Agenda packet — Modesto City Council, October 25, 2022 (part 2 of 3)

loop system and does not require the applicators to triple rinse and discard the containers into the trash. This reduces the City’s environmental footprint.

Modesto Municipal Code Section 8-3.204 generally requires all purchases, in excess of fifty thousand dollars $50,000 to follow formal bid procedures. However, MMC 8-3.204(b) provides that a purchase may be exempted from the City’s formal bidding requirement where the Purchasing Agency’s requirements can be met solely by a single article or process.

Additionally, the purchase of the weed abatement chemical premix from Nutrien Ag Solutions should be exempt from the formal bidding procedure in accordance with Modesto Municipal Code 8-3.204(b) because Nutrien Ag Solutions is the sole proprietor vendor that is able to provide the weed abatement chemical premix. Therefore, this purchase qualifies for exemption from the formal bidding procedures.

FISCAL IMPACT:

Funds are budgeted amount the accounts listed below:

FUND ACCOUNT
NUMBER

BUDGETED
AMOUNT
Wastewater Fund 4210-44314-53060 $60,000
Water Fund 4100-45050-52190 $10,000
ESTIMATED ANNUAL AMOUNT $70,000
FIVE (5) YEAR TOTAL NOT TO EXCEED $350,000
COMMITTEE RECOMMENDATION:

This item was presented to the Finance Committee on September 26, 2022, with a recommendation to forward to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the Sole Source Purchase Agreement with Nutrien Ag Solutions, Sacramento, CA, for Weed Abatement Chemical Premix known as (Aqumix Proprietary Custom Pre-blend) for a one-year Agreement with four (4) one-year extension options, for an annual estimated amount of $70,000, and a total amount not to exceed $350,000 over five years and authorizing the Director of Finance, or her designee to execute the Purchase Agreement. #9..
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Council Meeting, October 25, 2022
Sole Source Purchase Agreement for Weed Abatement Chemical Premix

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Approved by: _________________________________________
DeAnna Christensen, Director of Finance
_________________________________________
William Wong, Director of Utilities
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Agreement

3. Exhibit B

4. Bid Waiver
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING THE SOLE SOURCE PURCHASE AGREEMENT

WITH NUTRIEN AG SOLUTIONS, SACRAMENTO, CA, FOR WEED

ABATEMENT CHEMICAL PREMIX KNOWN AS (AQUMIX PROPRIETARY
CUSTOM PRE-BLEND) FOR A ONE-YEAR AGREEMENT WITH FOUR (4)

ONE-YEAR EXTENSION OPTIONS, FOR AN ANNUAL ESTIMATED
AMOUNT OF $70,000, AND A TOTAL AMOUNT NOT TO EXCEED $350,000

OVER FIVE YEARS AND AUTHORIZING THE DIRECTOR, OF FINANCE OR

HER DESIGNEE TO EXECUTE THE PURCHASE AGREEMENT
WHEREAS, the City of Modesto, Utilities Department has maintained over seven miles of State of California levee adjacent to the 3,000-acre ranch at the Jennings Facility for more than fifty-three (53) years. Every six-months, the levee is inspected by the Department of Water Resources to ensure the levee continues to meet the requirements of the Army Corps of Engineers; and
WHEREAS, the City is required to maintain this portion of the levee system in a bare ground condition to allow thorough inspections, to help with rodent control, maintain a weed free area around the water collection areas and to lessen mosquito habitat; and
WHEREAS, over the years the Utilities Department, Wastewater Division has tried different chemicals which allow for safe mixing, application processes and lowering labor costs. With the weed abatement product purchased through Nutrien Ag Solutions, the Wastewater Division has reduced the number of required treatments and increased the cost effectiveness of a single mixture, which can accomplish both post and pre-emergent weed control in one application; and
WHEREAS, Modesto Municipal Code Section 8-3.203 generally requires all purchases, in excess of fifty thousand dollars $50,000 to follow formal bid procedures. #9..
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However, MMC 8-3.204(b) provides that a purchase may be exempted from the City’s formal bidding requirement where the Purchasing Agency’s requirements can be met solely by a single article or process. Additionally, the purchase of the weed abatement chemical premix from Nutrien Ag Solutions should be exempt from the formal bidding procedure in accordance with Modesto Municipal Code 8-3.204(b) because Nutrien Ag Solutions is the sole proprietor vendor that is able to provide the weed abatement chemical premix. Therefore, this purchase qualifies for exemption from the formal bidding procedures.

NOW THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby authorizes the sole source Purchase Agreement with Nutrien Ag Solutions, Sacramento, CA, for weed abatement chemical premix known as (Aqumix Proprietary Custom Pre-blend) for a one-year agreement with four (4) one-year extension options, for an annual estimated amount of $70,000, and a total amount not to exceed $350,000 over five-years.

BE IT FURTHER RESOLVED that the Director of Finance, or her designee, is hereby authorized to execute the Purchase Agreement.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October, 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:
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Attest: _____

DIANE NAYARES-PERES, CMC,
City Clerk
APPROVED AS TO FORM:

BY:

JOSE M. SANCHEZ, City Attorney
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1 ANNUAL PURCHASE AGREEMENT NO. 230253
NUTRIEN AG SOLUTIONS, INC.

This agreement, hereinafter called AGREEMENT, made and entered into in the City of Modesto, State of California, this ____ day of _________, 2022, by and between the City of Modesto, a municipal corporation of the State of California, hereinafter called CITY, and Nutrien Ag Solutions, Inc., hereinafter called

VENDOR,
W I T N E S E T H:

WHEREAS, the Modesto City Council adopted Resolution No. 2022- authorizing the Award and AGREEMENT for the aqumix proprietary custom pre-blend described herein (the “GOODS”) to VENDOR, attached hereto as Exhibit “A” and made a part hereof, and WHEREAS, the CITY and VENDOR shall enter into an agreement for the purchase and delivery of aqumix proprietary custom pre-blend as described herein, attached hereto as Exhibit “B” and made a part hereof, and

NOW, THEREFORE, the parties hereto mutually agree as follows:

1. TERM OF AGREEMENT: The term of the AGREEMENT shall be for a period of ONE YEAR with FOUR one-year extension options at the sole discretion of City, for a total of up to five years.

Year one: October 1, 2022 Through September 30, 2023
Year two: October 1, 2023 Through September 30, 2024
Year three: October 1, 2024 Through September 30, 2025
Year four: October 1, 2025 Through September 30, 2026
Year five: October 1, 2026 Through September 30, 2027

2. PRICING:

A. Per the aforementioned Council Resolution, the estimated annual amount of the AGREEMENT is $70,000. The total amount paid by CITY to VENDOR over the full term of the AGREEMENT shall not exceed $350,000.

B. Pricing during AGREEMENT Year one shall be as set forth in Exhibit C Pricing, attached hereto and made a part hereof by this reference.
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2 C. Pricing shall remain firm for the first year of the AGREEMENT.

D. Price increases for each subsequent AGREEMENT years two, three, four, and five, shall be negotiated in good faith by the parties, but in no instance may exceed the net percentage increase during the prior twelve (12) month period in the Federal Bureau of Labor Statistics’ Producers Price Index (PPI) Industry Data for Chemical Manufacturer (Series ID PCU325) with acceptable supporting documentation to substantiate the increase by manufacture. Requests for price increases in any renewal year shall be submitted by VENDOR in writing at least 60 days prior to the annual anniversary date of the AGREEMENT.

3. USAGE: Vendor shall use commercially reasonable efforts to, subject to delays by the events described in Section 8, provide whatever quantities of GOODS may be requested by purchase orders issues by CITY during the term of this AGREEMENT. No minimum or maximum quantities are guaranteed or implied by CITY.

4. DELIVERY: Deliveries shall be made within five (5) business days after a purchase order isreceived by VENDOR. If the delivery cannot be made within this time frame,Vendor shall immediately notify the CITY by phone with the anticipated delivery date.

DEPARTMENT CONTACT: Nolan Harris, Jennings Plant Maintenance Supervisor, (209) 342-4524, [email protected]
PUCHASING CONTACT: Carol Wattle, Buyer, (209) 577-5406, [email protected]

5. PAYMENT: All invoices shall be paid in full by CITY after completion and acceptance of the GOODS by the CITY, and receipt of a properly prepared invoice submitted by VENDOR via email to [email protected]. As specified by the Purchasing Division, every invoice must reference this AGREEMENT number 230253. VENDOR will be paid by CITY via the following payment method Net 45 Days via manual check.

6. AMENDMENTS: No changes to this AGREEMENT shall be effective unless documented by a written amendment to this AGREEMENT and signed by the parties hereto with CITY represented by the Purchasing Division.

7. TERMINATION:

A. In the event either party fails to perform under this AGREEMENT or breaches any condition contained herein, the other party shall notify in writing the breaching party of the non-performance. Within 30 days after receipt of notification, the breaching party shall correct any non-performance to the reasonable satisfaction of the non-breaching party. Failure to correct any non-performance shall allow the nonbreaching party to terminate this AGREEMENT for cause.

B. CITY may terminate this AGREEMENT for convenience upon thirty (30) days prior notice to VENDOR by CITY’s authorized employee.

8. INSPECTION: All GOODS are subject to inspection and test by the CITY for compliance with specifications as included herein, within a reasonable time after delivery, not to exceed twenty (20) days. In the event GOODS are defective or not in conformity with this AGREEMENT or CITY’s purchase order, the CITY shall have the rights to either reject the GOODS or require replacement. Defective GOODS shall be removed from CITY premises andreplaced by and at the expense of VENDOR; provided that should the VENDOR #9..
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3 fail, neglect or refuse to do so within thirty (30) days after receipt of notice from CITY, the CITY shall thereupon have the right to purchase in the open market, in lieu thereof, a corresponding quantity of any such items. CITY may deduct from any moneys due or that may there after come due to VENDOR, or send an invoice to the VENDOR which shall be paid within thirty (30) days, the difference between the prices named in the AGREEMENT or purchase order and the actual cost thereof to the CITY. In the event that the VENDOR fails to make prompt delivery as specified for any item, the same conditions as to the rights of the CITY to purchase in the open market and to reimbursement set forth above shall apply, except when delivery is delayed by causes beyond VENDOR’s control, including, but not limited to, the manufacturer of the GOODS, fire, strike, freight delay or embargo, disease, virus, epidemic, pandemic, or Act of God or the government. Cost of inspection or deliveries or offers for delivery, which do not meet specifications, will be borne by the VENDOR. Failure by CITY to inspect and accept or reject shall not relieve the VENDOR from responsibility for compliance with specifications. Final acceptance shall be conclusive except as regards to latent defects, fraud, or such gross mistakes as amount to fraud.

9. RESPONSIBILITY: Unless otherwise specified, the VENDOR shall be responsible for all GOODS until delivered at CITY’s designated delivery point and shall, subject to the terms of Section 12m bear all risks as to items rejected or requiring replacement after notice of such rejection or replacement is given.

10. SHIPMENT: Unless otherwise authorized by CITY’s Purchasing Division, GOODS shall be delivered F.O.B.

Destination Freight Prepaid and Included in Price of GOODS. VENDOR may not collect freight or charge shipping expenses otherwise to CITY. Original receipted freight bill must accompany the invoice. Shipment must be made within the time stated on the purchase order, failing which CITY reserves the right to purchase elsewhere and charge VENDOR with any loss incurred, unless delay in making shipment is due to Events described in Section 8.

11. CHANGES: This AGREEMENT may at any time, by written purchase order of the CITY, be changed in regard to the GOODS to be furnished, quantities ordered, unit price, discount, or delivery point . In the event such change causes an increase or decrease in the cost of performance hereunder, and equitable adjustment will be made for the cost thereof, subject to the approval of the Purchasing Manager, and written notice given therefore.

12. WARRANTY: If a defect is discovered in any GOODS covered in this AGREEMENT, and VENDOR receives notice of such defect within six (6) months of delivery of the GOODS,VENDORshall replace such defective GOODS at its expense, including transportation/freight.

13. INSURANCE: Any AGREEMENT where work, maintenance, or service is performed on CITY property requires appropriate insurance. VENDOR shall ensure proper insurance certificates are on file with the CITY prior to performing onsite work. Contact CITY’s Purchasing Division to verify the type of insurance required.

14. TAX EXEMPTIONS: The CITY is exempt from payment of federal excise tax. All invoices shall be exclusive of such excise tax. Moreover, if the CITY’s purchase is not subject to sales tax, the statement for resale will appear in the body of the purchase order.

15. INDEMNITIES:

A. VENDOR shall hold the CITY and 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, arising directly or indirectly out of any negligent or intentional act or omission of VENDOR, or its agents, officers, #9..
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4 employees, or subcontractors relating to or during the performance of its obligations under this AGREEMENT. VENDOR’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 for VENDOR to procure and maintain a policy of insurance.

16. GOVERNING LAW: This AGREEMENT shall be deemed made in, governed by, performed in, and construed and enforced in accordance with the laws of the State of California, U.S.A., without giving effect to its conflicts of law provisions or principles.

17. VENUE: Venue for any dispute or claim arising or related to this AGREEMENT its performance, breach, or interpretation (including issues about its validity or enforceability), shall be exclusively in the Superior Court of Stanislaus County or the United States District Court for the Eastern District of California.

18. ATTORNEYS’ FEES: If a party to this AGREEMENT brings any action, including an action for declaratory relief, to enforce or interpret the provision of this AGREEMENT, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief to which that party may be entitled. The court may set such fees in the same action or in a separate action brought for that purpose.

19. LIMITATION OF LIABILITY: The CITY’s liability is limited pursuant to California Law.

20. NOTICES: Any notice, payment or instrument required or permitted by this AGREEMENT to be given or delivered to either party shall be deemed to have been received when personally delivered, or one calendar week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid addressed as follows:

CONTRACTOR: Nutrien Ag Solutions, Inc.
10200 Systems Parkway
Sacramento, CA 95827
Attn: Chris Blodget
With a copy to: Nutrien Ag Solutions, Inc.
3005 Rocky Mountain Avenue
Loveland, CO 80538
Attn: Legal Department
CITY: City of Modesto
Purchasing Division
P.O. Box 642
Modesto, CA 95353
Either party may change its address for delivery of notice by delivering written notice of such change of address to the other party.

21. ASSIGNMENT: Neither this AGREEMENT nor any portion hereof shall be subcontracted or assigned by a party without the written consent of the the other party in each and every instance.

22. MISCELLANEOUS: Time is of the essence in each and every provision of this AGREEMENT.

23. ENTIRE AGREEMENT: This AGREEMENT and its exhibits contain the entire understanding between VENDOR and CITY. Additional or new terms contained in this AGREEMENT which vary from VENDOR’s #9..
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5 bid are controlling and are deemed accepted by VENDOR by provision of any GOODS or other commencement of performance hereunder. . All previous bids, 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 or exception to any of the terms, conditions, and provisions of this AGREEMENT shall be considered valid unless specifically agreed to in writing by the parties.

24. 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.

IN WITNESS WHEREOF, the CITY OF MODESTO, a municipal corporation, has authorized the execution of this AGREEMENT in duplicate by its Director of Finance under authority of Resolution No. 2022- adopted by the Council of the City of Modesto on the _____________ day of _____________________, 2022 and Nutrien Ag Solutions, Inc., has caused this AGREEMENT to be duly executed. #9..
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6 EXHIBIT C
PRICING – EFFECTIVE OCTOBER 1, 2022

ITEM DESCRIPTION UNIT UNIT PRICE
(GALLON)
1 AQUMIX PROPRIETARY CUSTOM PRE-BLEND GAL $155.72
2 PCA RECOMMENDATIONS AND SERVICES, PRODUCT FIELD USE AND

SAFETY TRAINING EA INCLUDED
PRICING TO INCLUDE DELIVERY AND RETURN OF EMPTY DRUMS.

PRICING IS NET TO THE CITY, EXCLUSIVE OF FEDERAL EXCISE TAX, CALIFORNIA STATE, LOCAL, SALES AND USE TAX.

CITY OF MODESTO SALES TAX RATE 7.875%
MINIMUM ORDER: 135 GALLONS/ACRES. (9-15GAL DRUMS)
270 GALLONS (18-DRUMS)
300 GALLONS (20-DRUMS)
VENDOR CONTACT: Chris Blodget, Territory Manager
PHONE: (530) 762-8253
EMAIL: [email protected]
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: September 27, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: May and June 2022 Grant Application and Awards CONTACT: Maria Garnica, Accounting Manager, [email protected] 209-577-5249
DESCRIPTION:

Consider accepting an informational report on the May and June 2022 grant applications and awards. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

The Finance Department coordinated with California Consulting to update the Administrative Directive 7.2, “Grant Management.” The revised directive was updated on July 1, 2021 to streamline the grant management process and to establish better controls on local match requirements, including potential future costs which could be required as part of a grant agreement. Additionally, the Finance Department coordinated several training sessions to highlight key changes to the new directive.

This directive has eliminated the requirement to go to Council for the application and acceptance of grant awards if the amount of the grant is less than $1,000,000 and does not require any local match funding. The Director of Finance is authorized to approve grant applications and awards under $25,000 with no local funding requirements. The City Manager has the authority for approving grant applications and awards between $25,000 and under $1,000,000 with no local match funding requirements. Due to the need for quick turnaround on grant application and award acceptance required by the granting agencies, this directive allows for City departments to apply for more grants within the grant application periods and provide quick response to award acceptance deadlines.
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City Council, October 25, 2022
May and June 2022 Grant Application and Awards

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The Finance Department will inform Council of all grant activity by preparing a bi-monthly informational report on both grant applications and awards. Finance Department has established internal grant application forms to manage the types of grants being applied for and to ensure local match requirements will be managed within our current budget.

City departments continue to actively pursue new grant applications as part of notifications received from federal, state, and local agencies they have subscribed to, such as Department of Housing, Department of Transportation, State Water Resources Control Board, Department of Justice and professional government associations. City departments have staff assigned to monitor these grant application notices to determine if the City meets the required qualifications to apply for the grant.

DISCUSSION:

During the months of May and June 2022, City Council approved the below grant application and award acceptance agreements recommended by City staff based on opportunities to receive federal, state and/or local grant funds for the City with required local match or which exceeded $1,000,000 with no local match.

Community and Economic Development Department:
(Grant Award $1,724,157 – Local Match $0) – HomeKey 2.0 Project Application for 112 James Street, from the State of California. Funds from this grant in partnership with Stanislaus County Affordable Housing Corporation (STANCO) and Stanislaus County Behavioral Health and Recovery Services (BHRS) will be used to purchase a seven-unit apartment building known as James Street Apartments 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. (Grant Award $3,409,774 – Local Match $0) - Home Investment Partnerships Program (HOME)- American Rescue Plan Grant from Unites States Department of Housing and Urban Development. Funds from this grant are intended to be used primary to benefit qualifying individuals and families who are homeless, at risk of homelessness, or in other vulnerable populations. Activities that can be funded with the grant include the development and support of affordable housing, tenant based rental assistance programs, provisions of supportive services and acquisition and development of non-congregate shelter units. Based on the City’s analysis it has been determined that the grant awarded to the City would best serve the community in the development of permanent housing units.

Finance Department:
(Grant Award $1,332,915 – Local Match $0) California Water and Wastewater Arrearage Payment Program (CWWAPP). CWWAPP grant funds will be used to provide economic relief to residential and commercial customers with outstanding delinquency in their wastewater account, incurred during the COVID-19 relief time period of March 4,2020 to June 15, 2021.

Modesto Fire Department:
(Grant Application $40,000 – Local Match- Department budget $20,000) Cal Fire Rural Fire Capacity Program Grant from the State of California Cal Fire. Funds from this grant will be used for the replacement of wildland firefighting equipment in order to replace #10..
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City Council, October 25, 2022
May and June 2022 Grant Application and Awards

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aging and outdated wildland equipment that is no longer in service or does not meet current standards.

During the months of May and June 2022, the Director of Finance and City Manager approved the below grant applications recommended by City staff based on opportunities to receive local grant funds for the City with no required local match.

Public Works Department:
(Grant Application $58,000– Local Match $0) CalRecycle Used Oil Payment Program 13 Cycle from State of California Cal Recycle. Funds from this grant will be used to fund the curbside used oil collection, public education non the importance of recycling used oil and filters, staffing to make appointments, answer questions, and oversee the curbside used oil collection program and certified centers in Modesto. (Grant Application $50,000 – Local Match $0) Household Hazardous Waste Discretionary Grant Cycle 39 (HD39). Funds from this grant will be used to fund staff time, public education on household hazardous waste and the costs of the collection events including recycling and disposal of household hazardous waste.

During fiscal year 2021, City Council, City Manager and Director of Finance authorized grant applications for a combined amount totaling $16,745,457 of which $16,016,554 was successfully awarded to fund programs and projects Citywide.

FISCAL IMPACT:

No fiscal impact will result from the acceptance of this informational report on May and June 2022 grant application and awards. A monthly summary by grant application and awards is below:

Grant Applications: $148,000
Grant Applications Local Match from Department budget: $20,000 Grant Awards: $6,466,846
COMMITTEE RECOMMENDATION:

This item was accepted by the Finance Committee on September 26, 2022 and approved to forward to Council.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion accepting an informational report for the May and June 2022 grant applications and awards.

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
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May and June 2022 Grant Application and Awards

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Attachments:

1. May and June 2022 Grant Applications and Award

2. FY 2021 authorized applications status.
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May and June 2022 Grant Applications
Grant Application
Grant Title Month Grant Awarding Agency City Department Name/Division Grant
Application
Amount
Grant
Application
Local Match
Amount Local Match Source
Cal Fire Rural Fire Capacity Program Grant MAY-22 State of California - Cal Fire Modesto Fire Department 40,000 20,000 Current Budget CalRecycle Used Oil Payment Program 13 JUN-22 State of California -Cal Recycle Public Works Department 58,000 - N/A Household Hazardous Waste Discretionary Grant Cycle 39 (HD39) JUN-22 State of California -Cal Recycle Public Works Department 50,000 - N/A Total $ 148,000 $ 20,000
May and June 2022 Grant Awards
Grant Awards
Grant Title Month Grant Awarding Agency City Department Name/Division Grant Award
Amount
Grant Award
Local Match
Amount Local Match Source
California Water and Wastewater Arrearage Payment Program (CWWAPP) MAY-22 State of California Finance Department 1,332,915 - N/A HOME-American Rescue Plan Grant MAY-22 U.S. Department of Housing and Urban Development Community & Economic Development Department 3,409,774 - N/A Homekey 2.0 - 112 James Street MAY-22 State of California Community & Economic Development Department 1,724,157 - N/A Total $ 6,466,846 $ -
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Grant Applications Authorized July 2020 to June 2021
Grant Title Month

Grant Awarding Agency City Department Name/Division Grant Application $ Local Match $ Grant Status
Funds
Awarded $
California Department of Transportation for Highway Safety Improvement Program (HSIP) funds Jul-20 Caltrans Division of Local Assistance Community and Economic Development 1,958,330 $ 195,833 Awarded 1,958,330 2020 Edward Byrne Memorial Justice Assistance Grant Jul-20 Bureau of Justice Assistance Modesto Police Department $ 130,530 - Awarded 130,530 2020-2021 BHRS Party Patrol Grant Jul-20 Behavioral Health & Recovery Service of Stanislaus County Modesto Police Department $ 10,000 - Awarded 10,000 Beverage Container Recycling City/County Payment Program FY2020-2021 Oct-20 CalRecycle Public Works Department - Solid Waste $ 54,672 - Awarded 54,672 Urban Forest Management Activities Jan-21 California Department of Forestry and Fire Protection Public Works Department - Forestry $ 739,100 257,675 Awarded 557,420 Cannabis Equity Grant Program Jan-21 Governor's Office of Business and Economic Development Community Development Department $ 75,000 - Awarded 75,000 Office of Traffic Safety Pedestrian and Bicycle Safety Program Jan-21 Office of Traffic Safety Modesto Police Department $ 150,000 - Awarded 100,000 California Department of Health Naloxone Distribution Project Feb-21 California Department of Health Modesto Police Department $ 6,240 - Awarded 6,100 2021-2022 Alcohol Policing Partnership Program Mar-21 California Alcohol Beverage Control Modesto Police Department $ 57,500 - Awarded 55,000 Fiscal Year 2020 Staffing Adequate Fire and Emergency Response (SAFER) Grant Mar-21 Department of Homeland Security (DHS) Modesto Fire Department $ 4,489,734 - Awarded 4,244,402 Fiscal Year 2020 Assistance to Firefighters Grant (AFG) Mar-21 Department of Homeland Security (DHS) Modesto Fire Department $ 45,251 4,525 Not Awarded - Local Waste Tire Amnesty Grant Program TA6 Cycle FY21/22 Mar-21 CalRecycle Public Works Department - Solid Waste $ 25,000 - Not Awarded - Statewide Park Development and Community Revitalization Program Apr-21 California Department of Parks and Recreation Parks, Recreation and Neighborhoods $ 8,500,000 - Awarded 8,500,000 Federal Aviation Administration Grant Apr-21 Federal Aviation Administration (FAA) Public Works - Airport $ 339,100 33,910 Awarded 305,100 Cal Fire Rural Fire Capacity Program Grant FY 2021 May-21 Cal FIRE Modesto Fire Department $ 40,000 20,000 Awarded 20,000 U.S. DOJ Office of Community Oriented Policing Services Law Enforcement Mental Health and Wellness Act May-21 U.S. Department of Justice Modesto Police Department $ 125,000 - Not Awarded - $ 16,745,457 $ 511,943 $ 16,016,554
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: October 5, 2022
TO: Mayor & City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Alan Ernst, Fire Chief
SUBJECT: Acceptance of the FY 22/23 Cal Fire RFC Grant
CONTACT: Alan Ernst, Fire Chief, [email protected], 209-572-9590 DESCRIPTION:

Consider accepting the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity (RFC) Program Grant Award in the amount of $39,800, which includes a 50% local match, for the procurement of Wildland Firefighting Equipment. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

This action supports the City of Modesto 2020-2025 Strategic Plan focus on quality of life under Goal A: Improve Community Safety.

BACKGROUND:

On May 3, 2022, Council approved Resolution 2022-207, authorizing the application for this grant. Since then, the Modesto Fire Department has received notification that it has been awarded $39,800, which includes a 50% local match of funds.

The Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity (RFC) Program Grant provides funding to organize, train and equip fire departments in rural areas and rural communities to prevent and suppress fires. The Modesto Fire Department contract with City of Oakdale and Oakdale Fire Protection District allowed the department to apply for the grant. The RFC Grant Program provides financial assistance directly to eligible fire departments for critical training and equipment. The objective is to provide critically needed resources that equip and train emergency personnel to recognized standards, enhance operational efficiencies, foster interoperability, and support community resilience.

DISCUSSION
The Modesto Fire Department is seeking approval to accept the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity Program grant in an amount that will not exceed $39,800, which includes a 50% local match of funds. The department intends to apply this grant towards the purchasing of wildland firefighting equipment in order to replace aging and outdated wildland equipment that is #11..
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City Council, October 25, 2022
Acceptance of the FY 22/23 Cal Fire RFC Grant

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no longer in service or does not meet current standards. The deadline to accept the grant is December 1, 2022.

FISCAL IMPACT:

There is a 50% required local match for the Cal Fire RFC Program Grant. The awarded amount is $19,900, which requires a $19,900 local match. The department would fund the match within its adopted budget. Due to the critical need of replacing critical firefighting equipment, the department would prioritize funding within existing budget for the match. The equipment identified in the grant application has been identified as needing replacement; without this grant the Fire Department will bear the cost of the full $39,800.

COMMITTEE RECOMMENDATION:

This item was presented to the Safety and Communities Committee at the October 10, 2022 meeting and was recommended to forward to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity (RFC) Program Grant Award in the amount of $39,800, which includes a 50% local match, for the procurement of Wildland Firefighting Equipment.

Approved by:

Alan Ernst, Fire Chief
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Application
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-?
RESOLUTION ACCEPTING THE FISCAL YEAR 2022-2023 CAL FIRE RURAL

FIRE CAPACITY (RFC) PROGRAM GRANT AWARD IN THE AMOUNT OF $39,800, WHICH INCLUDES A 50% LOCAL MATCH, FOR THE

PROCUREMENT OF WILDLAND FIREFIGHTING EQUIPMENT
WHEREAS, on May 3, 2022, Council approved Resolution 2022-207, authorizing the application for this grant. Since then, the Modesto Fire Department has received notification that it has been awarded $39,800, which includes a 50% local match of funds; and
WHEREAS, the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity (RFC) Program Grant provides funding to organize, train and equip fire departments in rural areas and rural communities to prevent and suppress fires. The Modesto Fire Department contract with City of Oakdale and Oakdale Fire Protection District allowed the department to apply for the grant; and
WHEREAS, the RFC Grant Program provides financial assistance directly to eligible fire departments for critical training and equipment. The objective is to provide critically needed resources that equip and train emergency personnel to recognized standards, enhance operational efficiencies, foster interoperability, and support community resilience; and
WHEREAS, the Modesto Fire Department is seeking approval to accept the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity Program grant in an amount that will not exceed $39,800, which includes a 50% local match of funds. The department intends to apply this grant towards the purchasing of wildland firefighting equipment in order to replace aging and outdated wildland equipment that is no longer in service or does not meet current standards; and
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WHEREAS, there is a 50% required local match for the Cal Fire RFC Program Grant. The awarded amount is $19,900, which requires a $19,900 local match.

The department would fund the match within its adopted budget; and WHEREAS, due to the critical need of replacing critical firefighting equipment, the department would prioritize funding within existing budget for the match.

The equipment identified in the grant application has been identified as needing replacement; without this grant the Fire Department will bear the cost of the full $39,800.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the acceptance the Fiscal Year 2022-2023 Cal Fire Rural Fire Capacity (RFC) Program Grant award in the amount of $39,800, which includes a 50% local match, for the procurement of wildland firefighting equipment.

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DIANE NAYARES- PEREZ,
City Clerk
(SEAL)
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APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
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22061
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$19,900.00
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: September 5, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Scott Conn, Chief Information Officer
SUBJECT: CivicPlus Modesto Website Hosting Renewal
CONTACT: Scott Conn, Chief Information Officer
[email protected], 209-577-5229
DESCRIPTION:

Consider approval of a Sole Source Renewal Agreement with CivicPlus for continued, uninterrupted hosting and maintenance of the City’s website for a four-year term for a total amount not to exceed $164,285. (Funding Source: Information Technology Fund) STRATEGIC PLAN ELEMENT:

This item is consistent with the City’s 2020-2025 Strategic Plan to promote trust and engagement with the community and directly supports the Smart City Strategy adopted in 2021.

BACKGROUND:

The City’s website is available to employees and the public 24-hours per day, 7-days per week, 365-days per year and is utilized as the major information dissemination vehicle for residents and non-residents alike. That agreement is nearing completion and as the City has been satisfied with the hosting services supplied by CivicPlus, desires to renew the agreement for an additional four-year term.

DISCUSSION:

As part of this renewal agreement, CivicPlus has agreed to work with our IT and Community & Media Relations team to continue re-designing our website over time to make it easier to find topics of greatest interest and to navigate using a single button click to logical places where desired information should be located.

The renewal includes the addition of two new website editing modules, Design Center Pro and CivicOptimize. Design Center Pro will help facilitate the redesign of the existing site and allow staff to directly control and make desired design updates throughout the 4-year term of the agreement. CivicOptimize will allow staff to create and implement new electronic routable and #12..
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City Council, October 25, 2022
CivicPlus Modesto Website Hosting Renewal

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signable forms within the website designed to replace the current paper-based forms which must be downloaded and manually processed by residents and City staff alike.

The contingency of 10%, in the amount of $14,935, is recommended as a safeguard to cover unanticipated website-related costs such as new security requirements, additional update implementation work, training, and consulting.

Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment, or contractual services to be formally bid. However, Staff believes the renewal of this agreement with CivicPlus should be exempt from the formal bidding process in accordance with Modesto Municipal Code 8-3.204(b) since they are the sole provider of this already implemented and ongoing service. MMC 8-3.204(b) provides that a purchase may be exempted from the City’s formal bidding requirement where the Purchasing Agency’s requirements can be met solely by a single article or process.

The alternative to renewing with CivicPlus involves creation of a new external website Request For Proposal (RFP) to essentially obtain the identical services currently provided by CivicPlus.

Such an effort would engage significant City staff time and negate the approximately $34,500 in price reductions negotiated between the City and CivicPlus for this staff recommended renewal.

FISCAL IMPACT:

Under the renewal agreement, the financial impact for hosting, maintenance, security protection, implementation and training, and ongoing website optimization services will be as follows:

Annual Fee One-time Cost Total Comments
Year 1 $ 33,687 $ 8,101 $ 41,788
One-time charges for implementation and training on Design Center Pro and CivicOptimize
Year 2 $ 34,697 $ 158 $ 34,855 One-time charges for biennial security certification Year 3 $ 35,739 $ - $ 35,739 No one-time charges - regular hosting fees and maintenance Year 4 $ 36,810 $ 158 $ 36,968 One-time charges for biennial security certification 10% Contingency $ 14,093 $ 842 $ 14,935 Safeguard to cover unanticipated costs throughout term Totals = $ 155,026 $ 9,259 $ 164,285
This will not impact the current 2022-23 fiscal year nor subsequent years as this is sourced through the existing Information Technology Internal Service Fund (ISF) balance and will be included in the annual Information Technology ISF allocation.

COMMITTEE RECOMMENDATION:

This item was considered by the Finance Committee on September 26, 2022 and was recommended to forward to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the Sole Source Agreement with CivicPlus for the continued, uninterrupted hosting and maintenance of the City of Modesto’s website (www.modestogov.com) for a four-year term at an amount of $149,350 plus a 10% contingency in the amount of $14,935 for a total amount not to exceed $164,285; and authorizing the City Manager, or his designee, to execute the Agreement.
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City Council, October 25, 2022
CivicPlus Modesto Website Hosting Renewal

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Approved by:

Scott Conn, Chief Information Officer
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. CivicPlus Renewal Statement of Work

3. CivicPlus Renewal Bid Waiver form
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MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING THE SOLE SOURCE AGREEMENT WITH

CIVICPLUS FOR THE CONTINUED, UNINTERRUPTED HOSTING AND
MAINTENANCE OF MODESTO’S WEBSITE (WWW.MODESTOGOV.COM)
FOR A FOUR-YEAR TERM IN AN AMOUNT OF $149,350 PLUS 10%
CONTINGENCY IN THE AMOUNT OF $14,935, FOR A TOTAL AMOUNT NOT TO EXCEED $164,285; AND AUTHORIZING THE CITY MANAGER, OR HIS

DESIGNEE, TO EXECUTE AGREEMENT
WHEREAS, on September 22, 2015, by Resolution No. 2015-356, Council approved the award of agreement for website maintenance to CivicPlus; and WHEREAS, after a lengthy Request for Proposal (RFP) process accomplished in 2015, the City of Modesto entered into an agreement with CivicPlus to help re-design, host and implement our current website; and
WHEREAS, on September 25, 2018, by Resolution No. 2018-409, the City of Modesto renewed the agreement with CivicPlus for a four-year term to help re-design, host and implement our current website; and
WHEREAS, that agreement is nearing completion and as the City has been satisfied with the hosting services supplied by CivicPlus, desires to renew the agreement for an additional four-year term; and
WHEREAS another four-year term will cost $149,350 plus a 10% contingency in the amount of $14,935 for a total amount not to exceed $164,285; and WHEREAS Modesto Municipal Code Section 8-3.203 generally requires all purchases, which meet or exceed $50,000 for material, equipment, or contractual services to be formally bid; and
WHEREAS staff recommends the upgrade and renewal of this agreement to CivicPlus should be exempt from the formal bidding process in accordance with Modesto #12..
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Municipal Code 8-3.204(b) since they are the current and sole provider of this service; and
WHEREAS MMC 8-3.204(b) provides that a purchase may be exempted from the City’s formal bidding requirement where the Purchasing Agency’s requirements can be met solely by a single article or process; and
WHEREAS, this purchase of these services conforms to the Modesto Municipal Code; and
WHEREAS, under this agreement, the maintenance for year one will be $41,787.79; and
WHEREAS the maintenance for year two will be $34,855.39; and WHEREAS the maintenance for year three will be $35,738.31; and WHEREAS the maintenance cost for year four will be $36,968.46 for a four-year grand total of $149,349.95.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the renewed sole source agreement with CivicPlus for the continued website maintenance for the City of Modesto for a four-year term at an amount of $149,350 plus a 10% contingency in the amount of $14,935 for a total amount not to exceed $164,285.

BE IT FURTHER RESOLVED that the City Manager or his designee are hereby authorized to execute the agreement.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October 2022, by Councilmember ?, who #12..
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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
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CivicPlus Annual Payments
All Fees and Services are Invoiced October 1 each year:

Year 1 (2022-2023)
Annual Recurring Services (Oct 1, 2022 - Sept 30, 2023) $33,686.79 One-Time Services $8,101.00
Year 1 Total (October 1, 2022 – Sept 30, 2023) $41,787.79 Year 2 (2023-2024)
City of Modesto Annual Service – Engage
Website Hosting
$11,071.91
Media Center Storage Annual Fee $1,228.13
City of Modesto SSL Cert (modestogov.com)
(Every other year Fee)
$158.00
Design Center Pro Annual Service $5,402.35
CivicOptimize Annual Service $16,995.00
Annual Recurring Services (Oct 1, 2023 - Sept 30, 2024) $34,697.39 Biennial Recurring SSL Cert Fee $158.00
Year 2 Total (October 1, 2023 – Sept 30, 2024) $34,855.39 Year 3 (2024-2025)
City of Modesto Annual Service – Engage
Website Hosting
$11,404.08
Media Center Storage Annual Fee $1,264.98
Design Center Pro Annual Service $5,564.42
CivicOptimize Annual Service $17,504.85
Annual Recurring Services (Oct 1, 2024 - Sept 30, 2025) $35,738.31 Year 3 Total (October 1, 2024 – Sept 30, 2025) $35,738.31 Year 4 (2025 – 2026)
City of Modesto Annual Service – Engage $11,746.19
City of Modesto Annual Service – Engage
Website Hosting
$10,749.43
Recurring Website Redesign Available upon
renewal
Included
Media Center Storage Annual Fee $1,192.36
Design Center Pro Module – Implementation
& Training (One-time Fee)
$1,538.00
Design Center Pro Annual Service $5,245.00
CivicOptimize Implementation & Training
(One-time Fee)
$6,563.00
City of Modesto Annual Service –
CivicOptimize
$16,500.00
ATTACHMENT 1
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Website Hosting
Media Center Storage Annual Fee $1,302.92
City of Modesto SSL Cert (modestogov.com)
(Every other year Fee)
$158.00
Design Center Pro Annual Service $5,731.35
CivicOptimize Annual Service $18,030.00
Annual Recurring Services (Oct 1, 2025 - Sept 30, 2026) $36,810.46 Biennial Recurring SSL Cert Fee $158.00
Year 4 Total (October 1, 2025 – Sept 30, 2026) $36,968.46 Grand Total (Oct 1, 2022 – Sept 30, 2026) - $149,349.95 #12..
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CivicPlus
302 South 4th St. Suite 500
Manhattan, KS 66502 US
Product: CivicEngage Renewal
Client: Modesto, CA
Bill To
Modesto CA – CivicEngage – Renewal Statement of Work
Annual Renewing Services:

QTY Product Description PRODUCT TYPE Total
1 City of Modesto Annual Service Renewable $10,749.43
1 *Annual Fee Renewal for City of Modesto SSL Cert Renewable $158.00 Annual Recurring Services (Oct 1, 2022 - Sept 30, 2023) $10,749.43 *Line item is charged biennially and NOT subject to 3% uplift on each recurring year Additional Services added:

QTY Product Name DESCRIPTION PRODUCT
TYPE
TOTAL

1.00 Design Center Pro Bundle -
CivicEngage Central
Includes Annual Subscription,
Implementation, and 1 Block of Training
(Up to 2 individuals - 4 Hours)
USD 0.00

1.00 Design Center Pro Annual Fee -
CivicEngage Central
Design Center Pro Annual Fee Renewable USD 5,245.00

1.00 Design Center Pro
Implementation - CivicEngage
Central
Design Center Pro Implementation One-time USD 788.00

1.00 Design Center Pro Training (4h,
virtual) - CivicEngage
Up to 1/2 day virtual instruction with live
instructor. (Pricing per two (2) seats)
One-time USD 750.00
Total Investment - Year 1 USD 6,783.00
Annual Recurring Services – (Subject to Uplift) USD 5,245

1. This Statement of Work ("SOW") shall be subject to the terms and conditions of the CivicPlus Master Services Agreement located at https://www.civicplus.com/master-services-agreement (“MSA”), to which this SOW is hereby attached as the Renewal Statement of Work. By signing this SOW, Client expressly agrees to the terms #12..
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and conditions of the MSA throughout the Term of this SOW.

2. This renewal SOW shall remain in effect for an initial term starting October 1, 2022 through September 30, 2023 (“Initial Term”). In the event that neither party gives 60 days’ notice to terminate prior to the end of the Initial Term, or any subsequent Renewal Term, this SOW will automatically renew for an additional 1-year renewal term (“Renewal Term”). The Initial Term and all Renewal Terms are collectively referred to as the “Term”.

3. Annual Recurring Services shall be invoiced on the first day of the Initial Term and every 12 months thereafter.

Annual Recurring Services, including but not limited to hosting, support and maintenance services, shall be subject to a 3% annual increase each Renewal Term. Client will pay all invoices within 30 days of the date of such invoice

4. Client shall be entitled to receive a redesign during the Initial Term. Upon the initiation of an eligible redesign project, Client may begin accumulate eligibility towards a subsequent redesign after another 48 months of continuous service. Redesigns that include additional features not available on the original website may be subject to additional charges. Additional features include, but are not limited to, additional modules and integration of third-party software.

Recurring Redesigns are eligible for the website, subsite, and department headers included in this SOW only. Any subsequently purchased website, subsite, and department header shall not be included in a redesign hereunder.

The year of Client’s last redesign was 2019.

5. Client allows CivicPlus to display a “Government Websites by CivicPlus” insignia, and web link at the bottom of their web pages. Client understands that the pricing and any related discount structure provided under this SOW assumes such perpetual permission.

6. If Client’s use of the Design Center module results in a loss in website or software function or other issue requiring CivicPlus resources to remedy, Client will be charged an hourly fee of $160 for such resources.

Acceptance
By signing below, the parties are agreeing to be bound by the covenants and obligations specified in this SOW and the MSA terms and conditions found at: https://www.civicplus.com/master-servicesagreement.

IN WITNESS WHEREOF, the parties have caused this SOW to be executed by their duly authorized representatives as of the dates below.

Client CivicPlus
By: By:

Name: Name:

Title: Title:

Date: Date:
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CivicPlus
302 South 4th St. Suite 500
Manhattan, KS 66502
US
Client:

Modesto CA - CivicOptimize
Quote #: Q-21809-4
Date: 1/11/2022 4:42 PM
Expires On: 10/31/2022
Product: CivicOptimize
Bill To:

Modesto CA - CivicOptimize
SALESPERSON Phone EMAIL DELIVERY METHOD PAYMENT METHOD
Tiffany Grover x [email protected] Net 30
CivicOptimize - Statement of Work

QTY PRODUCT NAME DESCRIPTION PRODUCT
TYPE
TOTAL

1.00 Productivity Starter Package Productivity Starter Package USD 0.00

1.00 Productivity Starter System
Annual Fee
Productivity Starter System Annual Fee:
50 staff app users; 15,000 app user
submissions / month; Data Manager: 10
enabled forms/ app/ 5 app users
Renewable USD 15,000.00

1.00 Power Automate Integration Power Automate Integration Renewable USD 1,500.00

1.00 Productivity System Set-Up Productivity System Set-Up: Up to five (5) hours form development (Forms
Templates or Custom); App Graphics
(Icon & Banner); up to two (2) hours
training
USD 0.00

5.00 Productivity Custom Form
Development (1h)
Productivity Custom Form Development
(1h)
One-time USD 500.00

1.00 Productivity Custom App Banner Productivity Custom App Banner One-time USD 263.00

1.00 Productivity System Training (2h,
virtual)
Productivity System Training (up to 2h,
virtual)
One-time USD 375.00

1.00 Productivity Custom App Icon Productivity Custom App Icon One-time USD 160.00

1.00 Productivity Standard
Implementation Services
Standard Implementation: The CivicPlus
team will document your process
workflow, and will work with your team
to build, configure, and style your
solution. Up to 32 hours services.

One-time USD 5,265.00
Total Investment - Year 1 USD 23,063.00
Annual Recurring Services - Year 2 USD 16,995.00
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Total Days of Quote:365

1. This Statement of Work ("SOW") shall be subject to the terms and conditions of the CivicPlus Master Services Agreement located at https://www.civicplus.com/master-services-agreement (“MSA”), to which this SOW is hereby attached as the CivicOptimize Statement of Work. By signing this SOW, Client expressly agrees to the terms and conditions of the MSA throughout the Term of this SOW.

2. This SOW shall remain in effect for an initial term starting October 1, 2022 through September 31, 2023 (“Initial Term”). In the event that neither party gives 60 days’ notice to terminate prior to the end of the Initial Term or any subsequent Renewal Term, this SOW will automatically renew for an additional 1-year renewal term (“Renewal Term”).

The Initial Term and all Renewal Terms are collectively referred to as the “Term”.

3. The Total Investment - Year 1 will be invoiced at signing of this SOW. Client will pay all invoices within 30 days of the date of invoice.

4. Annual Recurring Services shall be invoiced on the start date of each Renewal Term. Annual Recurring Services, including but not limited to hosting, support and maintenance services, shall be subject to a 3% annual increase beginning in year 2 of service.

5. Client understands CivicPlus shall have no obligation to provide the Services or maintain Client data, information or other material after this SOW is terminated or if Client’s accounts are past due and unpaid, as set forth in the MSA.

6. Client’s use of the Services is subject to the Acceptable Use Policy set forth at https://www.civicoptimize.civicplus.help/hc/en-us/articles/360046849654-Acceptable-Use-Policy.

7. Client understands and agrees that the Client is solely responsible for the content and type of data stored for its end users and/or constituents. CivicPlus implements industry standard data protection for stored data; however, the Productivity services contracted for herein (the “Services”) are not intended to store personally identifiable information (“PII”), personal health information (“PHI”), payment card industry information (“PCI”) or any other financial data. CivicPlus strongly discourages Client from soliciting and storing PHI within the Services and prohibits Client from soliciting and storing any PCI or any other financial data within the system. CivicPlus cannot monitor and control Client’s actions; therefore, in the event Client solicits and stores any PII, PHI, PCI or other financial data, it is at Client’s sole discretion and risk. Client as the data owner, and not CivicPlus, is solely responsible for the applicable laws and regulations regarding any data breach involving such data, including breach notification and credit monitoring requirements.

8. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, CIVICPLUS MAKES NO

REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE

CLIENT WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND

HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.

Signature Page to Follow.
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IN WITNESS WHEREOF, the parties have caused this SOW to be executed by their duly authorized representatives as of the dates below.

Client CivicPlus
By: By:

Name: Name:

Title: Title:

Date: Date:
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Contact Information
*all documents must be returned: Master Service Agreement, Statement of Work, and Contact Information Sheet.

Organization URL
Street Address
Address 2
City State Postal Code
CivicPlus provides telephone support for all trained clients from 7am –7pm Central Time, Monday-Friday (excluding holidays).

Emergency Support is provided on a 24/7/365 basis for representatives named by the Client. Client is responsible for ensuring CivicPlus has current updates.

Emergency Contact & Mobile Phone
Emergency Contact & Mobile Phone
Emergency Contact & Mobile Phone
Billing Contact E-Mail
Phone Ext. Fax
Billing Address
Address 2
City State Postal Code
Tax ID # Sales Tax Exempt #
Billing Terms Account Rep
Info Required on Invoice (PO or Job #)
Are you utilizing any external funding for your project (ex. FEMA, CARES): Y [ ] or N [ ] Please list all external sources:

Contract Contact Email
Phone Ext. Fax
Project Contact Email
Phone Ext. Fax
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Pricing Sheet – pricing below is not guaranteed and is
subject to change
CivicEngage
AUDIOEYE – Minimum Pricing
▪ $11,300 Annually
CHATBOT – Minimum Pricing
▪ $12,000 Annually

DESIGN CENTER PRO
▪ $788 Set Up/ $5,245 - $5,245 Annually = $6,033 Year 1 ▪ Design Center Pro Training – 4hr Block - $750

SMS SUBSCRIBERS
▪ Block of 500 subscribers- $945 Annually
IMPLEMENTATION WORK – Minimum Pricing
▪ Block of Time-(4 Hours) - $625
50GB SITE STORAGE with BACKUP and DR – Minimum Pricing
▪ $1200 Annually
PLATINUM SECURITY – Minimum Pricing
▪ $4,800 Annually per domain
ADFS/ DNS/ SSL:
▪ ADFS- $3,000 Set Up/ $1,500 Annually = $4,500 Year 1
▪ DNS- $150 Set Up/ $180 Annually = $330 Year 1
▪ SSL $150 Set Up/ $150 Annually = $300 Year1
o Client Controlled or Wildcard- $158 Set Up
LOGO AND BRANDING – Minimum Pricing
▪ $11,500
PREMIUM DEPARTMENT HEADERS – Minimum Pricing
▪ $4,515 Set Up/ $800 Annually = $5,315 Year 1
Training Not Included
+CivicPlus.com CORPORATE OFFICE
302South4
th Street
Manhattan, KS 66502
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888.228.2233 + FAX 7853.587.8951
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+CivicPlus.com CORPORATE OFFICE
302South4
th Street
Manhattan, KS 66502
888.228.2233 + FAX 7853.587.8951
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Pricing Sheet – pricing below is not guaranteed and is
subject to change
PREMIUM SUBSITES – Minimum Pricing
▪ $17,400 Set Up/ $7,200 Annually = $24,600 Year 1
Training Not Included
PREMIUM ONE-TIME REDESIGN – Minimum Pricing
▪ $15,475
Training Not Included
TRAINING & CONSULTING – 3 Day Minimum Required for onsite Onsite Training:
▪ $3,750/day plus travel
Travel - $1,500 for first 2 nights + $500 each additional night Virtual Training: (Up to 6 people)
▪ 4-hour blocks- $750
Virtual Consulting: (Up to 6people)
▪ 4-hour blocks- $1,500

VIRTUAL WEBMASTER
▪ Block of 5 hours per month= $6,000 Annually
CivicOptimize
ANNUAL SERVICES – Minimum Pricing
▪ $5,265
ANNUAL ADD ON’S – Minimum Pricing
▪ Productivity External System Connector - $1,500 Annually ▪ Productivity Connector - $1,500 Annually
▪ Custom Domain Name - $1,500 Annually
TRAINING & CONSULTING – 3 Day Minimum Required for onsite Onsite Training:
▪ $3,750/day plus travel
Travel - $1,500 for first 2 nights + $500 each additional night Virtual Training: (Up to 6 people)
▪ 4-hour blocks- $750
Virtual Consulting: (Up to 6people)
▪ 4-hour blocks- $1,500
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+CivicPlus.com CORPORATE OFFICE
302South4
th Street
Manhattan, KS 66502
888.228.2233 + FAX 7853.587.8951
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Pricing Sheet – pricing below is not guaranteed and is
subject to change
CONTENT & FORM DEVELOPMENT – Minimum Pricing
▪ Productivity Custom Form Development (per page) - $40 ▪ Productivity Custom Form Development (per hour) - $100 DESIGN DEVELOPMENT – Minimum Pricing
▪ Productivity Custom App Banner - $160
▪ Logo Development - $5,000
▪ Productivity CSS Styling (1 Hour) - $160
▪ Hourly Design Work (per hour) - $160
▪ Productivity Custom App Icon - $160
INTEGRATIONS & CONNECTORS – Minimum Pricing
▪ Productivity Connector Setup (available integrations) - $1,500 ▪ Productivity External System Connector Development (per hour) - $265 ▪ Productivity Custom App Development - $265
▪ Payment Integrations - $265
▪ Database Integration - $265
▪ Technical Implementation - $250
Technical Support – Minimum Pricing
▪ API Technical Support (per hour) - $1,500
Approved Payment Gateway Package – Minimum Pricing
▪ Approved Payment Gateway - $1,500 Annually
▪ Approved Payment Gateway Implementation - $2,500
CP Pay Package – Minimum Pricing
▪ CP Pay – NO FEE
▪ CP Pay Implementation – NO FEE
CUSTOM IDP PACKAGE – Minimum Pricing
▪ Custom IdP Integration Implementation - $1,575
▪ Custom IdP Integration - $1,575 Annually
▪ Secondary set up of Custom IdP - $525
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Bid Waiver Approval Form
Supplier Name: Amount of Bid Waiver Request:

Supplier Contact: Supplier Phone No:

Are Federal Funds being utilized for portion of purchase? A bid waiver is required for any procurement commitment greater than $ 3,500 where a minimum of three bids are not obtained.

Justification for waiving the competitive bid requirements is limited to the following (provide detailed information in the comments section of form):

Reason for Bid Waiver - Check Box:

Sole Source - The item/service is unique in its specifications such that only one vendor is qualified to provide the good or service (Formal bidding exception under MMC 8-3.204(b))
OEM - Original Equipment Manufacturer / Distributor
Inflexible time constraints preclude the bidding process - Exigent circumstances (Formal bidding exception under MMC 8-3.204 (c))
The incumbent's cost, delivery and quality can be compared to a previous quote/bid obtained within the last six months, for the same or similar item/service (Total purchase must be less than $50,000)
Professional Services defined under MMC 8-3.103 (Formal bidding exception under MMC 8-3.204 (a))
Single Bid/Proposal – More than one supplier could provide the goods or service, but only one supplier provided bid/proposal for solicitation.

Requisition No: Department:

Project Description:

The purchase of any item utilizing any Federal Funding must comply with current applicable Circular Yes No
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Other (requires detailed comments)
Comments:

Approval Name Signature Date
Requestor
Division Manager
Department Director
Chief Information Officeri
Buyer
Purchasing Manager
Director of Finance
i
Information technology (IT) purchases will require Chief Information Officer Signature Buyer Comments:
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: October 5, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Accept Del Rio Tank No. 14, Well No. 68, and Pump Station Project CONTACT: Pete Kambel, Senior Civil Engineer, [email protected] 209-577-5444 DESCRIPTION:

Consider accepting the Del Rio Tank No. 14, Well No. 68, and Pump Station Project as complete, authorizing all necessary steps to file with the County Recorder, releasing securities, and releasing payments totaling $10,203,691 to Mountain Cascade, Inc., of Livermore, CA. (Funding Source: Water Fund-CIP)
STRATEGIC PLAN ELEMENT:

The recommended action supports the 2020-2025 City of Modesto Strategic Plan Initiatives, Goal D: Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.

BACKGROUND:

This project constructed a 0.25 million-gallon steel water tank, a 1,000 gallon-per-minute well production pump, a 2.45 million gallon-per-day booster pump station, a 1.4-acre-foot retention basin, and a 16-inch transmission main installation from the intersection of St. John Road and Country Club Drive, south to Ladd Road, where it ties into the tank site. The project increased service reliability, corrected existing supply and pressure deficiencies of the City’s Del Rio water system, located northwest of the Modesto city limits. The project site is located at 718 Ladd Road on approximately 4 acres just southeast of the intersection of Ladd Road and St. Johns Road.

The City was obligated to provide this improvement by January 31, 2014, in accordance with the amended terms of a Settlement Agreement between the City and the Del Rio Community Association. Project delays occurred due to litigation, while staff continued to work with the Del Rio Community Association to extend the deadline.

In consideration of the Settlement Agreement with the Del Rio Community Association and the City’s obligation to complete the recommended improvements to meet the existing Del Rio water #13..
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City Council, October 25, 2022
Accept Del Rio Tank No. 14, Well No. 68, and Pump Station Project

Page 2 of 4 ends

system needs, staff moved forward with final design of the Del Rio Tank 14, Well 68 and Pump Station Project in the summer of 2017.

On October 3, 2017, by Resolution No. 2017-390, Council approved a first amendment with North Star Engineering Group for final design services for the Del Rio Tank 14, Well 68 and Pump Station Project. At that same meeting, by Resolution No. 2017-391, Council accepted the Preliminary Design Report that generated the design.

DISCUSSION:

The project was advertised for bids on April 3, 2018. Bids were publicly opened on May 15, 2018, pursuant to Modesto Municipal Code section 8-3.403 and City Charter Section 1307. Three bids were received, and Mountain Cascade, Inc., of Livermore, CA, was the apparent lowest bidder at

7.31% below the engineer’s estimate.

On October 2, 2018, by Resolution No. 2018-432, Council awarded a contract to Mountain Cascade, Inc., of Livermore, CA, for the construction of the Del Rio Tank No. 14, Well No. 68, and Pump Station project in the amount of $8,111,702. The contractor received the Notice to Proceed with a first working day of November 13, 2018. All contract work was completed by November 5, 2020.

By accepting this project as complete, the City officially accepts the improvements made and authorizes the Notice of Completion to be filed. The City Clerk is authorized to complete all necessary steps to file the appropriate notices and documents with the County Recorder, release securities, and authorize payments totaling $10,203,691. The work is covered by a one-year warranty for any issues that may arise.

Staff recommends the project for acceptance as the contractor has complied with all contract requirements for the project.

FISCAL IMPACT:

The total project costs were $13,962,107 which included design, construction, and construction administration costs. The total project amount originally budgeted was $14,403,213 which included $8,111,702 or the construction contract and contingency with Mountain Cascade, Inc. of Livermore, CA.

The City’s “Change Order Approval Policy” enacted by Council Resolution No. 94-443 on July 19, 1994, and updated by Resolution No. 2019-326 on July 9, 2019, states that a contract of at least $1,000,000 but less than $10,000,000 allows Directors Authority not to exceed eight percent (8%) of the contract amount.

On May 05, 2020, by Resolution No. 2020-214, council authorized the Director of Utilities approval of change orders up to 38% of the original contract price for the Del Rio Tank No. 14, Well No. 68, and Pump Station Project. Therefore, the approved contingency amount for the project was $2,854,117.

There were thirty-six change orders resulting in an overall increase of $2,692,855 for change order work as listed on the attached change order log. A summary of the expenditures for the overall project is listed below:
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City Council, October 25, 2022
Accept Del Rio Tank No. 14, Well No. 68, and Pump Station Project

Page 3 of 4 ends

100473 – UPP.Engineering “Del Rio Water Tank”
PROJECT EXPENDITURES:

Construction Contract (Mountain Cascade, Inc.) $7,510,835 Construction Contingency (Change Orders) 35.9% $2,692,855 Environmental 4.3% $326,405
Land Acquisition 4.1% $311,115
Construction Administration – City Staff Support 2.3% $174,527 Construction Management - NV5 16.3% $1,221,589
Engineering Design -Carollo Engineers 6.1% $458,138
Engineering Design – NorthStar Engineering 9.6% $722,959 Engineering Design/Admin. – City Staff Support/Misc. 7.2% $543,684 TOTAL CONSTRUCTION EXPENDITURES: $13,962,107
*Percentages are based on Construction Contract amount.

COMMITTEE RECOMMENDATION:

The Del Rio Tank No. 14, Well No. 68, and Pump Station project was presented to the Special Finance Committee Workshop on April 30, 2018, as a highlighted high-profile project. This presentation was part of the draft Operating Budget Workshop, which was recommended to forward to Council for approval.

CEQA/NEPA REQUIREMENTS:

On September 5, 2017, Council certified the Final EIR for the Del Rio Tank and Wells Project by Resolution No. 2017-347. The EIR identified significant and unavoidable environmental impacts of the Project. Certification of the Final EIR required the adoption of a Statement of Overriding Considerations explaining the specific benefits of the Proposed Project that outweigh its significant and unavoidable impacts. Council determined that any remaining unmitigated environmental impacts attributable to the Del Rio Tank and Wells Project are outweighed by specific benefits outlined in the Final EIR.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Del Rio Tank No. 14, Well No. 68, and Pump Station Project as complete, authorizing all necessary steps to file with the County Recorder, releasing securities, and releasing payments totaling $10,203,691 to Mountain Cascade, Inc., Livermore, CA. #13..
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City Council, October 25, 2022
Accept Del Rio Tank No. 14, Well No. 68, and Pump Station Project

Page 4 of 4 ends

Approved by: _________________________________________
William Wong, Director of Utilities
_________________________________________
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. CCO Log

3. Project Suspension Form
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2022-XX
RESOLUTION ACCEPTING THE DEL RIO TANK NO. 14, WELL NO. 68, AND PUMP

STATION PROJECT AS COMPLETE, AUTHORIZING ALL NECESSARY STEPS TO

FILE WITH THE COUNTY RECORDER, RELEASING SECURITIES, AND RELEASING PAYMENTS TOTALING $10,203,691 TO MOUNTAIN CASCADE, INC.,

LIVERMORE, CA
WHEREAS, this project constructed a 0.25-million-gallon steel water tank, a 1,000 gallon-per-minute (gpm) well production pump, a 2.45 million gallon-per-day booster pump station, a 1.4-acre-foot retention basin, and a 16-inch transmission main installation from the intersection of St. John Road and Country Club Drive, south to Ladd Road, where it ties into the tank site; and
WHEREAS, the project increased service reliability, corrected existing supply and pressure deficiencies of the City’s Del Rio water system, located northwest of the Modesto city limits; and
WHEREAS, the project site is located at 718 Ladd Road on approximately 4 acres just southeast of the intersection of Ladd Road and St. Johns Road; and WHEREAS, the City was obligated to provide this improvement by January 31, 2014, in accordance with the amended terms of a Settlement Agreement between the City and the Del Rio Community Association; and
WHEREAS, project delays occurred due to litigation, while staff continued to work with the Del Rio Community Association to extend the deadline; and WHEREAS, in consideration of the Settlement Agreement with the Del Rio Community Association and the City’s obligation to complete the recommended improvements to meet the existing Del Rio water system needs, staff moved forward with #13..
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2 final design of the Del Rio Tank 14, Well 68 and Pump Station Project in the summer of 2017; and
WHEREAS, on October 3, 2017, by Resolution No. 2017-390, Council approved a first amendment with North Star Engineering Group for final design services for the Del Rio Tank 14, Well 68 and Pump Station Project; and
WHEREAS, at that same meeting, by Resolution No. 2017-391, Council accepted the Preliminary Design Report that generated the design; and WHEREAS, bids were publicly opened on May 15, 2018, pursuant to Modesto Municipal Code section 803.403 and City Charter Section 1307; and WHEREAS, three bids were received, and Mountain Cascade, Inc., of Livermore, CA, was the apparent lowest bidder at 7.31% below the engineer’s estimate; and WHEREAS, on October 2, 2018, by Resolution No. 2018-432, Council awarded a contract to Mountain Cascade, Inc., of Livermore, CA, for the construction of the Del Rio Tank No. 14, Well No. 68, and Pump Station project in the amount of $8,111,702; and WHEREAS, on May 05, 2020, by Resolution No. 2020-214, council authorized the Director of Utilities approval of change orders up to 38% of the original contract price for the Del Rio Tank No. 14, Well No. 68, and Pump Station Project and therefore, the approved contingency amount for the project was $2,854,117; and
WHEREAS, there were thirty-six change orders resulting in an overall increase of $$2,692,855; and
WHEREAS, by accepting this project as complete, the City officially accepts the improvements made and authorizes the Notice of Completion to be filed. #13..
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3 NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that the Del Rio Tank No. 14, Well No. 68, and Pump Station project as complete, authorizing all necessary steps to file with the county recorder, releasing securities, and releasing payments totaling $10,203,691 to Mountain Cascade, Inc., Livermore, CA. #13..
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4 The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October, 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
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CHANGE
ORDER
NO. DESCRIPTION EXECUTED AMOUNT
CAUSE

UNFORSEEN

CONDITIONS
DESIGN
ISSUE
ADDED
SCOPE

CONTRACT CHANGE ORDER LOG
Date: October 04, 2022
TIME
EXT.
2018/10 - Del Rio Tank No 14 Well 68 and Pump Station
PROJECT NUMBER AND NAME:
01 Revised Substantial Completion Date 09/16/22 $0.00 0 W.D. No Yes No 02 304 SS Trim On Butterfly Valves 04/30/19 -$2,206.00 0 W.D. No No No 03 Pump Building Underdrain Pipe Material Substitution 04/30/19 -$5,268.05 0 W.D. Yes No No 04 Storm Drain Pipe Material Change 04/30/19 -$9,000.00 0 W.D. Yes No No 05 Increase 16" PVC Pipe Pressure Class 04/30/19 $25,246.00 0 W.D. No No Yes 06 Furnish Granular Activated Carbon Absorption System 07/15/19 $854,079.70 0 W.D. No No No 07 Revised Paving on NB St. John Road 07/30/19 $143,062.50 0 W.D. No No No 08 Interior Tank Seal Welds 08/26/19 $22,050.00 0 W.D. No No No 09 Tank Cathodic Protection 10/04/19 $15,968.61 0 W.D. No No No 10 Tank Fall Protection 11/07/19 $5,092.61 0 W.D. No No No 11 Install Gacas, Infrastructure, and Ancillary Systems 11/27/19 $1,424,722.00 0 W.D. No No No 12 2KV Rated Cables For VFD Assemblies 12/15/19 $5,682.85 0 W.D. No No No 13 16" W Tie-in at Country Club Drive 06/26/20 -$4,718.68 0 W.D. No No No 14 Wet Grade At Pump Building 06/26/20 $9,666.01 0 W.D. No No No 15 Stanislaus County Encroachment Permit Fee
Reimbursement
06/26/20 -$80,000.00 0 W.D. No No No
16 Grandular Activated Carbon Absorption System
(GACAS) Installation Deferred Items
06/26/20 $140,469.00 0 W.D. No No No
17 Various Electrical, Instrumentation, and Controls
Changes
07/21/20 $20,520.59 0 W.D. No No No
18 Septic Distribution Box 07/21/20 $4,373.00 0 W.D. No No No 19 Revised Trench Drain 07/21/20 $2,563.07 0 W.D. No Yes No 20 Rock Slope Protection At Basin and West Swale 07/21/20 $34,000.00 0 W.D. No No Yes 21 Install Fire Hydrant Check Valves 09/21/20 $2,481.76 0 W.D. No No No 22 Well Head Modifications 09/21/20 $1,925.43 0 W.D. Yes No No 23 Relocate GAC Pipe Supports 09/21/20 $1,888.64 0 W.D. No Yes No 24 Revised Grading For Sliding Gage, Driveway, Curb and Gutter
09/21/20 $458.80 0 W.D. No Yes No
25 CCTV Ethernet Switch 09/21/20 $5,426.38 0 W.D. No Yes No 26 East Fence Line Closures and North Fence
Realignment
12/22/20 $1,532.13 0 W.D. No No Yes
27 Chemical Metering Pump Wiring 12/22/20 $920.00 0 W.D. No No Yes 28 DDW and City Punch List 12/22/20 $2,219.00 0 W.D. No No Yes 29 Change To Hydropneumatic Tank 12/22/20 $2,570.40 0 W.D. No No Yes 30 Load Bank Relocation 12/20/20 -$5,061.00 0 W.D. No No No 31 Conduit Tags 12/22/20 $6,755.16 0 W.D. No No Yes
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CHANGE
ORDER
NO. DESCRIPTION EXECUTED AMOUNT
CAUSE

UNFORSEEN

CONDITIONS
DESIGN
ISSUE
ADDED
SCOPE

CONTRACT CHANGE ORDER LOG
Date: October 04, 2022
TIME
EXT.
32 Pump Building Structural Changes 12/22/20 $12,000.00 0 W.D. No No Yes 33 St. John Irrigation Pipe 12/22/20 $15,000.00 0 W.D. No No Yes 34 Revised Electrical Drawings 02/28/21 $25,578.19 0 W.D. No No Yes 35 Chemical Room Piping 04/15/21 $2,035.20 0 W.D. No No Yes 36 Furnishings and Safety Equipment 04/15/21 $10,822.08 0 W.D. No No Yes Total Change Orders Processed To Date: $2,692,855.38
Original Contract Amount: $7,510,835.00
IDA To: $2,854,117.00
Total Working Days Time Extension: 0
Original Director's CCO Authority: $600,867.00
IDA Date: 5/5/2020
#13..
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Date:

Fund: 4180
Contact: Robert Davalos Ext. 15869
Capital/Non-Capital Project (CIP) #:

Project Creation: Non-Capital or Capital Project (Check One) Non-Capital Capital Project Name:

Project Description:

Council Acceptance/Project Completion Date:

Warranty Period (Yes/No) Yes Project Warranty End Date: 10/26/2023 Final Construction Contract Amount (including change orders):

Amount of Construction Cost categorized as Capital:

Project expenses include (Check one): Non-Capital Capital Capital and Non-Capital* * If project expenses include Capital and Non-Capital, provide and attach Itemized List of New Assets and Costs Open Commitments (Yes/No): Yes If Yes, list below:

Project Manager: Date:

Sr. Civil Engineer (Construction Admin.): Date:

Engineering Division Manager: Date:

Department Director: Date:

CFF/CFD Administrator: Date:

Financial Analyst (Budget): Date:

Director of Finance: Date:

Completed/Processed by: Date:

For projects under warranty period
100473
Utilities - Engineering
Reason for Suspend:
10/25/2022
$10,203,691.00
Project Suspension Form
10/3/2022
Requesting Department:

Project Organization: UPP Engineering Design
UPP Del Rio Water Tank
$9,840,165.90
This project will construct 0.25 million gallon steel water tank at Ladd Rd.

Project accepted at council, in warranty period
Authorization Signatures to Suspend Project
Horxon Water and Enviornment, Carollo Eng. NorthStar Eng. URS Corp. NV5 Last Revised 7/6/2021
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For both Non-Capital/Capital Projects
Verity Project Fund is correct.

Verify all encumbrances have cleared with zero balances once all costs are final.

GMS: Costing and Funds Check on Usage and Miscellaneous Costs PRC: Update Project Summary Amounts
PRC: Distribute Total Burdened Cost
For Non-Capital Projects
Enter and End Date in the Project Screen in Oracle.

For Capital Projects
Email the Asset Financial Analyst (Leslie Vaughn)of the closure (Capital Projects ONLY).

For both Non-Capital/Capital Projects
Email Project Closure Form to Requesting Department once completed.

File BT or AT if Budget Adjustment was necessary.

File Project Closure Form in the Closure Binder.

For Capital Projects that include Non-Capital expenses, include itemized list of new assets (schedule of values)
Before changing the Status to "Pending Close", attach a scanned copy of the signed Project Closure Form to the Project Screen.

Next change the Status to "Pending Close" and enter the date the Department Authorized the Project to be closed.

Email the Oracle Administrators (Nicole Hensley and Maria Garnica) to inactivate the Project Number on the General Ledger side of Oracle.

Finance Staff ONLY
Steps for Processing Project Closures
Grant Funded Projects - Verify with Program Manager and Financial Analyst in Accounting- that all final reporting and billing have been completed, and revenue has been received.

In Oracle, be sure to run the three processes individually after adjustments for both NonCapital/Capital Projects:

Before changing the Status to "Closed", attach a scanned copy of the signed Project Closure Form to the Project Screen in Oracle.

Email the Oracle Administrators (Nicole Hensley and Maria Garnica) to inactivate the Project Number on the General Ledger side of Oracle.

Last Revised 7/6/2021
#13..
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Pull-down Lists (DO NOT PRINT THIS PAGE)
Yes/No (Pulldown)
Yes
No
Department/Division (Pulldown List)
Community & Economic Development - Transportation Engineering Community & Economic Development -Land Development Engineering Community & Economic Development -Community Development Public Works - Traffic
Public Works - Streets
Public Works - Fleet
Utilities - Engineering
Utilities - Water
Utilities - Wastewater
Parks, Recreation & Neighborhoods
MPD
MFD
Last Revised 7/6/2021
#13..
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Date: 9/19/2022 11:55 AM
Del Rio Water Tank 100473
Capital Unsponsored
Organization : UPP.Engineering Design Category : Water Start Date : 01-JUL-2008 Hosting Fund : Water Fund - CIP Projects-4180 Type : Water End Date :

Element : Comm Svcs & Fac Area : System Wide Status : APPROVED Classification : Improvements Manager : Bryant, Tamorah Const. Code : Not Awarded Proj Desc : UPP - Del Rio Water Tank (100471)
Expenditure

PJTD BDGT
Previous Yr End
PJTD Actual
Previous Yr End
PJTD Available
Previous Yr End
PJTD Budget PJTD Actual PJTD Commit PJTD Available
CA Construction Admin 1,486,020.00 1,393,983.13 92,036.87 1,486,020.00 1,395,574.49 42,909.86 47,535.65 CCF City Construct Force 75,000.00 0.00 75,000.00 75,000.00 0.00 0.00 75,000.00 CON Construction 7,510,835.00 7,426,116.34 84,718.66 7,510,835.00 7,426,116.34 0.00 84,718.66 CTGY Contingency - CIP 2,854,117.00 2,777,574.06 76,542.94 2,854,117.00 2,777,574.06 0.00 76,542.94 EDA Eng/Design/Admin 1,792,108.00 1,722,730.32 69,377.68 1,792,108.00 1,724,450.31 44,376.39 23,281.30 ENV Environmental 374,018.00 326,404.76 47,613.24 374,018.00 326,404.76 47,612.90 0.34 LA Land Acquistion 311,115.00 311,115.35 -0.35 311,115.00 311,115.35 0.00 -0.35 Total 14,403,213.00 13,957,923.96 445,289.04 14,403,213.00 13,961,235.31 134,899.15 307,078.54 Net Total -445,289.04 -307,078.54
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CHANGE
ORDER
NO. DESCRIPTION EXECUTED AMOUNT
CAUSE

UNFORSEEN

CONDITIONS
DESIGN
ISSUE
ADDED
SCOPE

CONTRACT CHANGE ORDER LOG
Date: July 20, 2021
TIME
EXT.
2018/10 - Del Rio Tank No 14, Well No. 68 and Pump Station (100473) {Ladd Road at St Johns Road} PROJECT NUMBER AND NAME:
01 Revised Substantial Completion Date 04/30/19 $0.00 No Yes No 02 304 SS Trim On Butterfly Valves 04/30/19 -$2,206.00 0 W.D. No No No 03 Pump Building Underdrain Pipe Material Substitution 04/30/19 -$5,268.05 0 W.D. Yes No No 04 Storm Drain Pipe Material Change 04/30/19 -$9,000.00 0 W.D. Yes No No 05 Increase 16" PVC Pipe Pressure Class 04/30/19 $25,246.00 0 W.D. No No Yes 06 Furnish Granular Activated Carbon Absorption System 07/15/19 $854,079.70 0 W.D. No No No 07 Revised Paving on NB St. John Road 07/30/19 $143,062.50 0 W.D. No No No 08 Interior Tank Seal Welds 08/26/19 $22,050.00 0 W.D. No No No 09 Tank Cathodic Protection 10/04/19 $15,968.61 0 W.D. No No No 10 Tank Fall Protection 11/07/19 $5,092.61 0 W.D. No No No 11 Install Gacas, Infrastructure, and Ancillary Systems 11/27/19 $1,424,722.00 0 W.D. No No No 12 2KV Rated Cables For VFD Assemblies 12/15/19 $5,682.85 0 W.D. No No No 13 16" W Tie-in at Country Club Drive 06/26/20 -$4,718.68 0 W.D. No No No 14 Wet Grade At Pump Building 06/26/20 $9,666.01 0 W.D. No No No 15 Stanislaus County Encroachment Permit Fee
Reimbursement
06/26/20 -$80,000.00 0 W.D. No No No
16 Grandular Activated Carbon Absorption System
(GACAS) Installation Deferred Items
06/26/20 $140,469.00 0 W.D. No No No
17 Various Electrical, Instrumentation, and Controls
Changes
07/21/20 $20,520.59 0 W.D. No No No
18 Septic Distribution Box 07/21/20 $4,373.00 0 W.D. No No No 19 Revised Trench Drain 07/21/20 $2,563.07 0 W.D. No Yes No 20 Rock Slope Protection At Basin and West Swale 07/21/20 $34,000.00 0 W.D. No No Yes 21 Install Fire Hydrant Check Valves 09/21/20 $2,481.76 0 W.D. No No No 22 Well Head Modifications 09/21/20 $1,925.43 0 W.D. Yes No No 23 Relocate GAC Pipe Supports 09/21/20 $1,888.64 0 W.D. No Yes No 24 Revised Grading For Sliding Gage, Driveway, Curb and Gutter
09/21/20 $458.80 0 W.D. No Yes No
25 CCTV Ethernet Switch 09/21/20 $5,426.38 0 W.D. No Yes No 26 East Fence Line Closures and North Fence
Realignment
12/22/20 $1,532.13 0 W.D. No No Yes
27 Chemical Metering Pump Wiring 12/22/20 $920.00 0 W.D. No No Yes 28 DDW and City Punch List 12/22/20 $2,219.00 0 W.D. No No Yes 29 Change To Hydropneumatic Tank 12/22/20 $2,570.40 0 W.D. No No Yes 30 Load Bank Relocation 12/20/20 -$5,061.00 0 W.D. No No No 31 Conduit Tags 12/22/20 $6,755.16 0 W.D. No No Yes
#13..
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CHANGE
ORDER
NO. DESCRIPTION EXECUTED AMOUNT
CAUSE

UNFORSEEN

CONDITIONS
DESIGN
ISSUE
ADDED
SCOPE

CONTRACT CHANGE ORDER LOG
Date: July 20, 2021
TIME
EXT.
32 Pump Building Structural Changes 12/22/20 $12,000.00 0 W.D. No No Yes 33 St. John Irrigation Pipe 12/22/20 $15,000.00 0 W.D. No No Yes 34 Revised Electrical Drawings 02/28/21 $25,578.19 0 W.D. No No Yes 35 Chemical Room Piping 04/15/21 $2,035.20 0 W.D. No No Yes 36 Furnishings and Safety Equipment 04/15/21 $10,822.08 0 W.D. No No Yes Total Change Orders Processed To Date: $2,692,855.38
Original Contract Amount: $7,510,835.00
IDA To: $2,854,117.00
Total Working Days Time Extension: 0
Original Director's CCO Authority: $600,867.00
IDA Date: 5/5/2020
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: October 5, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: Accept Rebid Fire Station 5 Kitchen Remodel Project CONTACT: Pete Kambel, Senior Civil Engineer, [email protected], 209-577-5444 DESCRIPTION:

Consider approving an increase in the Director’s authority to issue Change Orders from 21% ($25,000) to 27% ($32,823) of the original construction contract price of $121,750; accepting the Rebid Fire Station 5 Kitchen Remodel Project as complete, authorizing all necessary steps to file with the County Recorder, releasing securities, and releasing payments totaling $154,573 to O.K.

Construction, of Antelope, CA. (Funding Source: General Fund) STRATEGIC PLAN ELEMENT:

BACKGROUND:

Fire Station 5 is a 55-year-old masonry building located at 200 W Briggsmore Ave. The scope of this project included renovations to the existing kitchen and office areas including new cabinets, countertops, appliances, flooring, and paint.

The project was advertised for bids on January 26, 2021. The bids were publicly opened on March 9, 2021, Modesto Municipal Code section 8-3.403 and City Charter Section 1307. Four bids were received and O.K. Construction of Antelope, CA was the apparent lowest bidder at

28.16% below the engineers estimate. The first two lowest bidders were deemed nonresponsive and the remaining two bids were above the engineer’s estimate by more than 15%.

For these reasons, staff recommended the rejection of all bids and the re-advertising of the project at a future date. This allowed staff time to re-evaluate the construction costs and scope of work to identify any clarifications to the bid package and adjustments to the engineer’s estimate and project budget.
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City Council October 25, 2022
Accept Rebid Fire Station 5 Kitchen Remodel

Page 2 of 3 ends

On April 13, 2021, by Resolution 2021-142, Council rejected all bids for the Fire Station 5 Kitchen Remodel Project, and authorized staff to re-advertise the project for bids at a future date with an amended scope of work.

DISCUSSION:

The Project was re-advertised for bids on April 27, 2021. Bids were publicly opened on May 25, 2021, pursuant to Modesto Municipal Code section 8-3.403 and City Charter Section 1307, and O.K. Construction, of Antelope, CA, was the responsible bidder at 28.16% above engineers estimate.

Only one bid was received from O.K. Construction, of Antelope, CA, which was 28.16% above the engineer’s estimate. Recent market volatility caused costs of lumber and metals to experience substantial increases and fluctuations. While the bid was above the engineer’s estimate, rebidding would likely have not resulted in lower bids.

On August 10, 2021, by Resolution No. 2021-326 Council awarded a contract to O.K.

Construction of Antelope, CA for the construction of the Rebid Fire Station 5 Kitchen Remodel project for the amount of $121,750. The contractor received the Notice to Proceed on October 25, 2021. All contract work was completed on April 4, 2022.

By accepting this project as complete, the City officially accepts the improvements made and authorizes the Notice of Completion to be filed. The City Clerk is authorized to complete all necessary steps to file the appropriate notices and documents with the County Recorder, release securities, and authorize payments totaling $154,573. The work is covered by a one-year warranty for any issues that may arise.

Staff recommends the project for acceptance as the contractor has complied with all contract requirements for the project.

FISCAL IMPACT:

The total project costs were $198,850 which included design, construction, and construction administration costs. The total project amount originally budgeted was $207,080 which included $146,750 for the construction contract and contingency with O.K. Construction of Antelope, CA.

The City’s “Change Order Approval Policy” enacted by Council Resolution No. 94-443 on July 19, 1994, and updated by Resolution No. 2019-326 on July 9, 2019, states that a contract of less than $250,000 allows Directors Authority not to exceed $25,000 of the contract amount.

The project had a total of 7 change orders resulting in an overall increase of $32,823. The change orders were executed for additional work and field adjustments listed on the attached change order log. Of that amount, $25,000 is approved for the original Directors Authority for change orders. The additional change order costs for the Fire Station 5 Kitchen Remodel project work are $7,823 greater than the original authorized change order authority. Additional costs were negotiated with the Contractor, due to cost escalation for work on the cabinetry, and are based on field-measured quantities of the work installed. These costs were funded by the Fire Department and no additional funding is requested at this time. This request is based on the need to document the additional Directors Authority needed to complete this project. #14..
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City Council October 25, 2022
Accept Rebid Fire Station 5 Kitchen Remodel

Page 3 of 3 ends

Staff requests Council approval to authorize an increase to the original Directors Authority of $25,000 to $32,823.

101234 – MFD – “Fire Station 5 Remodel”
PROJECT EXPENDITURES:

Construction Contract (O.K Construction) $121,750
Construction Contingency (Change Orders) 27% $32,823
Construction Administration – City Staff Support 31.8% $38,693 Engineering Design/ (Red Inc.) 10.6% $12,850
Engineering Design/Admin. – City Staff Support/Misc. 8.0% $9,793 TOTAL CONSTRUCTION EXPENDITURES: $215,909
*Percentages are based on Construction Contract amount.

COMMITTEE RECOMMENDATION:

This project was presented to the Finance Committee on June 3, 2020, as part of a report on upcoming construction projects. The Committee approved the list of projects and recommended that staff present the award of each project to Council upon successful bidding.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Rebid Fire Station 5 Kitchen Remodel Project as complete, authorizing all necessary steps to file with the County Recorder, releasing securities, and releasing payments totaling $154,573 to O.K. Construction, Antelope, CA.

Resolution authorizing an increase to the Director of Utilities authority for Change Orders for the Rebid Fire Station 5 Kitchen Remodel Project to the total amount of $32,823 (27% of the original contract price).

Approved by: _________________________________________
William Wong, Director of Utilities
_________________________________________
Joseph P. Lopez, City Manager
Attachments:

1. Resolutions (2)

2. CCO Log

3. Project Suspension Form
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2022-XX
RESOLUTION ACCEPTING THE REBID FIRE STATION 5 KITCHEN REMODEL

PROJECT AS COMPLETE, AUTHORIZING ALL NECESSARY STEPS TO FILE

WITH THE COUNTY RECORDER, RELEASING SECURITIES, AND RELEASING PAYMENTS TOTALING $154,573 TO O.K. CONSTRUCTION, ANTELOPE, CA WHEREAS, Fire Station 5 is a 55-year-old masonry building located at 200 W Briggsmore Avenue, and
WHEREAS, the scope of work included renovations to the existing kitchen and office areas including new cabinets, countertops, appliances, flooring, and paint, and WHEREAS, the project was originally advertised for bid on January 26, 2021, and bids were publicly opened on March 9, 2021, pursuant to Modesto Municipal Code section 8-3.403 and City Charter Section 1307, and
WHEREAS, four bids were received, and
WHEREAS, staff recommended the rejection of all four bids and the re-advertising of the project due to two bidders being deemed non-responsive and the remaining two bids coming in at more than 15% above the engineer’s estimate, and WHEREAS, on April 13, 2021, by Resolution 2021-142, Council rejected all bids for the Fire Station 5 Kitchen Remodel Project, and authorized staff to re-advertise the project for bids at a future date with an amended scope of work, and WHEAREAS, the project was re-advertised for bid on April 27, 2021, and WHEAREAS, bids were publicly opened on May 25, 2021, pursuant to City Charter Section 1307, and
WHEAREAS, only one bid was received from O.K. Construction, of Antelope, CA was the responsible bidder with the lowest responsive bid, and #14..
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2 WHEAREAS, on August 10, 2021, by Resolution No. 2021-326 Council awarded a contract to O.K. Construction of Antelope, CA for the construction of the Rebid Fire Station 5 Kitchen Remodel project for the amount of $121,750, and WHEREAS, the contractor received the Notice to Proceed with a first working day of October 25, 2021. All contract work was completed by April 4, 2022, and WHEREAS, the total project costs were $198,850 which included design, construction, and construction administration costs. The total project amount originally budgeted was $207,080 which included $146,750 for the construction contract and contingency with O.K. Construction, of Antelope, CA., and
WHEREAS, the City’s “Change Order Approval Policy” enacted by Council Resolution No. 94-443 on July 19, 1994, and updated by Resolution No. 2019-326 on July 9, 2019, states that a contract of at least $250,000 allows Directors Authority not to exceed $25,000 of the contract amount, and
WHEREAS, there were seven change orders on this project with an overall increase of $32,823, and
WHEREAS, the additional change order costs for the Fire Station 5 Kitchen Remodel project work are in excess of $7,823 of the original authorized change order authority, and WHEREAS, these costs were funded by the Fire Department and no additional funding is requested at this time, and
WHEREAS, this request is based on the need to document the additional Directors Authority needed to complete this project
WHEREAS, Staff requests Council approval to authorize an increase to the original Directors Authority of $25,000 to $32,823.
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3 WHEREAS, by accepting this project as complete, the City officially accepts the improvements made and authorizes the Notice of Completion to be filed.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that the Council adopt a Resolution Accepting The Rebid Fire Station 5 Kitchen Remodel Project as Complete, Authorizing All Necessary Steps To File With The County Recorder, Releasing Securities, and Releasing Payments Totaling $154,573 to O.K. Construction, Antelope, CA. #14..
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4 The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October, 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
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2022-XX

RESOLUTION AUTHORIZING AN INCREASE TO THE DIRECTOR OF UTILITIES AUTHORITY FOR CHANGE ORDERS FOR THE REBID FIRE STATION 5 KITCHEN REMODEL PROJECT TO THE TOTAL AMOUNT OF $32,823 (27% OF THE

ORIGINAL CONTRACT PRICE)
WHEREAS, on August 10, 2021, the City Council, by Resolution No. 2021-326, awarded a $146,750 contract to O.K. Construction, of Antelope, CA, for the construction of the Rebid Fire Station 5 Kitchen Remodel Project, and
WHEREAS, the project was funded by the General Fund, and WHEREAS, the Director’s authority of an additional 20.5 percent ($25,000) for change orders was authorized for the project, and
WHEREAS, the cost of the change order work has been estimated to be $32,823, an amount that exceeds the Director’s authority for the project as established by the Council’s Change Order Approval Policy adopted by Resolution No. 94-443, on July 19, 1994, and WHEREAS, the Director of Utilities currently has authority to approve change orders up to a cumulative amount of $25,000.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby authorizes the Director of Utilities to issue change orders on the Rebid Fire Station 5 Kitchen Remodel Project in the total amount of $32,823 (27% of the original contract price). #14..
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2 The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October, 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
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CHANGE
ORDER
NO. DESCRIPTION EXECUTED AMOUNT
CAUSE

UNFORSEEN

CONDITIONS
DESIGN
ISSUE
ADDED
SCOPE

CONTRACT CHANGE ORDER LOG
Date: September 09, 2022
TIME
EXT.
2021/16 - Fire Station 5 Kitchen Remodel (101234) Rebid ~Charge Appr Unit C/ Exp type “Services City-Interfund~”.

PROJECT NUMBER AND NAME:
01 6 Inch Rubber Base and Six Corner Protectors 03/11/22 $1,159.78 0 W.D. No Yes No 02 Paint Two Additional Doors and Frames 03/11/22 $875.48 1 W.D. No Yes No 03 Additional Lighting In Two Ofices and Hallway 03/11/22 $3,323.58 1 W.D. No Yes No 04 Electrical Power For Oven 03/11/22 $8,404.60 3 W.D. No Yes No 05 Raise Counters and Allocated Hot Water Line 07/15/22 $1,781.74 3 W.D. No Yes No 06 Raise Counters and Relocate Hot Water Line 07/15/22 $1,652.46 3 W.D. No Yes No 07 Cabinery Cost - send reso to 08/05/22 $15,625.00 0 W.D. No Yes No Total Change Orders Processed To Date: $32,822.64
Original Contract Amount: $121,750.00
IDA To:

Total Working Days Time Extension: 11
Original Director's CCO Authority: $25,000.00
IDA Date:
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Date: 9/7/2022 13:37 PM
Fire Station 5 Remodel 101234
Non-Cap Unsponsored
Organization : MFD.Administration and Officers Category : Start Date : 18-JAN-2020 Hosting Fund : Fire Department Unrestricted NonCapital Projects-0180Type : End Date :

Element : Area : Status : APPROVED
Classification : Manager : Tietjen, Timothy J Const. Code :

Proj Desc : MFD - Fire Station 5 Remodel
Revenue

PJTD BDGT
Previous Yr End
PJTD Actual
Previous Yr End
PJTD Available
Previous Yr End
PJTD Budget PJTD Actual PJTD Commit PJTD Available
60100 Transfer In from Fund 0100 93,580.00 93,580.00 0.00 93,580.00 93,580.00 0.00 0.00 63120 Transfer In from Fund 3120 113,500.00 113,500.00 0.00 113,500.00 113,500.00 0.00 0.00 Total 207,080.00 207,080.00 0.00 207,080.00 207,080.00 0.00 0.00 Expenditure

PJTD BDGT
Previous Yr End
PJTD Actual
Previous Yr End
PJTD Available
Previous Yr End
PJTD Budget PJTD Actual PJTD Commit PJTD Available
Appr Unit C Discretionary Expens 207,080.00 195,743.12 11,336.88 207,080.00 196,849.65 3,434.20 6,796.15 Total 207,080.00 195,743.12 11,336.88 207,080.00 196,849.65 3,434.20 6,796.15 Net Total -11,336.88 -6,796.15
#14..
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: October 5, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: William Wong, Director of Utilities
SUBJECT: First Amendment to Agreement with Bartle Wells Associates Wastewater Rate Study and Proposition 218 Assistance
CONTACT: William Wong, Director of Utilities, [email protected], 209-571-5801 DESCRIPTION:

Consider approving a First Amendment to the Agreement with Bartle Wells Associates, Berkeley, CA, for the Wastewater Rate Study & Proposition 218 Assistance in the amount of $29,900, for an amended total amount not to exceed $149,175. (Funding Source: Wastewater Fund)
STRATEGIC PLAN ELEMENT:

BACKGROUND:

On September 2, 2014, by Resolution 2014-334, Council approved an agreement with Carollo Engineers (Carollo), for consultant services to update the City’s Wastewater Master Plan which also included the preparation of a Wastewater System Engineer’s Report in an amount not to exceed $1,955,697.

On January 26, 2016, by Resolutions 2016-26 and 2016-27, Council approved the Wastewater System Engineer’s Report prepared by Carollo and the Wastewater Rate Study prepared by Bartle Wells Associates (BWA), respectively. In addition, by Resolution 2016-28, Council authorized staff to initiate the Proposition 218 process to increase wastewater rates.

On April 26, 2016, Council held a wastewater rate increase hearing for fiscal years 2016-17 through 2020-21; by Resolution 2016-181, Council adopted wastewater service rates effective July 1, 2016 in accordance with Proposition 218 and amended Resolutions 2007-463 and 2014- 129. Resolution 2016-181 also required that an annual review of the proposed maximum rate be conducted each year, and that the rate be acted upon by the Council prior to implementation. #15..
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Council Meeting, October 25, 2022
First Amendment to Agreement with Bartle Wells Associates Wastewater Rate Study and Proposition 218 Assistance

Page 2 of 3 ends

On June 6, 2017, staff conducted a review of the rates for FY 2017-18 adopted as part of the five-year schedule; by Resolution 2017-218 the FY 2017-18 adopted rate increase of 6% became effective September 1, 2017.

On March 13, 2018, staff conducted a review of the rates for FY 2018-19 adopted as part of the five-year schedule; by Resolution 2018-129 the FY 2018-19 adopted rate increase of 6% became effective July 1, 2018.

On October 22, 2019, staff conducted a review of the rates for FY 2019-20 adopted as part of the five-year schedule; by Resolution 2019-481 the FY 2019-20 adopted rate increase of 6% became effective January 1, 2020.

On September 22, 2020, staff conducted a review of the rates for FY 2020-21 adopted as part of the five-year schedule; by Resolution 2020-406 the FY 2020-21 approved rate increase of 4% will become effective January 1, 2021.

On December 8, 2020, by Resolution 2020-522, Council approved an agreement with Bartle Wells Associates for the preparation of the Wastewater Rate Study & Proposition 218 Assistance.

On April 12, 2022, by Resolution 2022-196 Council adopted wastewater service rates effective Fiscal Year 2022-23 through Fiscal Year 2026-27 which became effective July 1, 2022.

DISCUSSION:

The Wastewater Rate Study was initially scheduled to be completed by the end of 2021; Unfortunately, the project experienced delays due to additional analysis requirements and COVID related impacts.

The additional effort associated with the development, review and analysis of multiple operating and capital spending scenarios, information presentations to City staff, elected representatives and industry stakeholders resulted in an expansion of the original agreement’s scope and additional consultant charges. Therefore, staff is recommending a first amendment to the agreement with Bartle Wells Associates, Berkeley, CA, in the amount of $29,900.

FISCAL IMPACT:

To fully fund this effort an amendment to the Fiscal Year 2022-23 Operating Budget in the amount of $29,900 will be necessary in the following cost center:
4210-43110 Wastewater Rate Analysis

ANTICIPATED EXPENDITURES
Bartle Wells Associates - Agreement $119,275
Bartle Wells Associates - First Amendment to Agreement $29,900 TOTAL $149,175
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Council Meeting, October 25, 2022
First Amendment to Agreement with Bartle Wells Associates Wastewater Rate Study and Proposition 218 Assistance

Page 3 of 3 ends

COMMITTEE RECOMMENDATION:

This original request to enter into an agreement with Bartle Wells Associates was presented to the Finance Committee on October 26, 2020, where a recommendation was made that it be forward to Council. The First Amendment was not presented to Finance Committee as the wastewater rate study is complete and adopted. There will be no additional costs associated with this study, and staff will be able to close this contract out.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving a First Amendment to the Agreement with Bartle Wells Associates, Berkeley, CA, for the preparation of the Wastewater Rate Study & Proposition 218 Assistance in the amount of $29,900, for a revised total amount not to exceed $149,175, and authorizing the City Manager, or his designee, to execute the Agreement.

Approved by:

William Wong, Utilities Director
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Bartle Wells Associates – First Amendment to Agreement and Exhibit 1

3. Bartle Wells Associates – Agreement
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1 2022-

MODESTO CITY COUNCIL
RESOLUTION NO. 2022-?

RESOLUTION APPROVING A FIRST AMENDMENT TO THE AGREEMENT

WITH BARTLE WELLS ASSOCIATES, BERKELEY, CA, FOR THE
PREPARATION OF THE WASTEWATER RATE STUDY & PROPOSITION 218 ASSISTANCE IN THE AMOUNT OF $29,900, FOR A REVISED TOTAL AMOUNT NOT TO EXCEED $149,175, AND AUTHORIZING THE CITY

MANAGER, OR HIS DESIGNEE, TO EXECUTE THE AGREEMENT
WHEREAS, on December 8, 2020, per Resolution No. 2020-522, Council approved an agreement with Bartle Wells Associates for the preparation of a Wastewater Rate Study & Proposition 218 Assistance (Study), in an amount not to exceed $119,275; and
WHEREAS, the Study was initially scheduled to be completed by the end of 2021; unfortunately, the project experienced delays due to additional analysis requirements and COVID related impacts; and
WHEREAS, the additional effort associated with the development, review and analysis of multiple operating and capital spending scenarios, information presentations to City staff, elected representatives and industry stakeholders resulted in an expansion of the original agreement’s scope and additional consultant charges; and WHEREAS, on April 12, 2022, by Resolution 2022-196 Council adopted wastewater service rates effective Fiscal Year 2022-23 through Fiscal Year 2026-27 which became effective July 1, 2022; and
WHEREAS, staff is recommending a first amendment to the agreement with Bartle Wells Associates, Berkeley, CA, in the amount of $29,900; and #15..
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2 2022-
WHEREAS, in accordance with Modesto Municipal Code 8-3.2504(a) Exceptions to Formal Bidding Requirements, this amendment to the agreement is for professional services and, therefore, exempt from the bid requirement.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves a First Amendment to the Agreement with Bartle Wells Associates, for the preparation of a Wastewater Rate Study & Proposition 218 Assistance in an amount not to exceed $29,900 for the identified scope of services, for a revised maximum total amount of $149,175.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the First Amendment to the Agreement in a form approved by the City Attorney.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October 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:
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3 2022-
AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _______
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY:

JOSE M. SANCHEZ, City Attorney
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-1-

FIRST AMENDMENT TO AGREEMENT FOR PROFESSIONAL SERVICES

FOR THE PREPARATION OF A WASTEWATER RATE STUDY
& PROPOSITION 218 ASSISTANCE
This First Amendment to Agreement for Consultant Services is made with reference to the contractual agreement between the CITY OF MODESTO (“City”) and BARTLE WELLS ASSOCIATES, a California corporation (“Consultant”), entered into by the parties on the 8th day of December, 2020, hereinafter referred to as “Original Agreement”.

This First Amendment to Agreement for Professional Services is made with regard to the following recitals:

A. The Original Agreement between City and Consultant was approved via Council Resolution No. 2020-522.

B. Paragraph no. 9 “AMENDMENTS” of the Original Agreement acknowledges the parties understand it may become desirable or necessary for City or Consultant to modify the scope of services provided for under the Agreement and any such modification must be in writing signed by both parties.

C. Paragraph no. 3 “COMPENSATION” of the Original Agreement for Consultant Services specifies the sum of ONE HUNDRED NINETEEN THOUSAND TWO HUNDRED SEVENTY-FIVE AND 00/100 DOLLARS ($119,275) as the total compensation Consultant agrees to accept for performing all services and furnishing all staffing and materials for the project as well as performance by Consultant of all of its duties and obligations required in the Original Agreement.

D. On or about July 21, 2022 Consultant submitted to the City a budget augmentation for additional tasks requested by the City to be added to the Original Agreement for the completion of work related to the Preparation of a Wastewater Rate Study & Proposition #15..
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218 Assistance, attached hereto as Exhibit “1” and incorporated herein by this reference. Exhibit “1” identifies additional tasks to be performed by Consultant as well as Consultant’s costs for each additional task.

E. The estimated additional tasks result in increased costs as follows:

Task 1
Project Initiation & Data Collection

68.00 Task 2
Wastewater Financial Plan
2,953.00
Task 3
Wastewater Rate Study
11,182.00
Task 4
Reports, Meetings/Presentations & Prop 218
13,056.00
Task 5
Sewer Rate Proposition 218 Assistance
2,641.00
Total 29,900.00
F. The aforementioned estimated additional tasks increase the amount of the Original Agreement by TWENTY-NINE THOUSAND NINE HUNDRED AND 00/100 DOLLARS ($29,900). The amounts listed above are the estimated level of effort for each task.

In no case shall the total fee exceed the total contract amount under the Original Agreement and this First Amendment to Agreement without memorializing an additional written amendment to the original contract and must be signed by both parties.

G. The parties to the Original Agreement and to this First Amendment to Agreement now understand and agree that it is necessary to modify paragraph no. 1 entitled “SCOPE OF SERVICES” of the Original Agreement.

H. The parties to the Original Agreement and to this First Amendment to Agreement now understand and agree it is necessary to modify paragraph no. 3 entitled “COMPENSATION” of the Original Agreement.
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-3-
I. The parties to the Original Agreement and to this First Amendment to Agreement further understand and agree the Original Agreement is modified solely by the modifications contained in this First Amendment to Agreement and in no other way whatsoever.

NOW, THEREFORE, in consideration of this First Amendment to Agreement, and the mutual promises, covenants, and stipulations contained in the Original Agreement for Consultant Services and this First Amendment to Agreement, the parties agree as follows:

1. The parties agree that each of the recitals set out above is factually true and correct.

2. Paragraph 1 entitled “SCOPE OF SERVICES” of the Original Agreement shall be deleted and the parties agree to and hereby do substitute the following in its place:

SCOPE OF SERVICES.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached to the Original Agreement and referred to therein as Exhibit “A” or “Project”. In addition, Consultant shall undertake and complete the preparation of the scope of work as set forth and described in the documents attached to the First Amendment to Agreement and referred to herein as Exhibit “1”. The Consultant shall perform the services as described in the aforementioned Exhibit “A” and Exhibit “1” in a manner compatible with the standards of its profession and shall produce a fully complete project as described in Exhibit “A” and Exhibit “1” acceptable to City.
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-4-

3. Paragraph no. 3 entitled “COMPENSATION” of the Original Agreement between the parties shall be deleted and the parties agree to and hereby do substitute the following in its place:

COMPENSATION.

Consultant agrees to perform the work on a time and materials basis not to exceed ONE HUNDRED FOURTY NINE THOUSAND
ONE HUNDRED SEVENTY FIVE AND 00/100 DOLLARS
($149,175) (maximum compensation) for performing all services and furnishing all staffing and materials called for in Exhibits “A” and “B” to the Original Agreement and in Exhibit “1” to this First Amendment to Agreement as well as for performance by Consultant of all duties and obligations under the Original Agreement and the First Amendment to Agreement.

The compensation shall be paid pursuant to and in the manner and at the time set forth below:

Professional services received by the City under the Original Agreement and this First Amendment to Agreement shall be paid for on a “time and materials” basis with a “not to exceed” amount, as called for in Exhibits “A” and “B” of the Original Agreement and Exhibit “1” of the First Amendment to Agreement. Consultant shall prepare and City agrees to pay Consultant on time and materials for monthly billings, which include detailed tasks, hours worked, and billable rates for work completed. The local agency shall reimburse the CONSULTANT for actual costs (additional reimbursable expenses including, labor costs, #15..
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-5-
employee benefits, overhead, sub-consultant travel expenses and other direct costs) incurred by the CONSULTANT in performance of the work called for in Exhibits “A” and “B” of the Original Agreement and Exhibit “1” of this First Amendment to Agreement on the monthly billings, which include detailed receipts for actual costs paid by CONSULTANT in the interest of the project.

4. Except as herein amended or modified, the provisions of the Original Agreement are expressly reaffirmed and remain in full force and effect to the extent they are not in conflict with this First Amendment.

IN WITNESS WHEREOF, the City of Modesto, a municipal corporation, has authorized the execution of this First Amendment to Agreement for Consultant Services 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 _________ day of _______________, 2022, and BARTLE WELLS ASSOCIATES has caused this First Amendment to Agreement to be duly executed in duplicate. #15..
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2625 Alcatraz Ave, #602
Berkeley, CA 94705
Tel 510 653 3399
www.bartlewells.com
July 21, 2022
William S Wong, Director of Utilities
1010 Tenth Street, Suite 4600
Modesto, CA 95354
Re: Contract Amendment for Wastewater Rate Study
Bartle Wells Associates (BWA) is requesting an authorization additional budget authorization of $29,900 to complete the wastewater rate study. Through April 2022, BWA worked 336 hours beyond the project budget. The cost of this overage is $77,973. Per our discussion, BWA is requesting $29,900.

The work for the sewer study is complete and there will be no additional billing. While we regret that the cost has exceeded the initial budget, we believe the additional time and work invested has helped make the study a greater success.

The following are factors that contributed to BWA going over budget.  The project lasted five months longer than anticipated. Due to the project starting later than the proposed start date, Covid issues with staffing and workload, and additional analysis, the project lasted about five months longer than anticipated. During this time, the project team had about two to six meetings per month. These meetings required preparation, attendance, and follow-up.
 Additional work including:
o Reviewing, developing, and analyzing numerous capital spending scenarios o Updating all budget inputs when the next fiscal year budget completed o Informational presentations to the Finance Comittee and CanSeg representatives o Working with the City to ensure the billing data was used correctly in the rate models as the format of the billing reports had changed from the previous study Sincerely,

BARTLE WELLS ASSOCIATES
Douglas Dove, PE, President
Bartle Wells Associates
EXHIBIT 1
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SEWER BUDGET OVERAGE
CITY OF MODESTO SEWER RATE AND FEE STUDYBartle Wells AssociatesProject Budget Summary Sewer Overage Total Beginning N/A Ending
Project Budget D. Dove E. Helgeson M. Degroot 13-Jun-22 Budget TASK Budget Remaining $265 $225 $180 Mailing Cost Billing Remaining Task 1: Project Initiation $7,930.00 $0.00 0.99 $178.50 -$178.50 Task 2: Financial Plan $22,925.00 $0.00 3.6 29.99 $7,701.00 -$7,701.00Task 3: Rate Study $23,900.00 $0.00 16.0 106.76 5.0 $29,160.00 -$29,160.00Task 4: Reports Meetings and Presentations $14,020.00 $0.00 33.4 111.98 $34,047.00 -$34,047.00218 Mailing $48,000.00 $0.00 12.4 16.00 $6,886.00 -$6,886.00Subtotal $116,775.00 $0.00 65.4 264.7 6.0 $77,972.50 -$77,972.50Direct Expenses $2,500.00 $0.00 $0.00 Totals $119,275.00 $0.00 $77,972.50 -$77,972.50
Final Invoice After Amendment
Total Budget Overage $77,972.50
BWA Overage Which Will Not Be Billed -$48,072.50
Amendment Amount -$29,900.00
Remaining Contract $0.00
Final Invoice $29,900.00
# of hours
EXHIBIT 1 #15..
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: September 30, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jaylen French, Director of Community and Economic Development SUBJECT: Commercial Storefront Retailer Type 10 Business Permit Relocation Request Doctor’s Choice Dispensary (From 2039 Yosemite Avenue to 121 Phoenix Avenue, Modesto, CA 95350)
CONTACT: Sean M. Rando, Business Analyst, [email protected], 209-577-5473 DESCRIPTION:

Hearing to consider the relocation request of retail dispensary Doctor’s Choice from 2039 Yosemite Boulevard to 121 Phoenix Ave and granting a residential proximity waiver. (Funding Source: Cannabis Permit Application and Annual Permit Fees) STRATEGIC PLAN ELEMENT:

Allowing an established cannabis business to relocate and reinitiate operations will directly promote the goal of economic vitality which is consistent with the City Council 2020-2025 Strategic Plan Goal E, Drive Economy Vitality.

BACKGROUND:

Commercial Cannabis Businesses
In December 2017, the City Council adopted Ordinance 3684-C.S. legalizing certain commercial cannabis business operations, allowing up to ten (10) cannabis dispensaries with no limit on the number of non-dispensary businesses. Since that time, the City has approved eight (8) cannabis dispensary businesses, seven (7) of which are operational, as well as six (6) nondispensary cannabis businesses, three (3) of which are operational. In 2021 the Council formed a Cannabis Permit Review Committee (Committee) and delegated the authority to approve nondispensary and non-delivery cannabis businesses to said Committee.

Earlier this year, the Council expanded the role of the Committee to advise the Council on all cannabis-related issues and renamed the Committee, the Cannabis Program and Permit Review Committee.

Doctor’s Choice is one of the eight (8) currently licensed and permitted dispensaries approved within the City. Their original location, approved by council with a permit issued on December 19, 2018, is located at 2039 Yosemite Boulevard. The original lease term for this property #16..
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City Council, October 25, 2022
Commercial Storefront Retailer Type 10 Business
Permit Relocation Request Doctor’s Choice
Dispensary (From 2039 Yosemite Avenue to 121
Phoenix Avenue, Modesto, CA 95350)

Page 2 of 3 ends

commenced on December 1, 2018 and ended on November 30, 2021. When presented with new lease terms by the property owner, Doctor’s Choice opted to not renew the lease and pursue a new location that would be close in proximity to the area of their prior, approved location.

DISCUSSION:

Proposed Cannabis Retail location
The City’s Cannabis Ordinance, codified in part in Modesto Municipal Code (MMC) section 10-

3.703(a), requires retailer type 10 businesses to operate in commercial zone C-2, C-3, C-M, as well as industrial zone M-1 and M-2. The proposed location of 121 Phoenix Avenue is in a C-2 zone intended for general commercial purposes. MMC section 10-3.704(d) allows a commercial cannabis business to change physical locations if approved by the City. City staff has interpreted this to require approval by the Committee or Council; whichever body approved the original permit. The City Council is the approval authority for dispensaries and therefore must approve Doctors Choice’s relocation request. MMC section 10-3.703(b) levies further requirements that no commercial cannabis land use shall be located within one hundred (100) feet of any residential use. The proposed relocation site is approximately eighty-nine (89) feet from a residential area located to the west of the property based on a proximity study.

The Cannabis Ordinance allows for the waiver of proximity requirements by the City Council, if an impassible physical barrier exists between the commercial cannabis businesses and the land use that is causing a proximity issue. In December of 2018, during the original approval process for the eight (8) currently operating dispensaries, six (6) proposals requested waivers. Modesto City Council Resolution No. 2018-566 approved the waivers for the six requestees with the requirement that the dispensaries construct an impassable physical barrier.

Doctor’s Choice submitted revised security and site plans for the proposed site at 121 Phoenix Avenue to the City for review. These plans call for an 8-foot-high wrought iron fence with a locking gate to the rear of the business, which will provide the impassible physical barrier required in order for the Council to consider the proximity waiver. These plans were reviewed by the City’s consultant HdL as well as various City departments and they were found to be compliant with all state and local regulations.

FISCAL IMPACT:

The applicant has remitted the $6,380 cannabis permit application fee for the relocation, which covers staff and HdL costs for processing the application. The applicant will also remit the annual permit fee to cover on-going costs, which is currently set at $18,732. The business, upon resuming operations, will remit the cannabis excise tax, which is 8% of gross revenue for a retail commercial cannabis business.

COMMITTEE RECOMMENDATION:

This relocation request was presented to the Cannabis Program and Permit Review Committee on October 13, 2022 and was recommended to forward to Council for approval of the relocation and the granting of a residential proximity waiver.
#16..
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City Council, October 25, 2022
Commercial Storefront Retailer Type 10 Business
Permit Relocation Request Doctor’s Choice
Dispensary (From 2039 Yosemite Avenue to 121
Phoenix Avenue, Modesto, CA 95350)

Page 3 of 3 ends

CEQA/NEPA REQUIREMENTS:

The proposed location for the relocating of this commercial retail Type 10 business permit is exempt from the California Environmental Quality Act under the existing facilities exemption in Regulation 15301. The proposed project is permitted under the current zoning code.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the relocation of Type 10 Business Permit Relocation Request Doctor’s Choice Dispensary from 2039 Yosemite Avenue to 121 Phoenix Avenue, Modesto, CA 95350, and granting a residential proximity waiver.

Approved by:

Jaylen French, Director of Community and
Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Vicinity Map

3. Site Plan

4. Floor Plan

5. Security Plan
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION APPROVING THE RELOCATION REQUEST OF DOCTOR’S CHOICE DISPENSARY FROM 2039 YOSEMITE AVENUE TO 121 PHOENIX AVENUE, MODESTO CA 95350, AND GRANTING A RESIDENTIAL

PROXIMITY WAIVER
WHEREAS, the City Council has adopted a Commercial Cannabis Ordinance, Ordinance 3684-C.S., that established the City’s regulatory framework for commercial cannabis uses, and
WHEREAS, under Section 10-3.704(b) of the Ordinance, the City Council via Resolution 2017-525 established the total number of commercial cannabis permits issued by the City for cannabis dispensaries at ten maximum (10) permits, and WHEREAS, under Section 10-3.704(g) and City Council Resolution 2017-525, the City Manager designed the application forms and procedures for commercial cannabis dispensary renewal permits, with input from the City Council Ad Hoc Cannabis Committee, and
WHEREAS, City Council via Resolution 2018-566 issued a commercial cannabis permit to the following dispensary business, Doctor's Choice, located at 2039 Yosemite Ave., and
WHEREAS, on April 13, 2021 the City Council by Resolution No. 2021-132 established the Cannabis Permit Review Committee for the purpose of reviewing and approving commercial non-dispensary and non-delivery cannabis businesses, and WHEREAS, on March 1, 2022, the Council by Resolution No. 2022-109 expanded the role of the Cannabis Permit Review Committee to advise the Council on all #16..
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2 cannabis-related matters and renamed the Committee to the Cannabis Program and Permit Review Committee, and
WHEREAS, Doctor’s Choice requested relocation of the business from 2039 Yosemite Ave. to 121 Phoenix Ave. on November 8, 2021, and WHEREAS, pursuant to Modesto Municipal Code Section 10-3.704(d), a commercial cannabis business may move physical locations only upon City approval; and WHEREAS, the relocation request was heard at a properly noticed public hearing of the Cannabis Program and Permit Review Committee on October 13, 2022 with the committee recommending to forward to Council for approval of the relocation and the granting of a residential proximity waiver.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the relocation of Type 10 Business Permit Relocation Request Doctor’s Choice Dispensary from 2039 Yosemite Avenue to 121 Phoenix Avenue, Modesto, CA 95350, and granting a residential proximity waiver.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of October, 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:
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3 ATTEST: ____________________________
DIANE NAYARES-PEREZ, City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: __________________________________________
JOSE M. SANCHEZ, City Attorney
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City of Modesto
Community and Economic Development
Department
1010 Tenth Street, 3rd Floor
Modesto, CA 95354
CEDD – Phone: (209) 571-5566
Attachment: Proximity map created by CED Planning Division for 127 Phoenix Ave. #16..
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Description

AS NOTED
SHEET:
2/4/22
Documents prepared by Elevation
Design + Consulting are to be used
only for the specific project and
specific use for which they are
intended. Any extension of use to
other projects, by owner or any
other party, without the expressed,
written consent ofElevation Design +
Consulting is done at the user's own
risk. If used in a way other than that
specifically intended, user will hold
Elevation Design + Consulting
harmless from all claims and losses.
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SITE PLAN

DOCTOR'S CHOICE MODESTO, LLC
127 PHOENIX AVENUE
MODESTO, CA. 95354
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

October 25, 2022
Date: September 29, 2022
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jaylen French, Community and Economic Development Director SUBJECT: Award Stanislaus Regional Housing Authority Loans and Grants for the Development of Vine Street Affordable Housing Project
CONTACT: Jessica Hill, Community Development Manager
[email protected], 209-577-5321
DESCRIPTION:

Consider awarding Stanislaus Regional Housing Authority Loans and Grants in the total amount not to exceed $3,226,604 for the development of the Vine Street Affordable Housing Project including Vine Street Improvements and $100,000 for staff activity delivery costs. (Funding Source: Permanent Local Housing Allocation, HOME Investment Partnership, HOME Investment Partnership CHDO Set-Aside, and Community Development Block Grant Funds) STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto’s 2020-2025 Strategic Plan Goal C - Develop Homelessness and Housing Plan.

BACKGROUND:

The City of Modesto (City), Stanislaus Regional Housing Authority (Housing Authority), and Stanislaus Behavioral Health and Recovery Services (BHRS) have collaborated on the development of two complexes of affordable housing located on Vine Street.

On November 6, 2018, by Resolution number 2018-489, the City of Modesto awarded $280,000 in Community Development Block Grant (CDBG) to the Housing Authority for the acquisition of property located on Vine Street (APN: 030-010-042), between the Helen White Trail to the west, and S. Martin Luther King Dr to the east, for the future development of 34 affordable housing units.

Since the acquisition of the property in 2019, the Housing Authority has been developing the scope of the project and securing funding. This project is in partnership with BHRS – No Place Like Home funds and Mental Health Services Act (MSHA), and F&M Bank loan. It was determined that for this project to capitalize on the funding opportunities, the Housing Authority will utilize their non-profit arm Great Valley Development Corporation (GVDC), which is one of the City’s approved Community Housing Development Organizations (CHDO) as the developer for the project.
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City Council, October 25, 2022
Award Stanislaus Regional Housing Authority Loans and Grants for the Development of Vine Street Affordable Housing Project Page 2 of 5
The City is the direct recipient of several funding sources that are dedicated to the development of affordable housing within the City of Modesto. The City will use its HOME Investment Partnership (HOME), HOME CHDO Set-Aside, Permanent Local Housing Allocation (PLHA), and the Community Development Block Grant (CDBG) funds to complete development of the project.

DISCUSSION:

The Housing Authority as property owner, with GVDC as the developer, will construct 34 units of affordable housing in two separate housing complexes as well as Vine Street infrastructure and road improvements. The following describes the proposed project components:

King Kennedy Veterans Cottages
This gated development will consist of twenty-three (23) 580 square foot one-bedroom detached units with air conditioning, refrigerator, range, disposal, and laundry hookups or appliances in units. This development will be a permanent supportive housing complex serving Behavioral Health clients and veterans with incomes restrictions for designated units at or below 30% of the area median income (AMI). In partnership with BHRS, the development will offer these veterans, a permanent solution to their housing challenges and provide services as well as meeting room on site.

Helen White Court
This gated development will consist of twelve (12) units available to low-income seniors. These proposed one-bedroom and one-bath approximately 650 to 700 square foot attached units with air conditioning, refrigerator, range, disposal, and laundry hookups or appliances in units. The complex will serve those with incomes restrictions for designated units at or below 120% of the area median income (AMI). The complex will have a courtyard with a large, naturalized garden area. Off-site amenities, located within two (2) miles of the project locations include Public Transportation, Shopping, Medical Services, recreation, Schools, and Employment Center.

Vine Street Improvements
Vine Street is currently a private road, and not owned by the City. As a condition of approval through the City’s Planning approval process, the Housing Authority will be responsible for rightof-way acquisition, and curb, sidewalk, gutter, and pavement improvements from South Martin Luther King Drive to the concrete wall at the end of Vine Street that brings road up to City Standard creating a safe space that will support the increase in residential density.

Below is the breakdown of the development costs:

Uses of Funding Helen White Veteran Road
Repairs Totals
Total Unit
Construction Cost $2,202,224.00 $4,402,929.00 $6,423,153.00 Total Land Development Costs $2,921,638.00
Total Soft Costs $979,617.00
Total Development
& Financing Costs $3,186,909.00 $6,672,340.00 $465,160.00 $10,324,409.00 Hard Cost
Contingency (5%) $146,083.00 $305,406.00 $15,750.00 $467,240.00 Total Uses $3,332,992.00 $6,977,746.00 $480,910.00 $10,791,648.00 #17..
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City Council, October 25, 2022
Award Stanislaus Regional Housing Authority Loans and Grants for the Development of Vine Street Affordable Housing Project Page 3 of 5
To ensure that the project’s cost estimate was reasonable, the Housing Authority utilized a formal procurement process. Because of the increase in all costs and supply chain issues, the lowest responsible bidder came in with a total project cost of $10,791,648 including contingencies. Before approaching the City, the Housing Authority secured funding commitments totaling $7,565,044 or 70% of the total project cost. Staff is proposing that the City funds the project gap totaling $3,226,604. This funding commitment is 30% of the total project cost. One of the funding commitments in the amount of $1,884,671 in State of California No Place Like Home Program that was committed to this project in 2019 is in jeopardy if this project cannot secure this funding and begin construction as soon as possible.

If funded, the Housing Authority and GVHD is prepared to start construction immediately, and the project will be completed by December 2024.

Below is the breakdown of all the Sources of Funding for this project:

Sources of Funding Helen White Veteran Road Repairs Totals F&M Bank Loan $835,741.00 $1,876,301.00 $2,712,042.00
Stanislaus Regional $541,440.00 $541,440.00
Total Housing Authority $3,253,482.00
Round 1 NPLH $680,645.00 $1,204,026.00 $1,884,671.00
Stanislaus County BHRS $2,100,000.00 $2,100,000.00
Stanislaus County BHRS $326,891.00 $326,891.00
Total Stanislaus County $4,311,562.00
Modesto’s Proposed Funding
City of Modesto PLHA Loan $958,723.00 $958,723.00
City of Modesto CDBG Grant $480,910.00 $480,910.00
City of Modesto HOME CHDO Loan $195,512.43 $195,512.43
City of Modesto HOME Loan $857,883.00 $733,575.57 $1,591,458.57 Total Modesto $3,226,604.00
Total Sources $3,332,992.00 $6,977,746.00 $480,910.00 $10,791,648.00 FISCAL IMPACT:

The funding for this program will come from the following sources:
 State of California’s Department of Housing and Community Development, and project budget will transfer $958,723 from fund (1120) – Grants – PLHA Program to Vine Street project (101185).
 U.S. Department of Housing and Urban Development CDBG, and project budget will transfer $480,910 from fund (1130) – CDBG Direct Programs to Vine Street project (101185)
 U.S. Department of Housing and Urban Development HOME CHDO-Set-Aside, and project budget will transfer $195,512.43 from fund (1170) – HOME Investment Partnership Program to Vine Street project (101185)
 U.S. Department of Housing and Urban Development, and project budget will transfer $1,591,458.57 from fund (1170) – HOME Investment Partnership Program to Vine Street project (101185)
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City Council, October 25, 2022
Award Stanislaus Regional Housing Authority Loans and Grants for the Development of Vine Street Affordable Housing Project Page 4 of 5
There will be no impact to the General Fund.

COMMITTEE RECOMMENDATION:

On October 13, 2022 Citizen Housing and Community Development Committee (CH&CDC) approved an award to Stanislaus Regional Housing Authority with Great Housing Development Corporation as developer in the total amount not to exceed $3,226,604 in the form of loans and grants for the development of the Vine Street affordable housing project including the Vine Street road improvements and $100,000 for staff activity delivery costs and recommended forwarding to Council for approval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the Award of Loans and Grants to Stanislaus Regional Housing Authority with Great Housing Development Corporation as developer in the total amount not to exceed $3,226,604 for the development of the Vine Street Affordable Housing Project including the Vine Street Road Improvements and $100,000 for staff activity delivery costs and authorizing the City Manager or designee to execute Agreements.

Resolution amending the Fiscal Year 2022-2023 multi-year fund budget (101193) to increase the budget of the Vine Street Project Fund (101185) with Community Development Block Grant (CDBG) Funds, Home Investment Partnership Funds (HOME) Home Community Housing Development Organizations (CHDO) Set Aide and Permanent Local Housing Allocation (PLHA) for development of the Vine Street Affordable Housing Project totaling $3,226,604 and an additional $100,000 budgeted for activity delivery costs and budgeting the necessary transfers and authorizing the City Manager or his designee to take the necessary steps to implement the provisions in this Resolution.

Approved By: _______________________________________________ Jaylen French, Community and Economic Development Director _______________________________________________
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Budget Resolution

3. PLHA Loan Agreement

4. PLHA Regulatory Agreement

5. PLHA Deed of Trust

6. PLHA Promissory Note

7. CDBG Grant Agreement

8. HOME-CHDO Loan Agreement

9. HOME-CHDO Regulatory Agreement

10. HOME-CHDO Deed of Trust

11. HOME-CHDO Promissory Note

12. HOME Loan Agreement

13. HOME Regulatory Agreement

14. HOME Deed of Trust
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City Council, October 25, 2022
Award Stanislaus Regional Housing Authority Loans and Grants for the Development of Vine Street Affordable Housing Project Page 5 of 5

15. HOME Promissory Note
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10-25-2022/C&ED/JHill 1 2022-

MODESTO CITY COUNCIL
RESOLUTION NO. 2022-

RESOLUTION APPROVING THE AWARD OF LOANS AND GRANTS TO

STANISLAUS REGIONAL HOUSING AUTHORITY WITH GREAT HOUSING

DEVELOPMENT CORPORATION AS DEVELOPER IN THE TOTAL AMOUNT NOT TO EXCEED $3,226,604 FOR THE DEVELOPMENT OF THE VINE

STREET AFFORDABLE HOUSING PROJECT INCLUDING THE VINE
STREET ROAD IMPROVEMENTS AND $100,000 FOR STAFF ACTIVITY

DELIVERY COSTS AND AUTHORIZING THE CITY MANAGER OR

DESIGNEE TO EXECUTE AGREEMENTS
WHEREAS, the City, Stanislaus Regional Housing Authority (Stan Regional), and Stanislaus Behavioral Health and Recovery Services (BHRS) have been collaborating on the development of two complexes of affordable housing located on Vine Street; and
WHEREAS, on November 6, 2018, by Resolution number 2018-489, the City of Modesto awarded $280,000 in Community Development Block Grant (CDBG) to the Stanislaus Regional Housing Authority for the acquisition of property located on Vine Street (APN: 030-010-042), between the Helen White Trail to the west, and S. Martin Luther King Dr to the east, for the future development of 34 affordable housing units; and WHEREAS, since the acquisition of the property in 2019, the Stanislaus Regional Housing Authority has been further developing the scope of the project and securing funding; and
WHEREAS, in partnership with Stanislaus Behavior Health and Recovery Services (BHRS) – No Place Like Home Program funds, Mental Health Services Act (MSHA), and F&M Bank loan have determined that for this project to capitalize on the funding opportunities, it needs to be passed from Stanislaus Regional Housing Authority as developer to their non-profit arm Great Valley Development Corporation (GVDC) that #17..
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10-25-2022/C&ED/JHill 2 2022-
is one of the City’s approved Community Housing Development Organizations (CHDO); and
WHEREAS, as a direct recipient of several funding sources that are dedicated to the development of affordable housing within the City of Modesto, the City will use its HOME Investment Partnership (HOME), The HOME CHDO Set-Aside, Permanent Local Housing Allocation (PLHA), and the Community Development Block Grant (CDBG) funds to bring the full scope of this project into realization; and WHEREAS, Stanislaus Regional, as property owner, with Great Valley Development Corporation, as the developer, will produce 34 units of affordable housing that will result in two separate housing complexes and incidental Vine Street related infrastructure improvements; and
WHEREAS, King Kennedy Veteran Cottages will result in gated development consisting of twenty-three (23) 580 sq. ft. one-bedroom detached units with stove, refrigerator, dishwasher, microwave, and laundry unit. The complex will include one management unit; and
WHEREAS, it will be a permanent supportive housing complex for veterans with incomes restrictions for designated units at or below 30% of the area median income (AMI) that will be in partnership with BHRS, the development will offer these veterans a permanent solution to their housing challenges and provide services as well as an on-site meeting room; and
WHEREAS, The Helen White Court will result in a gated development that consist of twelve (12) units available to low-income seniors and one (1) manager unit; and
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10-25-2022/C&ED/JHill 3 2022-
WHEREAS, these proposed 1 bedroom and 1 bath approximately 650 to 700 sq. ft. attached units with incomes restrictions for designated units at or below 120% of the area median income (AMI) include a courtyard with a large, naturalized garden area utilizing boulders and cobblestone to create a rustic setting with trees for shading and benches for sitting and conversation in the center of the complex; and WHEREAS, Vine Street is currently a private road, and not owned by the City.

As a condition of approval through the City’s Planning approval process, the Stanislaus Regional Housing Authority will be responsible for right-of-way acquisition, curb, sidewalk, gutter, and pavement repairs from South Martin Luther King Drive to the concrete wall at the end of Vine Street that brings road up to City Standard creating a safe space that will support the increase in residential density; and WHEREAS, in order to ensure that the project’s cost estimate was reasonable, Stan Regional has already proceeded with the formal procurement process; and WHEREAS, because of the increase in all costs and supply chain issues the lowest responsible bidder came in with a total project cost of $10,791,648 including contingencies and before approaching the City of Modesto, Stan Regional had secured funding commitments totaling $7,565,044 or 70% of the total project cost; and WHEREAS, one of the funding commitments in the amount of $1,884,671 in State of California No Place Like Home Program that was committed to this project in 2019 is in jeopardy if this project cannot secure this funding and begin construction as soon as possible and it has been noted that this is the last project funded during that grant cycle that has not started construction; and
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10-25-2022/C&ED/JHill 4 2022-
WHEREAS, this funding commitment is 30% of the total project cost, and less than $95,000 per unit; and
WHEREAS, staff proposes that the City funds the project gap totaling $3,226,604; and
WHEREAS, staff proposes the project be allocated as a PLHA funded Loan in an amount not to exceed $958,723; and
WHEREAS, staff proposes the project be allocated as a CDBG funded Grant in an amount not to exceed $480,910; and
WHEREAS, staff proposes the project be allocated as a HOME CHDO Set-Aside funded Loan in an amount not to exceed $195,512.43; and WHEREAS, staff proposes the project be allocated as a HOME Entitlement funded Loan in an amount not to exceed $1,591,458.57; and WHEREAS, all loans shall be for a term of 55 years, with 1% simple interest, deferred until the end of the loan term.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the award of the following grants and loans to Stanislaus Regional Housing Authority with Great Housing Development Corporation for the development of the Vine Street affordable housing project including the Vine Street road improvements and $100,000 for staff activity delivery costs:

1. A PLHA funded loan in an amount not to exceed $958,723; and

2. A CDBG funded grant in an amount not to exceed $480,910; and

3. A HOME CHDO Set-Aside funded loan in an amount not to exceed $195,512.43; and
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10-25-2022/C&ED/JHill 5 2022-

4. A HOME Entitlement funded Loan in an amount not to exceed $1,591,458.57.

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.
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25h day of October, 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
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10-25-2022/C&ED/JHill 1 2022-

MODESTO CITY COUNCIL
RESOLUTION NO. 2022-
RESOLUTION AMENDING THE FISCAL YEAR 2022-2023 MULTI-YEAR FUND BUDGET (101193) TO INCREASE THE BUDGET OF THE VINE STREET PROJECT FUND (101185) WITH COMMUNITY DEVELOPMENT

BLOCK GRANT (CDBG) FUNDS, HOME INVESTMENT PARTNERSHIP

FUNDS (HOME) HOME COMMUNITY HOUSING DEVELOPMENT

ORGANIZATIONS (CHDO) SET AIDE AND PERMANENT LOCAL HOUSING

ALLOCATION (PLHA) FOR DEVELOPMENT OF THE VINE STREET
AFFORDABLE HOUSING PROJECT TOTALING $3,226,604 AND AN
ADDITIONAL $100,000 BUDGETED FOR ACTIVITY DELIVERY COSTS AND

BUDGETING THE NECESSARY TRANSFERS AND AUTHORIZING THE

CITY MANAGER OR HIS DESIGNEE TO TAKE THE NECESSARY STEPS TO

IMPLEMENT THE PROVISIONS IN THIS RESOLUTION
WHEREAS, the City of Modesto is applying to receive entitlement funding from the State of California Housing and Community Development Department (HCD) based on its entitlement status of the U.S. Department of Housing and Urban Development Community Development Block Grant Program; and
WHEREAS, each year the City of Modesto receives Community Development Block Grant (CDBG), and HOME Investment Partnership Grant (HOME) funds from the U.S. Department of Housing and Urban Development (HUD); and WHEREAS, the fiscal year 2022-2023 Multi-Year budget must be amended to increase the budget of Vine Street Project (101185) to total $3,226,604 in project expenses and $100,000 in activity delivery costs, to budget the revenues and expenses in the CDBG and PLHA programs and budget any necessary transfers.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it amends the fiscal year 2022-2023 multi-year fund budget to increase the budget to $3,326,604 for the Vine Street project (101185).
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BE IT FURTHER RESOLVED by that Council of the City of Modesto that it authorizes the City Manager or his designee to take the necessary steps to implement the provisions of this resolution.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25h day of October, 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
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THIS AFFORDABLE HOUSING LOAN AGREEMENT (this “Agreement”) is entered into effective as of ____________________, 2022 (the “Effective Date”) by and between the City of Modesto, a California charter city (“City”), Housing Authority of the County of Stanislaus, a public body corporate and politic (“Developer”), and Great Valley Housing Development Corporation, a California nonprofit public benefit corporation (“Developer”). City, Owner, 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. Developer owns that certain real property located on Vine Street, between the Helen White Trail to the west and S. Martin Luther King Drive to the east, in the City of Modesto, California, also known as Stanislaus County Assessor Parcel Number 030-010-042, as further described in Exhibit A, attached hereto and incorporated herein (the “Property”).

D. Developer intents to construct 35 residential units on the Property (the “Project”).

The Project will consist of two parts. One portion of the Project will consist of twenty-three (23) one-bedroom detached units, including one manager’s unit (“King Kennedy Veterans Cottages”).

The King Kennedy Veterans Cottages will be reserved for veterans. The second portion of the Development will consist of twelve (12) one-bedroom attached units (the “Helen White Court”).

Helen White Court will be reserved for seniors.

E. All units in the Project, except for one manager’s unit in the Helen White Court, are proposed to serve households with incomes that are between fifty percent (50%) and eighty percent (80%) of the Area Median Income for Stanislaus County. Seventeen of these units will be designated as PLHA funded units.

F. The Developer has requested, and the City has agreed to provide the Developer with a loan of Nine Hundred and Fifty-Eight Thousand Seven Hundred and Twenty Three Dollars ($953,723) 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.
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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

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 #17..
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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. (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 the Developer to develop the Project, City agrees to provide a Loan to Developer in the principal amount of Nine Hundred Thousand Dollars ($900,000). 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 #17..
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deposit the Loan Proceeds into escrow for development of the Project, or to such other fund reasonably acceptable to the City.

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. #17..
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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:
(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 three percent (3%) 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 Loan Proceeds are disbursed, 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
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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 of the Project, which shall consist of twenty-three (23) one-bedroom detached units twelve (12) one-bedroom attached units. Thirty-four (34) of the units will be reserved for occupancy by households with incomes that are between fifty percent (50%) and eighty percent (80%) of the Area Median Income for Stanislaus County, and one (1) unit will be an unrestricted manager’s unit, 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 issuance of a Final Certificate of Occupancy 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 #17..
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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, 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 #17..
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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.

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
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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 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. #17..
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(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. (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 #17..
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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.

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.
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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 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 #17..
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construction, rehabilitation, use or maintenance of residential property and used, stored and disposed of in compliance with Hazardous Materials Laws, and (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 #17..
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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 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.
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ARTICLE IX

DEFAULTS, REMEDIES AND TERMINATION

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 #17..
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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 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 #17..
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such rights or remedies, nor deprive either Party of its rights to institute and maintain any action 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. #17..
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(b) Developer shall maintain a comprehensive automobile liability coverage in the 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
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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 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
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Developer: Great Valley Housing Development Corporation P.O. Box 581918
Modesto, CA 95358
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 #17..
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the entire agreement between the Parties with respect to the subject matter hereof, and supersedes 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.
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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.
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IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

DEVELOPER:

Great Valley Housing Development, a public body
corporate and politic,
By: ______________________________________
, Executive Director
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
[City Signature Follows]
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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, City Attorney
APPROVED AS TO RISK MANAGEMENT:

By: _________________________________
Joe F. Rodriguez, Risk Manager
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Exhibit A

LEGAL DESCRIPTION
(Attach Legal Description.)
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B-1
Exhibit B

FORM OF SECURED PROMISSORY NOTE
(Attach form of Note.)
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C-1
Exhibit C

FORM OF DEED OF TRUST
(Attach form of Deed of Trust.)
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D-1
Exhibit D

FORM OF REGULATORY AGREEMENT
(Attach form of Regulatory Agreement.)
5028599.1
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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:_030-010-042 Space above this line for Recorder’s use.

REGULATORY AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(Vine Street – PLHA Loan)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") is dated as of ________, 2022, and is between the City of Modesto, a California charter city (“City”) and Stanislaus Regional Housing Authority, a public body corporate and politic (“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 generally located on Vine Street, between the Helen White Trail to the west and S. Martin Luther King Drive to the east, in the City of Modesto, California, also known as Stanislaus County Assessor Parcel Number 030- 010-042, as further described in Exhibit A, attached hereto and incorporated herein (the “Property”). Developer intends to develop an affordable multifamily housing development on the Land consisting of twenty-three (23) one bedroom detached units and twelve (12) onebedroom attached 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 Nine Hundred and Fifty-Eight Thousand Seven Hundred and Twenty Three Dollars ($953,723) 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”). #17..
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Due to the assistance provided Developer pursuant to the Agreement, Developer has agreed that thirty-four of the units in the Development shall be shall be affordable to; and seventeen units will be designated as PLHA units and be occupied by or available for occupancy by; households with incomes that are between fifty percent (50%) and eighty percent (80%) of the Area Median Income 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 seventeen (17) 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.
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(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, _______________, as trustee, and the City, as beneficiary, that will encumber the 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 eighty percent (80%) of Area Median Income, adjusted for actual household size.
(k) "Low Income Units" means the Units which, pursuant to Section 2.1(a) 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 from 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 (55) years from the Competition of Construction, but in no event later than December 31, 2079 (subject to extensions agreed upon by the Partners).
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(r) "Unit(s)" means one (1) or more of the units in the Development.

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 thirty -four (34) of the units in the Development to, and ensure that these Seventeen (17) Units are occupied or, if vacant, available for occupancy, by households with incomes that are between fifty percent (50%) and eighty percent (80%) of the Area Median Income (the “Assisted Units”). The Assisted Unis shall be broken down as follows:

Attached Units Detached Units
6 units 11 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 #17..
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(30%) of the seventy percent (70%) 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.

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 #17..
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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 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. #17..
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(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 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 #17..
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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.

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 Housing Authority of the County of Stanislaus. 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 #17..
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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 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 #17..
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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 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 Housing Authority of the County of Stanislaus 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 #17..
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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 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. #17..
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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:
(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, #17..
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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 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 #17..
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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 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, #17..
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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 Regional Housing Authority P.O. Box 581918
Modesto, CA 95358
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]
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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 Regional Housing Authority, a public body
corporate and politic
By: ______________________________________
, Executive Director
Date: ______________________________________
By: ______________________________________
Date: ______________________________________
[City Signature Follows]
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Regulatory Agreement
Signature Page
CITY:

By: ___________________________
Jose M. Sanchez, City Attorney
APPROVED AS TO RISK MANAGEMENT:

By: _________________________________
Joe F. Rodriguez, Risk Manager

SIGNATURES MUST BE NOTARIZED
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STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
______________________________________
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. #17..
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A-1

EXHIBIT A

LEGAL DESCRIPTION
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C-1

EXHIBIT B

INITIAL/ANNUAL CERTIFICATE OF

PROGRAM COMPLIANCE
Housing Authority of the County of Stanislaus, a public body corporate and politic, a California limited partnership ("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:

Seventeen (17) units are being made available to Low Income Households. Of these 17 units, six (6 ) shall be attached units, and eleven (11) shall be detached units.

During the term of the Regulatory Agreement the Owner will ensure that these units are occupied or, if vacant, available for occupancy, by Low Income Households.

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: ________________________________
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C-2
1669\01\2466400.1

CERTIFICATE OF

CONTINUING PROGRAM COMPLIANCE
The following information is being provided by Housing Authority of the County of Stanislaus, a public body corporate and politic (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:
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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 Low Income Households). 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.]
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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:

HOUSING AUTHORITY OF THE COUNTY OF
STANISLAUS, a public body, corporate and politic
By: ______________________________________
___________, Executive Director
Date: ______________________________________
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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 #17..
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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
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(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)
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I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

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
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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: 030-010-042 Space above this line for Recorder’s use.

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
(Vine Street – PLHA Loan)

THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is entered into as of ______________, 2022, by Stanislaus Regional Housing Authority, a public body corporate and politic, a California nonprofit public benefit corporation, a public body corporate and politic (“Trustor”) to _________________ (“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 generally located on Vine Street, between the Helen White Trail to the west and S. Martin Luther King Drive to the east, in the City of Modesto, California, also known as Stanislaus County Assessor Parcel Number 030- 010-042, as further described in Exhibit A, attached hereto and incorporated herein (the “Land”). Trustor intends to develop an affordable multifamily housing development on the Land consisting of twenty-three (23) one-bedroom detached units twelve (12) one-bedroom attached 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 of Nine Hundred and Fifty-Eight Thousand Seven Hundred and Twenty-Three Dollars ($953,723) (“Loan”) for the purpose of developing affordable housing. 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 #17..
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5028657.1 2
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 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 #17..
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5028657.1 3
Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”);
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 #17..
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5028657.1 4
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, 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 #17..
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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 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.
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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 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 #17..
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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 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. #17..
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7.10 Hazardous Materials.
(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 #17..
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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 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 #17..
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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' 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 #17..
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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 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 #17..
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secured by this Deed of Trust

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 #17..
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Deed of Trust, and does not cure that failure within ten (10) days following written notice from Beneficiary or Trustee;
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 #17..
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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 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 #17..
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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 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 #17..
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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 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.
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10.1 Additional Provisions. The Loan Documents grant further rights to Beneficiary 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 Regional Housing Authority
P.O. Box 581918
Modesto, CA 95358
Attn: Executive Director
Trustee: ____________
____________
____________

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, #17..
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successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided 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 #17..
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approval, notice, direction, or consent in a timely manner. In any approval, consent, or other 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 Regional Housing Authority, a public body corporate and politic
By: ______________________________________
___________, Executive Director
Date: ______________________________________
SIGNATURES MUST BE NOTARIZED.
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Exhibit A
LAND
(Attach legal description.)
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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
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5028665.1 1

SECURED PROMISSORY NOTE
(Vine Street - PLHA Loan)
$958,723 Modesto, California
_______________, 2022
FOR VALUE RECEIVED, Stanislaus Regional Housing Authority, a public body corporate and politic (“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 Nine Hundred and Fifty-Eight Thousand Seven Hundred and Twenty Three Dollars ($953,723), or so much thereof as may be advanced by City pursuant to the Agreement referred to below, with three percent (1%) 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%) interest on the outstanding 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. 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 fiftyseventh (57th) anniversary of the date the Regulatory Agreement is recorded against the Property (“Term”).
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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 3300, 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"):
(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; #17..
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(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 of Borrower or of the right of City to take further action without notice or demand as provided in this Note
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(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 Regional Housing Authority
P.O. Box 581918
Modesto, CA 95358
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. (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. #17..
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(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 Regional Housing Authority, a public body
corporate and politic
By: ______________________________________
___________, Executive Director
Date: ______________________________________
5028665.1
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3337579.3 1

CITY GRANT AGREEMENT
(City of Modesto CDBG Grant)
(Vine Street Road Repairs)
This Grant Agreement (this “Agreement”) is entered into as of ____________________, 2022, by and between the City of Modesto, a California charter city (the “City”) and Stanislaus Regional Housing Authority, a public body corporate and politic (“Recipient”). City and Recipient are collectively referred to in this Agreement as the “Parties.”

RECITALS
A. Defined terms used but not defined in these recitals have the meaning ascribed to them in Article 1 of this Agreement.

B. The City has received funds from HUD under Title I of the Housing and Community Development Act of 1974, as amended (the “CDBG Funds”). The CDBG Funds must be used by the City in accordance with 24 CFR 570 et seq. and the CDBG Regulations.

D. The Recipient has proposed to develop the road to City, as defined by HUD, who are experiencing crisis, housing instability, and or/homelessness, as more particularly described in the project summary attached hereto as Exhibit B and incorporated herein by this reference (the “Project”).

E. City wishes to give to Recipient a grant of Four Hundred and Eighty Thousand Nine Hundred and Ten Dollars ($480,910) (the “Grant”) of CDBG funds to help finance the offsite repairs of the Property for the purposes of constructing the Project thereon F. Concurrently herewith: (i) Recipient and City shall execute a Regulatory Agreement and Declaration of Restrictive Covenants (the “Regulatory Agreement”), which shall be recorded against the Property and which shall require Project rents to be affordable to low households for a term of not less than thirty (30) years; and (ii) Recipient shall execute a Deed of Trust (“Deed of Trust”), which shall secure Recipient’s performance of the Regulatory Agreement. This Agreement, the Regulatory Agreement and Deed of Trust are collectively hereinafter referred to as the “Grant Documents.”
G. The Grant is being made to finance acquisition of the Property in order to help achieve financial feasibility for the Project and to increase the supply of continuum of care services of homeless or at-risk youth in in the City.
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H. The California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) (“CEQA”) imposes no conditions on the City's consideration and approval of this Agreement because the Project is exempt from CEQA requirements under the categorical exemption set forth in 14 California Code of Regulations Section 15303(b).

I. In accordance with the National Environmental Policy Act of 1969, as amended (42 USC 4321-4347) (“NEPA”), the City has completed and approved all applicable environmental review for the activities proposed to be undertaken under this Agreement.

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 1 DEFINITIONS AND EXHIBITS
Section 1.1 Definitions
The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided:
“Agreement” means this Grant Agreement.
“Approved Project Budget” means the proforma development budget, including sources and uses of funds, as approved by the City, and attached hereto and incorporated herein as Exhibit C.
“Approved Financing” means all of the funds acquired by the Recipient and approved by the City for the purpose of financing the acquisition of the Property and development of the project, in addition to the Grant from the City and other grants which are secured by the Project as of the date of this Agreement. “Bid Package” means the package of documents Recipient's general contractor is required to distribute to potential bidders as part of the process of selecting subcontractors for the construction of the Project. The Bid Package is to include the following: (i) an invitation to bid, (ii) copy of the proposed construction contract; (iii) a form of bid guarantee that is reasonably acceptable to the City that guarantees, at a minimum, an amount equal to five percent (5%) of the bid price, and (iv) all Construction Plans (as defined in Section 3.2 below). “Recipient” has the meaning set forth in the first paragraph of this Agreement. “CDBG” means the Community Project Block Grant program under Title I of the Housing and Community Project Act of 1974 (42 U.S.C. 5301 et. seq.), as amended. “CDBG Funds” has the meaning set forth in Recital B.
“CDBG Regulations” means the statutory and regulatory provisions that govern the CDBG program under Title I of the Housing and Community Project Act of 1974 (42 U.S.C. 5301 et. seq.), as amended including 24 C.F.R. Part 570 et seq. #17..
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“City” means the City of Modesto, a California Charter City. “Deed of Trust” is defined in Recital G.
“Default” has the meaning set forth in Section 6.1 below. “Default Rate” has the meaning set forth in Section 6.2(c). “Hazardous Materials” has the meaning set forth in Section 4.9 below. “Hazardous Materials Claim” has the meaning set forth in Section 4.9 below. “Hazardous Materials Law” has the meaning set forth in Section 4.9 below. “HUD” means the U.S. Department of Housing and Urban Development. “Grant” means the City's grant to Recipient pursuant to this Agreement in the total principal amount of Five Hundred Thousand Dollars ($500,000) consisting of CDBG Funds.
“Grant Documents” means this Agreement, the Regulatory Agreement, the Deed of Trust, and any other document or agreement evidencing the Grant. “Parties” mean the City and Recipient.
“Project” has the meaning set forth in Recital E.
“Property” has the meaning set forth in Recital C.
“Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants dated of even date herewith between the City and the Recipient associated with the Grant, to be recorded against the Property. The form of the Regulatory Agreement will be provided by the City.
“Term” means the term of this Agreement, the Regulatory Agreement, and the Loan which commences as of the date of this Agreement and shall expire thirty (30) years from the date a certificate of occupancy is issued for the Project, but in no event later than December 31, 2051.
“Transfer” has the meaning set forth in Section 4.15 below.

Section 1.2 Exhibits
The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:
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Exhibit A: Legal Description of the Property
Exhibit B: Project Summary
Exhibit C: Approved Project Budget
Exhibit D: Federal Award Identification Information
ARTICLE 2 GRANT PROVISIONS
Section 2.1 Grant.

Upon satisfaction of the conditions set forth in Section 2.5 and Section 2.6 of this Agreement, the City shall grant to the Recipient the Grant for the purposes set forth in Section

2.3 of this Agreement.

2.1.1 Federal Award Identification. Federal award identification information regarding the funding provided to Recipient by this Agreement, as required by 24 CFR 200.331, is included in Exhibit D, attached hereto and incorporated herein.

Section 2.2 Reserved.

Section 2.3 Use of Grant Funds.

The Recipient shall use the proceeds of the Grant solely to fund the acquisition of the Property. Recipient shall not use the Grant proceeds for any other purposes without the prior written consent of the City.

Section 2.4 Security.

As security for performance of the Regulatory Agreement, Developer shall execute the Deed of Trust pursuant to which City shall be provided a lien against the Property. The Deed of Trust shall be recorded in the Official Records of the County of Stanislaus. The Deed of Trust may be subordinated only to such liens and subject only to such title exceptions as City may approve in writing as set forth below.

Section 2.5 Subordination.

Any agreement by the City to subordinate the Deed of Trust and/or Regulatory Agreement to the lien of Approved Financing (in each case, a “Senior Loan”), will be subject to the satisfaction of the following conditions:
(i) All of the proceeds of the proposed Senior Loan, less any transaction costs, are used to provide construction and/or permanent financing for the Project. (ii) The proposed lender of a Senior Loan (each, a “Senior Lender”) is a state or federally chartered financial institution, a nonprofit corporation or a public entity that is not affiliated with Recipient or any of Recipient's affiliates, other than as a depositor or a lender. (iii) Recipient demonstrates to the City's reasonable satisfaction that subordination of the Deed of Trust and/or Regulatory Agreement is necessary to secure adequate #17..
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acquisition, construction and/or permanent financing to ensure the viability of the Project, including the operation of the Project as a navigation center, as required by the Grant Documents. To satisfy this requirement, Recipient must provide to the City, in addition to any other information reasonably required by the City, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate acquisition, construction, construction and/or permanent financing to ensure the viability of the Project, and adequate financing for the Project would not be available without the proposed subordination.
(iv) The subordination agreement(s) is structured to minimize the risk that the Deed of Trust and/or Regulatory Agreement will be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Loan. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Recipient, including:
(i) providing the City or its successor with copies of any notices of default at the same time and in the same manner as provided to Recipient; and (ii) providing the City with a cure period of at least sixty (60) days to cure any default.
(v) The subordination(s) of the Loan is effective only during the original term of the Senior Loan and any extension of its term that is approved in writing by the City. (vi) The subordination does not limit the effect of the Deed of Trust and/or Regulatory Agreement before a foreclosure, nor require the consent of the Senior Lender prior to the City exercising any remedies available to the City under the Grant Documents.

Upon a determination by the City that the conditions in this Section have been satisfied, the City Manager or the City Manager's designee will be authorized to execute the approved subordination agreement without the necessity of any further action or approval.

The City agrees to subordinate the Deed of Trust and Regulatory Agreement to the lien of the deed of trust and any regulatory agreement securing the Senior Loan(s), subject to the conditions set forth in this Section 2.5.

Section 2.6 Conditions Precedent to Disbursement of Grant Funds.

The maximum amount of funds to be disbursed pursuant to this Section 2.6 shall not exceed the amount of the Grant. The City shall not be obligated to make any disbursements of Grant funds for acquisition of the Property or take any other action under the Grant Documents unless the following conditions precedent have been and continue to be satisfied prior to each such disbursement of Grant funds:

There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under this Agreement;
The Recipient holds title to the Property or is acquiring title simultaneously with the disbursement of the Grant proceeds;
Recipient has delivered to the City a copy of a corporate resolution authorizing Recipient's execution of the Grant Documents;
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There exists no material adverse change in the financial condition of Recipient from that shown by the financial statements and other data and information furnished by Recipient to the City prior to the date of this Agreement; The Recipient has furnished the City with evidence of the insurance coverage meeting the requirements of Section 4.16 below;
Recipient has caused to be executed and delivered to the City all City Grant Documents and any other instruments, and policies required under the Grant Documents; The Deed of Trust and the Regulatory Agreement have been recorded against the Property in the Office of the Recorder of the County of Stanislaus, or will be recorded simultaneously to the disbursement of the Grant;
The City has completed and approved all environmental reviews under NEPA, as necessary for the construction of the Project, and Recipient has provided the City evidence of compliance with all approved NEPA requirements and mitigation measures required by the NEPA environmental documentation;
The City has reasonably determined that the undisbursed proceeds of the Grant, together with other funds or firm commitments for funds that the Recipient has obtained in connection with the Project, are not less than the amount that is necessary to pay for development of the Project and to satisfy all of the covenants contained in this Agreement and the Regulatory Agreement;
Recipient has provided documentation reasonably satisfactory to the City demonstrating that Recipient has sufficient funds to purchase the Property;; The City has received a written draw request from the Recipient, including certification that the condition set forth in Section 2.6 continues to be satisfied, and setting forth the proposed uses of funds, the amount of funds needed, and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred.

ARTICLE 3 CONSTRUCTION OF THE IMPROVEMENTS
Section 3.1 Permits and Approvals.

Recipient shall obtain all permits and approvals necessary for the construction of the Project on the Property.

Section 3.2 Construction Plans.

Recipient shall submit to the City a copy of the Construction Plans for the Project and Bid Package. As used in this Agreement, “Construction Plans” shall mean all construction documentation upon which Recipient and Recipient's contractor shall rely in rehabilitating and constructing all the improvements on the Property (including any landscaping, parking, and common areas) and shall include, but not necessarily be limited to, #17..
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final architectural drawings, landscaping plans and specifications, final elevations, and building plans and specifications (also known as “working drawings”).

The Construction Plans shall be deemed approved by the City unless rejected by the City in writing for their failure to comply with the foregoing requirements within thirty (30) days after receipt by the City. Such approval of the Construction Plans by the City shall not relieve Recipient's Obligation to obtain any and all approvals required by the City or the City Building Services Department.

If rejected by the City in whole or in part, Recipient shall submit new or corrected Construction Plans within thirty (30) days after notification of the City's rejection and the reasons therefor. The City shall then have thirty (30) days to review and approve Recipient's new or corrected Construction Plans. The provisions of this Section relating to time periods for approval, rejection, or resubmission of new or corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the City.

Section 3.3 Construction Contract.

Not later than ten (10) days prior to the proposed commencement of construction of the Project, the Recipient shall submit to the City the proposed construction contract for the Project. All construction work and professional services shall be performed by persons or entities licensed or otherwise authorized to perform the applicable construction work or service in the State of California. Each contract that the Recipient enters for construction of the Project shall provide that at least five percent (5%) of the costs incurred shall be payable only upon completion of construction, subject to early release of retention for specified subcontractors upon approval by the City. The construction contract shall include all applicable CDBG requirements set forth in Section 4.8 below.

Upon receipt by the City of the proposed construction contract, the City shall promptly review same and approve or disapprove it within ten (10) days. If the construction contract is not approved by the City, the City shall set forth in writing and notify the Recipient of the City's reasons for withholding such approval. The Recipient shall thereafter submit a revised construction contract for City approval, which approval shall be granted or denied in ten (10) working days in accordance with the procedures set forth above. Any construction contract executed by the Recipient for the Project shall be in the form approved by the City. The City's approval of the construction contract shall in no way be deemed to constitute approval of or concurrence with any term or condition of the construction contract except as such term or condition may be required by this Agreement.

Section 3.4 Reserved.

Section 3.5 Commencement of Construction.

Recipient shall cause the commencement of construction of the Project no later than August 1, 2020 or such later date that the City may approve.

Section 3.6 Completion of Construction.
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Recipient shall diligently prosecute construction of the Project to completion, and shall cause the completion of the construction of the Project no later than twelve (12) months from construction commencement or such later date that the City may approve.

Section 3.7 Construction Pursuant Applicable Laws
Recipient shall cause all work performed in connection with the Project to be performed in compliance with (i) all applicable laws, ordinances, rules and regulations of federal, state, City or municipal governments or agencies now in force or that may be enacted hereafter, including without limitation and to the extent applicable, the prevailing wage provisions of the federal Davis-Bacon Act and implementing rules and regulations and state prevailing wages pursuant to Labor Code Section 1770 et seq., and the regulations pursuant thereto, as further set forth in subsection (c) below; (ii) the property standards set out in 24 CFR 5.701 et seq., and 24 CFR

92.251; and (iii) all directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and Recipient shall be responsible to the City for the procurement and maintenance thereof, as may be required of Recipient and all entities engaged in work on the Project.

Section 3.8 Accessibility.

To the extent applicable, Recipient shall construct the Project 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 (“Section 504”); Title II and/or Title III of the Americans with Disabilities Act; and Title 24 of the California Code of Regulations (collectively, the “Accessibility Requirements”). In compliance with Section 504 Recipient shall provide the City with a certification from the Project architect that to the best of the architect's knowledge, the Project comply with all federal and state accessibility requirements applicable to the Project. Recipient shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Recipient, its architect, contractor and subcontractors) to construct the Project in accordance with the Accessibility Requirements. The requirements in this Subsection survive repayment of the Grant and the reconveyance of the Deed of Trust.

Section 3.9 Equal Opportunity.

During the construction of the Project there shall be no discrimination on the basis of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin, ancestry, or disability in the hiring, firing, promoting, or demoting of any person engaged in the construction work.

Section 3.10 Minority and Women-Owned Contractors.

Recipient will use its best efforts to afford minority-owned and women-owned business enterprises the maximum practicable opportunity to participate in the construction of the Project. #17..
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Recipient shall, at a minimum, notify applicable minority-owned and women-owned business firms located in Stanislaus County of bid opportunities for the construction of the Project.

Documentation of such notifications shall be maintained by Recipient and available to the City as requested.

Section 3.11 Progress Reports.

Until such time as Recipient has received a certificate of occupancy from the City for the Project, Recipient shall provide the City with quarterly progress reports regarding the status of the construction of the Project.

Section 3.12 Construction Responsibilities.

It shall be the responsibility of Recipient to coordinate and schedule the work to be performed so that commencement and completion of the construction of the Project will take place in accordance with this Agreement.

Recipient shall be solely responsible for all aspects of Recipient's conduct in connection with the Project, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Project is solely for the purpose of determining whether Recipient is properly discharging its obligations to the City, and should not be relied upon by Recipient or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Project.

Section 3.13 Mechanics Liens, Stop Notices, and Notices of Completion.

If any claim of lien is filed against the Property or a stop notice affecting the Grant is served on the City or any other lender or other third party in connection with the Project, then Recipient shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond in sufficient form and amount, or provide the City with other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.

If Recipient fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section, then in addition to any other right or remedy, the City may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at Recipient's expense. Alternately, the City may require Recipient to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against Recipient.

Recipient shall file a valid notice of cessation or notice of completion upon cessation of construction on the Project for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Property.

Recipient authorizes the City, but without any obligation, to record any notices of completion or #17..
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cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Project and Property.

Section 3.14 Inspections.

Recipient shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Project by the City and by public authorities during reasonable business hours for the purposes of determining compliance with this Agreement.

ARTICLE 4 GRANT REQUIREMENTS
Section 4.1 Financial Accountings and Post-Completion Audits.

No later than sixty (60) days following completion of construction of the Project, Recipient shall provide to City a financial accounting of all sources and uses of funds for the Project.

Section 4.2 Annual Operating Budget.

At least one hundred fifty (150) days prior to the end of each year of the Term, Recipient shall provide to the City an annual budget for the operation of the Project. Unless rejected by the City in writing within fifteen (15) days after receipt of the budget, said budget shall be deemed accepted. If rejected by the City in whole or in part, Recipient shall submit a new or corrected budget within thirty (30) calendar days of notification of the City's rejection and the reasons therefor. The provisions of this Section relating to time periods for resubmission of new or corrected budgets shall continue to apply until such budget has been approved by the City.

Section 4.3 Information.

Recipient shall provide any information reasonably requested by the City in connection with the Project, including (but not limited to) any information required by HUD in connection with Recipient's use of the Grant funds.

Section 4.4 Records.

The Recipient shall keep and maintain at the Administrative Office, or elsewhere with the City's written consent, full, complete and appropriate books, record and accounts relating to the Project, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail Recipient's compliance with the terms and provisions of this Agreement. Books, records and accounts relating to Recipient's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement. All such books, records, and accounts shall be open to and available for inspection and copying by the HUD, the City, its auditors or other authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that Recipient may be required to furnish to any governmental #17..
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agency shall at all reasonable times be open for inspection by the City at the place that the books, records and accounts of the Recipient are kept. The Recipient shall preserve such records for a period of not less than five (5) years after the creation of such records in compliance with all HUD records and accounting requirements. If any litigation, claim, negotiation, audit exception, monitoring, inspection or other action relating to the use of the Grant is pending at the end of the record retention period stated herein, then the Recipient shall retain such records until such action and all related issues are resolved. Such records shall include all invoices, receipts, and other documents related to expenditures from the Grant funds.

Records must be kept accurate and current and in such a form as to allow the City to comply with the recordkeeping requirements contained in 24 CFR 92.506. Such records shall include but not be limited to:
(i) Records providing a full description of the activities undertaken with the use of the Grant funds;
(ii) Records demonstrating the eligibility of activities under CDBG Regulations set forth in 24 CFR 570 et seq. and that use of the CDBG Funds meets at least one of the national objectives of the CDBG program set forth in 24 CFR 570.208; (iii) Records demonstrating compliance with the HUD property standards and lead-based paint requirements;
(iv) Records demonstrating compliance with the income requirements for occupants;
(v) Records documenting compliance with the fair housing, equal opportunity, and affirmative fair marketing requirements; (vi) Financial records as required by 24 C.F.R. 570.502, and OMB Circular A-110 (24 C.F.R. Part 84);
(vii) Records demonstrating compliance with applicable relocation requirements which must be retained for at least five (5) years after the date by which persons displaced from the property have received final payments; (viii) Records demonstrating compliance with Section 3, and labor requirements, including certified payrolls from the Recipient's general contractor evidencing that applicable prevailing wages have been paid; and
The City shall notify Recipient of any records it deems insufficient. Recipient shall have fifteen (15) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than fifteen (15) days is reasonably necessary to correct the deficiency, then Recipient shall begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.

Section 4.5 City Audits.
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Each year, Recipient shall provide the City with a copy of Recipient's annual audit, which shall include information on all of Recipient's activities and not just those pertaining to the Project. In addition, the City or any designated agent or employee of the City at any time shall be entitled to audit all of Recipient's books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of Recipient and other places where records are kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of such audit to Recipient. The Recipient shall also follow audit requirements of the Single Audit Act and OMB Circulars A-122 and 110, to the extent required by applicable law and HUD regulations.

Section 4.6 CDBG Requirements.

Recipient shall comply with all applicable laws and regulations governing the use of the CDBG funds, as set forth in 24 CFR Part 570, including but not limited to the requirements of the Regulatory Agreement. In the event of any conflict between this Agreement and applicable laws and regulations governing the use of the Grant funds, the applicable laws and regulations shall govern.

The laws and regulations governing the use of the Grant funds include (but are not limited to) the following:
(i) Environmental and Historic Preservation. Section 104 (f) of the Housing and Community Project Act of 1974 and 24 CFR Part 58, which prescribe procedures for compliance with the National Environmental Policy Act of 1969 (42 USC 4321-4361), and the additional laws and authorities listed at 24 CFR 58.5.
(ii) Applicability of OMB Circulars. The applicable policies, guidelines, and requirements of OMB Circulars Nos. A-87, A-102, Revised, A-110, A-122, and A-133. (iii) Debarred, Suspended or Ineligible Contractors. The prohibition on the use of debarred, suspended, or ineligible contractors set forth in 24 CFR Part 24. (iv) Civil Rights, Housing and Community Project, and Age Discrimination Acts. The Fair Housing Act (42 USC 3601 et seq.) and implementing regulations at 24 CFR Part 100; Title VI of the Civil Rights Act of 1964 as amended; Title VIII of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of Title I of the Housing and Community Project Act of 1974 as amended; Section 504 of the Rehabilitation Act of 1973 (29 USC 794, et seq.); the Age Discrimination Act of 1975 (42 USC 6101, et seq.); Executive Order 11063 as amended by Executive Order 12259 and implementing regulations at 24 CFR Part 107; Executive Order 11246 as amended by Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as amended by Executive Order 12007; Executive Order 12432; Executive Order 12138 as amended by Executive Order 12608.
(v) Lead-Based Paint. The requirement of the Lead-Based Paint Poisoning Prevention Act, as amended (42 USC 4821 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42 USC 4851 et seq.), and implementing regulations at 24 CFR Part 35. #17..
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(vi) Relocation. The requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 USC 4601, et seq.) and implementing regulations at 49 CFR Part 24; Section 104(d) of the Housing and Community Project Act of 1974 and implementing regulations at 24 CFR Part 42; and 24 CFR 92.353; and California Government Code Section 7260 et seq. and implementing regulations at 25 California Code of Regulations Sections 6000 et seq. If and to the extent that construction of the Project results in the permanent or temporary displacement of residential occupants, homeowners, or businesses, then Recipient shall comply with all applicable local, state, and federal statutes and regulations with respect to relocation planning, advisory assistance, and payment of monetary benefits. Recipient shall prepare and submit a relocation plan to the City for approval. Recipient shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. The Recipient shall indemnify, defend (with counsel reasonably chosen by the City), and hold harmless the City against all claims which arise out of relocation obligations to residential occupants, homeowners, or businesses permanently or temporarily displaced by the Project.
(vii) Discrimination against the Disabled. The requirements of the Fair Housing Act (42 U.S.C. 3601 et seq.) and implementing regulations at 24 C.F.R. Part 100, Section 504 of the Rehabilitation Act of 1973 (29 USC 794), and federal regulations issued pursuant thereto, which prohibit discrimination against the disabled in any federally assisted program, the requirements of the Architectural Barriers Act of 1968 (42 USC 4151-4157) and the applicable requirements of Title II and/or Title III of the Americans with Disabilities Act of 1990 (42 USC 12131 et seq.), and federal regulations issued pursuant thereto. (viii) Clean Air and Water Acts. The Clean Air Act, as amended, 42 USC 7401 et seq., the Federal Water Pollution Control Act, as amended, 33 USC 1251 et seq., and the regulations of the Environmental Protection Agency with respect thereto, at 40 CFR Part 1500, as amended from time to time.
(ix) Uniform Administrative Requirements. The requirements of 24 CFR

92.505 and 24 CFR Part 570.502 regarding cost and auditing requirements. (x) Training Opportunities. The requirements of Section 3 of the Housing and Urban Project Act of 1968, as amended, 12 USC 1701u (“Section 3”), requiring that to the greatest extent feasible opportunities for training and employment be given to lower income residents of the project area and agreements for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the areas of the project. Recipient agrees to include the following language in all subcontracts executed under this Agreement:
(1) The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Project Act of 1968, as amended, 12 USC 1701u. The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing. #17..
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(2) The parties to this contract agree to comply with HUD's regulations in 24 CFR Part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the Part 135 regulations. (3) The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause; and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference; shall set forth minimum number and job titles subject to hire; availability of apprenticeship and training positions; the qualifications for each; the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin. (4) The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR Part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR Part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR Part 135.
(5) The contractor will certify that any vacant employment positions, including training positions, that are filled (1) after the contractor is selected but before the contract is executed, and (2) with persons other than those to whom the regulations of 24 CFR Part 135 require employment opportunities to be directed, were not filled to circumvent the contractor's obligations under 24 CFR Part 135.
(6) Noncompliance with HUD's regulations in 24 CFR Part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts.
(7) With respect to work performed in connection with Section 3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education Assistance Act (25 USC 450e) also applies to the work to be performed under this contract.

Section 7(b) requires that to the greatest extent feasible (i) preference and opportunities for training and employment shall be given to Indians, and (ii) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises.

Parties to this contract that are subject to the provisions of Section 3 and section 7(b) agree to comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with section 7(b).
(xi) Labor Standards. The applicable labor requirements set forth in 24 CFR Section 570.603, as such require compliance with the prevailing wage requirements of the Davis-Bacon Act and implementing rules and regulations (40 USC 3141-3148); the Copeland “AntiKickback” Act (40 USC 276(c)) which requires that workers be paid at least once a week without #17..
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any deductions or rebates except permissible deductions; the Contract Work Hours and Safety Standards Act – CWHSSA (40 USC 3701-3708) which requires that workers receive “overtime” compensation at a rate of 1-1/2 times their regular hourly wage after they have worked forty (40) hours in one (1) week; and Title 29, Code of Federal Regulations, Subtitle A, Parts 1, 3 and 5 are the regulations and procedures issued by the Secretary of Labor for the administration and enforcement of the Davis-Bacon Act, as amended.
(xii) Drug Free Workplace. The requirements of the Drug Free Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 CFR Part 24. (xiii) Anti-Lobbying; Disclosure Requirements. The disclosure requirements and prohibitions of 31 USC 1352 and implementing regulations at 24 CFR Part 87. (xiv) Historic Preservation. The Recipient shall comply with the historic preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 USC Section 470) and the procedures set forth in 36 CFR Part 800. If archeological, cultural, or historic period resources are discovered during construction, all construction work must come to a halt and Recipient shall immediately notify the City. Recipient shall not shall alter or move the discovered material(s) until all appropriate procedures for “post-review discoveries” set forth in Section 106 of the National Historic Preservation Act have taken place, which include, but are not limited to, consultation with the California State Historic Preservation Officer and evaluation of the discovered material(s) by a qualified professional archeologist. (xv) Faith Based Activities. If applicable, the 24 CFR Section 570.200(j) regarding eligible use of funds by organizations that are religious or faith-based. (xvi) Flood Disaster Protection. This Agreement is subject to the requirements of the Flood Disaster Protection Act of 1973 (P.L. 93-234). No portion of the assistance provided under this Agreement is approved for acquisition or construction purposes as defined under Section 3(a) of said Act, for use in an area identified by HUD as having special flood hazards which is located in a community not then in compliance with the requirements for participation in the national flood insurance program pursuant to Section 201(d) of said Act. The use of any assistance provided under this Agreement for such acquisition or construction in such identified areas in communities then participating in the national flood insurance program shall be subject to the mandatory purchase of flood insurance requirements of Section 102(a) of said Act.

Any contract or Agreement for the sale, lease, or other transfer of land acquired, cleared or improved with assistance provided under this Agreement shall contain certain provisions. These provisions will apply if such land is located in an area identified by HUD as having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, as amended, 42 USC 4001 et seq. These provisions shall obligate the transferee and its successors or assigns to obtain and maintain, during the ownership of such land, such flood insurance as required with respect to financial assistance for acquisition or construction purposes under -Section 102(s) of the Flood Disaster Protection Act of 1973. Such provisions shall be required notwithstanding the fact that the construction on such land is not itself funded with assistance provided under this Agreement.
(xvii) Program Income. The Recipient shall report on a monthly basis, all program income as defined at 24 CFR 570.500(a) generated by activities carried out with Grant funds #17..
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made available under this contract. The use of program income by the Recipient shall comply with the requirements set forth at 24 CFR 570.504. By way of further limitations, the Recipient may use such income during the contract period for activities permitted under this contract, which shall be CDBGEligible activities related to the operation of the Project as mutually agreed upon in writing by the City and Recipient, and shall reduce requests for additional funds by the amount of any such program income balance on hand. All unused program income shall be returned to the Grantee at the end of the contract period. Any interest earned on cash advances from the U.S. Treasury is not program income and shall be remitted promptly to the Grantee.
(xviii) Reversion of Assets. Upon expiration of this Agreement, Recipient shall transfer to City any unused Grant funds on hand and any accounts receivable attributable to the use of Grant Funds in accordance with 24 CFR § 570.503(b)(7). (xix) HUD Regulations. Any other HUD regulations present or as may be amended, added, or waived in the future pertaining to the Grant funds, including but not limited to HUD regulations as may be promulgated regarding subrecipients.

Section 4.7 Hazardous Materials.

Recipient 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. Recipient 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 may be customarily used in the construction of projects like the Project or kept and used in and about residential property of this type.

Recipient shall immediately advise the City in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Recipient or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, (“Hazardous Materials Law”); (ii) all claims made or threatened by any third party against Recipient or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as “Hazardous Materials Claims”); and (iii) Recipient'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.
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The City shall have 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.

Recipient shall indemnify and hold harmless the City and its council 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: (i) all foreseeable consequential damages; (ii) 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 (iii) all reasonable costs and expenses incurred by the City in connection with clauses (i) and (ii), 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: (1) losses attributable to diminution in the value of the Property; (2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the marketing of any rental space on the Property: and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties). This obligation to indemnify shall survive termination of this Agreement.

Without the City's prior written consent, which shall not be unreasonably withheld, Recipient shall 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 the City's reasonable judgment, impair the value of the City's security hereunder; provided, however, that the City's prior consent shall not be 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 the City's consent before taking such action, provided that in such event Recipient shall notify the City as soon as practicable of any action so taken. The City agrees not to withhold its consent, where such consent is required hereunder, if (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Recipient will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Recipient establishes to the reasonable satisfaction of the City that there is no reasonable alternative to such remedial action which would result in less impairment of the City's security hereunder; or (iv) the action has been agreed to by the City.

Recipient hereby acknowledges and agrees that (i) this Section is intended as the City's written request for information (and Recipient's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by the Parties to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736. #17..
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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 City's or the trustee's rights and remedies under the Deed of Trust, the City 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 Recipient to judgment, and (ii) any other rights and remedies permitted by law. For purposes of determining the City's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Recipient shall 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 Recipient knew or 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' fees, incurred by the City 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%) and the maximum rate permitted by law, until paid, shall be added to the indebtedness secured by the Deed of Trust and shall be due and payable to the City upon its demand made at any time following the conclusion of such action.

Section 4.8 Maintenance and Damage.

During the course of both construction and operation of the Project, Recipient shall maintain the Property and the Project in good repair and in a neat, clean and orderly condition. If there arises a condition in contravention of this requirement, and if Recipient has not cured such condition within thirty (30) days after receiving a City notice of such a condition, then in addition to any other rights available to the City, the City shall have the right to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property.

Subject to the requirements of Senior Lenders, and if economically feasible in the City's reasonable judgment after consultation with the Recipient, if any improvement now or in the future on the Property is damaged or destroyed, then Recipient shall, to the extent of available insurance proceeds, diligently undertake to repair or restore such improvement consistent with the plans and specifications approved by the City with such changes as have been approved by the City. Such work or repair shall be commenced no later than the later of one hundred twenty (120) days, or such longer period approved by the City in writing, after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and shall be complete within one (1) year thereafter. Any insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, then Recipient shall make up the deficiency. If Recipient does not make repairs, then any insurance proceeds collected for such damage or #17..
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destruction shall be retained for repayment to Lender, if repayment of the Grant is required under this Agreement, subject to the rights of the Senior Lenders.

Section 4.9 Fees and Taxes.

Recipient shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Property or the Project to the extent owned by Recipient, and shall pay such charges prior to delinquency.

However, Recipient shall not be required to pay and discharge any such charge so long as (a) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (b) if requested by the City, Recipient deposits with the City any funds or other forms of assurance that the City in good faith from time to time determines appropriate to protect the City from the consequences of the contest being unsuccessful.

Section 4.10 Notice of Litigation.

Recipient shall promptly notify the City in writing of any litigation which has the potential to materially affect Recipient or the Property and of any claims or disputes that involve a material risk of such litigation.

Section 4.11 Operation of Project.

Promptly after completion of construction, the Recipient shall operate the Project as a youth navigation center that will serve as a service hub providing a continuum of services for young people age 18-24 years old at or below eighty percent (80%) of the median income for Stanislaus County, as defined by HUD, who are experiencing crisis, housing instability, and or/homelessness, as more particularly Described in the project summary attached hereto as Exhibit B. Promptly after completion of construction, the Recipient shall operate the Project as an affordable housing development consistent with (i) HUD's requirements for use of the CDBG Funds, (ii) the Regulatory Agreement, and (iii) any other regulatory requirements imposed on Recipient.

Section 4.12 Nondiscrimination.

Recipient 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. Recipient covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Recipient or any person claiming under or through Recipient establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Recipient shall include such provision in all deeds, leases, contracts and other #17..
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instruments executed by Recipient, and shall enforce the same diligently and in good faith. The foregoing covenant shall run with the land. If and for so long as the Project is assisted with Section 8 Project-based vouchers, the Recipient may apply such tenant selection standards as are permitted under the Section 8 Project-based voucher program regulations.

Section 4.13 Transfer.

For purposes of this Agreement, “Transfer” shall mean any sale, assignment, or transfer, whether voluntary or involuntary, of (i) any rights and/or duties under this Agreement, and/or (ii) any interest in the Project, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Project is transferred and Recipient retains title. “Transfer” shall exclude the occupancy of any Unit in the Project by a household in compliance with the Regulatory Agreement. The City Manager is authorized to execute assignment and assumption agreements on behalf of the City to implement any approved Transfer.

No Transfer shall be permitted without the prior written consent of the City, which the City may withhold in its sole discretion. The Grant shall automatically accelerate and be due in full upon any Transfer made without the prior written consent of the City.

The City approves the grant of the security interests described in Section 1.1 above.

The term “Transfer” excludes the lease to a qualified tenant of the Property in compliance with the Regulatory Agreement.

Section 4.14 Insurance Requirements.

The Recipient shall maintain the following insurance coverage throughout the Term of the Grant:

Worker's Compensation insurance to the extent required by law, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident.

Comprehensive General Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations.

Comprehensive Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable.

Builders' risk insurance during the course of the construction, and, upon completion of construction, property insurance covering the Project, in form appropriate for the #17..
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nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable federal regulations.

Property insurance covering the Property, in form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear. Flood insurance shall be obtained if required by applicable federal regulations.

Commercial crime insurance covering all officers and employees, for loss of Grant proceeds caused by dishonesty, in an amount not less than the amount of the Grant, naming the City as a Loss Payee, as its interests may appear.

The Recipient shall cause any general contractor, agent, or subcontractor working on the Project under direct contract with the Recipient or subcontract to maintain insurance of the types and in at least the minimum amounts described in subsections (a), (b), and (c) above, except that the limit of liability for comprehensive general liability insurance for subcontractors shall be One Million Dollars ($1,000,000), and shall require that such insurance shall meet all of the general requirements of subsections (g), (h), and (i) below.

The required insurance shall be provided under an occurrence form, and Recipient shall maintain the coverage described in subsections (a) through (d) continuously throughout the Term. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit shall be three times the occurrence limits specified above.

Comprehensive and General Liability and Comprehensive Automobile Liability insurance policies shall be endorsed to name as an additional insured the City and its officers, agents, employees and members of the City Council.

All policies and bonds shall contain (i) the agreement of the insurer to give the County at least thirty (30) days' notice prior to cancellation (including, without limitation, for non-payment of premium) or any material change in said policies (ii) an agreement that such policies are primary and non-contributing with any insurance that may be carried by the City; (iii) a provision that no act or omission of the Recipient shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (iv) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against.

Section 4.15 Anti-Lobbying Certification.

The Recipient certifies, to the best of Recipient's knowledge or belief, that:

No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any #17..
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agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal grant or loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, Disclosure Form to Report Lobbying, in accordance with its instructions.

This certification is a material representation of fact upon which reliance was placed when this Agreement was made or entered into. Submission of this certification is a prerequisite for making or entering into this Agreement imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than Ten Thousand Dollars ($10,000) and no more than One Hundred Thousand Dollars ($100,000) for such failure.

Section 4.16 Payment of Other Indebtedness; Notice of Defaults.

Recipient shall promptly pay the principal and interest when due on any other indebtedness related to the Project.

Recipient shall promptly notify the City in writing of any defaults declared under any other financing for the Project by the lender of such financing.

Section 4.17 Prevailing Wage Requirements. To the extent, and if, required by applicable federal and state laws, rules and regulations, Developer and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and applicable federal labor laws and standards, and the regulations adopted pursuant thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. Developer shall submit to City a plan for monitoring payment of prevailing wages and shall implement such plan at Developer’s expense.

Section 4.18 Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold the City, and its respective elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the “Indemnitees”) harmless from and against 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”) which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection with, or relate to, the payment or requirement of payment of prevailing wages or the requirement of competitive bidding in the construction of the Project, the failure to comply with any state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of Developer related to this Agreement with respect to the payment or #17..
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requirement of payment of prevailing wages or the requirement of competitive bidding, whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that City does not and shall not waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. The provisions of this Section 4.18 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project.

Developer’s indemnification obligations under this Section 4.18 shall not apply to any Claim which arises as a result of an Indemnitee’s gross negligence or willful misconduct.

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF RECIPIENT
Section 5.1 Representations and Warranties.

Recipient hereby represents and warrants to the City as follows:

Organization. Recipient is a duly formed California non-profit benefit corporation, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted.

Authority of Recipient. Recipient has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Grant Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above.

Authority of Persons Executing Documents. This Agreement and the Grant Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Recipient, and all actions required under Recipient's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Grant Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken.

Valid Binding Agreements. This Agreement and the Grant Documents and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Recipient enforceable against it in accordance with their respective terms.

No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Grant Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on Recipient, or conflict with any provision of the #17..
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organizational documents of Recipient, or will conflict with or constitute a breach of or a default under any agreement to which Recipient is a party, or will result in the creation or imposition of any lien upon any assets or property of Recipient, other than liens established pursuant hereto.

Compliance With Laws; Consents and Approvals. The construction of the Project will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency.

Pending Proceedings. Recipient is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Recipient, threatened against or affecting Recipient or the Property, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Recipient, materially affect Recipient's ability to repay the Grant or impair the security to be given to the City pursuant hereto.

Title to Land. At the time of recordation of the Deed of Trust, Recipient will have good and marketable fee title to the Project and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than liens for current real property taxes and liens in favor of the City or approved in writing by the City, including documents associated with the Approved Financing further described in Section

1.1(c) above.

Financial Statements. The financial statements of Recipient and other financial data and information furnished by Recipient to the City fairly and accurately present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of Recipient from that shown by such financial statements and other data and information.

Sufficient Funds. Recipient holds sufficient funds, binding commitments for sufficient funds, and/or access to borrow sufficient funds to complete the acquisition of the Property and the construction of the Project in accordance with the terms of this Agreement.

Taxes. Recipient and its subsidiaries have filed all federal and other material tax returns and reports required to be filed, and have paid all federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their income or the Property otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with generally accepted accounting principles. There is no proposed tax assessment against Recipient or any of its subsidiaries that could, if made, be reasonably expected to have a material adverse effect on the Property, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Recipient and its subsidiaries, taken as a whole, which would be expected to result in a material impairment of the ability of Recipient to perform under any Loan Document to which it is a party, or a material adverse effect upon the legality, validity, binding effect or enforceability against Recipient of any Loan Document. #17..
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ARTICLE 6 DEFAULT AND REMEDIES
Section 6.1 Events of Default.

Each of the following shall constitute a “Default” by Recipient under this Agreement:
(a) Failure to Construct. Failure of Recipient to commence and complete construction of the Project within the times set forth in Article 3 above; (b) Reserved.
(c) Breach of Covenants. Failure by Recipient to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Grant Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to the Recipient or, if the breach cannot be cured within thirty (30) days, the Recipient shall not be in breach so long as Recipient is diligently undertaking to cure such breach and such breach is cured within ninety (90) days; provided, however, that if a different period or notice requirement is specified under any other section of this Article 6, the specific provisions shall control.
(d) Default Under Other Loans. A default is declared under any other financing for the Project by the lender of such financing and such default remains uncured following any applicable notice and cure period.
(e) Insolvency. A court having jurisdiction shall have made or entered any decree or order (i) adjudging Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, or seeking any arrangement for Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or liquidation of Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, if any such decree or order described in clauses (i) to (iv), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) calendar days; or (v) Recipient or Recipient's general partner, if Recipient is a partnership, or Recipient's managing member, if Recipient is a limited liability company, shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. .
(f) Assignment; Attachment. Recipient shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any #17..
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substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) calendar days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. (g) Suspension; Termination. Recipient shall have voluntarily suspended its business or, if Recipient is a partnership, the partnership shall have been dissolved or terminated, other than a technical termination of the partnership for tax purposes. (h) Liens on Property and the Project. There shall be filed any claim of lien (other than liens approved in writing by the City) against the Project or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Grant and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days, without discharge or satisfaction thereof or provision therefor (including, without limitation, the posting of bonds) satisfactory to the City. (i) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Property and the Project.
(j) Unauthorized Transfer. Any Transfer other than as permitted by Section 4.14.
(k) Representation or Warranty Incorrect. Any Recipient representation or warranty contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the City in connection with any of the Grant Documents, proving to have been incorrect in any material respect when made. After issuance of the certificates of occupancy for the Project, Default may be declared under this subsection only if the failure of representation or warranty also has a material adverse effect on the operation of the Project.

Section 6.2 Remedies.

The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the City or automatically where so specified, relieve the City of any obligation to make or continue the Grant and shall give the City the right to proceed with any and all remedies set forth in this Agreement and the Grant Documents, including but not limited to the following:
(a) Repayment. The City shall have the right to cause the Recipient to repay, upon written demand, the Grant within a reasonable period of time, as determined by the City in its sole discretion. The City may proceed to enforce repayment of the Grant and to exercise any or all rights afforded to the City, including foreclosure under the Deed of Trust. (b) Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require Recipient to perform its obligations and covenants under the Grant Documents or to enjoin acts on things which may be unlawful or in violation of the provisions of the Grant Documents.
(c) Right to Cure at Recipient's Expense. The City shall have the right (but not the obligation) to cure any monetary default by Recipient under a loan other than the Grant. #17..
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The Recipient agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Recipient upon demand therefor, together with interest thereon at the lesser of the maximum rate permitted by law and ten percent (10%) per annum (the “Default Rate”) from the date of expenditure until the date of reimbursement.

Section 6.3 Right of Contest.

Recipient shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute a Default hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the City or the rights of the City hereunder.

Section 6.4 Remedies Cumulative.

No right, power, or remedy given to the City by the terms of this Agreement or the Grant Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against Recipient and any other person, including but not limited to the Deed of Trust. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy.

ARTICLE 7 GENERAL PROVISIONS
Section 7.1 Relationship of Parties.

Nothing contained in this Agreement shall be interpreted or understood by any of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the City and Recipient or its agents, employees or contractors, and Recipient shall at all times be deemed an independent contractor and shall be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. Recipient has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. In regards to the construction and operation of the Project, Recipient shall be solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding, and all other laws and regulations governing such matters, and shall include requirements in each contract that contractors shall be solely responsible for similar matters relating to their employees. Recipient shall be solely responsible for its own acts and those of its agents and employees.

Section 7.2 No Claims.

Nothing contained in this Agreement shall create or justify any claim against the City by any person that Recipient may have employed or with whom Recipient may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance #17..
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of any work or services with respect to the purchase of the Property, the construction or operation of the Project, and Recipient shall include similar requirements in any contracts entered into for the construction or operation of the Project.

Section 7.3 Amendments.

No alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties. The City Manager is authorized to execute on behalf of the City amendments to the Grant Documents or amended and restated Grant Documents as long as any material change in the amount or terms of this Agreement is approved by the City Council, or in the event the amounts or terms of financing provided by other parties for the Project is revised, requiring conforming amendments to the Grant Documents.

Section 7.4 Indemnification.

The Recipient shall indemnify, defend and hold the City harmless against any and all claims, suits, actions, losses and liability of every kind, nature and description made against it and expenses (including reasonable attorneys' fees) which arise out of or in connection with this Agreement, including but not limited to the purchase of the Property, development, construction, marketing and operation of the Project, except to the extent such claim arises from the grossly negligent or willful misconduct of the City, its agents, and its employees. The provisions of this Section shall survive the expiration of the Term and the reconveyance of the Deed of Trust.

Section 7.5 Non-Liability of City Officials, Employees and Agents.

No member, official, employee or agent of the City shall be personally liable to Recipient in the event of any default or breach by the City or for any amount which may become due to Recipient or its successor or on any obligation under the terms of this Agreement.

Section 7.6 No Third Party Beneficiaries.

There shall be no third party beneficiaries to this Agreement.

Section 7.7 Discretion Retained By City.

The City's execution of this Agreement in no way limits the discretion of the City in the permit and approval process in connection with development of the Project.

Section 7.8 Conflict of Interest.

Except for approved eligible administrative or personnel costs, no person described in Section 7.8(b) below who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this Agreement or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, #17..
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or at any time after, such person's tenure. Recipient shall exercise due diligence to ensure that the prohibition in this Section 7.8(a) is followed.

The conflict of interest provisions of Section 7.8(a) above apply to any person who is an employee, agent, consultant, officer, or any immediate family member of such person, or any elected or appointed official of the City, or any person related within the third (3rd) degree of such person.

In accordance with Government Code Section 1090 and the Political Reform Act, Government Code section 87100 et seq., no person who is a director, officer, partner, trustee or employee or consultant of the Recipient, or immediate family member of any of the preceding, shall make or participate in a decision, made by the City or a City board, commission or committee, if it is reasonably foreseeable that the decision will have a material effect on any source of income, investment or interest in real property of that person or Recipient.

Interpretation of this section shall be governed by the definitions and provisions used in the Political Reform Act, Government Code Section 87100 et seq., its implementing regulations manual and codes, and Government Code Section 1090.

The Recipient shall comply with the conflict of interest provisions set forth in 24 CFR Section 570.611.

Section 7.9 Notices, Demands and Communications.

Formal notices, demands, and communications between the Parties shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the Parties as follows:

City: City of Modesto
1010 10th Street
P. O. Box 642
Modesto, CA 95353
Attention: Community Development Manager
Recipient: Center for Human Services
2000 W. Briggsmore Avenue, Ste. 1
Modesto, CA 95350
Attn: Executive Director
Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate by mail as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).

Section 7.10 Applicable Law.

This Agreement shall be governed by and construed in accordance with California law. #17..
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Section 7.11 Parties Bound.

Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal representatives, successors, and assigns. This Agreement is intended to run with the land and shall bind Recipient and its successors and assigns in the Property and the Project for the entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and assigns.

Section 7.12 Attorneys' Fees.

If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing Party will have the right to recover its reasonable attorneys' fees and costs of suit from the other Party.

Section 7.13 Severability.

If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the Parties have been materially altered or abridged by such invalidation, voiding or unenforceability.

Section 7.14 Force Majeure.

In addition to specific provisions of this Agreement, performance by either Party shall not be deemed to be in Default where delays or defaults are due to war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of transportation, or court order. An extension of time for any cause will be deemed granted if notice by the Party claiming such extension is sent to the other within ten (10) days from the commencement of the cause and such extension of time is not rejected in writing by the other Party within ten (10) days of receipt of the notice. In no event shall the City be required to agree to cumulative delays in excess of one hundred eighty (180) days.

Section 7.15 City Approval.

The City has authorized the City Manager to execute the Grant Documents and deliver such approvals or consents as are required by this Agreement, and to execute estoppel certificates concerning the status of the Grant and the existence of Recipient defaults under the Grant Documents. Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies. The City shall not unreasonably delay in reviewing and approving or disapproving any proposal by Recipient made in connection with this Agreement.

Section 7.16 Waivers.

Any waiver by the City of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of Recipient or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to Recipient to perform any obligation under this #17..
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Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the City to any act or omission by Recipient shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers.

Section 7.17 Title of Parts and Sections.

Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions.

Section 7.18 Entire Understanding of the Parties
This Agreement, together with the Grant Documents executed in connection with the Grant, constitutes the entire understanding and agreement of the Parties with respect to the Grant.

Section 7.19 Multiple Originals; Counterpart.

This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
[Signature Page Follows]
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WHEREAS, this Agreement has been entered into by the undersigned as of the date first above written.

Stanislaus Regional Housing Authority:

By: ________________________________

Title: ________________________________
By: ________________________________

Title: ________________________________
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CITY OF MODESTO
By: _______________________________
Joseph P. Lopez, City Manager
ATTEST:

By:

Diane Nayares-Perez, CMC, City Clerk
(SEAL)

APPROVED AS TO LEGAL FORM
Jose M. Sanchez, City Attorney
By: _______________________________
Jose M. Sanchez, City Attorney
APPROVED AS TO RISK MANAGEMENT:

By:

Name: __________________________
Risk Manager
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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
The land is situated in the State of California, County of Stanislaus, City of Modesto, and is described as follows:

PARCEL I:

CONDOMINIUM UNIT 1 THROUGH UNIT 3 AS SHOWN UPON THE AMENDED AND RESTATED CONDOMINIUM PLAN RECORDED ON AUGUST 7, 2014, IN AS INSTRUMENT NO. 2014-0051373-00, OFFICIAL RECORDS (REFERRED TO HEREIN AS “THE PLAN") AND BEING A SUBDIVISION OF LOT 1 AS SHOWN ON THAT CERTAIN MAP ENTITLED SUBDIVISION MAP NO. 2011-01, RECORDED OCTOBER 03, 2012, IN BOOK 44 OF MAPS, AT PAGE 16, (REFERRED TO HEREIN AS “THE MAP”), AND

AS FURTHER DESCRIBED AND DEFINED IN THE RESTATED DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR CORNERSTONE PLAZA RECORDED AUGUST 7, 2014, IN AS INSTRUMENT NO. 2014-0051374-00, OFFICIAL RECORDS, COUNTY OF STANISLAUS, STATE OF CALIFORNIA, (REFERRED TO HEREIN AS "THE DECLARATION").

EXCEPTING THEREFROM, ANY PORTION OF THE COMMON AREA LYING WITHIN SAID UNIT.

RESERVING THEREFROM:
(A) EASEMENTS THROUGH SAID UNIT, APPURTENANT TO THE COMMON AREA AND ALL OTHER UNITS, FOR SUPPORT AND REPAIR OF THE COMMON AREA AND ALL OTHER UNITS. (B) EASEMENTS, APPURTENANT TO THE COMMON AREA FOR ENCROACHMENT UPON THE AIR SPACE
OF THE UNIT BY THOSE PORTIONS OF THE COMMON AREA LOCATED WITHIN THE UNIT.

PARCEL II:

AN UNDIVIDED 3/5TH INTEREST IN AND TO THE COMMON AREA AS SHOWN AND DEFINED ON THE PLAN, RESERVING THEREFROM THE FOLLOWING:
(A) EXCLUSIVE EASEMENTS, OTHER THAN PARCEL III, AS DESIGNATED ON THE PLAN AND RESERVED BY GRANTOR TO UNITS FOR USE AS DESIGNATED IN THE DECLARATION; AND (B) NONEXCLUSIVE EASEMENTS APPURTENANT TO ALL UNITS FOR INGRESS AND EGRESS.

PARCEL III:

A NONEXCLUSIVE EASEMENT APPURTENANT TO PARCEL I ABOVE FOR SUPPORT, REPAIR AND

MAINTENANCE, AND FOR INGRESS AND EGRESS THROUGH THE COMMON AREA IN ACCORDANCE WITH CALIFORNIA CIVIL CODE SECTION 4505 (A).

PARCEL IV:

ENCROACHMENT EASEMENTS APPURTENANT TO THE UNIT IN ACCORDANCE WITH THE PROVISIONS OF THE DECLARATION.

APN: 060-036-028 (AFFECTS: UNIT 1); 060-036-029 (AFFECTS: UNIT 2) AND 060-036-030 (AFFECTS: UNIT 3)
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2 EXHIBIT B

PROJECT SUMMARY
Center for Human Services (CHS) will acquire 14,297 square feet of property located at 2000 W.

Briggsmore Ave., Modesto CA 95351. With the support of public/private youth serving organizations, CHS proposes the acquisition and rehabilitation of property to develop a Youth Navigation Center, a one stop service hub providing a continuum of services for young people (13-24 years old) who are experiencing crisis, housing instability, and/or homelessness.

Currently, there is no coordinated system of care for youth experiencing crisis, housing instability, and/or homelessness in Stanislaus County. There are also no dedicated shelter beds for 18-24 year olds. Services are fragmented or nonexistent. The proposed Youth Navigation Center will create a space where existing services can be relocated and new services developed, creating a clear pathway for youth/young adults.

CHS currently owns half of the building and will leverage the administrative and behavioral health programs already operating in this facility to support the young people accessing the Youth Navigation Center to be operated on the other half of the building. The property to be acquired consists of three parcels with Assessor Parcel Numbers (APNs): 060-36-028, 060-36- 029, and 060-36-30.

Once renovated, the center will provide the following services and facilitate a coordinated community response to youth homelessness as follows:
 Street outreach and engagement services
 Homeless prevention & diversion services
 Coordinated entry and assessment
 Crisis/Drop-in and Shelter for 13-17 year olds (8 beds)  Crisis/Drop-in and Low-Barrier Shelter for 18-24 year olds (24 beds)  Transitional Housing for 18-24 year olds (15 beds)
 Access to housing services including permanent housing slots designed for  youth with diverse circumstances
 On-site education and employment services
Besides the relocation of Pathways and Hutton House services to the new Youth Navigation Center, the project will include a new Low Barrier Emergency Shelter to provide 24 beds for young adults who are homeless. Services will include intake and assessment (VI-SPDAT), engagement, meeting basic needs, elimination of barriers to housing (assistance with documents, applications, etc), system navigation, linkage to services (including mental health and substance use services), and development of a housing plan. The length of stay will be up to 60 days. The shelter will be open from 7pm - 8am and will serve continental breakfast and dinner. Showers and laundry will also be available as well as access to computers. #17..
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EXHIBIT C

APPROVED PROJECT BUDGET
Sources Acquisition Rehabilitation Total
City of Modesto – CDBG Loan $500,000 $500,000
City of Modesto – CDBG Grant $500,000 $500,000
HEAP – State Funding $750,000 $750,000
CHS – Agency Reserves $200,000 $200,000
CHS – Capital Campaign/Loan $2,000,000 $2,000,000
Total $1,950,000 $2,000,000 $3,950,000
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2 EXHIBIT D

FEDERAL AWARD IDENTIFICATION INFORMATION
i) Participant’s name:

Center for Human Services
ii) Participant’s DUNS:
038119202
iii) Federal Award Identification Number (FAIN):

B-19-MC-06-0002
iv) Federal Award Date:
07/31/2019
v) Subaward Period of Performance Start and End Date:

Thirty (30) years from the date a certificate of occupancy is issued for the Project, but in no event later than December 31, 2021
vi) Amount of Federal Funds Obligated by this action by the CITY entity to the Participant:
$500,000 Entitlement Grant Funds
vii) Total Amount of Federal Funds Obligated to the Participant by the CITY including the current obligation:
$1,000,000 ($500,000 Entitlement Grant Funds; $500,000 Revolving Loan Funds) viii) Total Amount of the Federal Award committed to the Participant by the CITY:
$1,000,000
ix) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA):

See Exhibit B Project Summary
x) Name of Federal awarding agency:

US Department of Housing and Urban Development
xi) Contact information for CITY official responsible for awarding funding:

Community Development Manager 1010 10th Street, Ste 3100, Modesto CA 95354 xii) CFDA Number and Name:
14-218 Community Development Block Grant/Entitlement
xiii) Identification of whether the award is R&D:

Not Applicable
xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged per 2 CFR 200.414 Indirect (F&A) costs):

Not Applicable
3337579.3
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352473.1

HOME LOAN AGREEMENT

BY AND BETWEEN

THE CITY OF MODESTO,
a California Charter City
AND

THE STANISLAUS REGIONAL HOUSING AUTHORITY,
a public body, corporate and politic
(Vine Street Developments)
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TABLE OF CONTENTS
Page
3524731.1
i
ARTICLE 1 DEFINITIONS AND EXHIBITS 2
Section 1.1 Definitions....................................................................................................2 Section 1.2 Exhibits. .......................................................................................................8 ARTICLE 2 LOAN PROVISIONS 8
Section 2.1 Loan. ............................................................................................................8 Section 2.2 Interest..........................................................................................................9 Section 2.3 Use of HOME Loan Funds. .........................................................................9 Section 2.4 Security. .......................................................................................................9 Section 2.5 Subordination...............................................................................................9 Section 2.6 Conditions Precedent to Disbursement of the Construction Component. ..............................................................................................10 Section 2.7 Conditions Precedent to Disbursement of Retention Component. ............12 Section 2.8 Repayment of the HOME Loan. ................................................................13 Section 2.9 Reports and Accounting of Residual Receipts...........................................15 Section 2.10 Nonrecourse. ..............................................................................................16 ARTICLE 3 PREDEVELOPMENT REQUIREMENTS 17
Section 3.1 Predevelopment Requirements. .................................................................17 Section 3.2 Final Financing Plan. .................................................................................17 Section 3.3 Relocation Plan. .........................................................................................18 Section 3.4 Plans and Specifications. ...........................................................................18 Section 3.5 Applicable Governmental Approvals. .......................................................19 Section 3.6 Other Financing. ........................................................................................19 Section 3.7 Management Plan.......................................................................................19 Section 3.8 Construction Contract. ...............................................................................20 Section 3.9 Building Permit Issued...............................................................................20 Section 3.10 Insurance....................................................................................................20 Section 3.11 Performance and Payment Bonds. .............................................................21 Section 3.12 Evidence of Availability of Funds. ............................................................21 ARTICLE 4 CONSTRUCTION OF THE AFFORDABLE DEVELOPMENT 22 Section 4.1 Commencement of Construction Work. ....................................................22 Section 4.2 Completion of Construction Work.............................................................22 Section 4.3 Performance of Work Pursuant to Plans and Laws; Prevailing Wages. ......................................................................................................22 Section 4.4 Equal Opportunity......................................................................................24 Section 4.5 Minority and Women-Owned Contractors. ...............................................24 Section 4.6 Progress Reports; Amended Final Financing Plan. ...................................24 Section 4.7 Construction Responsibilities. ...................................................................25 Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion.....................25 Section 4.9 Inspections. ................................................................................................26 Section 4.10 Developer Fee. ...........................................................................................26 #17..
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TABLE OF CONTENTS
(continued)
Page
ii
Section 4.11 Marketing Plan...........................................................................................26 ARTICLE 5 LOAN REQUIREMENTS 27
Section 5.1 Match Requirement....................................................................................27 Section 5.2 Financial Accountings and Post-Completion Audits.................................27 Section 5.3 Annual Operating Budget. .........................................................................27 Section 5.4 Information. ...............................................................................................28 Section 5.5 Records. .....................................................................................................28 Section 5.6 Audits.........................................................................................................29 Section 5.7 HOME Requirements.................................................................................30 Section 5.8 Hazardous Materials. .................................................................................34 Section 5.9 Maintenance and Damage..........................................................................36 Section 5.10 Fees and Taxes...........................................................................................37 Section 5.11 Notice of Litigation....................................................................................37 Section 5.12 Operation of Development as Affordable Housing. ..................................37 Section 5.13 Non-Discrimination. ..................................................................................38 Section 5.14 Insurance Requirements.............................................................................38 Section 5.15 Anti-Lobbying Certification. .....................................................................40 Section 5.16 Purpose of Restriction on Transfer. ...........................................................40 Section 5.17 Prohibited Transfers...................................................................................41 Section 5.18 Permitted Transfers Without Prior City Approval.....................................41 Section 5.19 Permitted Transfers With Prior City Approval..........................................41 Section 5.20 Allowable Preferences. ..............................................................................42 Section 5.21 Affordability and Project Monitoring. .......................................................42 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE
DEVELOPER 43
Section 6.1 Representations and Warranties.................................................................43 ARTICLE 7 TERMINATION, DEFAULT AND REMEDIES 45
Section 7.1 Events of Default. ......................................................................................45 Section 7.2 Remedies....................................................................................................47 Section 7.3 Right of Contest. ........................................................................................48 Section 7.4 Remedies Cumulative. ...............................................................................48 Section 7.5 Survival......................................................................................................48 ARTICLE 8 GENERAL PROVISIONS 48
Section 8.1 Relationship of Parties................................................................................48 Section 8.2 No Claims. .................................................................................................49 Section 8.3 Amendments. .............................................................................................49 Section 8.4 Entire Understanding of the Parties. ..........................................................49 Section 8.5 Indemnification..........................................................................................49 Section 8.6 Non-Liability of City Officials, Employees and Agents. ..........................49 #17..
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TABLE OF CONTENTS
(continued)
Page
iii
Section 8.7 No Third Party Beneficiaries. ....................................................................50 Section 8.8 Action by the City......................................................................................50 Section 8.9 Waivers. .....................................................................................................50 Section 8.10 Notices, Demands and Communications. ..................................................50 Section 8.11 Applicable Law and Venue........................................................................51 Section 8.12 Parties Bound.............................................................................................51 Section 8.13 Attorneys' Fees...........................................................................................51 Section 8.14 Severability. ...............................................................................................51 Section 8.15 Extensions..................................................................................................51 Section 8.16 Conflict of Interest. ....................................................................................52 Section 8.17 Title of Parts and Sections. ........................................................................52 Section 8.18 Multiple Originals; Counterpart.................................................................53 Section 8.19 City Approval.............................................................................................53 Section 8.20 Operating Memoranda. ..............................................................................53 Section 8.21 Assignment by City. ..................................................................................53

EXHIBITS
Exhibit A: Legal Description
Exhibit B: Final Financing Plan
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3524731.1
1 HOME CHDO LOAN AGREEMENT
(HOME CHDO Loan- Vine Street Developments)
This HOME Loan Agreement (the "Agreement"), effective _______________________, 2022 (the "Effective Date"), is entered into by and between the City of Modesto, a California charter city (the "City"), and the Stanislaus Regional Housing Authority, a public body corporate and politic (the "Developer"), with reference to the following facts, purposes and intentions.

RECITALS
A. These Recitals refer to and utilize certain capitalized terms which are defined in Article 1 of this Agreement. The Parties intend to refer to those definitions in connection with the use of capitalized terms in these Recitals.

B. The City has received HOME Investment Partnership Act funds from the United States Department of Housing and Urban Development ("HUD") pursuant to the CranstonGonzales National Housing Act of 1990 ("HOME Funds"). The HOME funds must be used by the City in accordance with 24. C.F.R. Part 92.

C. Developer owns that certain real property located on Vine Street, between the Helen white Trail to the west and S. Martin Luther King Drive to the east, in the City of Modesto, California, also known as Stanislaus County Assessor Parcel Number 030-010-042, as further described in Exhibit A, attached hereto and incorporated herein (the “Property”).

D. Developer intents to construct 35 residential units on the Property (the “Project”).

The Project will consist to two parts. One portion of the Project will consist of twenty-three (23) one-bedroom detached units, including one manager’s unit (“King Kennedy Veterans Cottages”).

The King Kennedy Veterans Cottages will be reserved for veterans. The second portion of the Development will consist of twelve (12) one-bedroom attached units (the “Helen White Court”).

Helen White Court will be reserved for seniors.

F. The Developer has requested, and the City has agreed to provide the Developer with a loan of One Hundred and Ninety-Five Thousand Five Hundred and Twelve Dollars and Forty-Three Cents ($195,512.43) in HOME Investment Partnership Community Housing Development Corporation 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.

C. The HOME Loan is being made to increase the supply of affordable rental housing in the City of Modesto. Due to the assistance provided Developer pursuant to this #17..
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3524731.1
2 Agreement, the City has classified eleven (11) single-family one-bedroom cottage units as HOME-assisted units (each such unit a "HOME-Assisted Unit"), which Units are "floating" Units as defined in 24 C.F.R. 92.252(j). The HOME-Assisted Units are required to be intermingled throughout the Development and of comparable quality to all other Units and must meet the Uniform Federal Accessibility Standards and Section 3.8(g) below.

D. As a condition to providing the HOME Loan to the Developer, the City is imposing occupancy and affordability restrictions on the Development, ensuring that specified units therein remain affordable to specified income eligible households for a specified period as set forth in the HOME Regulatory Agreement.

E. In accordance with the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321-4347) ("NEPA"), the City has completed and approved all applicable environmental review for the activities proposed to be undertaken under this Agreement.

F. In accordance with the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) ("CEQA"), the City has completed and approved all applicable environmental review for the activities proposed to be undertaken under this Agreement.

NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the Parties agree as follows:

ARTICLE 1

DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.

The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided:
(a) "Agreement" means this HOME Loan Agreement.
(b) "Annual Operating Expenses" with respect to a particular calendar year means the following costs reasonably and actually incurred for operation and maintenance of the Development to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles:
(1) Property taxes and assessments imposed on the Development; (2) Debt service currently due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Development) on loans associated with the development of the Development and approved by the City in the Final Financing Plan; (3) Property management fees and reimbursements, not to exceed fees and reimbursements which are standard in the industry, and pursuant to a management contract approved by the City;
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3524731.1
3 (4) Premiums for property damage and liability insurance; utility services not paid for directly by tenants, including water, sewer, and trash collection; maintenance and repair;
(5) Any annual license or certificate of occupancy fees required for operation of the Development;
(6) Security services;
(7) Advertising and marketing costs;
(8) Cash deposited into reserves for capital replacements of the Development in an amount to be approved by the City as part of the Final Financing Plan; (9) Cash deposited into an operating reserve in an amount approved by the City as part of the Final Financing Plan and annual operating budgets, but with the operating reserve capped at six (6) months of gross rent from the Development (as such rent may vary from time to time);
(10) Utility services, maintenance and repair, including pest control, landscaping, grounds maintenance, painting and decorating, cleaning, common systems repair, janitorial supplies and services, advertising and marketing; (11) Deferred developer fee in an amount to be approved by the City as part of the Final Financing Plan;
(12) Extraordinary operating costs specifically approved by the City; (13) Payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves; (14) Reasonable accounting and legal fees;
(15) Other ordinary and reasonable operating expenses approved in writing by the City and not listed above; and
(16) Annual Operating Expenses shall exclude the following:
depreciation, amortization, depletion or other non-cash expenses, or any amount expended from a reserve account.
(c) "Approved Financing" means the loans or grants and equity acquired, or to be acquired, by the Developer and approved by the City in its reasonable discretion for the purpose of financing the Development, in addition to the HOME Loan, which may include a Farmers & Merchants Bank in the approximate amount shown in the approved Financing Proposal (the "F&M Bank Loan") as well as a grant provided to the Developer through the No Place Like Home Program operated by the California Department of Housing and Community Development;
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3524731.1
4 (d) "Approved Plans and Specifications" means the plans and specifications for the Construction Work, approved by the City pursuant to Section 3.4 below. (e) "CEQA" means the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.).
(f) "City" means the City of Modesto, a California charter city. (g) "City Attorney" means the City Attorney of the City of Modesto. (h) "City Council" means the City Council of the City of Modesto. (i) "City Manager" means the City Manager of the City of Modesto. (j) "City's Share of Residual Receipts" means the City's Pro Rata Share (as defined below) of fifty percent (50%) of Residual Receipts (the 50% being the "Lenders' Share of Residual Receipts") which shall be determined at the close of permanent financing, or any time any determination thereof is needed to be made. The Pro Rata Share shall be determined by calculating the percentage resulting from dividing the amount of the HOME Loan funds disbursed to the Developer in accordance with this Agreement by the aggregate sum of the funds disbursed to the Developer under the HOME Loan and the Approved Financing subordinate loans, in accordance with the applicable agreements. The Developer shall be entitled to the other 50% share of the Residual Receipts ("Developer's Share of Residual Receipts"). (k) "Close of Escrow" shall refer to the date of recordation of the HOME Deed of Trust against the Property pursuant to the terms of this Agreement and the date of recordation of the HOME Regulatory Agreement against the Property pursuant to the terms of this Agreement.
(l) "Commencement of Construction" means the date on which construction of the Development commences pursuant to Section 4.1 below. (m) "Completion of Construction" means the date the Developer receives a certificate of occupancy for the Affordable Development pursuant to Section 4.2 below. (n) "Construction Bonds" means copies of labor and material bonds and performance bonds for the Construction Work in an amount equal to one hundred percent (100%) of the scheduled cost of the Construction Work.
(o) "Construction Contract" means the construction contract approved by the City pursuant to the terms of Section 3.8 hereof.
(p) "Completion Date" means the date that all of the following have occurred:
(i) a final certificate of occupancy is issued by the City to certify completion of the construction of the Development; (ii) the final disbursement of HOME funds for the Development has been made; (iii) the City has verified the Development complies with the property standards set forth #17..
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3524731.1
5 in 24 CFR 92.251; and (iv) all project completion information has been entered by the City into the Integrated Disbursement and Information System (IDIS). (q) "Construction Work" means the physical Construction Work to construct the Development in accordance with the Approved Plans and Specifications and the Governmental Approvals.
(r) "Default" means an event of default under this Agreement, as more specifically described in Section 7.1 below.
(s) "Developer" means the Stanislaus Regional Housing Authority, a public body, corporate and politic, and its approved successors and assigns. (t) "Development" means 23 one-bedroom cottage units to be constructed on the Property, including all common areas and related amenities. (u) "Effective Date" has the meaning set forth in the first paragraph. (v) "Escrow" means the escrow account established by the Developer for the closing of Development financing with _______________, located at _____________, or another escrow company satisfactory to the City.
(w) "Evidence of Insurance Coverage" has the meaning set forth in Section 3.10 below.
(x) "Final Cost Certification" has the meaning set forth in Section 5.2. (y) "Final Financing Plan" means the Developer's final plan for financing the construction of the Development and the operation of the Development. The Final Financing Plan approved by the City as of the date of this Agreement is attached to this Agreement as Exhibit B, incorporated herein by reference, and may be revised from time to time with the approval of the City pursuant to Section 3.2 below.
(z) "Force Majeure" means the occurrence of one or more of those events described in Section 8.15, permitting an extension of time for performance of obligations under this Agreement.
(aa) "Governmental Approvals" means the City and other governmental permits and approvals necessary for the construction and operation of the Development, including but not limited to submissions of a precise plan, detailed exterior plans, overall design and architectural review and any required operating licenses, but excluding a building permit. (bb) "Gross Revenue" with respect to a particular calendar year, means all revenue, income, receipts, and other consideration actually received from operation and leasing of the Development, including, but not be limited to:
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3524731.1
6 (1) All rents, fees and charges paid by tenants, payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements resulting in actual income;
(2) The proceeds of business interruption or similar insurance; (3) The fair market value of any goods or services provided in consideration for the leasing or other use of any portion of the Development; (4) Subject to the rights of Senior Lenders, the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Development (or applied toward the cost of recovering such proceeds);
(5) Subject to the rights of Senior Lenders, condemnation awards for a taking of part or all of the Development or Property for a temporary period; and (6) Gross Revenue shall exclude tenants' security deposits, loan proceeds, capital contributions or other similar advances. (cc) "Hazardous Materials" means 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.
(dd) "Hazardous Materials Claim" means: (1) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Developer or the Development pursuant to Hazardous Materials Laws; (2) all claims made or threatened by any third party against the Developer or the Development relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials.
(ee) "Hazardous Materials Law" means any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials. (ff) "HOME" means the HOME Investment Partnership Act Program pursuant to the Cranston-Gonzales National Affordable Housing Act of 1990 (42 U.S.C. Section 12705 et. seq.), as amended.
(gg) "HOME Deed of Trust" means the deed of trust securing repayment of the HOME Loan, which shall be recorded against the Property, in a form to be provided by the City. (hh) “HOME Loan” means a loan in the amount of not to exceed One Million One Hundred Twenty Four Thousand Dollars ($1,124,000) loaned to Developer to fund construction costs of the Development.
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3524731.1
7 (ii) "HOME Loan Documents" means this Agreement, the Note, the HOME Regulatory Agreement and the HOME Deed of Trust HOME.
(jj) "HOME Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, between the City and the Developer, associated with the HOME Loan, to be recorded against the Property, in a form to be provided by the City. (kk) "HOME Term" means the period beginning on the date of this Agreement and ending on the twentieth (20th) anniversary of the Completion Date. (ll) "HOME Units" means the eleven (11) Units whose occupancy and rental charges are restricted pursuant to the HOME Regulatory Agreement. (mm) "HUD" means the United States Department of Housing and Urban Development.
(nn) "Management Plan" has the meaning set forth in Section 3.7 below. (oo) "Marketing Plan" has the meaning set forth in Section 4.11 below. (pp) "NEPA" means the National Environmental Policy Act of 1969 ("NEPA"), as amended (42 U.S.C. Sections 4321-4347).
(qq) "Note" means the promissory note, in a form to be provided by the City that will evidence the Developer's obligation to repay the HOME Loan. (rr) "Notice of Completion" means the Notice of Completion executed by Developer in the form specified in California Civil Code Section 9204. (ss) "Operating Memoranda" has the meaning given in Section 8.20 below. (tt) "Parties" means the City and the Developer and the term Party shall refer to each of them individually.
(uu) "Property" means that certain real property located in the City of Modesto, County of Stanislaus, State of California, on which the Development will be constructed, as more particularly described in Exhibit B attached hereto and incorporated herein. (vv) "Recorder" means the Office of the Stanislaus County Recorder. (ww) "Residual Receipts" means, in a particular calendar year, the amount by which Gross Revenue (as defined in Section 1.1(bb) exceeds Annual Operating Expenses (as defined in Section 1.1(b)) for that calendar year.
(xx) "Section 3" means Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. Section 1701(u).
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3524731.1
8 (yy) "Senior Lender" has the meaning set forth in Section 2.5 below. (zz) "Senior Lien" has the meaning set forth in Section 2.5 below. (aaa) "Term" means the term of this Agreement, which commences as of the date of this Agreement and, unless terminated earlier pursuant to this Agreement, ends fifty-five (55) years from the Completion Date, but in no event later than December 31 __, 2078 (subject to extensions agreed upon by the Parties).
(bbb) "Transfer" means any sale, assignment, or transfer, whether voluntary or involuntary, of: (1) any rights and/or duties under this Agreement, and/or (2) any interest in the Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of the Development is transferred and the Developer retains title.
(ccc) "Unit" means one (1) of the twenty three (23) one (1) bedroom cottages affordable rental housing units to be constructed as part of the Development.

Section 1.2 Exhibits.

The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:

Exhibit A: Legal Description
Exhibit B: Financing Plan
ARTICLE 2

LOAN PROVISIONS
Section 2.1 Loan.
(a) Subject to satisfaction of the conditions set forth in this Article 2, as applicable, the City shall lend to the Developer the HOME Loan for the purposes set forth in Section 2.3 of this Agreement. The obligation to repay the HOME Loan shall be evidenced by the Note, in the form to be provided by the City. For the purposes of this Article 2, the HOME Loan will be disbursed in two (2) components:
(1) The "Construction Component" shall be a portion of the HOME Loan in the approximate amount of One Million Eleven Thousand Six Hundred Dollars ($1,011,600) which shall be disbursed in accordance with the requirements of Section 2.6 below. (2) The "Retention Component" shall be a portion of the HOME Loan in the approximate amount of One Hundred Twelve Thousand Four Hundred Dollars ($112,400) #17..
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9 or the balance of the HOME Loan, which shall be disbursed in accordance with the requirements of Section 2.7 below.
(b) Federal award identification information regarding the funding provided to Developer by this Agreement, as required by 24 CFR 200.331, is included in Exhibit C, attached hereto and incorporated herein.

Section 2.2 Interest.
(a) Subject to the provisions of subsection (b) below, the outstanding principal balance of the HOME Loan shall bear interest at a rate of zero percent (0%) per year. (b) In the event of a Default, interest on the HOME Loan shall begin to accrue, as of the date of Default, and continuing until such time as HOME Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of ten percent (10%), compounded annually, or the highest rate permitted by law.

Section 2.3 Use of HOME Loan Funds.
(a) Construction Component. The Developer shall use the Construction Component funds to partially fund the construction of the Development consistent with the Final Financing Plan, and to the extent feasible, to fund the Developer Fee in accordance with the terms of this Agreement.
(b) Retention Component. The Developer shall use the Retention Component of the HOME Loan to reimburse the Developer for any construction costs associated with the construction of the Development, including to fund the Developer Fee in accordance with the terms of this Agreement.
(c) Reimbursements. No portion of the Loan shall be used to fund costs incurred more than twenty-four (24) months prior to the Effective Date or for any costs not allowed under 24 C.F.R. 92.206.
(d) No Other Uses. The Developer shall not use any proceeds of the HOME Loan for any other purpose without the prior written consent of the City.

Section 2.4 Security.

The Developer shall secure its obligations to repay the HOME Loan, as evidenced by the Note, by executing the HOME Deed of Trust and recording the HOME Deed of Trust against the Property at the Close of Escrow.

Section 2.5 Subordination.

Any agreement by the City to subordinate the HOME Deed of Trust to an encumbrance securing and/or evidencing Approved Financing (each such approved Final Financing Plan, a #17..
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10 "Senior Lien"), will be subject to the satisfaction of each of the following conditions, as reasonably determined by the City:
(a) All of the proceeds of the proposed Senior Lien, less any transaction costs, must be used to provide construction and/or permanent financing for the Development. (b) The proposed lender (each, a "Senior Lender") must be a state or federally chartered financial institution, a nonprofit corporation or a public entity that is not affiliated with the Developer or any of the Developer's affiliates, other than as a depositor or a lender. (c) The Developer must demonstrate to the City's reasonable satisfaction that subordination of the HOME Deed of Trust is necessary to secure adequate construction and/or permanent financing to ensure the viability of the Development, including the operation of the Development as affordable housing, as required by the HOME Loan Documents. To satisfy this requirement, the Developer must provide to the City, in addition to any other information reasonably required by the City, evidence demonstrating that the proposed amount of the Senior Lien is necessary to provide adequate construction and/or permanent financing to ensure the viability of the Development, and adequate financing for the Development would not be available without the proposed subordination.
(d) The subordination agreements must provide the City with adequate rights to cure any defaults by the Developer, including: (1) providing the City or its successor with copies of any notices of default at substantially the same time and in the same manner as provided to the Developer; and (2) providing the City with a cure period of at least sixty (60) days to cure any default.
(e) The subordination(s) described in this Section may be effective only during the original term of the Senior Lien and any extension of its term that is approved in writing by the City, which approval shall not unreasonably be withheld. (f) No subordination may limit the effect of the HOME Deed of Trust before a foreclosure, nor require consent of the holder of the Senior Lien to exercise any remedies by the City under the HOME Loan Documents.
(g) Upon a determination by the City Manager that the conditions in this Section have been satisfied, the City Manager will be authorized to execute the approved subordination agreement without the necessity of any further action or approval. (h) In the event there is a foreclosure of the Property, the HOME Regulatory Agreement shall be revived according to its original terms if, during the original HOME Regulatory Agreement 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 the Property.

Section 2.6 Conditions Precedent to Disbursement of the Construction Component. #17..
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11 (a) The Construction Component of the HOME Loan shall be disbursed in accordance with the following provisions. The division of the HOME Loan between the Construction Component and the Retention Component may be readjusted by the City Manager on behalf of the City without the need for formal amendment of this Agreement. The City shall not be obligated to make any disbursements of the Construction Component unless the following conditions precedent are satisfied:
(1) There exists no Default by Developer nor any act, failure, omission or condition that would constitute an event of Default by Developer under this Agreement or any other project financing agreements or contracts;
(2) The Developer has delivered to the City a copy of an authorizing resolution authorizing execution of the HOME Loan Documents and the transactions contemplated by this Agreement;
(3) The Developer has executed and delivered to the City the Note evidencing the Developer's obligations under this Agreement, the HOME Deed of Trust, and the HOME Regulatory Agreement;
(4) The HOME Regulatory Agreement and the HOME Deed of Trust, have been, or concurrently with the Close of Escrow will be, recorded against the Property in a lien position approved by the City, and subject only to those liens approved by the City; (5) The City has received and approved the Plans and Specifications; (6) The Developer has received all Governmental Approvals and all building permits necessary to perform the Construction Work pursuant to the terms of this Agreement;
(7) The undisbursed proceeds of the HOME Loan, together with other funds that the Developer has obtained in connection with the Development, are not less than the amount provided in the Final Financing Plan;
(8) The City has received and approved a construction contract that the Developer has entered or proposed to enter for construction of the Development as required under the terms of this Agreement;
(9) A title insurer reasonably acceptable to the City is unconditionally and irrevocably committed to issuing an LP-10 2006 ALTA Lender's Policy of insurance insuring the priority of the HOME Regulatory Agreement and HOME Deed of Trust in the amount of the HOME Loan subject only to such exceptions and exclusions as may be reasonably acceptable to the City, and containing such endorsements as the City may reasonably require; (10) All applicable federal (including all applicable requirements under the National Environmental Protection Act) and state environmental review has been completed for the Development;
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12 (11) The Developer has furnished the City with evidence of insurance coverage meeting the requirements of this Agreement; The City has received copies of labor and material payment and performance bonds as required pursuant to the terms of this Agreement; (12) The City has received and approved the Management Plan required pursuant to the terms of this Agreement;
(13) The Developer has obtained all permits and approvals necessary for the construction of the Development, as required under Section 3.5, and the City has received copies of the building permits required to construct the Development. (14) The City has completed as approved all environmental reviews under NEPA, and the Developer has provided the City evidence of compliance with all approved NEPA requirements and mitigation measures;
(15) The City has received reasonable evidence that the local match requirements set forth in 24. C.F.R. Section 92.218 et seq., have been satisfied pursuant to Section 5.1 of this Agreement; and
(16) The City has received a written draw request from the Developer, including certification that the condition set forth in subsection (a)(1) continues to be satisfied, and setting forth the proposed uses of funds consistent with the Final Financing Plan previously approved by the City, the amount of funds needed, and, a copy of the bill or invoice covering a cost incurred. When a disbursement is requested to pay any contractor in connection with improvements on the Property, the written request must be accompanied by: (i) certification by the Developer's architect reasonably acceptable to the City that the work for which disbursement is requested has been completed (although the City reserves the right to inspect the Property and make an independent evaluation); and (ii) conditional lien releases and/or mechanics lien title insurance endorsements reasonably acceptable to the City. (b) Upon satisfaction of the conditions in Section 2.6(a) above, the City shall disburse the Construction Component of the HOME Loan (or so much thereof as is required) for approved cost items as further described in the Final Financing Plan, on a monthly basis. (c) Notwithstanding any other provisions of this Agreement, the City shall have no obligation to disburse any portion of the HOME Loan to the Developer following notification by the City to the Developer of a Default by Developer under the terms of this Agreement.

Section 2.7 Conditions Precedent to Disbursement of Retention Component. (a) The City shall not be obligated to disburse the final One Hundred Twelve Thousand Four Hundred Dollars ($112,400) of HOME Loan funds which comprise the Retention Component of the HOME Loan unless the following conditions precedents are satisfied:
(1) The City has received a completion report from the Developer setting forth the income, household size, and ethnicity of tenants of the Development and the unit size, rent amount and utility allowance for all units in the Development. #17..
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13 (2) The City has received a final cost certification pursuant to Section

5.2 below.
(3) The City has received from the Developer copies of the final certificate of occupancy for the Development and the notice of completion has been recorded against title to the Property, or other equivalent document. (4) The City has received from the Developer current evidence of the insurance coverage meeting the requirements of Section 3.10 below. (5) The City has received from the Developer a form of lease, Marketing Plan and tenant selection plan for the Development. (6) The City has received from the Developer evidence of marketing for any vacant units in the Development such as copies of flyers, list of media ads, list of agencies and organizations receiving information on availability of units, as applicable. (7) The City has received from the Developer all relevant contract activity information, including, but not limited to evidence that the Developer has complied with the requirements in Section 4.3, Section 4.4, and Section 4.5. (8) The City has received from the Developer contact information for the property manager of the Development and the name and phone number of the on-site property manager.
(9) Developer has submitted a certification from the architect certifying that the Units have been constructed in compliance with the Approved Plans and Construction Contract, as defined in this Agreement.
(10) If Developer is required to pay prevailing wages under the DavisBacon Act (40 U.S.C. 3141-3148), the City has received from the Developer all certified payrolls, and any identified payment issues have been resolved, or the Developer is working diligently to resolve any such issues.
(11) The City has received a written draw request from the Developer, including certification that the conditions set forth in subsection 2.6(a) continues to be satisfied, and setting forth the proposed uses of funds consistent with the Final Financing Plan, and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred. The Developer shall apply the disbursement for the purpose(s) requested. (b) Notwithstanding any other provisions of this Agreement, the City shall have no obligation to disburse any portion of the HOME Loan to the Developer under this Section, following notification by the City to the Developer of a Default by Developer under the terms of this Agreement.

Section 2.8 Repayment of the HOME Loan.

The HOME Loan shall be repaid as follows:
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14 (a) Annual Payments. Commencing on April 1, 2023, and on April 1 of each year thereafter, through the end of the Term of the HOME Loan, the Developer shall make repayments of the HOME Loan in the amount of the City's Share of Residual Receipts. Payment of the City's Share of Residual Receipts shall be credited first against accrued interest and then against outstanding principal, and shall be accompanied by the Developer's report of Residual Receipts (including an independent auditor's report regarding the auditor's review of Annual Operating Expenses). The Developer shall provide the City with any documentation reasonably requested by the City to substantiate the Developer's determination of Residual Receipts. (b) Due in Full. All principal and accrued interest on the HOME Loan shall be due in full on the earliest to occur of the following: (1) the date of any Transfer not authorized by the City; (2) the date of any Default (subject to applicable notice and cure periods set forth in Section 7.1); or (3) the expiration of the Term.
(c) Right to Prepay. The Developer shall have the right to prepay the HOME Loan at any time without premium or penalty. However, this Agreement and the HOME Regulatory Agreement shall remain in effect for the entire Term regardless of any prepayment. (d) Special Repayment From Net Proceeds. Subject to the rights of senior lenders, No later than one hundred eighty (180) days from the Completion Date; the Developer shall pay to the City one-hundred percent (100%) of the Net Proceeds of Permanent Financing, as a special repayment of the Loan. The amount of the Net Proceeds of Permanent Financing shall be calculated using the actual principal amount of the permanent loans and/or grants made to the Developer, provided that if such amount is less than the amount set forth in the Approved Financing Plan, then the Developer shall provide sufficient evidence that the permanent loan is the maximum principal amount that the Developer could secure for the Development applying the permanent lender's underwriting standards. No later than one hundred fifty (150) days following completion of construction of the Development, Developer shall submit to the City for its review a preliminary calculation of the Net Proceeds of Permanent Financing. The City shall reasonably approve or disapprove Developer's determination of the amount of the Net Proceeds of Permanent Financing in writing within thirty (30) days of receipt. If Developer's determination is disapproved by the City, Developer shall re-submit documentation to the City until the City approval is obtained. Notwithstanding anything to the contrary, the Borrower may request a deduction from the Net Proceeds of Permanent Financing to fund additional capital reserve account and operating reserves upon approval from the City, which approval shall not be unreasonably withheld.
(e) Special Repayment For Un-leased Units. As required under 24 C.F.R.

92.252, if Developer fails to lease any one of the HOME Units within eighteen (18) months of the Completion of Construction of the Development subject to any force majeure extensions resulting from the application of Section 8.15(a) of this Agreement, the Developer shall pay to the City a proportionate share of the indebtedness of Developer to the City under this Agreement and the Note attributable to each of the HOME Units that has remained un-leased, together with any accrued interest thereon calculated pursuant to Section 2.2, which amount shall be immediately due and payable. Notwithstanding anything to the contrary, the requirements here under shall not apply if: (1) there exists an exigent health and safety system deficiency that #17..
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15 threatens the life, health or safety of residents; (2) the exigent health and safety system deficiency was not caused by the Developer; (3) the exigent health and safety system deficiency prevents the Developer from being able to rent the HOME Unit; and (4) the Developer shows good faith efforts to correct or abate the exigent health and safety system deficiency.

Section 2.9 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual payments required pursuant to Section 2.8, within one hundred twenty (120) days of the end of the Developer's fiscal year, the Developer shall furnish to the City an audited statement duly certified by an independent firm of certified public accountants approved by the City, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year.
(b) Books and Records. The Developer shall keep and maintain on the Property, or at its principal place of business, or elsewhere with the City's written consent, full, complete and appropriate books, records and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail the Developer's calculation of Residual Receipts. Books, records and accounts relating to the Developer's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the City, its auditors or other City authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that the Developer may be required to furnish any governmental agency shall at all reasonable times, and upon twenty-four (24) hours' notice, be open for inspection by the City at the place that the books, records and accounts of the Developer are kept. The Developer shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending. (c) Audits. The receipt by the City of any statement pursuant to this section or any payment by the Developer or acceptance by the City of any loan repayment for any period shall not bind the City as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the City or any designated agent or employee of the City at any time shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of the Developer and other places where records are kept.

Immediately after the completion of an audit, the City shall deliver a copy of the results of such audit to the Developer. If it shall be determined as a result of such audit that there has been a deficiency in a loan repayment to the City, then such deficiency shall become immediately due and payable with interest at the default rate set forth in this Agreement, as applicable, determined as of and accruing from the date that said payment should have been made. In addition, if the Developer's auditor's statement for any Development fiscal year shall be found to have understated Residual Receipts by more than five percent (5%) and at least Five Thousand Dollars ($5,000), and the City is entitled to any additional HOME Loan repayment as a result of said #17..
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16 understatement, then the Developer shall pay, in addition to the interest charges referenced hereinabove, all of the City's reasonable costs and expenses connected with any audit or review of the Developer's accounts and records.

Section 2.10 Nonrecourse.
(a) Except as provided below, upon recordation of the HOME Deed of Trust against the Affordable Parcel, the Developer shall have no direct or indirect personal liability for payment of the principal of, or interest on, the HOME Loan. Following recordation of the HOME Deed of Trust against the Affordable Parcel, the sole recourse of the City with respect to the principal of, and interest on, the Note shall be to the Property described in the HOME Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall:
(1) Limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; (2) Be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; (3) Be deemed in any way to limit the rights of the City to obtain specific performance by the Developer of its covenants under the HOME Loan Documents, other than the covenants to pay the City principal and interest due under the Note; or (b) The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve the Developer of its obligation to indemnify the City under this Agreement, or liability for:
(1) Fraud or willful misrepresentation by the Developer; (2) The failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the HOME Deed of Trust (to the full extent of such taxes, assessments or other charges); (3) The fair market value of any personal property or fixtures removed or disposed of by the Developer other than in accordance with the HOME Deed of Trust; and/or (4) The misappropriation of any proceeds by the Developer under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development. #17..
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17 ARTICLE 3

PREDEVELOPMENT REQUIREMENTS
Section 3.1 Predevelopment Requirements.

The tasks described below shall be completed by the Developer no later than the dates set forth in this Article 3, subject to Force Majeure. The dates set forth herein may be modified by Operating Memoranda executed by the Developer and by the City Manager on behalf of the City without formal amendment of this Agreement.

Section 3.2 Final Financing Plan.
(a) As a condition precedent to the first Construction Component draw, the Developer shall have submitted and received approval from the City for any updates to the a "Final Financing Plan" attached hereto as Exhibit B:
(1) An updated "sources and uses" breakdown of the costs of purchasing the Property and constructing the Development, and an updated operating proforma for the Development. Such updated sources and uses breakdown shall reflect the Developer's then current expectations for funding sources and development costs and may be in a form substantially similar to the most recently revised approved Financing Proposal, or in such other form as is mutually agreed upon by the Parties. The sources and uses breakdown shall include a project budget, detail the proposed uses of the HOME Loan funds to be disbursed to the Developer, and include a disbursement schedule identifying the source of funds and the timing of disbursement;
(2) An operating proforma for the first thirty (30) years of operation of the Development including funding for the provision of resident services. If the Development does not have a rental subsidy committed, the Final Financing Plan shall demonstrate that the target population can pay the proposed rents;
(3) Copies of all required funding commitments for performing the Construction Work consistent with the Final Financing Plan, including approval of the Bond Loan lender, and a preliminary tax credit reservation and an executed commitment letter from a tax credit equity investor acceptable to the City. The funding for the Construction Work shall include, but not be limited to, the following: (i) HOME Loan; (ii) F&M Bank Loan funds from the Housing Authority of the County of Stanislaus; and (iii) any other private and public funds that may become available; and
(4) Any other information that is reasonably necessary to the City in determining that the Developer has the financial capability to pay all costs of completing the Construction Work in accordance with the requirements of this Agreement. (b) The City shall review the Final Financing Plan to determine if, in the City's reasonable judgment, the Developer has the financial capability (taking into account all committed funds), to pay all realistically established costs of constructing and operating the Development. The City shall review the Final Financing Plan and shall either approve or disapprove the Final Financing Plan in writing within fifteen (15) days of receipt. If #17..
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18 disapproved, the City shall give specific reasons in writing for disapproval and the required revisions to the previously submitted Final Financing Plan. If the Final Financing Plan is disapproved, the Developer shall resubmit, a revised Final Financing Plan within fifteen (15) days of notification of disapproval. The City shall either approve or disapprove the submitted revised Final Financing Plan within fifteen (15) days of the date such revised Final Financing Plan is received by the City.
(c) The Developer shall submit any material revision to an approved Final Financing Plan to the City for its review and approval. Any proposed revisions to Final Financing Plan shall be considered and approved or disapproved by the City in the same manner and according to the same timeframe set forth above for the Final Financing Plan. Until a revised Final Financing Plan is approved by the City, the previously approved Final Financing Plan shall govern the financing of the Development.
(d) The Developer acknowledges that execution of this Agreement by the City does not constitute a commitment by the City to provide any additional financial assistance to the Developer apart from the monies loaned pursuant and subject to the HOME loan documents and in no way limits the discretion of the City to determine any future assistance amounts.

Section 3.3 Relocation Plan.
(a) If and to the extent that construction of the Development results in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then the Developer shall comply with all applicable local, state, and federal statutes and regulations, (including without limitation California Government Code Section 7260 et seq., and accompanying regulations) with respect to relocation planning, advisory assistance, and payment of monetary benefits. The Developer shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws.
(b) To the extent applicable, the Developer shall defend (with counsel reasonably acceptable to the City), the City against any claim for damages, compensation, fines, penalties, relocation payments or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer or the City) to satisfy relocation obligations related to the acquisition and construction of the Development. The terms of this Section shall survive the repayment of the HOME Loan, the reconveyance of the HOME Deed of Trust and the expiration of the Term.

Section 3.4 Plans and Specifications.
(a) No later than six (6) months from the Effective Date of this Agreement, the Developer shall submit to the City the plans and specifications for the construction of the Development, including all construction documentation upon which the Developer and the Developer's contractor shall rely in performing the Construction Work , including, but not necessarily limited to, final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings") (collectively the "Plans and Specifications").
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19 (b) The Developer acknowledges that the execution of this Agreement by the City does not constitute approval by the City of the Plans and Specifications and in no way limits the discretion of the City in reviewing and making decisions regarding any discretionary or other permits required for the Development.

Section 3.5 Applicable Governmental Approvals.
(a) Promptly following the City approval of the Approved Plans and Specifications, the Developer shall apply for the Applicable Governmental Approvals necessary for performance of the Construction Work in accordance with the Approved Plans and Specifications and in the manner contemplated by the HOME Loan Documents. (b) The Developer acknowledges that execution of this Agreement by the City does not constitute approval by the City of any required Applicable Governmental Approvals and in no way limits the discretion of the City in the permit, allocation and approval process.

Section 3.6 Other Financing. All other financing necessary to construct the Development, as required and approved by the City in the Final Financing Plan, shall be closed by the Developer prior to, or simultaneously with the funding of the Construction Component.

The Developer shall also submit to the City evidence reasonably satisfactory to the City that any conditions to the release or expenditure of funds described in the Final Financing Plan as the sources of funds to pay the costs of constructing the Development have been met or will be met subject to the Developer's satisfaction of standard disbursement preconditions required to be satisfied on a periodic basis, for construction of the Development. Submission by the Developer, and approval by the City, of such evidence of funds availability shall be a condition precedent to the City's obligation to disburse the Construction Component.

Section 3.7 Management Plan.
(a) As a condition precedent to the first Construction Component draw request under the HOME Loan, the Developer shall submit to the City for review, a proposed management and marketing plan (the "Management Plan") for the leasing and operation of the Development.
(b) The City shall review the Management Plan and either reasonably approve or disapprove the Management Plan within fifteen (15) days after receipt. Any disapproval shall state in writing the specific reasons for the disapproval and specify in reasonable detail all of the changes the City requests be made in order to obtain approval. The Developer shall thereafter submit the revised Management Plan within fifteen (15) days of notification of disapproval. The City shall either approve or disapprove the submitted revised Management Plan within fifteen (15) days of the date such revised Management Plan is received by the City, and shall approve the revised Management Plan if the requested changes have been made. #17..
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20 Section 3.8 Construction Contract.
(a) As a condition precedent to the first Construction Component draw request under the HOME Loan the Developer shall submit to the City for its approval the proposed construction contract for the Development. All construction work and professional services shall be performed by persons or entities licensed or otherwise authorized to perform the applicable construction work or service in the State of California. Each contract that the Developer enters for construction of the Development shall provide that at least ten percent (10%) of the costs incurred shall be payable only upon completion of construction, subject to early release of retention for specified subcontractors upon approval by the City. The City's approval of the construction contract shall in no way be deemed to constitute approval of or concurrence with any term or condition of the construction contract except as such term or condition may be required by this Agreement.
(b) The Developer shall submit the proposed Construction Contract with sufficient time for the City to review and approve such contracts. Upon receipt by the City of the proposed construction contract, the City shall promptly review same and approve or disapprove it within ten (10) working days. If the construction contract is 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. The Developer shall thereafter submit a revised construction contract for City approval, which approval shall be granted or denied in ten (10) working days in accordance with the procedures set forth above. Any construction contract executed by the Developer for the Development shall be in the form approved by the City.

Section 3.9 Building Permit Issued.

Not less than forty-five (45) days prior to the Commencement of Construction and as a condition precedent to the first Construction Component draw request under the HOME Loan, the Developer shall exercise diligent good faith efforts to obtain the building permit for the Construction Work. Upon delivery of evidence of receipt of such permit to the City this condition shall be considered satisfied.

Section 3.10 Insurance.

As a condition precedent to the initial draw request under the HOME Loan, the Developer shall submit to the City "Evidence of Insurance Coverage" meeting the general requirements set forth in Section 5.14 below. The City shall review and reasonably approve or disapprove of the Evidence of Insurance Coverage not less than ten (10) days after submission of complete information in the form required by the City. If the City disapproves the Evidence of Insurance coverage, it shall specify in writing the reasons for such disapproval. The Developer shall resubmit the information required within ten (10) days of the notification of disapproval. The City shall either approve or disapprove the submitted revised evidence of insurance within ten (10) days of the date such revised information is received by the City. No work shall be initiated on the Development prior to receipt of City's approval.
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21 Section 3.11 Performance and Payment Bonds.
(a) As a condition precedent to the first Construction Component draw request under the HOME Loan, the Developer shall deliver to the City copies the Construction Bonds, which shall:
(1) be in a form reasonably acceptable to the City;
(2) be issued by a surety licensed to do business in California and reasonably acceptable to the City; and
(3) name the City as a co-obligee.
(b) The City shall either reasonably approve or disapprove the submitted proposed Construction Bonds within fifteen (15) days from the date the City receives the Construction Bonds. If the proposed Construction Bonds are not approved by the City, then the City shall notify the Developer in writing of the reasons for disapproval and the required revisions to the previously submitted Construction Bonds. The Developer shall thereafter submit revised proposed Construction Bonds within fifteen (15) days of the notification of disapproval.

The City shall either approve or disapprove the submitted revised Construction Bonds within fifteen (15) days of the date such revised Construction Bonds are received by the City. The City shall approve the initial or revised Construction Bonds if they meet the standards set forth in Subsection (a) above.
(c) Notwithstanding the foregoing, the City shall consider other reasonable forms of security for the completion of the construction of the Project, from either the Developer or the Developer's general contractor, in lieu of such construction bonds described in this Section provided that: (1) all lenders set forth on the Financing Plan have agreed to such other security, and (ii) the City has the same enforcement rights under such security as the lenders set forth on the Financing Plan.

Section 3.12 Evidence of Availability of Funds.

As a condition precedent to the first Construction Component draw request under the HOME Loan, the Developer shall submit to the City evidence reasonably satisfactory to the City that any conditions to release or expend funds described in the approved Final Financing Plan for the purpose of paying the costs of the Construction Work have been satisfied or will be satisfied at the time of Commencement of Construction Work. The City shall either reasonably approve or disapprove the submitted information within fifteen (15) days from the date the City receives the information.
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22 ARTICLE 4

CONSTRUCTION OF THE AFFORDABLE DEVELOPMENT
Section 4.1 Commencement of Construction Work.

The Developer shall cause the Commencement of the Construction Work in a manner consistent with the Approved Plans and Specifications and all applicable Governmental Approvals no later than twelve (12) months from the effective date of this Agreement, subject to extensions pursuant to Section 8.15 below.

Section 4.2 Completion of Construction Work.

The Developer shall diligently complete the Construction Work in a manner consistent with the Approved Plans and Specifications and shall cause Completion of Construction of the Development, as evidenced by issuance of a certificate of occupancy, to occur no later than two years from the commencement of construction pursuant to Section 4.1, subject to extensions pursuant to Section 8.15 below.

Section 4.3 Performance of Work Pursuant to Plans and Laws; Prevailing Wages. (a) Changes. The Developer shall complete the Construction Work in conformance with the Approved Plans and Specifications. The Developer shall notify the City in a timely manner of any changes in the work required to be performed under this Agreement, including any additions, changes, or deletions to the Approved Plans and Specifications. A written change order authorized by the City must be obtained before any of the following changes, additions, or deletions in the Construction Work may be performed: (1) any change in the Construction Work the cost of which exceeds Twenty-Five Thousand Dollars ($25,000); or (2) any set of changes in the Construction Work the cost of which cumulatively exceeds Fifty Thousand Dollars ($50,000); or (3) any material change in building materials or equipment, specifications, or the structural or architectural design or appearance of the Development as provided for in the Approved Plans and Specifications. City consent to any additions, changes, or deletions to the work (collectively, "Changes") shall not relieve or release the Developer from any other obligations under this Agreement, or relieve or release the Developer or its surety from any surety bond. City consent to any Changes does not relieve the Developer from any requirements to receive approval from the City for such Changes. The City shall utilize best efforts to approve or disapprove change orders within five (5) working days of receipt of a request for approval.
(b) Compliance with Laws. The Developer shall cause all Construction Work performed in connection with the Development to be performed in compliance with: (1) all applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter, including (without limitation and to the extent applicable) the prevailing wage provisions of the federal DavisBacon Act and implementing rules and regulations, if applicable (as further discussed in subsection (c) below), and state prevailing wages pursuant to Labor Code Section 1770 et seq., and the regulations pursuant thereto, as further set forth in subsection (d) below; (2) the property standards set out in 24 C.F.R. Section 5.701 et. seq., and 24 C.F.R. Section 92.251; and (3) all #17..
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23 directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and the Developer shall be responsible to the agency for the procurement and maintenance thereof, as may be required of the Developer and all entities engaged in work on the Development.
(c) Davis Bacon. To the extent required by law, the Developer shall cause construction of the Development to be in compliance with the prevailing wage requirements of the federal Davis-Bacon Act (40 U.S.C. Sections 3141-3148). The Developer shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City, its councilmembers, officers, employees, agents, successors and assigns, against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer, its contractor and subcontractors) to pay prevailing wages as determined pursuant to the prevailing wage provisions of the federal DavisBacon Act and implementing rules and regulations in connection with the rehabilitation of the Development or any other work undertaken or in connection with the Property. The requirements in this subsection shall survive termination of this Agreement, repayment of the Loan and the reconveyance of the HOME Deed of Trust
(d) State Prevailing Wages. To the extent required by law, the Developer shall pay and shall cause the contractor and subcontractors to pay prevailing wages in connection with the Construction Work, as those wages are determined pursuant to Labor Code Sections 1720 et seq., to employ apprentices as required by Labor Code Sections 1777.5 et seq., and the implementing regulations of the Department of Industrial Relations (the "DIR"). In addition, as applicable, the Developer shall cause its respective contractors and subcontractors to do all the following: (i) all calls for bids, bidding materials and the construction contract documents for the Development must specify that (A) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Development unless registered with the DIR pursuant to Labor Code Section 1725.5 , and (B) the Development is subject to compliance monitoring and enforcement by the California Department of Industrial Relations ("DIR"); (ii) the Developer is required to provide the City all information required by Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within 2 days of the award of the contract (https://www.dir.ca.gov/pwc100ext/); (iii) the Developer shall cause its respective contractors to post job site notices, as prescribed by regulation by the DIR; (iv) the Developer shall cause its respective contractors to furnish payroll records required by Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner. The Developer shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City its councilmembers, officers, employees, agents, successors and assigns, against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer, its contractor and subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq., to employ apprentices pursuant to Labor Code Sections 1777.5 et seq., and implementing regulations of the DIR or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with the Construction Work or any other work undertaken or in #17..
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24 connection with the Development. The requirements in this subsection shall survive the repayment of the HOME Loan, and the reconveyance of the HOME Deed of Trust. (e) Accessibility Requirements. The Developer shall construct the Development to comply with all applicable federal and state disabled persons accessibility requirements including but not limited to the Federal Fair Housing Act, Section 504 of the Construction Act of 1973, Title II and/or Title III of the Americans with Disabilities Act of 1990, Title 24 of the California Code of Regulations and the Uniform Federal Accessibility Standards (UFAS). In compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et seq.), a minimum of five percent (5%) of all Units shall be constructed to be fully accessible to households with a mobility impaired member and an additional two percent (2%) of all Units shall be readily accessible to hearing and/or visually impaired persons. All Units in the Development shall also be built to comply with the Uniform Federal Accessibility Standards under 49 C.F.R. 31528.

Section 4.4 Equal Opportunity.

During the performance of the Construction Work there shall be no discrimination on the basis of race, color, creed, religion, age, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, military and veteran status, or disability in the hiring, firing, promoting, or demoting of any person engaged in the Construction Work .

Section 4.5 Minority and Women-Owned Contractors.

Developer shall use its best efforts to afford minority-owned and women-owned business enterprises the maximum practicable opportunity to participate in the construction of the Development. Developer shall, at a minimum, notify applicable minority-owned and womenowned business firms located in Stanislaus County of bid opportunities for the construction of the Development. Documentation of such notifications must be maintained by Developer and available to the County as requested.

Section 4.6 Progress Reports; Amended Final Financing Plan.

From the date of execution of this Agreement and continuing until Completion of Construction, the Developer shall provide the City with quarterly progress reports regarding the status of the Construction Work, including a certification that the actual construction costs to date conform to the Final Financing Plan. The Developer shall submit any required amendments to the Final Financing Plan to the City for approval within fifteen (15) days of the date the Developer receives information indicating that actual costs of the Development vary or will vary from the costs shown on the Final Financing Plan. Written consent of the City shall be required to amend the Final Financing Plan.
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25 Section 4.7 Construction Responsibilities.
(a) It shall be the responsibility of the Developer to coordinate and schedule the work to be performed so that Commencement of Construction and Completion of Construction will take place in accordance with this Agreement. (b) The Developer shall be solely responsible for all aspects of the Developer's conduct in connection with the Development, including (but not limited to) the quality and suitability of the Construction Work, the supervision of Construction Work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Development is solely for the purpose of determining whether the Developer is properly discharging its obligations to the City, and should not be relied upon by the Developer or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Development and does not relieve the Developer, or its consultants, from any applicable requirement to obtain City approval and/or inspections.

Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Property or the Development or a stop notice affecting the HOME Loan is served on the City or any other lender or other third party in connection with the Construction Work, then the Developer shall, within fifteen (15) days after such filing or service give notice to the City of the claim of lien, and within thirty (30) days either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond from a surety acceptable to the City in sufficient form and amount, or provide the City with other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section, then in addition to any other right or remedy, the City may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Developer's expense. Alternately, the City may require the Developer to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against the Developer.
(c) The Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Development for a continuous period of thirty (30) days or more, and take all other reasonable steps to forestall the assertion of claims of lien against the Property and/or Development. The Developer authorizes the City, but without any obligation to the City, to record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Development. The Developer agrees and acknowledges that the City must conduct on-site inspections, consistent with the requirements of 24 C.F.R. 92.504(d), to determine compliance with the property standards set forth in 24 C.F.R. 92.251, at least once every three(3) years after the completion of construction of the Development.
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26 Section 4.9 Inspections.
(a) The Developer shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Development by the City and by public authorities during reasonable business hours for the purposes of determining compliance with this Agreement. Developer agrees and acknowledges that the City must conduct or cause to be conducted on-site inspections, consistent with the requirements of 24 C.F.R. 92.504(d), to determine compliance with the property standards set forth in 24 C.F.R. 92.251, at least once every three (3) years after the completion of the Development. Such inspections do not relieve the Developer, or its contractors, from any applicable requirement to obtain City inspections in connection with the construction of the Development.
(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, in accordance with 24 C.F.R 92.251. 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 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 in conformance with 24 C.F.R. 92.504(d) Section 4.10 Developer Fee.

In no event shall developer fees paid to any entity for development services rendered, including administrative fees and costs in connection with the Development and deferred developer fees exceed the lesser of: (i) the maximum amount that is permitted by HCD, and; (ii) the amount approved in the Final Financing Plan.

Section 4.11 Marketing Plan.
(a) No later than six (6) months prior to the projected date of the completion of the Development, the Developer shall submit to the City for approval its plan for marketing the Development to income-eligible households as required pursuant to the HOME Regulatory Agreement, including information on affirmative marketing efforts and compliance with fair housing laws, including but not limited to the information required under 24 C.F.R. Section

92.351(a) (the "Marketing Plan").
(b) Upon receipt of the Marketing Plan, the City shall promptly review the Marketing Plan and shall approve or disapprove the Marketing Plan within fifteen (15) days after submission. If the Marketing Plan is not approved, the Developer shall submit a revised Marketing Plan within fifteen (15) days. If the City does not approve the revised Marketing Plan, the Developer shall be in default hereunder.
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27 (c) If after five (5) months after the Completion of Construction any HOME Unit remains unoccupied, the Developer shall submit a detail report of the ongoing marketing efforts, and if deemed appropriate by the City, any necessary amendments or updates to the Marketing Plan aimed at ensuring any unoccupied HOME Unit is promptly leased. If any of the HOME Units remain unoccupied eleven (11) months after the Completion of Construction, the Developer shall submit a detailed report of the ongoing marketing efforts and submit to the City an update to the Marketing Plan. Failure to lease all of the HOME Units to an eligible tenant within eighteen (18) months of Completion of Construction shall trigger the special repayment pursuant to Section 2.8(e).

ARTICLE 5

LOAN REQUIREMENTS
Section 5.1 Match Requirement.

The Developer shall ensure that the HOME Loan is matched with a minimum of 12.5% (the HOME match subject to the City's reduction amount) of the loan amount which is equal to One Hundred Forty Thousand Five Hundred Dollars ($140,500), in other, non-federal sources, pursuant to and eligible under 24 CFR 92.220.

Section 5.2 Financial Accountings and Post-Completion Audits.

The Developer shall provide to City a financial accounting of all sources and uses of funds for the Construction Work. No later than one hundred fifty (150) calendar days following completion of Construction Work, the Developer shall submit a cost certification prepared by the Developer's accountants showing the sources and uses of all funds utilized for the Development, as well as a copy of all documents that the Developer is required to submit to TCAC as part of the final feasibility and cost reasonableness analysis, as applicable. This requirement may be satisfied by providing the Final Cost Certification to the City. "Final Cost Certification" means the Final Cost Certification Sources and Uses of Funds prepared by Developer for the Development that: (1) Developer submits to TCAC; and (2) has been prepared using generally accepted accounting procedures in effect in the United States from time to time, consistently applied
Section 5.3 Annual Operating Budget.

At the beginning of each fiscal year of the Term, the Developer shall provide to the City an annual budget for the operation of the Development. Unless rejected by the City in writing within fifteen (15) days after receipt of the budget, said budget shall be deemed accepted. If rejected by the City in whole or in part, the Developer shall submit a new or corrected budget within thirty (30) calendar days of notification of the City's rejection and the reasons therefore.

The provisions of this Section relating to time periods for resubmission of new or corrected budgets shall continue to apply until such budget has been approved by the City. #17..
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28 Section 5.4 Information.

The Developer shall provide all information reasonably requested by the City in connection with the Construction Work and the operation of the Development, including but not limited to any information required by HUD in connection with the Developer's use of the HOME Loan funds.

Section 5.5 Records.
(a) The Developer shall keep and maintain at the Development, or elsewhere with the City's written consent, full, complete and appropriate books, records and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail Developer's compliance with the terms and provisions of this Agreement. Books, records and accounts relating to Developer's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement. All such books, records, and accounts shall be open to and available for inspection and copying by HUD, the City, its auditors or other authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that Developer may be required to furnish to any governmental agency shall at all reasonable times be open for inspection by the City at the place that the books, records and accounts of the Developer are kept. The Developer shall preserve such records for a period of not fewer than five (5) years after the creation of such records in compliance with all HUD records and accounting requirements. If any litigation, claim, negotiation, audit exception, monitoring, inspection or other action relating to the use of the Loan is pending at the end of the record retention period stated herein, then the Developer shall retain such records until such action and all related issues are resolved. Such records shall include all invoices, receipts, and other documents related to expenditures from the Loan funds. Records must be kept accurate and current and in such a form as to allow the City to comply with the applicable recordkeeping requirements contained in 24 C.F.R. Section 92.508. Such records shall include but not be limited to:
(1) Records providing a full description of the activities undertaken with the use of the Loan funds;
(2) Records demonstrating compliance with the City and HUD property standards and lead-based paint requirements, including, as applicable, the Uniform Physical Conditions Standards established by HUD pursuant to 24 C.F.R. 5.703; (3) Records demonstrating compliance with the Tenant Selection Plan requirements pursuant to 24 C.F.R. 92.253(d);
(4) Records demonstrating compliance with the affordability and income requirements for tenants and HOME affordability and income requirements; (5) Records documenting compliance with the fair housing, equal opportunity, and affirmative fair marketing;
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29 (6) Financial records as required by 24 C.F.R. 92.505, and OMB Circular A-110 (24 C.F.R. Part 84);
(7) Records demonstrating compliance with 24 C.F.R. Part 135 which implements Section 3 of the Housing Development Act of 1968; (8) Records demonstrating compliance with applicable relocation requirements which must be retained for at least five (5) years after the date by which persons displaced from the property have received final payments; (9) Records demonstrating compliance with MBE/WBE requirements; (10) Records demonstrating that tenant leases comply with the HOME Requirements;
(11) Records demonstrating compliance with Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u, and labor requirements, including certified payrolls from the Developer's general contractor (and any subcontractor) evidencing that applicable prevailing wages have been paid; (12) Financial records as required by 24 C.F.R. Section 92.505, and OMB Circular A-110; and
(13) Records demonstrating compliance with 24 C.F.R. 8.20. (b) The City shall notify Developer of any records it deems insufficient.

Developer shall have fifteen (15) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than fifteen (15) days is reasonably necessary to correct the deficiency, then Developer shall begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.

Section 5.6 Audits.
(a) Each year, the Developer shall provide the City with a copy of the Developer's annual audit, which shall include information on all of the Developer's activities and not just those pertaining to the Development, and shall submit all other financial information reasonably requested by the City determined by the City as necessary for compliance with the requirements of 24 C.F.R 504(d). Developer shall also follow audit requirements of the Single Audit Act and OMB Circulars A-122 and 110.
(b) In addition, the City or any designated agent or employee of the City at any time shall be entitled to audit all of Developer's books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of Developer and other places where records are kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of such audit to Developer.

The City shall deliver a copy of the results of the audit to Developer. If it is determined as a result of such audit that there has been a deficiency in a loan repayment to the County, then such deficiency will become immediately due and payable with interest at the Default Rate from the #17..
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30 date the deficient amount should have been paid. In addition, if any audit conducted pursuant to this Section 2.9(c) determines that Residual Receipts have been understated for any fiscal year by more than five percent (5%) and at least $5,000.00, then the Developer shall pay, in addition to the amounts set forth above, all of the costs and expenses incurred by the County in connection with the audit and review of Developer's accounts or records.

Section 5.7 HOME Requirements.
(a) The Developer shall comply with all applicable laws and regulations governing the use of the HOME funds as set forth in 24 C.F.R. Part 92, including but not limited to the requirements of the HOME Regulatory Agreement. In the event of any conflict between this Agreement and applicable laws and regulations governing the use of the HOME Loan funds, the applicable laws and regulations shall govern. During the HOME Term, these requirements shall be federal requirements, implemented by the City; thereafter, these requirements shall be deemed local City requirements.
(b) The laws and regulations governing the use of the HOME Loan funds include (but are not limited to) the following:
(1) Eligible Project Costs. Restrictions on funding only eligible project costs as defined under 24 C.F.R. 92.206.
(2) Environmental and Historic Preservation. 24 C.F.R. Part 50 and 24 C.F.R. Part 58, which prescribes procedures for compliance with the National Environmental Policy Act of 1969 (42 U.S.C. Sections 4321-4361), and the additional laws and authorities listed at 24 C.F.R. Section 58.5.
(3) Applicability of OMB Circulars. The applicable policies, guidelines, and requirements of OMB Circulars Nos. A-87, A-102, Revised, A-110, A-122, and A-133.
(4) Debarred, Suspended or Ineligible Contractors. The prohibition on the use of debarred, suspended, or ineligible contractors and subcontractors set forth in 24 C.F.R.

Part 24, including maintenance of all appropriate records for compliance thereof. (5) Civil Rights, Housing and Community Development, and Age Discrimination Acts. The Fair Housing Act (42 U.S.C. Section 3601 et seq.) and implementing regulations at 24 C.F.R. Part 100; Title VI of the Civil Rights Act of 1964 as amended; Title VIII of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of Title I of the Housing and Community Development Act of 1974 as amended; Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794, et seq.); the Age Discrimination Act of 1975 (42 U.S.C. Section 6101, et seq.); Executive Order 11063 as amended by Executive Order 12259 and implementing regulations at 24 C.F.R. Part 107; Executive Order 11246 as amended by Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as amended by Executive Order 12007; Executive Order 12432; Executive Order 12138 as amended by Executive Order 12608, Executive Order 13672, concerning Gender Identity. #17..
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31 (6) Lead-Based Paint. The requirement of the Lead-Based Paint Poisoning Prevention Act, as amended (42 U.S.C. Section 4821 et seq.), the Residential LeadBased Paint Hazard Reduction Act (42 U.S.C. Section 4851 et seq.), and implementing regulations at 24 C.F.R. Part 35.
(7) Relocation. The requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. Section 4601, et seq.) and implementing regulations at 49 C.F.R. Part 24; 24 C.F.R. 570.606, Section 104(d) of the Housing and Community Development Act of 1974 and implementing regulations at 24 C.F.R.

Part 42; 24 C.F.R. Section 92.353; and California Government Code Section 7260 et seq. and implementing regulations at 25 California Code of Regulations Section 6000 et seq. If and to the extent that construction of the Development results in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then the Developer shall comply with all applicable local, state, and federal statutes and regulations with respect to relocation planning, advisory assistance, and payment of monetary benefits. The Developer shall prepare and submit a relocation plan to the City for approval. The Developer shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. The Developer shall indemnify, defend (with counsel reasonably chosen by the City), and hold harmless the City, its councilmembers, officers, employees, agents, successors and assigns, against all claims which arise out of relocation obligations to residential tenants, homeowners, or businesses permanently or temporarily displaced by the Development.
(8) Discrimination against the Disabled. The requirements of the Fair Housing Act (42 U.S.C. 3601 et seq.) and implementing regulations at 24 C.F.R. Part 100, the requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794), the Uniform Federal Accessibility Standards (24 C.F.R. 8.20, et seq. 8.51), and federal regulations issued pursuant thereto, which prohibit discrimination against the disabled in any federally assisted program, the requirements of the Architectural Barriers Act of 1968 (42 U.S.C. Sections 4151-4157) and the applicable requirements of Title II and/or Title III of the Americans with Disabilities Act of 1990 (42 U.S.C. Section 12131 et seq.), and federal regulations issued pursuant thereto.
(9) Clean Air and Water Acts. The Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.

Section 1251 et seq., and the regulations of the Environmental Protection Agency with respect thereto, at 40 C.F.R. Part 1500, as amended from time to time. (10) Uniform Administrative Requirements. The requirements of 24 C.F.R. Section 92.505 regarding cost and auditing requirements. (11) Training Opportunities. The requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u ("Section 3") and implementing regulations 24 C.F.R. 135 et seq., requiring that to the greatest extent feasible opportunities for training and employment be given to lower income residents of the project area and agreements for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in, the areas of the project. The #17..
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32 Developer agrees to include the following language in all subcontracts executed under this Agreement:
(i) The work to be performed under this contract is subject to the requirements of Section 3. The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u, shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing. (ii) The parties to this contract agree to comply with HUD's regulations in 24 C.F.R. Part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the 24 C.F.R. Part 135 regulations. (iii) The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause; and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference; shall set forth minimum number and job titles subject to hire; availability of apprenticeship and training positions; the qualifications for each; the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin. (iv) The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 C.F.R. Part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 C.F.R. Part 135. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 C.F.R. Part 135.
(v) The contractor will certify that any vacant employment positions, including training positions, that are filled: (1) after the contractor is selected but before the contract is executed; and (2) with persons other than those to whom the regulations of 24 C.F.R. Part 135 require employment opportunities to be directed, were not filled to circumvent the contractor's obligations under 24 C.F.R. Part 135. (vi) Noncompliance with HUD's regulations in 24 C.F.R. Part 135 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts.
(vii) With respect to work performed in connection with Section 3 covered Indian housing assistance, Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. Section 450e) also applies to the work to be performed under this contract. Section 7(b) requires that to the greatest extent feasible: (1) preference and #17..
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33 opportunities for training and employment shall be given to Indians, and (2) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises. Parties to this contract that are subject to the provisions of Section 3 and Section 7(b) agree to comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with Section 7(b).
(12) Labor Standards. The Developer shall comply with applicable labor requirements set forth in 24 C.F.R. Section 92.354: the prevailing wage requirements of the Davis-Bacon Act and implementing rules and regulations (40 U.S.C. Sections 3141-3148); the Copeland "Anti-Kickback" Act (40 U.S.C. Section 276(c)) which requires that workers be paid at least once a week without any deductions or rebates except permissible deductions; the Contract Work Hours and Safety Standards Act – CWHSSA (40 U.S.C. Sections 3701-3708) which requires that workers receive "overtime" compensation at a rate of 1-1/2 times their regular hourly wage after they have worked forty (40) hours in one (1) week; and Title 29, Code of Federal Regulations, Subtitle A, Parts 1, 3 and 5 are the regulations and procedures issued by the Secretary of Labor for the administration and enforcement of the Davis-Bacon Act, as amended. Because, as provided in the HOME Regulatory Agreement, eight (8) units in the Development are HOME Units, it is the understanding of the City and the Developer that the construction of the Development is exempt from the prevailing wage requirements of the DavisBacon Act, pursuant to 24 CFR 92.354(a)(2). (13) Drug Free Workplace. The requirements of the Drug Free Workplace Act of 1988 (P.L. 100-690) and implementing regulations at 24 C.F.R. Part 24. (14) Anti-Lobbying; Disclosure Requirements. The disclosure requirements and prohibitions of 31 U.S.C. Section 1352 and implementing regulations at 24 C.F.R. Part 87.
(15) Historic Preservation. The historic preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. Section 470) and the procedures set forth in 36 C.F.R. Part 800. If archeological, cultural, or historic period resources are discovered during rehabilitation, all rehabilitation work must come to a halt and the Developer shall immediately notify the City. The Developer shall not shall alter or move the discovered material(s) until all appropriate procedures for "post-review discoveries" set forth in Section 106 of the National Historic Preservation Act have taken place, which include, but are not limited to, consultation with the California State Historic Preservation Officer and evaluation of the discovered material(s) by a qualified professional archeologist. (16) Flood Disaster Protection. The requirements of the Flood Disaster Protection Act of 1973 (P.L. 93-234) (the "Flood Act"). No portion of the assistance provided under this Agreement is approved for acquisition or construction purposes as defined under Section 3(a) of the Flood Act, for use in an area identified by HUD as having special flood hazards which is not then in compliance with the requirements for participation in the national flood insurance program pursuant to Section 201(d) of the Flood Act. The use of any assistance provided under this Agreement for such acquisition or construction in such identified areas in communities then participating in the National Flood Insurance Program is subject to the mandatory purchase of flood insurance requirements of Section 102(a) of the Flood Act. If the Property is located in an area identified by HUD as having special flood hazards and in which #17..
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34 the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4001 et seq., the property owner and its successors or assigns must obtain and maintain, during the ownership of the Property, such flood insurance as required with respect to financial assistance for acquisition or construction purposes under -Section 102(s) of the Flood Act. Such provisions are required notwithstanding the fact that the construction on the Property is not itself funded with assistance provided under this Agreement. (17) Faith Based Activities. If the Developer is a religious organization, as defined by the HOME requirements, the Developer shall comply with all conditions prescribed by HUD for the use of HOME Funds by religious organizations, including the First Amendment of the United States Constitution regarding church/state principles and the applicable constitutional prohibitions set forth in 24 C.F.R. 92.257. (18) Physical Needs Assessment. The Developer shall conduct, or caused to be conducted, a physical needs assessment on the Development once every five (5) years from the date that construction of the Development is completed. The Developer shall comply with all HUD requirements for conducting and documenting the physical needs assessment and shall provide the City with a copy of all documentation related to each physical needs assessment conducted, or caused to be conducted, by the Developer. (19) HUD Regulations. Any other HUD regulations present or as may be amended, added, or waived in the future pertaining to the Loan funds, including but not limited to HUD regulations as may be promulgated regarding subrecipients.

Section 5.8 Hazardous Materials.
(a) The Developer shall keep and maintain the Development in compliance with, and shall not cause or permit the Development 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 Development including, but not limited to, soil and ground water conditions. The Developer shall not use, generate, manufacture, store or dispose of, on, under, or about the Development or transport to or from the Development any Hazardous Materials except those materials as may be used in the construction and operation of the Development, or customarily kept and used in and about residential property of this type. (b) The Developer shall immediately advise the City in writing: (1) any time the Developer receives written notice of any Hazardous Materials Claims, and (2) if the Developer discovers of any occurrence or condition on any real property adjoining or in the vicinity of the Development that could cause the Development or any part thereof to be classified as "border-zone property" 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 Development under any Hazardous Materials Law.
(c) The City shall have 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 the Developer.

The Developer shall indemnify and hold harmless the City and its council members, directors, #17..
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35 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 Development (including asbestos) including without limitation: (1) all foreseeable consequential damages; (2) the costs of any required or necessary repair, cleanup or detoxification of the Development and the preparation and implementation of any closure, remedial or other required plans; and (3) all reasonable costs and expenses incurred by the City in connection with clauses (1) and (2), including but not limited to reasonable attorneys' 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: (1) losses attributable to diminution in the value of the Property, (2) loss or restriction of use of rentable space on the Property, (3) adverse effect on the marketing of any rental space on the Property, and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties). This obligation to indemnify shall survive termination of this Agreement.
(d) Without the City's prior written consent, which shall not be unreasonably withheld, the Developer shall not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Development, 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 the City's reasonable judgment, impair the value of the City's security hereunder; provided, however, that the City's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Development 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 the City's consent before taking such action, provided that in such event the Developer shall notify the City as soon as practicable of any action so taken. The City 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) the Developer will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (3) the Developer establishes to the reasonable satisfaction of the City that there is no reasonable alternative to such remedial action which would result in less impairment of the City's security hereunder; or (4) the action has been agreed to by the City. (e) The Developer hereby acknowledges and agrees that: (1) this Section is intended as the City's written request for information (and the Developer's response) concerning the environmental condition of the Development as required by California Code of Civil Procedure Section 726.5; and (2) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Development is intended by the Parties to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736. (f) In the event that any portion of the Development 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 #17..
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36 Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the City's or the trustee's rights and remedies under the HOME Deed of Trust, the City 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 Development; and (2) exercise: (i) the rights and remedies of an unsecured creditor, including reduction of its claim against the Developer to judgment; and (ii) any other rights and remedies permitted by law. For purposes of determining the City right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Developer shall 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 Development and the Developer knew or 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' fees, incurred by the City 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 Development is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) or the maximum rate permitted by law, until paid, shall be added to the indebtedness secured by the HOME Deed of Trust and shall be due and payable to the City upon its demand made at any time following the conclusion of such action. (g) The Developer hereby indemnifies the City and its council members, directors, officers, employees, agents, successors and assigns for any and all liability resulting from or related to the presence of any Hazardous Materials on the Property.

Section 5.9 Maintenance and Damage.
(a) During the course of operation of the Development, the Developer shall maintain the Development in good repair and in a neat, clean and orderly condition. If there arises a condition in contravention of this requirement, and if the Developer has not cured such condition within thirty (30) days after receiving a notice from the City of such a condition, then in addition to any other rights available to the City, the City shall have the right to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property.
(b) Subject to the requirements of senior lenders, and if economically feasible in the City's reasonable judgment after consultation with the Developer, if any improvement now or in the future on the Property is damaged or destroyed, then the Developer shall, at its cost and expense, diligently undertake to repair or restore such improvement consistent with the plans and specifications approved by the City with such changes as have been approved by the City. Such work or repair shall be commenced no later than the later of one hundred twenty (120) days, or such longer period approved by the City in writing, after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and shall be complete within one (1) year thereafter. Any insurance proceeds collected for such damage or destruction shall be applied to the cost of such repairs or restoration and, if such insurance proceeds shall be insufficient for such purpose, then the Developer shall make up the deficiency. If the Developer does not make #17..
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37 repairs, then any insurance proceeds collected for such damage or destruction shall be distributed as if such proceeds were Residual Receipts, subject to the rights of the Senior Lenders.

Section 5.10 Fees and Taxes.
(a) The Developer shall be solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Development to the extent owed by the Developer, and shall pay such charges prior to delinquency. However, the Developer shall not be required to pay and discharge any such charge so long as: (1) the legality thereof is being contested diligently and in good faith and by appropriate proceedings; and (2) if requested by the City, the Developer deposits with the City any funds or other forms of assurance that the City in good faith from time to time determines appropriate to protect the City from the consequences of the contest being unsuccessful.
(b) The City acknowledges that the Developer intends to apply to the State Board of Equalization for a welfare exemption from property taxes under California Revenue and Taxation Code Section 214 for the Development. Nothing in this Agreement shall prohibit the Developer from applying for and obtaining a welfare exemption for the Development.

Section 5.11 Notice of Litigation.

The Developer shall promptly notify the City in writing of any litigation related to the Development, and any litigation related to the Developer for which the amount claimed or at issue is in excess of Fifty Thousand Dollars ($50,000), and of any claims or disputes related to the Development that involve a material risk of litigation.

Section 5.12 Operation of Development as Affordable Housing. (a) Promptly after Completion of Construction of the Development, the Developer shall operate the Development as an affordable housing development consistent with:
(1) HUD's requirements for use of the HOME Loan Funds for the HOME Term; and (2) the HOME Regulatory Agreement for the Term of this Agreement. (b) Before leasing any Unit in the Development, the Developer shall submit its proposed form of lease agreement for the City's review and approval. The term of the form of lease agreement shall be for no less than one (1) year, except by mutual agreement between the Developer and the tenant, and shall not contain any provision which is prohibited by 24 C.F.R.

Modesto City CouncilOctober 25, 2022

Modesto City Council
October 25, 2022