engineering Services for Capital Projects, the Director at his direction, may secure a candidate firm if it is in the best interest of the City; and
#12..
- 201 -
WHEREAS, considering B&C is providing similar services for well project, and has rendered satisfactory services, there is efficiency in utilizing their resources, and WHEREAS, staff recommends approval of a consultant agreement for construction support services with B&C.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves an Agreement with Brown & Caldwell, Inc., of Rancho Cordova, CA, for Construction Support Services for Grayson Well 69 (Replacing Well 274) in the amount of $160,348 for the identified scope of services, plus $16,035 in additional services, if needed, for a total not to exceed amount of $176,383.
BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the Agreement, in a form approved by the City Attorney. #12..
- 202 -
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of May 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST: ______________________________
DIANE NAYARES-PEREZ, CMC, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ______________________________
JOSE M. SANCHEZ, City Attorney
#12..
- 203 -
-1-
AGREEMENT FOR DESIGN AND CONSTRUCTION SUPPORT SERVICES
GRAYSON WELL 69 (REPLACING WELL 274) PROJECT
THIS AGREEMENT, made and entered into in the City of Modesto, State of California, this 10th day of May, 2022, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and BROWN AND CALDWELL, a California corporation, hereinafter referred to as "Consultant".
This Agreement is made with regard to the following recitals:
A. The City has determined that design and construction support services should be performed for the Grayson Well 69 (Replacing Well 274) project for City.
B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).
NOW, THEREFORE, in consideration of this agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:
1. SCOPE OF SERVICES.
Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached hereto and referred to as Exhibit "A" or "project". The Consultant shall perform the services as described in Exhibit "A" in a manner compatible with the standards of its profession, and shall produce a fully complete project that is acceptable to City.
2. TERM OF AGREEMENT.
This Agreement is effective as of the date first written above and will continue in effect until City's acceptance of and payment for all services authorized by City and #12..
- 204 -
-2-
performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.
Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents commonly referred to as “project” attached hereto as Exhibit "A" and made a part hereof. City hereby gives Consultant notice to proceed with the preparation of the project in the manner described in Exhibit "A", as of the Effective Date of this agreement. Consultant shall diligently proceed with the preparation of the project and agrees to complete said preparation within the time period set forth in Exhibit "A".
3. COMPENSATION.
Consultant agrees to accept a sum not to exceed ONE HUNDRED SIXTY THOUSAND THREE HUNDRED FORTY EIGHT AND 00/100 DOLLARS ($160,348.00) (maximum compensation) as full remuneration for performing all services and furnishing all staffing and materials for Modesto in accordance with Exhibit "A" attached hereto and for performance by Consultant of all of its duties and obligations under this Agreement, except that additional services may be compensated as described below.
The Compensation shall be paid pursuant in the manner and at the times set forth below:
City shall pay Consultant on a time and materials basis for Consultant’s actual costs for all work called for in Exhibit “A” to this Agreement. All work to be performed under this Agreement shall be billed at the hourly rates set forth in Exhibit “B” attached hereto, Consultant shall submit monthly invoices to City which include detailed tasks, hours worked, and billable rates for all work completed, and detailed receipts for any out-of-pocket costs paid by Consultant in connection with work performed on this project. #12..
- 205 -
-3-
Additional services may be authorized by the City Manager in an amount up to, but not to exceed ten percent (10%) of the agreed maximum compensation, or SIXTEEN THOUSAND THIRT FIVE AND 00/100 DOLLARS ($16,035.00). In the event that additional services are deemed necessary, the Consultant shall provide a written request to the City Manager indicating the reason for additional work, scope and cost of such work. The City Manager shall provide a written response to the request, either approving or denying the additional expenditure. If additional services are requested and approved, they will be billed at the hourly rates set forth in Exhibit “B” and may not exceed the amount requested and approved in writing by the City Manager. In that event, the new total compensation shall not exceed ONE
HUNDRED SEVENTY SIX THOUSAND THREE HUNDRED EIGHTY TWO AND 00/100 DOLLARS ($176,383.00). If additional services in excess of this amount are deemed necessary by City Staff, an amendment to this Agreement will be required and must be approved by the City Council prior to commencing the work, as provided in Paragraph 9 of this agreement.
4. OBLIGATIONS OF CONSULTANT.
Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.
Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.
#12..
- 206 -
-4-
5. PERFORMANCE BY KEY EMPLOYEE.
Consultant has represented to City that Stephen Walters, P.E., will be the person primarily responsible for the performance of the services referred to in this Agreement.
City has entered into this Agreement in reliance on that representation by Consultant. Consultant therefore agrees that thirty percent (30%) or more of the time to be devoted to the project that is the subject of this Agreement will be that of the above-named person.
6. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.
Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. Any reuse for any project or purpose other than the services pursuant to this Agreement is at the City’s sole risk. No reports shall be used by the Consultant for purposes other than this contract without the express prior written consent of City.
Title to Data
If, as a part of this Agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this Agreement will be delivered to City upon the completion or termination of services under the contract.
All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City.
#12..
- 207 -
-5-
7. NEWS AND INFORMATION RELEASE.
Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from City through the City Manager.
8. INTEREST OF CONTRACTOR.
Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this contract if so required at the option of City.
9. AMENDMENTS.
Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work.
Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services. #12..
- 208 -
-6-
10. INDEPENDENT CONTRACTOR.
All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Consultant, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City.
Consultant has no authority or responsibility to exercise any rights or power vested in the City.
No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.
Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.
Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement.
Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.
If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and #12..
- 209 -
-7-
control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.
It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.
It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.
As an independent contractor, Consultant hereby indemnifies and holds City harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.
11. ASSIGNMENT.
Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.
12. PATENT/COPYRIGHT MATERIALS.
Unless otherwise expressly provided in the contract, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.
13. NOTICES.
Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the #12..
- 210 -
-8-
provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:
FOR CONSULTANT: Name: Brown and Caldwell
Address: 11020 White Rock Road
Rancho Cordova, CA 95670
Attention: Stephen T Walters, P.E.
Phone: (916) 365-9292
E-mail: [email protected]
FOR CITY: Name: City of Modesto
Address: P.O. Box 642
Modesto, CA 95353
Attention: Jesse Franco, Engineering Division Manager
Phone: (209) 571-5175
Facsimile: (209) 522-1780
E-mail: [email protected]
14. INSURANCE REQUIREMENTS.
The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies authorized in the State of California and shall provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation of the policy, notices of same shall be given to the Risk Manager of the City by certified mail, return receipt requested, for all of the following stated insurance policies. #12..
- 211 -
-9-
In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for non-payment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. (b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per accident of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
#12..
- 212 -
-10-
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work. . Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated. Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its agents, officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of subrogation against the City, its agents, officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's insurance policy(ies) shall include a provision that the general and auto liability coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the contract is signed.
CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. All endorsements referenced above must include the applicable policy number. #12..
- 213 -
-11-
For any claims related to this project, the CONSULTANT’S performance of services on this project, the Consultant’s commercial general liability and automobile liability insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the CONSULTANT’S insurance and shall not contribute with it.
15. TERMINATION OF AGREEMENT.
Termination by City for Default of Consultant
Should Consultant default in the performance of this Agreement or materially breach any of its provisions, at its option, City may terminate this Agreement by giving written notification to Consultant. The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, but not be limited to, any of the following: failure to perform required services or duties, willful destruction of City's property by Consultant, dishonesty or theft.
Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Work make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the City is prohibited from completing the Work for any reason. The City shall provide no less than ten (10) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.
#12..
- 214 -
-12-
Post-Termination Procedure
Upon receipt of a written notice of termination pursuant to either of the foregoing paragraphs, the Consultant shall:
a. Cease its work as directed in the notice of termination as of the termination date and see to it that its employees, subconsultants and agents are notified of such termination and act as specified in the notice of termination;
b. Terminate all orders and Subcontractors except as necessary to complete any portion of the Work that is not terminated; c. If directed in writing by the City to do so, assign all right, title and interest in subcontracts and materials in progress to City, in which case the City will have the right at its discretion to settle, or pay any or all claims arising out of the termination of such subconsultants, but in no event shall recovery by any Consultant or subconsultant include lost profits for portions of the Work not completed or undertaken, including materials not delivered; d. Deliver or otherwise make available to the City all data, drawings, specifications, reports, estimates, summaries and such other information and material as may have been accumulated by the Consultant in performing the Work whether completed or in process; e. Settle outstanding liabilities and claims, subject to the approval of City;
f. Complete performance of such part of the Work as has not been terminated;
#12..
- 215 -
-13-
g. Take such other actions as may be necessary, or as may be directed by the City for the protection and preservation of the Work and/or property related to the Work;
h. If City so requests, and at City's cost, Consultant shall provide sufficient oral or written status reports to make City reasonably aware of the status of Consultant's work on the project. i. The Consultant understands and agrees that City may, in City's sole discretion, refuse to pay Consultant for that portion of Consultant's services which were performed by Consultant on the project prior to the termination date and which remain
unacceptable and/or not useful to City as of the termination date.
City will pay Consultant an amount based on the percentage of satisfactory work completed in accordance with the notice of termination. The final payment to the Consultant after termination for convenience shall be limited to amounts due and owing under the Agreement at time of termination, including the following:
a. The cost of settling and paying valid claims arising out of the termination of the Work such as subconsultant agreements or contracts for materials;
b. The Agreement price allocable to the portion of the Work properly performed or goods supplied to the work site by the Consultant as of the date of termination, as determined in accordance with the notice of termination, reduced by any sums previously paid to the Consultant.
Authorization to Terminate Agreement
#12..
- 216 -
-14-
Termination of the Agreement may be invoked by the City Manager, or his/her designee, subject to the right of the Consultant to appeal the City Manager, or his/her designee’s, decision to the City Council. The Consultant shall appeal by notifying the City Clerk in writing within ten (10) calendar days of receipt of written notification from City of termination of the Agreement. In the event that termination of this Agreement is upheld by the City Council, any cessation of payment of delay claims, extended claims, Eichleay claims, or any other claims for delay shall be retroactive to the date of termination selected by the City Manager, or his/her designee.
16. CERTIFIED PAYROLL REQUIREMENT.
For consultants performing field work on public works contracts on which prevailing wages are required: The Consultant shall comply with the provisions of Section 1776 of the California Labor Code, regarding payroll records, and shall require its subconsultants and subcontractors to comply with that section as may be required by law.
17. INDEMNITY.
The Consultant shall hold the City, its agents, officers, employees, and volunteers, harmless from and save, defend and indemnify them against any and all claims, losses, liabilities, judgments or damages from every cause, including but not limited to injury to person or property or wrongful death, including reasonable costs and expenses of defense of any judicial or administrative action, to the extent arising directly or indirectly out of any negligent, reckless or willful misconduct of Consultant , or its agents, officers, employees, or volunteers relating to or during the performance of its obligations under this Agreement.
In no event shall the cost to defend charged to the Consultant exceed the Consultant’s proportionate percentage of fault. However, notwithstanding the foregoing, in the event one or more defendants is unable to pay its share of defense costs due to bankruptcy or #12..
- 217 -
-15-
dissolution of the business, the Consultant shall meet and confer with other parties regarding unpaid defense costs. Consultant's obligation to defend, indemnify, and hold the City, its agents, officers, and employees harmless under the provisions of this paragraph is not limited to or restricted by any requirement in this Agreement for Consultant to procure and maintain a policy of insurance.
18. DISPUTE RESOLUTION.
All claims, controversies, or disputes arising out of, or relating to the formation of this Agreement, or the breach, termination execution, enforcement, interpretation, or validity of this Agreement, including the determination of the scope or applicability of this contract provision shall first be negotiated or mediated by City staff and Consultant company officers to resolve said issues and failing to do so shall then be determined by binding arbitration in Modesto, California by one arbitrator, except as otherwise specified in this Agreement. The American Arbitration Association shall administer the arbitration under its Arbitration Rules then in effect, subject to the modifications of those rules contained in this paragraph. This agreement to arbitrate shall be specifically enforceable under the prevailing law of any court having jurisdiction, and the award rendered by the arbitrator may be entered in any court having jurisdiction. The appropriate venue for any arbitration or court proceeding relating to or arising out of this provision shall be in Stanislaus County, California.
This paragraph is not intended to and does not waive the claim filing requirements found in California Government Code section 900 et seq. In the event that a timely and legally sufficient, arbitrable claim is filed by Consultant with City, and the claim is rejected in whole or in part by City, this paragraph shall result in the conclusive, final, and binding resolution of all the issues presented in the claim by Consultant so long as any issues presented by the claim are arbitrable. Claims rejected by City or by operation of law, shall be submitted by #12..
- 218 -
-16-
Consultant to arbitration pursuant to the Arbitration Rules of the American Arbitration Association within ninety (90) days after mailing of the written rejection by City to Consultant.
Otherwise, the claim or claims shall be deemed waived in their entirety.
The “fast track’ rules of the American Arbitration Association shall apply to any claim or counterclaim less than ONE HUNDRED FIFTY THOUSAND AND 00/100 ($150,000.00) DOLLARS. In arbitration not proceeding under the “fast track” rules, the arbitrator shall have the power to order that depositions be taken and other discovery be made.
Both City and Consultant shall have the right, upon written notice, to take no more than three (3) depositions of the other as a matter of right in an arbitration proceeding under the “fast track” rules.
Whether or not City and Consultant may be engaged in interstate commerce, any controversy or dispute mentioned above shall be determined by, and the parties shall be bound by, the substantive law of the State of California, and not the Federal Arbitration Act at 9 USC Section 1 et seq.
The arbitrator may grant any remedy or relief deemed by the arbitrator just and equitable under the circumstances, whether or not such relief could be awarded in a court of law. The arbitrator shall be empowered to award monetary sanctions against a party for failure of cooperation in the arbitration. The arbitrator shall, in written award, allocate all the costs of the arbitration, including the fees of the arbitrator and the reasonable attorney fees of the prevailing party, against the party who did not prevail. The prevailing party shall be the party in whose favor the majority of the central issues in the case are resolved.
Notwithstanding anything in this provision to the contrary, the arbitrator shall have no power to award punitive damages or other damages not measured by the party’s actual damages (excluding litigation costs and fees) against any party. This limitation of the #12..
- 219 -
-17-
arbitrator’s powers under this Agreement shall not operate as an exclusion of the issue of punitive damages from this Agreement to Arbitrate sufficient to vest jurisdiction in a court with respect to that issue.
Consultant shall include in all subcontracts a specification whereby the subcontractor consents to being joined in an arbitration between City and Consultant involving the work of the subcontractor to be joined. Consultant’s failure to do so shall be a breach of this Agreement.
The parties hereby waive any rights provided by Title 9.2 of the California Code of Civil Procedure, Section 1296. The arbitrator’s award shall be deemed final, conclusive and binding to the fullest extent allowed by California law.
19. ENTIRE AGREEMENT.
This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by shipment of any article or other commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.
20. PARTIAL INVALIDITY.
If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.
21. WAIVER.
#12..
- 220 -
-18-
The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing.
22. AUDIT.
The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.
Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services. City's representative shall have the right to reproduce any of the aforesaid documents.
23. GOVERNING LAW.
This Agreement shall be governed according to the laws of the State of California.
24. HEADINGS NOT CONTROLLING.
Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.
25. COMPLIANCE WITH LAWS.
Consultant shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.
#12..
- 221 -
-19-
26. CITY BUSINESS LICENSE.
Consultant will have a City of Modesto business license.
27. COVID -19.
While Consultant has made reasonable efforts to incorporate into its plan for the Project any known current project impacts of the COVID-19 pandemic, Consultant has not accounted for, and is not responsible for, unknown future changes due to the COVID-19 pandemic, including, without limitation, additional restrictions by government agencies or others (such as the availability of the site for access or the availability of client or consultant staff or others) to the extent they delay or otherwise impact the Project. In that event, Consultant will notify the City and work in good faith to equitably address any unexpected impacts therefrom. #12..
- 222 -
-20-
IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this Agreement in duplicate by its City Manager and attestation by its City Clerk under authority of Resolution No. 2022- , adopted by the Council of the City of Modesto on the 10th day of May , 2022, and BROWN AND CALDWELL has caused this agreement to be duly executed in duplicate as of the Effective Date. #12..
- 223 -
1 Grayson Well 69 Surface Improvements
Scope of Work
Based on our understanding of the Grayson Well 69 Surface Improvements project and our discussions with City staff, we have prepared the following scope of work to provide part-time construction management services as requested.
The construction contract is fully executed, and the construction phase of the project is underway. Therefore, there is no need for preconstruction services in this scope of work. Other specific assumptions related to individual tasks are included with this scope. Our fee estimate is provided as Attachment A.
Task 1 // Construction Management & Administration
BC will provide construction management and administration services through the construction and final completion periods of the Grayson Well 69 Surface Improvements project. Services will include project management, construction management, contract administration, change order management, and closeout.
Task 1 Assumptions:
Assumed duration of services is twelve (12) months - a construction duration of two hundred and twenty (220) working days plus an additional month for closeout services.
While level of effort will fluctuate during the Work, we anticipate our Construction Manager (CM) will average 10 hours/week and our Project Administrator will average 4 hours/week.
No on-site trailer will be provided by the Contractor. BC staff will perform services from our Rancho Cordova, CA office and perform periodic site visits.
Task 1.1 // Project Management
Our Project Manager (PM) will be responsible for the administration of BCs contract, maintaining the project schedule and budget, and overseeing all invoicing and billing to the City.
Task 1.1 Assumptions:
Project Duration for invoicing purposes is 13 months
PM to spend two (2) hours per month reviewing and preparing invoices.
Project Analyst (PA) to spend two (2) hours per month preparing invoices.
Biller to spend one (1) hour per month issuing and transmitting invoices.
PM to spend one (1) hour per month reviewing schedule and budget with City PM and BC management.
Task 1.2 // Construction Management
Our construction management activities will include schedule review assistance, site coordination, and construction team coordination. These are described below.
Schedule Review Assistance:
While not responsible for the project’s schedule, BC will assist the City in the review of the Contractor’s construction schedules including updates and revisions in accordance with the construction documents. BC will provide general review comments for the City’s consideration as part of their schedule review and evaluation process. When change orders are being negotiated, BC will assist the City in assessing the impact of change orders on the construction schedule.
Site Coordination:
BC will coordinate the project team to identify planned construction activities that have the potential to conflict with each other, do not comply with project requirements, and/or disrupt normal City operations. BC will oversee this task via the construction progress meetings which will discuss in detail work activities planned in the following three-week interval. BC will also coordinate with the City’s Inspection staff periodically for additional information as needed. #12..
- 224 -
CM and Inspection Services – Grayson Well 69 Surface Improvements 2 Grayson Well 69 Surface Improvements
Construction Team Communication:
BC will be the primary point of contact for construction team. BC will facilitate communications among the City project manager (PM), Contractor, Designer, and Operations staff. We will conduct frequent informal communications with City staff.
Start-up and Commissioning Assistance:
BC will assist the City in preparing for and overseeing the testing, start-up, and commissioning phase of the project.
Will coordinate with the contractor and the designer to help ensure comprehensive start-up and testing plans are submitted and approved. We will promote a collaborative approach by engaging City operation staff early in the process and provide them multiple opportunities to provide input, feedback, and submittal review comments. We will assist the construction team in the Division of Drinking Water inspection and approval process.
Task 1.2 Assumptions:
City will take lead in schedule review and evaluation. BC will not provide full schedule analysis but will provide general review comments for the City’s consideration.
BC has assumed review assistance on up to 8 schedule update/time impact analysis schedules.
BC has assumed no more than 20 site visits will occur. These visits will occur as needed to observe construction progress and oversee site coordination.
The presence of BC at a construction site, whether as an on-site representative, resident engineer, construction manager, or otherwise, does not make the BC responsible for those duties that belong to the client, general contractor and/or subcontractors or others, and does not relieve the Contractor or others of their obligations, duties, and responsibilities, including, but not limited to, construction methods, means, techniques, sequences, and procedures necessary for completing all portions of the construction work in accordance with the contract documents, any health or safety programs and precautions required by such construction work, and any compliance with applicable laws and regulations.
Any inspection or observation of the Contractor's work is solely for the limited purpose of determining that the work is generally proceeding in conformance with the intent of the project specifications and contract documents. Consultant makes no warranty or guarantee with respect to the performance of any Contractor.
BC has no authority to exercise control over the Contractor in connection with their work or health or safety programs and precautions. Except to protect BC’s own personnel and except as may be expressly required elsewhere in the scope of services, BC has no duty to inspect, observe, correct, or report on health or safety deficiencies of the Contractor.
Task 1.3 // Construction Contract Administration
BC’s contract administration services will include leading regular communications and meetings, responding to RFIs and submittals. These activities are described below.
Meetings:
Our Construction Manager will lead progress, special topic, and start-up meetings throughout the duration of the construction phase. On average over the course of the project we anticipate progress meetings will be held biweekly, but we will adjust frequency to meet the needs of the project. Progress meetings will discuss work progress to date, Contractor’s three-week look ahead schedule, testing requirements, site coordination, status of project documentation, project issues and solutions, and safety concerns. Example special topic meetings include SCADA coordination, complex mechanical and electrical submittal packages, disinfection, operational testing, startup, and commissioning. BC will prepare and distribute meeting minutes.
Document Management System (CMIS):
BC will provide the web-based document management software called CMIS for the duration of the project This service includes project specific set-up, 12-months of access to the software, 8 total hours of group and/or one-onone trainings, technical support and final closeout and delivery of files. #12..
- 225 -
CM and Inspection Services – Grayson Well 69 Surface Improvements 3 Grayson Well 69 Surface Improvements
Submittal Management:
BC will process and track Contractor submittals through CMIS. BC will perform an initial review for completeness and general compliance with the specifications and then forward to reviewers. Upon completion of the Designer’s and City’s review, the submittal will be returned to the CM along with review comments for processing and returned to the Contractor. For submittals returned to the Contractor that require re-submittal, the re-submittal shall be retained as an action item for discussion at the weekly project meetings.
RFI Management:
BC will process and track Contractor RFIs through CMIS. BC will review Contractor RFIs and will provide information from construction documents back to the Contractor. When additional information or input outside of the construction documents are required, we will route a request to the Designer and/or City for resolution.
Change Management:
BC will issue field orders as needed to communicate change directives to the Contractor. The field orders may require input form the City and/or Designer. BC will provide a log of field orders. BC will support the City in their efforts to evaluate changed conditions, define the necessary scope, prepare cost estimates and impacts to the project schedule, solicit Contractor’s scope and estimate of costs, negotiate with the Contractor, and make final determinations. Change orders will be tracked and documented using CMIS and will be discussed at the weekly progress meetings to confirm negotiation and pricing progress.
Task 1.3 Assumptions:
BC to lead/attend a total of 40 progress, special topic, and start-up meetings.
Meeting duration is one (1) hour
Progress meetings have assumed one a week for the first few months and then average bi-weekly until project completion.
Meetings assumed to be held virtually via Microsoft Teams.
Deliverables: meeting agendas and minutes.
Document Management System (DMS) is CMIS.
BC will provide licensing and 8 hours of training for use of CMIS.
BC has assumed processing of up to 150 submittal documents that include: draft O&Ms, final O&Ms, submittals, submittal resubmittals, warranties forms,
BC has assumed review and processing of up to 30 RFIs.
City will take the lead in issue, dispute and contract change order resolution and processing. BC will provide a support role by overseeing, coordinating, and providing recommendations. BC will not provide comprehensive cost and schedule analysis or final change order documents.
BC has assumed providing support to address 15 change orders and 1 potential claim. We have not budgeted for additional legal or specialty expertise to assist the City in handling or negotiating claims that cannot be addressed with the City’s project team.
City staff effort required: Attend progress meetings. Participate in discussions and meetings regarding RFIs, submittals, change orders and special topics. Provide all inspection, materials testing and specialty inspections services. Maintain and issue weekly statements of working days. Review and process monthly progress payments.
Designer effort required: Provide typical engineering services during construction. Attend progress meetings, participation in discussions and meetings regarding RFIs, and submittals, change orders and special topics.
Review of submittal and RFIs. Issuing contract clarifications and changes. #12..
- 226 -
CM and Inspection Services – Grayson Well 69 Surface Improvements 4 Grayson Well 69 Surface Improvements
Task 1.4 // Final Completion Services
Operation and Maintenance (O&M) Manual Management:
BC will log and track O&M Manuals in a similar fashion as submittals. BC will perform an initial review to verify that all the required information is included, such as manufacturer’s local representative, operating instructions, preventative and corrective maintenance procedures, parts identification, warranty and testing forms. We will then forward to reviewers, collate comments, and return to Contractor until acceptable. After final acceptance testing, BC will have the Contractor submit all test results and warranties to be included in final O&M Manuals prior to submittal to the City.
Deliver Final Project Files:
Project files will be maintained electronically in CMIS. Files will always be available for the City to review. The electronic files will be packaged in accordance with City Standards and delivered at Final Completion.
Schedule of Services
Assumed duration of services is twelve (12) months - a construction duration of two hundred and twenty (220) working days plus an additional month for final completion services. #12..
- 227 -
5 Grayson Well 69 Surface Improvements
Attachment A:
Fee Estimate
#12..
- 228 -
Fee Estimate Attachment A
6 Grayson Well 69 Surface Improvements
Walters,
Stephen T
Bates,
Jacqueline
Durazo,
Elizabeth R
Kirk,
Casey
Uresti,
Irasema
Harrison,
Michael J
Romero,
Sara B
Terrazas,
Richard W
Phase Phase Description PM & CM
Project
Analyst PIC
Deputy
CM
Project
Adm.
Dir. Env.
Engineer Biller
Dir.
Project
Mgt.
Total
Labor
Hours
Total Labor
Effort
Total
ODCs
Total
Expense
Cost
Total
Expense
Effort Total Effort
$264.57 $112.39 $262.00 $192.73 $109.60 $276.79 $80.23 $287.97 001 CM & Administration 456 24 6 0 192 4 12 2 696 148,604.45 5,568.00 3,500.00 2,500.00 6,000.00 6,000.00 11,743.00 160,347.45 Leave Blank and ProtectedGRAND TOTAL 456 24 6 0 192 4 12 2 696 148,604.45 5,568.00 3,500.00 2,500.00 6,000.00 6,000.00 11,743.00 160,347.45 Construction Management and Inspection Services for Grayson Well 69 Surface Improvements CMIS (Doc Mgt)
7 Company Vehicles
8 APC 6
Team Member, Staff Classification & Hourly Rates Remibursable Expenses 5 #12..
- 229 -
2.74 Multiplier--2022 Rates
Level Engineering Technical/Scientific Administrative Hourly Rate/Range A Office/Support Services I $50-$65
B Drafter Trainee Field Service Technician I
Word Processor I
Office/Support Services II $65-$78
C Assistant Drafter Field Service Technician II
Word Processor II
Office/Support Services III $65-$78
D
Drafter
Engineering Aide
Inspection Aide Field Service Technician III
Accountant I
Word Processor III
Office/Support Services IV $65-$78
E
Engineer I
Senior Drafter
Senior Illustrator
Inspector I
Geologist/Hydrogeologist I
Scientist I
Senior Field Service Technician
Accountant II
Word Processor IV $79-$107
F
Engineer II
Inspector II
Lead Drafter
Lead Illustrator
Geologist/Hydrogeologist II
Scientist II
Accountant III
Area Business Operations Mgr
Technical Writer
Word Processing Supervisor $108-$114
G
Engineer III
Inspector III
Senior Designer
Supervising Drafter
Supervising Illustrator
Geologist/Hydrogeologist III
Scientist III
Accountant IV
Administrative Manager $109-$116
H
Senior Engineer
Principal Designer
Senior Construction Engineer
Senior Engineer
Senior
Geologist/Hydrogeologist
Senior Scientist Senior Technical Writer $114-$190
I
Principal Engineer
Principal Construction Engineer
Supervising Designer
Principal
Geologist/Hydrogeologist
Principal Scientist Corp.Contract Administrator $191-$193 J
Supervising Engineer
Supervising Constr. Engineer
Supervising Engineer
Supervising Scientist
Supervising Geologist/
Hydrogeologist Assistant Controller $192-$211
K Managing Engineer
Managing
Geologist/Hydrogeologist
Managing Scientist Area Bus Ops Mgr IV $210-$288
L
Chief Engineer
Executive Engineer
Chief Scientist
Chief Geologist/Hydrogeologist Corp Marketing Comm. Mgr. $270-$278 M Vice President $265-$365
N Senior Vice President $365
O President/Executive Vice President $365
P Chief Executive Officer $365
Brown and Caldwell Schedule of Hourly Billing Rates
#12..
- 230 -
CITY OF MODESTO
COUNCIL AGENDA REPORT
DATE OF MEETING:
May 10, 2022
Date: May 4, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jose M. Sanchez, City Attorney
SUBJECT: City Council Vacancy – District 4
CONTACT: Jose M. Sanchez, City Attorney, 209-577-5284, [email protected] DESCRIPTION:
Resolution declaring the City Council’s decision to fill the recent City Council vacancy by election during the November 2022 General Municipal Election when the voters of District 4 elect a candidate to a new four-year term starting in 2022 and ending in 2026, pursuant to City of Modesto Charter Section 702.
(Funding Source: General Fund)
STRATEGIC PLAN ELEMENT:
This item supports the City’s 2020-2025 Strategic Plan Goals to build a high-performance organization and improve community safety.
BACKGROUND:
On April 20, 2022, former Council Member Zoslocki submitted a letter of resignation, ending his term as Council Member effective 12:00 p.m. that day due to moving outside of his Council District. Former Council Member Zoslocki’s term is set to end in December 2022, after the swearing in of a new Council Member elected in the November 2022 election. Mr. Zoslocki was first elected to the Council in November of 2013, and re-elected to his seat in 2017.
On April 26, 2022, the Council held a special meeting to discuss the options on how to fill the Council vacancy and to provide the staff with direction. On a vote of 3-2, the Council provided staff with direction to allow the voters to fill the District 4 vacancy in the November 2022 General Municipal Election by electing an individual to a new four-year term starting in 2022 and ending in 2026. Staff is returning with the attached Resolution to formalize the Council’s decision.
DISCUSSION:
Modesto Charter Section 702, “Vacancies,” states that the if a vacancy in the office of Mayor or Council Member occurs, “the Council shall forthwith appoint a person to fill such vacancy,” #13..
- 231 -
City Council, May 10, 2022
City Council Vacancy – District 4
however, “[i]n the event that the Council shall fail to fill a vacancy by appointment within thirty (30) days after such office has become vacant, it shall forthwith cause an election to be held to fill such vacancy.” Modesto Charter Section 702 reads as follows:
“If a vacancy shall occur in the office of Mayor or Councilmember, the Council shall forthwith appoint a person to fill such vacancy. Said appointee shall possess such qualifications for eligibility as are set forth in Section 701 of this article and shall hold office until a successor is duly elected and qualified. Such successor shall be chosen at the next regular municipal election, or as otherwise may be required by recall proceedings instituted involving the office of Mayor or a Councilmember.
In the event that the Council shall fail to fill a vacancy by appointment within thirty (30) days after such office shall have become vacant, it shall forthwith cause an election to be held to fill such vacancy.”
Filling the Vacancy by Appointment
There is no guidance in the Charter or state law regarding how to fill vacancies by appointment.
The Council can decide to hold an application and interview process or decide to simply select an eligible individual. Any discussion, interviews, and/or appointment would need to happen in an open session of a scheduled Council meeting. Any person selected must reside within the boundaries of District 4, as they existed when former Council Member Zoslocki was elected, and be registered to vote.
Modesto Charter Section 701, “Eligibility,” states as follows: “No person shall be eligible to be nominated for or to hold office as a member of the Council or as Mayor unless the person is and shall have been for at least thirty (30) days preceding the person's nomination or appointment a resident and registered elector of the City of Modesto or of territory annexed thereto.” Filling the Vacancy by Election
Modesto Charter Section 702 states that if the Council fails to make an appointment within 30 days after the office becomes vacant (by May 20, 2022), the Council shall call an election to fill the vacancy. In this case, deciding to have the voters select the person to fill the vacancy would result in the voters filling the District 4 vacancy in the November 2022 General Municipal Election by electing an individual to a new four-year term starting in 2022 and ending in 2026.
The next possible regularly scheduled election available to fill the vacancy would be the November 2022 election. The District 4 seat will already be on the ballot for a new term.
Modesto Charter Section 302, “Procedure for Holding Elections,” states that “[u]nless otherwise provided by ordinances hereafter enacted, all elections shall be held in accordance with the provisions of the Elections Code of the State of California, as the same now exist or may hereafter be amended, for the holding of elections in general law cities, insofar as the same are not in conflict with this Charter.” The Charter is silent regarding the timing of a special election to fill a vacancy, so we look towards state law.
Government Code section 36512(b)(1) states that if the Council calls a special election, “the special election shall be held on the next regularly established election date not less than 114 days from the call of the special election.” This means that if the Council were to call an election to fill the vacancy on May 20, 2022 (after the 30 days), it could not hold the election before September 11, 2022. The Council would then look at the next regularly established election #13..
- 232 -
City Council, May 10, 2022
City Council Vacancy – District 4
date, which according to Elections Code section 1000, would be the “first Tuesday after the first Monday in November,” which is this upcoming General Municipal Election on November 8, 2022.
Given that Council Member Zoslocki’s District 4 term expires in November 2022, Council’s decision to have the voters fill the Council vacancy will result in the voters selecting who would fill the Council seat for the new term.
Sample Timeline
April 20, 2022 – Resignation
May 20, 2022 – Pursuant to Modesto Charter Section 702 – 30 day deadline to appoint.
If Council does not appoint, Council would need to call an election to fill the vacancy.
September 11, 2022 – If Council decided to call an election, pursuant to Government Code section 36512(b)(1), “the special election shall be held on the next regularly established election date not less than 114 days from the call of the special election.” Calling an election on May 20, 2022, would result in an election being held after September 11, 2022 (114 days from May 20, 2022).
November 8, 2022 – This election date is the next “regularly established election date” not less than 114 days from the potential call of an election to fill the vacancy from the date the election is called (May 20, 2022).
November 2022 – The District 4 seat is already scheduled for the November 2022 General Municipal Election.
FISCAL IMPACT:
Choosing to fill the vacancy through an election will not result in any additional costs since the District 4 Council seat is already scheduled to be on the November 2022 election for a new term.
COMMITTEE RECOMMENDATION:
This item was not presented to a committee.
RECOMMENDED COUNCIL ACTION:
Resolution declaring the Council’s decision to fill the recent City Council vacancy by election during the November 2022 General Municipal Election when the voters of District 4 elect a candidate to a new four-year term starting in 2022 and ending in 2026, pursuant to City of Modesto Charter Section 702 .
Approved by:
Jose M. Sanchez, City Attorney
Joseph P. Lopez, City Manager
#13..
- 233 -
City Council, May 10, 2022
City Council Vacancy – District 4
Attachments:
1. Resolution.
2. Former Council Member Zoslocki’s resignation letter. 5101337.3
#13..
- 234 -
1 MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION DECLARING THE COUNCIL’S DECISION TO FILL THE RECENT CITY COUNCIL VACANCY BY ELECTION DURING THE NOVEMBER 2022 GENERAL MUNICIPAL ELECTION WHEN THE VOTERS OF DISTRICT 4 ELECT A CANDIDATE TO A NEW FOUR-YEAR TERM STARTING IN 2022 AND ENDING IN 2026, PURSUANT TO CITY OF MODESTO CHARTER SECTION 702
WHEREAS, On April 20, 2022, former Council Member Zoslocki submitted a letter of resignation, ending his term as Council Member effective 12:00 p.m. that day due to moving outside of his Council District, and
WHEREAS, former Council Member Zoslocki was first elected to the Council in November of 2013, re-elected to his seat in 2017, and his seat was extended by one (1) year when the City moved to even year elections in 2020. Former Council Member Zoslocki’s term is set to end in December 2022, after the swearing in of a new Council Member elected in the November 2022 election, and WHEREAS, Modesto Charter Section 702, “Vacancies,” states that the if a vacancy in the office of Mayor or Council Member occurs, “the Council shall forthwith appoint a person to fill such vacancy,” however, “[i]n the event that the Council shall fail to fill a vacancy by appointment within thirty (30) days after such office has become vacant, it shall forthwith cause an election to be held to fill such vacancy,” and
WHEREAS, Modesto Charter Section 702 reads as follows:
“If a vacancy shall occur in the office of Mayor or Councilmember, the Council shall forthwith appoint a person to fill such vacancy. Said appointee shall possess such qualifications for eligibility as are set forth in Section 701 of this article and shall hold office until a successor is duly elected and qualified. Such successor shall be chosen at the next regular municipal election, or as otherwise may be required by recall proceedings instituted involving the office of Mayor or a Councilmember.
In the event that the Council shall fail to fill a vacancy by appointment within thirty (30) days after such office shall have become vacant, it shall forthwith cause an election to be held to fill such vacancy.”
WHEREAS, Modesto Charter Section 702 states that if the Council fails to make an appointment within thirty (30) days after the office becomes vacant (by May 20, 2022), the Council shall call an election to fill the vacancy. In this case, deciding to have the voters select the person to fill the vacancy #13..
- 235 -
2 would result in the voters filling the District 4 vacancy in the November 2022 General Municipal Election by electing an individual to a new four (4) year term starting in 2022 and ending in 2026, and WHEREAS, the next possible regularly scheduled election available to fill the vacancy would be the November 2022 election. The District 4 seat will already be on the ballot for a new term. Modesto Charter Section 302, “Procedure for Holding Elections,” states that “[u]nless otherwise provided by ordinances hereafter enacted, all elections shall be held in accordance with the provisions of the Elections Code of the State of California, as the same now exist or may hereafter be amended, for the holding of elections in general law cities, insofar as the same are not in conflict with this Charter.” The Charter is silent regarding the timing of a special election to fill a vacancy, so we look towards state law, and WHEREAS, California Government Code section 36512(b)(1) states that if the Council calls a special election, “the special election shall be held on the next regularly established election date not less than 114 days from the call of the special election.” This means that if the Council were to call an election to fill the vacancy on May 20, 2022 (after the 30 days), it could not hold the election before September 11, 2022. The Council would then look at the next regularly established election date, which according to Elections Code section 1000, would be the “first Tuesday after the first Monday in November,” which is this upcoming General Municipal Election on November 8, 2022, and WHEREAS, on April 26, 2022, the Council held a special meeting to discuss the options on how to fill the Council vacancy and to provide the staff with direction. On a vote of 3-2, the Council provided staff with direction to allow the voters to fill the District 4 vacancy in the November 2022 General Municipal Election by electing an individual to a new four (4) year term starting in 2022 and ending in 2026, and
WHEREAS, this Resolution declares the Council’s decision to have the vacancy filled in the November 2022 General Municipal Election when the voters elect a candidate to a new term.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby decides to fill the recent City Council vacancy, created by former Council Member Zoslocki’s resignation, by election during the November 2022 General Municipal Election when the voters of District 4 elect a candidate to a new four (4) year term starting in 2022, and ending in 2026 pursuant to City of Modesto Charter Section 702.
The foregoing Resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th of May 2022, by Council Member ____________, who moved its adoption, which motion being duly seconded by Council Member ____________, was upon roll #13..
- 236 -
3 call carried and the Resolution adopted by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ATTEST: ____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: _________________________________
JOSE M. SANCHEZ, City Attorney
5101311.3
#13..
- 237 -
April 19, 2022
Dear Councilmembers, Family, Friends, Neighbors, and many Acquaintances, I have served on the Modesto City Council now just shy of 8 ½ years. Yet, sometimes in politics, as in real life, you come to an unexpected crossroads you hadn’t been fully prepared for. A crossroad can come about due to a change in health, a change in job, a change to your family or any number of lifechanging events.
In my case, I am approaching the end of my extended 9-year term this November, which is a year longer than what I was originally elected to serve. But now, I need to step aside, unable to complete the remainder of this extended term, because I have sold my house in the district and, after prolonged consideration, determined my future will be served outside my district.
Of course, this consideration is not without regrets. In reflection, I instinctively recall the many wonderful people I have met and grown to know as friends and supporters of our City. Modesto is filled with so many kind, considerate, giving citizens, who are eager to assist and be part of a solution when our city is presented with what seems an insurmountable problem.
You see, Modesto primarily struggles because of budgetary constraints. Most often, during economic downturns, when the budget declines and then the application of attrition affects the entire organization.
Most notably within the ranks of public safety. That staff, Police and Fire Departments are affected because their salaries largely come from the “General Fund” of the City and that funding is primarily sourced from recession prone funds.
Even more impacted, is the Parks and Recreation Department. That is evidenced through reductions in parks programs and maintenance. All the reductions whether in staffing or services are necessary in order that the City, in the end, has a balanced budget.
Often during these challenging times, it is the citizens of Modesto, the unsung heroes that step forward and offer reasonable solutions to those challenges. This result has happened to me many times during my tenure.
Lakewood Park, and East La Loma Park are such an example. The City had closed those children’s playgrounds because of safety issues. The neighbors then rallied around a plan of fundraising and sweat equity and when combined with a smaller grant from the City, restored the playgrounds.
Other larger ongoing examples of citizens stepping forward to improve Modesto’s quality of life, to make Modesto a better place to live - are the Downtown Children's Museum, an interactive museum designed with a child’s interest and perspective. The Awesome Spot Playground at Beyer Park, an inclusive park design for children with disabilities where they can then play with their peers regardless of abilities.
Miracle League, a baseball stadium providing a safe and enjoyable team sport experience for children and young adults with physical and mental disabilities regardless of their experience level or ability.
Operation 9.2.99 Cleanup Project, A regularly scheduled monthly cleanup led by volunteers working to restore the waterfront of our beautiful Tuolumne River in Modesto. Dry Creek Trails Coalition, whose mission is to preserve, protect, and safeguard the Dry Creek Regional Park Trails.
All these are examples of community led projects and I have been fortunate to either have been personally involved, a supporter, or as the Councilmember to see the projects along. #13..
- 238 -
The reason I highlight these projects and there are many more, they’re an example of citizens who love their community and are eager to improve this City’s way of life, an exemplary and noble role.
In conclusion, having lived most of my life in Modesto and watched keenly those who had served on the many appointed boards, commissions, and committees together with those who have volunteered to improve the lifestyle or “lot in life” of the many that call Modesto home.
It is with my greatest respect that I can offer to you a bid of “thank you” for making my job as a City Councilman a much better experience. You are the life and fresh air I sought when critics and gnashers were spewing division. You are the ones I found solace to carry on with joy and continue on knowing Modesto will be a better place regardless of my efforts. With that, my resignation is effective today April 20, 2022, at 12:00pm
In closing, I offer this blessing to all,
“May the Lord bless you and protect you.
May the Lord smile on you and be gracious to you.
May the Lord show you his favor and give you his peace.” Sincerely,
Bill Zoslocki
#13..
- 239 -
CITY OF MODESTO
COUNCIL AGENDA REPORT
DATE OF MEETING:
May 10, 2022
Date:April 28, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jaylen French, Director of Community and Economic Development SUBJECT: Accept Project Homekey 2.0 Grant Award 112 James Street CONTACT: Jessica Hill, Community Development Manager
[email protected], 577-5321
DESCRIPTION:
Consider accepting the City of Modesto’s Project Homekey 2.0 Grant Award of $1,724,157 for the project located at 112 James Street, approving a loan in an amount up to $200,000 in Permanent Local Housing Allocation (PLHA) Funds for Stanislaus Equity Partners to assist with the aquisition, $50,000 for staff activity, and authorizing the City Manager or his designee to execute the agreements, and amending the Fiscal Year 2021-2022 multi-year fund budget to establish a project for the Homekey 2.0 Program to be funded with HCD Homekey 2.0 Grant funds and PLHA Grant funds. (Funding Source: Homekey 2.0 Funds and Permanent Local Housing Allocation Funds)
STRATEGIC PLAN ELEMENT:
This item supports the City of Modesto’s 2020-2025 Strategic Plan Goal C: Develop Homelessness and Housing Plan.
BACKGROUND:
In July of 2020, the State of California launched a $750 million program called “Project Homekey”1, with the aim of helping local communities rapidly acquire hotels, motels, commercial buildings, and other creative properties in order to rapidly house people experiencing homelessness during the COVID-19 pandemic. By December 29, 2020, the program had resulted in the acquisition of 94 projects statewide, representing 6,029 units of permanent housing for individuals experiencing homelessness.
Given the success of “Homekey 1.0”, in January of 2021, Governor Newsom’s Fiscal Year 2021-22 budget included another $1.4 Billion dollar allocation for “Project Homekey 2.0” (Homekey 2.0). The Notice of Funding Availability was released September 9, 2021, applications became available late September, and applications are being accepted on a rolling basis until funds are exhausted.
1 Project Homekey - https://homekey.hcd.ca.gov/
#14..
- 240 -
City of Modesto, May 10, 2022
Accept Project Homekey 2.0 Grant Award 112 James Street
Homekey 2.0 funds must be used to provide housing for individuals and families experiencing homelessness or who are at risk of homelessness. Under Homekey 2.0, local entities in partnership with a co-applicant (City of Modesto) will acquire and rehabilitate a variety of housing types including, but not limited to, hotels, motels, hostels, single-family homes, multifamily apartments, adult residential facilities, manufactured housing, and/or to convert commercial properties and other existing buildings to Permanent or Interim Housing for the Target Population.
To apply for funding, the City consulted with the Stanislaus Community System of Care2 (CSOC), the local CoC, for the following items:
Racial Disparities Analysis
Coordinated Entry System (CES)
Homekey Project information on CSOC Website
Operating Subsidy
Letter of support for need for an operating subsidy- rental subsidies sought for project but not available for this use
Community Engagement
Engaging with population to assist with design of the project Application Project Scoring Criteria
Homeless or at Risk of Homelessness with bonus consideration for Youth or chronically homeless.
o $150,000 “per door”
o $175,000 for Youth
o $200,000 for Chronically Homeless
Project complete within 12 months from date of award
Occupancy 90 days after completion
Site Control or Sales Contract at the time of application Proximity to amenities
55 year affordability covenant
In conformance with City of Modesto Administrative Directive 7.2 (Grant Management), Council approved this grant application to Project Homekey on February 2, 2022 through Resolution 2022-075.
DISCUSSION:
City staff submitted the application to the State of California on March 4, 2022, and on April 27, 2022, the City was notified of a project award of $1,724,157 of Project Homekey Funds.
This project is a partnership with Stanislaus Equity Partners (STEP), Stanislaus County Affordable Housing Corporation (STANCO) and Stanislaus County Behavioral Health and Recovery Services (BHRS). STEP identified a newly constructed seven unit apartment building already under construction and for sale located at 112 James Street and approached the City to 2 Stanislaus Community System of Care - https://csocstan.com/ #14..
- 241 -
City of Modesto, May 10, 2022
Accept Project Homekey 2.0 Grant Award 112 James Street
partner on a Project Homekey grant application in partnership with STANCO and BHRS to purchase the property for permanent supportive housing in Modesto.
This seven unit apartment building known as James Street Apartments is a newly constructed complex that will provide permanent supportive housing for Stanislaus County BHRS clients who are at risk or experiencing homelessness, and is designed to serve those who are homeless or chronically homeless and will result in 1 – one-bedroom, 4 – two bedroom units, and 2 – three bedroom apartment units.
There is a significant need for funding for this population. Currently, BHRS has housed 206 households in the community, and have approximately 300 households in our community who are ready for housing on their waitlist. Once a household is placed with permanent supportive housing, 98% of the households stay housed. For a one-person household, the maximum income a household can make cannot exceed $16,750 per year. Rent will be set at an affordable rate, and will not exceed $418 per month for a household of one, $478 per month for a household of two and $575 per month for a household of three. The project will remain affordable for a minimum of fifty-five (55) years.
The City originally proposed funding a $200,000 Community Development Block Grant (CDBG) to Stanislaus Equity Partners to assist with the acquisition costs of the project as part of the Homekey funding application. The funding was awarded through Resolution 2022-077 and had an approved budget established for the project with Resolutions 2022-078 and 2022-079 . It was later determined through the underwriting process that the State of California’s Permanent Local Housing Allocation was a better fit for this project design. Therefore, staff requests approval to change the funding source from CDBG to PLHA.
The apartment complex has been acquired, and should be fully occupied by June 30, 2022.
FISCAL IMPACTS:
The funding from the State of California’s Department of Housing and Community Development will have a new project created, and all funding will be received by the City prior to issuance to Stansislaus Equity Partners. There will be no impact to the General Fund.
COMMITTEE RECOMMENDATION:
This item was presented to the Citizens Housing and Community Development Committee on January 13, 2022 where the Committee unanimously endorsed the program.
RECOMMENDED COUNCIL ACTION:
Staff Recommendation:
Resolution accepting the City of Modesto’s Project Homekey 2.0 Grant Award of $1,724,157 for the project located at 112 James Street, authorizing the City Manager, or his designee, to execute the related agreements.
Resolution rescinding Resolution 2022-077 and approves approves a loan to Stanislaus Equity Partners in an amount up to $200,000 in Permanent Local Housing Allocation (PLHA) Funds to assist with the rehabilitation of 112 James Street, $50,000 for staff activity delivery costs, and authorizing the City Manager or his designee to execute the agreements #14..
- 242 -
City of Modesto, May 10, 2022
Accept Project Homekey 2.0 Grant Award 112 James Street
Resolution rescinding Resolution 2022-078 and 2022-079 and amending the fiscal year 2021-2022 multi-year fund budget to establish a new project for the Homekey 2.0 program to be funded with Homekey 2.0 Grant funds and PLHA Grant funds and authorizing the City Manager or his designee, to take the necessary steps to implement the provisions of this resolution Approved By:
Jaylen French, Director of Community and Economic Development Joseph P. Lopez, City Manager
Attachments:
1. Resolution
2. Resolution PLHA Loan
3. Budget Resolution – HomeKey 2.0
4. Stanislaus Equity Partners Loan Agreement
5. Stanislaus Equity Partners Regulatory Agreement
6. Stanislaus Equity Partners Deed of Trust for PLHA Loan
7. Stanislaus Equity Partners Promissory Note for PLHA Loan #14..
- 243 -
5/10/2022/C&ED/JHill 1 2022-
MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION ACCEPTING PROJECT HOMEKEY 2.0 GRANT AWARD
$1,724,157 FOR THE PROJECT LOCATED AT 112 JAMES STREET,
AUTHORIZING THE CITY MANAGER, OR HIS DESIGNEE, TO EXECUTE
THE RELATED AGREEMENTS
WHEREAS, in July of 2020, the State of California launched a $750 million program called “Project Homekey”, with the aim of helping local communities rapidly acquire hotels, motels, commercial buildings, and other creative properties in order to rapidly house people experiencing homelessness during the COVID-19 pandemic, and WHEREAS, by December 29, 2020, the program had resulted in the acquisition of 94 projects statewide, representing 6,029 units of permanent housing for individuals experiencing homelessness, and
WHEREAS, given the success of “Homekey 1.0”, in January of 2021, Governor Newsom’s Fiscal Year 2021-22 budget included another $1.4 Billion-dollar allocation for “Project Homekey 2.0” (Homekey 2.0) and a Notice of Funding Availability was released September 9, 2021, applications became available late September, and applications are being accepted on a rolling basis until funds are exhausted, and WHEREAS, the mission of HomeKey 2.0 is to prevent homelessness and to make homelessness rare, brief, by rapidly re-housing individuals through the provision of coordinated, compassionate, and high-quality services, and WHEREAS, during the 2021, strategic planning process conducted by the Stanislaus Community System of Care, the number one goal identified was to “Increase the availability of permanent housing for people experiencing homelessness,” and #14..
- 244 -
5/10/2022/C&ED/JHill 2 2022-
WHEREAS, under Homekey, local entities in partnership with a co-applicant (City of Modesto) will acquire and rehabilitate a variety of housing types, including but not limited to hotels, motels, hostels, single-family homes, multifamily apartments, adult residential facilities, manufactured housing, and/or to convert commercial properties and other existing buildings to Permanent or Interim Housing for the Target Population, and WHEREAS, Stanislaus Equity Partners in coordination Stanislaus County Affordable Housing Corporation, and Stanislaus County Behavioral Health and Recovery Services approached the City to partner on a Project Homekey grant for permanent supportive housing in Modesto, and
WHEREAS, STEP identified a newly constructed seven-unit apartment building already under construction and for sale located at 112 James Street; WHEREAS, this project is designed to serve those who are homeless or chronically homeless and will result in 1 – One-bedroom, 4 – two-bedroom units, and 2 – three-bedroom apartment units., and
WHEREAS, in conformance with Administrative Directive 7.2 Grant Management, Council approved this grant application to Project Homekey on January 11, 2022 through Resolution 2022-028, and
WHEREAS, City staff submitted the application to the State of California on March 4, 2022, and on April 27, 2022 the City was notified of a project award of $1,724,157 of Project Homekey Funds, and
WHEREAS, the James St, Apartments project is a seven unit, newly constructed complex that will provide permanent supportive housing for Stanislaus County BHRS #14..
- 245 -
5/10/2022/C&ED/JHill 3 2022-
clients who are at risk or experiencing homelessness and is designed to serve those who are homeless or chronically homeless, and
WHEREAS, there is a huge need for funding for this population. Currently BHRS has housed 206 households in the community, and have approximately 300 households in our community who are ready for housing on their waitlist, and WHEREAS, once a household is housed with permanent supportive housing, 98% of the households stay housed, and
WHEREAS, the project will remain affordable for this population for a minimum of fifty-five years, and
WHEREAS, the City and STEP will need to expend capital funds from the Project Homekey award within eight months of the date of award, and WHEREAS, the project will need to be fully completed and occupied within twelve months, and
WHEREAS, the complex has been acquired, and should be fully occupied by June 30, 2022.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby accepts the Project Homekey 2.0 Grant Award of $1,724,157 for the project located at 112 James Street.
BE IT FURTHER RESOLVED that the City Manager, or his designee, to execute the related agreements, in a form approved by the City Attorney, with the State of California and to take such other actions as are necessary to accept the grant.
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of May, 2022 by Councilmember ?, who moved #14..
- 246 -
5/10/2022/C&ED/JHill 4 2022-
its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#14..
- 247 -
05/10/2022/C&ED/JHill 1 2022-
MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION RESCINDING RESOLUTION 2022-077 AND APPROVES A LOAN IN AN AMOUNT UP TO $200,000 IN PERMANENT LOCAL HOUSING
ALLOCATION (PLHA) FUNDS TO STANISLAUS EQUITY PARTNERS TO ASSIST WITH THE REHABILITATION OF 112 JAMES STREET, $50,000 FOR
STAFF ACTIVITY DELIVERY COSTS, AND AUTHORIZING THE CITY
MANAGER OR HIS DESIGNEE TO EXECUTE THE AGREEMENTS
WHEREAS, under Homekey, local entities in partnership with a co-applicant (City of Modesto) will acquire and rehabilitate a variety of housing types, including but not limited to hotels, motels, hostels, single-family homes, multifamily apartments, adult residential facilities, manufactured housing, and/or to convert commercial properties and other existing buildings to Permanent or Interim Housing for the Target Population, and WHEREAS, in order to identify and assess, projects and developers eligible to meet the strict constraints for completion and occupancy, the City and County issued a joint Request for Information (RFI) on July 20, 2021 and this RFI targeted properties owners that The City and County are interested in sites that include, but are not limited to, hotel/motel properties, residential Single-Room Occupancy (SRO) hotels, multi- unit housing sites, and other properties that could be used for permanent housing, and WHEREAS, the RFI was open until August 15, 2021 and received 9 local properties were interested in having their properties reviewed for eligibility, and WHEREAS, as a Community Development Corporation, STEP works to empower Stanislaus residents with access to asset building opportunities through housing, small business services and affordable lending, so Stanislaus Equity Partners was formed with the support of several stakeholders and partners, including a feasibility study grant provided by the Stanislaus Community Foundation, and #14..
- 248 -
05/10/2022/C&ED/JHill 2 2022-
WHEREAS, the James St, Apartments project is a seven unit, newly constructed complex that will provide permanent supportive housing for Stanislaus County BHRS clients who are at risk or experiencing homelessness, and WHEREAS, individuals will be referred to the James St. Project through the Coordinated Entry System, and
WHEREAS, once a referral has been made Behavioral Health & Recovery Services (BHRS) will screen for eligibility, criteria will be; adults, older adults, transition age young adults with serious mental illness or children with severe emotional disorders and their families whom are homeless, chronically homeless or at risk of chronic homelessness, and
WHEREAS, BHRS will refer certified eligible applicants to Stanislaus Affordable Housing Corporation (STANCO) for the application process, BHRS housing staff will assist the applicant with the paperwork if necessary and all eligible tenant’s total household income, at time of move-in, shall not exceed the 30 percent AMI limit for all Homekey assisted units, and
WHEREAS, to assist with the gap, the City approved a $200,000 CDBG Grant to Stanislaus Equity Partners to assist with the acquisition costs of the project by Resolution 2022-077, and
WHEREAS, it has been determined that the project funding should change from CDBG Grant funding to PLHA Grant.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby rescinds Resolution 2022-077 and approves a loan to Stanislaus Equity Partners in an amount up to $200,000 in Permanent Local Housing Allocation (PLHA) #14..
- 249 -
05/10/2022/C&ED/JHill 3 2022-
Funds to assist with the rehabilitation of 112 James Street, $50,000 for staff activity delivery costs.
BE IT FURTHER RESOLVED that the City Manager, or his designee, to authorizing the City Manager or his designee to execute the agreement with such changes as determined by the City Attorney.
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of May, 2022 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY: ____________________________________
JOSE M. SANCHEZ, City Attorney
#14..
- 250 -
5-10-2022/C&ED/JHill 1 2022-
MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION RECINDING RESOLUTION 2022-078 AND 2022-079 AND AMENDING THE FISCAL YEAR 2021-2022 MULTI-YEAR FUND BUDGET TO ESTABLISH A NEW PROJECT FOR THE HOMEKEY 2.0 PROGRAM TO BE FUNDED WITH HOMEKEY 2.0 AND PERMANENT LOCAL HOUSING ALLOCATION
PROGRAM (PLHA) GRANTS AND AUTHORIZING THE CITY MANAGER OR
HIS DESIGNEE, TO TAKE THE NECESSARY STEPS TO IMPLEMENT THE
PROVISIONS OF THIS RESOLUTION
WHEREAS, the City of Modesto has been selected to receive funding from the State of California Housing and Community Development Department (HCD) in partnership with Stanislaus Equity Partners (STEP) for the Homekey 2.0 Program, and WHEREAS, the fiscal year 2021-2022 multi-year budget currently has this project budgeted with Community Development Block Grant (CDBG) Funding approved by Resolution 2022-078 and 2022-079, and
WHEREAS, the City originally proposed using CDBG Grant funding as a loan to Stanislaus Equity Partners to assist with property acquisition expense, it has been determined that the project funding source should change from CDBG Grant funding to PLHA Grant, and
WHEREAS, the project funding will include the Homekey 2.0 Program Grant funds totaling $1,724,157, and $200,000 in PLHA Grant funds for property acquisition and capital improvements and $50,000 in PLHA funds for administration, and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby amends the fiscal year 2021-2022 multi-year fund budget to rescind Resolutions 2022-78 and 2022-79 and establish a project for the Homekey 2.0 Program to be funded with HCD Homekey 2.0 Grant funds and PLHA Grant funds.
BE IT FURTHER RESOLVED that the City Manager or his designee is authorized to take the necessary steps to implement the provisions of this resolution. #14..
- 251 -
5-10-2022/C&ED/JHill 2 2022-
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 10th day of May, 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:
AYES:
NOES:
Councilmembers:
Councilmembers:
?
?
ABSENT: Councilmembers: ?
ATTEST:
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:
BY:
JOSE M. SANCHEZ, City Attorney
#14..
- 252 -
1 5028599.1
THIS AFFORDABLE HOUSING LOAN AGREEMENT (this “Agreement”) is entered into effective as of __________ (the “Effective Date”) by and between the City of Modesto, a California charter city (“City”) and Stanislaus Equity Partners, a California nonprofit corporation (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.”
RECITALS
A. The City has received funding from the California Department of Housing and Community Development (“HCD”) under the Permanent Local Housing Allocation (“PLHA”) program.
B. On July 14, 2020, by Resolution number 2020-318, the City Council of the City of Modesto adopted the City’s five-year PLHA Plan. The Plan identifies that the City will use the PLHA funds to expand and enhance the access to and number of affordable housing units within the City.
C. The Borrower intends to acquire that certain real property located at 112 James Street, Modesto, California, known as Stanislaus County Assessor’s Parcel Numbers 107-008- 015, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”).
D. Developer intents to acquire into 7 permanent supportive housing units on the Property (the “Project”). The Project will serve as permanent supporting housing for households at risk or experiencing homelessness.
E. All units in the Project, except for one manager’s unit in the, are proposed to serve households at risk for homelessness with incomes that at or below 50% of the Area Median Income for Stanislaus County.
F. The Developer has requested, and the City has agreed to provide the Developer with a loan of Two Hundred Thousand Dollars ($200,000) in PLHA funds (the “Loan”). The Loan shall be for a term of fifty-five (55) years, accruing one percent (1%) interest. Interest on the Loan shall be deferred until the end of the term of the Loan.
G. The purpose of this Agreement is to establish the terms conditions for advancing the Loan to Developer and, among other things, require mechanisms to secure the City’s financial interest in the Project.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.
ARTICLE I
#14..
- 253 -
2 5028599.1
DEFINITIONS
1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement.
1.1 “Claims” is defined in Section 8.2.
1.2 “Deed of Trust” is defined in Section 3.1.
1.3 “Environmental Laws” is defined in Section 8.4.
1.4 “Hazardous Materials” is defined in Section 8.3.
1.5 “Indemnitees” is defined in Section 8.2.
1.6 “Note” is defined in Section 3.1.
1.7 “Project” is defined in Recital C and in Section 4.1.
1.8 “Property” is defined in Recital C.
1.9 “City Documents” is defined in Section 2.3.
ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE
2.1 Developer's Representations. Developer represents and warrants to City as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. (i) Authority. The Developer is a duly organized California public body corporate and politic validly existing and in good standing under the laws of the State of California and has the power and authority to own the Property and carry on its business as now being conducted. Developer has the full right, power and authority to undertake all obligations of Developer as provided herein, and the execution, performance and delivery of this Agreement by Developer has been duly authorized by all requisite actions. The persons executing this Agreement on behalf of Developer have been duly authorized to do so. This Agreement and the other City Documents constitute valid and binding obligations of Developer. #14..
- 254 -
3 5028599.1
(ii) No Conflict. Developer's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement. (iv) No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding.
2.2 Effective Date. The obligations of Developer and City hereunder shall be effective as of the Effective Date set forth in the preamble to this Agreement.
2.3 Execution and Delivery of Documents. Developer shall execute, acknowledge as required, and deliver to City or deposit into escrow this Agreement and all other documents required in connection with the transactions contemplated by this Agreement, including without limitation the Note, the Deed of Trust, and the Regulatory Agreement (defined below), all of the foregoing identified hereinafter as the “City Documents.”
ARTICLE III
CITY FINANCIAL ASSISTANCE
3.1 Loan. In order to assist Developer to develop the Project, City agrees to provide a Loan to Developer in the principal amount of Two Hundred Thousand Dollars ($200,000). The Loan shall be evidenced by a secured promissory note dated as of the Effective Date and executed by Developer substantially in the form attached hereto as Exhibit B (the “Note”) in the amount of the Loan, upon the terms and conditions and for the purposes set forth in this Agreement. Developer’s obligations pursuant to this Agreement will be secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing to be executed by Developer as Trustor for the benefit of City, substantially in the form attached hereto as Exhibit C (the “Deed of Trust”) and recorded against the Property to secure repayment of the Loan. The Deed of Trust will be recorded against the Property subordinate only to such liens and encumbrances as City shall approve in writing, pursuant to Section 3.6.
Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 3.3, the proceeds of the Loan (“Loan Proceeds”) shall be disbursed in accordance with Section 3.2 hereof.
3.2 Use and Disbursement of Proceeds. The Loan Proceeds shall be used solely to develop the Project. Upon satisfaction of the conditions set forth in Section 3.3, City shall deposit the Loan Proceeds into escrow for development of the Project, or to such other fund reasonably acceptable to the City.
#14..
- 255 -
4 5028599.1
3.3 Conditions to Disbursement of Loan Proceeds. City’s obligation to provide the Loan and disburse the Loan Proceeds is conditioned upon the satisfaction of all of the following conditions:
(a) Developer’s execution and delivery to City of this Agreement, the Note, the Deed of Trust, and the Regulatory Agreement;
(b) Recordation of this Agreement, the Deed of Trust, and the Regulatory Agreement in the Official Records of Stanislaus County (the “Official Records”); (c) The closing and loan of financing in an amount which together with the Loan Proceeds will be sufficient to fully finance the development of the Project; (d) The issuance by an insurer satisfactory to City of an A.L.T.A. lender’s policy of title insurance (“Title Policy”) for the benefit of City in the amount of the Loan, insuring that the lien of the Deed of Trust is subject only to those defects, liens, conditions, encumbrances, restrictions, easements and exceptions as City may approve in writing (“Permitted Exceptions”) and containing such endorsements as City may reasonably require, with the cost of such Title Policy to be paid by Developer; (e) Developer’s delivery to the City of evidence of property and liability insurance coverage in accordance with the requirements set forth herein; (f) Developer’s delivery to City of each of the following a certified resolution indicating that Developer has authorized this transaction and that the persons executing the City Documents on behalf of Developer have been duly authorized to do so; (g) Developer’s delivery to City of detailed Project plans, consistent with the Project representations made to the City in furtherance of this Loan, and City’s approval of same.
The City shall have the right to waive any changes in Project plans that it deems appropriate as well as the right to reject any changes that it deems inappropriate; (h) Developer’s delivery, and City’s approval, which approval shall not be unreasonably withheld, conditioned or delayed of time frames for: (i) submittal of a full entitlement application for the Project; (ii) commencement of construction of the Project; and (iii) completion of the Project for issuance of a Certificate of Occupancy; (i) Developer’s delivery to City of a Financing Plan for the full development, construction and operation of the Project, satisfactory to City and updated as requested by City; and,
(j) Developer’s delivery to City of evidence satisfactory to the City that Developer has obtained all required Project construction financing.
3.4 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any other provision of this Agreement, the City shall have no obligation to disburse or authorize the disbursement of any portion of the Loan Proceeds following:
#14..
- 256 -
5 5028599.1
(i) the failure of any of Developer’s representations and warranties made in this Agreement or in connection with the Loan to be true and correct in all material respects when made;
(ii) the termination of this Agreement by mutual agreement of the Parties; (iii) the failure of Developer to satisfy the conditions to disbursement of the Loan set forth in Section 3.3 within twelve (12) months following the Effective Date unless an extension of such date is approved by City in writing; or
(iv) the occurrence of an Event of Default which remains uncured beyond any applicable cure period.
3.5 Interest Rate; Payment Dates; Maturity Date. The outstanding principal balance of the Note will accrue interest annually at a rate of one percent (1%) simple interest. The entire outstanding principal balance of the Loan and all accrued interest shall be payable in full on the fifty-fifth (55th) anniversary of the date the final certificate of occupancy issuance, but in no case later than the fifty-seventh (57th) anniversary of the date the Regulatory Agreement is recorded against the Property. Notwithstanding the foregoing, the City shall have the right to accelerate the maturity date and declare all sums payable under the Note upon the occurrence of (i) an Event of Default; (ii) the sale or other Transfer of the Property or any portion thereof (other than as permitted or approved pursuant to Article VI); or (iii) the recapitalization of the Project, other than as permitted or approved by the City.
3.6 Security; Subordination. As security for repayment of the Note, Developer shall execute the Deed of Trust in favor of City as beneficiary pursuant to which City shall be provided a lien against Developer’s interest in the Property and the Project. The Deed of Trust may be subordinated only to Permitted Exceptions and such liens and encumbrances as City shall approve in writing. The City agrees that it will not withhold consent to reasonable requests for subordination of this Agreement to deeds of trust provided for the benefit of lenders in a Cityapproved Financing Plan, provided that the instruments effecting such subordination include reasonable protections for the City in the event of default, including without limitation, extended notice and cure rights. Developer acknowledges that the Deed of Trust secures Developer’s performance of Developer’s obligations pursuant to this Agreement and the Regulatory Agreement which may survive repayment of the Note, and the Deed of Trust shall not be reconveyed prior to Developer’s satisfaction of such obligations.
3.7 Prepayment. Developer shall have the right to prepay the Loan at any time and from time to time, without penalty or premium.
ARTICLE IV
USE OF THE PROPERTY
4.1 Use Restrictions. Developer hereby covenants and agrees, for itself and its successors and assigns, that the Property shall be used solely for the construction and operation #14..
- 257 -
6 5028599.1
of the Project, which shall consist of one (1) one-bedroom units, four (4) two-bedroom units, and two (2) three-bedroom units. Nine (9) of the units will be reserved for occupancy by households with incomes that are at or below fifty percent (50%) of the Area Median Income for Stanislaus County, in accordance with the terms and conditions of this Agreement and an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants which the City and Developer shall execute substantially in the form attached hereto as Exhibit D (“Regulatory Agreement”) concurrently with the execution of this Agreement, and which shall be recorded in the Official Records. Developer represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with the restrictions set forth in this Agreement, and Developer covenants that it shall not enter into any agreement that is inconsistent with such restrictions without the express written consent of City.
4.2 Occupancy Requirements. For a term of fifty-five (55) years commencing upon the execution of this agreement for the Project, the Project shall be dedicated for use as affordable rental housing as described in Section 4.1.
4.3 Reports; Inspections. On an annual basis, Developer shall submit a written report (“Annual Report”) to the City in a form satisfactory to City. The Annual Report shall, at a minimum, include the following information: (i) total number of Project residents, and (ii) resident income.
Upon not less than forty-eight (48) hours advance notice to Developer or Developer’s management agent, Developer shall permit City representatives to enter and inspect the Property and the Project during reasonable business hours in order to monitor compliance with this Agreement.
4.4 Management Responsibilities. Developer shall be responsible for all management functions with respect to the Property and the Project, including without limitation client intake, property maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility for management or maintenance of the Property or the Project.
4.5 Management Entity. City shall have the right to review and approve the qualifications of any management entity proposed by Developer for the Project which approval shall not be unreasonably withheld, conditioned or delayed. The contracting of management services to a management entity shall not relieve Developer of its primary responsibility for proper performance of management duties. City hereby approves Developer as the initial management entity for the Project.
4.6 Maintenance. Developer shall at its own expense, maintain the Property, the improvements located thereon (the “Improvements”) and related landscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Project and the Property (including without limitation, the residence, common areas, landscaping, driveways, parking garage and walkways) in a condition free of all waste, #14..
- 258 -
7 5028599.1
nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property. Developer shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. Developer shall provide adequate security services for occupants of the Project.
4.6.1 City’s Right to Perform Maintenance. In the event that Developer breaches any of the covenants contained in Section 4.6, and such default continues for a period of ten (10) days after written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from City (with respect to landscaping, building improvements and general maintenance), then City, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the right, but not the obligation, to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Property. All costs expended by City in connection with the foregoing, shall constitute an indebtedness secured by the Deed of Trust, and shall be paid by Developer to City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City’s invoice therefor shall bear interest at the rate of the lesser of 10% per annum or the maximum rate permitted by law.
4.7 Management Plan. Prior to occupancy of the Project, Developer shall submit for City review and approval, a plan for managing the Property and Project ("Management Plan") which approval shall not be unreasonably withheld, conditioned or delayed. The Management Plan shall describe the management team, shall address how the Developer and the management entity plan to manage and maintain the Property and the Project, and shall include the proposed management agreement. Developer shall abide by the terms of the Management Plan in managing and maintaining the Property and the Project, and throughout the term of this Agreement, shall submit proposed modifications to City for its review and approval.
4.8 Taxes and Assessments. Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes assessed against the Property and payable by Developer, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge, the Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest.
4.9 Property Damage or Destruction. If any part of the Project is damaged or destroyed, Developer shall repair or restore the same, consistent with the occupancy requirements set forth in this Agreement. Such work shall be commenced within one hundred twenty (120) days after the damage or loss occurs and shall be completed within one year thereafter, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible. #14..
- 259 -
8 5028599.1
4.10 Obligation to Refrain from Discrimination. Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, nor shall Developer 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, sublessees, subtenants, or vendees in the property herein transferred. The foregoing provisions shall run with the land, be binding upon any subcontracting parties, successors, assigns and other transferees under this Agreement and shall remain in effect in perpetuity.
4.11 Compliance with Laws. Developer shall carry out and shall cause its contractors to carry out the Project, including but not limited to, any activities for which the Loan is being provided, in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards (including but not limited to, California Labor Code Section 1720 et seq. and the regulations adopted pursuant thereto (“Prevailing Wage Laws”)), applicable provisions of the California Public Contracts Code (if any), Article 34 of the California Constitution, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City 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., Government Code Section 4450 et seq., Government Code Section 11135 et seq., and the Unruh Civil Rights Act, Civil Code Section 51 et seq.
ARTICLE V
TERM OF AGREEMENT
5.1 Term of Restrictions. This Agreement shall remain in effect through the fifty-fifth (55th) anniversary of issuance of a Final Certificate of Occupancy for the Project, unless sooner terminated by written instrument executed by City.
ARTICLE VI
LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT
AND CONTROL
6.1 Change Pursuant to this Agreement. Developer and its principals have represented that they possess the necessary expertise, skill and ability to own and operate the Project on the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer and its principals are of particular concern to the City. It is because of these qualifications, experience, financial capacity and expertise that the City has #14..
- 260 -
9 5028599.1
entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.
6.2 Prohibition on Transfer. Developer shall not, except as expressly permitted by this Agreement, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Project, the improvements, or this Agreement, without the prior written approval of City. Any such attempt to assign this Agreement without the City’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee.
6.3 Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of temporary easements or permits to facilitate development of the Property; (ii) the lease of individual residences in accordance with the Regulatory Agreement to tenants for occupancy as their principal residence; (iii) assignments creating security interests for the purpose of financing the construction or permanent financing of the Project (iv) the dedication of any property required pursuant to this Agreement; (v) a Transfer to an entity which is under the direct control of Developer; (vi) a Transfer of limited partner interests in Developer; (vii) the removal and replacement of a general partner of Developer for cause by its limited partner pursuant to the terms of Developer’s Amended and Restated Agreement of Limited Partnership; or (viii) the exercise of rights under that certain Purchase Option and Right of First Refusal Agreement dated on or about the date hereof.
6.4 Requirements for Proposed Transfers. The City may, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 6.4 shall not apply to Transfers described in Section 6.3:
(i) The proposed transferee demonstrates to the City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City to competently manage the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement. (ii) The Developer and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Property or interest therein together with such documentation of the proposed transferee’s qualifications as the City may reasonably request. (iii) The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement and the other City Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations and restrictions set forth in this Agreement and the other City Documents. #14..
- 261 -
10 5028599.1
(iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City in form recordable in the Official Records.
Consent to any proposed Transfer may be given by the City Manager unless the City Manager, in his or her discretion, refers the matter of approval to the City Council. If a proposed Transfer has not been approved by City in writing within thirty (30) days following City’s receipt of written request by Developer, it shall be deemed rejected.
6.5 Effect of Transfer without City Consent. In the absence of specific written agreement by the City, no Transfer by Developer other than a Transfer that does not require consent of the City pursuant to Section 8 of the Regulatory Agreement shall be deemed to relieve the Developer or any other party from any obligation under this Agreement. Transfer in violation of this Agreement shall constitute an Event of Default permitting the City to exercise its remedies hereunder.
6.6 Recovery of City Costs. Unless City agrees otherwise in writing, Developer shall reimburse City for all City costs, including but not limited to attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten (10) days following City’s delivery to Developer of an invoice detailing such costs.
ARTICLE VII
SECURITY FINANCING AND RIGHTS OF MORTGAGEES
7.1 Mortgages and Deeds of Trust for Development. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property only for the purpose of securing loans approved by the City in writing for the purpose of financing the construction and operation of the Project. Developer shall not enter into any conveyance for such financing without the prior written approval of City Manager or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development.
7.1.1 Agreement to be Senior to Mortgages. This Agreement shall be recorded in the Official Records. Developer covenants and agrees that unless otherwise agreed upon by City pursuant to a written instrument and including without limitation, the provisions set forth in Section 7.2 below, this Agreement shall be senior in priority to any mortgage, deed of trust, or other security instrument recorded against the Property, and that if any such instrument has been recorded against the Property prior to recordation of such instruments, Developer shall promptly secure execution of such subordination agreements as may be necessary to ensure that City’s interests shall not be defeated as a result of foreclosure of any such instrument. #14..
- 262 -
11 5028599.1
7.1.2 Encumbrances. Developer agrees to use best efforts to ensure that any deed of trust secured by the Project for the benefit of a lender other than City (“Third-Party Lender”) shall contain each of the following provisions: (i) Third-Party Lender shall use its best efforts to provide to City a copy of any notice of default issued to Developer concurrently with provision of such notice to Developer (provided however, the failure to do so shall not impair such Third-Party Lender’s rights and remedies); (ii) City shall have the reasonable right, but not the obligation, to cure any default by Developer within the same period of time provided to Developer for such cure extended by an additional sixty (60) days; (iii) provided that City has cured any default under Third-Party Lender’s deed of trust and other loan documents, City shall have the right to foreclose City’s Deed of Trust and take title to the Project without acceleration of Third-Party Lender’s debt; and (iv) City shall have the right to transfer the Project without acceleration of Third-Party Lender’s debt to a nonprofit corporation or other entity which shall own and operate the Project as a shelter, subject to the prior written consent of the Third-Party Lender. Developer agrees to provide to City a copy of any notice of default Developer receives from any Third-Party Lender within three (3) business days following Developer’s receipt thereof.
7.1.3 Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Project or the Property, and the purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee’s sale or foreclosure sale. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Project or the Property that such violation has occurred.
7.2 Notice of Default and Right to Cure. Whenever City delivers any notice of default hereunder, City shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property provided that City has been provided with the address for delivery of such notice. City shall have no liability to any such holder for any failure by the City to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, within sixty (60) days after the receipt of the notice, to cure or remedy any such default or breach. In the event that possession of the Property (or any portion thereof) is required to effectuate such cure or remedy, the holder shall be deemed to have timely cured or remedied the default if it commences the proceedings necessary to obtain possession of the Property within sixty (60) days after receipt of the City’s notice, diligently pursues such proceedings to completion, and after obtaining possession, diligently completes such cure or remedy. A holder who chooses to exercise its right to cure or remedy a default or breach shall first notify City of its intent to exercise such right prior to commencing to cure or remedy such default or breach.
7.3 City’s Right to Cure Defaults. In the event of a breach or default by Developer under a mortgage or deed of trust secured by the Property, City may cure the default following prior notice thereof to the holder of such instrument and Developer. In such event, Developer shall be liable for, and City shall be entitled to reimbursement from Developer for all costs and #14..
- 263 -
12 5028599.1
expenses incurred by City associated with and attributable to the curing of the default or breach and such sum shall constitute indebtedness secured by the City’s Deed of Trust.
7.4 Holder to be Notified. Developer, for itself, its successors and assigns hereby warrants and agrees that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by the holder prior to its creating any security right or interest in the Property.
7.5 Modifications to Agreement. City shall not unreasonably withhold its consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter City’s substantive rights and obligations under this Agreement.
7.6 Estoppel Certificates. Either Party shall, at any time, and from time to time, within thirty (30) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 No City Liability; Developer’s Covenants. City shall not be responsible for the cost of any soil, groundwater or other environmental remediation or other response activities for any Hazardous Materials existing or occurring on the Property or any portion thereof, and Developer shall be solely responsible for all actions and costs associated with any such activities required for the development of the Project, the Property, or any portion thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous Materials in, on or under the Property, or any portion thereof, Developer (as long as Developer owns the property which is the subject of such notice) agrees to timely initiate and diligently pursue and complete all appropriate response, remediation and removal actions for the presence, release or discharge of such Hazardous Materials within such deadlines as specified by applicable Environmental Laws.
Developer hereby covenants and agrees that:
(1) Developer shall not knowingly permit the Project or the Property or any portion of either to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials in, on, under, about or from the Project or the Property with the exception of cleaning supplies and other materials customarily used in construction, rehabilitation, use or maintenance of residential property and used, stored and disposed of in compliance with Hazardous Materials Laws, and #14..
- 264 -
13 5028599.1
(2) Developer shall keep and maintain the Project and the Property and each portion thereof in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Hazardous Materials Laws.
8.2 Environmental Indemnification. Developer shall indemnify, defend (with counsel approved by City and hold the City, and its elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the “Indemnitees”) harmless from and against any and all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal or the alleged presence, release, 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 Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 8.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 8.2 shall survive the expiration or earlier termination of this Agreement.
8.2.1 No Limitation. Developer hereby acknowledges and agrees that Developer’s duties, obligations and liabilities under this Agreement, including, without limitation, under Section 8.2 above, are in no way limited or otherwise affected by any information the City may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Materials, whether the City obtained such information from the Developer or from its own investigations. It is further agreed that City does not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.
8.3 Hazardous Materials. As used herein, the term “Hazardous Materials” means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601 et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601 et seq.], the Hazardous Materials Transportation #14..
- 265 -
14 5028599.1
Authorization Act [49 U.S.C. Section 5101 et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901 et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401 et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280 et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300 et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100 et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5 et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000 et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.
8.4 Environmental Laws. As used herein, the term “Environmental Laws” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601 et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601 et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101 et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901 et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401 et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280 et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300 et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100 et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5 et seq.], and the PorterCologne Water Quality Control Act [California Water Code Section 13000 et seq.], as each of the foregoing now exist or are hereafter amended, together with any regulations promulgated thereunder.
ARTICLE IX
DEFAULTS, REMEDIES AND TERMINATION
#14..
- 266 -
15 5028599.1
9.1 Events of Default. The following events shall constitute an event of default on the part of Developer (“Event of Default”):
(a) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VI; (b) Developer fails to maintain insurance on the Property and the Project as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days; (c) Subject to Developer’s right to contest the following charges pursuant to Section 4.8, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within thirty (30) days of date of delinquency, but in all events upon the imposition of any such tax or other lien; (d) A default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(e) Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the City in connection with this Agreement or Developer’s request for the Loan proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to the City; (f) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; (g) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer;
(h) Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such #14..
- 267 -
16 5028599.1
lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution;
(i) The Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated;
(j) An event of default arises under any City Document and remains uncured beyond any applicable cure period; or
(k) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 9.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within thirty (30) days, a Developer Event of Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than sixty (60) days after receipt of notice of the default.
9.2 Remedies. Upon the occurrence of an Event of Default and the expiration of any applicable cure period, City shall have all remedies available to it under law or equity, including, but not limited to the following, and City may, at its election, without notice to or demand upon Developer, except for notices or demands required by law or expressly required pursuant to the City Documents, exercise one or more of the following remedies:
(a) Seek specific performance to enforce the terms of the City Documents; (b) Foreclose on the Property pursuant to the Deed of Trust; (c) Pursue any and all other remedies available under law to enforce the terms of the City Documents and City’s rights thereunder.
9.3 Remedies Cumulative; No Consequential Damages. 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 time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth herein, a party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages.
9.4 Inaction Not a Waiver of Default. No failure or delay by either Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive either Party of its rights to institute and maintain any action #14..
- 268 -
17 5028599.1
or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default.
ARTICLE X
INDEMNITY AND INSURANCE.
10.1 Indemnification. To the fullest extent permitted by law, Developer shall indemnify, defend (with counsel approved by City), and hold Indemnitees harmless from and against all losses, damages, fines, deficiencies, penalties, claims, demands, suits, actions, causes of action, legal or administrative proceedings, judgments, costs and expenses (including without limitation reasonable attorneys’ fees and court costs) or liabilities of any kind (all of the foregoing, collectively “Claims”) arising directly or indirectly in any manner in connection with or resulting from (a) any and all predevelopment, development or construction activities conducted in connection with the Property or the Project, including without limitation, site investigations conducted by or for Borrower, (b) any failure of any of Developer’s representations or warranties set forth in the City Documents, or made by Developer in connection with the execution and delivery of the City Documents or in any certificate furnished pursuant hereto, or in connection with any request for disbursement of Loan proceeds to be correct in all material respects, (c) any failure of Developer to comply with applicable laws pursuant to Section 4.11, including but not limited to, failure to comply with California Prevailing Wage Laws and (c) any Claim, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises in connection with the Loan, the City Documents, or any transaction contemplated thereby, or the relationship between Developer and City.
Developer’s obligations under this Section shall survive the making and disbursement of the Loan and the expiration or termination of this Agreement. It is further agreed that City does not and shall not waive any rights against Developer that it may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement. Developer’s indemnity obligations shall not apply to Claims arising solely as a result of the willful misconduct or gross negligence of the Indemnitees, and shall not be construed to require repayment of principal or interest on the Loan.
10.2 Liability and Workers Compensation Insurance.
(a) Developer shall maintain a commercial general liability policy in the amount of One Million Dollars ($1,000,000) combined single limit per occurrence, Two Million Dollars ($2,000,000) annual aggregate, or such other policy limits as City may require in its reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds. (b) Developer shall maintain a comprehensive automobile liability coverage in the #14..
- 269 -
18 5028599.1
amount of One Million Dollars ($1,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds.
(c) Developer shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for not less than ninety percent (90%) of the replacement value of the Project with deductible, if any, in an amount acceptable to City, naming City as loss payee.
(d) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M.
Best's rating of no less than A: VII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds.
Property insurance shall name City as loss payee as its interests may appear. (e) Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or nonrenewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. (f) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within fifteen (15) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City. (g) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City.
Developer shall furnish the required certificates and endorsements to City prior to the commencement of construction of the Project, and shall provide City with certified copies of the required insurance policies upon request of City.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 No Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder's fee, or other #14..
- 270 -
19 5028599.1
compensation with respect to the transactions contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the expiration or earlier termination of this Agreement.
11.2 Enforced Delay; Extension of Times of Performance. Subject to the limitations set forth below, performance by either Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Party, 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 City which shall not excuse performance by City), or any other cause beyond the affected Party’s reasonable control.
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 and such extension is not rejected in writing by the other Party within ten (10) days of receipt of the notice. Neither Party shall unreasonably withhold consent to an extension of time pursuant to this Section.
11.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
(iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient’s time or on a nonbusiness day.
City: City of Modesto
1010 Tenth Street, Suite 4400
Modesto, CA 95354
Attn: Community Development Manager
#14..
- 271 -
20 5028599.1
Developer: Stanislaus Equity Partners
820 H Street
Modesto, CA 95350
Attn: Executive Director
11.4 Attorneys’ Fees. If either Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees and disbursements.
11.5 Waivers; Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the waiving party. This Agreement may be amended or modified only by a written instrument executed by the Parties.
11.6 Binding on Successors. Subject to the restrictions on Transfers set forth in Article VI, this Agreement shall bind and inure to the benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named party shall be deemed to apply to any permitted successor and assign of such party who has acquired an interest in compliance with this Agreement or under law.
11.7 Survival. All representations made by Developer hereunder and Developer’s obligations pursuant to Sections 8.2, 10.1, and 11.1 shall survive the expiration or termination of this Agreement.
11.8 Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.
11.9 Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise herein, or unless the City Manager determines in his or her discretion that such action or approval requires referral to the City Council for consideration.
11.10 Entire Agreement. This Agreement, including Exhibits A through D attached hereto and incorporated herein by this reference, together with the other City Documents, contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes #14..
- 272 -
21 5028599.1
all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof.
11.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument.
11.12 Severability. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability.
11.13 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.
11.14 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Developer and the City as partners, co-venturers, or principal and agent with one another.
11.15 Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors in interest in the event of any default or breach by City or for any amount which may become due to Developer or its successors in interest pursuant to this Agreement.
11.16 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Friday, Saturday, Sunday, a federal holiday or a state holiday under the laws of California.
11.17 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of Stanislaus County, California or in the Federal District Court for the Eastern District of California.
11.18 Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement; provided, however, that such documents or instruments shall not expand the liability of Developer or City hereunder.
#14..
- 273 -
22 5028599.1
11.19 Refinancing of Senior Debt. Notwithstanding anything to the contrary contained in the City Documents, Borrower may refinance that certain senior loan made by Golden State Finance Authority, as assigned to, Bank of America, N.A. to Developer on or about the date hereof (the “Senior Indebtedness”) without the prior consent of the City (the “Refinanced Indebtedness”), and the City hereby agrees to subordinate the Loan and all documents securing or evidencing the Loan, including, but not limited to, the Deed of Trust, the Note, the Regulatory Agreement and this Agreement, to the Refinanced Indebtedness and the lien of any deed of trust or mortgage securing the Refinanced Indebtedness, provided that the principal balance of the Refinanced Indebtedness does not exceed the then outstanding principal balance of the Senior Indebtedness plus the costs of refinancing the Senior Indebtedness.
SIGNATURES ON FOLLOWING PAGE.
#14..
- 274 -
23 5028599.1
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.
DEVELOPER:
STANISLAUS EQUITY PARTNERS, a California nonprofit corporation By: ______________________________________
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
[City Signature Follows]
#14..
- 275 -
24 5028599.1
CITY:
CITY OF MODESTO, a California charter city
By: _____________________________________
Joseph P. Lopez, City Manager
Date: ______________________________________
ATTEST:
________________________________
Diane Nayares-Perez, CMC, City Clerk
APPROVED AS TO FORM:
By: ___________________________
Jose M. Sanchez, Acting City Attorney
APPROVED AS TO RISK MANAGEMENT:
By: _________________________________
#14..
- 276 -
25 5028599.1
Exhibit A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MODESTO,
COUNTY OF STANISLAUS, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
THE NORTH 98 FEET OF THE SOUTH 140 FEET OF LOT 8, IN BLOCK 213 OF THE CITY OF MODESTO, AS PER MAP THEREOF RECORDED DECEMBER 21, 1942, IN BOOK 15 OF MAPS, STANISLAUS COUNTY RECORDS. EXCEPTING THEREFROM THE EAST 181/3 FEET THEREOF
APN:107-008-015
#14..
- 277 -
B-1
Exhibit B
FORM OF SECURED PROMISSORY NOTE
(Attach form of Note.)
#14..
- 278 -
C-1
Exhibit C
FORM OF DEED OF TRUST
(Attach form of Deed of Trust.)
#14..
- 279 -
D-1
Exhibit D
FORM OF REGULATORY AGREEMENT
(Attach form of Regulatory Agreement.)
5028599.1
#14..
- 280 -
1 5028667.1
Recording requested by and when recorded
mail to:
City of Modesto
1010 10th Street
P. O. Box 642
Modesto, CA 95353
Attention: Community Development Manager
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
APN:_107-008-015_ Space above this line for Recorder’s use.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(112 James Street – PLHA Loan)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") is dated as of _____________, and is between the City of Modesto, a California charter city (“City”) Stanislaus Equity Partners, a California non-profit corporation (“Developer” or “Owner”). City and Developer are hereinafter collectively referred to as the “Parties.”
RECITALS
A. Defined Terms used but not defined in these recitals are as defined in Article 1 of this Agreement.
B. Developer owns fee simple title to certain real property located at 112 James Street, Modesto, California, known as Stanislaus County Assessor’s Parcel Numbers 107-008- 015, , as further described in Exhibit A, attached hereto and incorporated herein (the “Property”). Developer will acquire a newly constructed permanent supportive housing development on the Land consisting of consist of one (1) one-bedroom units, four (4) twobedroom units, and two (2) three-bedroom units. (the “Development”).
C. Pursuant to that certain Affordable Housing Loan Agreement dated by and between the City and Developer (the "Agreement"), the City has made a loan of Two Hundred Thousand Dollars ($200,000) to fund the development of the Development (the "Loan").
D. The Loan is being made to increase the supply of affordable rental housing in the City of Modesto as part of the Permanent Local Housing Allocation (“PLHA”) program managed by the California Department of Housing and Community Development (“HCD”).
Due to the assistance provided Developer pursuant to the Agreement, Developer has agreed that #14..
- 281 -
2 5028667.1
nine of the units in the Development shall be shall be affordable to and occupied by or available for occupancy by Low-Income Households for a period of not less than fifty-five (55) years.
E. The City has agreed to make the Acquisition Loan on the condition that the Property and Development be maintained and operated in accordance with restrictions concerning affordability, operation, and maintenance that are set forth in this Regulatory Agreement and in the related documents evidencing the Acquisition Loan.
F. In consideration of receipt of the Acquisition Loan, Developer agrees to observe all the terms and conditions set forth below.
The parties therefore agree as follows.
ARTICLE 1
DEFINITIONS; EXHIBITS
1.1 Definitions. The following terms have the following meanings:
(a) "Actual Household Size" means the actual number of persons in the applicable household.
(b) “Assumed Household Size" means the household size "adjusted for family size appropriate to the unit" in accordance with the California Tax Credit Allocation Committee rules and regulations.
(c) "Area Median Income” means the area median income for Stanislaus County, California, adjusted for household size, as published by the California Department of Housing and Community Development (“HCD”). If HCD ceases to make such determination, Area Median Income shall be the median income applicable to Stanislaus County, with adjustments for household size, as determined from time to time by the U.S. Department of Housing and Urban Development ("HUD") pursuant to the United States Housing Act of 1937 as amended, or such other method of median income calculation applicable to the City that HUD may hereafter adopt in connection with such Act.
(d) “Assisted Units" means the nine (9) Units within the Development designated as assisted by the City pursuant to this Regulatory Agreement. (e) "City" means the City of Modesto, a California charter city. (f) "Completion of Construction" means the date the construction of the Development is completed as evidenced by the issuance of a certificate of occupancy or equivalent document issued by the City, to certify completion of the construction of the Development.
(g) "Deed of Trust" means the Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith by and among Developer, as trustor, Old Republic Title, as trustee, and the City, as beneficiary, that will encumber the #14..
- 282 -
3 5028667.1
Property to secure repayment of the Loan and Developer's performance of the covenants set forth in the documents evidencing the Acquisition Loan as well as this Regulatory Agreement. (h) "Development" has the meaning set forth in Paragraph B of the Recitals. (i) "Loan Documents" means the documents executed by Developer evidencing the Loan including this Regulatory Agreement, the Note, Deed of Trust, and the Agreement.
(j) "Low Income Household" means a Tenant household with an Adjusted Income that does not exceed fifty percent (50%) of Area Median Income, adjusted for actual household size.
(k) "Low Income Units" means the Units which, pursuant to Section 2.1(b) below, are required to be occupied by Low Income Households. (l) "Management Agent" has the meaning set forth in Section 5.2. (m) "Note" means the secured promissory note, dated as of _______, that evidences Developer's obligation to repay the Loan, as such may be amended form time to time. (n) "Rent" shall mean the total of monthly payments by the tenants of a Unit for the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by Owner which are required of all tenants, other than security deposits; the cost of an adequate level of service for utilities paid by the tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not cable or telephone service; any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than Owner, and paid by the Tenant. Utility allowances may be determined by use of the utility allowance published by the local public housing authority or the California Utility Allowance Calculator ("CUAC") model allowed by the California Tax Credit Allocation Committee regulations, if the Property qualifies.
(o) "Services Provider" has the meaning set forth in Section 5.6. (p) "Tenant" means the tenant household that occupies a Unit in the Development.
(q) "Term" means the term of this Regulatory Agreement which commences as of the date of this Regulatory Agreement, and unless sooner terminated pursuant to the terms of this Agreement, expires on the date fifty-five (55th) years from the execution of this agreement, but in no event later than December 31, 2079 (subject to extensions agreed upon by the Partners).
(r) "Unit(s)" means one (1) or more of the units in the Development. #14..
- 283 -
4 5028667.1
1.2 Exhibits. The following exhibits are attached to this Regulatory Agreement and incorporated into this Regulatory Agreement by this reference:
Exhibit A: Legal Description of the Property
Exhibit B: Certificate of Continuing Program Compliance Exhibit C: Form of Certification of Tenant Eligibility
ARTICLE 2
AFFORDABILITY AND OCCUPANCY COVENANTS
2.1 Occupancy Requirements.
(a) Low Income Units. During the Term, Developer shall rent nine units where nine (9) of the units in the Development to, and ensure that these Units are occupied or, if vacant, available for occupancy, by households at risk for homelessness with incomes that at or below 50% of the Area Median Income (the “Assisted Units”). The Assisted Units shall be broken down as follows:
Attached Units
9 units
(b) Intermingling of Units. The Assisted Units are required to be intermingled throughout the Development and of comparable quality to all other Units. All Tenants must have equal access to and enjoyment of all common facilities in the Development. (c) Disabled Persons Occupancy. Developer shall cause the Development to be operated at all times in compliance with the provisions of: (1) the Unruh Act; (2) the California Fair Employment and Housing Act; (3) Section 504 of the Rehabilitation Act of 1973; (4) the United States Fair Housing Act, as amended; and (5) the Americans With Disabilities Act of 1990, which relate to disabled persons access. Developer shall indemnify, protect, hold harmless and defend (with counsel reasonably satisfactory to the City) the City, and its council members, board members, officers’ agents and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of Developer's failure to comply with applicable legal requirements related to housing for persons with disabilities. The provisions of this subsection will survive expiration of the Term or other termination of this Regulatory Agreement, and remain in full force and effect.
2.2 Allowable Rent.
(a) Rent for Assisted Units. Subject to the provisions of Section 2.3 below, the Rent paid by Tenants of Assisted Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of the fifty percent 50%) of Area Median Income, adjusted for Assumed Household Size. (b) No Additional Fees. Developer may not charge any fee, other than Rent, to any Tenant of the Units for any housing or other services provided by Developer. #14..
- 284 -
5 5028667.1
2.3 Rent Increases; Increased Income of Tenants.
(a) Rent Increases. The proposed initial Rents and subsequent Rents for all Assisted Units shall be provided to the Developer by the City prior to initial or subsequent occupancy and prior to a rent increase, and shall be subject to the requirements of this Agreement. Developer shall only impose Tenant Rent increases on the Assisted Units that are consistent with the applicable statutes, laws, and regulations of the State of California and City of Modesto. The Rent for such Assisted Units may be increased no more than once annually based upon the annual income certification described in Article 3. Tenants shall be given at least sixty (60) days written notice prior to any Rent increase. The City will provide Developer with a schedule of maximum permissible Rents for the Assisted Units annually. (b) Non-Qualifying Household. If, upon the annual certification of the income a Tenant of an Assisted Unit, Developer determines that the income of a Low Income Household has increased above the qualifying limit for a Low Income Household, such Tenant shall be permitted to retain the Unit and upon expiration of the Tenant's lease and upon sixty (60) days written notice, the Rent may be increased to the lesser of one-twelfth (1/12th) of thirty percent (30%) of the actual Adjusted Income of the Tenant, and Developer shall rent the next available Unit to a Low Income Household to comply with the requirements of Section 2.1 above, at a Rent not exceeding the maximum Rent specified in Section 2.2. Upon renting the next available Unit in accordance with Section 2.1, the Unit with the over-income Tenant will no longer be considered an Assisted Unit.
(c) Termination of Occupancy. Upon termination of occupancy of an Assisted Unit by a Tenant, such Unit will be deemed to be continuously occupied by a household of the same income level as the initial income level of the vacating Tenant, until such Unit is reoccupied or another Unit is re-designated as an Assisted Unit, at which time categorization of the Unit will be established based on the occupancy requirements of Section 2.1.
2.4 Units Available to the Disabled. Developer shall construct the Development in compliance with all applicable federal and state disabled persons accessibility requirements including but not limited to the Federal Fair Housing Act; Section 504 of the Rehabilitation Act of 1973; Title II and/or Title III of the Americans with Disabilities Act; and Title 24 of the California Code of Regulations.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
3.1 Income Certification. Developer shall obtain, complete, and maintain on file, immediately prior to initial occupancy and annually thereafter, income certifications from each Tenant renting any of the Assisted Units. Developer shall cause each Tenant in an Assisted Unit to execute a Certification of Tenant Eligibility in the form attached as Exhibit C. Developer shall fill out the "Development Owner" portion of the Certification of Tenant Eligibility and provide it to the City along with supporting documentation collected by Developer. Developer shall make a good faith effort to verify the accuracy of the income provided by all applicants or all members of the occupying household, as the case may be, in the income certification. To #14..
- 285 -
6 5028667.1
verify the information Developer shall take two or more of the following steps: (a) obtain pay stubs for the most recent two months; (b) obtain an income tax return for the most recent tax year; (c) conduct a credit agency or similar search; (d) obtain an income verification form from the applicant's current employer verifying employment for the last two months; (e) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies, verifying assistance for the last two months; or (f) if the applicant is unemployed and does not have a tax return, obtain another form of independent verification. Copies of the Certifications of Tenant Eligibility and accompanying documentation must be submitted to the City annually for each of the Assisted Units.
3.2 Reporting Requirements. Developer shall submit to the City: (a) not later than the ninety (90th) day after the close of each calendar year, or such other date as may be requested by the City, a signed copy of the Certification of Program Compliance in the form attached as Exhibit B; and (b) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the City in order to comply with reporting requirements of HUD, the State of California, and the City; including but not limited to reports, records, surveys evidencing compliance with the Agreement.
3.3 Additional Information. Developer shall provide any additional information reasonably requested by the City.
3.4 Records. Developer shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the City to inspect records, including records pertaining to income and household size of Tenants and Rent charged to such Tenants. All Tenant lists, applications and waiting lists relating to the Development are to be at all times: (a) separate and identifiable from any other business of Developer; (b) maintained as required by the City, in a reasonable condition for proper audit; and (c) subject to examination during business hours by representatives of the City. Developer shall retain copies of all materials obtained or produced with respect to occupancy of the units for a period of at least five (5) years. The City may audit, examine and make copies of all books, records or other documents of Developer that pertain to the Development.
3.5 On-Site Inspection.
(a) The City may perform, or cause to be performed, an on-site inspection of the Development (including Units, subject to the rights of Tenants) at least one (1) time per year during all business hours and upon reasonable notice (if such inspection includes entering any occupied Unit, then twenty-four hours' notice shall be considered reasonable) to monitor compliance with this Regulatory Agreement and any other requirements of the Agreement.
Developer shall cooperate in making the Property available for such inspection. (b) After the completion of an inspection the City shall deliver a copy of the inspection report to the Developer. If the City determines as a result of such inspection that there are any life-threatening health and safety related deficiencies, Developer has the obligation to correct such deficiencies immediately. If the City determines as a result of the inspection that there are any deficiencies for any of the inspectable items in the Development, the Developer #14..
- 286 -
7 5028667.1
shall correct such deficiencies within fifteen (15) days from the delivery of the inspection report or if a period longer than fifteen (15) days is reasonably necessary to correct the deficiency, then Developer must begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible. In addition, the Developer acknowledges that the City may re-inspect the Development to verify all deficiencies have been corrected or rely on third party documentation submitted by the Developer for non-hazardous deficiencies.
ARTICLE 4
OPERATION OF THE DEVELOPMENT
4.1 Residential Use. Developer shall operate the Development for residential use only, and such ancillary uses permitted at the Development as approved by the City. No part of the Development may be operated as emergency shelters (including shelters for disaster victims) or facilities such as nursing homes, convalescent homes, hospitals, residential treatment facilities, correctional facilities, halfway houses, housing for students, or dormitories (including farmworker dormitories).
4.2 Compliance with Loan Documents and Program Requirements. Developer's actions with respect to the Property shall at all times be in full conformity with: (a) all requirements of this Regulatory Agreement; (b) the Agreement; (c) the Loan Documents; and (d) any other regulatory requirements imposed on Developer.
4.3 Taxes and Assessments. Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Developer may apply for a property tax exemption for the Property under any provision of law or contest in good faith, any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it, Developer, on final determination of the proceeding or contest, will immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest.
4.4 Insurance Coverage. Prior to issuance of building permits for the Development, and continuing throughout the term of this Agreement Owner shall obtain and maintain property insurance for the risks of direct physical loss, with minimum coverage being the perils insured under the standard Causes of Loss - Special form (ISO Form CP 10 30) or its equivalent, covering all improvements, all fixtures, equipment and personal property, located on or in, or constituting a part of, the Property (“Improvements”), in an amount equal to one hundred percent (100%) of the full replacement cost of all such property. Insurance shall be provided by insurers licensed to do business in the State of California and having a rating of A-VII or better in Best Insurance Guide. Notwithstanding the forgoing, during such time that lenders providing financing for the Development impose insurance requirements that are inconsistent with the requirements set forth herein, Owner may satisfy the requirements of this Section by meeting the requirements of such lenders. Any insurance required for the Development shall name the City, and its officers, officials, employees and agents as an additional insured. Owner shall provide proof of required insurance to City upon request.
#14..
- 287 -
8 5028667.1
4.5 Property Damage or Destruction. If any part of the Development is damaged or destroyed, Owner shall repair or restore the same, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Such work shall be commenced within 120 days after the damage or loss occurs and shall be completed within two year thereafter, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible.
4.6 Property Tax Exemption. Developer may apply for a property tax exemption for the Property under any provision of law, including but not limited to, California Revenue and Taxation Section 214(g).
ARTICLE 5
PROPERTY MANAGEMENT, MAINTENANCE AND RESIDENT SERVICES
5.1 Management Responsibilities. The Developer shall submit to the City an initial proposed Management Plan no later than six (6) months after the commencement of construction of the Development as set forth in the Agreement. The Developer shall submit to the City for approval the name and qualifications of a proposed management agent, a proposed management agreement and written guidelines or procedures for tenant selection (in compliance with the Agreement), operation and management of the Development, and implementation of the income certification and reporting requirements of this Regulatory Agreement (collectively, the “Management Plan”). The City shall approve or disapprove the Management Plan in writing within fifteen (15) calendar days following the City's receipt of the complete Management Plan, which approval shall not be unreasonably denied. If the Management Plan is disapproved by the City, the City shall deliver a written notice to the Developer setting forth, in reasonable detail, the reasons for such disapproval. The Developer shall have fifteen (15) calendar days following the receipt of such notice to submit a revised Management Plan. The provisions of this Section relating to time periods for approval, disapproval, and resubmission of the new Management Plan shall continue to apply until the Management Plan has been approved by the City. The Developer shall submit to the City any proposed changes to the Management Plan, which shall be reviewed and approved by the City as set forth above.
5.2 Management Agent. Developer shall cause the Development to be managed by an experienced management agent reasonably acceptable to the City, with a demonstrated ability to operate residential facilities like the Development in a manner that will provide decent, safe, and sanitary housing (the "Management Agent"). The City hereby approves Stanislaus County Affordable Housing Corporation. as the initial Management Agent. Developer shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the City shall approve the proposed Management Agent by notifying Developer in writing. Unless the proposed Management Agent is disapproved by the City within thirty (30) days, which disapproval is to state with reasonable specificity the basis for #14..
- 288 -
9 5028667.1
disapproval, it shall be deemed approved. Pursuant to California Code of Regulations title 25, Section 42 all projects with 16 or more units must have a resident manager living on the Property. The City will not consider maintenance personnel as a substitute or equivalent to a trained, in residence property manager.
5.3 Periodic Performance Review. The City reserves the right to conduct an annual (or more frequently, if deemed necessary by the City) review of the management practices and financial status of the Development. The purpose of each periodic review will be to enable the City to determine if the Development is being operated and managed in accordance with the requirements and standards of this Regulatory Agreement. Developer shall cooperate with the City in such reviews.
For purposes of such periodic reviews, the Developer and the Management Agent shall make available to the City for inspection all books and records with respect to the Development.
In addition, the Developer shall provide the City with: (1) by not later than thirty (30) days prior to commencement of each Fiscal Year, the annual budget for the upcoming Fiscal Year; (2) within ninety (90) days following the end of each Fiscal Year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding Fiscal Year and the status of all reserve funds; and (3) within one hundred twenty (120) days following the end of each Fiscal Year, a copy of the Developer's federal income tax filings for the Fiscal Year
5.4 Replacement of Management Agent.
(a) If, as a result of a periodic review, the City determines in its reasonable judgment that the Development is not being operated and managed in accordance with any of the material requirements and standards of this Regulatory Agreement, the City shall deliver notice to Developer of its intention to cause replacement of the Management Agent, including the reasons therefor. Within fifteen (15) days after receipt by Developer of such written notice, the City staff and Developer shall meet in good faith to consider methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent.
(b) If, after such meeting, City staff recommends in writing the replacement of the Management Agent, Developer shall promptly dismiss the then current Management Agent, and must take steps to appoint as the Management Agent a person or entity meeting the standards for a management agent set forth above and approved by the City, and shall promptly and as soon as practicable dismiss the then-current Management Agent. (c) Any contract for the operation or management of the Development entered into by Developer shall provide that the Management Agent may be dismissed and the contract terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section constitutes a default under this Regulatory Agreement, and the City may enforce this provision through legal proceedings as specified in Section 6.7 below.
5.5 Approval of Management Policies. Developer shall submit its written management policies with respect to the Development to the City for its review, and shall amend #14..
- 289 -
10 5028667.1
such policies in any way necessary to ensure that such policies comply with the provisions of this Regulatory Agreement.
5.6 Resident Services Provider.
(a) The Developer will be providing on-site services which Developer will make available to all residents in the Development (the "Resident Services"). Developer hereby agrees to contract for a resident services coordinator at least one (1) month prior to completion of the Development. The Developer shall submit to the City for approval the name and qualifications of any proposed services provider (the "Services Provider"). The Services Provider shall have demonstrated the ability to provide Resident Services in residential facilities like the Development in an effective manner. The Developer shall submit such additional information about the background, experience and financial condition of any proposed Services Provider as is reasonably necessary for the City to determine whether the proposed Services Provider meets the standards for a qualified Services Provider of developments of this type. If the proposed Services Provider meets the standard for a qualified Services Provider set forth above, the City shall approve the proposed Services Provider by notifying Developer in writing.
Unless the proposed Services Provider is disapproved by the City within thirty (30) days, which disapproval is to state with reasonable specificity the basis for disapproval, it shall be deemed approved. The City hereby approves Stanislaus County Affordable Housing Corporation. as the initial Services Provider for the Development.
(b) The Developer shall submit to the City and initial proposed Resident Services Plan and Resident Services Budget no later than six (6) months after the commencement of construction of the Development. Each year thereafter, within sixty (60) days of the end of the Developer's fiscal year, the Developer shall furnish to the City a draft Resident Services Plan and Resident Services Budget. Upon receipt by the City of the proposed Resident Services Plan and Resident Services Budget, the City shall promptly review the same and approve or disapprove the Resident Services Plan and the Resident Services Budget within ten (10) working days. If the Resident Services Plan or Resident Services Budget are not approved by the City, the City shall set forth in writing and notify the Developer of the City's reasons for withholding such approval, which may include a request by the City for a change in the nature or scope of resident services or a change in service provider. The Developer shall thereafter submit a revised Resident Services Plan and Resident Services Budget for City approval, which approval shall be granted or denied within five (5) working days in accordance with the procedures set forth above. The Resident Services Budget shall show required expenditures from Annual Operating Expenses, and may include an annual sum dedicated for Resident Services consistent with the Developer's commitment to the Tax Credit Allocation Committee and subject to the approval of the City, provided however the Operating Expenses line item for Resident Services may be increased in such amount approved by the City prior to commencement of the Fiscal Year, pursuant to the procedure for submission and approval of the Resident Services Plan and Resident Services Budget as set forth above.
5.7 Property Maintenance.
(a) Developer shall maintain, for the entire Term of this Regulatory Agreement, all interior and exterior Improvements, including landscaping, on the Property in #14..
- 290 -
11 5028667.1
good condition and repair (and, as to landscaping, in a healthy condition), subject to reasonable wear and tear, and in accordance with the approved Management Plan, and all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, and in a decent, safe, sanitary condition and in good repair. (b) The City places prime importance on quality maintenance to protect its investment and to ensure that all City and City-assisted affordable housing projects within the City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to the City assuming Developer agrees to provide all necessary improvements to assure the Development is maintained in good condition. In addition, the Developer shall keep the Development free from all graffiti, and any accumulation of shopping carts, debris or waste material. The Developer shall promptly make all repairs and replacements necessary to keep the Development in first-class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials.
(c) In the event that Developer breaches any of the covenants contained in this section and such default continues for a period of five (5) days after written notice from the City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the City with respect to landscaping and building improvements, then the City, in addition to whatever other remedy it may have at law or in equity, has the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City is permitted (but is not required) to enter upon the Property and to perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, which amount shall be promptly paid by Developer to the City upon demand.
5.8 Crime Prevention Program. During the Term of this Regulatory Agreement Developer agrees to participate in the City of Modesto Police Department's Crime Free MultiHousing program or similar program administered by the City (the "Crime Prevention Program"). Information on the City's Crime Prevention Program is currently available at https://www.modestogov.com/mpd/programs/cfmh/. The City's periodic review of the management of the Development pursuant to Section 5.3 will include an evaluation of Developer's participation in the Crime Prevention Program.
ARTICLE 6
MISCELLANEOUS
6.1 Lease Provisions. In leasing the Units within the Development, Developer shall use a form of written lease approved by the City. The form of lease must comply with all requirements of this Regulatory Agreement, the other Loan Documents and must, among other matters:
#14..
- 291 -
12 5028667.1
(a) Provide for termination of the lease for failure to: (1) provide any information required under this Regulatory Agreement or reasonably requested by Developer to establish or recertify the Tenant's qualification, or the qualification of the Tenant's household, for occupancy in the Development in accordance with the standards set forth in this Regulatory Agreement; or (2) qualify as a Low Income Household as a result of any material misrepresentation made by such Tenant with respect to the income computation. (b) Be for an initial term of not less than one (1) year, unless by mutual agreement between the Tenant and Developer, and provide for no increase in Rent during such year. After the initial year of tenancy, the lease may be month-to-month by mutual agreement of Developer and the Tenant. Notwithstanding the above, any rent increases are subject to the requirements of Section 2.3 (a) above.
(c) Include a provision which requires a Tenant who is residing in a Unit required to be accessible pursuant to Section 2.4 and who is not in need of an accessible Unit to move to a non-accessible Unit when a non-accessible Unit becomes available and another Tenant or prospective Tenant is in need of an accessible Unit.
6.2 Lease Termination. Any termination of a lease or refusal to renew a lease for an Assisted Unit within the Development must be preceded by not less than sixty (60) days written notice to the Tenant by Developer specifying the grounds for the action.
6.3 Nondiscrimination.
(a) All of the Units must be available for occupancy on a continuous basis to members of the general public who are income eligible. Except as provided in subsection (c) below, Developer may not give preference to any particular class or group of persons in renting or selling the Units, except to the extent that the Units are required to be leased to income eligible households pursuant to this Regulatory Agreement. Developer herein covenants by and for Developer, assigns, and all persons claiming under or through Developer, that there exist no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, source of income (e.g., SSI), ancestry, disability, age, or military and veteran status, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor will Developer or any person claiming under or through Developer, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Unit or in connection with the employment of persons for the construction, operation and management of any Unit. Developer shall comply with Executive Orders 11246, 11375, 11625, 12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964, the California Fair Housing and Employment Act and other applicable Federal, State and local laws and regulations and policies relating to equal employment and contracting opportunities, including laws and regulations hereafter enacted.
(b) Developer shall accept as Tenants, on the same basis as all other prospective Tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its #14..
- 292 -
13 5028667.1
successor. Developer may not apply selection criteria to Section 8 certificate or voucher holders that is more burdensome than criteria applied to all other prospective Tenants, nor will Developer apply or permit the application of management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Tenants.
6.4 Term. The provisions of this Regulatory Agreement apply to the Property for the entire Term even if the Acquisition Loan is paid in full prior to the end of the Term. This Regulatory Agreement binds any successor, heir or assign of Developer, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by City. City is making the Loan on the condition, and in consideration of, this provision, and would not do so otherwise.
6.5 Notice of Expiration of Term.
(a) At least six (6) months prior to the expiration of the Term, Developer shall provide by first-class mail, postage prepaid, a notice to all Tenants containing: (1) the anticipated date of the expiration of the Term; (2) any anticipated increase in Rent upon the expiration of the Term; (3) a statement that a copy of such notice will be sent to the Count; and (4) a statement that a public hearing may be held by the City on the issue and that the Tenant will receive notice of the hearing at least fifteen (15) days in advance of any such hearing. Developer shall also file a copy of the above-described notice with the City Manager, or the Community Development Manager.
(b) In addition to the notice required above, Developer shall comply with the requirements set forth in California Government Code Sections 65863.10 and 65863.11. Such notice requirements include: (1) a twelve (12) month notice to existing tenants, prospective tenants and Affected Public Agencies (as defined in California Government Code Section 65863.10(a)) prior to the expiration of the Term; (2) a six (6) month notice requirement to existing tenants, prospective tenants and Affected Public Agencies prior to the expiration of the Term; (3) a notice of an offer to purchase the Development to "qualified entities" (as defined in California Government Code Section 65863.11(d)), if the Development is to be sold within five (5) years of the end of the Term; and (4) a notice of right of first refusal within the one hundred eighty (180) day period that qualified entities may purchase the Development.
6.6 Covenants to Run With the Land. The City and Developer hereby declare their express intent that the covenants and restrictions set forth in this Regulatory Agreement run with the land, and bind all successors in title to the Property, provided, however, that on the expiration of the Term of this Regulatory Agreement said covenants and restrictions expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof, is to be held conclusively to have been executed, delivered and accepted subject to the covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless the City expressly releases such conveyed portion of the Property from the requirements of this Regulatory Agreement.
6.7 Enforcement by the City. If Developer fails to perform any obligation under this Regulatory Agreement, and fails to cure the default within thirty (30) days after the City has #14..
- 293 -
14 5028667.1
notified Developer in writing of the default or, if the default cannot be cured within thirty (30) days, fails to commence to cure within thirty (30) days and thereafter diligently pursue such cure and complete such cure within ninety (90) days, the City may enforce this Regulatory Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Calling the Acquisition Loan. The City may declare an Event of Default under the Note, accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed of Trust.
(b) Action to Compel Performance or for Damages. The City may bring an action at law or in equity to compel Developer's performance of its obligations under this Regulatory Agreement, and may seek damages.
(c) Remedies Provided Under Loan Documents. The City may exercise any other remedy provided under the Loan Documents, including the Deed of Trust.
6.8 Attorneys' Fees and Costs. In any action brought to enforce this Regulatory Agreement, the prevailing party must be entitled to all costs and expenses of suit, including reasonable attorneys' fees. This section must be interpreted in accordance with California Civil Code Section 1717 and judicial decisions interpreting that statute.
6.9 Recording and Filing. The City and Developer shall cause this Regulatory Agreement, and all amendments and supplements to it, to be recorded in the Official Records of Stanislaus County.
6.10 Governing Law. This Regulatory Agreement is governed by the laws of the State of California.
6.11 Waiver of Requirements. Any of the requirements of this Regulatory Agreement may be expressly waived by the City in writing, but no waiver by the City of any requirement of this Regulatory Agreement extends to or affects any other provision of this Regulatory Agreement, and may not be deemed to do so.
6.12 Amendments. This Regulatory Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title that is duly recorded in the official records of Stanislaus County.
6.13 Notices. Any notice requirement set forth herein will be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows:
City: City of Modesto
1010 Tenth Street, Suite 4400
Modesto, CA 95354
Attn: Community Development Manager
Developer: Stanislaus Equity Partners
#14..
- 294 -
15 5028667.1
820 H Street
Modesto, CA 95350
Attn: Executive Director
Such addresses may be changed by notice to the other party given in the same manner as provided above.
6.14 Severability. If any provision of this Regulatory Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Regulatory Agreement will not in any way be affected or impaired thereby.
6.15 Multiple Originals; Counterparts. This Regulatory Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
6.16 Revival of Agreement after Foreclosure. In the event there is a foreclosure of the Property, this Regulatory Agreement will revive according to its original terms if, during the Term, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the Development or Property. [Remainder of Page Left Intentionally Blank]
#14..
- 295 -
Regulatory Agreement
Signature Page
WHEREAS, this Agreement has been entered into by the undersigned as of the date first written above.
SIGNATURES MUST BE NOTARIZED
DEVELOPER:
STANISLAUS EQUITY PARTNERS, a California nonprofit corporation By: ______________________________________
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
[City Signature Follows]
#14..
- 296 -
17 5028599.1
#14..
- 297 -
18 5028599.1
CITY:
CITY OF MODESTO, a California charter city
By: _____________________________________
Joseph Lopez, City Manager
Date: ______________________________________
ATTEST:
________________________________
Diane Nayares-Perez, CMC, City Clerk
APPROVED AS TO FORM:
By: ___________________________
Jose M. Sanchez, Acting City Attorney
APPROVED AS TO RISK MANAGEMENT:
By: _________________________________
SIGNATURES MUST BE NOTARIZED
#14..
- 298 -
STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. #14..
- 299 -
A-1
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MODESTO,
COUNTY OF STANISLAUS, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
THE NORTH 98 FEET OF THE SOUTH 140 FEET OF LOT 8, IN BLOCK 213 OF THE CITY OF MODESTO, AS PER MAP THEREOF RECORDED DECEMBER 21, 1942, IN BOOK 15 OF MAPS, STANISLAUS COUNTY RECORDS. EXCEPTING THEREFROM THE EAST 181/3 FEET THEREOF
APN:107-008-015
#14..
- 300 -
C-1
EXHIBIT B
INITIAL/ANNUAL CERTIFICATE OF
PROGRAM COMPLIANCE
STANISLAUS EQUITY PARTNERS, a California non-profit corporation ("Owner"), hereby certifies that it will comply with all applicable, ongoing requirements for the Property's Affordability Period which has been determined to be fifty-five (55) years from the date of issuance of the Certificate of Occupancy for the above-described Development. Affordability shall be maintained as follows:
Nine (9) units are being made available to serve households at risk for homelessness with incomes that at or below 50% of the Area Median Income.
During the term of the Regulatory Agreement the Owner will ensure that these units are occupied or, if vacant, available for occupancy, by serve households at risk for homelessness with incomes that at or below 50% of the Area Median Income.
Property owners and managers have participated in the Modesto Police Department's Crime Free Multi-Housing Unit Program, wherein specialized training and other resources are provided to multi-family property owners and managers to reduce the potential for onsite criminal activity.
Completion of the Department's four (4) training phases, a Final Certification has been achieved and will be maintained by the owner/representative and/or regional/onsite property manager.
Owner is maintaining and attaching the following records and reports in order to assist the City in meeting its record keeping and reporting requirements under and City Regulatory Agreement:
1. Files on the annual review and certification of tenant income;
2. All information on the qualification of affordable rents;
3. Terms and conditions of all signed leases between Tenants and Owner;
4. All other reports and records requested by City pursuant to the Loan Documents.
Dated: _______________
OWNER:
By: ________________________________
Title: ________________________________
#14..
- 301 -
C-2
1669\01\2466400.1
CERTIFICATE OF
CONTINUING PROGRAM COMPLIANCE
The following information is being provided by STANISLAUS EQUITY PARTNERS, a California non-profit corporation (the "Owner") to the City of Modesto, (the "City"), pursuant to that certain Agreement dated as of _________, 2022, as such may be amended from time to time, and the Regulatory Agreement dated as of ________. 2022, as such may be amended from time to time, with respect to the Development:
(A) Owner will comply with all applicable, ongoing requirements for the fifty-five (55) year Term from the date of issuance of the certificate of occupancy for the above-described project, and the ongoing City imposed affordability requirements for balance of the Property's Affordability Period which has been determined to be fifty-five (55) years from the date of issuance of the Certificate of Occupancy for the above-described project. (B) The total number of residential units which are completed and available for occupancy is .
The total number of such units occupied is .
(C) The following residential units (identified by unit number) have been designated Assisted Units, as described in the Regulatory Agreement (for a total of ); (D) The following residential units which are included in (B) above, have been designated as Assisted Units since , 20____, the date on which the last "Certificate of Continuing Program Compliance" was filed with the City by ; Unit Number Previous Designation of
Unit (if any) Replacing Unit Number
(E) The following residential units are considered to be occupied by Low Income Households based on the information set forth below:
#14..
- 302 -
C-3
1669\01\2466400.1
Number
of Unit
Date of
Unit
No.
Name of Tenant
Persons
Residing
in Unit
Total
Adjusted
Gross
Income
Initial
Occupancy
Monthly
Rental
Amount
Attach a Separate Sheet if Necessary
(F) In renting the residential units in the Development, Owner has not given preference to any particular group or class of persons not allowed under the Regulatory Agreement (except for persons who qualify as qualified serve households at risk for homelessness with incomes that at or below 50% of the Area Median Income). All of the residential units in the Development have been rented pursuant to a written lease, and the term of each lease is at least twelve months. A copy of the form lease for Assisted Units is attached.
(G) Property owners and managers have participated in the Modesto Police Department's Crime Free Multi-Housing Unit Program, wherein specialized training and other resources are provided to multi-family property owners and managers to reduce the potential for onsite criminal activity. Completion of the Department's three (3) training phases, a Final Certification (Phase V) has been achieved and is being maintained by the owner/representative and/or regional/-onsite property manager. (H) Each building in the Development and all Assisted Units in the Development are suitable for occupancy and comply with all applicable State and local health, safety and other applicable codes, ordinances, and requirements and the ongoing property standards, as specified in the Regulatory Agreement.
(I) The information provided in this "Certificate of Continuing Program Compliance" is accurate and complete, and no matters have come to the attention of Owner which would indicate that any of the information provided herein, or in any "Certification of Tenant Eligibility" obtained from the tenants named herein, is inaccurate or incomplete in any respect.
[Signature Page Follows.]
#14..
- 303 -
C-4
1669\01\2466400.1
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of Owner, on this day of , 20 .
OWNER:
STANISLAUS EQUITY PARTNERS, a California nonprofit corporation By: ______________________________________
___________, Executive Director
Date: ______________________________________
#14..
- 304 -
EXHIBIT C
FORM OF CERTIFICATION OF TENANT ELIGIBILITY
Rental Unit
Street Address Unit No
City Zip Code
I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above Development for which application is made, all of whom are listed below:
1. 2. 3. 4. 5.
Name of Members
in the Household
Relationship to
Head of Household Age Ethnicity Place of Employment
Ethnicity: ❑ White ❑ Black or African American ❑ Asian ❑ Asian & White ❑ American Indian or Alaska Native
❑ Native Hawaiian or Other Pacific Islander ❑ American Indian or Alaska Native & White ❑ Black or African American & White
❑ American Indian or Alaska Native & Black or African American ❑ Other Multi Race ❑ Hispanic
Date of Occupancy of Rental Unit by Tenant:
Date of Lease Signed for Rental Unit by Tenant:
Amount of Rent Paid Per Month:
Certification Date (Earlier of Date of Occupancy or Date Lease signed):
6. Anticipated Annual Income. The anticipated total annual income from all sources of each person listed in Section 1 for the twelve (12) month period beginning on the Certification Date listed above, including income described in (a) below, but excluding all income described in (b) below, is $ .
(a) The amount set forth above includes all of the following income (unless such income is described in (b) below): all wages and salaries, overtime pay, commissions, fees, tips and bonuses before payroll deductions; net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of #14..
- 305 -
capital indebtedness or any allowance for depreciation of capital assets); interest and dividends (including income from assets as set forth in item 7(b) below); full amount of periodic payments received from Social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; the maximum amount of public assistance available to the above persons; periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and any earned income tax credit to the extent it exceeds income tax liability. (b) The following income is excluded from the amount set forth above: casual, sporadic or irregular gifts; amounts that are specifically for or in reimbursement of medical expenses; lump sum additions to family assets, such as inheritances, insurance payment (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; amounts of educational scholarships paid directly to student or educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in either case only to the extent used for such purposes; hazardous duty pay to a member of the household in the armed forces who is away from home and exposed to hostile fire; relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; income from employment of children (including foster children) under the age of eighteen (18) years; foster child care payments; the value of coupon allotments under the Food Stamp Act of 1977; payments to volunteers under the Domestic Volunteer Service Act of 1973; payments received under the Alaska Native Claims Settlement Act; income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; payments on allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; and payments received from the Job Partnership Training Act.
7. Net Family Assets. If any of the persons described in item 1 above (or any person whose income or contributions were included in item 6) has any savings, stocks, bonds, equity in real property or other form of capital investment (excluding interests in Indian trust lands), provide:
(a) the total value of all such assets owned by all such persons: $ , and
(b) the amount of income expected to be derived from such assets in the twelve (12) month period commencing this date: $ .
8. Students
#14..
- 306 -
(a) Will any of the persons listed in item 1 above be or have they been full-time students during five (5) calendar months of this calendar year at an educational institution (other than a correspondence school) with regular faculty and students? Yes No
(b) (Complete only if the answer to Question 8(a) is "Yes"). Is any such person (other than nonresident aliens) married and eligible to file a joint federal income tax return, a veteran of the U.S. military?
Yes No
The above information is full, true, and complete to the best of my knowledge. I have no objections to inquiries being made for the purpose of verifying the statements made herein.
Signature: Date
(Signature Must be Notarized)
#14..
- 307 -
STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: ______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. #14..
- 308 -
FOR COMPLETION BY DEVELOPMENT OWNER ONLY:
A. Calculation of eligible income:
(1) Enter amount entered for entire household in 6 above: $ (2) If the amount entered in 7(a) above is greater than $5,000, enter $ (i) the product of the amount entered in 7(a) above multiplied by the current passbook savings rate as determined by HUD: $ (ii) the amount entered in 7(b) above: $
(iii) enter the greater of line (i) or line (ii): $
(3) TOTAL ELIGIBLE INCOME (Line A(1) plus line A(2)(iii)): $ B. Enter number of family members listed in item 1 above:
C. The amount entered in A(3) (Total Eligible Income) is: $ Less than $__________ of median income for the area in which the Development is located, which is the maximum income at which a household may be determined to be a qualifying tenant as that term is defined in the Agreement.
More than the above-mentioned amount.
D. Number of units assigned:
E. Monthly rent: $
F. This unit (was/was not) last occupied for a period of thirty-one (31) consecutive days by a person or persons whose adjusted income, as certified in the above manner, was equal to or less than the amount at which a person would have qualified as a qualifying tenant under the terms of the Agreement.
G. Applicant:
Qualifies as a qualifying tenant.
Does not qualify as a qualifying tenant.
5028667.1
#14..
- 309 -
5028665.1 1
SECURED PROMISSORY NOTE
(112 James Street - PLHA Loan)
$200,000 Modesto, California
____________(Date)
FOR VALUE RECEIVED, STANISLAUS EQUITY PARTNERS, a California nonprofit corporation (“Borrower”), promises to pay to the City of Modesto, a California charter city (“City”), in lawful money of the United States of America, the principal sum of Two Hundred Thousand Dollars ($200,000), or so much thereof as may be advanced by City pursuant to the Agreement referred to below, with one percent (1%) simple interest accruing on the outstanding principal balance, and in accordance with the terms and conditions described herein.
This Secured Promissory Note (this “Note”) has been executed and delivered pursuant to and in accordance with that certain Affordable Housing Loan Agreement executed by and between the City and Borrower dated ___________ (the “Agreement”), and is subject to the terms and conditions of the Agreement, which is by this reference incorporated herein and made a part hereof. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Agreement.
This Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date hereof, executed by Borrower for the benefit of City and encumbering the property described therein. City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein, in the Deed of Trust, the Regulatory Agreement and the other City Documents. The Regulatory Agreement shall remain effective for the full term thereof and shall survive the repayment of this Note.
I. INTEREST. Interest shall accrue at the rate of one percent (1%) simple interest on the principal balance of this Note; provided however, that upon the occurrence of an Event of Default and continuing until such time as the Loan is repaid in full or the default is cured, interest shall automatically be charged without notice to the lesser of (i) ten percent (10%), compounded annually, or (ii) the highest rate permitted by law (the “Default Rate"). The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent City from exercising any of its other rights or remedies. Default interest shall be calculated on the basis of a year of three hundred sixty-five (365) days, and charged for the actual number of days elapsed.
II. TERM. The entire outstanding principal balance of this Note, together with any interest accrued thereon and any other sums accrued hereunder shall be payable in full on the fifty-fifth (55th) anniversary of the date the Loan Proceeds are disbursed, but in no case later than the fifty- #14..
- 310 -
5028665.1 2
seventh (57th) anniversary of the date the Regulatory Agreement is recorded against the Property (“Term”).
III. DUE ON SALE. The entire unpaid principal balance and all interest and other sums accrued hereunder shall, at the option of the City, be due and payable upon the earliest of: (1) a Transfer other than a Transfer permitted or approved by the City as provided in the Agreement; (2) the occurrence of an uncured Event of Default by the Borrower for which the City exercises its right to cause the Loan indebtedness to become immediately due and payable; or (3) the expiration of the Term.
IV. PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note, provided that each such prepayment is accompanied by accrued interest (if any) on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal. The Regulatory Agreement shall remain in full force for the entire term thereof regardless of any prepayment of this Note.
V. TERMS OF PAYMENT.
(a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at City of Modesto, 1010 Tenth Street, Suite 3100, Attn:
Community Development Manager, or to such other place as Holder may from time to time designate.
(b) All payments due under this Note shall be paid in currency of the United State of America, which at the time of payment is lawful for the payment of public and private debts. (c) All payments on this Note shall be without expense to the City, and the Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney’s fees of the City, incurred in connection with the payment of this Note and the release of any security hereof.
(d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of the Borrower under this Note, if, for any reason whatsoever, the payment of any sums by the Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that the City may legally charge under the laws of the State of California, then the amount by which payments exceeds the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall the Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate.
VI. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default"):
#14..
- 311 -
5028665.1 3
(i) Any failure to pay, in full, any payment required under this Note when due and such failure continues for ten (10) days after City notifies Borrower thereof in writing; (ii) Any failure in the performance by the Borrower of any other terms, condition, provision or covenant set forth in this Note and such failure continues for thirty (30) days after City notifies Borrower thereof in writing; and (iii) The occurrence of an Event of Default under the Agreement, the Deed of Trust, the Regulatory Agreement, or any other instrument securing the obligations of the Borrower under this Note or under any other promissory notes hereafter issued by the Borrower to the City pursuant to the Agreement or the Deed of Trust, subject to any applicable cure periods set forth therein.
(b) Upon the occurrence of an Event of Default hereunder, City may, at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under applicable law, and (iii) exercise any and all rights and remedies available to City under this Note and the other City Documents, including without limitation the right to pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys' fees, incurred in connection with City's enforcement of this Note, regardless of whether suit is filed to seek enforcement, and the exercise of any or all of its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not alternative. (c) The failure to exercise the remedy set forth in above or any other remedy provided by law upon the occurrence of one or more of the Events of Default shall not constitute a waiver of the right to exercise any remedy at any subsequent time with respect to the same or any other default. The acceptance by the City hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of the City, except as and to the extent otherwise provided by law. Notwithstanding anything to the contrary contained herein, City agrees that any cure made or tendered by Borrower’s limited partner hereunder shall be accepted or rejected by the City on the same basis as if made or tendered by Borrower.
VII. WAIVERS.
(a) No waiver by City of any right or remedy under this Note shall be effective unless in writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.
No waiver that may be given by City will be applicable except in the specific instance for which it is given. No notice to or demand on Borrower will be deemed to be a waiver of any obligation #14..
- 312 -
5028665.1 4
of Borrower or of the right of City to take further action without notice or demand as provided in this Note
(b) To the maximum extent permitted by applicable law, Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice. Borrower expressly agrees that City may accept further security or release any security for this Note, all without in any way affecting the liability of the Borrower. (c) No extension of time for payment of this Note or any installment hereof made by agreement by the City with any person now or hereafter liable for payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note, either in whole or in part, except as otherwise approved in writing. (d) The obligations of the Borrower under this Note shall be absolute and the Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.
VIII. MISCELLANEOUS.
(a) Any notice required or permitted to be given hereunder shall be given in accordance with the Agreement, except that notices to Borrower shall be sent to:
Developer: Stanislaus Equity Partners
820 H Street
Modesto, CA 95350
Attn: Executive Director
(b) If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. (c) This Note shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Any legal action filed in connection with this Note shall be filed in the Superior Court of Stanislaus County, California, or in the Federal District Court for the Northern District of California.
(d) This Note shall bind Borrower and its successors and assigns and shall accrue to the benefit of City and its successors and assigns. Without limiting the generality of the foregoing, except in the case of a Transfer permitted or approved by the City as provided in Article 7 of the Agreement, this Note shall not be assumable without City’s prior written consent, which consent may be granted or denied in City’s sole discretion. #14..
- 313 -
5028665.1 5
(e) The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation. There shall be no amendment to or modification of this Note except by written instrument executed by Borrower and City. (f) The relationship of Borrower and City under this Note is solely that of borrower and lender, and the Loan evidenced by this Note and secured by the Deed of Trust will in no manner make City the partner or joint venturer of Borrower. (g) Time is of the essence with respect to every provision of this Note. (h) The Loan is a nonrecourse obligation of Borrower. Neither the Borrower nor any of its partners or any other party shall have any personal liability for repayment of the Loan. The City’s sole recourse under the Agreement, Note, Deed of Trust and other City Documents for repayment of the Loan shall be the exercise of the City’s rights against the Development and related security therefor.
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first written above.
BORROWER
STANISLAUS EQUITY PARTNERS, a California nonprofit corporation By: ______________________________________
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
5028665.1
#14..
- 314 -
5028665.1 6
#14..
- 315 -
5028657.1 1
Recording requested by and when recorded
mail to:
City of Modesto
1010 10th Street
P. O. Box 642
Modesto, CA 95353
Attention: Community Development Manager
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
APN: 107-008-015 Space above this line for Recorder’s use.
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(112 James Street)
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is entered into as of ___________, by Stanislaus Equity Partners, a California non-profit corporation (“Trustor”) to Old Republic Title (“Trustee”), for the benefit of the City of Modesto, a California charter city (“Beneficiary”).
RECITALS
A. Trustor owns fee simple title to certain real property located at 112 James Street, Modesto, California, known as Stanislaus County Assessor’s Parcel Numbers 107-008-015, as further described in Exhibit A, attached hereto and incorporated herein (the “Land”). Trustor intends to develop permanent supportive housing development on the Land consisting of consist one (1) one-bedroom units, four (4) two-bedroom units, and two (2) three-bedroom units. (the “Project”).
B. Beneficiary and Trustor entered into that certain Affordable Housing Loan Agreement dated ___________ (the “Agreement”). Pursuant to the Agreement, Beneficiary provided a loan to Trustor in the amount of up to Two Hundred Thousand Dollars ($200,000) (“Loan”) for the purpose of acquiring the Land. Trustor has issued to Beneficiary a secured promissory note dated as of the date hereof (the “Note”) to evidence Trustor’s obligation to repay the Acquisition Loan.
C. This Deed of Trust, the Agreement, the Note, and the Regulatory Agreement (defined below) are collectively referred to herein as the “Loan Documents.” D. As a condition precedent to the making of the Acquisition Loan, Beneficiary has required that Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien and security interest in the Project and in Trustor’s fee simple interest in the Land to secure repayment of the Note and performance of Trustor’s obligations under the #14..
- 316 -
5028657.1 2
Agreement and the other Loan Documents.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows.
1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment and performance of the Secured Obligations defined and described in Section 2, Trustor hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title and interest which Trustor now has or may later acquire in and to the Land, and all of the following, whether presently owned or hereafter acquired:
a. All buildings, structures, and improvements, now or hereafter located or constructed on the Land (“Improvements”);
b. All appurtenances, easements, rights of way, pipes, transmission lines or wires and other rights used in connection with the Land or the Improvements or as a means of access thereto, whether now or hereafter owned or constructed or placed upon or in the Land or Improvements and all existing and future privileges, rights, franchises and tenements of the Land, including all minerals, oils, gas and other commercially valuable substances which may be in, under or produced from any part of the Land, and all water rights, rights of way, gores or strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or adjoining the Land and Improvements (collectively, “Appurtenances”); c. All machinery, equipment, fixtures, goods and other personal property of the Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or hereafter located at or used in connection with the Land, the Improvements or Appurtenances, and all improvements, restorations, replacements, repairs, additions or substitutions thereto (collectively, “Equipment”);
d. All existing and future leases, subleases, licenses, and other agreements relating to the use or occupancy of all or any portion of the Land or Improvements (collectively, “Leases”), all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other payments which may now or hereafter accrue or otherwise become payable thereunder to or for the benefit of Trustor, including but not limited to security deposits (collectively, “Rents”); e. All insurance proceeds and any other proceeds from the Land, Improvements, Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made with or other security deposits given to utility companies, all claims or demands relating to insurance awards which the Trustor now has or may hereafter acquire, including all advance payments of insurance premiums made by Trustor, and all condemnation awards or payments now or later made in connection with any condemnation or eminent domain proceeding (“Proceeds”);
f. All revenues, income, rents, royalties, payments and profits produced by the Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”);
#14..
- 317 -
5028657.1 3
g. All architectural, structural and mechanical plans, specifications, design documents and studies produced in connection with development of the Land and construction of the Improvements (collectively, “Plans”); and
h. All interests and rights in any private or governmental grants, subsidies, loans or other financing provided in connection with development of the Land and construction of the Improvements (collectively, “Financing”).
All of the above-referenced interests of Trustor in the Land, Improvements, Appurtenances, Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed to Trustee or made subject to the security interest herein described are collectively referred to herein as the “Property.”
2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of the following (collectively, the “Secured Obligations”): (i) all present and future indebtedness evidenced by the Note and any amendment thereof, including principal, interest and all other amounts payable under the terms of the Note; (ii) all present and future obligations of Trustor to Beneficiary under the Agreement, the Regulatory and Declaration of Restrictive Covenants dated as of the date hereof, executed by and between City and Trustor and recorded substantially concurrently herewith (the “Regulatory Agreement”) or the other Loan Documents; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this Deed of Trust or any other City Document as such may be modified, supplemented, amended, renewed or extended.
3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue, income and proceeds of the Property. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, #14..
- 318 -
5028657.1 4
including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements, Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for performing any obligation of Trustor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. Absent Beneficiary’s written consent, Trustor shall not accept prepayment of Rents for any rental period exceeding one month.
4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the Property, and an assignment of the Rents and Leases, all in favor of Beneficiary, subject to the rights of any beneficiaries under deeds of trust senior in priority to this Deed of Trust (“Senior Deeds of Trust”). The parties acknowledge that some of the Property may be determined under applicable law to be personal property or fixtures. To the extent that any Property may be or be determined to be personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security interest in all such Property to secure payment and performance of the Secured Obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, as amended or recodified from time to time (the “UCC”), covering all such Property. To the extent such Property is not real property encumbered by the lien granted above, and is not absolutely assigned by the assignment set forth above, it is the intention of the parties that such Property shall constitute "proceeds, products, offspring, rents, or profits" (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements.
5. Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes Beneficiary, as secured party, to file such financing statements and amendments thereof and such continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and preserve Beneficiary's security interest in the Property and Rents, without requiring any signature or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall not be construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it.
Everything used in connection with the Property and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as part of the estate encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the property #14..
- 319 -
5028657.1 5
conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary’s lien granted hereby or by any other recorded document. Such mention in any financing statement is declared to be solely for the protection of Beneficiary in the event any court or judge shall at any time hold, with respect to the matters set forth in the foregoing clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be effective against a particular class of persons, including but not limited to the federal government and any subdivisions or entity of the federal government.
6. Fixture Filing. Subject to the rights of beneficiaries under Senior Deeds of Trust, this Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of Stanislaus County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the UCC.
7. Trustor’s Representations, Warranties and Covenants; Rights and Duties of the Parties.
7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor lawfully possesses and holds a fee simple interest in the Land and the Improvements, (ii) Trustor has good and marketable title to all of the Property; (iii) Trustor has the full and unlimited power, right and authority to encumber the Property and assign the Rents; (iv) subject only to encumbrances of record and senior liens permitted pursuant to the Loan Documents or otherwise approved in writing by Beneficiary (“Permitted Encumbrances”), this Deed of Trust creates a valid first lien on Trustor’s entire interest in the Property; (v) except with respect to Permitted Encumbrances, Trustor owns the Property free and clear of any deeds of trust, mortgages, security agreements, reservations of title or conditional sales contracts, (vi) there is no financing statement affecting the Property on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the correct address of Trustor’s chief executive office is specified in Section 10.2.
Trustor further represents and warrants that this Deed of Trust and all other documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do not violate the provisions of any agreement to which Trustor is a party or which affects the Property.
Trustor further represents and warrants that there are no pending, or to Trustor’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect Trustor’s ownership of the Property.
7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay when due the principal and any interest due on the indebtedness evidenced by the Note, and shall promptly pay and perform all other obligations of Trustor arising in connection with the Secured #14..
- 320 -
5028657.1 6
Obligations or the Loan Documents in accordance with the respective terms thereof.
7.3 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance with Laws. Trustor covenants that it shall use the proceeds of the Loan (the “Loan Proceeds”) solely for purposes authorized by the Loan Documents. Trustor shall keep the Land and Improvements in good repair and condition, and from time to time shall make necessary repairs, renewals and replacements thereto so that the Property shall be preserved and maintained.
Trustor covenants to comply with all federal, state and local laws, regulations, ordinances and rules applicable to the Property and the Project, including without limitation all applicable requirements of state and local building codes and regulations, and all applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not remove, demolish or materially alter any Improvement without Beneficiary’s consent, shall complete or restore promptly and in good and workmanlike manner any building, fixture or other improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due all claims for labor performed and materials furnished therefor. Trustor shall use the Land and Improvements solely for purposes authorized by the Loan Documents, shall not commit or allow waste of the Property, and shall not commit or allow any act upon or use of the Property which would violate any applicable law or order of any governmental authority, nor shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist thereon which could invalidate or which would be prohibited by any insurance coverage required to be maintained on the Property pursuant to the Loan Documents.
7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event of Default hereunder if any Transfer other than a Transfer permitted or approved by the City (as provided in the Agreement) of the Property, any part thereof or any interest therein occurs in violation of the requirements of the Loan Documents. If any such Transfer occurs in violation of such requirements, without limiting the provisions of Section 8 hereof, all obligations secured by this Deed of Trust, irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and without demand, immediately become due and payable, subject to any applicable cure period.
7.5 Inspections; Books and Records. Beneficiary and its agents and representatives shall have the right at any reasonable time upon reasonable notice to enter upon the Land and inspect the Property to ensure compliance with the Loan Documents. Trustor shall maintain complete and accurate books of account and other records (including copies of supporting bills and invoices) adequate to document the use of the Loan Proceeds and the operation of the Property, together with copies of all written contracts, Leases and other instruments which affect the Property. The books, records, contracts, Leases and other instruments shall be subject to examination and inspection at any reasonable time by Beneficiary following two business days prior notice.
7.6 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all taxes, levies, assessments and other charges affecting the Property that are (or if not paid may become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the validity or application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any #14..
- 321 -
5028657.1 7
part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably be required from time to time by Beneficiary; and provided further that Trustor shall timely make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.
7.7 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances, whether released of record or not, which are discharged in whole or in part by Beneficiary in accordance with this Deed of Trust.
7.8 Hazard, Liability and Workers’ Compensation Insurance. At all times during the term hereof, Trustor shall at Trustor’s expense, maintain insurance policies in accordance with the requirements set forth in the Loan Documents. Trustor shall file with Beneficiary prior to the commencement of the term hereof, certificates (or such other proof as Beneficiary may reasonably require, including without limitation copies of the required insurance policies) evidencing each of the insurance policies and endorsements thereto as required pursuant to the Loan Documents, and such certificates (or policies) shall provide that at least thirty (30) days’ prior written notice shall be provided to Beneficiary prior to the expiration, cancellation or change in coverage under each such policy. If any insurance policy required pursuant to the Loan Documents is canceled or the coverage provided thereunder is reduced, Trustor shall, within ten (10) days after receipt of written notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Beneficiary a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, Beneficiary may, without further notice and at its option, procure such insurance coverage at Trustor’s expense, and Trustor shall promptly reimburse Beneficiary for such expense upon receipt of billing from Beneficiary.
7.9 Condition of Property. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof: (i) Trustor has not received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code violation or violation of other governmental regulations concerning the Land that has not previously been corrected, and no condition on the Land violates any health, safety, fire, environmental, sewage, building, or other federal, state or local law, ordinance or regulation; (ii) no contracts, licenses, leases or commitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force; (iii) there are no, to Trustor’s best knowledge, threatened or pending actions, suits, or administrative proceedings against or affecting the Property or any portion thereof or the interest of Trustor in the Property; (iv) there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Land or any portion thereof; (v) Trustor has not received any notice from any insurer of defects of the Property which have not been corrected; (vi) there are no natural or artificial conditions upon the Land or any part thereof that could result in a material and adverse change in the condition of the Land; (vii) all information that Trustor has delivered to Beneficiary, either directly or through Trustor's agents, is accurate and complete; and (viii) Trustor or Trustor’s agents have disclosed to Beneficiary all material facts concerning the Property.
7.10 Hazardous Materials.
#14..
- 322 -
5028657.1 8
(a) Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as are used in construction of projects of the improvements on the Property or as may be customarily kept and used in and about residential property.
(b) Trustor shall immediately advise Beneficiary in writing if at any time it receives written notice of: (1) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); (2) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (1) and (2) above are hereinafter referred to as "Hazardous Materials Claims"); and (3) Trustor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as "border-zone property" (as defined in California Health and Safety Code Section 25117.4) under the provision of California Health and Safety Code, Sections 25220 et seq., or any regulation adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law. (c) Beneficiary has the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall indemnify and hold harmless Beneficiary and its board members, supervisors, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (1) all foreseeable consequential damages; (2) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (3) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (1) and (2), including but not limited to reasonable attorneys' fees and consultant's fees. This indemnification applies whether or not any government agency has issued a cleanup order.
Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (i) losses attributable to diminution in the value of the Property; (ii) loss or restrictions or use of rentable space on the Property; (iii) adverse effect on the marketing of any rental space on the Property; and (iv) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not #14..
- 323 -
5028657.1 9
limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the property and surrounding properties). (d) Without Beneficiary's prior written consent, which may not be unreasonably withheld, Trustor may not take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgment, impairs the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent is not necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor notifies Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if either: (1) a particular remedial action is ordered by a court of competent jurisdiction; (2) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (3) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (4) the action has been agreed to by Beneficiary. (e) The Trustor hereby acknowledges and agrees that: (1) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5; and (2) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736.
(f) In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to: (1) waive its lien on such environmentally impaired or affected portion of the Property; and (2) exercise (i) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to judgment, and (ii) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor will be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or in the exercise of reasonable diligence should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' #14..
- 324 -
5028657.1 10
fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) or the maximum rate permitted by law, until paid, will be added to the indebtedness secured by this Deed of Trust and will be due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action.
7.11 Notice of Claims; Defense of Security; Reimbursement of Costs. a. Notice of Claims. Trustor shall provide written notice to Beneficiary of any uninsured or partially uninsured loss affecting the Property through fire, theft, liability, or property damage in excess of an aggregate of Fifty Thousand Dollars ($50,000) within five (5) business days of the occurrence of such loss. Trustor shall ensure that Beneficiary shall receive timely notice of, and shall have a right to cure, any default under any other financing document or other lien affecting the Property and shall use best efforts to ensure that provisions mandating such notice and allowing such right to cure shall be included in all such documents. Within three business days of Trustor’s receipt thereof, Trustor shall provide Beneficiary with a copy of any notice of default Trustor receives in connection with any financing document secured by the Property or any part thereof.
b. Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve and defend the Property and title to and right of possession of the Property, the security of this Deed of Trust and the rights and powers of Beneficiary and Trustee created under it, against all adverse claims.
c. Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or Trustee may render in connection with this Deed of Trust, including without limitation, fees and expenses related to provision of a statement of obligations or related to a reconveyance. Trustor further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or Trustee or both of them under Sections 7.17 and 8.2, whether or not any lawsuit is filed, or in defending any action or proceeding arising under or relating to this Deed of Trust, including reasonable attorneys’ fees and other legal costs, costs of any disposition of the Property under the power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title. d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any change in the address of Trustor and the location of any Property, including books and records pertaining to the Property.
7.12 Indemnification. Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold harmless the Indemnitees (as defined in Section 7.10) from and against all Claims arising directly or indirectly in any manner in connection with or as a result of (a) any breach of Trustor’s covenants under any City Document, (b) any representation by Trustor in any City Document which proves to be false or misleading in any material respect #14..
- 325 -
5028657.1 11
when made, (c) injury or death to persons or damage to property or other loss occurring on the Land or in any improvement located thereon, whether caused by the negligence or any other act or omission of Trustor or any other person or by negligent, faulty, inadequate or defective design, building, construction or maintenance or any other condition or otherwise, (d) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises out of the Property, or any City Document or any transaction contemplated thereby, or any failure of Trustor to comply with all applicable state, federal and local laws and regulations applicable to the Property, provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee's gross negligence or willful misconduct. The obligations of Trustor under this Section shall survive the repayment of the Acquisition Loan and shall be secured by this Deed of Trust. Notwithstanding any contrary provision contained herein, the obligations of Trustor under this Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust.
7.13. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) Beneficiary's failure or refusal to perform or discharge any obligation or liability of Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste committed by Trustor, the lessees of the Property or any third parties, or any dangerous or defective condition of the Property; or (iv) any loss sustained by Trustor or any third party resulting from any act or omission of Beneficiary in managing the Property after an Event of Default, unless the loss is caused by the willful misconduct, gross negligence, or bad faith of Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in this Section 7.13, and agrees that Trustor shall assert no claim related to any of the foregoing against Beneficiary.
7.14 Insurance and Condemnation Proceeds. Subject to the rights of any senior lienholders, and notwithstanding anything contained in any of the Loan Documents, unless Beneficiary and Trustor otherwise agree in writing, any award of damages in connection with any condemnation for public use of, or injury to the Property or any part thereof shall be applied to restoration or repair of the Property, provided Trustor determines that such restoration or repair is economically feasible and there is no default under any City Document that is continuing beyond the expiration of all applicable cure periods. If Trustor determines that such restoration or repair is not economically feasible or if a default exists after expiration of all applicable cure periods, the insurance proceeds shall be applied to the sums secured by this Deed of Trust, with the excess, if any, paid to Trustor. In the event funds for such work are insufficient, Beneficiary may, in its sole discretion and subject to the approval of Beneficiary’s governing board, advance such additional funds as may be necessary to allow the Property to be repaired or restored, and may add the amount thereof to the principal balance of the Note. If the Property is abandoned by Trustor, or if Trustor fails to respond to Beneficiary within 30 days from the date notice is mailed by Beneficiary to Trustor that the insurance carrier offers to settle a claim for insurance benefits, Beneficiary is authorized to collect and apply the insurance proceeds at Beneficiary's option either to restoration or repair of the Property or to the sums secured by this Deed of Trust
#14..
- 326 -
5028657.1 12
7.15 Release, Extension, Modification. At any time and from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of the Property, consent to the making of any map or plat of the Land or part thereof, join in granting any easement or creating any restriction affecting the Property, or join in any extension agreement or other agreement affecting the lien or charge hereof. At any time and from time to time, without liability therefor and without notice, Beneficiary may (i) release any person liable for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the terms of payment of any Secured Obligation; (iii) accept additional real or personal property of any kind as security for any Secured Obligation, or (iv) substitute or release any property securing the Secured Obligations.
7.16 Reconveyance. Upon written request of Beneficiary stating that all of the Secured Obligations have been satisfied in full, and upon surrender of this Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of Trustee and all recordation fees related to such reconveyance.
7.17 Cure; Protection of Security. Beneficiary may cure any breach or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary may also enter the Property and/or do any and all other things which it may in its reasonable discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: appearing in and/or defending any action or proceeding which purports to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of Trust; paying, purchasing, contesting or compromising any encumbrance, charge, lien or claim of lien which in Beneficiary’s sole judgment is or may be senior in priority to this Deed of Trust, such judgment of Beneficiary to be conclusive as among Beneficiary, Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance required to be carried hereunder; otherwise caring for and protecting any and all of the Property; and/or employing counsel, accountants, contractors and other appropriate persons to assist Beneficiary. Beneficiary may take any of the actions permitted under this Section 7.17 either with or without giving notice, except for notices required under applicable law. Any amounts disbursed by Beneficiary pursuant to this paragraph shall become additional indebtedness secured by this Deed of Trust.
8. Default and Remedies.
8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default shall occur under this Deed of Trust upon the occurrence of any one or more of the following events:
a. Beneficiary’s declaration of an Event of Default under any City Document, subject to the expiration of any applicable cure period set forth in such document; b. Trustor fails to perform any monetary obligation which arises under this Deed of Trust, and does not cure that failure within ten (10) days following written notice from Beneficiary or Trustee;
#14..
- 327 -
5028657.1 13
c. If Trustor’s interest in the Property or any part thereof is voluntarily or involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of Section 7.4 hereof or if any other Transfer occurs in violation of the Agreement; d. Trustor fails to maintain the insurance coverage required under the Loan Documents or otherwise fails to comply with the requirements of Section 7.8 hereof and Trustor fails to cure such default within the time specified in Section 7.8; e. Subject to Trustor’s right to contest such charges as provided herein, Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure such default within ten (10) days.
f. Any representation or warranty of Trustor contained in or made in connection with the execution and delivery of this Deed of Trust or in any certificate or statement furnished pursuant hereto or in any other City Document proves to have been false or misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Trustor or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. h. If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance.
i. The holder of any other debt instrument secured by a mortgage or Deed of Trust on the Property or part thereof declares an event of default thereunder and exercises a right to declare all amounts due under that debt instrument immediately due and payable, subject to the expiration of any applicable cure period set forth in such holder’s documents; or j. Trustor fails to perform any obligation arising under this Deed of Trust other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nonmonetary default, provided that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such #14..
- 328 -
5028657.1 14
cure to completion with due diligence and in good faith and in no event later than ninety (90) days, or such longer period as the City may approve, following receipt of notice of default.
8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all of the rights and remedies described below, and may exercise any one or more or all, of the remedies set forth in any City Document, and any other remedy existing at law or in equity or by statute, subject to the nonrecourse provisions set forth in the Note. All of Beneficiary’s rights and remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to collect all expenses incurred in pursuing the remedies provided hereunder, including without limitation reasonable attorneys’ fees and costs.
a. Acceleration. Beneficiary may declare any or all of the Secured Obligations, including without limitation all sums payable under the Note and this Deed of Trust, to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Property. c. Entry. Beneficiary, in person, by agent or by court-appointed receiver, may enter, take possession of, manage and operate all or any part of the Property, and may also do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: taking and possessing copies of all of Trustor’s or the then owner's books and records concerning the Property; entering into, enforcing, modifying, or canceling Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to Trustor; completing any unfinished construction; and/or contracting for and making repairs and alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact to perform such acts and execute such documents as Beneficiary in its sole discretion may consider to be appropriate in connection with taking these measures, including endorsement of Trustor's name on any instruments.
d. UCC Remedies. Beneficiary may exercise any or all of the remedies granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or otherwise disposed of in any combination and in any #14..
- 329 -
5028657.1 15
manner permitted by applicable law.
Trustor’s limited partners (the “Limited Partners”) shall have the right to cure any default of Trustor hereunder upon the same terms and conditions afforded to Trustor. Provided that Beneficiary has been given written notice of the address for delivery of notices to the Limited Partners, Beneficiary shall provide any notice of default hereunder to the Limited Partners concurrently with the provision of such notice to Trustor, and as to the Limited Partners, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Section 10.2.
8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted, Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such notice to be recorded in the office of the Recorder of each County wherein the Property or some part thereof is situated as required by law and this Deed of Trust.
Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of Trust and the Note or other evidence of indebtedness which is secured hereby, together with a written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions of law and this Deed of Trust.
Notice of sale having been given as then required by law, and not less than the time then required by law having elapsed after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may, and at Beneficiary’s request shall, postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale.
After deducting all costs, fees, and expenses of Trustee and of the trust hereby created, including reasonable attorneys’ fees in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto.
Without limiting the generality of the foregoing, Trustor acknowledges and agrees that regardless of whether or not a default has occurred hereunder, if an Event of Default has occurred under the Loan Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including without limitation, the outstanding principal balance and all other #14..
- 330 -
5028657.1 16
amounts due under the Note.
At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid for and acquire the Property or any part of it to the extent permitted by then applicable law.
Instead of paying cash for such property, Beneficiary may settle for the purchase price by crediting the sales price of the property against the following obligations:
a. First, the portion of the Secured Obligations attributable to the expenses of sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse Beneficiary or Trustee under Section 7.11(c); and
b. Second, the remaining balance of all other Secured Obligations in any order and proportions as Beneficiary in its sole discretion may choose.
8.4 Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums which would be then due under the Loan Documents if the Secured Obligations had no acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, and in enforcing Beneficiary’s and Trustee’s remedies as provided herein, including, but not limited to, reasonable attorney’s fees; and (d) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred.
Nothing contained in Sections 8.3 and 8.4 is intended to expand upon or limit the rights of Trustor and Beneficiary under California law regarding Beneficiary’s exercise of the power of sale or Trustor’s reinstatement rights.
9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary; (b) the benefit of all laws now existing or which may hereafter be enacted providing for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling in the event of foreclosure; and (d) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind.
10. Miscellaneous Provisions.
10.1 Additional Provisions. The Loan Documents grant further rights to Beneficiary #14..
- 331 -
5028657.1 17
and contain further agreements and affirmative and negative covenants by Trustor which apply to this Deed of Trust and the Property.
10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be mailed to Trustor at the address set forth below. That address is also the mailing address of Trustor as debtor under the UCC. Beneficiary’s address set forth below is the address for Beneficiary as secured party under the UCC. Except for any notice required under applicable law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be made in writing, and sent to the parties at their respective addresses specified below or to such other address as a party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice shall be deemed delivered upon receipt;
b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail;
c. nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof.
Beneficiary: City of Modesto
Community & Economic Development Department
1010 Tenth Street, Suite 4400
P O Box 642
Modesto, CA 95353
Attn: Community Development Manager
Trustor: Stanislaus Equity Partners
820 H Street
Modesto, CA 95350
Attn: Executive Director
Trustee: Old Republic Title
1001 Sylvan Ave. Bldg. A
Modesto, CA 95350
10.3 Binding on Successors. The terms, covenants and conditions of this Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided #14..
- 332 -
5028657.1 18
however this Section 10.3 does not waive the provisions of Section 7.4.
10.4 Substitution of Trustee. Beneficiary may from time to time or at any time substitute a trustee or trustees to execute the trust hereby created, and when any such substitution has been filed for record in the office of the Recorder of Stanislaus County, it shall be conclusive evidence of the appointment of such trustee or trustees, and such new trustee or trustees shall succeed to all of the powers and duties of the Trustee named herein.
10.5 Attorneys’ Fees and Costs. In any action or proceeding to foreclose this Deed of Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and Trustee all costs of such action or proceeding, including reasonable attorneys’ fees.
10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be governed by the laws of the State of California without regard to principles of conflicts of laws.
Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated exclusively in the jurisdiction where the Land is located (the “Property Jurisdiction”).
The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the Loan Documents. Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held unenforceable or void, that provision shall be deemed severable from the remaining provisions, and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions herein contained. In this Deed of Trust, whenever the context so requires, the singular number includes the plural.
10.7 Waiver, Modification and Amendment. Any waiver by Beneficiary of any obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to any act or omission by Trustor shall not be construed as a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary’s or Trustee’s consent to be obtained in any future or other instance. No amendment to or modification of this Deed of Trust shall be effective unless and until such amendment or modification is in writing, executed by Trustor and Beneficiary. Without limiting the generality of the foregoing, Beneficiary’s acceptance of payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary of its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay.
10.8 Action By Beneficiary. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by Beneficiary’s Executive Director or by any person who shall have been designated by Beneficiary’s Executive Director, without further approval by the governing board of Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such approval, notice, direction, or consent in a timely manner. In any approval, consent, or other #14..
- 333 -
5028657.1 19
determination by Beneficiary required hereunder, Beneficiary shall act reasonably and in good faith.
10.9 Joint and Several Liability. If Trustor consists of more than one person or entity, each shall be jointly and severally liable for the faithful performance of all of Trustor’s obligations under this Deed of Trust.
10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of Trust.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.
TRUSTOR:
STANISLAUS EQUITY PARTNERS, a California nonprofit corporation By: ______________________________________
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
SIGNATURES MUST BE NOTARIZED.
#14..
- 334 -
5028657.1 20
Exhibit A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF MODESTO,
COUNTY OF STANISLAUS, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
THE NORTH 98 FEET OF THE SOUTH 140 FEET OF LOT 8, IN BLOCK 213 OF THE CITY OF MODESTO, AS PER MAP THEREOF RECORDED DECEMBER 21, 1942, IN BOOK 15 OF MAPS, STANISLAUS COUNTY RECORDS. EXCEPTING THEREFROM THE EAST 181/3 FEET THEREOF
APN:107-008-015
#14..
- 335 -
5028657.1 21
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 Stanislaus )
On_____________ before me, _____________________________, Notary Public, , personally appeared, ___________________________________, who proved to me the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature_____________________________
5028657.1
#14..
- 336 -
CITY OF MODESTO
COUNCIL AGENDA REPORT
DATE OF MEETING:
May 10, 2022
Date: November 9, 2021
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jaylen French, Director of Community and Economic Development SUBJECT: Consider approving the creation of a Pilot Program for Stand-Up Electric Scooter Sharing Program with Bird Rides, Inc.
CONTACT: Jaylen French, Community & Economic Development Department Director, [email protected], (209) 341-2938
DESCRIPTION:
Consider approving the creation of a pilot program to allow the use of a shared mobility service of stand-up electric scooters in the City of Modesto and issuing a shared mobility (SM) permit to Bird Rides, Inc, with such terms and conditions defined by the operating agreement, and as determined necessary by the City Manager. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:
The action supports the City Council’s 2020-2025 Strategic Plan Goal E, Drive Economic Vitality.
BACKGROUND:
In 2019, the Economic Development Committee forwarded a recommendation to the City Council for staff to develop a pilot program for electric scooters with vendor(s) that expressed interest in providing the service within the City of Modesto. For various reasons, including the COVID-19 pandemic and a shift in priorities, the initiative did not move forward. Since that time, State Assembly Bill 12861 was signed into law by Governor Newsom, which requires a shared mobility service provider, prior to operating, to enter into an agreement with, or obtain a permit from, the city or county with jurisdiction over each respective area of use.
Currently, the City of Modesto does not permit or prohibit the use of shared mobility devices within the City limits. Should the City choose to move forward with a scooter program, in order to comply with AB 1286, the City may elect to enter into an agreement with a vendor, issue a permit, and/or adopt an ordinance that provides regulation on shared mobility device use within the City limits.
1 AB1286 - https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1286 #15..
- 337 -
City of Modesto, May 3, 2022
Consider a Pilot Operating Agreement for Stand-Up Electric Scooter Sharing Program with Bird Rides, Inc.