Agenda packet, first session — Modesto City Council, November 25, 2025 (part 3 of 3)

reflects a balance between capital replacement projects that repair, replace, or enhance existing facilities, equipment or infrastructure and capital facility projects that significantly expand or add to the City’s existing fixed assets.

The City’s most recent CIP, Fiscal Year 2025-262, relates the City’s annual capital expenditures to a long-range plan for public improvements. By relating the plan for public improvements to the City’s capacity for funding, and scheduling expenditures over a period of years, the CIP helps maximize the funds available. This type of fiscal management is important during periods where budgetary demand exceeds financial resources.

The City’s CIP projects are financed, in part, by Capital Facilities Fees, as outlined in the description of the Capital Facilities Fees funds. The City’s CIP provides infrastructure for the residents and businesses in Modesto to keep pace with ongoing development in, and adjacent to, the community. Estimated projects costs, and the summary of fee apportionment to each impact fee category, are detailed within the adopted nexus studies establishing the individual Capital Facilities Fees Program and are on file with the Community and Economic Development Department.

The CIP is updated annually to reflect the current infrastructure needs of the City. As a CIP project is identified, the project is evaluated to determine the portion of the project that will service existing residents and businesses versus new development. Once the determination of use is made, the percentage of use attributable to new development is then funded by the appropriate fee, based on the type of project. The funding and commencement dates for projects are adjusted, as needed, to reflect the needs of the community.

DISCUSSION:

In 1987, the City established an impact fee program and is commonly referred to as the Capital Facilities Fees Program (CFF Program). Since inception, the CFF Program has been updated periodically to reflect the changes in land values, projects, and costs. The CFF Program sets forth the relationship between contemplated future developments, facilities needed to serve future development, and the estimated cost of those improvements based on the current General Plan build-out. Estimated project costs and CFF Program fee category allocation is identified in the 2003, 2011 and, 2019 Program updates.

The City’s CFF Program contains the following seven impact fee categories:
 Streets Capital Facilities Fee – Fund 3410
This fee is collected for roadway improvements such as expressways, interchanges, arterial and collector roads, turn lanes, intersections, and traffic signals.  Public Transportation Capital Facilities Fee – Fund 3420 This fee is collected for new buses, bus shelters, bus stops, bus maintenance facilities, and the northeast transfer station.
 Parks and Air Quality Facilities Fee – Fund 3432
This fee is collected for land and construction costs for neighborhood, community, and regional parks, sports facilities, community buildings and facilities that reduce automobile 2 City of Modesto CIP Fiscal Year 2025-2026 through 2029-2030 #10..
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City Council, November 25, 2025
Capital Facilities Fees Annual Report for Fiscal Year 2024-25

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travel by facilitating alternative modes of travel such as the Amtrak station parking lot, park and ride lots, vanpooling, carpooling, Class I bike trails, bike storage, turn lanes, footpaths, and pedestrian accesses.
 Police Capital Facilities Fee – Fund 3440
This fee is collected for the Police Tactical Training Center, police vehicles, parking facilities, communication systems, special equipment, and the future Northeast Area Precinct (to be shared with Fire).
 Fire Capital Facilities Fee – Fund 3450
This fee is collected for fire facility expansions, fire vehicles, special equipment, and the future Northeast Area Precinct (to be shared with Police).  General Government (City Hall and Other Government Facilities) Capital Facilities Fee – Fund 3470
This fee is collected for debt service payments on City Hall, related parking facilities, the corporation yard and related facilities, City vehicles, and the City’s information technology expansion.
 Administration Capital Facilities Fee – Fund 3480
This fee is collected for the administration of the CFF Program. This includes preparation of an Annual CFF Report, preparation of a Five-Year CFF Report, day-to-day management of the CFF Program including preparation of annual CIP budgets, CFF annual inflationary updates, land value analyses and updates and CFF Proformas.

The City’s Capital Facilities Fees Annual Report for Fiscal Year 2024-25 is provided as Attachment 2.

FISCAL IMPACT:

There is no fiscal impact to the General Fund related to the acceptance of the Capital Facilities Fees Annual Report for Fiscal Year 2024-25. Attachment 3 provides a summary of revenues and expenses for the CFF Funds for the fiscal year ending June 30, 2025.

COMMITTEE RECOMMENDATION:

This item is not required to be reviewed by Council Committee, because it is an annual report.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution accepting the Capital Facilities Fees Annual Report for Fiscal Year 2024-25 and making findings related to each of the fee categories.
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City Council, November 25, 2025
Capital Facilities Fees Annual Report for Fiscal Year 2024-25

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Approved by:

Jessica Hill,
Director of Community and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. Capital Facilities Fees Annual Report for Fiscal Year 2024-25

3. Summary of Capital Facilities Fees Revenues and Expenses #10..
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11/25/2025/CED/SRando/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX

RESOLUTION ACCEPTING THE CAPITAL FACILITIES FEES ANNUAL REPORT FOR FISCAL YEAR 2024-25 AND MAKING FINDINGS

RELATED TO EACH OF THE FEE CATEGORIES
WHEREAS, the City of Modesto imposes fees to mitigate the impacts of development, pursuant to Government Code section 66000 et seq.; and WHEREAS, California Government Code sections 66001 and 66006 require cities to annually make certain fee-related information available to the public and findings relating to the necessity of collecting fees for new development; and WHEREAS, the City, in accordance with Government Code section 66006(a) and Section 8-1.904 of the Modesto Municipal Code, established Capital Facilities Fees (CFF) for the purpose of collecting fees to fund the construction of public improvements that will be needed as a result of new development; and WHERAS, on June 24, 2003, the City Council, by Resolution No, 2003-309, amended Resolution No. 88-649, as amended, and adopted the 2003 CFF Update Report on file with the City Clerk for City facilities associated with capital items related to police, fire, parks, transit, streets, air quality, governmental facilities, and administration of the CFF program; and
WHEREAS, on March 22, 2011, by Resolution No. 2011-105, Council established the nexus for fees imposed by each land use, said nexus and fees were later amended by Resolution No. 2020-464 on September 22, 2020; and WHEREAS, the following fees were established by Resolution No. 2020-407:
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11/25/2025/CED/SRando/Item X 2 2025-XX
 The Streets CFF fund was established to accrue funds for arterial roadways, intersections, expressways, freeway interchanges and associated landscaping, and
 The Public Transportation CFF fund was established to accrue funds for the expansion of the City’s transit system including additional buses and their associated facilities, and
 The Parks and Air Quality CFF Fund was established to accrue funds to assist in the reduction of automobile travel, specifically for the development of park and ride lots, Class I Bike Trails, pedestrian accesses as well as land and construction costs for neighborhood, community, and regional parks, sports facilities, and community buildings, and  The Police CFF Fund was established to accrue funds for additional policing needs including an additional station, police cars and associated equipment, a northeast area precinct, a training facility, a computer aided dispatch system, and an expanded radio system, and
 The Fire CFF Fund was established to accrue funds for the construction of additional fire stations, fire vehicles, and a new training station, and  The General Government CFF Fund was established to accrue funds for the debt service payments on City Hall, related parking facilities, the corporation yard and related facilities, City vehicles and the City’s information technology expansion; and
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11/25/2025/CED/SRando/Item X 3 2025-XX
WHEREAS, California Government Code Section 66001(d) requires the local agency make specified findings every fifth year with respect to that portion of the account remaining unexpended, whether committed or uncommitted; and WHEREAS, the 5-year Capital Improvement Program (CIP) strives to reflect the goals and policies established by the General Plan by systematically planning, scheduling, managing, monitoring, and financing capital projects to ensure cost-effectiveness and conformity with established policies and adopted Specific Plans. The CIP guides the funding and construction of all public improvements constructed by the City, including roads, wastewater treatment facilities and lines, water lines, and parks; and WHEREAS, the City’s most recent CIP, Fiscal Year 2025-26, relates the City’s annual capital expenditures to a long-range plan for public improvements. By relating the plan for public improvements to the City’s capacity for funding, and scheduling expenditures over a period of years, the CIP helps maximize the funds available. This type of fiscal management is important during periods where budgetary demands exceeding financial resources; and
WHEREAS, the City’s Capital Improvement Plan (CIP) projects are financed, in part, by Capital Facilities Fees outlined in the description of the Capital Facilities Fees funds. The City’s CIP provide infrastructure to the residents and businesses in Modesto in order to keep pace with ongoing development in, and adjacent to, the community; and WHEREAS, the CIP is updated annually to reflect the current infrastructure needs of the City. As a CIP project is identified, the project is evaluated to determine the portion of the project that will service existing residents and businesses versus new development.

Once the determination of use is made, the percentage of use attributable to new development is then funded by the appropriate development fee, based on the type of #10..
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project; and
WHEREAS, the Capital Facilities Fee Annual Report for Fiscal Year 2024-25 has been completed and is on file with the City Clerk; and
WHEREAS, a fifteen-day public hearing notice was posted in the Modesto Bee in accordance with applicable law; and
WHEREAS, a public hearing at the City Council in the Tenth Street Place Chambers located at 1010 Tenth Street, Modesto, California was set for December 2, 2025, to enable the public to have the opportunity to comment on the CFF collected.

NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Modesto that it hereby accepts the Capital Facilities Fees Annual Report for Fiscal Year 2024-25, as described in Attachment 2.

BE IT FURTHER RESOLVED, by the Council of the City of Modesto that it hereby makes the following findings relating to each of the fee categories in accordance with Government Code Section 66001(d) and 66006(b):
1) The Capital Facilities Fee program, set forth in City Council Resolution No. 2020-407, and incorporated herein by reference, continues to be a necessary program to fund future infrastructure needed for new development. New development generates an increased demand on existing City facilities. In order to mitigate the impacts of that demand, the City improves existing facilities and/or builds new facilities from time to time. The City’s impact fees are charged based on the type of usage. For residential, there is a fee for single family units, and a different fee for each multi family unit. For non-residential uses, the fee is based on the square footage of the project. Accordingly, the fee #10..
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11/25/2025/CED/SRando/Item X 5 2025-XX
increases as the estimated demand from the proposed project increases. By Resolution No. 2011-105, Council established the nexus for fees imposed by each land use, said nexus and fees were later amended by Resolution No. 2020-464 on September 22, 2020. The fees are increased by an inflationary measure annually to account for the increased construction costs. 2) The Capital Facilities Fee Annual Report for Fiscal Year 2024-25 reports on the below information for each of the fee categories:
a. The amount of the fee
b. The beginning and ending balance of the account or fund c. The amount of the fees collected and the interest earned d. An identification of each public improvement on which fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.
e. An identification of an approximate date by which the construction of the public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement and the public improvement remains incomplete.
f. A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned impact fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan.
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g. The amount of refunds made due to sufficient funds being collected to complete financing on incomplete public improvements, and the amount of reallocation of impact funds made to administrative costs of refunding unexpended revenues exceeding the amount to be refunded. 3) All reportable fees, collections and expenditures have been received, deposited, invested, and expended in compliance with the relevant sections of the California Government Code and all other applicable laws for the Fiscal Year 2024-25. 4) No refunds and allocations of reportable fees, as required by California Government Code section 66001, are deemed payable at this time. .
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11/25/2025/CED/SRando/Item X 7 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025, 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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City of Modesto Capital Facilities Fees Annual Report
Fiscal Year 2024-25
Prepared By:

Community & Economic Development
Infrastructure Financing Program
November 2025
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
2 Table of Contents
LEGAL REQUIREMENTS ................................................................................................................................3 A. What Are Impact Fees?....................................................................................................................3 B. Establishing An Impact Fee Program...............................................................................................3 C. Adoption of a Capital Improvement Program.................................................................................3 D. Reporting..........................................................................................................................................4 DESCRIPTION OF CAPITAL FACILITIES FEES .................................................................................................5 FISCAL YEAR 2024-25 CURRENT FEE SCHEDULES ........................................................................................6 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES................6 FIVE YEAR REVENUE AND EXPENSE HISTORY..............................................................................................7 DEFERRED CAPITAL FACILITIES FEES............................................................................................................7 REFUNDS ......................................................................................................................................................7 CREDITS ........................................................................................................................................................7 TRANSFERS...................................................................................................................................................8 CAPITAL IMPROVEMENT PROJECTS ............................................................................................................8 EXEMPTIONS FOR ACCESSORY DWELLING UNITS (ADUs) ..........................................................................8 REDUCTION OF CAPITAL FACILITIES FEES....................................................................................................8 Table 1: Fee Schedules Effective July 1, 2024 through June 30, 2025 ................................................9 Table 2: Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2025 ..........................................................................................................................12 Table 3: Five Year Revenue History ...................................................................................................13 Table 4: Five Year Expenditure History .............................................................................................14 Table 5: Five Year Revenue and Expenditure History .......................................................................15 Table 6: Multifamily, Commercial and Industrial Deferrals..............................................................16 Table 7: Refunds.................................................................................................................................17 Table 8: Credits for Previously Existing Buildings .............................................................................17 Table 9: Transfers within Capital Facilities Fees Funds.....................................................................18 Table 10: Capital Improvement Program (CIP) Expenditures...........................................................19 Table 11: Exemptions for Accessory Dwelling Units.........................................................................20 #10..
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
3 LEGAL REQUIREMENTS
A. What Are Impact Fees?
California Government Code §66000 allows a local jurisdiction to establish an impact fee to mitigate the impacts of new development. These fees may be used for the purchase, construction, expansion, rehabilitation, or acquisition of public facilities, and must be consistent with the adopted fee program, which is updated every five years.

New development increases the demand for health and safety services provided by a city, affects the quality of the community’s infrastructure, and increases the need for public facilities. Typically, impact fees are paid to a city at the time a building permit is issued and assist in paying for the cumulative impact of new development through infrastructure improvements and additions. Facilities partly funded by impact fees include police and fire administrative buildings, park sites, bike trails, public landscape areas, community centers, transportation and transit facilities and roadway improvements. Impact fees cannot be used for maintenance of existing or future city facilities.

B. Establishing An Impact Fee Program
The City of Modesto (“City”) impact fee program, more commonly known as the Capital Facilities Fees Program (“CFF Program”), was established in 1987 and has been updated periodically to reflect the changes in land values, projects and costs. Impact fees imposed on new development must have the proper nexus to any project on which they are imposed. The CFF Program sets forth the relationship between contemplated future developments, facilities needed to serve future development and the estimated cost of those improvements based on the current General Plan for build-out. Estimated project costs and the summary of fee apportionment for each CFF Program fee category are identified in the 2003, 2011, 2019, 2020 and 2024 CFF Program updates.

C. Adoption of a Capital Improvement Program
California Government Code §66002 requires local agencies that have implemented an impact fee program to adopt a Capital Improvement Program (CIP) indicating the approximate location, size, and time of projects, plus an estimate for the costs of all facilities or improvements to be financed by the impact fees. At a minimum, a formal CIP is recommended as a five-year plan. The City annually produces a five-year CIP which assists in maintaining and updating the City’s General Plan.

The City’s CIP connects annual capital expenditures to a long-range plan for public improvements. The City’s CIP also assists in maximizing the funds available, connecting the plan for public improvements to the City’s capacity for funding, and projecting expenditures over a period of years. This type of fiscal management is particularly #10..
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
4 important during periods where budgetary demands exceed financial resources. The City’s CIP is financed in part by the impact fees collected through the CFF Program.

D. Reporting
Annual reporting of a local agency’s impact fee program is required by Government Code §66006. The impact fees collected must be segregated from general and other funds containing fees collected for other improvements. Interest on each impact fee fund or account must be credited to that fund or account and be used only for the purpose for which the impact fee was collected.

California Government Code §66006(b) requires that a local agency make the following information available to the public for each separate impact fee fund on an annual basis and that the local agency review that information at a public meeting. The law also requires the annual report include the following information for the prior Fiscal Year and be made available within 180 days after the last day of each fiscal year:
 Describe the type of impact fee in the account or fund.  Identify the amount of the impact fee.
 Provide the beginning and ending balance of the account or fund.  Provide the amount of impact fees collected and interest earned.  Identify each public improvement on which impact fees were expended and the amount of the expenditures on each improvement, including the total percentage of the cost of the public improvement that was funded with the impact fee.  Identify an approximate date by which the construction of the public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement and the public improvement remains incomplete.
 Describe each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned impact fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan.  Provide the amount of refunds made due to sufficient funds being collected to complete financing on incomplete public improvements, and the amount of reallocation of impact funds made to administrative costs of refunding unexpended revenues exceeding the amount to be refunded.

If an agency no longer needs the funds for the purposes collected or fails to make the required findings or perform certain administrative tasks prescribed, the agency may be required to refund, on a prorated basis to owners of the properties upon which the impact fees for the improvement were imposed, the monies collected for that project and any interest earned on those funds.
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
5 California Government Code §66001(d) also requires that the local agency make all of the following findings every fifth year with respect to that portion of the account remaining unexpended, whether committed or uncommitted:
 Identify the purpose to which the impact fee is to be allocated.  Demonstrate a reasonable relationship between the impact fee and the purpose for which is it charged.
 Identify all sources and amounts of funding anticipated to complete financing of incomplete improvements.
 Designate the approximate dates on which the funding is expected to be deposited into the appropriate account or fund.
 In any action imposing a fee as a condition of approval of a development project by a local agency, the local agency shall determine how there is a reasonable relationship between the amount of the impact fee and the cost of the public facility or portion of the public facility attributable to the development on which the impact fee is imposed.

DESCRIPTION OF CAPITAL FACILITIES FEES
The CFF Program mitigates the impacts associated with new development on certain public facilities. The CFF Program is used to finance the acquisition, construction, and improvement of public facilities as a result of new development. The City has the following CFF Program fee categories:

Streets Capital Facilities Fee – Fund 3410
This fee is collected for roadway improvements such as expressways, interchanges, arterial and collector roads, turn lanes, intersections and traffic signals.

Public Transportation Capital Facilities Fee – Fund 3420 This fee is collected for new buses, bus shelters, bus stops, bus maintenance facilities, and the northeast transfer station.

Air Quality and Parks Facilities Fee – Fund 3432
This fee is collected for facilities that reduce automobile travel by facilitating alternative modes of travel such as the Amtrak station parking lot, park and ride lots, vanpooling, carpooling, Class I bike trails, bike storage, turn lanes, footpaths, and pedestrian accesses as well as land and construction costs for neighborhood, community, and regional parks, sports facilities, and community buildings.

Police Capital Facilities Fee – Fund 3440
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
6 This fee is collected for the Police Tactical Training Center, police vehicles, parking facilities, communication systems, special equipment, and the future Northeast Area Precinct (to be shared with Fire).

Fire Capital Facilities Fee – Fund 3450
This fee is collected for fire facility expansions, fire vehicles, special equipment, and the future Northeast Area Precinct (to be shared with Police).

City Hall and Other Government Facilities Capital Facilities Fee – Fund 3470 This fee is collected for debt service payments on City Hall, related parking facilities, the corporation yard and related facilities, City vehicles, and the City’s information technology expansion.

Administration Capital Facilities Fee – Fund 3480
This fee is collected for the administration of the CFF Program. This includes preparation of an Annual CFF Program Report, preparation of a Five-Year CFF Report, day-to-day management of the CFF Program including preparation of annual CIP budgets, CFF Program annual inflationary updates, land value analyses and updates and CFF Program Proformas.

FISCAL YEAR 2024-25 CURRENT FEE SCHEDULES
The current CFF Program allows for an annual inflationary adjustment equal to the increase in the annual change in the San Francisco Bay Area Engineering News Record (ENR) Construction Cost Index (CCI) through the month of December of the preceding year. Based on the ENR CCI, the CFF fee schedule was not adjusted from the previous fiscal year. Table 1 reflects the breakdown of the CFFs for the Fiscal Year 2024-25 from July 1, 2024 to June 30, 2025 by the following fee dwelling area: City Limits, Sphere of Influence and Downtown Economic Incentive.

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES1
The Combining Statement of Revenues, Expenditures and Changes in Fund Balances provided in Table 2 outlines the beginning and ending balance of each fund for Fiscal Year 2024-

25. Expenditures are identified by general categories. All revenue, unless collected under the deferral program, is collected at the time a building permit is issued. Since the CFF Program is a “pay-as-you-go” program, the City must accrue enough revenue prior to commencing construction of a project, resulting in an “aging” of fund balances. The aging or accumulation occurs until enough revenue has been collected to construct a project. 1 Financial data is current as of September 30, 2025
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
7 FIVE YEAR REVENUE AND EXPENSE HISTORY
As previously discussed, most revenue is collected when a building permit is issued for new development. Tables 3 and 4 provide a five-year snapshot of the CFF Program revenues and expenditures, respectively. Table 5 offers a combined picture of revenues, expenses and fund balance levels over the past five years.

DEFERRED CAPITAL FACILITIES FEES
Multi-Family, Commercial and Industrial
The CFF Deferral Program for Multi-Family, Commercial, and Industrial developments has been implemented since 1991. Deferrals assist in off-setting the cost of new development by allowing applicants to pay a portion of the CFF due at the time of building permit issuance and the balance, plus interest, over a predetermined period of time. Table 6 details the five (5) active deferrals in Fiscal Year 2024-25.

Single-Family Residential
The Single-Family Deferral Program allows applicants to pay a portion of their fees due at the time of building permit issuance and defer payment of the CFF, water connection and wastewater capacity fees until final inspection. There were no Single-Family Residential Deferrals in Fiscal Year 2024-25.

REFUNDS
There can be instances when CFFs collected may be refunded if a building permit expires, is revoked, voluntarily surrendered or voided, and no construction or improvement of land has commenced. In addition, CFF paid for placement of Trailers may be refunded if requested in writing with six years of payment, minus the administration component. There were no CFF refunds made in Fiscal Year 2024-25, as shown on Table 7.

CREDITS
CFF credits are granted when previously existing building(s) are removed and new building(s) are constructed. These credits may off-set up to but not more than 100% of the CFF due for the new development. Moreover, additional square footage added shall be subject to payment of applicable CFF at building permit issuance.

In Fiscal Year 2024-25, there were a total of six (6) credits provided for previously existing buildings.

Table 8 details the credits provided in Fiscal Year 2024-25. #10..
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CITY OF MODESTO

CAPITAL FACILITIES FEES ANNUAL REPORT
FISCAL YEAR 2024-25
8 TRANSFERS
A total of fourteen (14) inter-fund transfers occurred in Fiscal Year 2024-25.

Table 9 offers details of each transfer.

CAPITAL IMPROVEMENT PROJECTS
Information on projects funded by the CFF Program can be found in Table 10. The information in the table includes a listing of current projects, estimated construction start and end dates, estimated project costs, percentage of project funded by the CFF Program and general accounting information.

EXEMPTIONS FOR ACCESSORY DWELLING UNITS (ADUs)
California law (Government Code §65852.2) exempts an Accessory Dwelling Unit (ADU) less than 750 sq. ft from CFF and requires that fees for an ADU over 750 sq. ft. be charged proportionately in relation to the square footage of the primary dwelling unit. Table 11 lists all ADUs for Fiscal Year 2024-25. There were a total of one-hundred and eight (108) ADUs issued permits, this includes permits for ADUs within the City of Modesto’s Sphere of Influence.

In Fiscal Year 2024-25, there were twelve (12) ADUs which were developed more than 750 square feet and due CFF. Three (3) of these permits were charged proptionately based on ADU size in relation to the primary unit.

There are occasions in which an ADU has a higher proportionate rate. Per the City’s CFF Policies and Procedures, in no event shall the impact fee for the ADU exceed the CFF rate for Multi-Family residential. In Fiscal Year 2024-25, nine (9) were charged at the multi-family rate.

REDUCTION OF CAPITAL FACILITIES FEES
An applicant may request a reduction in the CFF if it is determined that the project will generate a lower number of trips than the trip generation rates that were used as the basis for the current CFF. Any such fee reduction must be based on a trip generation study, using accepted methodology, as determined by the City. The fee reduction shall be no greater than a proportionate reduction in trips demonstrated in the trip generation study. Any such reduction shall be approved by the City Manager. There were no CFF reductions granted in Fiscal Year 2024-25.
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9 Table 1: Fee Schedules Effective July 1, 2024 through June 30, 2025 Fee Parks and
Category Air Quality
Single-Family Residential Dwelling Unit $ 8,244 $ 120 $ 7,551 $ 766 $ 477 $ 631 $ 357 $ 18,146 Multi-Family Residential Dwelling Unit $ 5,709 $ 83 $ 5,195 $ 462 $ 220 $ 387 $ 194 $ 12,250 Senior Housing Dwelling Unit $ 4,975 $ 45 $ 5,067 $ 450 $ 215 $ 380 $ 136 $ 11,268 Hotel/Motel Room $ 4,287 $ 75 $ - $ 174 $ 83 $ 146 $ 109 $ 4,874 Retail <50,000 SF 1,000 SF $ 12,394 $ 246 $ - $ 207 $ 101 $ 175 $ 335 $ 13,459 Retail 50,000-100,000 SF 1,000 SF $ 10,290 $ 203 $ - $ 208 $ 99 $ 174 $ 278 $ 11,252 Retail 100,000-300,000 SF 1,000 SF $ 8,684 $ 171 $ - $ 209 $ 101 $ 175 $ 236 $ 9,575 Retail >300,000 SF 1,000 SF $ 8,102 $ 157 $ - $ 208 $ 99 $ 176 $ 221 $ 8,963 Medical Office 1,000 SF $ 15,654 $ 313 $ - $ 347 $ 167 $ 291 $ 432 $ 17,204 General Office 1,000 SF $ 7,576 $ 134 $ - $ 347 $ 166 $ 291 $ 196 $ 8,710 Hospital 1,000 SF $ 10,978 $ 194 $ - $ 347 $ 167 $ 292 $ 273 $ 12,250 Daycare 1,000 SF $ 6,063 $ 106 $ - $ 347 $ 167 $ 291 $ 158 $ 7,132 Church 1,000 SF $ 1,292 $ 23 $ - $ 352 $ 168 $ 296 $ 45 $ 2,176 Nursing Home 1,000 SF $ 1,892 $ 33 $ - $ 351 $ 168 $ 295 $ 58 $ 2,796 Industrial (Manufacturing) 1,000 SF $ 2,937 $ 51 $ - $ 149 $ 71 $ 124 $ 76 $ 3,408 Industrial (Warehousing) 1,000 SF $ 2,058 $ 36 $ - $ 150 $ 71 $ 125 $ 56 $ 2,496 FY 2024-2025 CFF PROGRAM - Development within City Limits Unit Measure
Per
Streets Transit Police Fire General Gov’t. Admin Total
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10 Table 1, cont’d: Fee Schedules Effective July 1, 2024 through June 30, 2025 Fee Parks and
Category Air Quality
Single-Family Residential Dwelling Unit $ 8,963 $ 96 $ 1,817 $ - $ - $ - $ 231 $ 11,107 Multi-Family Residential Dwelling Unit $ 6,451 $ 69 $ 1,152 $ - $ - $ - $ 157 $ 7,829 Senior Housing Dwelling Unit $ 3,774 $ 41 $ 1,260 $ - $ - $ - $ 126 $ 5,201 Hotel/Motel Room $ 4,519 $ 47 $ - $ - $ - $ - $ 68 $ 4,634 Retail <50,000 SF 1,000 SF $ 12,894 $ 135 $ - $ - $ - $ - $ 188 $ 13,216 Retail 50,000-100,000 SF 1,000 SF $ 10,734 $ 112 $ - $ - $ - $ - $ 157 $ 11,004 Retail 100,000-300,000 SF 1,000 SF $ 9,100 $ 97 $ - $ - $ - $ - $ 132 $ 9,329 Retail >300,000 SF 1,000 SF $ 8,500 $ 92 $ - $ - $ - $ - $ 125 $ 8,716 Medical Office 1,000 SF $ 16,391 $ 175 $ - $ - $ - $ - $ 240 $ 16,806 General Office 1,000 SF $ 8,023 $ 83 $ - $ - $ - $ - $ 123 $ 8,230 Hospital 1,000 SF $ 11,480 $ 121 $ - $ - $ - $ - $ 173 $ 11,774 Daycare 1,000 SF $ 6,474 $ 69 $ - $ - $ - $ - $ 99 $ 6,642 Church 1,000 SF $ 1,549 $ 16 $ - $ - $ - $ - $ 34 $ 1,599 Nursing Home 1,000 SF $ 2,185 $ 23 $ - $ - $ - $ - $ 41 $ 2,249 Industrial (Manufacturing) 1,000 SF $ 3,123 $ 33 $ - $ - $ - $ - $ 47 $ 3,203 Industrial (Warehousing) 1,000 SF $ 2,229 $ 24 $ - $ - $ - $ - $ 35 $ 2,288 FY 2024-2025 CFF PROGRAM - Development within City’s Sphere of Influence Unit Measure
Per
Streets Transit Police Fire General Gov’t. Admin Total
#10..
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11 Table 1, cont’d: Fee Schedules Effective July 1,2024 through June 30, 2025 Fee Parks and
Category Air Quality
Single-Family Residential Dwelling Unit $ - $ 120 $ 7,550 $ 766 $ 477 $ 631 $ 357 $ 9,902 Multi-Family Residential Dwelling Unit $ - $ 83 $ 5,196 $ 462 $ 220 $ 387 $ 194 $ 6,541 Senior Housing Dwelling Unit $ - $ 45 $ 5,068 $ 449 $ 215 $ 379 $ 137 $ 6,293 Hotel/Motel Room $ - $ 75 $ - $ 174 $ 83 $ 146 $ 109 $ 588 Retail <50,000 SF 1,000 SF $ - $ 247 $ - $ 208 $ 100 $ 175 $ 335 $ 1,066 Retail 50,000-100,000 SF 1,000 SF $ - $ 203 $ - $ 208 $ 99 $ 174 $ 278 $ 963 Retail 100,000-300,000 SF 1,000 SF $ - $ 171 $ - $ 209 $ 100 $ 175 $ 235 $ 891 Retail >300,000 SF 1,000 SF $ - $ 157 $ - $ 208 $ 99 $ 175 $ 221 $ 861 Medical Office 1,000 SF $ - $ 313 $ - $ 347 $ 167 $ 290 $ 431 $ 1,548 General Office 1,000 SF $ - $ 134 $ - $ 347 $ 167 $ 291 $ 195 $ 1,134 Hospital 1,000 SF $ - $ 193 $ - $ 347 $ 167 $ 291 $ 272 $ 1,270 Daycare 1,000 SF $ - $ 106 $ - $ 347 $ 167 $ 291 $ 158 $ 1,070 Church 1,000 SF $ - $ 23 $ - $ 351 $ 168 $ 296 $ 45 $ 883 Nursing Home 1,000 SF $ - $ 33 $ - $ 350 $ 168 $ 295 $ 58 $ 904 Industrial (Manufacturing) 1,000 SF $ - $ 51 $ - $ 149 $ 71 $ 125 $ 76 $ 472 Industrial (Warehousing) 1,000 SF $ - $ 36 $ - $ 150 $ 71 $ 125 $ 56 $ 438 FY 2024-2025 CFF PROGRAM - Development within the Downtown Economic Incentives Program Unit Measure
Per
Streets Transit Police Fire General Gov’t. Admin Total
Table Endnotes
Endnote 1
To qualify for this program, the project must consist of new development in the designated Downtown areas and must include a residential use. #10..
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12 Table 2: Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 20252
3410 3420 3430 3432 3440 3450 3460 3470 3480
Streets Public Transp.

Air
Quality
Parks & Air
Quality
Police Fire Parks General Gov't Admin. Total
REVENUES:

Intergovernmental $ 55,167 $ - $ - $ - $ - $ - $ - $ - $ - $ 55,167 Fees Collected $ 1,505,965 $ 24,562 $ - $ 283,375 $ 81,205 $ 41,919 $ 23,468 $ 67,330 $ 41,787 $ 2,069,611 Interest and Rent $ 1,221,741 $ 22,424 $ - $ 313,283 $ 1,576 $ 880 $ 5,086 $ 1,387 $ 10,912 $ 1,577,289 Net Change in Fair Value of Investments $ 852,162 $ 15,586 $ - $ 249,916 $ 530 $ 278 $ - $ 435 $ 7,183 $ 1,126,090 Mis cellaneous $ 15,245 $ - $ - $ - $ - $ - $ - $ - $ - $ 15,245 TOTAL REVENUES $ 3,650,280 $ 62,572 $ - $ 846,574 $ 83,311 $ 43,077 $ 28,554 $ 69,152 $ 59,882 $ 4,843,402 EXPENDITURES:

Current:

General Gov’t. $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Community Development $ - $ - $ - $ - $ - $ - $ - $ - $ 19,677 $ 19,677 Highways and Streets $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Public Works $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Parks and Recreation $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Public Safety $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Capital Outlay: $ -
Community Development $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Highways and Streets $ 1,713,761 $ - $ - $ - $ - $ - $ - $ - $ - $ 1,713,761 Parks and Recreation $ - $ - $ - $ - $ - $ - $ 4,196,427 $ - $ - $ 4,196,427 TOTAL EXPENDITURES $ 1,713,761 $ - $ - $ - $ - $ - $ 4,196,427 $ - $ 19,677 $ 5,929,865

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES $ 1,936,519 $ 62,572 $ - $ 846,574 $ 83,311 $ 43,077 $ (4,167,873) $ 69,152 $ 40,205 $ (1,086,463)

EXCESS (DEFICIENCY) OF REVENUES & OTHER USES
$ (267,279) $ 62,572 $ - $ (1,237,362) $ (7,689) $ 33,023 $ (2,628,171) $ (5,848) $ 40,205 $ (4,010,549) FUND BALANCES, July 1 $ 35,078,090 $ 634,643 $ - $ 8,820,782 $ 9,089 $ (304,142) $ 2,656,460 $ 7,224 $ 290,159 $ 47,192,305 PRIOR PERIOD ADJUSTMENT $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - FUND BALANCES, June 30 $ 34,810,811 $ 697,215 $ - $ 7,583,420 $ 1,400 $ (271,119) $ 28,289 $ 1,376 $ 330,364 $ 43,181,756 FY 2024-25
2 Financial data is current as of September 30, 2025.
#10..
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13 Table 3: Five Year Revenue History
Fund 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025 Five Year Total FUND 3410 – STREETS
Fees Collected $ 3,522,904 $ 4,555,401 $ 2,463,578 $ 3,649,898 $ 1,505,965 $ 15,697,746 Grant Monies $ (3,495,247) $ 948,142 $ 5,386,673 $ (417,948) $ 55,167 $ 2,476,787 All Other Revenue Sources $ 26,665 $ (727,444) $ 234,398 $ 1,493,224 $ 2,089,148 $ 3,115,991 Subtotal $ 54,322 $ 4,776,099 $ 8,084,649 $ 4,725,174 $ 3,650,280 $ 21,290,524 FUND 3420 – PUBLIC TRANSPORTATION
Fees Collected $ 54,546 $ 70,380 $ 31,242 $ 64,721 $ 24,562 $ 245,451 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ 126 $ (13,976) $ 5,417 $ 26,488 $ 38,010 $ 56,065 Subtotal $ 54,672 $ 56,404 $ 36,659 $ 91,209 $ 62,572 $ 301,516 FUND 3430 –AIRQUALITY MITIGATION
Fees Collected $ 25,814 $ 3,528 $ - $ - $ - $ 29,342
Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ 113 $ (2,803) $ - $ - $ - $ (2,690) Subtotal $ 25,927 $ 725 $ - $ - $ - $ 26,652
FUND 3432 – PARKS AND AIRQUALITY
Fees Collected $ 1,168,952 $ 2,243,935 $ 853,248 $ 731,604 $ 283,375 $ 5,281,114 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ 1,472 $ (263,233) $ 71,969 $ 533,238 $ 563,199 $ 906,645 Subtotal $ 1,170,424 $ 1,980,702 $ 925,217 $ 1,264,842 $ 846,574 $ 6,187,759 FUND 3440 – POLICE
Fees Collected $ 251,079 $ 360,120 $ 93,820 $ 165,438 $ 81,205 $ 951,662 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ (614) $ (15,932) $ 4,200 $ 12,119 $ 2,106 $ 1,879 Subtotal $ 250,465 $ 344,188 $ 98,020 $ 177,557 $ 83,311 $ 953,541 FUND 3450 – FIRE
Fees Collected $ 125,491 $ 171,598 $ 55,766 $ 83,102 $ 41,919 $ 477,876 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ (141) $ (7,738) $ 1,811 $ 4,169 $ 1,158 $ (741) Subtotal $ 125,350 $ 163,860 $ 57,577 $ 87,271 $ 43,077 $ 477,135 FUND 3460 – PARKS
Fees Collected $ 202,188 $ 8,847 $ - $ - $ 23,468 $ 234,503 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ 1,393 $ (42,396) $ - $ - $ 5,086 $ (35,917) Subtotal $ 203,581 $ (33,549) $ - $ - $ 28,554 $ 198,586 FUND 3470 –GENERAL GOVERNMENT
Fees Collected $ 190,097 $ 269,333 $ 77,225 $ 137,598 $ 67,330 $ 741,583 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ (408) $ (9,820) $ 2,826 $ 8,064 $ 1,822 $ 2,484 Subtotal $ 189,689 $ 259,513 $ 80,051 $ 145,662 $ 69,152 $ 744,067 FUND 3480 –ADMINISTRATION
Fees Collected $ 110,676 $ 146,873 $ 65,283 $ 105,453 $ 41,787 $ 470,072 Grant Monies $ - $ - $ - $ - $ - $ -
All Other Revenue Sources $ 61 $ (3,977) $ 1,365 $ 11,543 $ 18,095 $ 27,087 Subtotal $ 110,737 $ 142,896 $ 66,648 $ 116,996 $ 59,882 $ 497,159 TOTAL $ 2,185,167 $ 7,690,838 $ 9,348,821 $ 6,608,711 $ 4,843,402 $ 30,676,939 #10..
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14 Table 4: Five Year Expenditure History
Fund 2020-21 2021-22 2022-23 2023-24 2024-25 Five Year Total Fund 3410 – Streets $ (1,752,997) $ (3,914,103) $ (1,125,606) $ (2,661,728) $ (1,713,761) $ (11,168,195) Fund 3420 – Public Transportation $ - $ - $ - $ - $ - $ - Fund 3430 – Air Quality Mitigation $ (8,431) $ - $ - $ - $ - $ (8,431) Fund 3432 – Parks and Air Quality $ - $ - $ (797,485) $ - $ - $ (797,485) Fund 3440 – Police $ - $ - $ - $ - $ - $ -
Fund 3450 – Fire $ - $ - $ - $ - $ - $ -
Fund 3460 – Parks $ (140,487) $ (43,433) $ (89,292) $ (100,250) $ (4,196,427) $ (4,569,889) Fund 3470 – General Government $ - $ - $ - $ - $ - $ -
Fund 3480 – Administration $ (76,394) $ (86,371) $ (56,252) $ (16,066) $ (19,677) $ (254,760) TOTAL $ (1,978,309) $ (4,043,907) $ (2,068,635) $ (2,778,044) $ (5,929,865) $ (16,798,760) #10..
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15 Table 5: Five Year Revenue and Expenditure History3
$(10,000,000)
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
Fees Collected Grant Monies All Other Revenue Expenditures Fund Balance, June 30 2020-21 2021-22 2022-23 2023-24 2024-25
All Revenues
3 Financial data is current as of September 30, 2025.
#10..
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16 Table 6: Multifamily, Commercial and Industrial Deferrals #10..
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17 Receivable
Outstanding
Balance
Fund Applicant Address 30-Jun-25
Fund 3410
Streets
1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 41,463.56 $ 13,251.88 $ 28,211.68 Osiel & Karina Luna
5 108 Spencer Ave.2 10/29/2020 12/1/20263 2 $ 3,089.98 $ 100.00 $ 2,989.98 Group 5 & Hiremath 3600 Dale Rd.
4 8/17/2022 9/1/2027 2 $ 113,280.73 $ 25,793.02 $ 87,487.71 LPC Kiernan, LLC 1224 Kiernan Ave.
6 12/7/2022 8/27/2024 - $ 389,105.01 $ 389,105.01 $ -
Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 197,285.04 $ - $ 197,285.04
Subtotal $ 744,224.32 $ 428,249.91 $ 315,974.41
Fund 3420 1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 606.17 $ 194.41 $ 411.76
Public
Transportation
Osiel & Karina Luna 108 Spencer Ave. 10/29/2020 12/1/2026 3 2 $ 37.06 $ - $ 37.06
Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 1,643.79 $ 376.35 $ 1,267.44 LPC Kiernan, LLC 1224 Kiernan Ave. 12/7/2022 8/27/2024 - $ 4,234.18 $ 4,234.18 $ - Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 2,878.44 $ - $ 2,878.44
Subtotal $ 9,399.64 $ 4,804.94 $ 4,594.70
Fund 3432 1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 37,713.75 $ 12,053.50 $ 25,660.25 Parks and Air
Quality
Osiel & Karina Luna 108 Spencer Ave. 10/29/2020 12/1/2026 3 2 $ 619.46 $ - $ 619.46
Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 103,065.74 $ 23,468.52 $ 79,597.22 Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 179,458.92 $ - $ 179,458.92
Subtotal $ 320,857.87 $ 35,522.02 $ 285,335.85
Fund 3440
Police
1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 4,900.72 $ 1,566.90 $ 3,333.82 Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 9,158.27 $ 2,086.51 $ 7,071.76 Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 15,858.08 $ - $ 15,858.08
Subtotal $ 29,917.07 $ 3,653.41 $ 26,263.66
Fund 3450 Fire 1192 Norwegian Ave. LP 1192 Norwegian Ave. 1 12/22/2021 1/1/2027 2 $ 1,595.81 $ 510.69 $ 1,085.12
Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 4,367.79 $ 996.21 $ 3,371.58 Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 7,460.28 $ - $ 7,460.28
Subtotal $ 13,423.88 $ 1,506.90 $ 11,916.98
Fund 3470 1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 2,803.37 $ 986.90 $ 1,816.47
General
Government
Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 7,678.86 $ 1,748.91 $ 5,929.95 Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 13,303.16 $ - $ 13,303.16
Subtotal $ 23,785.39 $ 2,735.81 $ 21,049.58
Fund 3480 1192 Norwegian Ave. LP 1192 Norwegian Ave.
1 12/22/2021 1/1/2027 2 $ 1,402.46 $ 443.93 $ 958.53
Administration Osiel & Karina Luna 108 Spencer Ave.
2 10/29/2020 12/1/20263 2 $ 84.65 $ - $ 84.65
Group 5 & Hiremath 3600 Dale Rd. 8/17/2022 9/1/2027 2 $ 3,851.17 $ 874.45 $ 2,976.72 LPC Kiernan, LLC 1224 Kiernan Ave. 12/7/2022 8/27/2024 - $ 6,111.60 $ 6,111.60 $ - Perfect Logistics Inc. 4113 Coffee Rd
4 11/1/2025 11/1/2030 5 $ 6,610.08 $ - $ 6,610.08
Subtotal $ 18,059.96 $ 7,429.98 $ 10,629.98
TOTAL $ 1,159,668.13 $ 483,902.97 $ 675,765.16
Payment
Start Date
Payment
End Date
Years
Remaining
Balance as of
30-Jun-24 Payoffs
#10..
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18 Table 7: Refunds
There were no refunds processed in the Fiscal Year 2024-25.

Table 8: Credits for Previously Existing Buildings
Fund 3410 111Laurel St $ 5,709.00 $ (5,709.00) $ -
Streets 429 14th St $ 8,244.00 $ (8,244.00) $ -
620 Cedar Ave $ 8,244.00 $ (8,244.00) $ -
829 Brady Ave $ 8,244.00 $ (8,244.00) $ -
1707 Connie Way $ 8,244.00 $ (8,244.00) $ -
1900 El Sereno St $ 8,244.00 $ (8,244.00) $ -
Subtotal $ 46,929.00 $ (46,929.00) $ -
Fund 3420 111Laurel St $ 83.00 $ (83.00) $ -
Public 429 14th St $ 120.00 $ (120.00) $ -
Transportation 620 Cedar Ave $ 120.00 $ (120.00) $ -
829 Brady Ave $ 120.00 $ (120.00) $ -
1707 Connie Way $ 120.00 $ (120.00) $ -
1900 El Sereno St $ 120.00 $ (120.00) $ -
Subtotal $ 683.00 $ (683.00) $ -
Fund 3432 111Laurel St $ 5,195.00 $ (5,195.00) $ -
Parksand 429 14th St $ 7,551.00 $ (7,551.00) $ -
Air Quality 620 Cedar Ave $ 7,551.00 $ (7,551.00) $ -
829 Brady Ave $ 7,551.00 $ (7,551.00) $ -
1707 Connie Way $ 7,551.00 $ (7,551.00) $ -
1900 El Sereno St $ 7,551.00 $ (7,551.00) $ -
Subtotal $ 42,950.00 $ (42,950.00) $ -
Fund 3440 111Laurel St $ 462.00 $ (462.00) $ -
Police 429 14th St $ 766.00 $ (766.00) $ -
620 Cedar Ave $ 766.00 $ (766.00) $ -
829 Brady Ave $ 766.00 $ (766.00) $ -
1707 Connie Way $ 766.00 $ (766.00) $ -
1900 El Sereno St $ 766.00 $ (766.00) $ -
Subtotal $ 4,292.00 $ (4,292.00) $ -
Fund 3450 111Laurel St $ 220.00 $ (220.00) $ -
Fire 429 14th St $ 477.00 $ (477.00) $ -
620 Cedar Ave $ 477.00 $ (477.00) $ -
829 Brady Ave $ 477.00 $ (477.00) $ -
1707 Connie Way $ 477.00 $ (477.00) $ -
1900 El Sereno St $ 477.00 $ (477.00) $ -
Subtotal $ 2,605.00 $ (2,605.00) $ -
Fund 3470 111Laurel St $ 387.00 $ (387.00) $ -
General 429 14th St $ 357.00 $ (357.00) $ -
Government 620 Cedar Ave $ 631.00 $ (631.00) $ -
829 Brady Ave $ 631.00 $ (631.00) $ -
1707 Connie Way $ 631.00 $ (631.00) $ -
1900 El Sereno St $ 631.00 $ (631.00) $ -
Subtotal $ 3,268.00 $ (3,268.00) $ -
Fund 3480 111Laurel St $ 194.00 $ (194.00) $ -
Administration 429 14th St $ 357.00 $ (357.00) $ -
620 Cedar Ave $ 357.00 $ (357.00) $ -
829 Brady Ave $ 357.00 $ (357.00) $ -
1707 Connie Way $ 357.00 $ (357.00) $ -
1900 El Sereno St $ 357.00 $ (357.00) $ -
Subtotal $ 1,979.00 $ (1,979.00) $ -
TOTAL $ 102,706.00 $ (102,706.00) $ -
Fund Address CFF Due CFF Credit CFF Paid
#10..
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19 Table 9: Transfers within Capital Facilities Fees Funds4 Fund Transfer Description Transfer Amount
Transfer Out - Fund 3160 - Pelandale Ave. Interchange - Phase II $ (910,538) Transfer Out - Fund 3160 - SR 132 West Expressway $ (1,293,260) $ (2,203,798)
Fund 3420 - Public Transportation $ -
$ -
Transfer Out - Fund 3130 -Downey Shade Structure Replacement $ (59,632.19) Transfer Out - Fund 3140 -Dry Creek to TRRP Trail Connection $ (372.20) Transfer Out - Fund 3140 - Cesar E. Chavez Park Renovation Project $ (253,482.50) Transfer Out - Fund 3460 - Mary E. Grogan Community Park - Phase 2 $ (1,539,702.80) Transfer Out - Fund 6710 - TRRP Gateway Phase 3 $ (17,090.67) Transfer Out - Fund 6710 - TRRP Masterplan Update 2020 $ (5,469.03) Transfer Out - Fund 6710 - TRRP B Improvements $ (107,777.50) Transfer Out - Fund 6710 - TRRP Carpernter Road Area Soccer Complex $ (25,305.81) Transfer Out - Fund 6710 - TRRP River Pavilion $ (75,105.17) $ (2,083,938)
Fund 3440 - Police Transfer Out - Fund 0100 - Transfer In -General Fund $ (91,000) $ (91,000)
Fund 3450 - Fire Transfer Out - Fund 0100 - Fire Station #11 $ (46,000) $ (46,000)
Fund 3470 -General Government Transfer Out - Fund 0100 - Transfer In -General Fund $ (75,000) $ (75,000)
Fund 3480 - Administration $ -
$ -
$ (4,499,736)
Fund 3410 - Streets
Fund 3432 - Parks & Air Quality
4 Financial data is current as of September 30, 2025.
#10..
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20 Table 10: Capital Improvement Program (CIP) Expenditures1-5 Fund
CIP Project
Number
Project Name % Funded
by Fee
% Funded
by Other
Budget
Expenses up to
June 30, 2024
Committed
Funds
FY 2024/25
Expenditures
Balance Available
Estimated
Construction
Start FY
Estimated
Construction
End FY
100048 Claratina/McHenry Plan Lane 100% 0% $ 341,500 $ 39,005 $ - $ - $ 302,495 2026/27 2028/29 100051 Claratina: McHenry/Coffee 4 Ln 100% 0% $ 6,062,911 $ 4,193,433 $ 579,191 $ 617 $ 1,289,670 2026/27 2028/29 100586 CED - 7th St Bridge Tuolumne 86% 14% $ 1,401,911 $ 933,366 $ - $ 144,692 $ 323,853 2025/26 2028/29 100614 State Route 132 W. Express 26% 74% $ 34,540,705 $ 34,121,040 $ 36,031 $ 55,272 $ 328,362 2019/20 2025/26 100944 Tuolumne, 7th & B Intersection 100% 0% $ 350,000 $ 751 $ - $ 1,852 $ 347,397 2025/26 2028/29 100945 Hetch-Hetchy Crossing 100% 0% $ 5,070,000 $ 766,946 $ 93,017 $ 22,616 $ 4,187,421 2026/27 2028/29 101181 Claus Road Plan Line 100% 0% $ 250,000 $ 28,624 $ - $ - $ 221,376 2026/27 2028/29 101182 Standiford Interchange PID 85% 15% $ 7,098,000 $ 2,256,131 $ - $ 1,488,718 $ 3,353,151 2029/30 2031/32 Subtotal $ 1,713,767
Fund 3460
Parks
101017 Mary Grogan Park - Phase 2 100% 0% $ 5,629,822 $ 867,954 $ 101,924 $ 4,196,427 $ 463,517 2022/23 2025/26 Subtotal $ 4,196,427
TOTAL $ 5,910,194
Fund 3410
Streets

1. Projects 100048, 10051, and 100945 (Claratina projects – all directly related) have been delayed due to ongoing right-of-way acquisition challenges related to the crossing of the Hetch-Hetchy facilities on Claratina Avenue.

2. Projects 100586 and 100944 (7th Street Bridge) have regulatory approval delays associated with the crossing.

3. Project 101181 (Claus) has been delayed by changes to the specific plan area. Coordination is required for the ultimate development plans in the area before final plan line can be completed.

4. Project 101182 (Standiford) has been delayed by process changes for approval of the Project Study Report (PSR) and coordination with impacted property owners in the area.

5. Financial data is current as of September 30, 2025.
#10..
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21 Table 11: Exemptions for Accessory Dwelling Units
Fees apply to the Streets Fund – 3410.

Fund Due Credit Paid
Streets - 3410 $608,004.35 $(548,064.00) $59,940.35
Fees apply to the Public Transportation Fund – 3420.

Fund Due Credit Paid
Public Transportation - 3420 $8,842.18 $(7,968.00) $874.18 Fees apply to the Parks and Air Quality Fund – 3432.

Fund Due Credit Paid
Parks & Air Quality - 3432 $553,311.16 $(498,720.00) $54,591.16 Fees apply to the Police Fund – 3440.

Fund Due Credit Paid
Police - 3440 $49,303.21 $(44,352.00) $4,951.21
Fees apply to the Fire Fund – 3450.

Fund Due Credit Paid
Fire - 3450 $23,599.49 $(21,120.00) $2,479.49
Fees apply to the General Government Fund – 3470.

Fund Due Credit Paid
General Government - 3470 $41,290.58 $(37,152.00) $4,138.58 Fees apply to the Administration Fund – 3480.

Address Due Credit Paid
Administration - 3480 $20,736.37 $(18,624.00) $2,112.37 #10..
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22 Fee Totals by Fund
Fund Due Credit Paid
All Funds Combined $1,305.087.34 $(1,176,000.00) $129,087.34 Division Endnote
Endnote 1
For individual addresses please contact the Community Development Division #10..
- 521 -
Combining Statements of Revenues, Expenditures and Changes in Fund Balance Year Ended June 30, 2025 3410 3420 3430 3432 3440 3450 3460 3470 3480
Streets Public Transp. Air
Quality
Parks & Air
Quality Police Fire Parks General Gov't Admin. Total
REVENUES:

Intergovernmental $ 55,167 $ - $ - $ - $ - $ - $ - $ - $ - $ 55,167 Fees Collected $ 1,505,965 $ 24,562 $ - $ 283,375 $ 81,205 $ 41,919 $ 23,468 $ 67,330 $ 41,787 $ 2,069,611 Interest and Rent $ 1,221,741 $ 22,424 $ - $ 313,283 $ 1,576 $ 880 $ 5,086 $ 1,387 $ 10,912 $ 1,577,289 Net Change in Fair Value of Investments $ 852,162 $ 15,586 $ - $ 249,916 $ 530 $ 278 $ - $ 435 $ 7,183 $ 1,126,090 Miscellaneous $ 15,245 $ - $ - $ - $ - $ - $ - $ - $ - $ 15,245 TOTAL REVENUES $ 3,650,280 $ 62,572 $ - $ 846,574 $ 83,311 $ 43,077 $ 28,554 $ 69,152 $ 59,882 $ 4,843,402 EXPENDITURES:

Current:

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER)
EXPENDITURES $ 1,936,519 $ 62,572 $ - $ 846,574 $ 83,311 $ 43,077 $ (4,167,873) $ 69,152 $ 40,205 $ (1,086,463)

OTHER FINANCING SOURCES (USES)
Transfers In $ - $ - $ - $ - $ - $ - $ 1,539,702 $ - $ - $ 1,539,702 Transfers Out 1 $ (2,203,798) $ - $ - $ (2,083,936) $ (91,000) $ (10,054) $ - $ (75,000) $ - $ (4,463,788) Sale of Assets $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
TOTAL OTHER FINANCING SOURCES $ (2,203,798) $ - $ - $ (2,083,936) $ (91,000) $ (10,054) $ 1,539,702 $ (75,000) $ - $ (2,924,086) EXCESS (DEFICIENCY) OF REVENUES & OTHER USES $ (267,279) $ 62,572 $ - $ (1,237,362) $ (7,689) $ 33,023 $ (2,628,171) $ (5,848) $ 40,205 $ (4,010,549) FUND BALANCES, July 1 $ 35,078,090 $ 634,643 $ - $ 8,820,782 $ 9,089 $ (304,142) $ 2,656,460 $ 7,224 $ 290,159 $ 47,192,305 PRIOR PERIOD ADJUSTMENT $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - FUND BALANCES, June 30 $ 34,810,811 $ 697,215 $ - $ 7,583,420 $ 1,400 $ (271,119) $ 28,289 $ 1,376 $ 330,364 $ 43,181,756 1 Transfer out for Fund 3450 Fire only reflects the interest owed.

FY 2024-25
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

November 25, 2025
Date: October 21, 2025
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director, Community and Economic Development SUBJECT: 3401 N. McClure Road Rezone from Highway Commercial to Low Density Residential
CONTACT: Vanessa Castro, Senior Planner
[email protected], (209) 577-5282
DESCRIPTION:

Hearing to rezone the property located at 3401 N. McClure Road from Highway Commercial to Low Density Residential. (Funding Source: Application Fees) STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2025-2026 Strategic Plan Initiative Goal C:
“In partnership with public agencies and other key stakeholders, develop and implement a comprehensive housing and homeless action plan” by fostering the development of new affordable housing units.

BACKGROUND:

The project area of 3401 N. McClure Road is located at the northwest corner of Yosemite Boulevard and N. McClure Road, totaling approximately 4.15 acres. To the north, properties are zoned Low Density Residential (R-1), to the east and south, the adjacent properties are zoned Highway Commercial (C-3), and to the west, the adjacent properties are zoned Planned Development 446 (P-D 446).

The site is currently vacant, with no existing structures, pavement, or landscaping. The current C-3 zoning allows for highway-oriented and regional-serving commercial uses. If approved, the site would be rezoned to R-1 to facilitate the development of 38 singlefamily, affordable for-sale homes and includes the construction of a new public street (Street “A”), utility extensions, sidewalks, and associated frontage improvements along N.

McClure Road, as well as an additional four (4) parcels to accommodate a public utilities easement on the southernmost end of the development. These additional parcels are not intended to be built upon and are not included in any of the proposed development of the housing project.
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DISCUSSION:

On June 5, 2025, the City of Modesto received an application from Self-Help Enterprises (SHE) to develop affordable housing on a vacant parcel located at an infill site at 3401 N.

McClure Road (Figure 1). The project is being implemented in collaboration with Stanislaus Equity Partners. This housing development will provide affordable homeownership opportunities for first-time buyers facing housing cost burdens and contribute 38 new single-family homes to the City’s housing stock.

Figure 1: Location Map
The project received $4.2 million in CalHome secondary financing and a $7 million allocation from the New Markets Tax Credit program which will fund the construction of the first 17 homes. All the homes will be reserved for households earning at or below 80% of the Area Median Income (AMI), which, according to the United States Department of Housing and Urban Development (HUD), is $78,700 for a family of 4 in 2025.1 This project represents a significant opportunity to promote neighborhood stability, especially in one of the City's historically underserved census tracts. The proposed development will provide affordable homeownership opportunities to cost-burdened firsttime buyers in Modesto, creating a pathway for families to build generational wealth and 1 https://www.huduser.gov/portal/datasets/il.html
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improve housing stability; the single-family affordable housing typology for this project is the first of its kind in the City of Modesto.

State Density Bonus Law and Development Standards Concessions:

Per City of Modesto Municipal Code Section 10-8.404, an applicant is entitled to request up to four concessions resulting in reductions in site development standards or modifications of zoning code requirements for a housing development in which 100% of the units are reserved for low-income households.

SHE is proposing an affordable housing project that qualifies under this provision and has requested the following three concessions as allowed under the City of Modesto Municipal Code Section 10-8.404:

1. Reduced Off-Street Parking Requirement
SHE requests a reduction in the required number of off-street parking spaces, from two spaces per unit to one space per unit, accommodated by a one-car garage.

2. Reduced Minimum Lot Width
SHE requests a reduction in minimum lot widths from the standard 50-60 feet to approximately 20 feet. Lot widths range from 20 feet to 53.7 feet.

3. Reduced Minimum Lot Area
SHE requests a reduction in the minimum lot area requirement from 5,000-5,500 square feet to a minimum of 2,919 square feet per lot. Lot areas range from 2,919 to 8,349 square feet. 32 of the lots range from approximately 3,000 to 3,600 square feet in area.

Staff is in support of these concessions as they facilitate the development of 100% affordable housing and support site design efficiency and affordability and are consistent with the intent of State Density Bonus Law and applicable provisions of the City of Modesto Municipal Code.

The project directly aligns with key housing goals and policies outlined in the City’s Sixth Cycle Housing Element (2023-2031), specifically Goal 1 to “Provide adequate residential sites to accommodate projected housing needs and encourage the production of a variety of housing types,” and Goal 2 to “Provide a broad range of housing opportunities to meet the needs of all income levels, with emphasis on providing housing that meets the special needs of the community.”
Rezone:

The project site is currently zoned Highway Commercial (C-3). Per City of Modesto Municipal Code Section 10-4.201, C-3 zones are designated to support highway-oriented and transportation-related services and businesses that cater to citywide and regional needs. The applicant is proposing to rezone the site to Low-Density Residential (R-1) to enable the development of residential homes. This proposed housing project in a C-3 zone requires that the applicant apply for a rezone and the development review permit #11..
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entitlements concurrently. The R-1 zone allows for a maximum density of 10.9 dwelling units per acre, as outlined in Modesto Municipal Code Section 10-4.104.

In accordance with the City of Modesto Urban General Plan Policy III.A.2, rezones should align with land use designations. However, the policy states that if the rezone involves a site of less than five acres, the rezone may be approved even if it does not conform to the designated land use and is consistent with the overarching goals and policies of the General Plan. Since the subject site is smaller than five acres, if it is aligned with the goals outlined in the City’s Housing Element, the requested rezone from C-3 to R-1 does not require a General Plan Amendment.

Upon review, the requested Rezone is consistent with the following goals of the General Plan, and therefore does not require a General Plan Amendment pursuant to Policy III.A.2:
 Policy II.A.2: Keep urban development as contiguous as possible in order to minimize urbanization of valuable farmland, foster resident convenience, improve air quality, reduce vehicle miles traveled, improve public health and safety, and provide for economy in City services.
 Policy II.A.4: Direct urban growth to areas currently served with City services.  Policy II.F.5: Pursue a diverse supply of housing types and costs, as well as a diverse supply of jobs with varying income potential, to balance local job and housing opportunities.
 Policy III.A.2: Rezonings should also be consistent with the General Plan Land Use Designations. However, rezonings involving less than five (5) acres may occur even if they are not consistent with the Land Use Designation for the property, as long as the rezoning can be found consistent with the Land Use goals and policies of the General Plan. Rezonings of five (5) acres or more that are inconsistent with the applicable Land Use Designation(s) will require a General Plan amendment.  Policy III.B.1: Provide incentives for infill development, redevelopment, and growth in existing urbanized areas by allowing more diverse number of permitted land uses, which in turn will drive economic vitality.

The project will allow for the development of the site as a 100% affordable housing residential subdivision and will provide opportunities for inclusive housing within the City.

The project is designed to be consistent with good architecture and is comparable with other surrounding market rate housing, improving the welfare of those intended to occupy these homes. The project site is currently vacant, and the project will bring new housing with fixed and enclosed sanitary and living conditions that will improve public health, and the project is conditioned to meet all building safety provisions and is not expected to have a detrimental impact on public health, safety, or welfare.

The project has been referred to local utility companies, the City Engineering and Transportation Department, Fire Department, Parks Planning, and the Public Works Department. Standard Conditions of Approval have been applied to the project. On the dais at the Planning Commission, the following condition of approval was amended as follows: “Applicant shall install climbing vines on all masonry walls, in a landscape planter, #11..
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visible to public view, or apply anti-graffiti coating on all masonry walls to discourage tagging.”
FISCAL IMPACT:

City expenditures related to the review of the project are funded by application fees provided by the applicant. There is no impact to the General Fund.

COMMITTEE RECOMMENDATION:

This project was presented to Planning Commission on October 20, 2025, and was recommended to forward to Council for approval. The motion carried 6-0-1.

The applicant simultaneously applied for a Vesting Tentative Subdivision Map, which was approved by the Commission. The CEQA/Mitigated Negative Declaration EA/C&ED No. 2025-19 was certified and adopted by the Commission. The motion carried 6-0-1.

CEQA/NEPA REQUIREMENTS:

An Initial Study (IS), Environmental Assessment No. EA/C&ED No. 2025-19, was conducted on July 31, 2025. The City of Modesto has reviewed and considered the proposed Project and has determined that the Project will not have a significant effect on the environment, based on substantial supporting evidence provided in the IS. The City proposes adopting a Mitigated Negative Declaration (MND) for this Project in accordance with the requirements of the California Environmental Quality Act (CEQA). In accordance with Section 15105 of the CEQA Guidelines, the IS/MND was released for a 20-day public review and comment period which commenced on September 29, 2025, and concluded on October 18, 2025; staff did not receive any comment. Planning staff recommends the adoption of a Mitigated Negative Declaration (MND) for the project, which has been prepared in accordance with the California Environmental Quality Act (CEQA).

The mitigation measures include:
 Time restrictions for noise-generating construction activities.  All noise-producing equipment and vehicles using internal-combustion engines shall be equipped with manufacturers’ recommended mufflers.  Material stockpiles and mobile equipment staging, parking, and maintenances areas shall be located as far as practicable from the existing residences to the north and west.
 Site access road speed limits shall be established and enforced during construction.
 Notification of construction hours and durations shall be provided to the existing residences to the residences to the north and west of the project site.
 If unusual circumstances or emergencies prevent certain construction activities from complying with City requirements, a noise control plan shall be developed to ensure that sufficient mitigation is implemented during construction to avoid adverse noise impacts.

The MND concludes that, with the implementation of specific mitigation measures above, the project will not result in significant adverse environmental impacts. #11..
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RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution certifying and adopting the CEQA Initial Study / Mitigated Negative Declaration EA/C&ED No. 2025-19 for a proposed rezone from Highway Commercial (C-3) to LowDensity Residential (R-1) at the property located at 3401 N. McClure Road.

Motion introducing and waiving the first reading of an Ordinance amending Section 25-3- 9 of the zoning map of the City of Modesto to rezone from Highway Commercial (C-3) zone to Low Density Residential (R-1) zone, property located at 3401 N. McClure Road. (Self Help Enterprises)
Approved by:

Jessica Hill, Director of Community Development
and Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. City Council Resolution

2. City Council Ordinance

3. Planning Commission Resolution No. 2025-41

4. Financial Interest Disclosure Form

5. Levine Act Form
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MODESTO CITY COUNCIL
RESOLUTION NO. 2025-

RESOLUTION CERTIFYING AND ADOPTING THE CEQA INITIAL STUDY / MITIGATED NEGATIVE DECLARATION EA/C&ED NO. 2025-19 FOR A PROPOSED REZONE FROM HIGHWAY COMMERCIAL (C-3) TO LOWDENSITY RESIDENTIAL (R-1) AT THE PROPERTY LOCATED AT 3401 N.

MCCLURE ROAD
WHEREAS, an application was submitted by Self-Help Enterprises (SHE) on June 5, 2025, requesting approval of a rezone from Highway Commercial (C-3) to Low Density Residential (R-1) at the property located at 3401 N. McClure Road (Stanislaus County APN: 033-089-041); and
WHEREAS, said application was made concurrently with a proposed new Vesting Tentative Subdivision Map to subdivide approximately 4.15 acres into 38 singlefamily residential parcels at the property located at 3401 N. McClure Road; and WHEREAS, the City’s Community and Economic Development Department prepared an Initial Study (EA/C&ED No. 2025-19) in accordance with the California Environmental Quality Act (CEQA), and a Mitigated Negative Declaration was prepared which determined that, with specific mitigation measures, the project would not have a significant effect on the environment; and
WHEREAS, the mitigation measures include time restrictions for noisegenerating construction activities; all noise producing equipment and vehicles shall be equipped with manufacturers’ recommended mufflers; material stockpiles, staging, parking and maintenances areas shall be located as far as practicable from the existing residences to the north and west; site access road speed limits shall be enforced during construction; notification of construction hours and durations shall be provided to the existing residences to the north and west; and if unusual circumstances or emergencies #11..
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prevent certain construction activities from complying with City requirements, a noise control plan shall be developed to ensure sufficient mitigation is implemented to avoid adverse noise impacts; and
WHEREAS, a 20-day public review period for the proposed Initial Study/Mitigated Negative Declaration began on September 29, 2025, and concluded on October 18, 2025; and
WHEREAS, the City did not receive any public comments on the draft Initial Study/Mitigated Negative Declaration and no changes to the document were necessary as a result; and
WHEREAS, said matter was considered by the Planning Commission at a duly noticed public hearing which was held on October 20 2025, whereupon the Planning Commission considered the Initial Study/Mitigated Negative Declaration and recommended that the City Council adopt the Initial Study/Mitigated Negative Declaration on a 6-0-1 vote; and
WHEREAS, said matter was considered by the City Council at a duly noticed public hearing which was held on November 25, 2025, at 5:30 p.m., in the Tenth Street Place Chambers located at 1010 10th Street, Modesto, California.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that the Council has reviewed and considered Environmental Assessment No. EA/C&ED 2025-19 and the associated Mitigated Negative Declaration, copies of which are on file with the Community and Economic Development Department, Third Floor, 1010 Tenth Street, Modesto, California, and are attached hereto as Exhibit “A” and Exhibit “B” and incorporated herein as reference,
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and based on the substantial evidence included in said Initial Study makes the following findings:

1. The City Council hereby certifies and adopts Initial Study EA/C&ED No. 2025-19 in accordance with CEQA, which
concluded that the with the incorporation of mitigation measures, the project would not have a significant impact on the
environment.

2. All feasible mitigation measures set forth in EA/C&ED No. 2025- 19 which are appropriate to the project shall be incorporated in the project.

3. The Initial Study, EA/C&ED No. 2025-19 provides substantial evidence to support findings 1 and 2 above.

BE IT FURTHER RESOLVED that the property owner and developer shall, at their sole expense, defend, indemnify and hold harmless the City of Modesto, its agents, officers, directors and employees, from and against all claims, actions, damages, losses, or expenses of every type and description, including but not limited to payment of attorneys’ fees and costs, by reason of, or arising out of, this development approval. The obligation to defend, indemnify and hold harmless shall include but is not limited to any action to arbitrate, attack, review, set aside, void or annul this development approval on any grounds whatsoever. The City of Modesto shall promptly notify the developer of any such claim, action, or proceeding.

BE IT FURTHER RESOLVED by the Council of the City of Modesto that the Community & Economic Development Director is hereby authorized and directed to file a notice of approval or determination within five (5) business days with the Stanislaus County Clerk pursuant to Section 21152 of the Public Resources Code. #11..
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The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025, 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, CMC, City Clerk
(SEAL)
APPROVED AS TO FORM:

By: ______________________________________
JOSE M. SANCHEZ, City Attorney
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EXHIBIT A

INITIAL STUDY/MITIGATED NEGATIVE DECLARATION
EA/C&ED NO. 2025-19
https://www.modestogov.com/DocumentCenter/View/24617/McClure-IS-Final

EXHIBIT B

MITIGATION MONITORING AND REPORTING PROGRAM
EA/C&ED NO. 2025-19
https://www.modestogov.com/DocumentCenter/View/24618/McClure-MND-Final #11..
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ORDINANCE NO. -C.S.

AN ORDINANCE AMENDING SECTION 25-3-9 OF THE

ZONING MAP OF THE CITY OF MODESTO TO REZONE
FROM HIGHWAY COMMERCIAL (C-3) ZONE, TO LOW
DENSITY RESIDENTIAL (R-1) ZONE, PROPERTY
LOCATED AT 3401 N. MCCLURE ROAD (SELF HELP

ENTERPRISES)
WHEREAS, a verified application for an amendment to Section 25-3-9 of the Zoning Map was filed by Self Help Enterprises on June 5, 2025, to rezone a 4.15 acre property located at 3401 N. McClure Road from Highway Commercial (C-3) Zone, to Low Density Residential (R-1) Zone; and
WHEREAS, after a public hearing held on October 20, 2025, at which hearing evidence both oral and documentary was received and considered, it was found and determined by the Planning Commission that the requested zone change will not be detrimental to the public health, safety or welfare because it will facilitate affordable homeownership opportunities to a currently vacant site and will be served by City infrastructure, the requested zone change will result in an orderly planned use of land because it will establish residential zoning consistent with adjacent R-1 and Planned Development 446 zones, and will ensure a logical transition and compatible neighborhood design, and the requested zone change is in accordance with the community objectives as set forth in the Modesto Urban Area General Plan and any applicable specific plan(s) because it supports infill housing, promotes the production of affordable housing and is aligned with General Plan policies that encourage diverse housing typologies; and WHEREAS, by Resolution No. 2025-41, adopted on October 20, 2025, the Planning Commission recommended to the Council that the application of Self-Help Enterprises #11..
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to amend Section 25-3-9 of the Zoning Map to rezone the hereinafter described property from Highway Commercial, (C-3), to Low Density Residential, (R-1), be approved; and WHEREAS, the City prepared an Initial Study (EA/C&ED No. 2025-19) in accordance with the California Environmental Quality Act (CEQA), and a Mitigated Negative Declaration was prepared which determined that, with specific mitigation measures, the project would not have a significant effect on the environment.

NOW, THEREFORE, the Council of the City of Modesto does ordain as follows:

SECTION 1. After a public hearing held on December 2, 2025, in the Tenth Street Place Chambers located at 1010 10th Street, Modesto, California, at which hearing evidence both oral and documentary was received and considered, this Council hereby finds and determines as follows:

1. The City Council hereby certifies and adopts Initial Study EA/C&ED No. 2025-19 in accordance with CEQA, which concluded that with the incorporation of mitigation measures, the project would not have a significant impact on the environment.

2. All feasible mitigation measures set forth in EA/C&ED No. 2025-19 which are appropriate to the project shall be incorporated in the project.

3. The Initial Study, EA/C&ED No. 2025-19 provides substantial evidence to support findings 1 and 2 above.

4. The requested change will not be detrimental to the public health, safety or welfare because it will facilitate affordable homeownership opportunities to a currently vacant site and will be served by City infrastructure.

5. The requested change will result in an orderly planned use of land because it will establish residential zoning consistent with adjacent zoning of R-1 and Planned Development 446, and will ensure a logical transition and compatible neighborhood design.
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6. The requested change is in accordance with the community’s objectives as set forth in the General Plan and any applicable specific plan(s) because it supports infill housing, promotes the production of affordable housing and is aligned with General Plan policies that encourage diverse housing typologies.

SECTION 2. ZONING CHANGE. Section 25-3-9 of the Zoning Map is hereby amended to rezone the following described property from Highway Commercial (C-3), to Low Density Residential (R-1):

C-3 to R-1
APN: 033-089-041
SECTION 3. ZONING MAP. Section 25-3-9 of the Zoning Map of the City of Modesto is amended to appear as set forth on the map attached hereto, which is hereby made a part of this ordinance by reference.

SECTION 4. EFFECTIVE DATE. This ordinance shall go into effect and be in full force and operation from and after thirty (30) days after its final passage and adoption.

SECTION 5. PUBLICATION. At least two (2) days prior to its final adoption, copies of this ordinance shall be posted in at least three (3) prominent and distinct locations in the City; and a notice shall be published once in The Modesto Bee, the official newspaper of the City of Modesto, setting forth the title of this ordinance, the date of its introduction and the places where this ordinance is posted.
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The foregoing ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025, by Councilmember , who moved its introduction and passage to print, which motion being duly seconded by Councilmember , was upon roll call carried and ordered printed and published by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

APPROVED:

SUE ZWAHLEN, Mayor
ATTEST:

By:

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

By:

JOSE M. SANCHEZ, City Attorney
APPROVED AS TO DESCRIPTION:

By:

Community & Economic Development
Department, Planning Division
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FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the , 2025, Councilmember ______________moved its final adoption, which motion being duly seconded by Councilmember ________________, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

APPROVED:

MAYOR, SUE ZWAHLEN
ATTEST: ____________________________
DIANE NAYARES, CMC, City Clerk
Effective Date: _________________, 2025
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

November 25, 2025
Date: November 6, 2025
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jessica Hill, Director of Community and Economic Development SUBJECT: TEFRA Hearing and Development Loan for Seventh Street Village CONTACT: Edgar Garcia, Community Development Manager
[email protected], (209) 571-5101
DESCRIPTION:

Hearing to approve the issuance of bonds by the California Municipal Finance Authority (CMFA) for the benefit of Seventh Street Village LP to provide for the financing of the Seventh Street Village project, for the purposes of satisfying the requirements of the Tax and Equity Fiscal Responsibility Act of 1982 (TEFRA), issuance of a HOME Investment Partnership Loan in an amount not to exceed $5,000,000, and approval of a license agreement for placement of private stormwater facilities in right-of-way. (Funding Source: Community Development Block Grant and HOME Investment Partnerships)
STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto’s 2025-2026 Strategic Plan Quality of Life Goal C:

Develop a Homelessness and Housing Plan.

BACKGROUND:

Visionary Home Builders of California, Inc. (VHB) submitted their Tier 1 proposal by the Request for Proposals (RFP) deadline of January 25, 2023, and submitted for the State of California Affordable Housing and Sustainable Communities (AHSC) grant, for a project located on 7th Street between I and J Street in coordination with the City.

On March 14, 2023, by Resolution No. 2023-122 City Council authorized the joint application for Seventh Street Village and the pre-commitment of an amount not to exceed $7,967,750 from the City’s Housing and Urban Development Funding and it included a Capital Facility Fees affordable housing exemption contingent on the award of the Affordable Housing and Sustainability Program (AHSC).

On September 12, 2023, by Resolution No. 2023-421, City Council accepted the award from the joint submission between the City of Modesto and Visionary Home Builders of California, Inc. for a State of California’s Affordable Housing and Sustainability Program in an amount of $33,010,880 for the development of Seventh Street Village as well as any grant required #12..
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TEFRA Hearing and Development Loan for Seventh Street Village

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transportation improvements. By Resolution No. 2023-424 the City committed funding not to exceed $7,000,000 in affordable housing funding: Visionary Home Builders, Inc. submitted a series of tax credit applications to fund the remaining development costs to the California Municipal Finance Authority.

The California Municipal Finance Authority (CMFA)1 was created on January 1, 2004, pursuant to a joint exercise of powers agreement to promote economic, cultural and community development, through the financing of economic development and charitable activities throughout California. CMFA serves to meet the requirements of the Tax and Equity Fiscal Responsibility Act (TEFRA) by serving as the issuer of revenue bonds as a joint exercise of powers authority and public entity of the State of California.

DISCUSSION:

The Seventh Street Village development will sit on four parcels totaling .88 acres. The project is comprised of 79 housing units with a mix of 1-bedroom, one-bath, 2-bedroom, one-bath, and 3- bedroom two-bath units.

Seventh Street Village units will have a full kitchen with pantry cabinets, interior laundry rooms with full-size washers and dryers, separate dining, and family rooms. The elevation style was chosen to follow the Central California modern downtown lifestyle and is enhanced, stucco wall finish with exposed cast-in-place concrete, manufactured metal canopies, exposed metal stairs, and accent details on the building elevations. To add energy efficiency, the project is designed to achieve Green Point Rating Certification.

On-site Amenities:
 Head start/Day Care Facility with playground
 Community /Cooling Center
 Teen Center
 Office Space for Services
The project is within walking distance of public transportation, recreation, an elementary and high school, and proximity to shopping and services. These nearby services will enhance the marketability of the subject property. The enhanced level of design and proximity to amenities is an element to provide a sense of community and pride. Visionary Home Builders, Inc. is required to install and maintain control measures to minimize pollutants in urban runoff and Low Impact Development (LID) devices, structures, and or areas to reduce or contain all storm water runoff and has requested to install the Stormwater LID Devices in the City’s public right-of-way adjacent to the Project and buried under the surface.

The City has been actively working with Visionary Home Builders, Inc. to bring this project forward. Since the approval of the Affordable Housing Sustainable Communities (AHSC) application in 2023, the project cost has increased by nearly $10 million from approximately $56 million to nearly $66 million. The City has performed an in-depth analysis in coordination with the City’s professional consultants that included review of comparable projects. As was presented to City Council, from the 2023 award and the project costs increased by about $15 million bringing the new project budget to $75.3 million. As staff was made aware, they began to collaboratively work with the developer to reconcile the project budget to account for the project increase.
1 California Municipal Finance Authority (CMFA) https://www.cmfa-ca.com/ #12..
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City Council, November 25, 2025
TEFRA Hearing and Development Loan for Seventh Street Village

Page 3 of 6 ends

On July 31, 2025, staff met with the developer regarding the investor bids, and the available funds to develop the project. At that time staff were made aware that investor bids originally estimated at $.93 cents on the dollar, came in at $.84 cents on the dollar resulting in a $4 million gap. Additionally, during this meeting, it was determined that the project budget did not account for the required demolition of the road, or reconstruction of 7th Street as were listed as conditions of their planning project approval, which resulted in an overall $7.5 million gap.

In August 2025, staff continued to work with the developer to identify changes to the project scope with the goal of balancing the budget. At this time, the following proposed reductions were submitted to the City:

Affordable Housing Scope Adjustments
 Parking reduction to 1 floor of parking so 110 stalls would now be 51 stalls  Façade reduction from brick to stucco that includes waterproofing material adjustments  Reduction from three stairways to two stairways
 Simplification of the podium rooftop courtyard and mezzanine design elements  Adjusted interior finishes to more cost-effective options.

Sustainable Transportation Adjustments
 Change the bike lane connectivity route from the original application scope to begin at Farmer’s Market at 16th Street to the Dry Creek Trail.

As a result of these scope reductions the gap was reduced to $4.2 million ($3.5 million for 7th Street; and $700k gap in housing budget). Staff continued to ask for options to balance the project budget. On September 24, 2025, staff met with the developer to discuss concerns with the project gap, and increased costs. Both parties continued to look for options to address the project deficit.

City staff met regularly with Visionary Home Builders, Inc. beginning on September 24th to address the City’s concerns. On October 10, 2025, Visionary Home Builders, Inc. identified additional sources of funding which decreased the funding gap in the housing budget to about $1.7 million. VHB proposed that this gap be covered by the AHSC – Surface Transportation Infrastructure funding that was identified in the AHSC Grant application for this purpose.

Additionally, on November 4, 2025, the City Council motioned to accept a Seventh Street Village project update regarding the project scope adjustments and directed that the City hold the required Tax Equity and Fiscal Responsibility Act (TEFRA) hearing.

On December 11, 2024, the California Tax Credit Allocation Committee (CTCAC)2 presented Seventh Street Village with its award notification as part of the 4% Tax Credit program. The tax credit award in the amount of $37,517,305 was the final amount needed to complete the development of Seventh Street Village. Visionary Home Builders, Inc. formed the Seventh Street Village, LP, a California limited partnership to deliver this project.

With the approval of this item the project team is working with the California Municipal Finance Authority (CMFA) and the State Housing and Community Development Department (HCD) to 2 The California Tax Credit Allocation Committee (CTCAC) https://www.treasurer.ca.gov/ctcac/tax.asp #12..
- 550 -
City Council, November 25, 2025
TEFRA Hearing and Development Loan for Seventh Street Village

Page 4 of 6 ends

close all the project financing outlined below and the project would then break ground by December 19, 2025 with an estimated project completion date of Winter 2027.

Project Costs: Seventh Street Village
Source Amount
Land Acquisition $ 3,867,358
Construction Cost $43,972,854
Development Design and Permitting $20,032,688
Cost of Bond Issuance $ 881,736
Total Project Development $68,754,636
Project Financing: Seventh Street Village
Source Amount
Modesto Commitment $ 7,000,000
Modesto CDBG $ 2,000,000
Modesto HOME $ 5,000,000
AHSC Award – HCD for Housing Development $18,856,835
AHSC - HCD Off-site Improvements $ 1,300,000
AHSC - HCD Housing Development $16,000,000
AHSC - HCD Sustainable Transportation Infrastructure $ 1,556,835 Other Capital Financing Sources $42,897,801
Tax-Exempt Perm Loan $ 7,414,000
Raza Development Fund Loan $ 987,500
Deferred Developer Fee $ 3,324,862
General Partner $ 3,355,544
GP Capital Sponsor $ 100
Limited Partners $27,815,795
Grand Total $68,754,636
As a requirement of the CTCAC Award and the final source needed for the development, the City is holding a Public Hearing to approve the issuance of the bonds by the CMFA for the benefit of Seventh Street Village LP, a California limited partnership (the “Borrower”), to provide for the financing of the Project, such adoption is solely for the purposes of satisfying the requirements of TEFRA, under the Internal Revenue Code of 1986 and the California Government Code Section 6500 (and following).

Per Resolution No. 2023-424 the City Council committed $7,000,000 approving the City’s investment in this project includes a previously issued Community Development Block Grant funded loan agreement in the amount of $2,000,000 that is being used in this project for the land costs and off-site improvements. This action also maintained the commitment of the of the $5,000,000 to be split with a HOME investment of $3,509,216 and a Permanent Local Housing Allocation investment in the amount of $1,490,784. Staff is recommending instead of the split funding the approval of the entire $5,000,000 be in a HOME loan agreement in an amount not to exceed $5,000,000 with the term of 3% interest for 55-years. Repayment of this loan is on an annual basis based on the residual receipts. The loan will be secured by a deed of trust. It is #12..
- 551 -
City Council, November 25, 2025
TEFRA Hearing and Development Loan for Seventh Street Village

Page 5 of 6 ends

anticipated that the other lenders for the project will request the City’s loan be subordinated to their funding. This is common for projects where the City’s funding is much smaller than the funding provided by other lenders. Any subordination must comply with the City’s standard requirements.

For the stormwater facility to be constructed within the right of way on 7th Street, staff recommends Council approval for the license agreement for the placement of stormwater facilities in the public right-of-way property located at 914-930 7th street, Modesto, California also known as Stanislaus County Assessor’s parcel numbers 104-006-007, 104-006-008, 104- 006-009, 104-006-010 for the development of Seventh Street Village.

The next steps following the approval of this hearing, the project will finalize and close on all of the lending agreements that include the City’s HOME loan and Stormwater License Agreement by December 19, 2025 with the goal of starting construction before the end of December 2025.

Sustainable Transportation Infrastructure
The Sustainable Transportation Infrastructure components as applied for in 2023, were also presented to City Council on November 4, 2025, and the City Council directed City staff to adjust the scope that would shift the bike lane infrastructure from the Dry Creek Trail, through Rue De Yoe, along I Street to the Farmer’s Market. City staff will be working with the State and other partners to amend the required AHSC grant requirements to ensure compliance with the grant terms.

FISCAL IMPACT:

The funding for this program will come from the following sources:
 U.S. Department of Housing and Urban Development CDBG, and project budget was already issued to this project in an amount not to exceed $2,000,000 from fund (1130) – CDBG Direct Programs
 U.S. Department of Housing and Urban Development, and project budget was already approved for $200,000 with an additional set-aside of $150,000 for activity delivery, for a combined total transfer of $5,350,000 from fund (1170) – HOME Investment Partnership Program
 There is no City impact for the Tax bond request.
 License Maintenance Agreement will generate revenue in the amount of $1.00 per year for the life of the project.
 There will be no impact to the General Fund.

COMMITTEE RECOMMENDATION:

This item was presented to the Citizen’s Housing and Community Development Committee on March 9, 2023, and it was subsequently reviewed by the City Council on November 4, 2025, and it was recommended to the City Council for consideration.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution of the City Council of Modesto approving a plan of finance of the California Municipal Financial Authority to issue and reissue revenue bonds for a qualified residential rental project for the benefit of Seventh Street Village LP, and certain other matters relating thereto.

Resolution approving a HOME Investment Partnership program loan in a total amount not to #12..
- 552 -
City Council, November 25, 2025
TEFRA Hearing and Development Loan for Seventh Street Village

Page 6 of 6 ends

exceed $5,000,000 at 3% simple interest to begin accrual after the issuance of Certificate of Occupancy to Visionary Home Builders of California, Inc., a California non-profit, Stockton, CA, for the development of Seventh Street Village, an additional $150,000 for staff activity delivery, and authorizing the City Manager or his designee to negotiate and execute agreements.

Resolution approving a License Agreement for the placement of stormwater facilities in the public right-of-way property located at 914-930 7th Street, Modesto, California also known as Stanislaus County Assessor’s parcel numbers 104-006-007, 104-006-008, 104-006-009, 104- 006-010 to Visionary Home Builders of California, Inc, a California nonprofit, Stockton, CA for the development of Seventh Street Village, and authorizing the City Manager or his designee to negotiate and execute agreements.

Resolution approving a First Amendment to the Community Development Block Grant (CDBG) funded loan in a total amount not to exceed $2,000,000 at 3% simple interest for 55- years to begin accrual after issuance of Certificate of Occupancy, for acquisition, predevelopment, site improvements, and off-site improvements of Seventh Street Village, and authorizing the City Manager or his designee to negotiate and execute the Amendment.

Approved by:

Jessica Hill, Director of Community and
Economic Development
Joseph P. Lopez, City Manager
Attachments:

1. Resolution – TEFRA Hearing

2. Resolution – HOME Agreements

3. Resolution – Maintenance Agreement

4. Resolution – First Amendment to CDBG Agreement

5. HOME Loan Agreement

6. HOME Deed of Trust

7. HOME Promissory Note

8. HOME Regulatory Agreement

9. Stormwater License Agreement
#12..
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11/25/2025/CED/EGarcia/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MODESTO

APPROVING A PLAN OF FINANCE OF THE CALIFORNIA MUNICIPAL

FINANCE AUTHORITY TO ISSUE AND REISSUE REVENUE BONDS FOR A

QUALIFIED RESIDENTIAL RENTAL PROJECT FOR THE BENEFIT OF

SEVENTH STREET VILLAGE LP, AND CERTAIN OTHER MATTERS

RELATING THERETO
WHEREAS, Visionary Home Builders of California, Inc., a California nonprofit public benefit corporation (the “Sponsor”), on behalf of Seventh Street Village LP, a California limited partnership, or another ownership entity created by VHB Seventh Street Village LLC, a California limited liability company, its general partner (the “General Partner”), or by another affiliate of the Sponsor (such limited partnership or other ownership entity, the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) undertake a proposed plan of finance to issue and reissue from time to time one or more series of revenue bonds in an outstanding principal amount not to exceed $50,000,000 (the “Bonds”) to finance and refinance the acquisition, construction, development and equipping of a 79-unit qualified residential rental project (the “Project”) to be owned and operated by the Borrower and located at 914-930 7th Street within the City of Modesto, California (the “City”); and WHEREAS, an “applicable elected representative” of the jurisdiction in which the Project is to be located is required to approve the proposed plan of finance for the Project under Section 147(f) of the Internal Revenue Code of 1986, as amended (the “Code”); and
#12..
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11/25/2025/CED/EGarcia/Item X 2 2025-XX
WHEREAS, the City Council of Modesto (the “City Council”) is the elected legislative body of the City and is an “applicable elected representative” for purposes of Section 147(f) of the Code; and
WHEREAS, the Authority has advised that the Bonds may be issued pursuant to a “plan of finance” to issue an original issue of Bonds and to issue or reissue one or more additional series of Bonds from time to time after the original issue of Bonds, if necessary or desirable to comply with applicable legal requirements, all in an aggregate principal amount not to exceed $50,000,000 to finance the Project, and all within the three-year period commencing on the date of the issuance of the first series of Bonds pursuant to this resolution; and
WHEREAS, the Authority has requested that the City Council approve the proposed plan of finance in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the proposed plan of finance for the Project; and NOW, THEREFORE, BE IT RESOLVED, by the City Council of Modesto, as follows:

Section 1. The foregoing recitals are true and correct. #12..
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11/25/2025/CED/EGarcia/Item X 3 2025-XX
Section 2. The City Council hereby approves the proposed plan of finance of the Authority to issue and reissue from time to time of one or more series of revenue bonds in an outstanding principal amount not to exceed $50,000,000. It is the purpose and intent of the City Council that this resolution constitute approval of the proposed plan of finance for the Project for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of a governmental unit having jurisdiction over the area in which the Project is to be located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement.

Section 3. The City shall have no responsibility or liability whatsoever with respect to the Bonds. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein.

Section 4. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing transaction approved hereby.

Section 5. The City Clerk shall forward a certified copy of this Resolution to the Authority in care of its counsel:

Ronald E. Lee, Esq.
#12..
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11/25/2025/CED/EGarcia/Item X 4 2025-XX
Jones Hall, APLC
475 Sansome Street, Suite 1700
San Francisco, CA 94111
Section 6. This resolution shall take effect immediately upon its adoption.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________

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

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney

#12..
- 557 -
11/25/2025/CED/EGarcia/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-

RESOLUTION APPROVING A HOME INVESTMENT PARTNERSHIP
PROGRAM LOAN IN A TOTAL AMOUNT NOT TO EXCEED $5,000,000 AT 3%

SIMPLE INTEREST TO BEGIN ACCRUAL AFTER THE ISSUANCE OF

CERTIFICATE OF OCCUPANCY TO VISIONARY HOME BUILDERS OF

CALIFORNIA, INC, A CALIFORNIA NON-PROFIT, STOCKTON, CA FOR

THE DEVELOPMENT OF SEVENTH STREET VILLAGE, AN ADDITIONAL $150,000 FOR STAFF ACTIVITY DELIVERY, AND AUTHORIZING THE CITY

MANAGER OR HIS DESIGNEE TO NEGOTIATE AND EXECUTE THE LOAN AGREEMENTS.

WHEREAS, Visionary Home Builders of California, Inc. (VHB) submitted their Tier 1 proposal by the RFP deadline of January 25, 2023 and submitted for the State of California Affordable Housing and Sustainable Communities (AHSC) grant, for a project located on 7th Street between I and J Street in coordination with the City; and WHEREAS, on March 14, 2023, by Resolution No. 2023-122 City Council authorized the joint application for Seventh Street Village and the pre-commitment of an amount not to exceed $7,967,750 from the City’s Capital Facility Fees affordable housing exemption program and the affordable housing funding sources contingent on the award of the Affordable Housing and Sustainability Program (AHSC); and WHEREAS, on September 12, 2023, by Resolution No. 2023-421, City Council accepted the award from the joint submission between the City of Modesto and Visionary Home Builders of California, Inc. for a State of California’s Affordable Housing and Sustainability Program in an amount of $33,010,880 for the development of Seventh Street Village as well as any grant required transportation improvements and by Resolution No. 2023-424 the City committed funding not to exceed $7,000,000 in affordable housing funding; and
#12..
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11/25/2025/CED/EGarcia/Item X 2 2025-XX
WHEREAS, on December 11, 2024, the California Tax Credit Allocation Committee (CTCAC) presented Seventh Street Village with its award notification as part of the 4% Tax Credit program. The tax credit award in the amount of $37,517,305 was the final amount needed to complete the development of Seventh Street Village; and WHEREAS, Seventh Street Village development will sit on four parcels totaling .88 acres. The project is comprised of 79 housing units with a mix of 1-bedroom, onebath, 2-bedroom, one-bath, and 3-bedroom two-bath units; and WHEREAS, on July 31, 2025, staff met with the developer regarding the investor bids, and the available funds to develop the project. At that time staff were made aware that investor bids originally estimated at $.93 cents on the dollar, came in at $.84 cents on the dollar resulting in a $7.5 million gap; and
WHEREAS, on November 4, 2025, staff presented the project updated and that City staff has been actively working with Visionary Home Builders to bring this project forward and since the approval of the Affordable Housing Sustainable Communities (AHSC) application in 2023, the project cost has increased by nearly $10 million from approximately $56 million to nearly $66 million; and
WHEREAS, on November 4, 2025, by Council Motion the Seventh Street Village accepted the projects update regarding the following project scope adjustments that included parking reduction to 1 floor of parking so 110 stalls would now be 51 stalls, façade reduction from brick to stucco that includes waterproofing material adjustments, reduction from 3 stairways to 2 stairways, simplification of the roof garden and mezzanine design elements, and adjusted interior finishes to more cost-effective options would be required to move this project forward within budget; and #12..
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11/25/2025/CED/EGarcia/Item X 3 2025-XX
WHEREAS, the Council motion requested that the City hold the required Tax Equity and Fiscal Responsibility Act (TEFRA) hearing; and WHEREAS, with the approval of this item the project team will be working with California Municipal Finance Authority (CMFA) and the State of California to close all the project financing outlined below and the project would then break ground by December 2025 with an estimated project completion date of Winter 2027; and WHEREAS, City staff is recommending the approval of the HOME loan agreements in an amount not to exceed $5,000,000, with 3% interest for a term of 55- years, with repayment of this loan on an annual basis based on the residual receipts.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it herby approves a HOME Investment Partnership program loan in a total amount not to exceed $5,000,000 at 3% simple interest to begin accrual after the issuance of Certificate of Occupancy to Visionary Home Builders of California, Inc, a California non-profit out of Stockton, CA for the development of Seventh Street Village, an additional $150,000 for staff activity delivery.

BE IT FURTHER RESOLVED, and authorizing the City Manager, or his designee, to negotiate and execute the Loan Agreement and all related documents, in a form approved by the City Attorney.
#12..
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11/25/2025/CED/EGarcia/Item X 4 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________

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

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney

#12..
- 561 -
11/25/2025/CED/EGarcia/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-

RESOLUTION APPROVING A LICENSE AGREEMENT FOR THE
PLACEMENT OF STORMWATER FACILITIES IN THE PUBLIC RIGHT-OFWAY PROPERTY LOCATED AT 914-930 7TH STREET, MODESTO, CALIFORNIA ALSO KNOWN AS STANISLAUS COUNTY ASSESSOR’S
PARCEL NUMBERS 104-006-007, 104-006-008, 104-006-009, AND 104-006-010 TO VISIONARY HOME BUILDERS OF CALIFORNIA, INC, A CALIFORNIA NONPROFIT OF STOCKTON, CA FOR THE DEVELOPMENT OF SEVENTH

STREET VILLAGE, AND AUTHORIZING THE CITY MANAGER OR HIS

DESIGNEE TO NEGOTIATE AND EXECUTE AGREEMENTS
WHEREAS, Visionary Home Builders of California, Inc. (VHB) submitted their Tier 1 proposal by the RFP deadline of January 25, 2023 and submitted for the State of California Affordable Housing and Sustainable Communities (AHCS) grant, for a project located on 7th Street between I and J Street in coordination with the City; and WHEREAS, on March 14, 2023, by Resolution No. 2023-122 City Council authorized the joint application for Seventh Street Village and the pre-commitment of an amount not to exceed $7,967,750 from the City’s Capital Facility Fees affordable housing exemption program and the affordable housing funding sources contingent on the award of the Affordable Housing and Sustainability Program (AHSC); and WHEREAS, on September 12, 2023, by Resolution No. 2023-421, City Council accepted the award from the joint submission between the City of Modesto and Visionary Home Builders of California, Inc. for a State of California’s Affordable Housing and Sustainability Program in an amount of $33,010,880 for the development of Seventh Street Village as well as any grant required transportation improvements and by Resolution No. 2023-424 the City committed funding not to exceed $7,000,000 in affordable housing funding; and
#12..
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11/25/2025/CED/EGarcia/Item X 2 2025-XX
WHEREAS, on December 11, 2024, the California Tax Credit Allocation Committee (CTCAC) presented Seventh Street Village with its award notification as part of the 4% Tax Credit program. The tax credit award in the amount of $37,517,305 was the final amount needed to complete the development of Seventh Street Village; and WHEREAS, Seventh Street Village development will sit on four parcels totaling .88 acres. The project is comprised of 79 housing units with a mix of 1-bedroom, onebath, 2-bedroom, one-bath, and 3-bedroom two-bath units; and WHEREAS, Visionary Home Builders, Inc is required to install and maintain control measures to minimize pollutants in urban runoff and Low Impact Development (LID) devices, structures, and or areas to reduce or contain all storm water runoff and has requested install the Stormwater LID Devices in the City’s public right-of-way adjacent to the Project and buried under the surface; and
WHEREAS, on November 4, 2025, by Council Motion the Seventh Street Village accepted the projects update regarding the following project scope adjustments that included parking reduction to 1 floor of parking so 110 stalls would now be 51 stalls, façade reduction from brick to stucco that includes waterproofing material adjustments, reduction from 3 stairways to 2 stairways, simplification of the roof garden and mezzanine design elements, and adjusted interior finishes to more cost-effective options would be required to move this project forward within budget; and WHEREAS, the Council motion requested that the City hold the required Tax Equity and Fiscal Responsibility Act (TEFRA) hearing; and WHEREAS, with the approval of this project the stormwater facility will need to be constructed within the right of way on 7th Street, staff recommends Council approval #12..
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11/25/2025/CED/EGarcia/Item X 3 2025-XX
for the license agreement for the placement of stormwater facilities in the public right-ofway property located at 914-930 7th street, Modesto, California also known as Stanislaus County Assessor’s parcel numbers 104-006-007, 104-006-008, 104-006-009, 104-006- 010 for the development of Seventh Street Village.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it herby approves a License Agreement for the placement of stormwater facilities in the public right-of-way property located at 914-930 7th Street, Modesto, California also known as Stanislaus County Assessor’s parcel numbers 104-006-007, 104-006-008, 104- 006-009, 104-006-010 to Visionary Home Builders of California, Inc, a California nonprofit out of Stockton, CA for the development of Seventh Street Village.

BE IT FURTHER RESOLVED, that the City Manager, or his designee, is authorized to negotiate and execute the final License Agreement, in a form approved by the City Attorney.
#12..
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11/25/2025/CED/EGarcia/Item X 4 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 25th day of November, 2025 by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers: ?
NOES: Councilmembers: ?
ABSENT: Councilmembers: ?
ATTEST: ____________________________

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

BY: ____________________________________
JOSE M. SANCHEZ, City Attorney

#12..
- 565 -
11/25/2025/CED/EGarcia/Item x 1 2025-xxx

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX

RESOLUTION APPROVING A FIRST AMENDMENT TO THE COMMUNITY

DEVELOPMENT BLOCK GRANT (CDBG) FUNDED LOAN IN A TOTAL
AMOUNT NOT TO EXCEED $2,000,000 AT 3% SIMPLE INTEREST FOR 55-

YEARS TO BEGIN ACCRUAL AFTER ISSUANCE OF CERTIFICATE OF

OCCUPANCY, FOR ACQUISITION, PREDEVELOPMENT, SITE

IMPROVEMENTS, AND OFF-SITE IMPROVEMENTS OF SEVENTH STREET

VILLAGE, AND AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO NEGOTIATE AND EXECUTE THE AMENDMENT.

WHEREAS, Visionary Home Builders of California, Inc. (VHB) submitted their Tier 1 proposal by the RFP deadline of January 25, 2023, for an affordable housing development project located on 7th Street between I and J Street (Seventh Street Village) for development and funding consideration to pursue an Affordable Housing and Sustainability Communities (AHSC) grant in coordination with the City; and WHEREAS, the Seventh Street Village development will sit on four parcels totaling .88 acres, and the project is comprised of 79 housing units with a mix of onebedroom one-bath, two-bedroom one-bath, and three-bedroom two-bath units. The project will be designed as a modern garden-style community which will consist of one fourstory building on a podium.; and WHEREAS, the Seventh Street Village project is proposing to include transportation improvements that includes bike lane improvements connecting to a proposed bike network, and sidewalk improvements; and
WHEREAS, in collaboration with Stanislaus Regional Transit Authority there will be improvements through bus shelters and/or bulb outs, and in collaboration with San Joaquin Rail Commission the Seventh Street Village project will include the acquisition of an Altamont Corridor Express (ACE) engine; and
WHEREAS, the State issued its Round 7 Notice of Funding Availability on #12..
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11/25/2025/CED/EGarcia/Item x 2 2025-xxx
December 15, 2022, for $750 million in funding under the AHSC program that focuses on the development of affordable housing with the goal of decreasing greenhouse gas emissions, and the City and VHB submitted a joint application for the Seventh Street Village project for a total award. $33,010,880 will be a loan given to VHB and used for construction of Phase I of this development, and $15,000,000 will be a grant given to the City and used for transportation related infrastructure improvements; and WHEREAS, on August 30, 2023, the Strategic Growth Council (SGC) voted to award the Seventh Street Village project a total of $33,010,880 that includes a construction program that promotes sustainability for tenants, and the transportation related improvements; and
WHEREAS, on March 14, 2023, by Resolution No. 2023-122, the City committed $7,000,000 in its affordable housing funding sources to the Seventh Street Village project contingent on the project obtaining the AHCS Award and $200,000 in staff activity delivery; and
WHEREAS, the City desires to approve a First Amendment to the Community Development Block Grant (CDBG) funded loan to broaden the eligible uses of the agreement to include predevelopment and site improvements of Seventh Street Village as well as provide the City Manager, or his designee, the authority to negotiate and execute the terms of the amendment; and
WHEREAS, the City desires to approve a First Amendment to the Community Development Block Grant (CDBG) funded loan in an amount not to exceed $2,000,000 at 3% simple interest for 55 years to begin accrual after issuance of Certificate of Occupancy for acquisition, predevelopment, site improvements, and off-site improvements.
#12..
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11/25/2025/CED/EGarcia/Item x 3 2025-xxx
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the First Amendment to the Community Development Block Grant (CDBG) funded loan in a total amount not to exceed $2,000,000 at 3% simple interest for 55-years to begin accrual after issuance of Certificate of Occupancy, for acquisition, predevelopment, site improvements, and off-site improvements of Seventh Street Village.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to negotiate and execute the First Amendment to the Community Development Block Grant (CDBG) funded loan 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 November, 2025 by Councilmember , who moved its adoption, which motion being duly seconded by , 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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352473.1

HOME LOAN AGREEMENT

BY AND BETWEEN

THE CITY OF MODESTO,
a California Charter City
AND

VISONARY HOME BUILDERS OF CALIFORNIA, INC
a California nonprofit corporation,
SEVENTH STREET VILLAGE LP, a California limited partnership, VHB SEVENTH STREET VILLAGE LLC, a California limited liability company (7th Street Village)
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B-1
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. ...................................................................24 Section 4.8 Mechanics Liens, Stop Notices, and Notices of Completion.....................25 Section 4.9 Inspections. ................................................................................................25 Section 4.10 Developer Fee. ...........................................................................................26 Section 4.11 Marketing Plan...........................................................................................26 #12..
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TABLE OF CONTENTS
(continued)
Page
ii
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. ...............................................................................................27 Section 5.5 Records. .....................................................................................................27 Section 5.6 Audits.........................................................................................................29 Section 5.7 HOME Requirements.................................................................................29 Section 5.8 Hazardous Materials. .................................................................................34 Section 5.9 Maintenance and Damage..........................................................................36 Section 5.10 Fees and Taxes...........................................................................................36 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. .....................................................................39 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
BORROWER 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 Section 8.7 No Third Party Beneficiaries. ....................................................................49 Section 8.8 Action by the City......................................................................................50 #12..
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(continued)
Page
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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.................................................................52 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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1 HOME LOAN AGREEMENT
(HOME Loan- 7th Street Village)
This HOME Loan Agreement (the "Agreement"), effective _______________________, 2025 (the "Effective Date"), is entered into by and between the City of Modesto, a California charter city (the "City"), and Visionary Home Builders of California, Inc., a California nonprofit corporation (the “Sponsor”), on behalf of Seventh Street Village LP, a California limited partnership, or another Borrower ship entity created by VHB Seventh Street Village LLC, a California limited liability company, its general partner (the “General Partner”), or by another affiliate of the Sponsor (such limited partnership or other Borrower ship entity, the “Borrower”), 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. Borrower owns that certain real property generally located at 914-930 7th Street, , Modesto, California, also known as Stanislaus County Assessor’s Parcel Numbers 104-006-007- 000, 104-006-008-000, 104-006-009-000, 104-006-010-000, as more particularly described and depicted in Exhibit A, attached hereto, and incorporated herein the “Property”). The Property consists of 4 separate legal parcels which are a combined approximately .88 acres in size.

D. Borrower intents to construct 79 residential units on the Property (the “Project”).

The Project will consist of 79 housing units with a mix of 1-bedroom, one-bath, 2-bedroom, onebath, and three-bedroom 2-bath units (the “Units”) ).

E. Seventy-seven (77) Units 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. The two (2) remaining Units will be manager’s units. .

F. The Borrower has requested, and the City has agreed to provide the Developer with a loan of Five Million Dollars ($5,000,000.00) in HOME Investment Partnership Funds (the “Loan”). The Loan shall be for a term of fifty-five (55) years, accruing three percent (3%) simple interest per year.

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 Borrower pursuant to this #12..
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2 Agreement, the City has classified twenty (20) Units as HOME-assisted units (each such unit a "HOME-Assisted Unit"), which eight (8) will be one-bedroom, seven (7) will be two-bedrooms and five (5) will be three-bedrooms units, at which the 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 Borrower, 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; #12..
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3 (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;
(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 Borrower 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 Loan in the approximate amount shown in the approved Financing #12..
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4 Proposal (the "F&M Bank Loan") as well as a grant provided to the Borrower through the No Place Like Home Program operated by the California Department of Housing and Community Development;
(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 Borrower in accordance with this Agreement by the aggregate sum of the funds disbursed to the Borrower under the HOME Loan and the Approved Financing subordinate loans, in accordance with the applicable agreements. The Borrower shall be entitled to the other 50% share of the Residual Receipts ("Borrower '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.
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5 (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 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 Visionary Home Builders of California, a California Nonprofit Corporation, and its approved successors and assigns. (t) "Development" means seventy-nine (79) units with a mix of 1-bedroom, one-bath, 2-bedroom, one-bath, and three-bedroom 2-bath 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 Borrower 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 Borrower '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. #12..
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6 (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:
(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 Borrower or the Development pursuant to Hazardous Materials Laws; (2) all claims made or threatened by any third party against the Borrower 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. #12..
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7 (hh) “HOME Loan” means a loan in the amount of not to exceed Five (5) Million Dollars ($5,000,000.00) loaned to Borrower to fund construction costs of the Development.
(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 Borrower, 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 fifty-fifth (55th) anniversary of the Completion Date. (ll) "HOME Units" means the twenty (20) 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 Borrower 's obligation to repay the HOME Loan. (rr) "Notice of Completion" means the Notice of Completion executed by Borrower 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 Borrower 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.
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8 (xx) "Section 3" means Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. Section 1701(u).
(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, 2082 (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 Borrower retains title.
(ccc) "Unit" means the seventy-nine (79) 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 Borrower 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:
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9 (1) The "Construction Component" shall be a portion of the HOME Loan in the approximate amount of Four Million Five Hundred Dollars ($4,500,000.00) 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 Five Hundred Thousand Dollars ($500,000.00) 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 Borrower 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 simple interest at a rate of three percent (3%) 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 Borrower 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 Borrower 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 Borrower shall not use any proceeds of the HOME Loan for any other purpose without the prior written consent of the City. #12..
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10 Section 2.4 Security.

The Borrower 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 "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 Borrower or any of the Borrower 's affiliates, other than as a depositor or a lender. (c) The Borrower 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 Borrower 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 Borrower, 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 Borrower; 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. #12..
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11 (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 Borrower of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former Borrower or those with whom the former Borrower 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. (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 Borrower nor any act, failure, omission or condition that would constitute an event of Default by Borrower under this Agreement or any other project financing agreements or contracts;
(2) The Borrower 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 Borrower has executed and delivered to the City the Note evidencing the Borrower'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 Borrower 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 Borrower 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 Borrower has entered or proposed to enter for construction of the Development as required under the terms of this Agreement;
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12 (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;
(11) The Borrower 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 Borrower 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 Borrower 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 Borrower, 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 Borrower '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 Borrower following notification by the City to the Borrower of a Default by Borrower under the terms of this Agreement.
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13 Section 2.7 Conditions Precedent to Disbursement of Retention Component. (a) The City shall not be obligated to disburse the final Five Hundred Thousand Dollars ($500,000.00) 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 Borrower 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. (2) The City has received a final cost certification pursuant to Section

5.2 below.
(3) The City has received from the Borrower 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 Borrower current evidence of the insurance coverage meeting the requirements of Section 3.10 below. (5) The City has received from the Borrower a form of lease, Marketing Plan and tenant selection plan for the Development. (6) The City has received from the Borrower 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 Borrower all relevant contract activity information, including, but not limited to evidence that the Borrower has complied with the requirements in Section 4.3, Section 4.4, and Section 4.5. (8) The City has received from the Borrower contact information for the property manager of the Development and the name and phone number of the on-site property manager.
(9) Borrower 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 Borrower is required to pay prevailing wages under the DavisBacon Act (40 U.S.C. 3141-3148), the City has received from the Borrower all certified payrolls, and any identified payment issues have been resolved, or the Borrower is working diligently to resolve any such issues. Borrower
(11) The City has received a written draw request from the Borrower, 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 #12..
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14 applicable, a copy of the bill or invoice covering a cost incurred or to be incurred. The Borrower 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 Borrower under this Section, following notification by the City to the Borrower of a Default by Borrower under the terms of this Agreement. Borrower
Section 2.8 Repayment of the HOME Loan.

The HOME Loan shall be repaid as follows:
(a) Annual Payments. Commencing on the later of: (i) April 1 following the Completion Date, or (ii) April 1, 2029, and on April 1 of each year thereafter, through the end of the HOME Term, 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 Borrower shall provide the City with any documentation reasonably requested by the City to substantiate the Borrower 's determination of Residual Receipts.
(b) Due in Full. Subject to Section 2.8(c), 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) or the date of any Default (subject to applicable notice and cure periods set forth in Section 7.1); or (3) the expiration of the HOME Term. (c) Right to Prepay. The Borrower 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 Borrower 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 Borrower, provided that if such amount is less than the amount set forth in the Approved Financing Plan, then the Borrower shall provide sufficient evidence that the permanent loan is the maximum principal amount that the Borrower 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, Borrower 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 Borrower 's determination of the amount of the Net Proceeds of Permanent Financing in writing within thirty (30) days of receipt. If Borrower 's determination is disapproved by the City, Ow Borrower 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 #12..
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15 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 Borrower 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 Borrower shall pay to the City a proportionate share of the indebtedness of Borrower 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 threatens the life, health or safety of residents; (2) the exigent health and safety system deficiency was not caused by the Borrower; (3) the exigent health and safety system deficiency prevents the Borrower from being able to rent the HOME Unit; and (4) the Borrower 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 Borrower 's fiscal year, the Borrower 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 Borrower 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 Borrower 's calculation of Residual Receipts. Books, records and accounts relating to the Borrower '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 Borrower 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 Borrower are kept. The Borrower 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 Borrower 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) #12..
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16 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 Borrower 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 Borrower. 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 Borrower '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 understatement, then the Borrower 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 Borrower '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 Borrower 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 Borrower 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 Borrower of its obligation to indemnify the City under this Agreement, or liability for:
(1) Fraud or willful misrepresentation by the Borrower; (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); #12..
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17 (3) The fair market value of any personal property or fixtures removed or disposed of by the Borrower other than in accordance with the HOME Deed of Trust; and/or (4) The misappropriation of any proceeds by the Borrower 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.

ARTICLE 3

PREDEVELOPMENT REQUIREMENTS
Section 3.1 Predevelopment Requirements.

The tasks described below shall be completed by the Borrower 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 Borrower 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 Borrower 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 Borrower '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 Borrower, 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
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18 (4) Any other information that is reasonably necessary to the City in determining that the Borrower 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 Borrower 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 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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, homeBorrower s, or businesses, then the Borrower 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 Borrower 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 Borrower 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 Borrower 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.
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19 Section 3.4 Plans and Specifications.
(a) No later than six (6) months from the Effective Date of this Agreement, the Borrower shall submit to the City the plans and specifications for the construction of the Development, including all construction documentation upon which the Borrower and the Borrower '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").
(b) The Borrower 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 Borrower 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 Borrower 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 Borrower prior to, or simultaneously with the funding of the Construction Component.

The Borrower 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 Borrower 's satisfaction of standard disbursement preconditions required to be satisfied on a periodic basis, for construction of the Development. Submission by the Borrower, 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 Borrower 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 #12..
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20 changes the City requests be made in order to obtain approval. The Borrower 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.

Section 3.8 Construction Contract.
(a) As a condition precedent to the first Construction Component draw request under the HOME Loan the Borrower 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 Borrower 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 Borrower 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 Borrower of the City's reasons for withholding such approval. The Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower shall resubmit the information required within ten (10) days of the notification of disapproval. The City shall #12..
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21 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.

Section 3.11 Performance and Payment Bonds.
(a) As a condition precedent to the first Construction Component draw request under the HOME Loan, the Borrower 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 Borrower in writing of the reasons for disapproval and the required revisions to the previously submitted Construction Bonds. The Borrower 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 Borrower or the Borrower '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 Borrower 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 Borrower 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 Borrower 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.

Borrower
(a) Changes. The Borrower shall complete the Construction Work in conformance with the Approved Plans and Specifications. The Borrower 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 Borrower from any other obligations under this Agreement, or relieve or release the Borrower or its surety from any surety bond. City consent to any Changes does not relieve the Borrower 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 Borrower 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 directions, rules and regulations of any fire marshal, health officer, building inspector, or other #12..
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23 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 Borrower shall be responsible to the agency for the procurement and maintenance thereof, as may be required of the Borrower and all entities engaged in work on the Development.
(c) Davis Bacon. To the extent required by law, the Borrower 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 Borrower 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 Borrower, 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 Borrower 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 Borrower 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 Borrower 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 Borrower shall cause its respective contractors to post job site notices, as prescribed by regulation by the DIR; (iv) the Borrower 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 Borrower 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 Borrower, 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 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. #12..
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24 (e) Accessibility Requirements. The Borrower 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.

Borrower 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. Borrower 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 Borrower 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 Borrower 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 Borrower shall submit any required amendments to the Final Financing Plan to the City for approval within fifteen (15) days of the date the Borrower 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.

Section 4.7 Construction Responsibilities.
(a) It shall be the responsibility of the Borrower 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. #12..
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25 (b) The Borrower shall be solely responsible for all aspects of the Borrower '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 Borrower is properly discharging its obligations to the City, and should not be relied upon by the Borrower 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 Borrower, 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 Borrower 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 Borrower 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 Borrower 's expense. Alternately, the City may require the Borrower 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 Borrower.
(c) The Borrower 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 Borrower 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 Borrower 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.

Section 4.9 Inspections.
(a) The Borrower 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 #12..
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26 this Agreement. Borrower 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 Borrower, 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 Borrower. If the City determines as a result of such inspection that there are any life-threatening health and safety related deficiencies, Borrower 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 Borrower 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 Borrower must begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible. In addition, the Borrower 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 Borrower 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 Borrower 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 Borrower shall submit a revised Marketing Plan within fifteen (15) days. If the City does not approve the revised Marketing Plan, the Borrower shall be in default hereunder.
(c) If after five (5) months after the Completion of Construction any HOME Unit remains unoccupied, the Borrower 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 #12..
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27 Borrower 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(f).

ARTICLE 5

LOAN REQUIREMENTS
Section 5.1 Match Requirement.

The Borrower shall ensure that the HOME Loan is matched with a minimum of 25% (the HOME match subject to the City's reduction amount) of the loan amount which is equal to Four Hundred Forty-Six Thousand Seven Hundred Forty Three Dollars ($446,743), in other, nonfederal sources, pursuant to and eligible under 24 CFR 92.220.

Section 5.2 Financial Accountings and Post-Completion Audits.

The Borrower 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 Borrower shall submit a cost certification prepared by the Borrower 's accountants showing the sources and uses of all funds utilized for the Development, as well as a copy of all documents that the Borrower 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 Borrower for the Development that: (1) Borrower 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 Borrower 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 Borrower 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.

Section 5.4 Information.

The Borrower 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 Borrower 's use of the HOME Loan funds.
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28 Section 5.5 Records.
(a) The Borrower 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 Borrower 's compliance with the terms and provisions of this Agreement. Books, records, and accounts relating to Borrower '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 Borrower 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 Borrower are kept. The Borrower 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 Borrower 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;
(6) Financial records as required by 24 C.F.R. 92.505, and 2 C.F.R.

Part 200;
(7) Records demonstrating compliance with 24 C.F.R. Part 135 which implements Section 3 of the Housing Development Act of 1968; #12..
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29 (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 Borrower '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 2 C.F.R. Part 200; and
(13) Records demonstrating compliance with 24 C.F.R. 8.20. (b) The City shall notify Borrower of any records it deems insufficient.

Borrower 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 Borrower 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 Borrower shall provide the City with a copy of the Borrower 's annual audit, which shall include information on all of the Borrower '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). Borrower shall also follow audit requirements of the Single Audit Act and 2 C.F.R. Part 200.
(b) In addition, the City or any designated agent or employee of the City at any time shall be entitled to audit all of Borrower 's books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of Borrower 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 Borrower. The City shall deliver a copy of the results of the audit to Borrower. 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 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 Borrower 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 Borrower 's accounts or records.
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30 Section 5.7 HOME Requirements.
(a) The Borrower 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) Uniform Administrative Requirements. The applicable policies, guidelines, and requirements of2 C.F.R. Part 200.
(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 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. (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. #12..
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31 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 Borrower 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 Borrower shall prepare and submit a relocation plan to the City for approval. The Borrower 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 Borrower 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) 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 Borrower 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 #12..
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32 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 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).
(11) Labor Standards. The Borrower 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) #12..
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33 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 Borrower 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). (12) 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. (13) 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.
(14) 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 Borrower shall immediately notify the City. The Borrower 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. (15) 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 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 Borrower 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. (16) Faith Based Activities. If the Borrower is a religious organization, as defined by the HOME requirements, the Borrower shall comply with all conditions prescribed by HUD for the use of HOME Funds by religious organizations, including the First Amendment #12..
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34 of the United States Constitution regarding church/state principles and the applicable constitutional prohibitions set forth in 24 C.F.R. 92.257. (17) Physical Needs Assessment. The Borrower 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 Borrower 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 Borrower. (18) 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 (19) Violence Against Women Act. Recipient and its officers, employees, and agents shall not penalize any tenant, resident, occupant, or guest at the Project based on their requests for law enforcement or emergency assistance, or based on criminal activity of which they are a victim or otherwise not at fault under applicable federal, state, and local laws, statues, ordinances, and policies. Prohibited penalties include those specified in 34 USC § 12495.
(20) Build America, Buy America. To the extent applicable, all iron and steel, construction materials, and manufactured products used in the Project shall be produced in the United States, in accordance with the applicable requirements of the Infrastructure Investment and Jobs Act, Pub. L. 117-58 and 2 CFR 184.

Section 5.8 Hazardous Materials.
(a) The Borrower 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 Borrower 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 Borrower shall immediately advise the City in writing: (1) any time the Borrower receives written notice of any Hazardous Materials Claims, and (2) if the Borrower 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.
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35 (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 Borrower.

The Borrower shall indemnify and hold harmless the City and its council members, 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 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 Borrower 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 Borrower 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 Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (3) the Borrower 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 Borrower hereby acknowledges and agrees that: (1) this Section is intended as the City's written request for information (and the Borrower '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. #12..
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36 (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 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower , if any improvement now or in the future on the Property is damaged or destroyed, then the Borrower 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 #12..
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37 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 Borrower shall make up the deficiency. If the Borrower does not make 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 Borrower 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 Borrower, and shall pay such charges prior to delinquency. However, the Borrower 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 Borrower 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 Borrower 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 Borrower from applying for and obtaining a welfare exemption for the Development.

Section 5.11 Notice of Litigation.

The Borrower shall promptly notify the City in writing of any litigation related to the Development, and any litigation related to the Borrower 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 Borrower 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 Borrower 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 Borrower and the tenant and shall not contain any provision which is prohibited by 24 C.F.R.

Section 92.253(d) and any modifications thereto. Any Borrower termination of a lease agreement or refusal to renew must be in conformance with 24 C.F.R. Section 92.253(c) and must be preceded by not fewer than sixty (60) days written notice to the tenant by the Borrower specifying the grounds for the action.
(c) Before leasing any HOME Unit in the Development, the Borrower must provide the City, for its review and approval, with the Borrower 's written tenant selection plan. #12..
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38 The Borrower 's tenant selection plan must, at a minimum, meet the requirements for tenant selection set out in 24 C.F.R. Section 92.253(d), and any modifications thereto. (d) The Borrower must determine the income eligibility of each tenant household in a HOME Unit pursuant to 24 C.F.R. 5.233 and 24 C.F.R. 5.609, and any applicable Tenant Selection Plan the City's approved tenant certification procedures within sixty (60) days before the household's expected occupancy of one of the Development's HOME Units. The Borrower shall certify each tenant household's income on an annual basis. (e) The maximum household income of a household occupying a HOME Unit in the Development, and the total charges for rent, utilities, and related services to each household occupying a HOME Unit, shall be maintained as provided in the HOME Regulatory Agreement.

Section 5.13 Non-Discrimination.

Borrower covenants by and for itself and its successors and assigns that there will be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age (except for lawful senior housing in accordance with state and federal law), familial status, disability, sex, gender, gender identity, gender expression, sexual orientation, marital status, ancestry, military and veteran status or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor may Borrower or any person claiming under or through Borrower establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property. Borrower shall comply with Executive Orders 11246, 11375, 11625, 12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964, the California Fair Housing and Employment Act and other applicable Federal, State and local laws and regulations and policies relating to equal employment and contracting opportunities, including laws and regulations hereafter enacted.

The foregoing covenant will run with the land.

Section 5.14 Insurance Requirements.
(a) Required Coverage. The Borrower shall maintain and keep in force, at the Borrower 's sole cost and expense, the following insurance coverage, applicable to the Development, throughout the Term of this Agreement:
(1) Workers' 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;
(2) Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) 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. Products and Completed Operations coverage shall be obtained no later than completion of construction of the Development; #12..
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39 (3) Comprehensive Commercial 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 coverage for owned, non-owned and hired vehicles, as applicable; provided, however, that if the Borrower does not own or lease vehicles for purposes of this Agreement, then no automobile insurance shall be required and both parties to this Agreement shall initial this provision signifying the same; and (4) Builders' risk insurance during the course of construction (and upon completion of construction, property insurance) covering the Development and 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 interest may appear. Flood insurance shall be obtained if required by applicable federal regulations. (5) Commercial crime insurance covering all officers and employees, for loss of Loan proceeds caused by dishonesty, in an amount approved by the City, naming the City as a Loss Payee, as its interest may appear.
(b) Contractor's Insurance. The Borrower shall cause any general contractor, demolition contractor, or agent working on the Development under direct contract with the Borrower to maintain insurance of the types and in at least the minimum amounts described in subsections (a) above, and shall require that such insurance shall meet all of the general requirements of subsections (c) below. Subcontractors working on the Development under indirect contract with the Borrower shall be required to maintain the insurance described in subsections (a)(1) through (a)(3) above, except that the limit for the insurance described in subsection (a)(2) may be One Million Dollars ($1,000,000). Liability and Comprehensive Automobile Liability insurance to be maintained by such contractors and agents pursuant to this subsection shall name as additional insureds the City, its council members, officers, agents, and employees.
(c) General Requirements. The required insurance shall be provided under an occurrence form, and the Borrower shall maintain such coverage 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 (3) times the occurrence limits specified above.

Comprehensive General Liability, Comprehensive Automobile Liability and Property insurance policies (including builders' risk) shall be endorsed to name as an additional insured the City, and its officers, council members, agents, and employees.

All policies and bonds shall contain: (1) the agreement of the insurer to give the City at least thirty (30) days' notice prior to cancellation (including, without limitation, for nonpayment of premium) or any material change in said policies; (2) an agreement that such policies are primary and noncontributing with any insurance that may be carried by the City; (3) a provision that no act or omission of the Borrower shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (4) a waiver by the insurer of all #12..
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40 rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against.
(d) Certificate of Insurance. Upon the City's request at any time during the term of this Agreement, the Borrower shall provide certificates of insurance, in form and with insurers reasonable acceptable to the City, evidencing compliance with the requirements of this Section, and shall provide complete copies of such insurance policies, including a separate endorsement naming the City, and its council members, officers agents and employees as additional insured.

Section 5.15 Anti-Lobbying Certification.

The Borrower certifies, to the best of the Borrower 's knowledge or belief, that:
(a) 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 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 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;
(b) 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 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.
(c) 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, and 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 5.16 Purpose of Restriction on Transfer.

This Agreement is entered into solely for the purpose of the Borrower 's construction and operation of the Development in accordance with the terms of this Agreement and the HOME Regulatory Agreement. The qualifications and identity of the Borrower are of particular concern to the City, in view of:
(a) The importance of the construction of the Development to the general welfare of the community;
#12..
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41 (b) The public aids that have been made available by law and by the government for the purpose of making such development possible; (c) The reliance by the City upon the unique qualifications and ability of the Borrower to serve as the catalyst for construction of the Development and upon the continuing interest which the Borrower will have in the Development to assure the quality of the use, operation, and maintenance deemed critical by the City in the construction of the Development; (d) The fact that a change in ownership or control of the Borrower of the Development, or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the Borrower or the degree thereof, is for practical purposes a transfer or disposition of the Development; and
(e) The importance to the City of the standards of use, operation, and maintenance of the Development.

It is because of the qualifications and identity of the Borrower that the City is entering into this Agreement and that Transfers are permitted only as provided in this Agreement.

Section 5.17 Prohibited Transfers.
(a) The limitations on Transfers set forth in this Article shall apply throughout the Term of this Agreement. Except as expressly permitted in this Agreement, the Borrower represents that it has not made or created and agrees that it will not make or create or suffer to be made or created, any Transfer (as defined in Section 1.1 hereof), either voluntarily or by operation of law, without the prior written approval of the City, which consent the City may withhold at its sole discretion.
(b) Any Transfer made in contravention of this Section shall, at the City's discretion, be void and shall be deemed to be a default under this Agreement, whether or not the Borrower knew of or participated in such Transfer. The HOME Loan shall automatically accelerate and be due in full upon any unauthorized Transfer.

Section 5.18 Permitted Transfers Without Prior City Approval.

The term "Transfer" shall exclude the leasing of any single Unit in the Development to an occupant in compliance with the HOME Regulatory Agreement.

Section 5.19 Permitted Transfers With Prior City Approval. (a) Except as permitted under Section 5.18, any Transfer shall be permitted only after:
#12..
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42 (1) The City has delivered to the Borrower its prior written approval of such Transfer, which approval may not be unreasonably withheld; and (2) The transferee has assumed the Borrower 's obligations under this Agreement by signing this Agreement or such other reasonable documentation as the City may require.
(b) Following completion of construction of the Development, the City shall not unreasonably withhold its consent to a proposed Transfer, provided that the City reasonably determines that the proposed transferee is qualified to operate the Development in compliance with the HOME Regulatory Agreement including meeting the following requirements:
(1) The proposed transferee has at least five (5) years' experience operating multifamily rental housing developments comparable to the Development. (2) The proposed transferee has no record of loan defaults, maintenance problems, housing or building code violations, or substantiated fair housing complaints at properties it has owned or operated; and
(3) The proposed transferee has satisfactory credit.

Section 5.20 Allowable Preferences.
(a) The Borrower shall give a preference in the rental of any of the Units in the Development to eligible households displaced by activity of the former Redevelopment Agency of the City of Modesto or the City, as provided in Health and Safety Code Section 33411.3. The preferences stated in this section are required by law and apply to the rental of Units in the Development throughout the Term.
(b) In accordance with 24 C.F.R 92.504(c)(3), so long as Borrower provides supportive housing services at the Development in conformance with the requirements of the Veterans Affairs Supportive Housing ("VASH"), notwithstanding anything to the contrary in subsection (a) above, the Borrower may provide preference to households reasonably determined by the Borrower to be VASH-eligible households, as allowed under 24 C.F.R. 92.253, for any VASH assisted units, so long as such preference does not violate nondiscrimination requirements listed in 24 C.F.R. 92.350.

Section 5.21 Affordability and Project Monitoring.
(a) Throughout the HOME Term, the Borrower shall comply with all applicable record keeping and monitoring requirements set forth in (24 CFR Section 92.508) of the HOME Regulations and shall annually complete and submit to City a certification of continuing program compliance.
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43 (b) Representatives of the City shall be entitled to enter the Property upon at least twenty-four (24) hours’ notice at reasonable times to monitor compliance with this Agreement, to inspect the records of the Development with respect to the Units, and to conduct an independent audit of such records. The Borrower agrees to cooperate with the City in making the Property available for such inspection. If for any reason the City is unable to obtain the Borrower 's consent to such an inspection, the Borrower understands and agrees that the City may obtain, at the Borrower 's expense, an administrative inspection warrant or other appropriate legal order to obtain access to and search the Property. The Borrower agrees to maintain records in a business-like manner and to make such records available to the City upon twenty-four (24) hours’ notice at reasonable times. Unless the City otherwise approves, such records shall be maintained for the most recent five years until five years after the HOME Term. (c) Throughout the Term, the Borrower grants the City inspection rights as set forth in Section 4.9 above, and Borrower shall make best efforts to allow the City to comply with all applicable physical monitoring requirements set forth in (24 CFR Section 92.504(d) and 24 C.F.R. 92.251) of the HOME Regulations.
(d) The City will enforce a per-unit monitoring charge on all HOME assisted developments. HOME assisted developments will be charged as follows:
 1-20 assisted units = $35.00 per unit/ annually
 20+ assisted units = $25.00 per unit/ annually
(e) The City will enforce a physical inspection charge on all HOME assisted developments. The inspection charge for HOME assisted development will be the lesser of: (1) Five Thousand Dollars ($5,000) per inspection; or (2) the actual costs incurred by the City to secure a qualified third party, independent of the Borrower , to conduct the physical inspections in accordance with the requirements set forth in this Agreement, and any related staffing costs incurred by the City in association therewith.
(f) The Borrower shall pay such charge within fifteen (15) days of receipt of an invoice from the City.
(g) The City reserves the right to waive or defer a portion of the monitoring charge if a development is unable to pay these costs. All waivers must be submitted in writing, with adequate supporting financial documentation, for review by the City Manager.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1 Representations and Warranties.

The Borrower hereby represents and warrants to the City as follows:
#12..
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44 (a) Good Standing. The Borrower 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 its property and carry on its business as now being conducted.
(b) Corporate Authority. The Borrower 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 HOME Loan 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. (c) Authority of Persons Executing Documents. This Agreement and the HOME Loan 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 the Borrower , and all actions required under the Borrower 's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the HOME Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. (d) Valid Binding Agreements. This Agreement and the HOME Loan 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 the Borrower, enforceable against the Borrower in accordance with their respective terms. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the HOME Loan 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 the Borrower , or any provision of the organizational documents of the Borrower , or will conflict with or constitute a breach of or a default under any agreement to which the Borrower is a party, or will result in the creation or imposition of any lien upon any assets or property of the Borrower , other than liens established pursuant hereto.
(f) Compliance With Laws; Consents and Approvals. The Borrower represents and warrants that the construction of the Development 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. (g) Pending Proceedings. The Borrower 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 the Borrower , and its general partner respectively, threatened against or affecting the Borrower , respectively, or the #12..
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45 Property, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Borrower , materially affect the Borrower 's ability to repay the HOME Loan or impair the security to be given to the City pursuant hereto. (h) Title to Land. At the time of recordation of the HOME Deed of Trust, the Borrower will have good and marketable fee title to the Property 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 assessments not yet due and payable, the liens in favor of the City or approved in writing by the City. (i) Financial Statements. The financial statements of the Borrower and other financial data and information furnished by the Borrower to the City fairly 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 the Borrower from that shown by such financial statements and other data and information.
(j) Sufficient Funds. The Borrower holds sufficient funds and/or binding commitments for sufficient funds to complete the acquisition and construction of the Development.
(k) Taxes. The Borrower has filed all federal and other material tax returns and reports required to be filed, and has paid all federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon it or its 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 the Borrower that could, if made, be reasonably expected to have a material adverse effect upon the Property, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole, which would be expected to result in a material impairment of the ability of the Borrower to perform under any HOME Loan Document to which it is a party, or a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any HOME Loan Document.

ARTICLE 7

TERMINATION, DEFAULT AND REMEDIES
Section 7.1 Events of Default.

Each of the following shall constitute a "Default" under this Agreement:
(a) Failure to Satisfy Predevelopment Requirements. Failure of the Borrower to satisfy any of the requirements set forth in Article 3 subject to notice and cure pursuant to Section

7.1(f) below;
(b) Failure to Make Payment. Failure of the Borrower to repay the principal and any interest on the HOME Loan that is due and payable to the City pursuant to this #12..
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46 Agreement following written notice by the City of such failure and fifteen (15) days opportunity to cure;
(c) Failure to Commence or Complete Construction Work. Failure of the Borrower to commence and prosecute to completion, the Construction Work within the time frames set forth in this Agreement;
(d) Failure to Comply with the Management Plan. Failure to comply with the Management Plan approved by the City and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to the Borrower, which notice provides reasonable detail of the default and the required cure for such default; (e) Failure to Comply with the Marketing Plan. Failure to comply with the Marketing Plan approved by the City and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to the Borrower, which notice provides reasonable detail of the default and the required cure for such default; (f) Breach of Covenants. Failure of the Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the HOME Loan Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the City to the Borrower (which notice shall provide reasonable detail of the default and required cure) or, if the breach cannot be cured within thirty (30) days, the Borrower shall not be in breach so long as the Borrower is diligently undertaking to cure such breach and such breach is cured within sixty (60) days; provided, however, that if a different period or notice requirement is specified under any other section of this Article 7, the specific provisions shall control;
(g) Default Under Other Loans. A default is declared under any Approved Financing by the lender of such Approved Financing (subject to applicable notice and cure); (h) Insolvency. A court having jurisdiction shall have made or entered any decree or order: (1) adjudging the Borrower to be bankrupt or insolvent; (2) approving as properly filed a petition seeking reorganization of the Borrower or seeking any arrangement for the Borrower under the 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 Borrower in bankruptcy or insolvency or for any of their properties; (4) directing the winding up or liquidation of the Borrower , if any such decree or order described in clauses (1) to (4), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or (5) the Borrower 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 (1) to (4), inclusive. The occurrence of any of the events of Default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Note;
(i) Assignment; Attachment. The Borrower shall have assigned its assets for the benefit of its creditors 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 #12..
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47 upon shall have been returned or released within ninety (90) days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the HOME Loan Documents; (j) Suspension; Dissolution. The Borrower shall have: (1) the operation of their business voluntarily or involuntarily suspended by the State of California, (2) voluntarily stop or terminate the operation of its business; (3) if the Borrower is a partnership, the partnership shall have the operation of the partnership voluntarily or involuntarily dissolved, suspended or terminated by the State of California;
(k) Liens on Property and the Development. There shall be filed any claim of lien (other than liens approved in writing by the City) against the Development, the Property, or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the HOME Loan and the continued maintenance of said claim of lien or notice to withhold for a period of thirty (30) days without discharge or satisfaction thereof or provision therefore (including, without limitation, the posting of bonds) satisfactory to the City; (l) Condemnation. The condemnation, seizure, or appropriation by any public agency of all or the substantial part of the Property and the Development, except condemnation by the City, shall cause the HOME Loan to accelerate but shall not be a Default; (m) Unauthorized Transfer. Any Transfer other than as permitted by Sections 5.18 and 5.19;
(n) Representation or Warranty Incorrect. Any representation or warranty of the Borrower , respectively, contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the City in connection with any of the HOME Loan Documents, proves to have been incorrect in any material and adverse respect when made and which default cannot be cured within thirty (30) days after receipt of written notice thereof from the City to the Borrower s; and/or
Section 7.2 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 HOME Loan and shall give the City the right to proceed with any and all remedies set forth in this Agreement and the HOME Loan Documents, including but not limited to the following:
(a) Acceleration of Note. The City shall have the right to cause all indebtedness of the Borrower to the City under this Agreement and the Note, together with any accrued interest thereon, to become immediately due and payable. Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured Party under the law including the Uniform Commercial Code, including foreclosure under the HOME Deed of Trust. The Borrower shall be liable to pay the City on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the City in connection with the collection of the HOME Loan and #12..
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48 the preservation, maintenance, protection, sale, or other disposition of the security given for the HOME Loan;
(b) Specific Performance. The City shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the Borrower to perform its obligations and covenants under the HOME Loan Documents or to enjoin acts or things which may be unlawful or in violation of the provisions of the HOME Loan Documents, except that such remedy shall not be available to the City until the Commencement of Construction; (c) Right to Cure at the Borrower 's Expense. The City shall have the right (but not the obligation) to cure any monetary default by the Borrower under a loan other than the HOME Loan. The Borrower agrees to reimburse the City for any funds advanced by the City to cure a monetary default by the Borrower upon demand therefore, together with interest thereon at the lesser of the maximum rate permitted by law or ten percent (10%) per annum from the date of expenditure until the date of reimbursement;
Section 7.3 Right of Contest.

The Borrower 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 7.4 Remedies Cumulative.

No right, power, or remedy given to the City by the terms of this Agreement or the HOME Loan 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 the Borrower and any other person. 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.

Section 7.5 Survival.

Upon termination or expiration of this Agreement, those provisions of this Agreement that recite that they survive termination of this Agreement shall remain in effect and be binding upon the parties notwithstanding such termination.

ARTICLE 8

GENERAL PROVISIONS
Section 8.1 Relationship of Parties.
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49 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, the Borrower or the Borrower 's agents, employees or contractors, and the Borrower 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. The Borrower 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 regard to the construction and operation of the Development, the Borrower 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. The Borrower agrees to be solely responsible for its own acts and those of its agents and employees.

Section 8.2 No Claims.

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

Section 8.3 Amendments.

Subject to Sections 8.19 and 8.20, no alteration or variation of the terms of this Agreement shall be valid unless made in writing by the Parties and approved by the City Council.

Section 8.4 Entire Understanding of the Parties.

This Agreement constitutes the entire understanding and agreement of the Parties with respect to the City.

Section 8.5 Indemnification.

Except as directly caused by the City's gross negligence or willful misconduct, the Borrower agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City) the City and its council members, officers, employees, representatives, agents, successors and assigns, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of: (1) the Borrower 's performance or non-performance of its obligations under this Agreement; (2) the Borrower 's ownership of the Property and Development; (3) the marketing, rental and operation of the Development; or (4), or any documents executed by the Borrower in connection with the Property or Development. The provisions of this Section shall survive termination of this Agreement. #12..
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50 Section 8.6 Non-Liability of City Officials, Employees and Agents.

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

Section 8.7 No Third Party Beneficiaries.

There shall be no third party beneficiaries to this Agreement.

Section 8.8 Action by the City.
(a) Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent, request, extension of time, waiver of condition, termination, or other action by the City is required or permitted under this Agreement, such action may be given, made, or taken by the City Manager without further approval by the City Council, and any such action shall be in writing. The amount of the HOME Loan may not be increased without approval of the City Council.
(b) 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 Manager is also hereby authorized to approve, on behalf of the City, requests by the Borrower for reasonable extensions of time deadlines set forth in this Agreement.

The City Manager shall not unreasonably delay in reviewing and approving or disapproving any proposal by the Borrower made in connection with this Agreement.

Section 8.9 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 the Borrower or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to the Borrower to perform any obligation under this 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 the Borrower 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.
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51 Section 8.10 Notices, Demands and Communications.

Formal notices, demands, and communications between the City and the Borrower 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 City and the Borrower as follows:

City: City of Modesto
1010 Tenth Street, Suite 3100
Modesto, CA 95354
Attn: Community Development Manager
Borrower: Visionary Home Builders of California
315 N. San Joaquin Street
Stockton, CA 95202
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 for delivery or refusal of delivery. Copies of notices sent to the Borrower shall also be sent to any limited partner of the Borrower who requests such notices in writing and provides its address to the City.

Section 8.11 Applicable Law and Venue.

This Agreement shall be governed by and construed in accordance with California law.

Any action brought claiming a breach of this Agreement or interpreting this Agreement shall be brought and venued in Stanislaus County, California.

Section 8.12 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 the Borrower and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the City and its successors and assigns.

Section 8.13 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 attorney's fees and costs of suit from the other Party.

Section 8.14 Severability.
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52 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 8.15 Extensions.
(a) Force Majeure. In addition to specific provisions of this Agreement, performance by any Party shall not be deemed to be in default where delays or defaults are due to to war, insurrection, strikes, lock-outs or other labor disturbances, one or more acts of a public enemy, war, riot, sabotage, blockade, embargo, floods, earthquakes, fires, quarantine restrictions, freight embargoes, lack of transportation, court order, delays or failures of performance by any governmental authority or utility company (other than the acts or failure to act of the City and so long as the Party seeking the extension has adequately complied with the applicable processing requirements of such governmental authority or utility company), delays resulting from changes in any applicable laws, rules, regulations, ordinances or codes, or a change in the interpretation thereof by any governing body with jurisdiction, or any other cause (other than lack of funds of the Borrower or the Borrower 's inability to finance the construction of the Development) beyond the reasonable control or without the fault of the Party claiming an extension of time to perform or an inability of performance. 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 the Party granting the extension agrees to the extension in writing. In no event shall the City be required to agree to cumulative delays in excess of one hundred eighty (180) days.

Section 8.16 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person described in subsection (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, or at any time after, such person's tenure. Borrower shall exercise due diligence to ensure that the prohibition in this Section is followed.
(b) The conflict of interest provisions of subsection (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.
(c) In accordance with California Government Code Section 1090 and the Political Reform Act, California Government Code section 87100 et seq., no person who is a director, officer, partner, trustee or employee or consultant of the Borrower , or immediate family member of any of the preceding, shall make or participate in a decision, made by the City or a #12..
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53 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 Borrower . Interpretation of this section shall be governed by the definitions and provisions used in the Political Reform Act, California Government Code Section 87100 et seq., its implementing regulations manual and codes, and California Government Code Section 1090. (d) The Borrower shall comply with the conflict of interest provisions set forth in 24 C.F.R. Section 92.356.

Section 8.17 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 8.18 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.

Section 8.19 City Approval.

Whenever this Agreement calls for City approval, consent, or waiver, the written approval, consent, or waiver of the City Manager shall constitute the approval, consent, or waiver of the City, without further authorization required from the City Council. The City hereby authorizes the City Manager to deliver such approvals or consents as are required by this Agreement, to execute estoppel certificates concerning the status of the HOME Loan and the existence of the Borrower defaults under the Loan Documents, and to waive requirements under this Agreement, on behalf of the City. 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 Manager is also hereby authorized to approve, on behalf of the City, requests by the Borrower for reasonable extensions of time deadlines set forth in this Agreement. The City shall not unreasonably delay in reviewing and approving or disapproving any proposal by the Borrower made in connection with this Agreement.

Section 8.20 Operating Memoranda.
(a) The Parties acknowledge that the provisions of this Agreement require a close degree of cooperation, and that new information and future events may demonstrate that changes are appropriate with respect to the details of performance of the parties under this Agreement. The parties desire, therefore, to retain a certain degree of flexibility with respect to the details of performance of those items covered in general terms under this Agreement. If and when, from time to time during the term of this Agreement, the parties find that refinements or adjustments regarding details of performance are necessary or appropriate, they may effectuate such refinements or adjustments through a memorandum (individually, an "Operating Memorandum", and collectively, "Operating Memoranda") approved by the parties which, after execution by both parties, shall be attached to this Agreement as addenda and become a part hereof.
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54 (b) Operating Memoranda may be executed on the City's behalf by its City Manager, or the City Manager's designee. Operating Memoranda shall not require prior notice or hearing, and shall not constitute an amendment to this Agreement. Any substantive or significant modifications to the terms and conditions of performance under this Agreement shall be processed as an amendment of this Agreement in accordance with Section 8.3 hereof, and must be approved by the City Council.

Section 8.21 Assignment by City.

The City may assign its rights and obligations under the HOME Loan Documents to any other public entity without the consent of the Borrower. [Remainder of Page Left Intentionally Blank]
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HOME Loan Agreement
Signature Page
3524731.1
WHEREFORE, this HOME Loan Agreement is executed by the Borrower and City and is effective as of the date first above written.

BORROWER:

VISONARY HOME BUILDERS OF CALIFORNIA, INC
a California nonprofit corporation
By: ______________________________________
Executive Director
Date: ______________________________________
[City Signature Follows]
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HOME Loan Agreement
Signature Page
3524731.1
CITY:

CITY OF MODESTO, a California charter city
By: _____________________________________
Joseph Lopez, City Manager
Date: ______________________________________
ATTEST:
________________________________
Diane Nayares-Peres, CMC, City Clerk
APPROVED AS TO FORM:

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

By: _________________________________
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EXHIBIT A

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

Lot 27, 28, 29 in Block 42 of the City of Modesto, according to the Official Map of the Town of Modesto, filed in the Office of the County Recorder of Stanislaus County, California, on April 18,1903, in Volume 15 of Maps.

AP N'S: 104-006-008-000
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EXHIBIT A

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

Lot 30, 31, 32 in Block 42 of the City of Modesto, according to the Official Map of the Town of Modesto, filed in the Office of the County Recorder of Stanislaus County, California, on April 18,1903, in Volume 15 of Maps.

APN'S: 104-006-009-000
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EXHIBIT A

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

The land referred to is situated in the County of Stanislaus, City of Modesto, State of California, and is described as follows:

Lots 4 and 5 and the Northwesterly one half of Lot 6 in Block 34 of "The City of Modesto", asper Map filed for record December 21, 1942, in Volume 15 of Maps, Stanislaus County Records.

APN:104-016-002-000
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EXHIBIT A

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

Lots 22 and 23 and the East 1/2 of Lot 24 in Block 42 of the City of Modesto. According to the Official Map thereof, Filed for record December 21, 1942, in Volume 15, Page 42, of Maps, Official Records of Stanislaus County, California.

APN: 104-006-007
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EXHIBIT A

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

The Northwesterly 1/2 of Lot 24 and Lots 25 and 26 in Block 42 of the City of Modesto.

According to the Official Map thereof, Filed for record December 21, 1942, in Volume 15, Page 42, of Maps, Official Records of Stanislaus County, California.

APN: 104-006-010-000
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B-1

EXHIBIT B

FINAL FINANCING PLAN
Source Amount
Modesto CDBG $ 2,000,000
Modesto HOME $ 5,000,000
Modesto Commitment $ 7,000,000
Modesto CFF Deferral $ 967,750
AHSC Award – HCD for Housing Development $33,010,880
AHSC - HCD Off-site Improvements $1,300,000
AHSC - HCD Housing Development $16,000,000
Tax Credits and Other Sources $30,778,210
Total $71,756,840
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C-1

EXHIBIT C

FEDERAL AWARD IDENTIFICATION INFORMATION
i) Participant’s name:
ii) Participant’s UEI:
iii) Federal Award Identification Number (FAIN):
iv) Federal Award Date:
v) Subaward Period of Performance Start and End Date:
vi) Amount of Federal Funds Obligated by this action by the CITY entity to the Participant:
vii) Total Amount of Federal Funds Obligated to the Participant by the CITY including the current obligation:
viii) Total Amount of the Federal Award committed to the Participant by the CITY:
ix) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA):
x) Name of Federal awarding agency: The City of Modesto xi) Contact information for CITY official responsible for awarding funding:
xii) CFDA Number and Name:
xiii) Identification of whether the award is R&D:
xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged per 24 CFR 200.414 Indirect (F&A) costs):
3524731.1
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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:104-006-007-000 Space above this line for Recorder’s use.

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
(HOME Loan 7th Street Village)

THIS HOME DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “HOME Deed of Trust”) is entered into as of ______________, 2025, by Visionary Builders of California, Inc. a California nonprofit corporation, SEVENTH STREET VILLAGE LP, a California limited partnership, and VHB SEVENTH STREET VILLAGE LLC, a California limited liability company (collectively, “Trustor”) to _________________ (“Trustee”), for the benefit of the City of Modesto, a California charter city (“Beneficiary”).

RECITALS
A. Trustor owns fee simple title to the land generally located at 914-930 7th Street, Modesto, California also known as Stanislaus County Assessor’s Parcel Number 104-006-007- 000, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Land”). Trustor intends to construct 79 residential units on the Property (the “Project”). The Project will consist of 79 housing units with a mix of 1-bedroom, one-bath, 2- bedroom, one-bath, and three-bedroom 2-bath units .

B. Beneficiary and Trustor have entered into that certain HOME Loan Agreement dated as of ____________, 2025 (the “Home Loan Agreement”) pursuant to which Beneficiary will provide a loan to Trustor in the amount of up Five Million Dollars ($5,000,000.00) in HOME Investment Partnership Funds (“Loan”) for the purpose of partially financing the construction of the Project. 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 Loan.

C. This Home Deed of Trust, the Home Loan Agreement, the Note, and the Home Regulatory Agreement (defined below) are collectively referred to herein as the “HOME Loan Documents.”
D. As a condition precedent to the making of the HOME Loan, Beneficiary has #12..
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required that Trustor enter into this HOME 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 Loan Agreement and the other HOME 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”);
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f. All revenues, income, rents, royalties, payments and profits produced by the Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”);
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 HOME 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 Loan Agreement, the Grant Agreement, the HOME 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 “HOME Regulatory Agreement”) or the other HOME 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 HOME 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 HOME 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, #12..
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shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 #12..
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items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the property 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 HOME 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 HOME 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 HOME 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 HOME Loan Documents or otherwise approved in writing by Beneficiary (“Permitted Encumbrances”), this HOME 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 HOME 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 #12..
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knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect Trustor’s ownership of the Property.

7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay when due the principal and any interest due on the indebtedness evidenced by the Note, and shall promptly pay and perform all other obligations of Trustor arising in connection with the Secured Obligations or the HOME 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 HOME 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 HOME 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 HOME Loan Documents.

7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event of Default hereunder if any Transfer (as defined in the Loan Agreement) of the Property, any part thereof or any interest therein occurs in violation of the requirements of the HOME 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 HOME 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 HOME 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 #12..
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become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the validity or application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any 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 HOME 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 HOME 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 HOME 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 HOME 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 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 #12..
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material facts concerning the Property.

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 boardmembers, 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; #12..
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(ii) loss or restrictions or use of rentable space on the Property; (iii) adverse effect on the marketing of any rental space on the Property; and (iv) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not 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 #12..
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portion of the Property and the Trustor knew or in the exercise of reasonable diligence should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' 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 HOME 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 HOME 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 HOME 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 HOME 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 #12..
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acceptable to Beneficiary), and hold harmless the Indemnitees (as defined in Section 7.10) from and against all Claims arising directly or indirectly in any manner in connection with or as a result of (a) any breach of Trustor’s covenants under any City Document, (b) any representation by Trustor in any City Document which proves to be false or misleading in any material respect 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 Loan and shall be secured by this HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 #12..
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offers to settle a claim for insurance benefits, Beneficiary is authorized to collect and apply the insurance proceeds at Beneficiary's option either to restoration or repair of the Property or to the sums secured by this HOME 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 HOME 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 HOME Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this HOME Deed of Trust. The recitals in any reconveyance executed under this HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 #12..
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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 HOME 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 Loan Agreement; d. Trustor fails to maintain the insurance coverage required under the HOME 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 HOME 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 HOME 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
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j. Trustor fails to perform any obligation arising under this HOME Deed of Trust other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nonmonetary default, provided that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such 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 HOME 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 HOME 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-infact 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.
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competent jurisdiction to foreclose this HOME 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 HOME Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or otherwise disposed of in any combination and in any 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 HOME Deed of Trust.

Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this HOME 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 HOME 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.
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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 HOME Loan Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including without limitation, the outstanding principal balance and all other 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 HOME Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this HOME 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 HOME Deed of Trust or at any time prior to entry of a judgment enforcing this HOME 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 HOME 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 HOME 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 HOME Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums secured by this HOME Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this HOME 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, #12..
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notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this HOME Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind.

10. Miscellaneous Provisions.

10.1 Additional Provisions. The HOME Loan Documents grant further rights to Beneficiary and contain further agreements and affirmative and negative covenants by Trustor which apply to this HOME 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 HOME 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 3100
P O Box 642
Modesto, CA 95353
Attn: Community Development Manager
Trustor: Visionary Home Builders of California
315 N. San Joaquin Street
Stockton, CA 95202
Attn: Executive Director
Trustee: ____________
____________
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____________

10.3 Binding on Successors. The terms, covenants and conditions of this HOME Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME 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 HOME Deed of Trust. The captions used in this HOME Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions herein contained. In this HOME 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.
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10.8 Action By Beneficiary. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by Beneficiary’s Executive Director or by any person who shall have been designated by Beneficiary’s Executive Director, without further approval by the governing board of Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such approval, notice, direction, or consent in a timely manner. In any approval, consent, or other 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.

DEVELOPER:

SEVENTH STREET VILLAGE LLC, a California limited
liability company
By: ______________________________________
______________________, Executive Director
Date: ______________________________________

SIGNATURES MUST BE NOTARIZED
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Exhibit A
LAND

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

APN: 104-006-007-000
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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_____________________________
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3525741.1 1

SECURED PROMISSORY NOTE
(HOME Loan – 7th Street Village)
$5,000,000.00 Modesto, California
_________,2025
FOR VALUE RECEIVED, the undersigned Visionary Home Builders of California, Inc., a California Non-profit Corporation, SEVENTH STREET VILLAGE LP, a California limited partnership, and VHB SEVENTH STREET VILLAGE LLC, a California limited liability company (collectively, "Borrower"), hereby promises to pay to the order of the City of Modesto, a municipal corporation ("Holder"), the principal amount of up to Five Million Dollars ($5,000,000.00), subject to Section 2.6 of the Loan Agreement, plus interest thereon pursuant to Section 2 below.

1. Borrower's Obligation. This Secured Promissory Note (the "Note") evidences Borrower's obligation to repay Holder the principal amount of Five Million Dollars ($5,000,000.00) or such other amount as may be advanced by the Holder pursuant to the HOME Loan Agreement between Borrower and Holder dated as of _____________,2025, as such may be amended from time to time (the "Loan Agreement"), together with all interest on the outstanding principal balance in accordance with the terms and conditions described herein.

Borrower’s obligation under this Note are secured by that certain HOME Deed of Trust dated as of the date hereof executed by Borrower for the benefit of Holder and encumbering the property described therein. All capitalized terms used but not defined in this Note have the meanings set forth in the Loan Agreement.

2. Interest.
(a) Subject to the provisions of subsection (b) below, outstanding principal balance of the Loan shall bear interest at a rate of three percent (3%) simple interest 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.

3. Term and Repayment Requirements. The unpaid principal balance hereunder, together with accrued interest thereon, is due and payable no later than the date that is the fiftyfifth (55th) anniversary of the Completion Date (as defined in the Loan Agreement), but in no event later than December 31, 2082, This Note is due and payable as set forth in Section 2.8 of the Loan Agreement.

4. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of Holder, except as provided in the Loan Agreement.
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5. Security. This Note, with interest, is secured by the HOME Deed of Trust. Upon execution, the HOME Deed of Trust will be recorded in the official records of Stanislaus County, California. Upon recordation of the HOME Deed of Trust, this Note will become nonrecourse to Borrower, pursuant to and except as provided in Section 2.10 of the Loan Agreement which section is hereby incorporated into this Note. The terms of the HOME Deed of Trust are hereby incorporated into this Note and made a part hereof.

6. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at City of Modesto, 1010 Tenth Street, Suite 3100, Attn:

Community Development Manager, or to such other place as Holder may from time to time designate.
(b) Annual Payments. Commencing on the later of: (i) April 1 following the Completion Date, or (ii) April 1, 2028, and on April 1 of each year thereafter, through the end of the HOME Term, 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 Borrower shall provide the City with any documentation reasonably requested by the City to substantiate the Borrower 's determination of Residual Receipts.
(c) All payments on this Note shall be without expense to Holder, and Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of Holder, 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 Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest that exceeds the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate will automatically be deducted from the principal balance owing on this Note, so that in no event is Borrower obligated under the terms of this Note to pay any interest that would exceed the lawful rate. (e) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.
(f) Borrower may prepay the amounts due under this Note at any time without premium or penalty.

7. Event of Default; Acceleration.
(a) Upon the occurrence of an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under #12..
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this Note and the Deed of Trust will, at the option of Holder, become immediately due and payable without further demand.
(b) Holder's failure to exercise the remedy set forth in subsection 7(a) above or any other remedy provided by law upon the occurrence of an Event of Default does not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Event of Default. The acceptance by Holder of any payment that is less than the total of all amounts due and payable at the time of such payment does not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.

8. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment of this Note.

Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.

9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower shall be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
(c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
(d) This Note shall be governed by and construed in accordance with the laws of the State of California.
(e) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence.
(f) The Loan Documents, of which this Note is a part, contain the entire agreement between the parties as to the Loan. This Note may not be modified except upon the written consent of the parties.
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[Signature Page Follows]
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Signature page
IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day and year first above written.

BORROWER:

VHB SEVENTH STREET VILLAGE LLC a
California nonprofit corporation
By: ___________________________________
_________________, Executive Director
Date: ___________________________________
3525741.1
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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:104-006-007-0000, 104-006-008-00, Space above this line for Recorder’s use. 104-006-009-00, & 104-006-010-00

REGULATORY AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(HOME Loan – Visionary Home Builders of California)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is dated as of ________, 2025, and is between the City of Modesto, a California charter city (the "City"), and Visionary Home Builders of California, INC., a California nonprofit corporation, SEVENTH STREET VILLAGE LP, a California limited partnership, and VHB SEVENTH STREET VILLAGE LLC, a California limited liability company (collectively, "Borrower").

RECITALS
A. Defined Terms used but not defined in these recitals are as defined in Article 1 of this Agreement.

B. Borrower owns fee simple title to the land generally located at 914-930 7th Street, Modesto, California also known as Stanislaus County Assessor’s Parcel Numbers 104-006-007- 000, 104-006-008-000, 104-006-009-000, 104-006-010-000, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”). The Property consists of 4 separate legal parcels which are a combined approximately .88 acres in size. Borrower intends to develop 79 residential units on the Property (the “Project”). The Project will consist of 79 housing units with a mix of 1-bedroom, one-bath, 2-bedroom, one-bath, and three-bedroom 2-bath units (the “Development”).

C. Pursuant to that certain HOME Loan Agreement by and between the City and Borrower, dated as of ______________, as such may be amended from time to time (the "Loan Agreement"), the City has made a loan of Five Million Dollars ($5,000,000.00) in HOME Investment Partnership Funds ("HOME Funds") to fund costs associated with the construction and operation of the Development (the "Loan"). The City has the authority to loan the HOME Funds pursuant to 24 C.F.R. 92.205.
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D. The City has agreed to make the 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 Agreement and in the related documents evidencing the Loan.

E. In consideration of receipt of the Loan at an interest rate substantially below the market rate, Borrower 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) "Adjusted Income" means the total anticipated annual income of all persons in the Tenant household as calculated pursuant to 24 C.F.R. 92.203(b)(1). Adjusted income includes income from all persons in the household, including nonrelated individuals. (c) "Agreement" has the meaning set forth in the first paragraph of this Agreement.
(d) "City" means the City of Modesto, a California charter city. (e) "Completion Date" means the date that all of the following have occurred:
(1) a final certificate of occupancy, or equivalent document is issued by the City to certify completion of the construction of the Development; (2) the final disbursement of HOME funds for the Development has been made; (3) the City has verified the Development complies with the property standards set forth in 24 C.F.R. 92.251; and (4) all project completion information has been entered by the City into the Integrated Disbursement and Information System (IDIS). (f) "Completion of Construction" means the date the construction of the Development is completed as evidenced by the issuance of a certificate of occupancy or equivalent document issued by the City, to certify completion of the construction of the Development.
(g) "City-Assisted Units" means the twenty (20) Units within the Development designated as assisted by the City pursuant to this Agreement. (h) "Deed of Trust" means the Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith by and among Borrower, as trustor, _______________, as trustee, and the City, as beneficiary, that will encumber the Property to #12..
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secure repayment of the Loan and Borrower's performance of the covenants set forth in the documents evidencing the Loan.
(i) "Development" has the meaning set forth in Paragraph B of the Recitals. (j) "High HOME Rent" means a monthly Rent amount not exceeding the maximum rent published by HUD for a Low-Income Household for the applicable bedroom size as set forth in 24 C.F.R. 92.252(a)(1).
(k) "HOME" means Home Investment Partnerships Act Program funded pursuant to the Cranston-Gonzales National Housing Act of 1990. (l) "HOME Funds" has the meaning set forth in Paragraph C of the Recitals. (m) "HOME Regulations" means the regulations set forth in 24 C.F.R. Part 92. (n) "HOME Term" means the period beginning on the date of this Agreement and ending on the fifty-fifth (55th) anniversary of the date of this Agreement. After the expiration of the HOME Term, for the purposes of the HOME Regulations, the Development will no longer be considered an existing HOME assisted rental project. (o) "HUD" means the United States Department of Housing and Urban Development.
(p) "Loan" has the meaning set forth in Paragraph C of the Recitals. (q) "Loan Agreement" has the meaning set forth in Paragraph C of the Recitals.
(r) "Loan Documents" means the documents executed by Borrower evidencing the Loan including this Agreement, the Note, Deed of Trust, and the Loan Agreement.
(s) "Low HOME Rent" means a monthly Rent amount not exceeding the maximum rent published by HUD for a Very Low-Income Household for the applicable bedroom size as set forth in 24 C.F.R. 92.252(a)(2).
(t) "Low Income Household" means a Tenant household with an Adjusted Income that does not exceed eighty percent (80%) of Median Income, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than eighty percent (80%) of Median Income on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes, as such definition may be amended pursuant to 24 C.F.R. Section

92.2. An individual who is a student that is ineligible to receive Section 8 assistance under 24 C.F.R. 5.612, and thus ineligible to receive any type of HOME assistance, shall not qualify as a Low-Income Household.
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(u) "Low Income Units" means the Units which, pursuant to Section 2.1(b) below, are required to be occupied by Low Income Households. (v) "Management Agent" has the meaning set forth in Section 5.2. (w) "Median Income" means the median gross yearly income, adjusted for Actual Household Size as specified herein, in the County of Stanislaus, California, as published from time to time by HUD. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the City shall provide Borrower with other income determinations that are reasonably similar with respect to methods of calculation to those previously published by HUD.
(x) "Note" means the promissory note, dated as of ___________, 2025, that evidences Borrower's obligation to repay the Loan, as such may be amended from time to time. (y) "Property" has the meaning set forth in Paragraph B of the Recitals. (z) "Rent" means the total monthly payments by the Tenant of a Unit for the following: (1) use and occupancy of the Unit and land and associated facilities, including parking; (2) any reasonable and customary separately charged fees or service charges assessed by Borrower which are required of all Tenants which meet the requirements under 24 C.F.R.

92.214(b)(3), other than security deposits; (3) the City-approved utility allowance, calculated pursuant to 24 C.F.R. 92.252(d), for the cost of an adequate level of service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service or cable TV; and (4) 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 Borrower, and paid by the Tenant. In no event shall the Rent of a City-Assisted Unit exceed the amount approved by the City pursuant to Section 2.2 hereof. (aa) "Services Provider" has the meaning set forth in Section 5.6. (bb) "Tenant" means the tenant household that occupies a Unit in the Development.
(cc) "Tenant Services" has the meaning set forth in Section 5.6. (dd) "Term" means the term of this Agreement which commences as of the date of this Agreement, and unless sooner terminated pursuant to the terms of this Agreement, expires on the date fifty-five (55) years from the Completion Date, but in no event later than December 31, 2078 (subject to extensions agreed upon by the Partners). (ee) "Unit(s)" means one (1) or more of the units in the Development. (ff) "Very Low Income Household" means a household with an Adjusted Income that does not exceed fifty percent (50%) of Median Income, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than fifty percent (50%) of Median Income on the basis of HUD findings that such variations are necessary #12..
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because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes, as set forth in 24 C.F.R. Section 92.2. An individual who is a student that is ineligible to receive Section 8 assistance under 24 C.F.R. 5.612, and thus ineligible to receive any type of HOME assistance, shall not qualify as a Very Low-Income Household. (gg) “Very Low-Income Units" means the Units which, pursuant to Section

2.1(a) below, are required to be occupied by Very Low-Income Households.

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

Exhibit A: Legal Description of the Property
Exhibit B: Schedule of HOME Rents
Exhibit C: Certificate of Continuing Program Compliance Exhibit D: Form of Certification of Tenant Eligibility
ARTICLE 2

AFFORDABILITY AND OCCUPANCY COVENANTS

2.1 Occupancy Requirements.
(a) City Assisted Units. During the Term, Borrower shall rent twelve (12) of the City-Assisted Units, and ensure that these Units are occupied by or, if vacant, available for occupancy by, Low Income Households. Eight (8) of the City Assisted Units shall be occupied by or, if vacant, available for occupancy by Very Low Income Households. (b) Intermingling of Units. The City-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. Borrower 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. Borrower 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 Borrower'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 Agreement, and remain in full force and effect.
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2.2 Allowable Rent.
(a) Very Low Income Rent. Subject to the provisions of Section 2.3 below, the Rent paid by Tenants of Very Low Income Units may not exceed the Low HOME Rent provided annually by the City.
(b) Low Income Rent. Subject to the provisions of Section 2.3 below, the Rent paid by Tenants of Low Income Units may not exceed the High HOME Rent provided annually by the City.
(c) No Additional Fees. Borrower may not charge any fee, other than Rent, to any Tenant of the Units for any housing or other services provided by Borrower.

2.3 Rent Increases; Increased Income of Tenants.
(a) Rent Increases. The proposed initial Rents and subsequent Rents for all City-Assisted Units shall be provided to the Borrower by the City prior to initial or subsequent occupancy and prior to a rent increase, and shall be subject to the HOME Regulations. A schedule of current HOME rents is attached as Exhibit B. Borrower may not impose any Rent increases on City-Assisted Units, without prior submission to the City of any proposed Rent increases and without written approval from the City of the proposed Rent increases. The Rent for such City -Assisted Units may be increased no more than once annually based upon the annual income certification described in Article 3 and in no event shall any increase exceed three (3%) percent. Tenants shall be given at least sixty (60) days written notice prior to any Rent increase. The City will provide Borrower with a schedule of maximum permissible Rents for the City-Assisted Units annually.
(b) Non-Qualifying Household. If, upon the annual certification of the income a Tenant of a City-Assisted Unit, Borrower determines that the income of a Very Low Income Household or 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 must be increased to the lesser of one-twelfth (1/12th) of thirty percent (30%) of the actual Adjusted Income of the Tenant, or fair market rent (subject to 24 C.F.R. 92.252(i)(2) regarding low income housing tax credit requirements), and Borrower shall rent the next available Unit to a Very Low Income Household or Low Income Household as applicable to comply with the requirements of Section 2.1 above, at a Rent not exceeding the maximum Rent specified in Section 2.2, or re-designate another comparable Unit in the Development with a Very Low Income Household or Low Income Household as applicable as a City-Assisted Unit, to meet the requirements of Section 2.1 above.

Upon renting the next available Unit in accordance with Section 2.1 or re-designating another Unit in the Development as a City-Assisted Unit, the Unit with the over-income Tenant will no longer be considered a City-Assisted Unit.
(c) Termination of Occupancy. Upon termination of occupancy of a CityAssisted 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 #12..
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reoccupied or another Unit is re-designated as a City-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. Borrower 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. In compliance with Section 504 of the Rehabilitation Act, a minimum of one (1) unit in the Development shall be constructed to be readily accessible and usable by households with a mobility impaired member, and a minimum of one (1) unit in the Development shall be constructed to be readily accessible and usable by households with a hearing or vision impaired member. Not less than thirty (30) days from the Completion Date, the Borrower shall deliver to the City the certification required pursuant to Section 4.8(f) of the Loan Agreement
ARTICLE 3

INCOME CERTIFICATION AND REPORTING

3.1 Income Certification. Borrower shall obtain, complete, and maintain on file, immediately prior to initial occupancy and annually thereafter, income certifications from each Tenant renting any of the City-Assisted Units. Borrower shall cause each Tenant in a CityAssisted Unit to execute a Certification of Tenant Eligibility in the form attached as Exhibit D.

Borrower 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 Borrower.

Borrower 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 Borrower 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 City-Assisted Units.

3.2 Reporting Requirements. Borrower 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 C; 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 Section 5.4 of the Loan Agreement. #12..
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3.3 Additional Information. Borrower shall provide any additional information reasonably requested by the City.

3.4 Records. Borrower 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 Borrower; (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. Borrower 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 Borrower that pertain to the Development.

3.5 HOME Record Requirements. For the period of the HOME Term all records maintained by Borrower pursuant to Sections 3.2 and 3.4 above are to be: (a) maintained in compliance with all applicable HUD records and accounting requirements; and (b) open to and available for inspection and copying by HUD and its authorized representatives at reasonable intervals during normal business hours; provided however, records pertaining to Tenant income verifications, Rents, and Development physical inspections must be kept for the most recent five (5) year period and are subject to HUD inspection for five (5) years after expiration of the HOME Term. Borrower is subject to the audit requirements set forth in 24 CFR 92.505 during the HOME Term.

3.6 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 Agreement. Borrower shall cooperate in making the Property available for such inspection. Borrower agrees and acknowledges that during the HOME Term, 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. (b) After the completion of an inspection the City shall deliver a copy of the inspection report to the Borrower. If the City determines as a result of such inspection that there are any life-threatening health and safety related deficiencies, Borrower 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 Borrower 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 Borrower must begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible. In addition, the Borrower acknowledges that the City may re-inspect the Development to verify all #12..
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deficiencies have been corrected or rely on third party documentation submitted by the Borrower for non-hazardous deficiencies in conformance with 24 C.F.R 92.504(d). (c) After expiration of the HOME Term and for the balance of the term of this Agreement, the City may perform on-site inspections as deemed reasonably necessary by the City.

ARTICLE 4

OPERATION OF THE DEVELOPMENT

4.1 Residential Use. Borrower 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. Borrower's actions with respect to the Property shall at all times be in full conformity with: (a) all requirements of the Loan Documents; (b) all requirements imposed on projects assisted with HOME Funds as contained in 42 U.S.C. Section 12701, et seq., 24 C.F.R. Part 92, and other implementing rules and regulations, as such may be amended or supplemented from time to time; and (c) any other regulatory requirements imposed on Borrower.

4.3 Taxes and Assessments. Borrower 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 Borrower 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 Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, 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 Property Tax Exemption. Borrower 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 TENANT SERVICES

5.1 Management Responsibilities. Borrower is responsible for all management functions with respect to the Development, including without limitation the selection of Tenants in accordance with the requirements of 24 C.F.R. 92.253(d), certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. The City has no #12..
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responsibility for management of the Development. Borrower shall retain a professional property management company approved by the City in its reasonable discretion to perform Borrower's management duties hereunder.

5.2 Management Agent. Borrower 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 the Visionary Home Builders of California, INC.,as the initial Management Agent. Borrower shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the City shall approve the proposed Management Agent by notifying Borrower 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. Because the Development consist of seventy-nine (79) units, two resident managers will reside at the Development. 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 Agreement. Borrower shall cooperate with the City in such reviews.

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 Agreement, the City shall deliver notice to Borrower of its intention to cause replacement of the Management Agent, including the reasons therefor.

Within fifteen (15) days after receipt by Borrower of such written notice, the City staff and Borrower 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, Borrower 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 in Section 5.2 above and approved by the City pursuant to Section 5.2 above, and shall promptly and as soon as practicable dismiss the thencurrent Management Agent. #12..
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(c) Any contract for the operation or management of the Development entered into by Borrower shall provide that the Management Agent may be dismissed and the contract terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section constitutes a default under this Agreement, and the City may enforce this provision through legal proceedings as specified in Section 6.7 below.

5.5 Approval of Management Policies. Borrower 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 Agreement.

5.6 Tenant Services Provider.
(a) The Borrower will be providing on-site services which Borrower will make available to all tenants in the Development (the "Tenant Services"). The Borrower shall submit to the City for approval the name and qualifications of any proposed services provider (the "Services Provider").
(b) The Services Provider shall have demonstrated the ability to provide Tenant Services in residential facilities like the Development in an effective manner. The Borrower 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.
(c) 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 Borrower 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.

5.7 Property Maintenance.
(a) Borrower shall maintain, for the entire Term of this Agreement, all interior and exterior Improvements, including landscaping, on the Property in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with 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 pursuant to the Uniform Physical Conditions Standards established by HUD pursuant to 24 C.F.R. 5.703 and as required under 24 C.F.R. 92.251.
(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 Borrower agrees to provide all necessary improvements to assure the Development is maintained in good condition. Borrower #12..
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shall make all repairs and replacements necessary to keep the improvements in good condition and repair.
(c) In the event that Borrower 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 Borrower to the City upon demand.

5.8 Crime Prevention Program. During the Term of this Agreement Borrower agrees to participate in the City of Modesto Police Department's Crime Free Multi-Housing 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 Borrower's participation in the Crime Prevention Program.

ARTICLE 6

MISCELLANEOUS

6.1 Lease Provisions. In leasing the Units within the Development, Borrower shall use a form of written lease approved by the City. The lease must not contain any provision which is prohibited by 24 C.F.R. Section 92.253(b) and any amendments thereto. The form of lease must comply with all requirements of this 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 Agreement or reasonably requested by Borrower 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 Agreement; or (2) qualify as a Very Low Income Household or 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 Borrower, 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 Borrower and the Tenant. Notwithstanding the above, any rent increases are subject to the requirements of Section 2.3 (a) above.
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(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 a City-Assisted Unit within the Development must be in conformance with 24 C.F.R. 92.253(c), and any termination of a lease or refusal to renew a lease for any Unit within the Development must be preceded by not less than sixty (60) days written notice to the Tenant by Borrower 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, Borrower 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 Agreement. Borrower herein covenants by and for Borrower, assigns, and all persons claiming under or through Borrower, 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 Borrower or any person claiming under or through Borrower, 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. Borrower shall comply with Executive Orders 11246, 11375, 11625, 12138, 12431, 12250, 13672, Title VII of the Civil Rights Act of 1964, the California Fair Housing and Employment Act and other applicable Federal, State and local laws and regulations and policies relating to equal employment and contracting opportunities, including laws and regulations hereafter enacted.
(b) Borrower 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. Borrower 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 Borrower 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.
(c) In accordance with 24 C.F.R 92.504(c)(3), so long as Borrower provides supportive housing services at the Development in conformance with the requirements of the Veterans Affairs Supportive Housing ("VASH"), notwithstanding anything to the contrary in subsection (a) above, the Borrower may provide preference to households reasonably determined by the Borrower to be VASH-eligible households, as allowed under 24 C.F.R. 92.253, for any #12..
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VASH assisted units, so long as such preference does not violate nondiscrimination requirements listed in 24 C.F.R. 92.350.

6.4 Term. The provisions of this Agreement apply to the Property for the entire Term even if the Loan is paid in full prior to the end of the Term. This Agreement binds any successor, heir or assign of Borrower, 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. For the purposes of the HOME Regulations, the Development shall only be considered a HOME assisted project for the duration of the HOME Term, and nothing in this Agreement may be read to infer otherwise.

6.5 Notice of Expiration of Term.
(a) At least six (6) months prior to the expiration of the Term, Borrower 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. Borrower 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, Borrower 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 Borrower hereby declare their express intent that the covenants and restrictions set forth in this 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 Agreement said covenants and restrictions expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof, is to be held conclusively to have been executed, delivered and accepted subject to the covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless the City expressly releases such conveyed portion of the Property from the requirements of this Agreement.

6.7 Enforcement by the City. If Borrower fails to perform any obligation under this Agreement, and fails to cure the default within thirty (30) days after the City has notified Borrower in writing of the default or, if the default cannot be cured within thirty (30) days, fails #12..
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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 Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Calling the 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 Borrower's performance of its obligations under this 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 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 Borrower shall cause this Agreement, and all amendments and supplements to it, to be recorded in the Official Records of Stanislaus County.

6.10 Governing Law. This Agreement is governed by the laws of the State of California.

6.11 Waiver of Requirements. Any of the requirements of this Agreement may be expressly waived by the City in writing, but no waiver by the City of any requirement of this Agreement extends to or affects any other provision of this Agreement, and may not be deemed to do so.

6.12 Amendments. This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title that is duly recorded in the official records of Stanislaus County.

6.13 Notices. Any notice requirement set forth herein will be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows:

City: City of Modesto
1010 Tenth Street, Suite 3100
Modesto, CA 95354
Attn: Community Development Manager
Borrower: Visionary Home Builders of California
315 N. San Joaquin Street
Stockton, CA 95202
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16 3525800.1
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 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 Agreement will not in any way be affected or impaired thereby.

6.15 Multiple Originals; Counterparts. This 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 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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HOME Regulatory Agreement
Signature Page
3525800.1
WHEREAS, this Agreement has been entered into by the undersigned as of the date first written above.

BORROWER:

VISIONARY HOME BUILDERS OF CALIFORNIA, INC.,
a California nonprofit corporation
By: ______________________________________
______________________, Executive Director
Date: ______________________________________
[City Signature Follows]
[Remainder of Page Left Intentionally Blank]
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HOME Regulatory Agreement
Signature Page
3525800.1
CITY:

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

By: _________________________________
Risk Manager
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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. #12..
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A-1

EXHIBIT A

LEGAL DESCRIPTION
The land is situated in the City of Modesto, Stanislaus County, State of California, and is described as follows:
(This will be taken from the HOME Agreements or Deed Of Trust Agreement) #12..
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B-1

EXHIBIT B

HOME PROGRAM RENTS
The attached HOME Rents reflect the current HOME rents as of the Effective Date. The initial Rents and subsequent Rents for all City-Assisted Units must be provided to the Borrower by the City prior to occupancy and are subject to the HOME Regulations. The City will provide Borrower with a schedule of maximum permissible Rents for the City-Assisted Units annually. #12..
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C-1

EXHIBIT C

INITIAL CERTIFICATE OF

PROGRAM COMPLIANCE
VISIONARY HOME BUILDERS OF CALIFORNIA, INC., a California nonprofit corporation ("Owner"), hereby certifies that it will comply with all applicable, ongoing HOME Program 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 Project.

Affordability shall be maintained as follows:

Twenty (20) of which eight (8) will be one-bedroom, seven (7) will be two-bedrooms and five (5) will be three-bedrooms units, are being made available to Low Income Households.

During the term of the Regulatory Agreement the Owner will rent twenty (20) City-Assisted Units, and ensure that these units are occupied or, if vacant, available for occupancy, by Low or Very Low Income Households. During the term of the Regulatory Agreement the Owner will rent all of the City-Assisted Units, and ensure that these units are occupied or, if vacant, available for occupancy, by Low or Very 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 the HOME Program 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:

VISIONARY HOME BUILDERS OF CALIFORNIA,
INC., a California nonprofit corporation
By: ________________________________
________________, Executive Director
Date: ________________________________
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C-2

ANNUAL CERTIFICATION OF

CONTINUING PROGRAM COMPLIANCE
VISIONARY HOME BUILDERS OF CALIFORNIA, INC., a California nonprofit corporation ("Owner"), hereby certifies that it will comply with all applicable, ongoing HOME Program 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 Project.

Affordability shall be maintained as follows:

Twenty (20) housing units, which eight (8) will be one-bedroom, seven (7) will be two-bedrooms and five (5) will be three-bedrooms units,
During the term of the Regulatory Agreement the Owner will rent twenty (20) City-Assisted Units, and ensure that these units are occupied or, if vacant, available for occupancy, by Low or Very Low Income Households. During the term of the Regulatory Agreement the Owner will rent all of the City-Assisted Units, and ensure that these units are occupied or, if vacant, available for occupancy, by Low or Very Low Income Households.

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.

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:

CERTIFICATE OF

CONTINUING PROGRAM COMPLIANCE
The following information is being provided by the VISIONARY HOME BUILDERS OF CALIFORNIA, INC., a California nonprofit corporation (the "Owner") to the City of Modesto, (the "City"), pursuant to that certain HOME Loan Agreement dated as of _________, 2025, as such may be amended from time to time, and the Regulatory Agreement dated as of ________. 2025, as such may be amended from time to time, with respect to the Development:
(A) Owner will comply with all applicable, ongoing HOME Program requirements for the fifty-five (55) year HOME 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 CityAssisted 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 City-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
If a floating unit was substituted, please attach any information on unit substitutions and filling of vacancies to evidence maintenance of required unit mix and income targeting.) (E) The following residential units are considered to be occupied by Low or Very Low Income Households and Low Income Households based on the information set forth below:
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C-4
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 or Very Low Income Households and 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 City-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 City-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 Section of the 5.7 of 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-5
1669\01\2466400.1
IN WITNESS WHEREOF, I have hereunto affixed my signature, on behalf of Owner, on this day of , 20 .

OWNER:

EXHIBIT D

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 #12..
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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.
3525800.1
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Recording Requested by and
After Recording Return To:

City of Modesto
Attn: Engineering Services
P.O. Box 642
Modesto, CA 95353

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
APN: 104-006-007-000, 104-006-008-000,
104-006-009-000, 104-006-010-000
LICENSE AGREEMENT BETWEEN VISIONARY HOMEBUILDERS, INC. AND THE

CITY OF MODESTO
This License Agreement (“License”) is made and entered into as of _______, 2025 (the “Effective Date”), by and between Visionary Home Builders, Inc., a California corporation (“Licensee”), and the City of Modesto, a California charter city (“City”), with reference to the following facts:

RECITALS
WHEREAS, Licensee is the owner of certain real property located at 914-930 7th Street, Modesto, California also known as Stanislaus County Assessor’s Parcel Numbers 104-006-007- 000, 104-006-008-000, 104-006-009-000, 104-006-010-000, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Licensee Property”); and
WHEREAS, Licensee has received approval to develop a residential project on the Licensee Property (the “Project”); and
WHEREAS, as a condition of approval of the Project, the Licensee is required to install and maintain control measures to minimize pollutants in urban runoff and Low Impact Development (LID) devices, structures, and or areas to reduce or contain all storm water runoff, as further described and depicted in Exhibit B, attached hereto and incorporated herein, (the “Stormwater LID Devices”); and
WHEREAS, it is not possible to locate the Stormwater LID Devices on the Licensee Property without significant changes to the design of the Project; and WHEREAS, Licensee has requested that the City allow the Licensee to install the Stormwater LID Devices in the City’s public right-of-way adjacent to the Project and buried under the surface; and
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WHEREAS, the installation of the Stormwater LID Devices will be beneficial for the public because it will help ensure that pollutants from the Project do not enter either the stormwater or sanitary sewer system, and therefore treatment of such pollutants will not be at the public’s expense; and
WHEREAS, the City has agreed to allow the Licensee to install the Stormwater LID Devices in the City’s public right-of-way adjacent to the Project, as further described and depicted in Exhibit C, attached hereto and incorporated herein by this reference (the “City Property”).

NOW, THEREFORE, Licensee and City agree as follows:

1. Recitals.

The above recitals are true and correct and are incorporated herein by this reference.

2. License.

City hereby grants a revocable license to Licensee for the sole purpose of installing and maintaining the Stormwater LID Devices in the City Property. Licensee expressly acknowledges that Licensee has no right, either express or implied, to use the City Property, except as expressly provided by this License.

Licensee shall not impair or interfere with City’s ability to access or use the City Property. City reserves the right to enter upon any portion of the City Property at any time. Licensee’s use of the City Property shall be subordinate to the prior use and control of City and to any and all rules and regulations, including, but not limited to, ingress, egress, safety, sanitation and security that may be prescribed by City. Licensee shall also be responsible for ensuring that its activities and use of the City Property comply with all applicable laws, including, but not limited to, statutes, ordinances, codes, and rules and regulations of any governmental body having jurisdiction over the City Property.

3. Installation.

Licensee shall install the Stormwater LID Devices in the ground, below the surface, on the City Property. Licensee shall obtain an encroachment permit from the City prior to commencing any construction or installation work in the public right-of-way. Licensee shall restore the City Property, and any landscaping, to the condition as it existed prior to the installation, and in accordance with all applicable City standards. The location and size of any surface level access cover for the Stormwater LID Devices shall be approved by the Director of Engineering Services in writing prior to installation. Any such access cover shall be slip-resistant and shall be constructed in such a manner as to not present a tripping hazard to pedestrians.

4. Maintenance.
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Licensee shall have the sole responsibility to repair any damage to the City Property arising out of any of Licensee’s activities or the exercise of any of its rights conferred by this License.

Licensee shall also have the sole responsibility to keep the Stormwater LID Devices in good working order, and to perform maintenance and repair of the Stormwater LID Devices as necessary to satisfy this requirement. Licensee shall at all times comply with that certain Stormwater Retention, Treatment Device and Low Impact Structure Access and Maintenance Agreement between the City and Licensee and dated as of Effective Date (the “Maintenance Agreement”).

After installation of the Stormwater LID Devices shall not alter the City Property or make any permanent changes to the City Property, including replacement of the Stormwater LID Devices, without the prior written consent of City’s Director of Engineering Services.

If the Stormwater LID Devices are no longer necessary, Licensee shall remove the Stormwater LID Devices from the City Property and restore the City Property to the condition it was in prior to Effective Date, or to such other condition as approved by the City’s Director of Engineering Services in writing.

5. Costs.

Licensee shall be solely responsible for all costs and expenses it incurs in performing its obligations under this License. If Licensee fails to perform its obligations under this License, or the Maintenance Agreement, City may perform such obligations itself at Licensee’s expense. If Licensee fails to reimburse the City for such costs within thirty (30) days of receipt of an invoice from City, then City is authorized to record such costs as a lien or special assessment against the Licensee Property, to be collected at the same time and in the same manner as property taxes.

6. Annual License Fee.

The Licensee shall pay the City an annual licensee fee of One Dollar ($1.00) on the Effective Date and annually thereafter each year that this License remains in effect. If Licensee fails to pay such licensee fee, City shall send an invoice for such annual fee to the Licensee. If Licensee fails to pay City the full amount stated in the invoice within thirty (30) days of the date of delivery of the invoice, City may record the outstanding amount as a lien against the Licensee Property.

7. Term.

This License shall commence on the Effective Date written above, and shall continue until terminated as provided herein..

8. Termination.

Licensee shall have the right to terminate this License at any time, without cause, upon written notice to City. Upon breach of any term of this License by Licensee, City shall provide written notice of such breach to Licensee. Licensee shall have fourteen days from delivery of such notice to correct the breach. If Licensee does not correct the breach within such time, City may, at its #12..
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sole and absolute discretion, terminate this License, without any cost to City. Upon termination of this License by either party, Licensee shall restore City Property pursuant to Section 9 below.

9. Restoration.

Upon termination of this License, Licensee shall, at its sole cost and expense, restore the City Property to the condition it was in prior to Effective Date, or to such other condition as approved by the City’s Director of Engineering Services in writing. If Licensee fails to restore the City Property as required by this Section, City may elect to and restore the City Property itself, and thereafter send an invoice for these costs to Licensee. If Licensee fails to pay City the full amount stated in the invoice within thirty (30) days of the date of delivery of the invoice, City may record the outstanding amount as a lien or special assessment against the Licensee Property, collected at the same time and in the same manner as property taxes.

10. Release and Indemnity.

Licensee agrees to indemnify, defend, with counsel acceptable to City, and hold City and its elected and appointed officers, officials, employees, and agents (collectively “Indemnitees”) harmless from and against all liability, loss, cost, claim, demand, action, suit, legal or administrative proceeding, penalty, deficiency, fine, damage and expense, including without limitation, reasonable attorney’s fees and costs of litigation, (collectively “Claims”) resulting from or arising in connection with Licensee’s use of the City Property, except as caused by the sole negligence or willful misconduct of any of the Indemnitees. Licensee’s indemnification obligations set forth in this Section 10 shall survive the expiration or earlier termination of this License.

11. Notices.

Any notice or other communication which may be required or permitted to be given or delivered hereunder shall be in writing and shall be personally delivered or sent by first class United States Mail as follows:

CITY:

City of Modesto
Attn: Engineering Services
P.O. Box 642
Modesto, CA 95353
LICENSEE:

Visionary Home Builders of California
315 N. San Joaquin Street
Stockton, CA 95202

12. Covenant.
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It is understood and agreed that the covenants herein contained constitute a covenant running with the land and inure to the benefit and burden of, and shall be binding, on the heirs, executors, administrators, successors, and assigns of the Licensee and City.

13. Governing Law.

This Agreement shall be interpreted in accordance with the laws of the State of California.

Venue for any dispute or claim arising out of or in connection with this Agreement shall lie in the County of Stanislaus.

14. No Waiver.

No delay on the part of any party in exercising any right or remedy under this Agreement or failure to exercise the same shall operate as a waiver in whole or in part of any such right or remedy.

15. Modifications and Amendments.

This Agreement may be modified, amended or changed only by a written agreement signed by both parties.

16. Counterparts.

This Agreement may be executed in one or more counterparts, all of which together shall constitute one and the same Agreement.

17. Attorneys’ Fees.

In any action or proceeding arising from or relating to this Agreement commenced by a party hereto, the prevailing party shall be entitled to recover its reasonable attorneys’ fees in addition to any other costs, interest and damages permitted by law.

18. Construction.

Each Party hereto has had an equivalent opportunity to participate in the drafting of this Agreement and/or to consult with legal counsel. In addition, the usual construction of an agreement against the drafting party shall not apply hereto.

19. Recording.

The Licensee and City agree that this agreement shall be recorded in the official records of the County of Stanislaus upon execution.

Signatures on Following Page
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IN WITNESS WHEREOF, Licensee and City have caused this Agreement to be executed by their duly authorized officers as follows:

VISIONARY HOME BUILDERS OF CALIFORNIA, INC., a California nonprofit corporation
By: ______________________________________
______________________, Executive Director
CITY OF MODESTO, a California charter city
By: _____________________________________
Joseph Lopez, City Manager
ATTEST:
________________________________
Diane Nayares-Perez, CMC, City Clerk
APPROVED AS TO FORM:

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

By: _________________________________
Risk Manager

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

STATE OF CALIFORNIA )

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

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

WITNESS my hand and official seal.

Signature (Seal)
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EXHIBIT A

LEGAL DESCRIPTION OF LICENSEE PROPERTY
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EXHIBIT B

DESCRIPTION OF LID FACILITIES
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EXHIBIT C

LOCATION OF LID FACILITIES
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Modesto City CouncilNovember 25, 2025

Modesto City Council
November 25, 2025